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Cannondale Business Case

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Crummer Graduate School of Business

MGT 615 Business Policy Dr. Theodore T. Herbert

Size-Up of the Situation

Cannondale Corporation is the leading manufacturer and marketer of high-performance aluminum bicycles and bicycle components in the world. The company vision is to be the world’s best bicycling company and focuses on close relationships with their customers, employees and vendors in order to reach this goal. Over the past ten years Cannondale has experienced tremendous sales growth from $54.5 million in 1991 to $176.8 million in 1999 (322%), and is currently enjoying an estimated 20% market share in the United States. Due to increased operating costs and fierce competition within the industry, Cannondale has over the last two years encountered slower sales growth – paving way for adjustments to their business strategy. At the time of this case (2000) the top management of Cannondale is considering new market opportunities and is pursuing a diversification strategy into the off-road motorcycle industry. The challenge for the company is how to efficiently utilize current manufacturing and marketing experience to create a first mover advantage in the motorcycle industry - introducing high quality and innovative trendy motorcycles.

Analysis of the External Environment

The $5 billion U.S. bicycle industry is operating within a mature and highly competitive environment with many players competing fiercely for market share. There are an estimated 54.5 million adult cyclists within the U.S. market and the average total annual sale during the 90’s was 11.5 million units. Due to high price elasticity and lower demand for bicycles, the

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