Application of the Model.

Nalebuff and Brandenburgers PARTS Model was developed for analysing competitive situations using game theory concepts introducing the notion that competitors can cooperate whilst also competing (Hubbard & Beamish, 2011). The PARTS Model can be applied to the majority of cases when evaluating competitive situations. The model can be broken down and scrutinised singularly, however it most effective when used in conjunction with all sections. To demonstrate how the model can be applied in this instance analysed against a case study. Professor Chwo-Ming Yu and Professor Paul Beamish (2009) wrote the case Giant ICN: Formation of the A-Team which examines the production and exportation of bicycles from Taiwan and China. Taiwan was commonly known as the bicycle kingdom, their significant export of bicycles worldwide was notable. China begun producing bicycles at lower costs and overtook Taiwans exportation volume in 1992, sparking concern for the Taiwanese unlikely allies collaborated to form the A-Team. The collaboration of value-chain members was to ensure Taiwanese firms remained a major exporter. The PARTS model can analyse key competitive situations of this case by breaking down each aspect.

Players
Hubbard and Beamish (2011) discuss Nalebuff and Brandenburgers rendition of value net linking organisations to their competitors and complementors to establish the players (book reference). Players may include suppliers, competitors, consumers and complementors. Professor Yu and Professor Beamish (2009) are transparent in identifying the players involved in the Giant ICN: Formation of the A-Team; parts suppliers, Giant, Merida, consumers, Chinese exportation market, mass market, dealer market and so on. The Formation of the A Team was the collaboration of Taiwanese production companies Giant and Merida however the power of partnership was not always prevalent as the companies were previously competing against one another. Nalebuff and Brandenburger (2011) stated having some existing competitors link together can be a good way to provide sufficient demand for new suppliers to enter. Following the decline in leadership from the Taiwanese exports key players Giant and Merida set aside reservations to join forces and ensure Taiwan remained a key player in the scheme of worldwide bicycle trade. Working in partnership allows for additional suppliers to enter the market by increasing trading power continuing to remain competitive (Yu & Beamish, 2009).

Added Value
Added value is the total value of industry with the organisation less the total value of the industry without the organisation (Hubbard & Beamish, 2011). The case study fortunately provides material particulars that could measure the value of the

organisation. Separately Giant and Merida have recorded there selling value at USD $276.9 million and $212.5 million respectively as at 2006. When compared to the Chinese exports/value they would register minor however in this situation value is not only a monetary figure. Value for the Taiwanese organisations is to ensure production, exports and remaining robust worldwide competitor appears considerably more important to the Taiwanese people, for years the Chinese have been superior with big productions companies and lower rates therefore taking business from smaller local companies, hence providing an adequate reason behind combing forces to form the A Team and retain production in smaller countries with possibility of production expansion to worldwide locations (Yu & Beamish, 2009).

Rules
A bicycle is a two-wheeled, lightweight steerable apparatus that is propelled by the rider, the metal frame supports the mounted wheels, saddle, chain and consists of handlebars to assist steering (Bicycle, 2013). The rules behind production of bicycles are not implicit rather whom can be innovative, whilst maintain industry standards. The case explained the Chinese production companies choosing to categorise bicycles by low-end, mid-end and high-end aiming to target different consumers based on structure and price. The A Team recognised the variation of standards of each bicycle and aimed to upgrade the overall quality of bicycles, promote brands and produce more innovative, high-value-added bicycles (Yu & Beamish, 2009). The A Team changed the rules of the game by pioneering contemporary products (Yu & Beamish, 2009); bicycles catered to the current trends such as a fixie, a custom built bike consumers can make their own modernising previous trends, perceiving the current consumer base desperate for change and quick to copy the fixie became a phenomenon. Chinese manufacturers challenged such productions and changed their focus and therefore rules by producing light-weight, high-quality mountain bikes. Choosing to take a different approach rather than direct competition would appear uncertain rather figures show mountain-biking would retain stronger profits as it is not necessarily a trend rather a sport and ongoing interest (Bicycle Statistics: Usage, Production, Sales, Import, Export. 2013). Rules may be initiated by organisations and trends however there are stern laws that were set in place worldwide to ensure safety standards are maintained, if these are not adhered to and a consumer suffers any harm the organisation will be penalised not only by workplace laws but their reputation will deteriorate. In 1978, the requirements for bicycles became law and bicycles became a regulated commodity (Mitchell, 2006).

Tactics
Tactics are those actions that are taken to carry out or support a business or functional strategy (Hubbard & Beamish, 2011). Tactics can be intended not only to develop their own actual effect, but too affect perceptions of players, especially competitors. Altering competitors perceptions could have the same outcomes of changing the game itself. Giant bicycles have become a leader in bicycle sales particularly in the area of sporting. Following the initial case study by Professor Yu and Professor Beamish (2009) Giant have changed their tactics aiming to use marketing techniques such as gorilla advertising at notable bicycle events. Giants most recent tactic has been a statement issued on their website stating Giant bikes win world championships. They win design awards, too. But most importantly, they win the hearts of riders who choose to make cycling a part of their lives. We support that choice. We think it makes the world a better place (About Giant, 2013). Giant sponsors world champion competitors and then markets their success with the sales of their products. Their tactical growth has landed them with over 12,000 retail partnerships around the world (About Giant, 2013). It is evident that tactics are a big part of the game the bicycle organisations within the case study are part of a competitive fog whereby they may not know everything they need to in regards to their competitors tactics, intentions, performance and so on. However that is generally what keeps the organisations going, innovation will prevail.

Scope
Competitors often define the game differently. The scope of the game signifies characteristics of the organisation; such as the geographical location/scope, consumer types and functional use of the product/s (Hubbard & Beamish, 2011). Professor Yu and Professor Beamish (2009) examine the production locations specifically as China and Taiwan however their ideal exporting markets vary. Depending on the size of the production and the alignment to organisational vision the exports may be prioritised to mass markets (developed countries selling low-end bicycles through discount stores and exercise shops) or dealer markets (mid-end and high-end bicycles sold through bicycle dealers). Both Giant and Merida in recently years has established their scope as high quality products made by local production firms and not generated by low-cost large organisations therefore appealing to a specific consumer base wanting a guaranteed quality product (Yu & Beamish, 2009). An organisations scope should be an ongoing process with continuing changes to consumers wants, needs and trends organisations ideally should analyse their targets and ensure they are at the top of consumer buying lists.