The rise of giant

Over the years, the multinational bicycle manufacturer, Giant, has

faced different cross-cultural issues in different regions. In the early
stage of company development, Giant as an original equipment
manufacturer (OEM) fully utilized its competitive advantage of low
labour cost and adopted the overall low cost leadership approach. It
successfully minimized the cost through economies of scale. However,
the company soon lost its competitiveness as the rising of the
developing countries also acquired cheap labour source, such as China
and Southeast Asia, its biggest buyer (i.e. approximately 75% of sales
of Giant), Schwinns bicycles stopped ordering from Giant. The price
competitions in newly emerged developing countries facilitated the
growth of those countries but seriously threatened the business life of
Giant. Giant did not emphasise itself on lowering costs through the
standardization of operation and lowering the quality of bicycles using
global strategy to regain the market share. The result of heavily
reliance on a single or more buyers was costly due to this strategy and
the geographic concentration of production might fail to quickly adapt
to the local market conditions, losing its competitive position as a
result.
Owing to the reasons above, Giant started to differentiate its own
bicycle products by level or by use in order to produce higher quality
and better design with competitive price. During the OEM process, it
acquired certain knowledge of bicycle design. Hence, it cooperated
with external academic institutions and formed alliance with its main
rival, Merida, to further differentiate its own manufacturing skills from
other competitors. For examples, it developed the carbon fiber bicycles
and aluminum alloy bicycles through spending extensively in the
Research and Development (R&D). From OEM manufacturing, Giant has
actively constructed its own brand through technical development, by
upgrading the core technical capacity to penetrate the high-end
market and developed countries later on. Furthermore, the strategic
alliances with its rivals facilitate the growth of Giant by merging and
combing the resources and technology to further consolidate its own
competencies in the bicycle industry. Hence, the quality of bicycles
increased significantly and the types of bicycles can more segmented
to cater the needs of consumers in different regions.
Regarding the needs and income level of consumers in developed
and developing countries, Giant adapted to the multi-domestic
strategy to serve different purposes of the consumers in different
regions. For example, in the Europe or the United States, the functionspecific bicycles, such as mountain, BMX, and fitness bikes, are
becoming more popular with the growing concerns of green transports
and health lifestyles. The pursuit of quality of life with higher income
has driven those demands. In China or other developing countries, the

need of basic transportation remains the crucial to the general

consumers, given with the ease of maintenance and competitive price.
The products are tailored-made to local use by customizing the
attributes of bicycles. Hence, the pressure of the local adaptation is
high, but Giant avoided price competition (i.e. lowering its cost of
production) and differentiated itself from technology and ingenuity,
penetrating the biking market in many developed countries. It also
developed bicycles with the design of compact geometry to
revolutionize the cycling industry.
However, the corruption or the absence of biking road or the lack
of parking spaces might pose risks to Giant to expand its business in
developing countries. Giant originally focused on manufacturing and
cost-reduction, it shifted to become more marketing and consumeroriented by operating its own stores in order to provide new shopping
experience to the customers. Also, with the direct contact with the
customers, the feedback received could further improve the
techniques and quality of products. For example, the folding bicycles
could cater for the needs of the commuters with the lack of parking
space.
The exporting strategy to expand its business internationally, such
as the Europe and the United States, seemed to be successful. Based
on mass production, it partnered with a European based distributor and
later became a wholly owned subsidiary to expand its distribution
network in the Europe. It minimized the risk and took the advantage of
local distributors from their valuable distribution network in local
markets.
For Giant, transnational strategy might not be the best solution to
address the issues. The decentralization of the operation through
extensive outsourcing to developing countries outside Taiwan might
expose to the economic risk due to piracy and counterfeiting,
undermining the core competency of the company and resulting in a
significant profit loss. The lack of sophisticated regulation on
intellectual property is one of the contributors to this problem. The
technological cost might be higher than outsourcing the manufacturing
process of core components.
Giant should continue the current multi-domestic strategy to
differentiate its brand and products. It should find the niche market in
the cycling industry, for example, specialization of female bicycles, to
attract more potential consumers. It has to stay in a leading role in
technology and innovation in the industry to enjoy the first mover
advantage in the market. It could be achieved by actively finding the
needs of the consumers in different areas.
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