Strategic Management — ASSTRUS BIKE COMPANY, ADELAIDE AUSTRALIA Essay Example
The biking industry in Australia is one that has been underestimated, in terms of its massive growth potential and market competition. This cycling boom has been stirred by a quite a number of factors. As the Australian economy continues to grow there is an increased need for alternative transportation. Research conducted by the Australian Bureau of statistics shows that the number of bicycle commuters has increased from 15% to 22 % between the years 2001 to 2006 (Australian Bureau of Statistics, 2009). This has resulted in companies investing in cycling infrastructure. More people are turning to cycling not only to ease mobility, but also to keep healthy. With the increase in gas prices, economic constraints and obesity related health complications, cycling have been adopted as a viable mode of transportation.
Companies are venturing into the cycling industry to meet supply and demand and tap into the economic potential the industry offers. It is therefore necessary for any company joining the market to stand out by identifying the gaps as well as the opportunities which can be exploited. In this study, we take an in-depth look at the Asstrus Bike Company and its breakout into the Australia transport industry. The Asstrus Bike Company was begun in Adelaide in the year 2005 with a vision to improve urban transport by offering overall sustainable solutions through the e-bike.
The cycling industry holds many economic benefits to the government, companies and individuals alike. The economic benefits associated with cycling are estimated at about AU$205bn stemming from employment opportunities, fuel saving, reduced carbon emissions, promoted health as well as reduced congestion (Wickens 1999, p.2). It is estimated that imports of bicycles and parts from international markets are AU$100milion with Australia being among the top sales destinations (Wickens 1999, p.2).
The Asstrus Biking Company has opened up job opportunities directly employing over 100 employees as manufacturers, retailers and distributors. Although most manufacturing plants are based overseas, Asstrus Company has adopted locally based manufacturing as a marketing strategy to encourage people to buy locally manufactured products. It would seem like the production costs would be much higher, however, this has not been the case. Initially the setup of the production factory was a heavy undertaking for Asstrus however, in the long term, manufacturing and production on the ground has tremendously cut down some costs associated with freight and taxation. Proving that locally manufactured bicycles can be market price friendly, while providing work opportunities for the locals.
Asstrus is committed towards making its home city carbon neutral for this reason they are encouraging a radical shift towards more innovative solutions such as the smart bikes and the e-bikes. In terms of data on bicycle users, the number of cyclists in Australia has gone up from 1.6M to 2.4 M between the years 2007 and 2012. The expected revenue growth rate per annum is expected to be 5.3 % (Wickens 1999, p. 2).
The Asstrus Bike Company seeks to have a diversified products base, which can be used by any person in spite age and gender. In this case the e-bikes suit both the youth and older population. However, in order for this to be practical it is necessary that an evaluation of the target market be done, to understand what works and what has to be twerked in order to reach expected demands. It has products which vary depending on taste and consumer preferences. It was found that there are about three main categories of cyclists. These are the Utilitarian, Recreational and Non-cyclist. The utilitarian cyclist is basically uses cycling as the main means of transport at about 95% of the time. On the other hand the recreational cycler used its just once in a while about 47% of the time and the non-cyclist never uses this mode of transport (Fogarty and Mugera 2013, 304).
In Countries like Germany and China, it was found that the sale of e-bike is like to steadily rise over the years and 27% by the year 2025. Global income is estimated at $25Bn. The reason most Australian shy away from cycling is mostly due to the distance and safety concerns. E-bikes make it much easier for commuters to travel even further distances (Rissel et al. 2010, 267-272).
There are certain standards which govern the companies within the cycling industry. Among these standards, there are some which are mandatory and other voluntary. These standards are observed through the Australia Competition and Consumer Commission (ACCC).
The e-bike is affordable for a large segment of the population. Accessories are also available for those clients who would wish to personalize their bikes, however at an extra cost. Research carried out by Mintrel shows that people pay more attention to the brand, product features as well as quality as opposed to cost and are therefore opting for the high end or specialized bikes. Eventually other traditional shops like Obkie will also face stiff competition if they are unable to adapt to new technology. The middle age demographic that is between 35 and 54 years are recorded to spend the most amount of money when it comes to purchasing.
There is increased demand for e-bikes with about 60% of sales recorded for bikes and another 40% for its accessories. There is also demand for locally manufactured products which would be a great marketing and a selling point for the Asstrus Bike Company. Demand can be created by holding an expo aimed at showcasing the company. This will alert consumers of the latest technological developments. Demand can also be created by introducing cycle tourism in a bid to improve the cycle networks. It was found that from 2009 to 2014 the number of visitors cycling in Australia increased by 25%. In 2014 it is estimated that around 2.4 million tourists also took part in cycling. This goes to show that projection of Australia as a leading tourist hub would create even more business for companies in the cycle industry. It would also help to introduce an innovative program which will encourage people to make a shift towards a greener carbon free environment (Rissel etc al. 2010, 267).
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