Bicycle Product Production Although Bicycle Production Has Term Paper

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Bicycle

Product Production

Although Bicycle production has grown to well over one hundred million bicycles in the year 2000, there are still specialty markets that have not been saturated. Couple that with the fact that there are still many nations in the world where citizens cannot afford to purchase automobiles, and a potential for new products becomes more obvious. With these factors in mind, this report will present reasons that will justify producing specialty bicycles in the Daniel Manufacturing Company's spare warehouse space.

Competition

It is obvious that world production is up. Currently, the largest producer of bicycles in the world is the nation of China. "China manufactured a record 52 million bicycles in 2000 -- over half the world total. Nearly two thirds of these were exported, with 17 million going to the United States." (Larsen, 2002)

The European Union's new found togetherness makes it seem like a large producer of bicycles; however, when seen as individual nation states, only Germany was producing more than ten million bicycles in the year 2000. India also produced a little more than ten million bicycles. The next closest producer was Italy who runs second out of Europe having produced approximately 3 million bicycles.

Because the United States is such a giant importer of manufactured bicycles, the nation only produced a little over one million bikes. As late as 1995, the United States used to produce nearly nine million bicycles annually but economic restructuring and foreign competition has brought the Unites States production numbers down to the current lows.

World Sales

The United States has well over forty million cyclists which currently makes it the number one market in the world. The problem with those figures is that the United States is currently importing ninety seven percent of the bicycles sold to those millions. Off shore locations like the Virgin Islands, Haiti and Puerto Rico are all bicycle utilizing nations due to island locale and convenience.

One must also consider the North American Free Trade Agreement (NAFTA).

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This free trade pact opens the doors to both Mexico and Canada. Additionally, Canada has trading rights with off limits nations such as Cuba, Iraq and Iran while Mexico can be considered the gateway to Central and South Americas.

If the new bicycles were intended for export, India produces a great many of the domestically ridden bicycles but they do not touch upon specialty bikes as proposed here. Another potentially large bicycle market is the continent of Africa.

Throughout many of the countries in Africa, sales have been declining because of economic and political destabilization. A secondary reason for reduced sales is the lack of moderately priced models and few or no replacement parts. A third reason is strictly politically motivated. For example, in Senegal, the nation levies highly restrictive tariffs on imports in order to protect domestic manufacturing which ranges in production numbers of under two thousand five hundred bikes annually. Examples of neighboring nations such as Ghana reducing their similar tariffs helped create responsive markets.

There are many nations within the continent of Africa where both the economic and political fronts are strong and stable. Therefore, as target markets, the United States, India and Africa alone could justify manufacturer of specialty bikes.

But, other potential buyers include the before mentioned European nations. (See Appendix A). Countries like the Netherlands, Denmark, Germany, Switzerland, Sweden, Austria, England, Wales, France and Italy are all very bicycle entrenched. As mentioned above, the nations of Italy and Germany are the top European producers but they certainly do not meet the demand generated out of these nations.

Reason 1

The number one reason for manufacturing bicycles in the Daniel's Manufacturing Company spare facility is profitability. Through technology and standardization, we are able to make high quality products at a fraction of the cost of materials and implementation.

Because of NAFTA, importing the products like Canadian steel and rubber from Mexico would be tariff free. Computerized milling and shaping tools will keep labor costs down and will also be.....

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