MITTAL SCHOOL OF BUSINESS

MGN – CA-03

TOPIC – YUSHAN BICYCLE: LEARNING TO RIDE ABROAD

Submitted by - MD UJALE

Roll Number - RQ2050A14

Section - Q2050

Registration Number - 12002485

Group Number - Group 8

Group Member Name - Tarandeep Singh, Ashish Supare,

Bhavarpreet Kaur, Megha Kumari, Kritika Upadhyay.

Faculty Name - Dr. Vikas Kumar Sir

 YUSHAN BICYCLE
LEARNING TO RIDE ABROAD

SYNOPSIS:
Yushan Bicycles, one of Taiwan's leading bicycle manufacturers, is pursuing an international
expansion strategy by increasing demand for its range of traditional and electric bicycles and
by shifting its product mix toward higher-margin models sold through specialty bicycle retail
shops.  Its early success in Asia has allowed it to shift its product mix towards higher-margin
models sold through specialty bicycle retail shops.

CASE DESCRIPTION:
The Yu-shan or YUSHAN case was specifically developed for international management
and international business courses, but it can also be used in competitive strategy, corporate
strategy, and general management programs. It is especially useful for analysing situations in
which issues of strategy, organization, and management converge.

INTRODUCTION:
Yushan Bicycles, one of Taiwan's leading bicycle manufacturers, is pursuing an
international expansion strategy by increasing demand for its range of traditional and
electric bicycles and shifting its product mix toward higher-margin models sold through
specialty bicycle retail shops. However, the manager of its new Australian subsidiary
has taken a different approach that focuses on selling lower-priced models through
large sporting-goods retailers. The manager's strategy has yielded disappointing
financial results so far, and he and company executives disagree on the cause and next
steps. The Yushan case was specifically developed for international management and
international business courses, but it can also be used in competitive strategy, corporate
strategy, and general management programs. It is especially useful for analysing
situations in which issues of strategy, organization, and management converge.
Yan-Ting Hsieh and Zhiwen Tseng, both semi-professional cyclists, started Yushan
Bicycles in 1985, naming their company after Taiwan’s highest mountain. Yushan’s
headquarters and manufacturing operating were in Taichung, Taiwan, home to almost
600 bicycle companies, which created a close-knit supply chain, from component
makers to distributors. China led the world in bicycle production, but Taiwanese
manufacturers generally made midrange to high-end products of superior quality .
Yushan bicycles is now 7th largest bike manufacturing in Taiwan, producing over
200,000 bicycles per year. Their bikes are made for comfort and performance, and have
a streamlined shape and distinctive colours.

Product line:
The company’s product lines included road bikes designed to be ridden on smooth pavement;
touring bikes suited to long-distance rides; mountain bikes intended for rugged terrain;
aerodynamic sport/performance bikes; and hybrids that combined feathers of road and
mountain bikes and were well-suited for commuting. Within each bicycle type, Yushan
offered several models that were differentiated by frame design and size, handlebar style,
number of gears, and saddle.

Target customer:
The company targeted a wide range of consumers, from those seeking basic bicycles at a
reasonable price to experience cyclists willing to pay more for additional attributes and
performance. In recent years, it had shifted its product mix to favour the latter category of
buyer and thereby capture the larger margins this segment offered. In 2007, the company
introduces its first electric, with the rechargeable battery, powered motored electric bikes,
that were helpful to riders to maintain a constant speed on flat or inclined roads. Unlike, the
traditional motorbikes or moped, the e-bikes were engaged when the rider is pedalling.  Liu
Chen, who oversaw the company’s manufacturing operations, believed that as production of
e-bikes reached scale, their profit margins would be at least double those of Yushan’s
conventional bikes.

PRODUCT DETAILS:

Cycles
Electric bikes
Electric bicycles
Electric scooter
The pictures here represent how the company - Yushan bicycles are able to manufactures the
mountaineering bikes and successfully held one of the events in Taiwan.
The company’s product lines included road bikes designed to be ridden on smooth pavement;
touring bikes suited to long-distance rides; mountain bikes intended for rugged terrain;
aerodynamic sport/performance bikes; and hybrids that combined feathers of road and
mountain bikes and were well-suited for commuting. Within each bicycle type, Yushan
offered several models that were differentiated by frame design and size, handlebar style,
number of gears, and saddle.

FINANCIAL STABILIZATION:
James Hamilton was named general manager of Yushan Australian in April 2013. Although
he did not have a bicycle or sporting goods identity, he had 25 years of experience in high
performance sales and marketing teams at several successful Australian consumer-goods
companies. Like all subsidiaries of Yushan, YA was expected to become financially self-
sufficient as soon as possible. Hamilton lost very little time building YA's operations from
ground to ground operations, while at the same time developing a local strategy that fit
Yushan's objectives.
Hamilton's first priority was to rent staff, leased office and warehouse space, and to develop
relationships with distributors. By the end of 2013, he had begun implementing a strategy
aimed at increasing volume with the company's most popular road and touring bikes. Since
they did not have the staff to record Australia's plurality in widely scattered independent
specialty bicycle stores, they initially decided to target sporting goods chains. In another
deviation from the company's normal behavior, Hamilton set prices at the lower end of the
range for similar quality bicycles on the market to quickly build volume.
Once the sales limit of 10,000 units was reached - something he expected to achieve within
two to three years - Hamilton planned to raise prices, hoping for self-funding investment in
the next phase of his strategy. This second phase will include advertising to build Yushan's
brand image, expand distribution in specialty bicycle shops, and provide the necessary
service levels to support its high-end, high-margin bicycles. "Special retailers are not
interested in us until we build our brand and product reputation," he said.
Within its first four months, the YA's new leader created 15 employees, including sales reps,
marketing specialists, warehouse employees, and administrative staff. The subsidiary was
based in Melbourne, but in recognition of the country's large geographic spread, Hamilton
began opening sales offices in Sydney, Brisbane and Perth. Due to its reputation and track
record, as well as Taiwan's management lack of familiarity with the Australian market,
Yushan gave Hamilton considerable autonomy in both strategic and operational matters.
By December 2015, Yushan's bicycle sales in Australia had reached 5,960 units, and
Hamilton felt he was making solid progress toward the 10,000-unit goal he had set before the
price increase and product mix was upgraded. In the end quarter of 2013, however, YA
reported results far below budget. The unexpected loss caused tension between Yushan's
headquarters and YA. Each offered different explanations for poor results and different
proposals for necessary action.
Equally frustrating for Hamilton was the unpredictability of transfer prices, which were
quarterly adjusted to reflect an increase in manufacturing costs. Zonghan defended the
practice, explaining that Yushan was financially boosted by its international expansion and
needed subsidiaries to increase costs. But the policy created difficulties in YA.
The currency fluctuations created another problem. For example, between January 2015 and
September 2015, the Australian Dollar (A$) lost 15% against the New Taiwan Dollar (NT$).
Because the transfer prices were stated in NT $, the subsidiary bore the costs of this
weakening of the local currency, significantly increasing the actual product cost above the
budgetary cost of goods.
The analysis of the financial statement has involved the methods use in interpreting and
assessing the outcome of the current and past financial position or performance since they
associate to particular interest factors in investment decisions. Thus, the analysis of the
financial statement is important mode of assessing the past performance as well as planning
and forecasting the future performance.

SWOT ANALYSIS
The four key components of SWOT analysis are - Strengths, Weaknesses, Opportunities and
Threats. Yushan Bicycles can utilize qualities to make specialty situating in the market, can
endeavor to diminish and eliminate weaknesses so it can more readily contend with
contenders, watch out to use openings gave by industry structure, guidelines and other
improvement in outside condition, lastly make arrangements and create techniques to
alleviate dangers that can subvert the plan of action of Yushan Bicycles.
 Opportunities Threats

Strengths Strength Opportunities (SO) Strength Threats (ST)

Strategies
Using Yushan Bicycles
strengths to consolidate and
expand the market position.
Weaknesses Weakness Opportunities
(WO) Strategies
Strategies
Yushan Bicycles can utilize
two methodologies -
expanding on present qualities,
or investigate the pattern and
construct cycles to two-
dimensional market infiltration
approach.
Weakness Threats (WT)
Strategies

Building methodologies Yushan Bicycles should

dependent on customer
situated item improvement
and advertising approach.
simply escape these business
territories and spotlight on
quality and dangers box, or on
shortcoming and openings
box.

STRENGHTS:
Strengths are the Yushan Bicycles capacities and assets that it can use to manufacture a
feasible upper hand in the commercial center. Strengths originate from positive parts of five
distinct advantages and capabilities – human resource, activities and processes, financial
resources, physical assets, for example, land, building, and past encounters and triumphs.
- Strong relationship with existing suppliers
- Intellectual property rights
- Strong brand equity and brand awareness
- Managing regulations and business environment
- Successful go to market track records

WEAKNESS:
Weakness are the zones, abilities or aptitudes in which Yushan Bicycles needs. It restricts the
capacity of the firm to construct a feasible upper hand. Weakness originate from lack or
nonattendance of five distinct advantages and capacities - physical assets, for example, land,
building, HR, activities and processes, budgetary assets, and past encounters and triumphs.
- Implementation of technology in processes
- Organization culture
- Customer dissatisfaction
- Lack of work force diversity
- Track record on environment consideration is not very encouraging

OPPORTUNITIES:
Opportunities are large scale environment factors and developments that Yushan Bicycles
can use either to unite existing business sector position or use them for additional extension.
Opportunities can rise up out of different factors, for example, - changes in customer
inclinations, political turns of events and strategy changes, monetary development,
mechanical advancements, and increment in buyer disposable income.
- Access to international Talent in global market
- Increase in consumer disposable income
- E-Commerce and social media-oriented business models
- Reducing cost of market entry and marketing into international markets
- Lucrative opportunities in international market

THREATS:
Threats are full scale environment factors and advancements that can crash plan of action of
Yushan Bicycles. Treats can rise up out of different factors, for example, - changes in
purchaser inclinations, political turns of events and strategy changes, mechanical
advancements, monetary development, and increment in customer disposable income.
- Growing protectionism
- Crushing middle class in developed and developing world
- US China trade relations
- Increasing bargaining power of consumers
- Credit binge post 2008 recession

EXPANSION STRATEGY:
With development in its homegrown market easing back and neighborhood request focused
on Yushan's more affordable models, Hsieh and Tseng chose to grow universally not
exclusively to catch creation scale economies, yet additionally to overhaul their item blend.
Yushan's first abroad attack came in 2016, when it started trading to Singapore. After two
years, it effectively entered the Japanese market, where, similarly as in Taiwan, the
dissemination channels were overwhelmed by strength retailers. Deals in the Asia Group
assembled consistently, however there was expanding interest for better quality models.
Zonghan, a hard-driving chief with a lifetime of deals involvement with the Taiwanese bike
industry, was especially satisfied with Japanese e-bicycle deals. Since their presentation
during the 1990s, e-bicycles had demonstrated very mainstream with Japanese ladies.
The second period of Yushan's worldwide push accompanied the production of the Europe
Group, one of Taiwan's biggest bike send out business sectors. Around 10% of the 20 million
bikes sold across Europe every year were imported from Taiwan, the most appeal originating
from customers looking for better quality models. Hsieh and Tseng accepted that,
notwithstanding giving expanded volume, Yushan expected to gain from more refined
European purchasers.
Specialty bike retailers spoke to the prevailing direct in most European nations, ranging from
a 43% market share of the overall industry in France to a 72% share in the Netherlands.
Simultaneously e-bicycles were picking up ubiquity: deals were developing by over 20% per
annum. Request came from wealthy naturally cognizant workers as well as progressively
from business clients for undertakings, for example, bundle conveyance. In 2010, fully
expecting grow request, the organization extended its production line limit and expanded the
extent of room used to create the titanium and carbon-fiber outlines utilized in more
extravagant bikes. It additionally expanded its creation limit with respect to e-bicycles.
Rivals in the European market were very much settled in, and it was hard for newcomers like
Yushan to pick up share. While attempting to construct its offer through customary
circulation procedures, the organization additionally started seeking after an equal technique.
Following an opportunity meeting among Hsieh and an exchange serve from Poland,
Yushan's Europe Group likewise began to concentrate shrewdly in contracts for huge volume
deals in Eastern Europe, especially new metropolitan bicycle share programs.
In 2013, Yushan dispatched the third leg of its worldwide extension system by setting up
deals auxiliaries in Australia, New Zealand, and Indonesia. Chen recommended the
occasional tops sought after in the Southern Hemisphere would assist him with adjusting
creation plans. Besides, in light of the fact that infiltration of the European market was
moderate and troublesome, Zonghan accepted the Australian and New Zealand markets could
give information and experience that would be important in Yushan's possible arranged
section into the United States.
As the worldwide methodology developed, so did the company's organizational structure.
Assembling activities were centralized and worked as a benefit community. functional
divisions, for example, building, faculty and showcasing were likewise situated in Taichung
and were assigned as cost focuses.
To deal with the extension and unpredictability of the new global activities, Zonghan
designated three local group supervisors to oversee subsidiaries in Asia, Europe, and
Oceania. subsidiaries in Australia, New Zealand, and Indonesia answered to Zonghan through
the Oceania Group, driven by Wei Yeh, a 40-year-old manager recently selected from a
Taiwanese export organization. All subsidiaries were self-ruling benefit places answering to
the gathering supervisors, all situated at Yushan's central command. Nation subsidiary
directors had impressive opportunity to adjust approaches for their neighborhood markets.
They were likewise needed to propose yearly deals and benefit targets.
By late 2015, the Asia Group (including domestic Taiwan sales) accounted for 70% of
revenue, the Europe Group provided 22% and the Oceania Group contributed the remaining
8%. Profitability varied even more widely by group.
PESTEL ANALYSIS:
POLITICAL FACTOR:
- Role of Non-Government Organization, Civil Society and Protest Groups – The nation
has a dynamic common society network and Yushan Bicycles should assemble spans with
them and search out regions of co-tasks. Common society bunches are compelling in strategy
making as well as in building a general public wide story.
- Democracy and Other Democratic Institutions – According to Christopher A. Bartlett,
Paul S. Myers the just organizations are should have been reinforced further with the goal
that business, for example, Yushan Bicycles can flourish in an open, straightforward and
stable world of politics. Reinforcing of fair establishment will cultivate more prominent
straightforwardness and decrease the degree of debasement in the nation.
- Segregation of Political Responsibilities between Different Government Agencies –
There are various government offices which lessens the danger of overpowering weight by
one organization. In any case, on the other side it does increments both time and cost of
working together and getting confirmations and clearances.
- Role Local Governments Play – Local governments are profoundly persuasive in the
arrangement making cycle and execution as the vast majority of the strategies and guidelines
are actualized by the neighborhood government as requirement offices generally report to
nearby government in their own states with respect to different laws.

ECONOMIC FACTOR:
- Employment Level - If the employment rate is high then it will affect Yushan Bike
strategies in two ways - it will provide enough customers with Yushan Bicycle products,
secondly it will make it harder for Yushan bikes to hire skilled and skilled workers.
- Declining prices in both domestic and foreign markets - Compare the rate of decline in
the last decade with the prices of Yushan bicycle products and the total product prices remain
stable in the US market. Yushan bikes should take into account the fact that in the United
States' economic downturns could lead to widespread inflation and high risk of inflation.
- Foreign Exchange Rate - A number of companies have made losses over the past few
years due to the forex risk in Venezuela, Brazil and Argentina. Yushan bikes should be aware
of forex risk history before entering the new market. Many US companies have made losses
in Mexico on the common forex problems in that country.
- Financial Market Structures and Balanced Availability of Funds - The Federal
Reserve's monetary policy has led to a general slowdown in global financial markets. Yushan
bikes can be borrowed at a lower cost under such circumstances. But this strategy poses a risk
when interest rates will rise.

SOCIAL FACTOR:
- Attitude towards Authority – Various societies in various aspect of the world have
distinctive demeanor towards power. In Asia authority is regarded while in west it is
something to defy. Yushan Bicycles ought to deliberately examine the demeanor towards
power before dispatching an advertising effort for its items and administrations.
- Nature of Social Contract between Government and Society – Before going into a
market Yushan Bicycles needs to comprehend the idea of implicit agreement among
government and society. For instance, it has been amazingly hard for US organizations to
enter UK wellbeing market as UK wellbeing framework is a nationalized framework and
everything experiences contracts at public level.
- Attitude towards Health and Safety – The mentality towards wellbeing and security is
frequently reflected in the nature of the items and cost structures of assembling measures.
Yushan Bicycles has rigid standards for wellbeing and security standards so in developing
economies it might need to rival players who don't have significant expense structures that of
Yushan Bicycles.
- Level of Social Concerns and Awareness in Society – Higher degree of social worries in
the general public regularly result higher shopper activism and weight from non-legislative
associations, and weight gatherings.

TECHNOLOGICAL FACTOR:
- Empowerment of Supply Chain Partners – Yushan Bicycles ought to examine territories
where innovation can enable gracefully chain accomplices. This can help Yushan Bicycles to
get more straightforwardness and make gracefully chain more adaptable.
- Acceptance of Mobile Payments and Fintech Services – One of the regions where US are
missing behind China is Mobile Payments. Yushan Bicycles ought to survey what are favored
decision of versatile installments in neighborhood economy and picked the plan of action
dependent on it.
- Research and Development Investment Levels – If there is elevated level of interest in
innovation improvement area then there are high odds of building a self-continuing biological
system that drives advancement. Yushan Bicycles can use such a circumstance to recruit the
best individuals in business.
- E-Commerce and Related Infrastructure Development – As E-Commerce is basic for
Yushan Bicycles plan of action. It ought to assess the internet business foundation,
innovation framework and so on before entering another market.
- Technology move and permitting issues for Yushan Bicycles – laws and culture of
authorizing of IPR and other computerized resources ought to be investigated cautiously so
that Yushan Bicycles can dodge investigations and IPR burglaries.

ENVIRONMENTAL FACTOR:
- Influence of Climate Change – How environmental change will affect Yushan Bicycles
plan of action and flexibly chain. For instance, if the gracefully chain isn't adaptable it can
prompt bottlenecks if shipments from one aspect of the world are deferred due to abrupt
atmosphere move.
- Environmental Standards and Regulations both at National and Local Levels – Often
nature strategy at public and nearby level can be unique. This can help Yushan Bicycles in
various choices, for example, plant area, item advancement, and valuing technique.
- Level of Consumer Activism Regarding Environmental Concerns – Yushan Bicycles
has to know the degree of shopper activism with respect to ecological concerns is. It will help
Yushan Bicycles in both growing ecologically agreeable items and ruining PR stagger blocks.
- Influence and Effectiveness of Environmental Agencies – The part of condition
principles implementation offices is basic in protecting standards. In any case, regularly in
rising nations these offices defer the cycle as a strategy to extricate pay-offs. Yushan Bicycles
ought to know about presence of such practices in a nation.

LEGAL FACTOR:
- Health and Safety Laws – What are the wellbeing and security laws in the nation and what
Yushan Bicycles needs to do to agree to them. Various nations have diverse demeanor
towards wellbeing and security so it is better for Yushan Bicycles to lead an intensive
examination before entering the market.
- Data Protection Laws – Yushan Bicycles needs to evaluate what are the information laws
in the nation and what it needs to do to agree to them. For instance, the greater part of EU
nations presently needs the EU resident information to be spared in EU nations as it were.
- Laws with respect to Monopoly and Restrictive Trade Practices – As another player
Yushan Bicycles shouldn't be stressed over the imposing business model and prohibitive
exchange provides legal counsel.
- Time Taken for Court Proceedings – Even if the nation has best of the laws, it doesn't
mean a lot on the off chance that they can't be upheld in an opportune way. Yushan Bicycles
ought to do an essential exploration with respect to how much time it frequently takes to
close a legal dispute in the nation given such a legitimate difficulties Yushan Bicycles can
confront.
- Business Laws – Before going into new market – Yushan Bicycles needs to survey what
are the business laws and how they are not quite the same as home market.
- Employment Laws – What are the work laws in the nation and are they predictable with
the plan of action of Yushan Bicycles. For instance, Uber work framework isn't predictable
with French laws and it is confronting difficulties in the nation.

Conclusion:
 Yushan needs to maintain all its subsidiary autonomy and adapt the cultural aspects for
entering into the market. 
 The company needs to hire a sales manager and regional manager who is already having
experience in the country. So, they can manage the process easily.
 Company needs to reorganize to reflect a similar product in organizational culture of the
country.
 The company's price strategy did not favor establishing a market and did not help to
prevent falling subsidiaries. Hence, price strategies of the company should be reframed in
order to ensure profitable expansion of Yushan Bicycles.
Reference:
https://caserighted.com/yushan-bicycles-learning-to-ride-abroad/

https://prezi.com/p/h0qdwtcknci1/yushan-bicycle-company/

https://www.hbs.edu/faculty/Pages/item.aspx?num=52588

https://www.scribd.com/presentation/427441058/Yushan-Bicycles-Presentation

https://www.essay48.com/case/3993-Yushan-Bicycles-Learning-to-Ride-
Abroad-Case-Solution

http://fernfortuniversity.com/hbr/case-solutions/3993-yushan-bicycles--
learning-to-ride-a.php

https://www.thecasesolutions.com/yushan-bicycles-learning-to-ride-abroad-
144587