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Yushan Bicycles Learning to Ride Abroad Case Solution

Solution Id Length Case Author Case Publisher
2629 1808 Words (7 Pages) Christopher A. Bartlett, Paul S. Myers Harvard Business School : 917539
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Yushan Bicycles, founded in 1985 is recognizable as Taiwan's 7th most dominant bicycle manufacturer. Owing to its contemporary development, it calculated to expand internationally by raising demands for its traditional and electric bicycles. Its internationalization strategy has three categories: 1. Asia Market, 2. European Market and 3. Oceania Market. Its primary step towards going international came in 2006 when it decided to set up an operational space in Japan and Singapore, and it was soon popular amongst the locales. This efficacious admittance acted as a drive for Yushan to take its operations ahead and its target markets were followed by Europe, New Zealand, and Australia. However, the Australian market welcomed Yushan with limitations. Hamilton, manager of the Australian subsidiary decided to towards an approach different than the Yushan Headquarters where he kept the prices low. This led to severe financial setbacks in the long run and was further accelerated by delays in delivery and planning issues.

Following questions are answered in this case study solution

  1. What is the motivation behind Yushan’s expansion abroad? What is their internationalization strategy? What are the political and economic risks they face? How effectively are they achieving their internationalization strategy?

  2. Describe James Hamilton’s objectives for Yushan Australia? What I your evaluation of his approach? How well do they fit with Yushan’s internationalization plans in terms of the A. Strategic; B. Operational; C. Organizational and Financial objectives? 

  3. What is the source of Yushan Australia’s financial shortfall and what are their operational problems? Be specific!

  4. Diagnose the problem from the perspective of Yushan’s headquarters. Then, describe the problem from Yushan Australia’s perspective?

  5. How should Zonghan and Hamilton negotiate to resolve their differences? What specific actions should they take to improve Yushan Australia’s performance? Your recommendations will shape their decision manking.

Case Analysis for Yushan Bicycles Learning to Ride Abroad Case Solution

1. What is the motivation behind Yushan’s expansion abroad? What is their internationalization strategy? What are the political and economic risks they face? How effectively are they achieving their internationalization strategy?

With its pronouncement to tailor to consumers who were experienced cyclists and were keen to pay an additional amount for extra features, Yushan Bicycles shifted its product mix towards them in hopes to expand more in this segment while also being able to sustain a greater profit margin. To capture this market, it was imperative to expand its operations internationally and will also aid Yushan in gaining a production scale economy. Another encouragement behind Yushan's expansion came from China taking over the international bicycle market whereas Yushan also had the potential to cater to the demand ranging from mid-range products to high-end products, hence. Additionally, capturing markets like Australia and Europe will also assist Yushan in eventually entering the market of the United States.

Yushan's internationalization strategy is comprised of increasing the number of sales through capturing a wide market which will help in achieving production scale economies and a centralized manufacturing setup. Furthermore, with its expansion strategy, it also planned to increase the factory capacity which will further accelerate the profit margins. With expansion internationally comes a wide range of political and economic factors which must be catered to if the company wants to successfully make its mark. In the case of Yushan, the political risks include the employment laws and taxation policies which vary for different markets. In case of economic risks, there is a risk of currency fluctuations as was seen in the case of the Australian subsidiary when the AU$ ended up losing 15% to the NT$ and as the transfer prices were set in NT$, the Australian branch had to induce this loss which affected the profits as the actual prices were increased than what was locked in the budgeted cost. 

The internationalization strategy proved to be beneficial in the Asian market, especially the Japanese market where Yushan's e-bike became popular amongst Japanese women. However, in the case of the European market and the Oceania market, Yushan will still have to devise a better strategy to take over competitors.

2. Describe James Hamilton's objectives for Yushan Australia? What is your evaluation of his approach? How well do they fit with Yushan's internationalization plans in terms of the A. Strategic; B. Operational; C. Organizational and Financial objectives? 

James Hamilton was appointed general manager of the Australian subsidiary. He was not a specialist in sporting products; he did, however, have 25 years of expertise running sales and marketing teams. His foremost task was to devise a strategy that complements Yushan's objectives. He intended to do this by devising strong relationships with distributors and hiring staff and his strategy was targeted at making volume through Yushan's touring bikes he started this by targeting Australia's sporting-goods chains and in doing so he kept the prices towards the lower range than the already established competitors to capture the market share. His aim was to hike the costs after the 10,000 objectives were hit, which he planned to do in two to three years. His strategy also included building a brand image for Yushan which will lead to it being recognized by consumers in the face of an extremely competitive market environment. 

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