Whenever I see an adult on a bicycle, I have hope for the human race ~ H.G. Wells

As kids our biggest thrill was too learn to ride a bicycle. And as we grew up we graduated to scooters and later to cars. But the Giant Bicycle Company aims at taking us even beyond our automobiles – into the world of cycling and wellness.  Giant Manufacturing Co. Ltd. founded in 1972 is a Taiwanese bicycle company which bills itself as the world’s largest bicycle manufacturer.Giant has manufacturing operations in Taiwan, Netherlands, and China. Giant today is a top brand by itself and sells in over 50 countries through 10,000 retail stores.

An interesting case study written by Prof. Arun Kumar Jain was discussed in our class at Tasmac. Elwin, Bhawana and Ankita presented the case highlighting some of the key strategic issues on Giant’s success.

So how does a small company from a small country become a big global brand?

Great leadership King Liu was a charismatic leader with a powerful an inspiring vision –To be the world’s best bicycle company. It was in Taichung in west-central Taiwan a young 38 year old after trying his hand on several small businesses chose to manufacture bicycles. He realized that riding bicycle was a worldwide trend and his vision went way beyond the profitability of business – he was into the growth of both cycling and cycling culture. Underlying his vision was a strong belief that cycling is good for people’s health and well being and good for the environment.

In the first decade of Giant’s growth overseas sales were very low and it was not because of quality – it was more due a perception of lack of trust in a ‘Made in Taiwan’ product. King Liu resolved to make Taiwan as synonymous with bikes as Switzerland was with watches. It became his dream to turn Taiwan into a ‘cycling nation’.

An inspirational interlude Island Etude is a Taiwanese film. A film about an aurally handicapped college student who grabs his bike, backpack, and guitar and goes on a 7-day, 6-night round-the-island tour. On the way he discovers the natural and cultural beauty of Taiwan and during his encounters with different people he is exposed to local arts, folk customs, and approaches to environmental protection and a host of other cultural enlightenments. http://www.youtube.com/watch?v=pNA_EHD2YCk&feature=related ‘Inspired by the film, Giant’s 73-year-old chairman King Liu decided to circle Taiwan on a bicycle, a task difficult even for a 20-year-old, but one the chairman managed without a hitch’ – says Jeffrey Sheu of Giant .

Sources of competitive advantages Starting as an OEM manufacturer Giant sold exclusively for big brand names Schwinn and Nishiki. But then a day came when its biggest client, Schwinn Bicycles in the U.S., rather abruptly stopped placing orders on Giant. Orders were transferred to Chinese manufacturers due to lower costs leading to a serious crisis. But Giants responded swiftly with a brand building strategy.

Building Brand started from Taiwan: That’s when Giant began to market bicycles under their own brand name in Taiwan. King Liu’s cycling trip was symbolic of cycling being a combination of lifestyle and leisure and also a natural expression of success in life. As a result Taiwan enthusiastically celebrates the first Sunday of May as national cycling day.

The Team

Giant went into an image change overdrive from the older heavy bicycle stereotype to state of the art high-end bicycles. Commitment to sport of cycling reflected through sponsorships of professional and amateur teams at International and regional levels. Global Giant Mountain Bike Team and ONCE level 1 road team became trend setters. Such sponsorship allows product developers to see their designs in real world settings leading to further product development.

Balancing innovation and efficiency simultaneously

(a) Innovative and entrepreneurial capabilities were triggered through the bicycle ‘cluster effect’. Michael Porter in his cluster theory highlights how several competitive benefits (innovation, knowledge exchange etc)  accrue when interconnected players within an industry are concentrated in close proximity – in this case the Taiwanese bicycle cluster.

(b) Giant achieved cost efficiency by moving manufacturing facilities to China. The cluster effect also helped reduce transaction costs, R&D costs and attracts international customers due brand power generated by cluster.

Global Giant Local Touch – this ability was another source of competitive advantage.  Giant’s worldwide HQ oversees global considerations and coordination such as brand mgt, product R&D & finance etc. Global standardization through their superior wheel system and a light bicycle frame system were patented and standardized (75%) for their products globally to achieve economies of scale.

The local touch was captured through Giants regional sales companies who were given freedom to collect analyze and react to local consumer needs and market trends with 25% customization. As a result Giant US and Giant Europe sell different selections of bicycles. To understand the Chinese environment and draw maximum value from Chinese JV partners’ unique lower cost manufacturing skills Giant practiced Guanxi in a spirit of trust and mutual respect and cooperation.

Overseas Expansion

The Dutch just love their bicycles and ride them everywhere. It was natural for Giant to pedal into this bicycle-friendly nation as an

entry into the European market. Here again King Liu rode more than 500 kilometers heralding a Green World on Wheels Tour to

King Liu

gain firsthand experience riding in one the most cycling friendly nations in the world. It is King’s hope that his Green World on Wheels Tour will open up communication with The Netherlands as Taiwan continues to improve its own cycling infrastructure.

In 1980s Giant overtook American manufacturers with lightweight bicycles and the European market with MTB (Mountain Bikes). In addition to light weight frames were their high-quality shock absorber and aluminum alloy bikes. The Giant name now is synonymous with technological innovation and the state-of-the-art throughout the global bicycle industry. Giant continues in 2011 to top all other manufacturers in prestigious events and reviews of best bikes in the world market.

We end this post with an inspiring quote by Sir Arthur Conan Doyle – “When the spirits are low, when the day appears dark, when work becomes monotonous, when hope hardly seems worth having, just mount a bicycle and go out for a spin down the road, without thought on anything but the ride you are taking.”

About dilipnaidu

An open mind! Love to share my thoughts and a keenness to learn. An engineer and a MBA I had a wonderful innings in the Army and later moved to consultancy and teaching. My current interests are reading, music, growing culinary herbs, playing golf and yoga. I am serious on "Living life less seriously". A warm welcome to you be well and be cheerful always.

15 responses »

  1. whatuful says:

    Hey I went through your link haha! This post is really interesting.

    Like

  2. ajaydongre says:

    Hi Dilip!
    Thanks for sharing this!
    I am proud to be associated with this brand (I own a bike shop and stock GIANT bikes, Goa). Also pleased to see and Asian brand taking a major chunk in international market.

    Regards,
    Ajay Dongre,
    Escapades – for the road and beyond, Goa, http://www.escapadebikes.com

    Like

    • Dilip says:

      Hi Ajay,

      How fantastic to know of your close association the Giant bikes and biking in general. Your website and blog at http://www.escapadebikes.com reveals the expertise you guys have in everything on bikes.

      It will be great if you could share a small article on biking to inspire me and my students – many of whom are already are taking up to biking after our case study on Giant Bicycles.

      With kind regards!

      Like

  3. pdhillon says:

    Helpful, loved to read🙂, your initiatives are really good.

    Like

  4. Dhananjay Das says:

    Some times before i had asked some question to change my professional field. You sent some very good case and i got my answer. I will always keep in touch with you whenever i am stuck with a problem. Thanks for the suggestion.

    With Regards,
    Dhananjay Das

    Like

  5. Bhawana Khadka says:

    Dear Sir
    The case Giant Bicycle has really widened and cleared our knowledge about innovation,R&D,Guanxi and many other strategic alliances in global business expansion.Being a small company the decision of GB to venture into Netherlands dominated by strong bicycle companies was a huge turning point.It could yield maximum benefit of Netherlands being the largest recipient of US foreign direct investment and the people’s craze for bicycle.The strategies and core competencies of GB gives us understanding on how small companies can go global and uniquely present their mark in the world.

    Undoubtedly bicycle has huge benefits in our lives and our deteriorating obsessed health.It reminds me of my childhood experience of falling and rising with great enthusiasm,so as to learn cycling and those beautiful rides.Similar wonderful experience I had while preparing and presenting this case with my friends Elvin and Ankita.Thank you very much for your motivation and also being an ideal mentor to us.

    Like

    • Dilip says:

      Hi Bhawana,

      Thanks for your comments. Your active participation in this case study as well as in others has been a good example for all in our class.

      Thanks for your support as class representative.

      With best wishes and kind regards.

      Like

  6. Navin Kumar says:

    Sir,

    It is innovation which is the key to Giant bicycle’s success and off course it all started with King’s pragmatic & visionary leadership.Initially, the strategy was to to manufactures bikes that were designed and sold abroad under different brands or as an Original Equipment Manufacturer(OEM). King Liu made himself responsible for operations & Anthony Lo devoted himself to crafting Giant’s marketing strategies.This is an ideal instance of how delegation at the top level can ensure success of any organization. A good understanding of the industry & the immediate environment in which it operates further allowed the company to hone it’s competitive advantage over it’s competitors. Giant Bicycle is an ideal example of how a local & small player can transform itself into a global leader.

    Thanks & regards,
    Navin Kumar

    Like

    • Dilip says:

      @ Hi Ankita many thanks & do visit again!

      @ Hello Navin,

      You are right King Liu’s leadership was amazing and inspirational. His own vision aimed at improving health and well being of the people and society.

      Out of the three sources of competitive advantages highlighted in the post the two – Balancing innovation and efficiency simultaneously and Global Giant Local Touch are capabilities that most CEO’s of MNCs find very challenging to develop.

      Like

  7. ankita sen says:

    thank you so much for sharing this case study with us.This case study is informative and simple to understand.It really helped me in clarifying certain aspects of the topic.
    Thank you once again sir for giving us such a important information.

    With Regards,
    Ankita

    Like

  8. The Giant Bicycle …..Company not only backs each and every one of their products but …..will look at every opinion and answer any question a customer may …..have especially if they are not satisfied in any aspect about their …..purchases. ……….Derby Bicycle Center has over 30 years experience with every type …..of bike made and sold in the USA and we choose Giant Bicycles for …..the most important reason anyone can have. Giant Bicycle is the …..absolute best for the customers………..If you ever have any problem with a Giant Bicycle purchase you …..can be assured that you will get the support and answers you need …..by a professional company such as Giant.

    Like

  9. suhas says:

    When did you last ride a cycle? I have to put on the thinking cap.

    Well, we rode a cycle in IMA. Later rode it as a Capt. Sold the same for the cost price of Rs.100-00. Later I would ride my wife’s cycle to PT every morning. Don’t remember more.

    But one day there was a fire alarm at Jabalpur.It was near the place where I was posted. In the heat of things I grabbed some cycle that was near by and reached the place of fire.

    The fire brigade came crashing & controlled every thing.That was the last ride on a cycle as I remember.
    Any way lot of changes in tech.have caused reduction in weight ,design and appearance.
    Change is the only constant.

    Like

    • dilipnaidu says:

      Ha ha, in IMA it was our cycle that took us speeding in squads from one training event to another. And at rare times lift the cycle up above our heads if the seniors found us slouching while cycling.

      Cheers!

      Like

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s