International Strategic Management

Compiled by, Munaza Kazmi

Submitted to, Dr. Syed Haider Ali Shah

Department of Management Sciences
Bahria University, Islamabad

Case Study:

The Organizational Environment and The Global Environment featuring TREK Bike

Question-1 Why was Trek unable to compete with foreign bicycle manufacturing based on
price?

Answer:

Before answering the question, I want my reader to consider over the contemporary picture of
industry, you and I are buyers of “iPhone”, but have you seen what written at the back, i.e.
“Designed in California and assemble in China, have you ever wondered, why it is so? Or
let’s come to daily business, you must have visited chemist to buy a mouthwash, have to ever
noticed “Colgate” mouthwash 500ml made of UK/USA price is Rupees 440, but of Thailand
its Rupees 280 only. Doesn’t it feel a huge price difference, now the question arises “why is it
so”. Well the reason so simple, it is basically due to the difference of the country where it is
manufactured, since the labor cost of these countries (China, India, Thailand, Pakistan, etc.)
are very low as compared to UK/USA, that’s why we are loaded with call centers that operate
in night shifts – outsourcing.

Same was the issue pertaining with Trek, as it is an American company, having its plant
located in the same region. Higher labor costs and expensive tariffs make it harder for most
of American businesses to compete on a price basis with foreign competition.

Question-2 Trek employees can stop the assembly line if they spot a defect. What are the
advantages and disadvantages of this policy?
Answer:

Here the company had empowered his workers by giving them a sense of authority with
responsibility. So, let’s discuss its pros and cons.
Better to start with its Advantages,
  Empowered employees feel themselves as a part of organization hence there comes an
increase in sense of ownership and responsibility, which ultimately leads to cost
saving and productivity.
 Now your turn to answer a simple question, tell me when you work with diligence,
when you’re happy or when sad…. Happy indeed. Subsequently the empowered
personals are happier than others, besides are productive and show great desire to
embrace a healthy change.
 Along it can help in improving the service quality standard.
 Improvement in company’s overall culture, it may give rise to collaboration and
empathy, which surely leads to good communication among departments and lesser
rate of turnover.
On the other side, it has a few disadvantages as well.
 The empowerment could lead to misuse of authority, since humans are fickle and
manipulative, they will always be out to trick you unless you force them to be honest.
 Also, there are chances of some people to bring conflict and misunderstanding among
workers and staff.
 Empowering is costly business, see the case of a house a servant should be always
kept at an arm’s length otherwise he will cross that fine line, am signaling towards the
chance of building arrogance since their confidence level would have been increased.
 And there’s a risk of security since you share the sensitive information with them.

Question-3 What is the importance of Trek's “dealer advice meetings?”

Answer:

The idea that Terk embraced was somehow similar to Lean Management, where the business
focuses on creating value by continuous improvement, by understanding what your customer
desires.
When we say dealer advice meetings is significance or having some benefits, generically we
are saying so as the dealer is market person, who have all the knowledge related to market,
and its trend since it’s his day to day business.
Consequently, dealer advice meetings given Terk an opportunity to get hands on the market
and customer knowledge through dealer’s feedback and suggestions, along a fair chance to
associate the results of previous suggestions on which the company acted.