Cycles Devinci, a bike manufacturer in Quebec, set out to achieve 20% annual growth and expand into the Asia Pacific region by 2021. To achieve this goal, Simon Brodeur proposed a plan to sell 1,000 bikes by that time. His proposal addressed strategic dimensions such as business models, competitive advantage, and international marketing. At the same time, it considers quantitative and qualitative criteria such as estimated demand and political/cultural challenges.
Yves Plourde and Yan-Raphael Aspirot
Harvard Business Review (HEC250-PDF-ENG)
October 25, 2019
Case questions answered:
- What is Devinci’s position within the industry? How does Cycles Devinci benefit from that position?
- How would you rate Devinci’s international expansion efforts to date?
- Given Devinci’s position, is internationalization in the Asian market desirable? Realistic?
- Based on the data collected by Brodeur (presented at the end of the case), how would you go about evaluating potential markets? In other words, how would you choose the most promising markets?
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Cycles Devinci: Develop an Asia-Pacific Internationalization Strategy? Case Answers
1.) What is Devinci’s position within the industry? How does Cycles Devinci benefit from that position?
Cycles Devinci was engaged in the manufacturing of bikes in Quebec, Canada, and used a combined approach of manufacturing their own frames as well as subcontracting frame production. These manufacturers imported major production components. However, Devinci retained its frame production in Canada to some extent, which was unusual for Canadian bike manufacturers.
Founded in 1897, by the mid-1990s, the company entered a period of strong growth, doubling its revenues each year. Cycles Devinci expanded its retail network throughout Canada, the US, and Europe. By 2018, it had 80 employees and a turnover of more than $20 million and hence was thriving in Canada and several international markets.
In 2018, the bike business was fragmented. Large manufacturing capacities and distribution networks allow multinationals to benefit from industry-wide economies of scale. Therefore, smaller enterprises that couldn’t compete on pricing emphasized brand loyalty and exceptional service to retailers. So, SMEs were trying to hold their own against mass producers on the international scene, and this is where Cycles Devinci operated.
Cycles Devinci benefitted from its position as:
Its products were distinguished by its aluminum frames. As aluminum is inexpensive, the products were competitively priced and were more shock-resistant. The company was located in the heart of Aluminium Valley, giving it a direct advantage and ease in the procurement of raw materials. It also benefitted from local expertise in processing its raw material. It also added carbon bikes to its product range to enhance its competitiveness.
Cycles Devinci became the “last mass producer of bikes in Canada” in 2014. So, the “Made in Canada” pledge stamped on its frame had some value. The company believed in the benefits of domestic production, like the ability to control quality, react quickly to customer demand, and innovate efficiently.
It was these advantages that convinced PBSC Urban Solutions, the distributor of bike-sharing systems, to continue working with Devinci rather than turning to Chinese or Taiwanese subcontractors. It is also to be noted that the success of this system enabled the company to return to international markets.
The company’s products cover all price points from low (up to $1000), medium ($1000 to $4000), and high ($4000 and up). Its bikes were safe and reliable.
R&D was at the core of the company’s success. Cycles Devinci did not…
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