Bicycle Manufacturing in Colombia, Research Paper Example

Currently, a majority of the bicycle products that are available in Colombia are imports from other nations, such as China and Japan. There is a growing need for bicycles in the country because local production will increase the affordability of an item that few Colombian’s own. According to an article entitled “Red tape slows entry into Latin America”, the middle-class income is rising, is increasing the demand for bicycles as a necessity for those who can’t afford cars (Formosa 1). Since it would be time consuming and expensive from a business perspective to begin a bicycle manufacturing company from scratch, it would be beneficial to partner with an American company, such as Trek Bicycle Corporation, to open up a subsidiary with a new name in Colombia.

The main strength of this project is that there is currently little competition and opening up a subsidiary that appears to be Latin American based will drive customers due to loyalty. In addition, the economy in Colombia grew by 4.5% in 2013 (Mallen 1) so the demand for bicycles will be high in Colombia because for one of the first times, the population will be able to afford them and there are very few current owners. Furthermore, a domestic bicycle company will be able to offer lower prices than imports, which will give it a competitive edge. The weakness of this project stems from the fact that at first, it may be more expensive to establish a new manufacturing firm rather than to export bicycles from an existing one overseas. However, these costs will be reimbursed overtime if the projected bicycle sales become a reality. Opportunities that this project could exploit to its advantage is that there are very few Latin American bicycle manufacturing firms. If the company markets itself in a way that seems uniquely Latin American and reflective of Colombia’s wants and needs, it will be successful. Lastly, major threats to the company are from the business that Colombia is currently conducting with Japan and China to retrieve the few bicycles that are currently sold in the country.

Works Cited

Formosa N. “Red tape slows entry into Latin America”. 2 December 2011. Web. 22 February 2014. http://www.bicycleretailer.com/international/2011/12/02/red-tape-slows-entry-latin-america#.UwkCKfldUUh

Mallen PR. “Colombia’s Economy In 2014: Rising Private Consumption, Investment Will Support Growth”. 17 January 2014. Web. 22 February 2014. <http://www.ibtimes.com/colombias-economy-2014-rising-private-consumption-investment-will-support-growth-1543047>