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Template – Group Course Project Report
Group members:
Case study:
BUS 609 – Strategic Management

Step 1 – Situation analysis
Step 2 – Objective / decision problem
1.
Step 3 – Decision criteria
1.
Step 4 – Options / alternatives
1.
Step 5 – Decision matrix
See Appendix 1 for Rating scale
Criteria

Decision Matrix
Options / Alternatives

Step 6 – Recommendation
Step 7 – Implementation plan & contingencies
Potential contingencies include:

1
Template – Group Course Project Report
BUS 609 – Strategic Management
Appendix 1: Rating scale for Decision Matrix
Each alternative is rated on a 6-point scale shown below, on each criterion:
• +++ or (3+) = the alternative fully contributes to meeting the objective on a criterion;
• ++ or (2+) = the alternative significantly helps meet the objective on a criterion;
• + or ( 1+) = the alternative somewhat helps meeting the objective on a criterion;
• – or (1-) = the alternative somewhat detracts from the objective on a criterion;
• — or (2-) = the alternative significantly detracts from the objective on a criterion;
• — or (3-) = the alternative fully obstructs meeting the objective on a criterion.
Appendix 2:
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1
Airbus’s
Long
Game
○ To best Boeing’s 737, it
considers building a stretched
version of its newer A220 jet
Edited by
James E. Ellis
The Airbus A320 set its manufacturer on the path
to becoming the world’s largest aircraft producer.
Crisscrossing continents since the late 1980s, the
single-aisle jet boasts advanced aviation controls
such as joystick steering and a choice of engines
from competing manufacturers that have made it
an industry favorite alongside the Boeing 737, bringing in the bulk of orders and profit at the European
aerospace giant.
Now, Airbus SE is studying a new airliner
that could eclipse the three-decade-old A320. A
stretched version of its smaller A220 jet, the model
would accommodate about the same number of
passengers as the 170-capacity A320, but with better fuel economy and more modern design specifications, while allowing the company to sidestep the
huge investments needed for an all-new aircraft.
Pushing into the niche occupied by the A320
and the 737, the A220-500 would give Airbus an
opportunity to take market share at a time when
Boeing Co. has said it won’t come out with an allnew jet model for the rest of this decade. Boeing
will wait until there’s a “generational leap” in
technology that would provide fuel savings of
GRAHAM HUGHES/BLOOMBERG
10
B
U
S
I
N
E
S
S
! BUSINESS
Bloomberg Businessweek
May 8, 2023
○ Number of seats
a stretched A220
is expected to have,
about 50 more than
its smallest model
170
▹ An A220 being
assembled at a plant
in Mirabel, Quebec
ng
20% to 30% versus current narrowbody jets, Chief
Executive Officer Dave Calhoun said at its April 18
annual meeting. That timeline might give Airbus a
chance to build sales momentum for a stretched
A220 version in the next few years. “Whereas
Boeing may be forced to develop something new,
Airbus can keep harvesting its current offering,”
says Addison Schonland, an analyst at aviation consultant AirInsight. “They lose nothing.”
Airlines already flying the existing A220 variants—
including Air France—Air Baltic, Delta, JetBlue and
KLM—are interested in the European planemaker
building a larger version, say people close to the
discussions, who asked not to be named speaking
about private deliberations. Other potential buyers
11
include Air Canada, British Airways parent IAG SA
and even Lufthansa, Boeing’s first customer for the
737, one of the people says.
Airbus has said it’s not a question of if, but
when, it will start making the A220-500. The
Paris Air Show in June will provide a chance for
it to gauge interest from customers and seek their
input. “They need to talk to airline customers and
aircraft-leasing companies to get the exact specifications,” says Michael Weiss, chief commercial officer at aircraft financier ABL Aviation.
Airbus and Boeing have focused in recent years
on tweaking existing aircraft rather than designing brand-new models, whose development costs
can reach $15 billion. But the cheaper route of
Bloomberg Businessweek
stretching a tried-and-tested plane still bears
considerable financial and strategic risk. It could
sap billions of dollars of much-needed cash flow if
Airbus leaders are wrong about airlines’ appetite
for a possible successor to the 737 and the A320,
today’s workhorses of the skies.
To be commercially viable, the larger A220
would need the range to fly cross-country in the
US, meaning it would probably need a more powerful engine than the two current versions. The
turbofan that powers Boeing’s 737 Max, built by
the CFM joint venture between General Electric Co.
and France’s Safran SA, would be a good fit—if
Airbus could modify the current deal that makes
Raytheon Technologies Corp.’s Pratt & Whitney
unit the exclusive engine maker for the A220.
But that would also necessitate a redesign of
the wing and the pylons from which the turbines
hang—investments that could quickly run into the
billions of dollars for Airbus and its suppliers. And
the company needs to increase A220 production to
start earning a profit on the jet. It churns out about
50 A320-type aircraft each month, compared with
only about half a dozen A220s.
As Airbus studies the stretched A220, management is weighing a series of complex trade-offs.
There’s the risk of cannibalizing its biggest cash
cow, the A320, with a lower-priced plane that’s
costlier to make. “They’re absolutely under no
compulsion to do it, because the A320 competes
well with the Max 8,” George Dimitroff, head of valuations for consultant Ascend by Cirium said of the
stretched A220. “Yes, it would boost sales, but it
would eat into the A320 market.”
Executives must also figure out their engine
strategy after technical issues on the Pratt engine
grounded a substantial part of the current A220
fleet in recent years. Pratt won’t be in a position to
invest in an upgraded version until it sorts out its
own supply chain strains, which could take a year
or two, says one of the people close to the discussions. Raytheon Chief Financial Officer Neil Mitchill
declined to comment on whether the company is in
talks about the A220-500 with Airbus. “I don’t want
to get ahead of our customer,” he says.
Rival CFM might be tempted to develop an
engine for Airbus’s new plane, but only if it could
provide them for all three A220 models and not just
the stretched version, giving it enough potential
sales to justify the investment, says ABL Aviation’s
Weiss. A second engine option could also create a commercial complication by reducing the
new plane’s commonality with the smaller A220
models. Airlines typically prefer maintaining as
much interchangeability as possible within their
fleets, making it easier to handle spare parts and
employee training. Otherwise “it’s a standalone
product, and that’s not attractive,” says Dimitroff.
Airbus inherited the engineering studies for a
third A220 model when it took control of the jetliner family from cash-strapped Bombardier Inc.
in 2018. Bombardier designed the aircraft then called
the C-Series but struggled to build sufficient sales.
Executives have become increasingly intrigued as
they study the market for a roomier aircraft offering seating similar to that of the 737 Max 8—Boeing’s
only hot seller in the single-aisle category—but with
a newer design and better fuel economy.
With the A220-500, Airbus could divide its
narrowbody lineup into six models across two families. The three A220 models would span the lower
end of the narrowbody market to complement the
three versions of the company’s larger A321—itself
a stretch version of the original A320 that’s become
its bestselling single-aisle model.
Airbus CEO Guillaume Faury says he can afford
to take some time before pulling the trigger on a
stretched A220. “We don’t need the plane today, but
we believe it will make a lot of sense when the A320
family have gone more to the A321,” Faury said in an
interview in November, days after Boeing’s Calhoun
had ruled out designing a new midsize plane.
Still, Airbus risks its window of opportunity.
If the new jet doesn’t begin flying commercially
until the early 2030s, it would chance being leapfrogged by Boeing’s next narrowbody. Some even
think launching the plane now might be too late.
“Frankly, today is when the A220-500 should have
been entering service to have a shot at good market penetration,” says Scott Hamilton, a consultant
with Leeham Co. —Julie Johnsson and Siddharth
Philip, with Ryan Beene and Mary Schlangenstein
THE BOTTOM LINE By building an extended version of its A220
jet, Airbus could save billions of dollars compared with developing a
totally new plane. But misjudging demand could prove costly.
May 8, 2023
” Airbus has added
production space at its
A220 plant in Canada as
it ramps up production
AIRBUS: GRAHAM HUGHES/BLOOMBERG. VIEHBACHER: SIMON DAWSON/BLOOMBERG. *A GENETIC NEURODEVELOPMENTAL DISORDER. DATA: COMPANY REPORT
12
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Title:
Rad’s Bestselling E-Bike Disrupts America’s Pandemic Commute.
Authors:
Source:
Boudway, Ira (AUTHOR)
Bloomberg.com. 10/27/2020, pN.PAG-N.PAG. 1p.
Persistent link to https://edgewood.idm.oclc.org/login?url=https://search.ebscohost.com/login.aspx?direct=true&
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(Permalink):
Cut and Paste:
Rad’s Bestselling E-Bike Disrupts
America’s Pandemic Commute.
Database:
Business Source Complete
Full Text
(Bloomberg Businessweek) — In March, as U.S. states began issuing stay-at-home orders, Mike
Radenbaugh, co-founder and chief executive officer of Rad Power Bikes LLC, made a plan for lean
times. The temporary shutdown of the U.S. economy, he figured, would be bad for his business, a
Seattle-based startup that sells electric bicycles online. “We really started to batten down the
hatches,” he says. “It was a lot around cash planning and preserving the business in case of it
cratering.”
But by mid-April, Radenbaugh realized he’d miscalculated. Not only was Rad not hurting, it couldn’t
replenish bike stocks fast enough. Sales tripled that month over the same period in 2019, he says.
They haven’t cooled since. By mid-May, Rad had sold through its inventory. It’s restocked since
then, but many models are still on back order.
Bike retailers across the country are in the same happy predicament. With the pandemic disrupting
vacation plans, exercise routines, and commutes, Americans are turning to bicycles in record
numbers. Electric bikes, though a tiny slice of the market, have been especially hot, with sales more
than doubling in the first eight months of this year over the same period last year, according to NPD
Group Inc., which tracks bike shops and big-box stores but not direct-to-consumer brands such as
Rad.
Last year the U.S. imported about 270,000 e-bikes, mostly from China, says Ed Benjamin, founder
and chairman of the Light Electric Vehicle Association. This year, Benjamin expects the total will end
up somewhere between 500,000 and 600,000. Even that won’t fully meet demand, he says, because
the virus forced many Chinese factories to shut down in the spring: “There’s howls of frustration
about getting more bikes.”
No other company, Benjamin says, sells more e-bikes than Rad. The privately held business,
founded in 2015, had sales of about $100 million last year.
Rad’s customers tend to be middle-age suburbanites and rural retirees, says Ty Collins, co-founder
and chief marketing officer. They don’t especially care that motorized bicycles are considered
“mechanical doping” in the bike racing world. They just want a little help to get over a hill on the way
to work, to drop off their kids at school without sweating, or simply to ride a bike for the first time in
years.
Within the cycling industry, there’s hope that the pandemic will help convert this demographic into
permanent e-bikers, which has already happened in Europe and Asia. (About 270 million e-bikes are
used daily in China alone.) There is some precedent: During the oil crisis of 1973, U.S. bike sales
spiked, leading to a long-term change in bike culture. “Before that bicycle boom, bicycles were toys
for kids,” says Benjamin, who worked at a Schwinn dealership at the time. “An adult on a bicycle, or
even a teenager on a bicycle, was regarded as messed up.” A similar trend is emerging for the ebike now. “It’s been a little bit exotic,” he says. “In another year it’ll be regarded as an entirely valid,
entirely acceptable transportation choice.”
If Benjamin is right, Rad has a considerable head start in the market. There are more than 100,000
Rad bikes on the road worldwide. The company’s success comes down largely to its pricing. Rad
bikes are hundreds, and sometimes thousands, of dollars cheaper than competitors’ bikes. The
company’s cargo bike, the RadWagon, for instance, sells for $1,700, whereas a top-of-the-line model
from Riese & Müller goes for more than $8,000. Rad keeps its prices low, in part, by cutting out the
bike shops. Markups there account for $600 of the average price of $2,600 for an e-bike, according
to the nonprofit PeopleForBikes. Rad also uses cheaper motors, gears, brakes, and other parts than
many of its bike shop competitors. For Rad to live up to its vision of selling workaday vehicles by the
millions and reshaping the way Americans go from place to place, it will have to prove that low cost
doesn’t mean low quality and fend off increasing competition from traditional bike makers.
Radenbaugh, 30, built his first e-bike 15 years ago as a teenager. He wanted a new way to make the
16-mile trip to and from his high school in Garberville, Calif., a dirt-road town four hours north of San
Francisco. The bus was a “long and dreary” ride; his mountain bike left him soaked in sweat; and
there was nothing more mortifying for a self-described “nerdy guy” than arriving with his mom, the
school nurse. So Radenbaugh soldered together a 40-pound lead-acid battery and a Specialized
mountain bike using parts he found online and at the local RadioShack. After a few failed trials, the
bike was ready to ride down Highway 101. It did get him to school, but didn’t help his efforts to look
cool: “I got honked at a lot by classmates,” he recalls.
Two years later, in 2007, Radenbaugh sold a home-built e-bike at a local summer fair, swapping it
for a 20-foot tepee, which he put up in his family’s yard and lived in for a few months. Over the next
couple of years, as he finished high school and enrolled at Humboldt State University, Radenbaugh
and Collins, a childhood friend and college roommate, built and sold custom bikes on campus,
advertising in classified ads and on Craigslist. In 2014, Radenbaugh moved to Seattle to pursue Rad
Power full time. The following year, he and Collins sold their first batch of about 300 bikes through a
prepay online campaign on Indiegogo and opened their online store.
“We saw what the likes of Warby Parker and Casper were doing and saw an opportunity there,”
Collins says. But as a relatively low-margin business with hundreds of competitors, e-bikes hadn’t
been a typical target for venture capitalists. During its first year, Rad took a five-figure sum from a
pair of investors who happened to have an office nearby, but otherwise rose on its own steam until
last year when Darrell Cavens and Mark Vadon, co-founders of Zulily LLC, put in more cash.
Still, Rad couldn’t follow the typical direct-to-consumer startup playbook of losing huge sums to
acquire new customers. “We didn’t take the strategy of let’s get customers at any cost,” Collins says.
“We needed profit to keep going.” In the early days, he adds, he was the only person answering calls
when customers had questions or problems. He used what he learned from those conversations to
target ads on Facebook. He and Radenbaugh had expected to sell bikes to people like
themselves—twentysomething city dwellers—but their early customers, he says, were mostly
“suburban dudes in their 50s, 60s, and 70s.”
“It really was baby boomer after baby boomer,” Radenbaugh says. As sales grew, so did Rad’s ad
budget. The company now spends in a day running ads on Facebook, Instagram, and Google what it
used to spend in a month, Collins says. The customer base, he adds, has since broadened to
include more of the young city dwellers they had envisioned.
In February, Rad raised $25 million from a group of venture investors, including Vulcan Capital.
Although Rad has been profitable since 2015, Radenbaugh says, the infusion of cash will allow the
company to develop products, expand service, and sell bikes faster. “When people jump on these
bikes and try them out, it’s a totally new experience,” says Stuart Nagae, one of Rad’s venture
investors. “So I’m superbullish on adoption.”
Rad’s growth prospects will depend partly on convincing customers that they can use the bikes to
replace at least some car trips. That’s what happened to Zachary Deegan, a schoolteacher in
exurban Denver who got interested in e-bikes while teaching a lesson on urban planning to his high
school environmental studies class. He was running through the costs of the Hyundai Santa Fe and
Subaru Impreza that he and his wife, Amanda, use to commute and to get around town with their
two kids. “As I’m saying it out loud, I was like, ‘Oh my God. What am I doing?’ ” he recalls. After
some research, Deegan bought the RadWagon 3 ($1,500), which weighs 75 pounds and can carry
two kids. His wife got the RadRunner, a $1,200 bike with smaller wheels. “They were kind of a sweet
spot for a good, durable bike,” Deegan says, “but pretty affordable.” In July the Deegans sold their
Santa Fe for $12,500.
Rad ships its bikes via FedEx in a big box. They come partly assembled, with a small bag of
wrenches and a booklet of instructions for attaching the front tire, handlebars, seat, pedals, and a
few other parts. In July, Rad sent the latest version of the Wagon to my home in suburban New
Jersey, where I lugged the box to the back of the driveway and spent the better part of a day putting
together the bike. I’ve assembled my share of Ikea dressers, and I can say confidently that this was
more difficult. If, like me, you don’t know what “torque to 10 newton meters” means or what a cable
pinch bolt is, you’ll want help.
Rad operates nine mobile service vans that will deliver and assemble bikes for a fee in Austin;
Portland, Ore.; Sacramento; Seattle; and Vancouver. It also offers service from the bike repair
startup Velofix Holdings Ltd., which sends vans on house calls, and from about 450 bike shops in
the U.S. that are part of its service network. The nearest shop to me, however, was more than 10
miles away, and there was no way I was going to be able to fit the bike in the trunk of my car. So I
was left to my own devices and whatever help I could get through emails to Rad’s roughly 100
support staff in Seattle, who couldn’t torque any bolts for me. “We have a lot of room to grow in this
area,” Radenbaugh acknowledges.
I could have also brought it to an out-of-network bike shop, but they’re overwhelmed with service
requests at the moment and aren’t especially eager to work on e-bikes they don’t sell. At Gregg
Cycles, one of the most popular bike shops in the Seattle area, there’s a surcharge for work on Rad
bikes. “We’ve had discussions with our service staff numerous times,” says longtime general
manager Marty Pluth. “They want to ban working on Rad Power bikes because they’re so poorly put
together.” He says Gregg has had to buy electric stands to be able to lift the heavy frames while they
work on them. And he worries about the quality of Rad’s components. The gears and brakes are the
kind Pluth would normally expect to see on lighter, less expensive bikes. “When you’re selling ebikes below $2,000, it has to be a compromise,” he says.
Pluth isn’t an impartial observer—Gregg sells more expensive e-bikes made by Cannondale,
Specialized, Trek, and others—but the consensus around the e-bike industry is that you get what
you pay for. Rad bikes are, by most accounts, better than the $800 e-bikes that can be found
on Amazon.com but worse than, say, a $5,000 Specialized. “It’s really hard to divorce quality from
price,” says Morgan Lommele, head of e-bike initiatives at PeopleForBikes. “I look at direct-toconsumer brands, and the reason why their sales are booming is because they’re just cheaper than
the in-store counterparts. But they’re selling a product that, in my opinion, isn’t as durable.”
Radenbaugh disputes this. “It’s a common tactic for traditional bike shops that sell e-bikes from our
competitors to try to use our affordability against us, claiming our lower price tag means lower
quality,” he says. “Let me be clear: It does not.” Rad is cheaper, he says, because it cuts out the
middlemen. Its bikes, Radenbaugh says, are made with “similar high-quality components” to those of
the bike shop brands.
This year, Dorel Industries Inc., which owns Cannondale and Schwinn, began selling midprice ebikes online through its Charge brand. Trek sells an e-model through the Electra brand. The prices
are competitive with Rad’s, and the bikes come with the support of the hundreds of bike shops in
their networks. Radenbaugh is undaunted by these efforts to sell both online and in stores. “While
they’re trying to figure that out, we’re just scooping up market share,” he says.
After only five hours of sweating and muttering about deflopilator springs, I was able to get the
Wagon up and running. At first it felt unwieldy. Turns were surprisingly wide; stops and starts,
awkward. The bike’s rechargeable lithium-ion battery sits under the seat and connects to a motor in
the hub of the rear wheel that adds power as you peddle. Buttons on the left handlebar control, on a
scale of zero to 5, the level of assistance. A twist throttle on the right offers an extra shot of power.
(As a Class 2 e-bike, the motor quits automatically once it reaches 20 mph.) After a couple of hours I
was comfortable enough maneuvering the bike to put my two kids—ages 8 and 5—onto the back for
a cruise.
Whatever its durability, the RadWagon was fun to ride and turned heads. “I want one of those so
bad,” said a child on the sidewalk as we rolled past. The counter guy at the pizza shop came outside
to tell us how cool the bike was. Nothing brings in new customers faster, Radenbaugh says, than a
test ride from a friend or neighbor. “Once you do that, you can’t get the grin off your face,” he says.
“You can’t go very many days before you crack and have to get one.”
I haven’t cracked, yet. The Wagon was just too much bike for my little garage, so I sent it back. My
kids were sad to see it go. Another e-bike, I promised them as the FedEx guy took the Wagon away,
was in our future. With the pandemic dragging on into winter, promising long months cooped
indoors, I may crack sooner rather than later. Read next: An Indian-Made Motorcycle With a Retro
Look Is Coming After Harley
©2020 Bloomberg L.P.
~~~~~~~~
By Ira Boudway
Reported by Author
Sample solution – Rad’s E-bikes
BUS 609 – Strategic Management
This sample solution is for illustrative purposes only. We can only use the information available in October 2020,
when the case study was written; no information available after that date should be used to support the analysis or
recommendations of this case study.
Step 1 – Situation analysis
1. E-bikes are relatively new and fun to ride, though vary widely in price and perceived quality. Lower
priced e-bikes are selling well, though they tend to be heavier.
2. A few months into the 2020 pandemic, sales of exercise equipment and bicycles grew rapidly as US
consumers sought ways to exercise and be outdoors without risking exposure to COVID. Sales of
e-bikes grew even faster (2020 sales were more than double 2019 sales in the first 8 months of
each year) – consumer attitude is changing in favor of e-bikes, creating an opportunity to convince
consumers to replace some car trips with e-bikes.
3. Growing rapidly, Rad sells lower priced e-bikes mostly to middle-age suburbanites and rural
retirees. It initially grew mostly organically rather than through venture capital funds.
4. Rad’s direct to consumer business model is cutting out the middleman (20% + markup shaved),
which is good for Rad and its customers in this seemingly price-sensitive segment.
5. Considerable backorders exist due to rapid demand growth and simultaneous supply chain
constraints related to the pandemic. Most e-bikes sold in the US are imported from China.
6. Rad ships bikes partly assembled, in a FedEx box; users do the final assembly with instructions and
tools from Rad. This could affect returned orders.
7. It has a very limited service operation, and independent bike shops are not enthusiastic about
servicing Rad products due to quality concerns. This is a challenge for the buyers
8. E-bike industry consensus is that lower priced bikes are of low quality. Large incumbent
competitors (Trek, Cannondale, Schwinn) are starting to compete with Rad on price, and they have
their own stores and dealer network to provide sales and service.
9. E-bikes are a tiny segment of the overall bicycle market. Venture capitalists are not too keen to
invest since they are harder to scale up. There are also many entry barriers.
Step 2 – Objective / decision problem see foot note 1
1. How can Rad fend off increasing competition from larger established companies?
2. How can Rad make its supply chain more reliable and robust?
3. How should Rad address after-sale service gap?
Step 3 – Decision criteria see foot note 2
1. How will the chosen alternative impact Rad’s current market positioning?
1 Instructor’s note: You could define the decision problem in different ways – #1 is much broader in nature, while #2 and #3
are narrower. Depending on how each decision problem defined, will have its own separate set of decision criteria and
options. For this sample solution, we will focus on #1 only.
2 Instructor’s note: Always prioritize your decision criteria, and clearly know why you did so. A different prioritization can
lead you to choose a different alternative.
© Raj Kamal 2023
1
Sample solution – Rad’s E-bikes
BUS 609 – Strategic Management
2. Speed – How quickly can the alternative help Rad fend off competition and grow?
3. Capabilities – Does Rad have the skills, experience, financial resources to compete with
incumbents? see foot note 3
Step 4 – Options / alternatives see foot note 4
1. Status quo – Continue implementing current strategy
2. Partner with a larger incumbent firm
3. Build an upscale brand see foot note 5
Step 5 – Decision matrix
See Appendix 1 for Rating scale
Criteria
Impact on
current
positioning
Speed
Rad’s
resources &
capabilities
Status quo
(+) None – current
leadership continues to
fight, but competitive
threats grow; postpandemic sales might
decline see foot note 6
(-) Competitive threats
continue to grow
(+) Current leadership and
resources are already in
place, though competitive
threats continue to grow
Options / Alternatives
Partner w/ incumbent
(++) The right partner can
help strengthen the
brand, address service
gaps
(+) Rad’s market share
and positioning could
attract an incumbent
looking for a lower price
sub-brand, though such
complex negotiations take
time
(-) Rad is homegrown; Rad
skills in navigating
complex negotiations are
not known
Build upscale brand
(++) Could indirectly but
positively influence
perceptions of inferior
quality
(—) will take much time;
very hard to execute
(—) Rad has no
experience or quality
reputation here; requires
large product
development effort
3 Instructor’s note: You could add other criteria, or change the priority order of these three;
this report is for illustrative
purposes only.
4 Instructor’s note: You could use a different set of options / alternatives, this report is for illustrative purposes only.
5 Instructor’s note: There is precedence for such strategies – Honda created its luxury brand, Acura; Toyota created its
luxury brand, Lexus.
6 Instructor’s note: We now know that sales of such items started falling in 2022 – example: Peloton. However, we cannot
use that information in analyzing this case since that fall in demand was not known in 2020.
© Raj Kamal 2023
2
Sample solution – Rad’s E-bikes
BUS 609 – Strategic Management
Step 6 – Recommendation
While none of the three alternatives above is a clear winner, Status Quo and Partnering with an
Incumbent seem to be more pragmatic than building an Upscale Brand. Rad is currently see foot note 7
selling well, and there is a backlog of orders. Rad should continue on its current path (Status Quo). It
should also explore expanding into the European market which has a well-established bicycle culture.
Step 7 – Implementation plan & contingencies
In order to support continuing the current strategy, Rad will need to strengthen its supply chain, and
find ways to eliminate the backorders- otherwise, it risks losing sales and market share. Given Rad’s
history, it needs the revenue to fund continued growth.
Rad should explore social media to reach potential customers and to address low quality perceptions.
Rad will also need to address the lack of after-sale service support. Independent bike shops in the US
usually align themselves with select brands, so getting their support will not be easy. Although Rad has
recently (February 2020) raised $25 million from VCs, it likely does not have funds to create its own
national network of service shops – creating such a network would be very expensive and take
considerable time to find locations, local staff, among other things. Rad will be better off providing
financially incentives to existing independent US bike shops in its largest markets to start servicing its
bikes.
In addition, Rad could explore options to partner with another company that can complement its
brand and market reach. Such a company could be an incumbent bike brand which does not already
directly compete with Rad and might also be exploring a foray into the growing e-bike segment.
Potential contingencies include: see foot note 8
(a) Rad is unable to eliminate backorders with current suppliers, hampering its growth. Rad should
start exploring alternative suppliers in China or other countries (e.g., in South East Asia) who
can provide the components and basic assembly.
(b) Rad’s competitors continue to aggressively pursue Rad’s target segment with medium to lowpriced e-bikes. Rad will likely have to counter the threat through product enhancements and
more aggressive pricing.
(c) Rad’s batteries might malfunction and be deemed unsafe. There has been growing concerns
about the safety of lower-quality batteries, including in the automotive sector. Rad will need to
focus on safety and communicate that message effectively to its customers.
7 Instructor’s note: Recall that the case information pertains to October 2020, so while analyzing this case, we cannot use
information that becomes available after that date to support the recommendation.
8 Instructor’s note: I have offered a few contingencies only as examples; you might identify different ones.
© Raj Kamal 2023
3
Sample solution – Rad’s E-bikes
BUS 609 – Strategic Management
Appendix 1: Rating scale for Decision Matrix see foot note 9
Each alternative is rated on a 6-point scale shown below, on each criterion:
• +++ or (3+) = the alternative fully contributes to meeting the objective on a criterion;
• ++ or (2+) = the alternative significantly helps meet the objective on a criterion;
• + or ( 1+) = the alternative somewhat helps meeting the objective on a criterion;
• – or (1-) = the alternative somewhat detracts from the objective on a criterion;
• — or (2-) = the alternative significantly detracts from the objective on a criterion;
• — or (3-) = the alternative fully obstructs meeting the objective on a criterion.
9 Instructor’s note: You could use a different rating scheme though be careful of inserting a false sense of specificity or
rigor.
© Raj Kamal 2023
4
Decision-making methodology
1
2
3
4
5
6
7
Situation
analysis
Problem /
objective
Decision
criteria
Options /
alternatives
Decision
matrix
Recommendation
Implementation
plan &
contingencies
What has
brought us to
this point?
What do
we want to
achieve?
How will we
evaluate /
compare the
options?
(Prioritize)
What are our
options?
How well does
each option
meet our
criteria?
(aka Evaluation
matrix)
©Raj Kamal 2023
What should we do?
How will we
implement?
1
Decision-making methodology
1
2
3
4
5
6
7
Situation
analysis
Problem /
objective
Decision
criteria
Options /
alternatives
Decision
matrix
Recommendation
Implementation
plan &
contingencies
What has
brought us to
this point?
What do
we want to
achieve?
How will we
evaluate /
compare the
options?
(Prioritize)
What are our
options?
How well does
each option
meet our
criteria?
(aka Evaluation
matrix)
©Raj Kamal 2023
What should we do?
How will we
implement?
2
Decision-making methodology
1
2
3
4
5
6
7
Situation
analysis
Problem /
objective
Decision
criteria
Options /
alternatives
Decision
matrix
Recommendation
Implementation
plan &
contingencies
What has
brought us to
this point?
What do
we want to
achieve?
How will we
evaluate /
compare the
options?
(Prioritize)
What are our
options?
How well does
each option
meet our
criteria?
(aka Evaluation
matrix)
©Raj Kamal 2023
What should we do?
How will we
implement?
3
Example – Decision-making methodology for graduate degree
Methodology step
Example: Seeking a graduate degree
1. Situation analysis
Why do I want to get a grad degree? Career growth? Personal growth?
2. Problem statement / objective
Should I seek a grad degree? If yes, where?
3. Prioritized decision criteria
Career impact; cost; time away from family; time away from work;….
4. Alternatives
(a) Status quo; (b) full time @ big univ in town; (c) full time @ big univ out of
town (remote); (d) smaller private college in town; ….other?
5. Decision matrix
6. Recommendation
7. Implementation plan &
contingencies
©Raj Kamal 2023
See next slide
4
Example – Decision matrix
Decision criteria
(prioritized):
Status quo = do not seek a
grad degree
Full time @ big university in
town
Full time @ big university
out of town (remote)
Smaller private college in
town
1. Career impact
– – – (three negatives)
No career advancement
+++ (three positives)
Significant career
advancement
+++ (three positives)
Significant career
advancement
++ (two positives)
Career benefits; not national
name brand
2. Cost = tuition, other,
loss of income
+++ (three positives)
No additional cost
– (one negative)
In-state tuition; no employer
$
– – – (three negatives)
Out of state tuition; no
employer $
++
Less than big university, less
than out-of-state
3. Schedule flexibility
Not applicable
— (three negatives)
Very rigid, not flexible
— (three negatives)
Very rigid, not flexible
+++ (three positives)
Very flexible timing and
sequence of courses
4. Time away from
family and work
+++ (three positives)
No change
— (two negatives)
Less family time for next 2
years; supportive employer
– – (two negatives)
Away for 2 weeks a year; Less
family time for next 2 years;
supportive employer
– (one negative)
Some time away from family;
supportive employer
©Raj Kamal 2023
5
Example – Decision matrix
Decision criteria
(prioritized):
Status quo = do not seek a
grad degree
Full time @ big university in
town
Full time @ big university
out of town (remote)
Smaller private college in
town
1. Career impact
– – – (three negatives)
No career advancement
+++ (three positives)
Significant career
advancement
+++ (three positives)
Significant career
advancement
++ (two positives)
Career benefits; not national
name brand
2. Cost = tuition, other,
loss of income
+++ (three positives)
No additional cost
– (one negative)
In-state tuition; no employer
$
– – – (three negatives)
Out of state tuition; no
employer $
++
Less than big university, less
than out-of-state
3. Schedule flexibility
Not applicable
— (three negatives)
Very rigid, not flexible
— (three negatives)
Very rigid, not flexible
+++ (three positives)
Very flexible timing and
sequence of courses
4. Time away from
family and work
+++ (three positives)
No change
— (two negatives)
Less family time for next 2
years; supportive employer
– – (two negatives)
Away for 2 weeks a year; Less
family time for next 2 years;
supportive employer
– (one negative)
Some time away from family;
supportive employer
©Raj Kamal 2023
Implementation plan:
• Application date
• Approval from manager
• Funding sources – savings; loan application;…
• Class start date
• Plan of study / completion date
• Contingencies
6