“On Your Bike – Giant Manufacturing”
The Economist
September 20, 2008
pg. 79
In an article appearing in its “Business” section (“On Your Bike – Giant Manufacturing,” September 20, 2008, pg. 79), The Economist reports that Giant Manufacturing Company, Ltd. (http://www.giant-bicycles.com), a Taiwanese manufacturer of branded and third-party bicycles, sold a record 460,000 units in August and is on course to record its most profitable year since being founded in 1972. The Economist’s coverage of Giant’s evolution as a company is accurate in some regards, but it fails to adequately explain Giant’s positioning as a firm relative to its competitors, and leaves unaddressed the true nature of the bicycle industry.
The Economist states that there are “in effect no barriers to entry to the bike business” and as a result, Giant “must come up with a further innovation” in order to “survive.” While firms must constantly innovate in order to remain competitive and foster growth, The Economist implies that Giant’s market is almost perfectly competitive and made up of many buyers and sellers (all of whom offer identical products at any given time), and that new firms face no barriers to entry. The Economist would have the reader believe that Giant is a price taker, simply one of many firms offering a similar product or service, which only momentarily enjoys a competitive advantage as a result of some minute product enhancement, like the integration of “shock-absorbers” into a new frame (which was actually first tried over 10 years ago by Scott Sports SA. This is a gross oversimplification of the reality of both the industry as a whole and Giant’s business model. Especially sloppy is the final paragraph, which states:
“Because frame- and component-makers are hap ...