Shimano Case Study

SHIMANO Report

SHIMANO’s Growth Strategy

1 Shimano’s Growth Factor  

They have huge challenges and because of their strategy, they succeed in the Business.

Shimano is the Japanese manufacturer which has high quality manufacturing skills especially bicycle components and they care much for customer in order to deal with customer needs. History starts from 1921 when Shozaburo Shimano established Shimano Iron Works in Sakai city in Osaka and then he started to produce bicycle parts.

In order to explain factors behind Shimano’s success, I will start with industry analysis.

Industry analysis

1921 Shozabro established Shimano Iron and begins production of the bicycle freewheel. 1957, great product A hub gear developed and 1958 Shuzo Shimano became president. From 1965, Shimano established sales company in US and 197, they start fishing division. It means they focus on bicycle business until they start fishing business in 1970.

First difficulty was great depression around 1930s, but they focused on improving and developing company’s technical capabilities.

At that time, president believe that ‘What we need to do is to produce high quality free wheels.’ And keep focusing on technology.

Instead of give discount, they offer free replacement for defective item. Their failure is low so they can pay the replacement fee and they can shows the confidence by doing this.

Moving into the European market

In 1960 to 1970, Shimano considering to enter Europe market but learned from internal report that, Bicycle culture is deeply entrenched in Europe, manufacture have great pride and persistence in what they do and not easily accept the product especially from Asia. Europe has a lot of countries, so demand also varied depend on the country, Germany and Holland are similar to US but Italy and France are different. They think it is for race. But US is for transportation or travel. Each country has each market, and legal, cultural barrier are there.

So, they established subsidiary in Germany Dusseldorf because Germany are similar preference with US, so they can use similar strategy in US by focusing on the quality of its products then build brand recognition by importing assembled bicycles.

However Shimano was not well known in Europe market and its brand name was weak, so they decided to enter road race which is the symbol of bicycle culture in Europe then try to gain brand image.

Road races is popular in Europe with long history since 1900s, so it’s gave a high visibility and used by a successful team gave Shimano good image. Shimano produced a new parts for race. It required strong R&D and facilities. They produced superior performance produce such as gear, bars for racing. They learnt importance of produce parts that enable bicycle to perform well from a comprehensive perspective.

They developed special parts for racing and this new technology was extremely high performance and it is light, durable. They got ability to handle shorter time with high quality. Plus they got Beligan road racing team sponsor and build strong brand recognition.

SWOT Analysis of Shimano

Strengths

Strong R&D and technology with factory and skilled worker.

Customer Focus service.

Quick decision making with family business management

Dominate market in Japan

Lots of technical capabilities with lots of university graduates and investment in production plant

The plant reduce needed processes and cut production cost around 30%

Direct sales to bicycle assemblers and retailers and get customer’s feedback easily.

Weakness

No strong connection with trading company in US, EU, CN.

Opportunities

High demand of Mountain Bike market overseas such as US.

Getting attention for high quality parts in overseas market such as US.

Threats

Demand fluctuation.

Competitive in EU market such as Campagnolo.

Key points Strategy which Shimano took

1960’s entering US market.

US market was emerging at that time, since fitness boom came, many people use bicycle not only for transportation but also for leisure and sports. There were a lot of opportunity especially for individuals who wants high quality and who have a lot of customize request. Shimano has high quality and customer oriented, so it is totally fit in this society.