An Analysis of the Montague Bicycle Company

The following sample Business case study is 989 words long, in MLA format, and written at the undergraduate level. It has been downloaded 481 times and is available for you to use, free of charge.

The Montague Corporation prides itself on doing something a little different. Instead of attempting to create the best product available, they are attempting to create their own niche in the market. In this case, they are creating foldable bicycles for those who want portability in their bikes. The company’s primary objective is to secure a 25% market share overall bicycle sales, and it aims to do this by targeting sales to these niche demographics, such as those with limited space, members of the military (who place the foldable bicycles on their backpacks when they go skydiving) and to those with sponsorship with higher-end automotive companies (Tripsas, 1). The primary goal of the company has not changed much, simply because it was lofty, to begin with, and has not been reached yet, but the company is working hard to change that.

Montague Bicycle Company was actually founded by David Montague and his father in 1988. Ever since being founded, sales have steadily grown, from $1.5 million in 1990 to $10.3 million in 1999, all the way to $18.1 million in 2006 (Tripsas, 1-2). In terms of recent events affecting the firm, there have been a number of competitors emerging in the bicycle market, and this has necessitated a change toward making their bicycles stand out, yet also appear as functional and practical as they really are to consumers. For example, the growth in popularity of high-performance bicycles with smaller wheels and better handling (popular among youths) caused Montague to introduce some new models into the market. In 1999, they introduced the X-Series Bicycles, which did not fold in half, but featured several performance upgrades from their folding brethren (Tripsas 5-7). Later, in 2007, Montague introduced another line of bicycles that focused on off-road capabilities as well as overall durability. In terms of recent growth, Montague has not undergone any particularly drastic explosions in growth, but have been steadily growing almost since their original founding in 1988 (Tripsas 3). At the most recent writing, Montague has 32 independent sales representatives throughout the nation, and their products are carried by about 540 dealers (Tripsas 3-6).

The current strategy of the company is to focus on diversifying its product development line and using this as a means of achieving greater sales and, possibly, finally reaching that 25% market share milestone. On that note, it is difficult to gauge Montague’s position, market share-wise, relative to its competitors, because there are so many different bicycle brands; about 143, in fact (Vosper 1). It can easily be seen, via sales figures, that Montague is certainly nowhere near the top. The bicycle market is extremely segmented, and the company with the most market share, Trek/Fisher, only controls about 23% of the market (Vosper 2). Montague is considered to be in the “other” category, which, combined, comprises 31.5% of the total market share. This is, of course, not good news for Montague, but they are working to change their market position, which is still low because they are, relatively speaking, a new company, and are still working on establishing a solid base of customers. The bicycle market has always been segmented, and this trend seems to be going strong, although the number of companies each year does seem to be decreasing (there were 150 last year, for example). The key resources and competencies of the company are not physical, nor are they financial. Rather, the company is rich in ideas, as well as connections. The company’s patented folding design for its bicycles is its chief claim to fame, and the main aspect that separates it from its competitors, giving it a competitive edge, and allows it access to niches that would otherwise be taken by other competitors. For example, one of the biggest niches for Montague is, surprisingly, the military, which makes up about 30% of Montague’s revenue. The portability the bicycles provide allows Montague access to these niches that competitors simply are not competent with. This is also Montague’s core competency: innovation. With new ideas come new niches, and new market shares that people might not have known even existed previously.

The companies’ advantage with their competitive strategies is tenuous at best. As previously stated, Montague is not even close to being a top competitor in the bicycle area, and sales of bicycles are only increasing in places like big department stores and similar discount houses (Lindberg and Vaughn, 5). Another problem for bicycle businesses is that there are more and more international sales for bicycles, many of whom can manufacture and sell lower-quality bicycles at significantly lower prices. In addition, the consumer base of bicycles is becoming increasingly fragmented, with younger bicyclers preferring narrow-wheeled, faster bikes, and older adults preferring more safety. Montague is doing the right thing in appealing to specific niches, rather than attempting to try to appeal to everybody.

For this reason, the future for Montague is very uncertain and depends largely on how the various consumer bases for bicycles develop. There are numerous opportunities for Montague, however, depending on which direction, if any, they want to take it. For example, they could focus on creating bikes that are simply portable or require no tools to disassemble and reassemble. In any case, the fragmenting consumer market for bicycles is only an opportunity for Montague, who is currently something of an underdog in the bicycle market. Nevertheless, the only way for Montague to go from here is up, and the best way to do that is to continue appealing to their niche markets, but also to continue searching for new markets and appeal to the needs of them.

Works Cited

Lindberg, Lynn and Vaughn, Donald “Bicycle Shops: Business and Industry Profile” Illinois Department of Commerce and Community Affairs, 2004, 3-15, Print

Tripsas, Mary “Montague Corporation: Unfolding the Future in Cycling” Harvard Business School, 2008, 1-25, Print

Vosper, Rick “Who’s Number 1?” Bicycle Retailer and Industry News, 2012, 1-5, Print