Exercise – Five Forces Analysis

This exercise asks you to apply Porter’s Five Forces to the off-road bike industry Colorado Ricardo Mountain Bikes competes in.

The Scenario: Colorado Ricardo Mountain Bikes

Colorado Ricardo Mountain Bikes was founded by Ricardo Francisco, a keen off-road cyclist who grew frustrated with bikes breaking down under the strain of the Colorado mountains. After years of trial and error, he built a bike tough enough to survive the terrain and named it the “Colorado Ricardo”. Word spread quickly among local riders, and Ricardo gave up his day job to build and sell bikes full-time from a small workshop outside Denver.

The business grew quickly in its early years, reaching a peak of around 10,000 bikes sold annually. Sales have fallen for three years running since then. Ricardo still has a loyal following among serious off-road riders in Colorado, but larger national manufacturers have started targeting the same off-road niche he once had largely to himself, a small number of specialist suppliers make the frame components his bikes depend on, and independent bike shops – his main route to customers – can switch between brands easily. Meanwhile, gravel bikes and e-mountain bikes are drawing riders toward substitute products.

Your task: Assess the off-road bike industry using Porter’s Five Forces – competitive rivalry, the bargaining power of suppliers, the bargaining power of buyers, the threat of new entrants and the threat of substitute products – and conclude whether the industry currently looks attractive for Colorado Ricardo.

Porter's Five Forces: competitive rivalry, supplier power, buyer power, threat of new entrants, threat of substitutes

Once you have drafted your own answer, compare it with Marketing Teacher’s suggested answer.