Why Would A Bicycle Manufacturing Unit Shut Down With Demand Growing?

The Main Reason for the Decrease in Bicycle Industry



Business
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Why Would A Bicycle Manufacturing Unit Shut Down With Demand Growing?

Was bicycling ever so popular? Yes. At the turn of the 1970s, it was because many people around the world, but particularly America, witnessed a "cycle boom," with purchases so high that bike shops routinely sold out, and lengthy waiting lists had to be placed with their names. And now, during the global pandemic, history repeats. However, the comparatively growing demand for bikes, on the one hand, has brought joy and ecstasy to the best bicycle brands in the world, even so on the other hand, the question that "Can a bicycle manufacturing unit shut down with demand growing?" has aroused more significant concerns. If this doesn't seem a valid question to you, then you must read this case below.

 Why is the boom In the cycle industry

                                                                                   Source: Pexels

 

 

Shut Down Of Ajanta Cycle's Unit during Pandemic

 

In Sahibabad, just outside of Delhi, Atlas Bikes – a brand that has been associated with bicycles in India – shut its last manufacturing facility, citing a shortage of funds to operate the plant. However, the CEO, N.P. Singh Rana maintains that the closure is only temporary and that the business is to restart operations once it sells surplus land to collect around Rs. 50 Crore. The company shut down the plant on June 3, ironically, on World Cycling Day. The plant was opened in 1989, the largest in the world. It was the last functional plant of the Atlas cycle and produced more than two lakh bikes monthly. The news of shutting down one of the best cycle manufacturer brands in India disheartened many bike lovers and triggered a sensation among the leading bike manufacturers.

 

Why Shutdown When The World Cycle Industry Is Booming During Pandemic?

 

Atlas Cycle cited fund shortage reasons for the closure of its unit, the time when the world's best cycle manufacturing companies are reaping in profitsThis point should be raised and evaluated to understand the scenario better as to what factors lead to the drastic failure of a business. The leading causes for failed business include;

 

  • Poor location,
  • Poor management,
  • Poor resource planning,
  • Inadequate expansion,
  • Unforeseen financial leverage,
  • Investments in capital assets and low credit structures.

 

 However, not all companies close because of business failure, although a profitable corporation often wishes to shut its doors.

 Cycle Industry Is Booming During Pandemic

                                                                                   Source: Pixabay

 

#1. Business Plan

 

Several corporate problems are owing to a weak or fictitious company strategy. A successful strategic plan describes the business owner's priorities and lays out a path map to meet these goals. The business strategy must define its industry, revenue predictions, consumer requirements, particular niches, and pricing points. It requires a communications policy, schedule, recovery plan, and short-term and long-term priorities. The business strategy reflects not only on the new business but also on the industry's future competition. And the top bike brands in the world follow the same path.

 

#2. Management

 

A chef with talent may struggle as a restaurant manager if he does have no management skills. Bad management is a crucial cause of failure in the industry. You have more to run a restaurant than a great cook; you have more to operate a good photography studio than a professional photographer. Business administration requires organizational abilities, teamwork, an eye for detail, and the worldly but necessary paperwork. Top bike manufacturers in the world, i.e., Trek, Cannondale, and Kona Bikesfocus more on the management plan than Ajanta Cycles.

 

#3. Unanticipated events

 

The entrepreneur may have an ideal business strategy, adequate finances, outstanding leadership skills, and perfect health, but a completely unpredictable unforeseen incident may close his firm. A tornado could fall in his city, demolishing his place of business. An entrepreneur in another country may create a new product or service that becomes obsolete. Unfortunately, his primary source might go out of business, rendering it impossible to produce. Sometimes an unexpected occurrence capable of shutting a business is challenging to foresee.

Unanticipated Events

                                                                                  Source: Pixabay

 

#4. Not Adapting To the Latest Trends

 

The growing market of 'recreational bikes' had already led cycling makers to boil down before the COVID-19 break. The luxury bike has evolved from a sport to a fashion accessory. Cycling is a social practice more than ever, and for many of the millennium members, high-end biking becomes a way to express and exude their personalities. And with all this, technology is also playing a pivotal role- as people today love to buy from the broadest range of cycles and accessories online. When a business doesn't adapt to these changes and consequently customizing its products to the growing demand pattern, changes fall trap to the situation like in the case of Ajanta Cycles.

 

What Is The Way To Survive In Any Time?

 

The businesses that survive have several things in common. We will share these standard success features. First of all, we will begin with a close and dear subject to everybody in the manufacturing industry – efficient ways to reduce production costs. Of course, this is a massive subject, but we showcased what we see as the most critical manufacturing cost savings techniques that businesses have adopted.

 

#1. Implement Lean Production Principles

 

Implementing lean production practices may reduce production cost by growing work productivity, lowering input, declining inventories, and eliminating mistakes and scrap as much by as half. The fundamental objective of lean production is to do more with less and focus on waste disposal.

 

#2. Simplify Supply Chain Management

 

The product can be constructed with standard components when developing new models or re-evaluating existing works. If there are several types of products or materials, the product cannot be steadily flowed because of its variety and unpredictable nature of demand. The key to creating quality with great-volume, simple to access components is to order pieces ahead of time, depending on the organization's forecasts.

 Simplify chain management of cycle

                                                                                        Source: Pixabay

 

#3. Total Cost Measurement

 

The total cost metric concentrates on calculating total cost savings to motivate and promote continuous savings. Total cost calculation continues with the solution to the cost driver. Cost drivers are also the root causes of expenses. Recognizing the reasons behind the prices can provide you with more reliable and appropriate statistics and promote more attempts to lower or remove production costs.

 

Summing Up

 

There is no denying that following the wrong business strategies and unplanned manufacturing may even lead to the fall of top bike manufacturers in the world when there is a surge in the overall bike industry (as during a pandemic). However, this painful situation can be tackled with the right set of strategies to cope with the short and long-term challenges. 

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