Santa Cruz Bicycles Bicycle enthusiasts not only love the ride their bikes provide
Question # 00256862
Posted By:
Updated on: 04/19/2016 10:54 AM Due on: 05/19/2016
Santa Cruz Bicycles
Bicycle enthusiasts not only love the ride their bikes provide, but they are also often willing to
pay for newer technology especially when it will increase their speed or comfort. Innovating new
technologies for bikes is only half the battle for bike manufacturers. Designing the process to
manufacture the bikes is often the more daunting challenge.
Consider the case of Santa Cruz Bicycles. It is a small 85 person company that is working to bring
state of the art technology in mountain bike design to market. It digitally designs and builds mountain
bikes and tests them under the most extreme conditions to bring the best possible product to their
customers. A few years back, the company designed and patented the Virtual Pivot Point (VPP)
suspension system, a means to absorb and shocks that mountain bikers encounter when on the rough
terrain of the off-road ride. One feature of the new design allowed the rear wheel to bounce 10 inches
without hitting the frame or seat, providing shock absorption without feeling like the rider was sitting on
a coiled spring.
Failure of the first few prototypes was the motivation for a complete redesign. The company had
to find a way to go from design to prototype faster. The research team had been using computer aided
design software (CAD) but it took 7 months from design to prototype. This was a drain on company time
and finances. The company decided to adopt the use of product life cycle management (PLM) system
that allowed them to analyze and model capabilities in a much more robust manner. The team found a
system that uses simulation capabilities to analyze the impact of the new designs on rough mountain
biking terrain. It should allow the designers to track the pertinent variables and make adjustments to
the design in a few minutes. Simulations should be as short as a few minutes as compared to 7 hours for
the older software.
To work in conjunction with the new software, the company is considering hiring a new master
frame builder to build and test prototypes in-house. This would require an investment in a van-size
machine that can fabricate intricate parts for their prototypes, a process they used to outsource. These
changes have resulted in a significant design-to-prototype process. What used to average about 28
months from start of design to shipping of the new bike should now take 12 to 14 months. This
equipment will be housed in a separate building in an industrial warehouse as currently the staff are
located in a central office building in downtown Brampton.
Once the designs are finalized the company sends general design specifications to a
manufacturer in China to establish a contract price. Due to the long distance and cost of travel, the
contracts are sent via the internet and agreements are negotiated through teleconferencing. Once the
contracts are finalized the final detailed specifications are forwarded via the internet.
The new computing technology and infrastructure required to run their operations has been
managed in-house. With the investment in their new technologies that provides them significant
competitive advantage to the company the company is concerned with the security of their software
systems.
In addition to the technology concerns, the company must also find a way to fund the project.
They have approached several banks as well as investors in the capital markets. Due to the high failure
rate of IT projects, you plan to make a presentation to the investors to assure them you have a viable
WBS and understand the triple threat on IT projects. Toward the end of the presentation you are going
to provide them with a financial plan to support raising additional capital. The potential investors have
INFO 31787
Final Exam Monday
April 2016
Page 1
requested audited financial statements. In addition, the investors have requested a second opinion on
the viability of the new software for use by Santa Cruz Bicycles. They are questioning the advantages of
the software for a small company such as Santa Cruz as compared to large companies that normally
employ PLM software. Management has approached Ernst and Young to complete the audit.
Management recognizes it will be imperative this new technology is kept secure so they have
hired you, an expert in business controls, to make recommendations on how they can protect this
competitive advantage. In addition, they are concerned that some employees may not embrace the
changes as they are experts in CAD technology but not in PLM technology. The company wants to retain
its employees as they are expert bike designers. The company must decide whether to hire new
employees to work with the master frame builder. Due to the high cost of investment it is imperative
this IT project is successful.
Instructions:
You are the consultant that will make recommendations to Santa Cruz Bicycles on how to ensure the
success of this project. Analyze and write up the case in case format. Support your analysis with specific
examples from the case, and be sure to employ appropriate terminology learned in the course. The
mark breakdown is 3 marks for the introduction where you identify the events affecting the company, 3
marks for recommendations on how the company should move forward, and 14 marks for the Analysis
(make 7 points in the analysis, each point including a reference to a management model which is then
supported with facts from the specific case). In the analysis and recommendations be sure that 4 of the
7 points relate to material learned after the midterm exam. You are not limited to discussing topics
represented by the models below.
INFO 31787
Final Exam Monday
April 2016
Page 2
INFO 31787
Final Exam Monday
April 2016
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Bicycle enthusiasts not only love the ride their bikes provide, but they are also often willing to
pay for newer technology especially when it will increase their speed or comfort. Innovating new
technologies for bikes is only half the battle for bike manufacturers. Designing the process to
manufacture the bikes is often the more daunting challenge.
Consider the case of Santa Cruz Bicycles. It is a small 85 person company that is working to bring
state of the art technology in mountain bike design to market. It digitally designs and builds mountain
bikes and tests them under the most extreme conditions to bring the best possible product to their
customers. A few years back, the company designed and patented the Virtual Pivot Point (VPP)
suspension system, a means to absorb and shocks that mountain bikers encounter when on the rough
terrain of the off-road ride. One feature of the new design allowed the rear wheel to bounce 10 inches
without hitting the frame or seat, providing shock absorption without feeling like the rider was sitting on
a coiled spring.
Failure of the first few prototypes was the motivation for a complete redesign. The company had
to find a way to go from design to prototype faster. The research team had been using computer aided
design software (CAD) but it took 7 months from design to prototype. This was a drain on company time
and finances. The company decided to adopt the use of product life cycle management (PLM) system
that allowed them to analyze and model capabilities in a much more robust manner. The team found a
system that uses simulation capabilities to analyze the impact of the new designs on rough mountain
biking terrain. It should allow the designers to track the pertinent variables and make adjustments to
the design in a few minutes. Simulations should be as short as a few minutes as compared to 7 hours for
the older software.
To work in conjunction with the new software, the company is considering hiring a new master
frame builder to build and test prototypes in-house. This would require an investment in a van-size
machine that can fabricate intricate parts for their prototypes, a process they used to outsource. These
changes have resulted in a significant design-to-prototype process. What used to average about 28
months from start of design to shipping of the new bike should now take 12 to 14 months. This
equipment will be housed in a separate building in an industrial warehouse as currently the staff are
located in a central office building in downtown Brampton.
Once the designs are finalized the company sends general design specifications to a
manufacturer in China to establish a contract price. Due to the long distance and cost of travel, the
contracts are sent via the internet and agreements are negotiated through teleconferencing. Once the
contracts are finalized the final detailed specifications are forwarded via the internet.
The new computing technology and infrastructure required to run their operations has been
managed in-house. With the investment in their new technologies that provides them significant
competitive advantage to the company the company is concerned with the security of their software
systems.
In addition to the technology concerns, the company must also find a way to fund the project.
They have approached several banks as well as investors in the capital markets. Due to the high failure
rate of IT projects, you plan to make a presentation to the investors to assure them you have a viable
WBS and understand the triple threat on IT projects. Toward the end of the presentation you are going
to provide them with a financial plan to support raising additional capital. The potential investors have
INFO 31787
Final Exam Monday
April 2016
Page 1
requested audited financial statements. In addition, the investors have requested a second opinion on
the viability of the new software for use by Santa Cruz Bicycles. They are questioning the advantages of
the software for a small company such as Santa Cruz as compared to large companies that normally
employ PLM software. Management has approached Ernst and Young to complete the audit.
Management recognizes it will be imperative this new technology is kept secure so they have
hired you, an expert in business controls, to make recommendations on how they can protect this
competitive advantage. In addition, they are concerned that some employees may not embrace the
changes as they are experts in CAD technology but not in PLM technology. The company wants to retain
its employees as they are expert bike designers. The company must decide whether to hire new
employees to work with the master frame builder. Due to the high cost of investment it is imperative
this IT project is successful.
Instructions:
You are the consultant that will make recommendations to Santa Cruz Bicycles on how to ensure the
success of this project. Analyze and write up the case in case format. Support your analysis with specific
examples from the case, and be sure to employ appropriate terminology learned in the course. The
mark breakdown is 3 marks for the introduction where you identify the events affecting the company, 3
marks for recommendations on how the company should move forward, and 14 marks for the Analysis
(make 7 points in the analysis, each point including a reference to a management model which is then
supported with facts from the specific case). In the analysis and recommendations be sure that 4 of the
7 points relate to material learned after the midterm exam. You are not limited to discussing topics
represented by the models below.
INFO 31787
Final Exam Monday
April 2016
Page 2
INFO 31787
Final Exam Monday
April 2016
Page 3
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Rating:
/5
Solution: Santa Cruz Bicycles Bicycle enthusiasts not only love the ride their bikes provide