CASE STUDY

Global Bike Group

Background and overview of Global Bike strategy and operations.

Product MOTIVATION PREREQUISITES

SAP S/4HANA 2020 A general understanding of Global None
Global Bike Bike (the enterprise) prior to
embarking on hands-on exercises
Fiori 3.0 and case studies in the SAP ERP NOTES
client is critical for success. None
Level
This narrative provides a historical
Beginner
background for how Global Bike
began and an overview of its
Focus operations and strategy. This
Company Background information will be used extensively
throughout the curriculum material.
Authors
Simha Magal
Stefan Weidner
Jeff Word

Version
4.1

Last Update
May 2022

© SAP UCC Magdeburg

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Company History

Task Get to know the company’s history. Time 15 min

Short Description Read the below narrative to learn about the company’s
history.

The Global Bike Group has a pragmatic design philosophy that comes from Notes
its deep roots in both the off-road trail racing and long-distance road racing
sports. Nearly 20 years ago, its founders designed their first bikes out of
necessity – they had races to win and the bikes that were available at the time
did not perform to their extremely high standards. So, they took matters into
their own hands and built legendary bikes that would outlast and outperform
the competition. From these humble origins, Global Bike Incorporated was
born and continues to deliver innovative high-performance bicycles to the
world’s most demanding riders.
This heritage of entrepreneurial spirit and quest for design perfection is still
the cornerstone of Global Bike’s corporate philosophy. Global Bike produces
bikes for the most demanding competitors – whether the competition is on
pavement or dirt, for money, fame or just bragging rights.
John Davis earned his racing scars in the mountain racing circuit in America,
where he won numerous downhill and cross-country championships. Early on,
John realized that the mass-produced bicycles available were inadequate in
many ways for the type of racing he was doing. So, John stripped four of his
old bikes down to the bare metal and rebuilt them into a single “Frankenstein”
bike that he rode to win the national championship. Once news of his
Frankenstein bike got out, John’s friends and even his competitors began
asking him to build them a Frankenstein bike too. While recovering from an
injury in 1990, John started producing the first series of Frankenstein bikes in
his garage – each one custom-built from cannibalized parts from other bikes.
As more and more orders came in, John successfully expanded Frankenstein
Bikes from his garage operations into a full-blown manufacturing facility in
Dallas and began producing custom trail bikes which he sold through a
network of specialized bike dealers throughout the country.
At nearly the same time, halfway around the world in Heidelberg, Germany,
Peter Schwarz was studying engineering and competing in regional touring
races on weekends. In between his races and studies, Peter worked at a bike
shop in Heidelberg, fixing student bikes and tuning the touring bikes that he
and his friends rode for competitions. As Peter’s reputation as a fierce
competitor and mechanical wizard grew, he also began to design and build
road bikes based on an ultra-light composite frame that he had created for one
of his engineering courses. Peter’s innovative use of carbon composite
materials allowed him to build a frame that was significantly stronger and one
tenth the weight of competing frames. As a student, Peter did not have a great
deal of financial resources, so he partnered with a local company that
manufactured his frame designs as a contract manufacturer. Soon, Peter’s
frames were being used by racers all over Europe and he started Heidelberg
Composites to market and design frames which would be fabricated by a
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contract manufacturer on a larger scale. Heidelberg Composites sold its

frames to specialized bike stores throughout Europe and directly to racing
teams, eventually becoming the leader in lightweight touring frames in
Europe.
Through a twist of fate, Peter and John met each other in 2000 and
immediately recognized their mutual passion for performance and
complimentary business models. Each had been looking for a partner in
another racing field and each had been looking for a partner in a different
market. They quickly realized that a merger between their two companies
would be extremely synergistic and that the combination of their product lines
and regional distribution channels would generate a great deal of efficiencies.
So, in 2001, Heidelberg Composites and Frankenstein Bikes merged to form
Global Bike. Today, John and Peter share the responsibilities for managing
Global Bike’s growing organization as co-CEOs. John is responsible for sales,
marketing, service & support, IT, finance and human resources groups and
Peter is responsible for research, design, procurement and manufacturing
groups from an organizational reporting perspective.

Figure 1:
Board of Organizational Structure
Directors

John (Co-CEO) Peter (Co-CEO)

Chief VP Research
Chief Financial VP Human
VP Marketing Information and VP Operations
Officer Resources
Officer Development

However, Global Bike is a process-centric organization, so John and Peter

prefer to think of the processes that they are responsible for, rather than the
functional areas of the company that report to them. From this perspective,
Peter is responsible for Idea-to-Market and Build-to-Stock and John is
responsible for Order-to-Cash and Service & Support, as well as the
supporting services for all four key processes. The simple way to look at their
responsibilities would be to say that Peter spends money and builds products
and John sells products and brings in money.

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Figure 2:
Enterprise Process Map

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Corporate Overview

Task Develop an organizational chart for Global Bike’s enterprise structure. Time 15 min
Short Description Read the below narrative to gather all relevant
information for sketching Global Bike’s current company structure.

Due to several tax and export issues, Global Bike Groups’s headquarters is Notes
located in Dallas and Global Bike Inc. is registered as a US company,
following US GAAP accounting standards. Global Bike Group operates a
subsidiary company, Global Bike Germany GmbH, which is based in
Heidelberg and is subject to IFRS accounting standards and German tax
regulations.
Material planning, finance, administration, HR and IT functions are
consolidated at the Dallas headquarters. The Dallas facility manufactures
products for the US and export markets and its warehouse manages product
distribution for the central US and internet retailers. Global Bike Inc. also has
warehouses for shipping and export in both San Diego and Miami. San Diego
handles West Coast distribution and exports for Asia, while Miami handles
East Coast distribution and Latin America exports.
Global Bike Germany GmbH has its headquarters in Heidelberg Germany.
The majority of research and development is housed in the Heidelberg offices.
Heidelberg is also the main manufacturing facility for Global Bike in Europe.
The Heidelberg warehouse handles all shipping for southern Europe. The
Hamburg warehouse handles all shipping for the UK, Ireland, Middle East and
Africa. Global Bike sells its bikes throughout the world and employs
approximately 100 people, 2/3rds of the employees are in the US and the
remaining 1/3 in Europe.

Organizational Chart

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Product Strategy

Task Get familiar with Global Bike’s product strategy. Time 15 min
Short Description Read the below narrative about Global Bike’s product
strategy.

Global Bike is a world-class bicycle company serving the professional and Notes
“prosumer” cyclists for touring and off-road racing. Global Bike’s riders
demand the highest level of quality, toughness and performance from their
bikes and accessories.
Product development is the most critical element of Global Bike’s past and
future growth. Global Bike has invested heavily in this area, focusing on
innovation, quality, safety and speed to market. Global Bike has an extensive
innovation network to source ideas from riders, dealers and professionals to
continuously improve the performance, reliability and quality of its bicycles.
In the touring bike category, Global Bike’s handcrafted bicycles have won
numerous design awards and are sold in over 10 countries. Global Bike’s
signature composite frames are world-renowned for their strength, low weight
and easy maintenance. Global Bike bikes are consistently ridden in the Tour
de France and other major international road races. Global Bike produces two
models of their signature road bikes, a deluxe and professional model. The
key difference between the two models is the type of wheels used, aluminum
for the basic model and carbon composite for the professional model.
Global Bike’s off-road are also recognized as incredibly tough and easy to
maintain. Global Bike trail bikes are the preferred choice of world champion
off-road racers and have become synonymous with performance and strength
in one of the most grueling sports in the world. Global Bike produces two
types of off-road bike, a men’s and women’s model. The basic difference
between the two models is the smaller size and ergonomic shaping of the
women’s frame.

Figure 3
Global Bike Finished
Products

Global Bike also sells an accessories product line comprised of helmets, t-

shirts and other riding accessories. Global Bike partners with only the highest
quality suppliers of accessories which will help enhance riders’ performance
and comfort while riding Global Bike bikes.

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Figure 4
Global Bike Trading
Goods

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Manufacturing Strategy

Task Get familiar with Global Bike’s manufacturing strategy. Time 10 min
Short Description Read the below narrative about Global Bike’s
manufacturing strategy.

Global Bike operates two production facilities, Dallas and Heidelberg. Each Notes
facility has three assembly lines and can produce around 1000 bikes per year.
Total production capacity is roughly 6000 bikes per year, but can be increased
by 15%-20% by using overtime hours and part-time workers.
Global Bike has outsourced the production of both off-road and touring frames
and the carbon composite wheels to trusted partners who have specialty
facilities to fabricate the complex materials used. Global Bike maintains very
collaborative research and design relationships with these specialty partners
to ensure that innovations in both material and structural capabilities are
incorporated into the frames. Global Bike primarily assembles semi-finished
goods into finished goods at its production facilities. Finished goods are either
stored in the local warehouse or shipped to other regional distribution centers
to fulfill customer orders.

Figure 5
Global Bike Raw
Materials
Global Bike Semi-
Finished Goods

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Distribution Network

Task Get familiar with Global Bike’s distribution network. Time 10 min
Short Description Read the below narrative about Global Bike’s distribution
network.

Given the highly specialized nature of Global Bike’s bicycles and the Notes
personalized needs of riders, Global Bike sells its bikes exclusively through well-
known and respected Independent Bicycle Dealers (IBDs). These dealers employ
staff members who are experts in off-road and tour racing to help consumers
choose the right Global Bike bike and accessories for their individual needs.

Figure 6
Global Bike
Customers in
US and Germany

Due to the highly technical nature of its products, Global Bike has embraced the
Internet primarily as an information channel, maximizing its potential for
educating consumers and partners and marketing its products to a large audience.
Since Global Bike’s main sales channel is through specialty resellers and there
are complex tax issues associated with selling in multiple states and countries,
they have a limited amount of internet sales.

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Partner Network

Task Get familiar with Global Bike’s partner network. Time 10 min
Short Description Read the below narrative about Global Bike’s partner
network.

Global Bike has established an extensive partner operation to ensure process Notes
continuity between Global Bike and its partners to deliver best-in-class
products for its customers. Special attention has been paid to nurturing strong
relationships with suppliers and Global Bike is generally the largest customer
of its main suppliers.

Figure 7
Global Bike Vendors in
US and Germany

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IT Strategy

Task Get familiar with Global Bike’s IT strategy. Time 5 min

Short Description Read the below narrative about Global Bike’s
information technology strategy.

During 2009, Global Bike integrated a shared services model for all IT Notes
functions, located in the Dallas office. Along with this move to centralized IT,
Global Bike also implemented SAP ERP (version 6.0). Prior to this, divisions
were running multiple, independent application environments. All ERP
functions are centralized with the primary objectives to reduce costs and
deliver best-in-class technology to all divisions globally. This centralized
approach offers Global Bike an advanced business platform under a highly
controlled environment, which enables consistency of operations and process
integrity across the globe. In 2017, the company’s management decided to
move to SAP S/4HANA to accelerate the digital transformation.

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