Schwinn Bicycle was the leader in the industry for a hundred years. Edward Schwinn, the fourth generation of Schwinns in the business, took control in 1979. Thirteen years later, the bike company was on life support, having watched its market share fall by 60 percent. Analysts attribute the decline of the company to a refusal to live in the present.
Because it was family owned, and always had been, Edward Schwinn refused outside help when the company began to show signs of weakness. Because Schwinn was “the name” in bicycles, Edward Schwinn refused to spend money on keeping the brand name in consumers’ consciousness. Because Schwinn was always the kind of company that operated on a handshake and long-term commitment, Edward Schwinn agreed to outsource all their manufacturing to a Chinese supplier without adequately protecting Schwinn’s long term interests.
By the end, in 1992, Schwinn Bicycle was $75 million in debt and losing a million per month. No investor would come near the company until it could be picked up for next to nothing in a bankruptcy sale. Product recognition among children dropped to close to zero. And the Chinese manufacturer ended its deal with Schwinn and began producing its own bikes in plants originally paid for with Schwinn money.
The company declared bankruptcy, and the Schwinn family lost all control over the family’s business. Edward Schwinn’s explanation for the fall? “We are where we are.” To which one family member responded, “Where we are is out of business because you were asleep at the wheel!”
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