TY - JOUR
T1 - Peloton’s ride to growth
AU - Winchester, Christopher Curtis
AU - Pleggenkuhle-Miles, Erin
AU - Bass, Andrea Erin
N1 - Funding Information:
Disclaimer. This case is intended to be used as the basis for class discussion rather than to illustrate either effective or ineffective handling of a management situation. The case was compiled from published sources.
Publisher Copyright:
© 2021, Emerald Publishing Limited.
PY - 2021/12/7
Y1 - 2021/12/7
N2 - Theoretical basis: The theoretical basis for this case is a focus on vertical integration, first-mover advantage and competitive dynamics. Vertical integration is based on Williamson’s (1979) theory of transaction-cost economics as it relates to vertical integration; the discussion on first-mover advantage is built off of Suarez and Lanzolla’s (2005) dynamics of first-mover advantage; and the analyzes on competitive dynamics derives from the MacMillan et al. (1985) early empirical tests of interfirm rivalry dynamics. Research methodology: The authors conducted extensive research using the following sources: IBISWorld, MergentOnline and academic journals, trade magazines and websites. Additionally, the authors successfully piloted the case on more than 350 undergraduate students enrolled in a business and corporate strategy course. Case overview/synopsis: Peloton used vertical integration to control the creation of its own software, bikes, exercise classes and retail outlets. In doing so, Peloton was one of the first companies in the industry to have near full control of the production process (Gross and Caisman, 2019). Due to this integration, Peloton was one of the fitness equipment industry leaders. However, Peloton’s high level of vertical integration coupled with rapid growth led to lackluster profitability. Given the rise in popularity of in-home exercise equipment, Peloton had room to continue its growth, but the question remained whether it was strategically positioned to do so. Complexity academic level: This case is best taught in undergraduate and graduate strategy courses. For undergraduate courses, it could be incorporated into lessons on competitive dynamics, internal analysis and first-mover advantage and strategic positioning. For graduate courses, it could be incorporated into lessons on vertical integration and delving more in-depth into the long-term sustainability of having a first-mover advantage.
AB - Theoretical basis: The theoretical basis for this case is a focus on vertical integration, first-mover advantage and competitive dynamics. Vertical integration is based on Williamson’s (1979) theory of transaction-cost economics as it relates to vertical integration; the discussion on first-mover advantage is built off of Suarez and Lanzolla’s (2005) dynamics of first-mover advantage; and the analyzes on competitive dynamics derives from the MacMillan et al. (1985) early empirical tests of interfirm rivalry dynamics. Research methodology: The authors conducted extensive research using the following sources: IBISWorld, MergentOnline and academic journals, trade magazines and websites. Additionally, the authors successfully piloted the case on more than 350 undergraduate students enrolled in a business and corporate strategy course. Case overview/synopsis: Peloton used vertical integration to control the creation of its own software, bikes, exercise classes and retail outlets. In doing so, Peloton was one of the first companies in the industry to have near full control of the production process (Gross and Caisman, 2019). Due to this integration, Peloton was one of the fitness equipment industry leaders. However, Peloton’s high level of vertical integration coupled with rapid growth led to lackluster profitability. Given the rise in popularity of in-home exercise equipment, Peloton had room to continue its growth, but the question remained whether it was strategically positioned to do so. Complexity academic level: This case is best taught in undergraduate and graduate strategy courses. For undergraduate courses, it could be incorporated into lessons on competitive dynamics, internal analysis and first-mover advantage and strategic positioning. For graduate courses, it could be incorporated into lessons on vertical integration and delving more in-depth into the long-term sustainability of having a first-mover advantage.
KW - COVID-19 pandemic
KW - Competitive dynamics
KW - First-mover advantage
KW - Peloton
KW - Vertical integration
UR - http://www.scopus.com/inward/record.url?scp=85123506154&partnerID=8YFLogxK
UR - http://www.scopus.com/inward/citedby.url?scp=85123506154&partnerID=8YFLogxK
U2 - 10.1108/TCJ-02-2021-0040
DO - 10.1108/TCJ-02-2021-0040
M3 - Article
AN - SCOPUS:85123506154
SN - 1544-9106
VL - 17
SP - 754
EP - 783
JO - CASE Journal
JF - CASE Journal
IS - 6
ER -