Adapted from Case Study $52$ Santa Cruz Bicycles pg$.130$; Fictitious information has been added to the case.Given the trend of adopting a healthier lifestyle, more people are taking up cycling. Indoor and outdoor cyclists are spoilt with choices. For those who prefer cycling from the comfort of their home, they can purchase stationary bikes. For high$-$end outdoor bikes, there are numerous brands such as Specialized, Trek, Santa Cruz, and Shimano while that of lower$-$end outdoor bikes include Decathlon, and Aleco. High$-$ and lower$-$end outdoor bikes vary in terms of prices and the difference can be stark. Take the case of mountain bikes. The lower$-$end ones can be purchased as cheap as $$85,$ but the high$-$end ones can be more than $$5000$ and can push beyond $$10000.$ The components for a high$-$end bike are likely to be manufactured by different companies and specialized in nature. Thus, certain components of high$-$end bikes may be produced in limited quantities. The high$-$end bikes vary in terms of warranties for their components in terms of prices $($for a range of fees$),$ length, and terms of coverage. By contrast, the components for low$-$end bikes tend to be produced in vast amounts and non$-$proprietary. Also, they tend to have very limited warranties. Bicycle enthusiasts who seek high$-$end bikes not only love the ride their bikes provide but also are often willing to pay for newer technology, especially when it will increase their speed or comfort. Innovating new technologies for bikes requires significant investment and 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 bicycles from Santa Cruz. It digitally designs and builds mountain bikes and tests them under the most extreme conditions to bring the best possible product to its customers. Santa Cruz management believes that improving the technology of its bikes will help the company to compete against its competitors. A few years back, the company designed and patented the Virtual Pivot Point $($VPP$)$ suspension system, a means to absorb the shocks that mountain bikers encounter when on the rough terrain of the offroad 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.The first few prototypes did not work well; in one case, the VPP joint's upper link snapped after a quick jump. The experience was motivation for a complete overhaul of the design and engineering process to find a way to go from design to prototype faster. The $25$person company adopted a similar system used by large, global manufacturers: product life cycle management $($PLM$)$ software.The research and development team had been using computeraided design $($CAD$)$ software, but it took seven months to develop a new design, and if the design failed, starting over would be the only solution. This design approach was a drain not only on the company's time but also on its finances. The design team found a PLM system that helped members analyse and model capabilities in a much more robust manner. The team used simulation capabilities to watch the impact of the new designs on rough mountain terrain. The software tracks all the variables the designers and engineers need so they can quickly and easily make adjustments to the design. The new system allows the team of designers and engineers who work collaboratively to run a simulation in a few minutes, representing a very large improvement over their previous design software, which took seven hours to run a simulation. Such innovative design will help to boost the sales the company to places. The software was just one component of the new process design. The company also hired anew master frame builder to build and test prototypes inhouse and invested in a vansize machine that can fabricate intricate components for the prototypes, a process the company previously outsourced. The result was a significant decrease in its designtoprototype process. What once averaged about $28$ months from start of design to shipping of the new bike now takes $12$ to $14$ months. The various software and hardware that are employed as part of its bicycle design and manufacturing are billed to the relevant business unit$($s$).$ The management prefers such a method as it allows tracking of significant expenses incurred by specific business unit$($s$).$Santa Cruz has also setup an online website specifically for its customers such that they can share their experiences and feedback on issues they encounter. There are moderators who provide recommendations and advice when appropriate. Negative feedback will be considered by the engineers and other staff in their design and manufacturing of the bikes. The online site is opened to non$-$customers for browsing. However, non$-$customers cannot post questions.Given the technology of its bikes, Santa Cruz is well$-$known for producing quality bikes and has a solid customer base. Santa Cruz has continued improving the technology of its bikes.

$($a$)$ Formulate how information strategies may be employed by Santa Cruz to deliver business value by: Describing how network effects can be potentially useful to its business. You may indicate certain assumptions to support your answers.

$($b$)$ Discuss the key activities of Santa Cruz by: Identifying the maturity level that the organisation has exhibited. Explain your answer with case facts.