In 2019 Peloton purchased Tonic Fitness Technology in order to produce their bikes and treadmills in house. In 2021 they announced they were spending another $400 million to build a manufacturing facility in Ohio to meet demand. Yet, on July 12th Peloton announced it will shut down its factories operated by Tonic Fitness Technology and outsource production of their bikes, treadmills, and rowers to a Taiwanese manufacturer.

The company referred to this decision as a "natural progression" for their business.

1. Is this a natural progression for any company?

2. Why do you think Peloton would decide to outsource so soon after spending so much building their own production network? (what role did the pandemic play)

3. Think about Peloton as a brand - their image - their strategy in marketing their products. Are they still aligned with that operationally, and what would you do if you were calling the shots?