Kootney Bicycle Case

our business. As the president and the CEO of Bikes Bikes Bikes, I am proud to present to you the

The company started off producing 20,000 units of mountain bikes. We did not change the production quantity. Last year our forecast sales were 24,000 when we only sold 19,866; therefore we thought it would be best to leave production at 20,000 bikes. Having excess inventory, we concluded that 20,000 units should be enough considering our quality has not changed and our advertising will not increase the sales dramatically. Although we had the choice to produce as much as 30,000 units, we felt as though we did not have sufficient money to increase production. We were interested in allocating the money towards marketing as opposed to production. We realized that without awareness, no matter how many units we make, sales would be inefficient.

Being aware of our external environment and constantly striving to adaptation and customer satisfaction will allow Off The Chain Bikes to maximize our revenue, shareholder value, and brand popularity. These maximized components will allow us to stay at the top of the industry and create healthy longevity for our company and its employees.

My recommendation is for the company to stay focused on its main competitive advantage of supplying a

Demand – Customers are loyal and identify with the HD brand. Currently demand outmatches supply, so HD is considering whether to raise prices or expand capacity via various options.

Upon reviewing the Competition Bikes Inc. (CBI) Budget Schedules and ProFormas for Year 9, there are a few concerns that should be analyzed. The first is the forecasted sales in units. The forecast for year 9 is 3,510 units, which is a 3.2% increase over the 3,400 units sold in year 8. The storyline mentions the economic downturn, which has led to a decrease in bike sales. It can take some time to recover sales lost during an economic downturn, and given that sales were down 15% between year 7 and year 8, to go from a 15% decrease in sales to a 3.2% increase in sales in the span of only two years may be an unrealistic goal. I would want to see a specific plan in place for

For the youth bike we decided to keep the advertising expenditure at 2 million in order to raise the awareness of this new product line. This also helps establish a good market share in case competitors also decide to launch the youth bike. Since we have a low capacity for the bike, we also decided to increase the price from $370 to $400, resulting in an increase in gross margin. With this increase, we are still producing at a high yet relatively low volume.

BCH Executives have agreed to begin the new touring motorcycle project with larger motors for long distance driving. The proposed target audience suggested for this product would maintain an income up to 100,000 annually. The project completion goal is within five (5) years of the marked beginning date. The company will use the current facilities where the medium-sized manufacturing are created with modification of the equipment and as well as additional staff. With an estimated goal of 100 larger motor motorcycle production at a cost determined by the approved budget, this project will utterly build additional profit for the company.

2. How did Ducati become the second most profitable motorcycle maker in the world despite its small scale?

Consumers are not limited to a single market, many of them will be purchasing multiple bikes, but all of them have specific preferences. Successful company will meet customer’s needs and maximize sales by growing the potential market size as well as taking sales from competitors.

Great pressure from suppliers and competitors caused some deterioration of basic performance for AGI during 2004–2006. Two main problems are

1.a) To value Spyder Active Sports Inc., we decided to use the WACC method since we can easily value its cost of assets with the data immediately available to us in the case. We first unlevered the beta’s of 7 comparable companies and took the average to get a comparable unlevered beta for Spyder (Exhibit 1). Since we are assuming Spyder is entirely equity financed, its unlevered asset beta is equal to the beta of its assets. We now have a rough estimate of Spyder’s asset beta, we can

The fight amongst the major players in this industry is not over price, but over capturing the market share. Since, there is no one definitive leader in the motorcycle industry on the global level, the companies tend to steal each other’s business, this makes the industry rivalry cut throat. One of the crucial factors that make this industry extremely attractive is the constant drive for innovation. Since different industry participants have different approach towards the same segment of the industry, there is a very high

Explosion of the Mountain Bike Market. (1980-1990) With the introduction of mountain bikes in the 1970s and appreciation of the yen in the 1980s, Shimano’s location fell even further in advantage. However, the company remained highly successful and introduced many innovations throughout the 1980s due to its long culture of innovation and quality, as well as its early

Historically Harley-Davidson to be a Niche Marketer, which is they had focused in on one particular aspect of the market. Kotler and Keller identified the following characteristics of niche marketing; customers have a distinct set of needs, they are willing to pay more to the firm that best suits their needs, it is not likely to attract competitors, gains economies through specialized products and it has a size, profit and to grow. Almost all of these hold true for the “heavyweight” segment of motor cycles that Harley-Davidson produced.