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Executive Summary:
Wheelie Cool Bikes Company was formed on April 22nd of 2015. With the help of Drexel
University, Shihao Tang, Katya Metelkova, and James Salvo founded WCB with one motto on
our mind: “Wheel do it your way”. WCB emphasizes the influential role consumers have on our
decision-making, and actions for the future. WCB is geared for the consumers’ varying lifestyles,
values, and customs. Here at WCB, we honor the integrity of our customers and want to make
sure we have outstanding quality, and exceptional service with the goal of affordability and
conservation because we understand the importance of being optimal at providing our bicycles
while understanding our consumer’s price sensitivity and values towards preserving the
surrounding environment. Our mountain bike serves as a model of affordability, while also
containing the most innovative technology known to man. Our diversification of our product
line, has led to our newest addition to WCB’s family, BOLT. Our road bicycle, BOLT, serves as
a counterweight to our product line. As our mountain bike sells in sports stores, BOLT will be
sold mainly in bicycle stores, geared to our most competitive consumers, interested in the cycling
side of sports. Our four objectives do not function as short-term or long-term, here at WCB, we
attend objectives as if they never can become accomplished. These objectives will always be at
the horizon and be the major forces that influence all operation management. These four
objectives, Profitability, Diversification, International Recognition, and Customer Satisfaction,
are interrelated and connected. At all times, we as the controllers of the company, and all of our
employees honor these four groups of objectives; without one, we would not have the other.
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Mission Statement:
The vision at Wheelie Cool Bikes is to liberate our customers from the norm and help create
bicycles tailored to personal liking. With the help of our manufacturers, distributors,
shareholders, and community we hope to spread and share this vision with the public so that
everyone can ride in style. Wheelie Cool Bikes brings your idea to life!
Situational Analysis:
The first economic factor in relation to our bicycles would be the economic terms:
substitutes and complementary goods. An example can be linked to gasoline. As gasoline prices
decrease, a consumer is more inclined to buy a vehicle like a motorized scooter than a bicycle.
Another example could be as the cost of living rises along with inflation, more consumers are
inclined to result to bicycles and public transportation like SEPTA. This consequence could
result to a competitive advantage for public transportation. A consumer may not have a lump
sum of cash at one point of time especially if they are in a time of recession. To combat their
competitive advantage, our company will promote customers to use credit and other financing
practices like layaway. Using these techniques, will help promote our product in periods of
consumer’s price sensitivity.
Key competitive forces in the market of transportation would be other bicycle companies,
vehicles, public transportation and most recently bike sharing companies like Ride Indego. All
forces share a commonality, their ability to benefit from our company’s failure. These forces
represent a substitute to our bicycles. As the economic force portion pointed out, when external
factors like gasoline and inflation increase/decrease, it influence our sales; operations
completely. We need to account for what can happen and what will happen in the future. To
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combat our real world dilemma of bike sharing, we planned a hopeful strategy/objective to
develop a relationship with Indego in Philadelphia. As a bike sharing company, they outsource to
other bicycle companies for their help with the manufacture of bikes. Hopefully, we can become
involved in their start-up process, and develop ties in order to combat the future competition
between Wheelie Cool Bikes and Indego which would be inevitable. Basically before a rivalry is
created, Wheelie Cool Bikes can develop a partnership with Indego.
What if the federal government grows in power compared to state/local power? Laws and
regulations can become enforced stricter as they have in the past. These new practices could
result in higher operating costs. If the company needs more measures, we would have to adapt
our factories in areas of training, reconstruction, new operation rules, technology, etc. which all
stems from the company’s limited resources. To battle the government’s future policing, our
company will operate most efficiently and comply with all measures dictated by the most recent
ISO 14000, which will help our organization minimize our impact on the environment, comply
with laws and regulations, and to continually improve in all areas of operation. Another
regulatory force the federal government enforces and will continuously enforce our price floors.
More specifically to Wheelie Cool Bikes would be the price floors of minimum wage. The
company’s workers in the factories are considered unskilled workers and would be affected by
future policing of minimum wage increases. The company will have to be aware of any changes
in the near future, like the increase to minimum wage to $10.10 per hour. If this change occurred,
then our company must be able to adapt to the change of operation costs. Most importantly, we
want our company to be most efficient while also maximize our equality in our employees: we
do not want to lay off any of our employees in the near future.
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Companies must evaluate the benefits of technology while acknowledging the
consequences that result. Before upgrading to new technology, a company should forecast the
problems and benefits because at points, problems can outweigh the benefits. As with Trek
Bicycle Company in 1985, they borrowed technology from the aerospace industry which lead
their development of its first bonded aluminum bike frame. The new adoption became
problematic due to their history of hand-brazed steel frames. They did not take in account of the
change in business processes, efficiency, and the direct and indirect costs involved. Instead of a
success in their innovative frame, their manufacturing came to an abrupt halt which proved to be
only ephemeral due to their next actions. Even though the halt sacrificed efficiency and sales.
Trek knew they needed to develop contingency plans for their future. They learned from their
experience and new they had to develop a plan of action which proved to be successful, next year
they introduced a three-tube carbon composite: a complete success. They responded to expansion
of production and into the field of clothing,
The reason Trek’s story should go noticed is because it signifies how significant
analyzing technology forces are before implementing them. Our company will learn from Trek’s
example, and make sure to monitor forecast of future expansions in technology. We also must be
cautious that consequences can become sudden also. Four years later, Trek faced a
discontinuation of the Trek 5000 even after preparation, this time it was the fault of an
outsourced manufacturer. What we also learned from this example is that always being at the
frontier of technology of your industry is key. If our Wheelie Cool Bikes have the most cutting-
edge technology among the four opposing companies, customers who pursue high-end products
will prefer to choose our bicycle over our competitors, which will help us dominate the upscale
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market. While we try to obtain our goal of top-notch technology, we must also plan for the forces
that come along with our new technology.
Analyzing community values, lifestyles, and customs helps the company see the best fit
for our product. We must find a demographic segment our bicycle could flourish. Our local city
serves as a promising target for our bicycles and the future of the company. The emerging values
of conservation and trends brought on by local hipsters, gives an optimistic view for our bicycles
for the future. It can help begin the company’s future with road bicycles. These ‘city’ bikes prove
a useful way to save the atmosphere and more importantly money. We can promote health
influential bicycles as well. Our bikes save money, the Earth, and at the same time, promotes a
healthy lifestyle; an emerging trend promoted by advocates such as First Lady Michelle Obama.
SWOT Analysis:
Using the SWOT Analysis we were able to develop a vital business strategy. Research helped us
identify key issues and valuable opportunities in our company’s environment:
Strengths applicable to a bicycle company of our nature include, strong infrastructure,
employee capability, and understanding of trends. A strong infrastructure within an organization
is an essential internal factor. It serves as the pillars or foundation of the company itself. Without
well-structured management, marketing, finance, and operations teams the company’s well-being
is at jeopardy. Wheelie Cool Bikes is in the process of developing a solid infrastructure, we
forecast this to be one of our major strengths. Aside from having a well-balanced infrastructure,
employment is an internal factor we have control over. We aim to hire employees with varying
strengths to ensure capability in all areas of the business. With our well-equipped team at
Wheelie Cool Bikes, we make it our duty to have a clear understanding of market trends. This is
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an external factor that determines much of what needs to be produced. With that said Wheelie
Cool Bikes prides itself on it’s in depth research and application of consumer/market trends.
Understanding and analyzing weaknesses is perhaps the most important aspect of the
SWOT analysis. This is where we confront the issues at hand and figure out ways to either get
rid of or deter them. We understand that weaknesses are almost inevitable. With that said, here at
Wheelie Cool Bikes we’ve faced weaknesses in the production department, loss in profit due to
government regulations, and limitations on public exposure because of marketing budgets. After
a very successful first year, our team made the decision to decrease the value of the bicycle and
increase the amount of units for sale by a few thousand. Although a strategic plan, we
underestimated the amount of demand we would get in return. Our supply and demand curves
were not successfully correlated. This is an internal factor that not only affects profits, but also
the brand image. Aside from losing profit because of a shortage of goods we also experienced an
increase in expenses because of a very common external factor; the implementation of
government regulations. Wheelie Cool Bikes imports state of the art fiberglass material in bulk
from leading manufacturers in Japan. Unfortunately the U.S government has increased the price
of taxes on goods imported from international areas in an effort to increase domestic trade. Our
expenses increased by 4 %. We’ve also stumbled a little in the marketing department, an internal
factor that could have been omitted if further research was conducted. Once we invested most of
our earnings amongst distributors we didn’t allow ourselves to spend as much money on
advertising and PR as we would have liked. A loss in profit, and an increase in expenses are a
company’s two worst fears, but at Wheelie Cool Bike’s we see it as a learning experience.
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Seizing opportunities is something that can set apart the great businesses from the good
ones. At Wheelie Cool Bikes we analyzed several internal and external factors that can prove to
be advantageous to our company in the future. As a bicycle company we have to take many
things into account. One of which is weather. Weather is an external force that cannot be
controlled. With this knowledge our company will seek to distribute large quantities of bicycles
in areas where weather is predominantly dry. It is also important to recognize the influence of
external forces like technological advancements. For instance, in recent news there has been an
up rise of a service in which bicycles are made available for shared use to individuals on a very
short term basis. This Bike share system allows people to borrow a bike from point "A" and
return it at point "B". Our marketing team sees this as a golden opportunity. An opportunity to
not only develop a better brand image but gain exposure on a new platform. Research will be
conducted to determine which location would have the most foot traffic. Location is something
that can’t be stressed enough. Facility location is crucial to the success and exposure of the
company. We’ve taken that internal factor into consideration and decided to pursue building
facilities in locations and communities that have a substantial amount of bike riders
In the business world, the existence of threat is what keeps the companies on their toes
and working hard to be the best. Our threats keep us striving to be the greatest. With the creation
of new companies comes the creation of competition. Competition amongst Bike companies is
alive and well. Competitors seek to create new products and offer new services, so we at Wheelie
Cool Bikes have to be aware of competition. Competition is an external threat that can be
compromised by a hardworking and effective infrastructure. Demographics can also pose as a
threat to our company and companies alike. This external factor focuses on things like gender,
household income, marital status, employment status, education attainment, ethnicity and
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religious affiliation. If our company fails to interpret the demographic data correctly, it could
very well be our downfall. It is our duty to observe and apply these sort of things to ensure
customer satisfaction. Perhaps the most detrimental threat is an internal firm affair. Wheelie Cool
Bikes is a company that is fairly young. With that said, all employees and all of management are
looking to develop this company and help it flourish. However, who’s to say that greed or power
hunger won’t surface after the company starts becoming more successful?
Business Resources:
James is in charge of deciding products’ retail price and production quantity. he will take
many factors into this consideration such as the influence from operating cost (ads,PR etc),
pricing strategy, demand curve as well as the price from our competitive company, and finally
come up with the most profitable retail price and production quantity.
Katya is in charge of determining advertising and PR expenses as well as distribution and
branding cost. After analyzing ads and PR costs from previous years and from other competitors,
Katya will adjust those costs in order to either cut unnecessary spend or encourage valuable
promotion. In addition, she will also decide new support and margin percentage to retailers after
viewing their previous performance, and adjust branding expenditure after analyzing.
Shihao is in charge of collecting information from annual report such as sales revenue,
retail price, awareness, PR and distribution of our company. This could help team to observe the
relationship between retail price and sale revenue, as well as the influence caused by advertising,
PR and distribution. In addition, he will also record public information from other competitors,
which allow team to speculate price strategy from other companies and help find the causes
when certain companies have unusual performances.
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Business Strategy:
Our first objective is profitability, which is an objective that is essential to the growth and
development of our company. At the end of the day, the ultimate goal of a company is to
maximize wealth. At Wheelie Cool Bikes we used our in depth understanding of market trends to
drive sales and get optimal results. Because of our focus on controlling costs in both production
and operations while maintaining the profit margin on products sold, we were able to freely
launch our new BOLT road Bike. We expect this decision to not only increase profitability, but
also set us apart from competitors by the end of next year.
Diversifying the company’s product line will separate us from our competitors. Our
competitors do not have as much of readily available cash as Wheelie Cool Bikes has which
gives WCB an advantage to expand in the road bike market. Our company does not believe any
other company are confident enough to expand as of right now. Being the first company to break
the iceberg gives us an advantage. Our road bike will be the first on market, first bought, and will
be the first road bike every consumer will think of when they need a fast, affordable bike while
also being eco-friendly, and designed their way. To achieve our goal of diversification, our
company will continue to wipe out our long-term debt which was one million. In just two years,
we decreased the long-term debt to 250,000 while still increasing our profits and keeping our
operating expenses stagnant. The reason why we are decreasing our long term debt is to make
our company appealing to stockholders who want to invest in a healthy profitable company.
What prospective stockholder would not want to invest in a company that can pay its long term
debt while also having wonderful numbers in sales? Our company is also planning to issue
dividends as well to make a stock even more appealing. The reason why we want to expand our
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number of stocks will be to act as a buttress to our diversification efforts. Even though we are
decreasing our debt, we will still be receiving the cash but from a more reliable source and a
source we are not forced to pay. Using equity financing outweighs the debt financing options
extensively.
Achieving international awareness and recognition can and will affect the outcome of
Wheelie Cool Bikes. We cannot stay known in one location, our whole lifespan. If we did, we
would have no way to increase our sales and expand into other markets. In order to help diversify
our product line and increase our profitability, we must venture into unknown areas of the world.
In order to take this journey, our company must employ endless amounts of research in foreign
markets: the consumers, producers, and other factors that could influence our company’s
profitability and expansion. In order to achieve international awareness, Wheelie Cool Bikes
must increase the advertising efforts locally, nationally, and globally; more concentrated on our
mountain bikes. Also, we must increase public relations for our new expansion of our product
line. Road bikes have a high sensitivity to public relations, and if we increase our PR
expenditures dramatically, it will allow our company’s brand recognition to positively correlate
with our efforts. Our research, advertising, and public relations will allow our company to
capitalize on our diversification and profitability.
In order to create and maintain a good image in the public eye, we have to consider customer
satisfaction. Customer satisfaction is a primary objective at Wheelie Cool Bikes. Happy and
satisfied clientele is what generates revenue. We pride ourselves on listening to the consumers
and incorporating their ideologies into our products. Market trends show that hipsters are an up
and coming force in the bike riding community, whose main value is sustaining a healthy
environment. With that said, our recent focus has been on conservatism. Our dedicated and
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capable team of employees are eager to create a bicycle that is eco-friendly. The idea is to create
an extremely long-lasting bicycle made of organic material, so that we can help reduce the
amount of trash that ends up in landfills. There isn’t necessarily a time frame set for this
objective because we’re continuously looking for new ways to satisfy the needs and wants of our
customers. We carefully craft our bicycles with the consumer in mind.
Financial Projections and Budgets:
1. Revenue prediction
Outcome: By analyzing our performance and competitors, we have forecasted our 4th to
6th year revenue:
Year Forecast Revenue($)
2017(4th) 18428774
2018(5th) 17765150.4
2019(6th) 17035406.8
Analysis:
5 companies’ sale performance in 2016
Team Revenue($) sales unit price($) awareness PR
1 13783500 18378 750 0.21 0.06
2 3350000 3350 1000 0.21 0.06
3 19957434 27006 739 0.33 0.09
4 15877620 21780 729 0.21 0.07
5 16365080 21533 760 0.22 0.06
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We create a rough demand curve by using 5 companies’ sales performance in 2016:
The function above presents a general relationship between quantity of demand and price
of product. Furthermore, we can determine the estimated revenue by multiplying quantity
and price, which form a distribution below:
As this graph present: when retail price is near 500$ per unit, company will have highest
revenue 21 million dollars. Our recent retail price is 760$ per unit and revenue is about 16
million dollars.
750
1000
739729760
y = -0.0121x + 1018.6
0
200
400
600
800
1000
1200
0 5000 10000 15000 20000 25000 30000
retailprice($)
quantity
Maintain bike demand curve in 2016
500, 21428410
760,
0
5000000
10000000
15000000
20000000
25000000
0 100 200 300 400 500 600 700 800 900 1000 1100
Revenue($)
Retail Price($)
Revenue Vs Retail Price
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In addition, the recommended retail price from MikesBike market information report is
700$, we plan to reach this price and observe what the market demand would be.
Therefore, we decide to progressively reduce our retail price and, as the result, get more
demand from market. At the same time, we will increase budge on advertising and
branding to improve Wheelie Cool Bikes’ brand awareness.
*The reasons why we didn’t cut our price directly to 500$ are:
1. This is only a rough analysis, data and outcomes are not accurate enough for us make
such risky decision.
2. Customers who bought our product before price cutting will be upset for their extra
costs, which might influence the relationship with clients.
2. Forecasting cost per unit
According to the polynomial function above, our 4th to 6th year cost per unit:
Year Forecast Cost per unit($) Reduce rate
2017(4th) 224.30 2.8%
2018(5th) 215.49 4.1%
2019(6th) 204.99 5.1%
3. Expected Cost of Goods Sold
Outcome
237.89
235.23
230.61
y = -0.98x2
+ 0.28x + 238.59
230.00
231.00
232.00
233.00
234.00
235.00
236.00
237.00
238.00
239.00
0 0.5 1 1.5 2 2.5 3 3.5
cost($perbikes)
Time(year)
Costper unit Trend
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Year Cost per unit($) Quantity of
products sold
COGS($)
2017(4th) 224.3 23000 5158900
2018(5th) 215.49 24600 5301054
2019(6th) 204.99 26300 5391237
Analysis:
Cost of Goods Sold = Cost per unit * quantity of products sold
Cost per unit has been determined previously.
And then quantity of products sold:
Again, based on this graph and the forecasting retail prices we determined before, we
could know the expected quantity of our product simply divide revenue by retail price:
Year Revenue($) Price($) Quantity
2017(4th) 17035407 740 23000
2018(5th) 17765650 720 24600
2019(6th) 18428774 700 26300
4. Gross Profit
Gross Profit = Revenue – Cost of Goods Sold
Forecasting Revenue and COGS have been determined above.
500, 21428410
760,16239543
0
5000000
10000000
15000000
20000000
25000000
0 100 200 300 400 500 600 700 800 900 1000 1100
Revenue($)
Retail Price($)
Revenue Vs Retail Price
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Reason: Brand recognition will lead to the fate of a company. We closely analyzed our
competitors in our market to see what type of strategies, they were employing that
brought them beneficial progress in reaching their objectives. We noticed the heightened
amount of advertising expenses our competitor, Ride Along Bikes, were cumulating
which lead to their high amount of sales and high number of brand recognition. This
analysis lead us to increase our advertising extensively in the next three years. We
noticed that the problem with Ride Along Bikes is that they increased their advertising
expenditures too drastically too early. There is a maximum amount of four million and in
the years to come, they will hit their brick wall. To combat their strategy, we employed a
gradual increase in our total advertising expenditures to make sure we do not hit that
brick wall and still achieve a high brand recognition. Our company had to decide how
much to invest in each media outlet for advertising. At this point, we utilized the market
research Mikes Bikes gave. We noticed for mountain bikes that consumers for mountain
bikes, concentrate more of their time in magazines and television. This trend helped our
team to implement a strategy of advertising: concentrate more resources in the media
outlet that will lead to the most success, and in this circumstance, it was television and
magazines.
B. Public Relationship
Year Total(%) TV($) Internet($) Magazines($)
2017(4th) 350,000 150,000 40,000 160,000
2018(5th) 1,100,000 150,000 350,000 600,000
2019(6th) 1,200,000 150,000 450,000 600,000
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Reason: in 2017, we don’t spend too much on PR because our only product—mountain
bike is not sensitive to Public relationship. However, after 2017, our company plans to
largely increase budget on PR since our new road bike comes out, and road bike has high
sensitivity on public relationship especially on internet (40%) and magazine (60%)
subsections. Therefore, we increase 410 thousand dollars in internet PR and 440
thousand dollars in magazine PR in order to create more sales in new road bikes.
C. Distribution
Year Bike Shop Sports Store Discount Stores
Support Margin% Support Margin% Support Margin%
2017(4th) 10,000 27 50,000 29 10,000 27
2018(5th) 50,000 27 50,000 29 10,000 25
2019(6th) 75,000 27 50,000 29 10,000 25
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Reason: Looking at previous performances report for each retailer below, we could see
Sports Store’s lucrative sale performance. Therefore we decide to focus on Sports Stores
by giving them more support and margin percentage.
D. Branding
Year Expenditure
2017(4th) 310,000
2018(5th) 335,000
2019(6th) 350,000
Bike Shops Sports Stores Discount Stores
Max Stores 400 800 1,000
Stores Stocking 70 312 186
Retail Sales $1,138,874 $11,851,547 $1,278,259
Wholesale Sales $831,378 $8,414,599 $933,129
Wholesale Margin % 73% 71% 73%
Channel % (of total sales) 8% 83% 9%
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Reason: Just like advertising, we have to develop our company’s popularity from
customers, so we rise branding budget amount about 7% each year to get more brand
awareness from market.
