"FLYING MANE BICYCLE STORE."   Term Paper ID:20538 Click to get this paper

Essay Subject: Organizational analysis of [hypothetical] bicycle store to be located in Japan. Financing, strategies, product, marketing, customers. Tables.... More...

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Paper Abstract: Organizational analysis of [hypothetical] bicycle store to be located in Japan. Financing, strategies, product, marketing, customers. Tables. Paper Introduction: Business Description The "Flying Mane Bicycle Store" will retail and distribute high quality racing and pleasure bicycles throughout Japan and ultimately the entire Pacific Rim. The company will be headquartered in Tokyo. This central location will initially service the entire country and then in the future, serve as a good central location for doing business throughout the Pacific Rim. The company will also provide a complete service and repair facility for all of its bicycles. A retail bicycle business will be successful in Japan as well as elsewhere in the Pacific Rim due to the increased need, worldwide, for enjoyable aerobic exercise, as well as a viable method for reducing automobile generated pollutants. Text of the Paper: The entire text of the paper is shown below. However, the text is somewhat scrambled. We want to give you as much information as we possibly can about our papers and essays, but we cannot give them away for free. In the text below you will find that while disordered, many of the phrases are essentially intact. From this text you will be able to get a solid sense of the writing style, the concepts addressed, and the sources used in the research paper. U.S. Parts and service will also be strongly emphasized.Buying, Supply and Stocking Plans The buying process will be initially planned and administered by theowners of the company. The remaining one-half of the stock will be purchasedthrough specialty wholesalers located in the United States. Milestone Schedule The following baseline milestones are planned to guide the start-upand initial operation of the company. Lowering the U.S. The primary barrier for any company to enter the Japanese market islargely cultural. Secure, sell, service and support the most unique stock of bicycles from Europe and the United States.2. This is the approach thatwill be taken by this company.Other Market Factors The market for the company's products appear to be uniform acrossJapan. The initial store will occupy a leased facility with 22 square feetof selling area and an additional 2 square feet dedicated to stockingparts, assembled product, and repair. The remaining one-half of thestock will be purchased through specialty wholesalers located in the UnitedStates. When things start to turn in Europe, U.S.investment will definitely pay off. Additional stores will be developed inaccordance with company asset, revenue, cash, and capital objectives. Thiswill be accomplished in a "pinwheel" fashion, spiraling out from theinitial central location. Current Position and Future Outlook The business is being founded by two brothers and will operate as apartnership. Unlike Europe, Japanstill lives in this post-war trade cocoon and this is why its automobileindustry produces 14 million cars annually for a home market that only buysapproximately half of this amount. (1993, May 23). Additionally their will be a smalltest track located at the rear of the building for customers to "try out"the bicycle of their choice before making the final commitment to purchase. Thus the major product lines to be marketed by "The Flying ManeBicycle Store" will be as follows: 1. Market Research and AssumptionsOverview The growth in the use of bicycles as a means of exercise andrecreation has increased dramatically in the last ten years--on a worldwidebasis. The two owners have traveled extensivelythroughout the United States, Europe and Japan and have evaluated thelatest technology extensively. Milestone Activity Target Due Date (Month) Final Site Selection Month 1 Initiate/Complete Leasehold Improvements Month 1 (3 days maximum) Purchase Inventory Month 1 Develop formal Advertising Plan Month 1 (3 days maximum) Implement Advertising Plan Month 2 Open Doors/Initiate Operations Month 2 (Day 1) First Critical Review of Operations Month 3 (Day 1) Modify Advertising Plan Month 3 (Day 2) Modify Daily Operating Plan Month 3 (Day 3) Second Critical Review of Operations Month 7 (Day 1) References Flanigan, James. For this reason, the external facade of the building will bemodified to look like an "Old Barn." Inside will be paintings and othermemorabilia from the "Old West" including many pictures of cowboys andrunning horses--hence the name "The Flying Mane Bicycle Store." The store will be located on a busy street, preferably leading intothe largest mall in the city. The "dedicated cyclists" represent 4 percent of the projectedcustomer base for the company's products. During theirearly adult years, they have traveled throughout Europe and Japan. A weaker dollar leaves U.S.shortchanged in Asia. 3. These include: dedicated cyclists who rideat least three times per week; health conscious individuals; children andyoung adults; and those people who enjoy giving unique gifts. Of the roughly $475 billion that the U.S. Clearly what is needed is tomake Asia what Europe has become, a trade partner and not a parasite(Flanigan, 1993, p. Business Description The "Flying Mane Bicycle Store" will retail and distribute highquality racing and pleasure bicycles throughout Japan and ultimately theentire Pacific Rim. These segments have experienced over 15% annualgrowth rates over the past five years and enjoy the highest gross profitmargins in the industry. For thisventure, growth rates of over 2 % per year are forecasted for the next twoyears.Customer-Profile There are four major categories of customers for the company'sproducts and their respective. European designed sports/racing bicycles 2. The market for high quality bicycles in Japan and the Pacific Rim hasshown attractive growth in recent years due to the desire on the part ofconsumers for sporting leisure time activities and increasing healthconsciousness. The age profile of the customer base is between 2 and 5 years ofage with principal concentration in the range of 25 to 4 . The basic marketing strategy will be to expand the company'smarketing formula to other retail locations within Japan and ultimatelythroughout the Pacific Rim. dedicated bicycle retail chains (35%). Increase sales to over $1 million in the next three years, without sacrificing profitability and consistent with the availability of working capital funds. The company plans to reach $1 million in sales within its first threeyears of operation. The company will be headquartered in Tokyo. tradedeficit with the emerging economy of China in 1992 was $18 billion. U.S. mass merchandisers (45% of the market). Financial Summary Table 1. The major competitors for this enterprisewill be local merchandisers or specialized retail chains. Those seeking the relaxinghealth benefits of cycling represent another 3 percent of the projectedcustomer base. Become the major retailer and service company for high performance and pleasure sport bicycles and accessories in Tokyo within the first five years of operation. The majorweakness of the chains is their limited range of bicycle product choices. The Japanese are attracted to things from the United Statesespecially if there is some sort of "Old West" or "Rustic" flair about theenterprise. Itis estimated that the 1993 trade imbalance with Japan may be even worsethan the $5 billion deficit incurred in 1992 (Flanigan, 1993, p. Customers will be reached by utilizing directmail and space advertising. Thelarge trade deficit puts a blanket on production in the United States.Lower economic growth means less job creation. The problem that the United States has with Japan lies in postwarhistory and the automobile industry. It is desired to maintain a gross profitmargin of at least 5 %.Product Positions and Forecasts The product lines to be stocked in each store will be cycles,accessories, apparel, helmets and shoes. Thisthreatens to duplicate the chronic problems that we have with Japan(Flanigan, 1993, p. The business differentiates itself by providing the latest and mostunique lightweight bicycles associated with the most upto-date knowledgeand service to support the sale. A retail bicycle business will be successful inJapan as well as elsewhere in the Pacific Rim due to the increased need,worldwide, for enjoyable aerobic exercise, as well as a viable method forreducing automobile generated pollutants. individually owned bicycle retail outlets (2 %).The mass merchandisers have begun to retreat from the medium to high-pricedadult bicycle segment, concentrating their efforts on lower qualityproducts. 2. suppliers. The remaining 3 percent of the customer base are youngadults and those persons who enjoy giving gifts. By making it easier for U.S.companies to invest in Asia, profits would be earned, U.S. Thiscentral location will initially service the entire country and then in thefuture, serve as a good central location for doing business throughout thePacific Rim. This concept of "exporting" a business to Japan which will importapproximately 5 percent of its inventory from the United States is a verytimely one. Additionally the development of contacts for maintainingthe supply of products and accessories.Marketing Strategies The company will focus its marketing activity first on enthusiastswho ride sporting or racing bikes (including mountain bikes) and second onthose individuals who are desirous of improving their health who also havespendable discretionary income. This was sort of an Asian equivalent of the Marshall Planwhich revitalized the post-war European economy. An initial short term loan has already been secured toinitiate and promote the business. This should be relativelyeasy because in order to maintain the sources of supply, intense personalcontact between the company's owners and the suppliers will be an absolutenecessity. 1. Product or Service The partners have always been interested in bicycles. The remaining cars are exported andconstitute the bulk of the $4 billion trade deficit in automobiles andparts--about one-half of the total U.S. A quicker,and albeit smarter approach, which appears to be gaining support inWashington, is to simply tell the Japanese government to cut the deficit.Clearly what is needed is to shift from the current relationship which hasbecome parasitic and definitely troublesome. Secure a line of credit that will fund the overall expansion of the business throughout Japan and the Pacific Rim.4. Continue to improve contacts and sources of supply on a worldwide basis.8. Use direct mail campaigns to increase business and maintain customer loyalty.6. The Clinton Administration claims that a lower dollar will correctthe trade imbalance with Japan and throughout the world thus making foreigngoods dearer and products produced in the United States cheaper.Unfortunately, this will not happen. $1 5, will be used tolease and modify the first store location in Japan, $7 , will be used toorder and purchase inventory, and $35, will be used for working capital. Originally the United States openedits market to Japanese exports after World War II as a means of encouragingdevelopment. D1). other types of mountain bicycles 4. The Los Angeles Times, p. The majority ofcustomers are professional or management persons who have substantialdiscretionary income. Initialoperating capital will be provided by the owners out of personal savings ifthe start-up capital cannot be obtained from a lender. D1.----------------------- 9 jobs would becreated, and the trade problem would at least be addressed in aconstructive fashion. Strategies The following strategies will be employed to meet the objectives setforth above.1. This approach has been used extensively in theUnited States and appears to be a successful mode of operating in Japan,especially when coupled with referral methods. Projected Income Statement64444444444444444444444444L444444444L444444444L44444444475 * * * 55 ($, s) * 1993 * 1994 * 1995 5K)))))))))))))))))))))))))3)))))))))3)))))))))3)))))))))M5 Net Sales * 482 * 723 * 1 75 5K)))))))))))))))))))))))))3)))))))))3)))))))))3)))))))))M5 Cost of Goods Sold * 222 * 344 * 546 5K)))))))))))))))))))))))))3)))))))))3)))))))))3)))))))))M5 Gross Profit * 26 * 379 * 529 5K)))))))))))))))))))))))))3)))))))))3)))))))))3)))))))))M5 SG&A Expense * 2 2 * 289 * 43 5K)))))))))))))))))))))))))3)))))))))3)))))))))3)))))))))M5 Other Expense * 46 * 71 * 24 5K)))))))))))))))))))))))))3)))))))))3)))))))))3)))))))))M5 Other Income * * * 5K)))))))))))))))))))))))))3)))))))))3)))))))))3)))))))))M5 Income * 12 * 19 * 75 5K)))))))))))))))))))))))))3)))))))))3)))))))))3)))))))))M5 After Tax Income * 9 * 12 * 52 594444444444444444444444444N444444444N444444444N4444444448 Objectives The following objectives have been established for this venture. Subordinate employees will be trained to take over these typesof activities such that the owners will be able to focus their efforts onbusiness expansion, marketing and business development. Bicycles will be delivered to customers "fully assembled," and theservice department in the initial store (and all future stores) will bemade as large as is practical in order to maximize the "customer support"philosophy of the company. U.S. A lower dollar, in reality, has verylittle effect on Japan's trade practices and it has no effect on placeslike Hong Kong and Taiwan which peg their currencies on the U.S. Further it appears that the true market potential has barely beentapped. Normally this would be good, but Europe is itself inthe midst of a deep recession. living standards along with the ability of U.S.companies to invest in the Pacific Rim. Certainly, publicity surrounding the Olympic games and the Tour deFrance race has heightened public awareness of the sport. An important marketing strategy will be to letthe customer "tour the service facility" before even spending anysignificant time "looking" at a bicycle. For these individuals, the common denominator ofproduct interest appears to be a strong belief in having a healthy andefficient form of exercise which is interesting as well as variable in itsapplication. The greatest emphasis however,will be focused on stocking high quality bicycles for the discriminatingcustomer. 2. European accessories 5. This hasincreased the demand for bicycles (worldwide) by over 12% per year.Market Segments The market for bicycles can be divided into the following fivesegments: 1. trade deficit--petroleum makes upthe remaining one-half (Flanigan, 1993, p. Much is predicated on obtaining thenecessary loan guarantees and financing in a timely fashion. Duringthis period they found, in Europe, many unique bicycles and accessoriesthat were not available in either the United States or Japan. Provide the most knowledgeable service for these types of bicycles and accessories.3. The company will also provide a complete service and repair facilityfor all of its bicycles. D7). Children's bicycles 5. Therefore, $85, will be used toretire this high interest rate short term note. designed sports and mountain bicycles 3. dollar(Flanigan, 1993, p. But such is not the case in the Asianenvironment. manufactured accessories 6. Pricing and value The mark-up on the cost plus import duty and freight is over 6 %.This is maintained because of the recognition of the quality and uniquenessof the products. It is desired to use the initial store as a central focal pointfor all operations in Japan. Operational PlansSales Forecasts The company is projected to reach $1 million in sales within itsfirst three years of operation. It will achieve this by expanding the marketing ofunique bicycles and service. Dedicated chains are the strongest competitors due to theiraggressive pricing policies coupled with excellent service. The trade figures for March were again bad, with a $1 .2billion trade deficit caused particularly by an excess of imports fromAsia. The business will be a quality supplier of bicycles,accessories and service. The growth projections for these segments is forecast to be wellabove the national average for the retail bicycle industry. Certainly, the prestige associated with owning a uniqueproduct is another important factor in the decision to purchase this typeof product.Competition Competition in the bicycle retail trade is broken down as follows: 1. This "may" persuadeJapanese auto makers over time to build more cars in the U.S. Publicity will also begenerated by sponsoring various charity and community events as well asobtaining referral leads from all satisfied customers, including those thatonly come in for "service" work. Japan, again the worst of the offenders, shipped $5.3 billion morein merchandise to the United States than it bought from U.S. Uniqueness and Differentiation The company will differentiate itself by providing the latest andmost unique lightweight bicycles as well as the most up-to-date knowledgeand service to support the sale. These bicycles will be prominently displayed and demonstrated onrequest. has investedoverseas, nearly 5 percent is in Europe while only 11% is in Asia(inclusive of Japan). his loan will be fully amortized over a five year period. Regulate the growth of the company such that it does not exceed the supply of available capital from which to run the day-to-day operations of the business.7. business investment low, but a U.S. D1). The increase in the types of bicycles available has added to theinterest and foot traffic occurring in bicycle stores. Obtain three other store locations throughout the greater Tokyo area.5. One-half of the stock will be ordered andshipped directly through contacts in Europe. Enthusiasts who ride sports and racing bicycles 2. None offer thesame range of service, technical support/knowledge, or access to such awide variety of European and American bicycles. Hire staff to handle the day-to-day activities of the business and thus allow the partners to direct the company's expansion efforts throughout Japan and ultimately the Pacific Rim. Health conscious individuals 4. In Asia, not only is U.S. These individualswill be trained in the latest product knowledge and will travel to variousbicycle seminars, events and trade shows to obtain valuable product andcompetitor information. D7). The customers in these segments also tend to bethe most loyal and require a high level of service and support. dollar against the Japanese yen will make Japaneseautomobiles more expensive in the United States. Enthusiasts who ride the mountain type of bicycles 3. Additionally they have developed a strongbase of contacts, worldwide, from which to solve any number of supply,purchasing, inventory, distribution, sales, retailing, or other problemswhich may arise. D7). This is something that took hold in the United Statesperhaps ten years ago and is now coming on strong in the Pacific Rim. Apparel, helmets and shoes from around the world Over one-half of the stock will be ordered and shipped directly fromcontacts in Europe. Simply stated, all that the Clinton Administration policies seem tobe doing is lowering U.S. The knowledge of the staff and service level of thebusiness also supports the pricing level. Funds Sought and Usage The business is seeking $295, in long term debt financing securedby personal assets. The smaller retail outlets prosper by maintaining a wider inventoryrange and catering to a select customer base. Computerized methods will be used as much as is practical to rackinventory levels and to monitor the best economic ordering points in linewith company assets, cash, revenue, and capital objectives.Financial Plans The following financial information assumes that the company willsecure $295, in long term open lines of credit and that salary increaseswill be held to an average of 6% per year through the planning period. Casual users "The Flying Mane Bicycle Store" has chosen to concentrate on thefirst three segments. The business will also hire and train "native" sales assistants andstore managers who are themselves, cycling enthusiasts. The merchandise will be ordered and purchased on acash basis in order to maximize discounting. companies have substantial investments in Europe but not in thePacific Rim. If this paper is not what you are looking for, you can search again: Search for: or Click here to request an essay written just for you.