Analyzing Business Strategy and Performance: Lessons from a Bicycles Division

QUESTION

Students will present 1) a summary of the original plan, 2) departures from the plan, 3) the justification for the departures, 4) the firm’s performance since the plan was presented/accepted, and 5) how well the division is prepared to compete in the future. The students are also asked to reflect on the lessons they learned from participation in the exercise.

(we analyzed the surveys of the potential markets to see which bikes were preferred in which geographical areas. We prioritized speed bikes and mountain bikes in the NORAM and APAC markets, while also offering an affordable and durable work bike. We wanted to focus on smaller, higher margin segments that hit the largest geographic markets to become a dominant company in the world of bicycles. With more expensive and specialized bikes, we discovered the appropriate markets to reach the consumers of the specific community that focused on performance and utility, rather than price – we set up a shop in New York and Tokyo. These cities had a high demand for speed and mountain bikes and customers were willing to pay more for them, increasing our possible profit margins. We marketed our bikes at a retail price ~10% lower than the survey “price willing to pay”, while producing local and internet ads promoting our products and utilizing market research to understand the market to be able to make future modifications. We expect the demand for our bikes will be 198 in the next quarter, with 50% of those being the Aerrow 1 (speed bike), 40% Mountain X (mountain bike), and 10% Road Runner (work bike).

1. Review your firm’s financial, market, operational and HR performance during the second year

1. Highlight the key features of the business plan which was presented to the venture capitalist

• Marketing Strategy
• Sales Channel
• Human Resource Strategy
• Manufacturing Strategy
• Financial Strategy

1. Assess your firm’s business strategy and performance during the second year (This section can be done simultaneously with Section 2 above.)

• Compare actions taken against the business plan
• Discuss departures from the business plan and justification
• Review significant events that affected the company and/or market
• Review goals relative to performance for key performance indicators (include the promises made relative to demand, revenue, net income, ROI, etc.)

1. Explain why your firm was able to achieve or not achieve your goals — what were the causes of your better or weaker than expected performance? (candidness here is very important)

1. What were the lessons learned?

• How did you benefit from participating in the simulation?
• Are there any lessons that you can take into the business world?

ANSWER

 Analyzing Business Strategy and Performance: Lessons from a Bicycles Division

Introduction

In the past year, our bicycles division embarked on a strategic journey with a well-defined business plan. This essay will summarize the original plan, evaluate departures from the plan and their justifications, assess the firm’s performance, and analyze the division’s preparedness to compete in the future. Additionally, we will reflect on the lessons learned from participating in this exercise and how they can be applied to the real-world business landscape.

Summary of the Original Plan

The bicycles division’s original plan was focused on targeting specific markets and segments to become a dominant player in the world of bicycles. Through surveys of potential markets, the division identified preferences for speed bikes and mountain bikes in the NORAM and APAC markets. Additionally, an affordable and durable work bike was offered to cater to a broader audience. The strategy involved setting up shops in high-demand areas such as New York and Tokyo, where customers were willing to pay a premium for specialized bikes. Marketing efforts included retail pricing below the “price willing to pay” identified in surveys, local and internet advertising, and market research for future modifications. The division aimed to achieve 198 bike sales in the next quarter, with specific target percentages for each bike model.

Departures from the Plan and Justification

Throughout the second year, several departures from the original plan were made due to unforeseen challenges and market dynamics. Firstly, despite the initial focus on smaller, higher-margin segments, the division experienced unexpected demand for the affordable work bike in some emerging markets. This led to a strategic shift towards increasing production and marketing efforts for the Road Runner model. Justification: Meeting this demand allowed the division to capitalize on untapped markets, boost overall sales volume, and improve profitability.

Secondly, the market’s response to the Mountain X model was lower than expected in some regions. In response, the division modified the marketing strategy, focusing on enhancing product features and introducing promotions to attract customers. Justification: This adaptation aimed to regain market interest and compete effectively against competitors offering similar mountain bike models.

Firm’s Performance since the Plan was Presented/Accepted

The division’s financial performance during the second year showed positive growth, exceeding some key performance indicators outlined in the original plan. The total number of bike sales surpassed the target, primarily driven by the unexpectedly high demand for the Road Runner model. The division achieved healthy revenue and improved net income, thanks to the successful shift towards the affordable work bike segment. The return on investment (ROI) was commendable, given the strategic focus on smaller, higher-margin markets.

 Division’s Preparedness to Compete in the Future

The division is well-prepared to compete in the future, with valuable insights gained from the market research and adaptation strategies implemented during the second year. The presence in key locations like New York and Tokyo has strengthened the brand’s visibility and reputation. Additionally, the division’s ability to respond swiftly to market changes and customer preferences positions it favorably to tackle new challenges and explore untapped opportunities in the ever-evolving bicycle industry.

Lessons Learned

Participating in this exercise has provided valuable lessons for the bicycles division and its team members:

Flexibility is Key: The business landscape can be unpredictable, and it is crucial to be adaptable and willing to modify strategies based on market feedback and changing circumstances.

Market Research is Vital: Comprehensive market research helps identify customer preferences, regional disparities, and potential demand, enabling better-informed decision-making.

Embrace Emerging Opportunities: Being open to seizing emerging opportunities, even if they deviate from the initial plan, can lead to significant growth and success.

Importance of Customer-Centricity: Prioritizing customer needs and preferences can create a loyal customer base and boost sales in specific segments.

 Collaboration and Communication: Effective collaboration and communication among team members and stakeholders are essential for achieving shared goals and addressing challenges.

Benefiting from the Simulation

Participating in this simulation has provided the division’s team members with a real-world experience in strategic decision-making, risk management, and adaptability. It has enhanced their problem-solving skills, teamwork, and ability to think critically in a dynamic business environment.

Lessons Applicable to the Business World

The lessons learned from this simulation hold substantial relevance in the real-world business landscape. Embracing flexibility, conducting thorough market research, prioritizing customer-centricity, and fostering effective collaboration are fundamental elements for sustainable growth and success in any industry.

Conclusion

The bicycles division’s strategic journey showcased the significance of dynamic business planning and adaptability in achieving success. Departures from the original plan were justified by market demands, resulting in positive financial performance and enhanced preparedness to compete in the future. The valuable lessons learned from this exercise are transferable to the business world, reinforcing the importance of staying agile, customer-focused, and open to emerging opportunities in pursuit of long-term prosperity. By applying these lessons, the division, and its team members are well-equipped to navigate future challenges and continue their path of growth and excellence in the bicycle industry.