Mike’s Bikes Final PresentationBusiness 111

Instructor: Eric Rios, MBS, MSWinter 2012

Jennifer DeWittChief Executive Officer

Ruohao Chen Chief Financial Officer

Aimee EldridgeChief Operating Officer

1. Maximize our Share Holder Value!

2. Take the entrepreneurial risk of a more expensive bike and profit !

3. Introduce new products!

4. Eliminate debt!

5. Be eff icient and keep quality high!

Business Year: 2012Product Marketing – “The Four P’s”

• High Price/Low Volume Product Strategy - Raised our Mountain Bike price from $700 to $760.- Decreased our Forecast Sales to $16,600.

• Properly allocated costs for Advertising- Television: $75,000, Internet: $330,000 and Magazines: $405,000.

• Properly Allocated Costs for Public Relations- Television: $50,000, Internet: $170,000 and Magazines: $220,000.

• Production - Lowered Quantity due to Leftover Inventory

GOOD DECISIONS

• Increased our expense on Advertising while lowering our expense on Public Relations. This was the right decision for the market we wanted to dominate!

is going the

Business Year: 2013Firm Marketing

• Distribution & Branding- $700,000 allocated to Branding .- Margin percentage : 25% bike shop, 25% sports stores, 20% discount stores.- No support was given.

• Maintenance - Decreased PR by $200,000, which allowed us to raise Advertising to $1.10 Million.- Kept our price the same, but raised Forecast Sales to $18,000.- Increased our Quantity to 17,700 .

Business Year: 2014Operations Management and Finance

• Capacity- We looked towards our long term goals and held on to our Capacity.

• Production Eff iciency - We made adjustments for the new year.

• Quality- We raised our Quality because it was important for us to continue to score high in this area.

• Loans Available - We looked at our available cash and decided to pay all of our debts! No Loans for this

company!

GOOD DECISIONS

• Paid off our debts!!

Business Year: 2015Design and Development

• 2nd Product Launch- New Road Bike “Adler” and, again, went for the higher price of $2,170.00.- We properly allocated funds in Advertising and Public Relations.- We gave bonuses to the stores that would be selling our new product! - Spent more on Branding.

• Equity and Dividends - Issued 10,000,00 shares. - We left our dividends as is this period.

• Maintenance - We adjusted our production for the new year.

- Increases to Efficiency and Quality .

GOOD DECISIONS

• Issued more stock to gain higher capital resources. We now had enough money to expand our producing quality in the forthcoming period.

• Launched a new Road Bike production line which was set at the right price!

• Used our money effectively on Advertising and Public Relations.

Business Year: 2016Finance

• 3 rd Product Launch- Added more Standard Capacity Units (SCU)

- Started producing a new Youth Bike “Kinder” and set price for $325.00.- We properly allocated funds in Advertising and Public Relations.- We gave bonuses to the stores that would be selling our new product!

• Maintenance - Increases in Efficiency and Quality.

BAD DECISIONS

• We launched Kinder and did not realize that the Youth Market was less competitive. In hindsight, we should have put more resources toward the Youth Market at this point of the competition.

Business Year: 2017

• Maintenance- Added more SCU (Standard Capacity Units) with plans to compete with the lead team, Dr.

Cycle. - Discussed adjusting our Efficiency but decided to keep it as is.- Adjusted our Production Plans so that we had very little idle time.- Repurchased ALL of our Equity ($5,190,000.00).- Increased our Youth Bike price to help us in the market. Now, set for $360.00.

GOOD DECISIONS

• We repurchased our Equity, which increased our stock price.

BAD DECISIONS• We increased our expense on Efficiency and Quality. We hoped this would allow us

to produce more bikes. In fact, we did not change our Production Plan so we did not produce as planned. We faced too much idle resource in our next period due to this decision.

• Final Shareholders Value

• Product Revenue

• Final Profit After Taxes

• Final Debt to Equity Ratio

• Final Market Share

$0.00

$10.00

$20.00

$30.00

$40.00

$50.00

$60.00

2012 2013 2014 2015 2016 2017

Share Holder Value

Share Holder Value

$49.53

$49.53

Dr. Cycle:$114.66

RAD Bikes:$56.24

$-

$5,000,000

$10,000,000

$15,000,000

2012 2013 2014 2015 2016 2017

Cycle City

Dr. Cycle

RAD Bikes

Cumulative Total$24,463,717

Profits After Tax

• We attempted to be modest in our decisions. Our firm was successful by placing 3 rd in the competition, but perhaps we could have beat gone further if we were more aggressive and controlled the market better.

• If we put resources towards the Youth Bike market initially, we may have made more profits since the Youth Bike market is less competitive.

• We did good in the Youth Bike market. Perhaps if we added this as our 2 nd product rather than our 3rd, we could have dominated this market better.

“Mikes Bikes seemed overwhelming at first because we felt the manual wouldn’t be enough. It wasn’t until we had our first rollover did we realize how implemental the manual would be.” – Jennifer DeWitt

“I think Mike’s Bikes is an interesting game. Knowing how to work with teammates is extremely important to success in this simulation.” – Ruohao Chen

“At first this simulation was very intimidating, but once our teamfigured it out it is a very lifelike competition with real life scenarios. Really shows you want to expect out there!” – Aimee Eldridge

“Sending emails to the team after we made decisions, helped us

recall the information easily when it was time to do our final presentation.

We also utilized Facebook chat during the simulation so that we could discuss in

real time.” - Jennifer DeWitt

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