mikesbikespresentationfinal-1224174999577598-9
TRANSCRIPT
Executive Board
Mission Statement
SWOT
Competitors
Financials
Products
Actions
CSR
Future
Mgmt 492 – Professor Shanthi Gopalakrishnan – Mikes Bikes Final Presentation
Executive Board
Mission Statement
SWOT
Competitors
Financials
Products
Actions
CSR
Future
Executive Board
Executive Board
Mission Statement
SWOT
Competitors
Financials
Products
Actions
CSR
Future
Twisters’ bikes are built for riders, by riders, and we have been doing it better than anyone since 2004. We understand the need for new technology and how to best design our bikes to our customers satisfaction because we know the customer is the most important part of our business. Our new Quencher bike was built ready to take any degree of abuse you can generate on a daily use, but it is also built tough so that it will last a lifetime. At Twister we take building bikes seriously with our dedication to you, the customer, but also to your communities, the environment and our stakeholders. We are a company of great ethics and standards in which we feel the customers comes first. Quality and customers service are our #1 policy. From leisure bikes to mountain bikes, to jump and trail bikes and more, every Twister bike is tough, fast and fun to ride. Come see what more than six years of building the best bikes can do to your ride. Thank you for being a proud and loyal customer of Twister.
Executive Board
Executive Board
Mission Statement
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"Twisters mission is to serve low-to-middle income families the opportunity to own affordable bicycles. We hope to have our growth limited by only our imaginations and to have the ability to develop a technically competitive product that suits the customers design needs. We seek to provide low cost items in high quantities to rapidly expanding and growing low-to-middle income segments. Twister seeks to provide our product on-time, on-quality, and on-cost. To meet our customer's needs we strive to continue to keep our production costs down thus enabling us to return those savings to them. We hope to meet our employee's needs by creating a small community of employees in which to conduct business where hopefully we can make an environment of admiration, trust, and dignity which employees will feel embraced by. We will do our best to continue to train employees and sell a high enough volume of products to help keep as many jobs available as possible. Twister hopes that we can create strong relations with our distribution and supplier partners. This can ultimately aid us in getting our products into more stores. By creating better relations, we also hope to reduce operating costs, allowing us to then return the cost-savings back to our consumers. In addition, we hope to be able to aid the community by supporting others businesses through supplier relations and being sure to operate in a manner that continues to support the citizens and environment in which we work."
Mission Statement
Executive Board
Mission Statement
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Competitors
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Future
Social Responsibility• Employee Volunteerism
– Our employees volunteer in many different national and local groups.
• Partners and Partnerships– United Way, America’s Second Harvest, and
HOSTS Learning – “Help One Student to Succeed.”
• Cash and Product Donations– In 2010, we contributed more than $1 million in
cash and $5 million in product to various charitable organizations around the world.
CSR
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Environment• Proper maintenance of plant and
equipment.• Safety Plan• Protecting global and local eco-
systems.– Emissions, Kyoto Protocol
CSR
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CORPORATE• We are firmly committed to the fair and equitable treatment of
all our employees and job applicants.• Customers and consumers expect more from Twister and it is
every employee’s job to make sure Twister meets their expectations.
• Investors count on Twister to deliver on its commitments, provide accurate information about its affiliates and to make responsible business decisions based on reliable records.
• Twister believes in doing business with suppliers, contractors, joint venture partners, agents, sales representatives, distributors and consultants who embrace and demonstrate high standards of ethical behavior.
• We actively seek opportunities to contribute to the communities in which we do business, and to improve the environment that sustains us all.
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CORPORATE• Employee safety is a value at Twister. We are
committed to providing a safe and healthy work environment and preventing accidents.
• Employees are accountable for observing the safety and health rules and practices that apply to their jobs.
• They are expected to take precautions necessary to protect themselves and their co-workers, including immediately reporting accidents, injuries and unsafe practices or conditions.
• Employees also are expected to report to work free from the influence of any substances that could prevent or impair them from performing their jobs safely
CSR
Executive Board
Mission Statement
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• Adventure– Adv3Proj
• Kids– Lil’ Tykes
• Leisure– Quencher
• Commuter– Gatorade
Products
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Financials
Products
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Future
Products
Executive Board
Mission Statement
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Products
• Profit per bike – 2003: $1134– 2004: $1501– 2005: $1454– 2006: $1545– 2007: $1560– 2008: $907
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Products
• Technical Specs– Specialized A1 Premium Aluminum comfort frame
with smooth-welded finish– Specialized ultra-smooth coil suspension seat post– Specialized fully adjustable Ahead-style stem and
anatomic 80mm-rise alloy handlebars – Shimano Deore 24 speed drive train with Shimano
Alivio Rapidfire shifting– Specialized Hemisphere tires with Armadillo
puncture prevention technology– Specialized A1 Premium Aluminum comfort frame
with smooth-welded finish– Specialized ultra-smooth coil suspension seat post– Colors: Black, Blue, Green, Yellow
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Products Speedy
Firm 1
Cynical
Firm 6
Twister
Extreme
Market Share
Executive Board
Mission Statement
SWOT
Competitors
Financials
Products
Actions
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Future
Products
Executive Board
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Products
• Profit per bike – 2006: -$291– 2007: -$234– 2008: $250– 2009: $290
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Technical Specs– Specialized A1 Premium Aluminum comfort
frame with smooth-welded finish– Padded covering for frame – Specialized ultra-smooth coil suspension
seat post– 16 White or Black tire– Specialized Premium Aluminum comfort
frame with smooth-welded finish– Specialized ultra-smooth coil suspension
seat post– Colors: Pink, Blue, Green, Red, White,
Yellow
Executive Board
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Products Speedy
Firm 1
Cynical
Firm 6
Twister
Extreme
Market Share
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Mission Statement
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Products
Executive Board
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• Profit per bike – 2007: $294– 2008: $97
• Technical specs– 21-speed road bike features a lightweight
aluminum 22.5-inch frame – Alloy calipers and ally brake levers – High-profile alloy Vitesse racing rims – Shimano derailleur and Shimano Revo
shifts makes it easy to change gears quickly and smoothly
– High-performance 700c tires are up to the challenge of rigorous street racing
– Color: Can be customizable with any color
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ProductsSpeedy
Firm 1
Cynical
Firm 6
Twister
Extreme
Speedy's Bikes
Market Share
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Products
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• Profit per bike – 2010: $240
Description/picture• Technical specs
– 21-speed road bike features a lightweight aluminum 22.5-inch frame
– Alloy calipers and ally brake levers – High-profile alloy Vitesse racing rims – Shimano derailleur and Shimano Revo shifts makes
it easy to change gears quickly and smoothly – High-performance 700c tires are up to the challenge
of rigorous street racing – Color: Can be customizable with any color
Products
Executive Board
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ProductsSpeedy
Firm A
Cynical
Firm B
Twister
Market Share
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Bike Type Estimated Market Size
Rec. prime cost
Our Prime Cost
Market Product Specs (S/T)
Our last product specs
Kids 320,000 $62 $55.90 79/11 72/14
Racer 28,000 $431 N/A 23/90 N/A
Commuters 150,000 $56 $44.49 28/11 27/11
Leisure 160,000 $60 $47.62 53/11 52/11
Adventurers 170,000 $315 $275.00 61/65 50/60
Products
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Competitors
Market share
.5%
Share Price
$0.85
Sales Revenue
$1,594,692
Profit After Tax
14,999
Competes in:
Commuter
Firm 1
Speedy
Twister
Cynical
Extreme Rider
Firm 6
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Competitors
Market share
.7%
Share Price
$1.44
Sales Revenue
$2,382,435
Profit After Tax
($2,021,283)
Competes in:
Kids
Leisure
Adventure
Market share
9.1%
Share Price
$4.09
Sales Revenue
$29,193,631
Profit After Tax
$4,573,198
Competes in:
Kids
Racers
Leisure
Adventure
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Competitors
Market share
29.6%
Share Price
$54.98
Sales Revenue
$94,600,862
Profit After Tax
$11,635,633
Competes in:
Kids
Commuters
Leisure
Adventure
Market share
12.3%
Share Price
$18.42
Sales Revenue
$48,324,587
Profit After Tax
$5,679,129
Competes in:
Kids
Racers
Commuters
Leisure
Adventure
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Competitors
Market share
47.9%
Share Price
$151.11
Sales Revenue
$150,409,566
Profit After Tax
$43,462,313
Competes in:
Kids
Racers
Commuters
Leisure
Adventure
Executive Board
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• Product development –– We’ve hit the target market 100% on 4 out of the 5 bikes we’ve
developed and hope to continue to hit this mark on our future product developments.
• In keeping good relations with our suppliers we’ve managed to get our raw materials stocking to below 4% of our manufacturing capacity (down from 8% two years ago).
– Through continuing to increase our relations with our suppliers, we seek to make this percentage even more minimal in the future.
• Twister has successfully been working on creating a strong brand image. This has enabled us to rebound and be back on our way to profitability in the last two years.
• Breakdowns have dropped to .4% from 9.7% and 13.5% two and three years earlier.
– This is from an increase in spending on preventative maintenance.
SWOT
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• We tried to expand too quickly in the beginning
• We were overspending on advertising in the beginning. This resulted in our team not receiving a proper return on our investment for each year which led us into bankruptcy.
• We’re in far fewer markets then any of our competitors
• Our awareness and PR are not meeting the standards of the bike market we are competing in.
• We have a significantly large (67.8%) idle time
• Low capital
SWOT
Executive Board
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• Expand our operations abroad • Since we currently only offer one bicycle,
there’s the opportunity available to Twister to venture into other bicycle categories such as racer bicycle.
• There’s the opportunity to move beyond bicycles and offer skateboards, scooters, and rollerblades.
• New outlets of advertising available can enable us to reach a larger target market and with the internet we can reach a larger audience at lower costs.
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• We have an extremely small market share compared to most of our other competitors and it may be hard to find a way to compete with companies such as Cynical Cycles.
• There’s competitors in every market already, so seeking expansion and attempting to gain a foot in a new market is proving hard.
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Advertising Expense
$665,000
$165,000
$400,000
$0
$100,000
$200,000
$300,000
$400,000
$500,000
$600,000
$700,000
Adv3 Lil Tykes QuencherProduct name
Exp
end
itu
re
Financials
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PR Expenditure
$575,000
$25,000$0
$0
$100,000
$200,000
$300,000
$400,000
$500,000
$600,000
$700,000
Adv3 Lil Tykes QuencherProduct Type
Exp
end
itu
re
Financials
Executive Board
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• Adv3 and Quencher were approx. capturing the market: Huge Price – Adv3 - $2,025; Quencher - $375
• Lil’ Tykes was re-designed - $350• With failure of selling enough products,
net income drastically fell : – NI = ($3,704,021)
• Enough money was spent on Adv3 and Quencher, thus branding a product which was drifting away from demand
Financials
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($3,704,021)
$2,819,030
($2,030,633)
$4,849,663
($5,000,000)
($4,000,000)
($3,000,000)
($2,000,000)
($1,000,000)
$0
$1,000,000
$2,000,000
$3,000,000
$4,000,000
$5,000,000
$6,000,000
Net Income Total Assets Total Equity Total Liabilities
Balance Sheet Specs
Val
ue
Financials
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Financials
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Future
$7,505,849
$5,482,550
$2,023,299
($3,704,021)
($6,000,000)
($4,000,000)
($2,000,000)
$0
$2,000,000
$4,000,000
$6,000,000
$8,000,000
$10,000,000
Sales Revenue Cost of Goods Sold Gross Margin Net Income
Income Statement Specs
Val
ue
Financials
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• Beginning Cash Flow = $1,990,171• Net Cash Change = ($5,439,834)• Ending Cash Balance =
($3,449,663)• Financing Activities:• Cash disbursement
– Interest paid on Debt - $112,000– Interest on Overdraft - $76,087
Financials
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Income Statement Specs
($5,301,747)
$0
($138,087)
($6,000,000)
($5,000,000)
($4,000,000)
($3,000,000)
($2,000,000)
($1,000,000)
$0
Operating Cashflows Investment Cash Flows Financing Cash Flows
Cash Flows
Val
ue
Financials
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• Adv3 and Quencher were far away from capturing the market: Prices were dropped
• Adv3 - $1,450; Quencher - $375• Advertising expenses were dropped• Not much emphasis were made on
advertisement and branding • Price was the key issue (raised) - $360
Financials
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Advertising Expense
$175,000 $165,000
$400,000
$0
$50,000
$100,000
$150,000
$200,000
$250,000
$300,000
$350,000
$400,000
$450,000
Adv3 Lil Tykes QuencherProduct Name
Exp
end
itu
re
Financials
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PR Expenditure
$135,000
$25,000
$0$0
$20,000
$40,000
$60,000
$80,000
$100,000
$120,000
$140,000
$160,000
Adv3 Lil Tykes QuencherProduct Name
Exp
end
itu
re
Financials
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Balance Sheet
($11,317,504)
$6,596,620
($13,348,137)
$19,944,758
($20,000,000)
($15,000,000)
($10,000,000)
($5,000,000)
$0
$5,000,000
$10,000,000
$15,000,000
$20,000,000
$25,000,000
Net Income Total Assets Total Equity Total Liabilities
Balance Sheet Specs
Val
ue
Financials
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$2,882,075$1,957,344
$924,731
($11,317,504)
($14,000,000)
($12,000,000)
($10,000,000)
($8,000,000)
($6,000,000)
($4,000,000)
($2,000,000)
$0
$2,000,000
$4,000,000
Sales Revenue Cost of GoodsSold
Gross Margin Net Income
Income Statement Specs
Val
ue
Financials
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• Decisions made were not effective• NI went further down from ($3,704,021)
to ($11,317,504)• Sales revenue drastically fell from
$7,505,849 to only $2,882,075 • Cost of good sold decreased, which
showed some hope in the process ($1,957,344)
• Similar product line and no reduction of cost in Quencher overcame the advantages of the kids bike
Financials
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($10,698,063)
$0
($4,397,031)
($12,000,000)
($10,000,000)
($8,000,000)
($6,000,000)
($4,000,000)
($2,000,000)
$0
Operating Cashflows Investment Cash Flows Financing Cash Flows
Cash Flows
Va
lue
Financials
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• Similar product line with new tech specs with Lil’ Tykes and no reduction in branding of other two – increased operating cash outflow– from $5,301,747 to $10,698,063
• No investment was made to boost the cash inflows
• Interest on long term debt increased to $551,302; Interest on Overdraft = $3,845,711 from $76,087
• Ending Cash Flow = ($18,544,758) from ($3,449,663)
Financials
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• Cash Flow Injection of $22mi• Strategies Chosen:
– Lil Tykes: Price reduced - $290– Adv3 and Quencher were abandoned
• Single Product – Advertisement/PR Expenditure was reduced
• No new Bikes were produced – Inventory was cleared out
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• Plant space was reduced• Employee strength was reduced
accordingly• Idle time had to be controlled• Debt was repaid which affected
the reduction in cash outflows in interest payments
• Company’s leveraging pressure was relieved
Financials
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($4,225,053)
$4,396,809 $4,396,809
$0
($5,000,000)
($4,000,000)
($3,000,000)
($2,000,000)
($1,000,000)
$0
$1,000,000
$2,000,000
$3,000,000
$4,000,000
$5,000,000
Net Income Total Assets Total Equity Total Liabilities
Balance Sheet Specs
Val
ue
Financials
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• Liabilities were taken to $0 which increased NI from ($11,317,504) to ($4,255,053)
• Sales Revenue was not a big figure as their was single product sold, and that too at a reduced price - $182,247
• Cost of good sold went further down - $115,470 from $1,957,344
Financials
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$182,247 $115,470 $66,777
($4,225,053)($4,500,000)
($4,000,000)
($3,500,000)
($3,000,000)
($2,500,000)
($2,000,000)
($1,500,000)
($1,000,000)
($500,000)
$0
$500,000
Sales Revenue Cost of Goods Sold Gross Margin Net Income
Income Statement Spec
Va
lue
Financials
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• Single Product in demand: Drastically reduced operating out cash flows
• Injection of money gave cash inflow of investment
• The debt was repaid
• Ending Cash Balance turned positive– $1,750,628 from ($18,544,758)
Financials
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($1,726,656)
$2,813,710
$19,208,331
($5,000,000)
$0
$5,000,000
$10,000,000
$15,000,000
$20,000,000
$25,000,000
Operating Cashflows Investment Cash Flows Financing Cash Flows
Cash Flows
Val
ue
Financials
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• Financial Injection and Lil Tykes helped Twister come out of low figures of NI
• Now, Twister abandoned the kids bike and went to a competitive commuter bike
• Using the money made, Gatorade was launched– Price - $296– PR Expenditure - $0; – Advertising Expenditure - $15,000
(further reduced)
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• Plant size was further reduced to deduct the idle time
• Margins made by the distributors were further controlled
• Emphasis were made on sport and department stores where sales are huge
• Gatorade had the app. Tech specs of market
Financials
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$14,999
$5,581,798 $5,581,798
$0$0
$1,000,000
$2,000,000
$3,000,000
$4,000,000
$5,000,000
$6,000,000
Net Income Total Assets Total Equity Total Liabilitiesbalance Sheet Specs
Val
ue
Financials
Executive Board
Mission Statement
SWOT
Competitors
Financials
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Future
$1,594,692
$497,919
$1,096,772
$14,999$0
$200,000
$400,000
$600,000
$800,000
$1,000,000
$1,200,000
$1,400,000
$1,600,000
$1,800,000
Sales Revenue Cost of GoodsSold
Gross Margin Net Income
Income Statement Specs
Val
ue
Financials
Executive Board
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Financials
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Future
$782,472
$1,738,694
$1,241,914
$0
$200,000
$400,000
$600,000
$800,000
$1,000,000
$1,200,000
$1,400,000
$1,600,000
$1,800,000
$2,000,000
Operating Cashflows Investment Cash Flows Financing Cash FlowsCash Flows
Va
lue
s
Financials
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• Commuter bike’s price didn’t allow to make much revenue - $1,594,692
• However, operating cash flows and investment cash are positive
• NI is looking positive and correct strategies will allow it to prosper further
• Competitor watch is necessary, especially with the prices
Financials
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Financials
-1.31
-1.72
-0.97
0.0027
-1.8-1.6-1.4-1.2
-1-0.8-0.6-0.4-0.2
00.2
2007 2008 2009 2010
Return On Assets
Executive Board
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Financials
-1.82
-0.0038
-0.85
0.347
-0.97
0.465
0.0027
0.294
-2
-1.5
-1
-0.5
0
0.5
2007 2008 2009 2010
Return on Equity
Twister
Firm 1
Executive Board
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Future
100
0
100
0.16 0 0.23 0 0.140
10
20
30
40
50
60
70
80
90
100
2007 2008 2009 2010
Financials
Executive Board
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Share Holder Value
0.14 0.161.25 1.02
7.78
10.86
18.2919.89
0
5
10
15
20
25
1 2 3 4
Year (2004 - 2007)
Sh
are
Ho
lde
r V
alu
e
Financials
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• Significantly cut both work force and plant size to reduce operating costs and attempt to fix idle time (turnaround strategy)
• Liquidated overstock of kids bikes.
• Over the years we’ve exited all bike categories and recently entered the commuter market (retrenchment)
• Began decreasing overspending on advertising
• Increase number of bikes inspected
• Paid off all of our debt (increase stock price)
Actions
•Process
•Reduce idle time
•Product
•Improve quality of product and manufacturing to cut down on warranties and breakdowns.
•Profit
•Focus on creating higher products with better service
•Walk away from unprofitable businesses
•Partners
•Increase stock price
Executive Board
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In being back on track to profitability, Twistersfuture growth strategies are clear and strong. As an organization we seek to • start building our brand back up by re-
launching bike lines we had to liquidate, in addition to spreading out into the racer bike segment.
• expand our warehouse size, first back to the operating size we possessed years earlier, and then possibly seeking to go even larger to support the new ventures we are hoping to get into.
• Re-hire a significant portion of our workers
Future
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• For the short term, in order to pay off of our injection loan, we strive to focus on steadily gaining in the market over the next few years and getting back on our feet by attracting customers through brand loyalty and quality bikes. By growing in new, untapped markets we also hope to be able to increase our profits exponentially over the next couple of years. As a result of our past issues with production and debt we lost a lot of relationships with our distributors. By working out our relations and making our products available in more stores we hope to increase our profitability as well as get our name out there.
Future
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• In addition to bicycles, we hope to be able to offer a wider variety of accessories and products. These items would include: – Company shirts, bicycle gloves, and riding apparel. – Bicycle helmets – Indoor bicycles intended for use by consumers to
either get indoor exercise or to cross-train in the off-season.
– Our own line of bike care products such as lubes cleaners, tire pumps and bike covers.
– Bike accessories such as bicycle locks for added security and reflector lights for consumer safety.
Future
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• Launch an interactive website for consumers to use. – provide the consumer with information
on Twister’s product information– create the “ultimate cycle experience”.
• Our online website will consist of an area where consumers can read about and keep up on the latest information in the bicycle industry from new companies to sporting events taking place.
• Create a social network for bicycle enthusiasts where they can have an open forum to chat with other cycling fans.
Future
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• Over the next several years, Twister hopes to implement a new ERP system. Implementing an ERP system will help our company to unify our business processes, lower costs so we can provide a better return to our investors, and improve relations and delivery time with our suppliers.
• Twister is looking to expand into foreign markets. At first we will venture in China and India as these areas have large populations and will offer us a significant growth opportunity. If our initial venture into overseas markets proves to be profitable, we may seek to expand our operations abroad in order to enable us to keep costs low and profits higher. Future
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• Expand beyond bicycles into other areas of transportation. – Scooters
• rising in popularity over the last few decades and we’d feel it would align well with our company’s strategy.
– Rollerblades– Skateboards. Future
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• After acquiring a bit more capital, Twister seeks to offer the options of creating customizable bikes to our consumers.
• Seek to partner with companies in the creation of themed bicycles. For example:– Partner with Disney to create a
children’s bicycle– Partner with Dave Mirra to
create a racer bikeFuture
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• Major Initiatives– Cost Reduction
• Value engineering• Globalization• In our products and our process
– Rebuild and Recharge workers
• Financial Initiatives– Improve profitability– Drive improved liquidity– Enhance financial controls– Raise more capital
Future
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FutureFuture
• Improve Liquidity– Working Capital reduction– Top line growth– Asset sales– Other cash sources
• Get Control over core flow– Offer new incentives– Engage the customer– Build relationships
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• Going Forward– Deliver cost savings– Efficiency gains– Provide a safer work environment
• Why now?– The environment is right– Management team is coming
together– Changes in technology are making
cost reduction opportunities hugeFuture
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Future