Kootenay Bicycles Case Summary
ANGEL INVESTOR Improvements | Unresolved Issues | Negative Aspects | * Cash injection * Opportunity to expand | * Business management
(Accounting) * Human resources (Staffing) * Imitability * Production costs | * Control of firm * Restricts him as manager * Potential job loss in future | Owners Preferences
As Kootenay Bicycles does not have a mission and vision statement, the Company’s implied objectives are entrenched in the owner’s preferences and values. * Building frames is his passion, and he intends to keep bending metal into beautiful bikes and make his company a success.
* His goal is to ensure customer satisfaction as each bike is handcrafted to meet needs of its customers. Also, all frames …show more content…
and bikes are crafted with its own unique paint and artwork that show off Shackelton’s creative side.
Angel Investor
Jacqi Alnan, the angel investor gave Shackelton two options which include either selling 50% to 100% of his company, where they intend to purchase the business and then sell them when they become larger (within two to four years). He has the opportunity to declare the price for the company, and if he makes a compelling case, they would inject more cash to fund expansion. Although, there will be a considerable amount of cash inflow to pursue the expansion opportunity, if he sells 50% his company he would be restricted to staying on as manager, it does not fit his objectives since he is more interested in crafting bikes than managing his company. This is not a feasible alternative as he stands the chance of losing control of his firm and a potential job loss in the future if he sells 100% of his company and is made to sign a non-competition agreement that prevents him from working in the region for a certain period. or Angel Investor * Plan to purchase 50% to 100% of company and sell them within two to four years. * With 50% he stays as manager, or he sells 100% he may lose his job in future, and sign a non-competition agreement.
Positives
* Opportunity to name price for company * Cash inflow for expansion * Increased capacity to produce more bikes
Negatives * Lose ownership and control of firm * Conflicts with owner’s preference by restricting him to manage bikes and not produce. * Potential job loss in future
Other Business issues and problems
Adequately handling orders and tubing: The debates and changes made to bike geometry in response to customer suggestions have been time consuming.
Although this process has become faster in recent years as they can effectively make changes without compromising product quality. Another time consuming input is the cutting, handling of tubes and clamping them into jigs requires a lot of expertise.
Inspection time: Moreover, Shackelton insists on personally inspecting each bike, even the Entrée model. Bill Cullen is confident inspection is excessive because they are both experienced, and there is almost no waste/ mistakes in his welds and tubing. Moreover, he believes if the company wishes to produce more bikes, the excessive inspection process would have to be reduced and an extra staff should be added to complete the final assembly of the bikes.
Continuity: In the event of unforeseen circumstances, for example, If Shackelton dies, the business would be dissolved. Also, the business seems to be taking a toll on Bill since he has been working in the metal working industry for over 35 years. His health may be a factor to consider with regards to future operations, and he would need to hire more staff if the company …show more content…
expands.
Marketing
Furthermore, Marketing has been minimal, and the company’s website is merely informational as Shackelton believes the bikes literally sell themselves. He may have to increase marketing if he intends to gain a foothold in the specialty-goods industry.
*if we need to cut out things.. just cut out marketing and adequate handling of orders and tubing.
APPENDIX STUFF
Capabilities
Kootenay Bicycles has only two employees besides Shackelton: 1.
Bill Cullen, his right hand man and vastly experienced in metal working. He and bill are both willing to work long hours because they enjoy their job and they spend about 30-35 hours to building bikes. Usually they can only at least one bike per week. 2. Mrs. Shackelton, who is part time order taker/bookkeeper but lacks the expertise and managerial skill to manage the business, and cannot effectively create financial statements.
The company currently has three bike models; The Entrée, Dlux, and Ultra models. The material used for the entrée and Dlux offers affordable custom frame of good quality and the Ultra models are made with the best bicycle components. The bikes have extremely light tubing that supports up to 275 pounds; have wider tires than average bikes, and a unique frame geometry that is stable on slippery and unstable riding surfaces. Hence, the bikes can be driven on slippery and unstable riding surfaces.
Moreover, Kootenay Bicycles was able to sell 160 bikes in the past year with the current facility, and can build an additional 50 bikes within the next year. Nevertheless, this would not satisfy the market demand, and Bill believes they can do much more with less inspection time, and someone else handling final assembly of bikes. Also, Kootenay bicycles website is mainly informational, as he does little or no marketing since he believes the bikes sell
themselves.
Consumer Analysis
The main appeal of the Shackelton’s customers “Kroozers” is his conscientiousness. Everything from the details of manufacture, quality of tubing and customization of parts complement the physical characteristics, riding style and habits of each customer. Cam’s customers in Canada mainly buy Kroozers for commuting or winter driving. In America, Kroozers are the choice for desert racing.
Moreover, Shackelton is pleased with the feedback from his customers as they revere quality over price. Kroozer owners frequently comment that the price should be higher because the value received trumps the price paid. And since his customers are pleased, there is a steady demand all year long for his Kroozers, and are not bothered by late deliveries.
Mission vision | | Internal | Owners preferencesLose control/ownership of company. | | External
Increased Store capacity | Other Issues
Potential job loss in future
Lack of managerial skill to operate store | | Financial
Cash influx to fund expansion |
MBH
Final recommendation and reason Cam should agree to Mountain High Bikes proposition and become partners after five years. The resources and capabilities the MBH has can enable him and Bill to produce a lot more bikes, and not worry about the managerial side of the company. His product mix should include only the Ultra models, and frame sets.
If there is enough money from selling an additional 2,500 bikes within the time period, Cam should buy back the outstanding interest by activating the shotgun clause. He should continually check the financial statements to ensure they do not end up in a situation where after five years there is no money to activate the shotgun clause. Or terminate agreement before the five years with enough capital.
Pros
Accounting taken care of, increased store size,
Gain foothold in specialty bikes industry
Efficient manufacturing setting and production support that can cut direct labour by 35 to 40% as well as increase bikes produced to about 500 per year.
Disadvantage, loss of control of firm in the next few years.
Conditions
Cam could seek better terms (4 years). or he can retain control of the firm.
MBH
Reduction in labour hours for up to 35% to 40%
Balanced score card?
(Accounting) * Human resources (Staffing) * Imitability * Production costs | * Control of firm * Restricts him as manager * Potential job loss in future | Owners Preferences
As Kootenay Bicycles does not have a mission and vision statement, the Company’s implied objectives are entrenched in the owner’s preferences and values. * Building frames is his passion, and he intends to keep bending metal into beautiful bikes and make his company a success.
* His goal is to ensure customer satisfaction as each bike is handcrafted to meet needs of its customers. Also, all frames …show more content…
and bikes are crafted with its own unique paint and artwork that show off Shackelton’s creative side.
Angel Investor
Jacqi Alnan, the angel investor gave Shackelton two options which include either selling 50% to 100% of his company, where they intend to purchase the business and then sell them when they become larger (within two to four years). He has the opportunity to declare the price for the company, and if he makes a compelling case, they would inject more cash to fund expansion. Although, there will be a considerable amount of cash inflow to pursue the expansion opportunity, if he sells 50% his company he would be restricted to staying on as manager, it does not fit his objectives since he is more interested in crafting bikes than managing his company. This is not a feasible alternative as he stands the chance of losing control of his firm and a potential job loss in the future if he sells 100% of his company and is made to sign a non-competition agreement that prevents him from working in the region for a certain period. or Angel Investor * Plan to purchase 50% to 100% of company and sell them within two to four years. * With 50% he stays as manager, or he sells 100% he may lose his job in future, and sign a non-competition agreement.
Positives
* Opportunity to name price for company * Cash inflow for expansion * Increased capacity to produce more bikes
Negatives * Lose ownership and control of firm * Conflicts with owner’s preference by restricting him to manage bikes and not produce. * Potential job loss in future
Other Business issues and problems
Adequately handling orders and tubing: The debates and changes made to bike geometry in response to customer suggestions have been time consuming.
Although this process has become faster in recent years as they can effectively make changes without compromising product quality. Another time consuming input is the cutting, handling of tubes and clamping them into jigs requires a lot of expertise.
Inspection time: Moreover, Shackelton insists on personally inspecting each bike, even the Entrée model. Bill Cullen is confident inspection is excessive because they are both experienced, and there is almost no waste/ mistakes in his welds and tubing. Moreover, he believes if the company wishes to produce more bikes, the excessive inspection process would have to be reduced and an extra staff should be added to complete the final assembly of the bikes.
Continuity: In the event of unforeseen circumstances, for example, If Shackelton dies, the business would be dissolved. Also, the business seems to be taking a toll on Bill since he has been working in the metal working industry for over 35 years. His health may be a factor to consider with regards to future operations, and he would need to hire more staff if the company …show more content…
expands.
Marketing
Furthermore, Marketing has been minimal, and the company’s website is merely informational as Shackelton believes the bikes literally sell themselves. He may have to increase marketing if he intends to gain a foothold in the specialty-goods industry.
*if we need to cut out things.. just cut out marketing and adequate handling of orders and tubing.
APPENDIX STUFF
Capabilities
Kootenay Bicycles has only two employees besides Shackelton: 1.
Bill Cullen, his right hand man and vastly experienced in metal working. He and bill are both willing to work long hours because they enjoy their job and they spend about 30-35 hours to building bikes. Usually they can only at least one bike per week. 2. Mrs. Shackelton, who is part time order taker/bookkeeper but lacks the expertise and managerial skill to manage the business, and cannot effectively create financial statements.
The company currently has three bike models; The Entrée, Dlux, and Ultra models. The material used for the entrée and Dlux offers affordable custom frame of good quality and the Ultra models are made with the best bicycle components. The bikes have extremely light tubing that supports up to 275 pounds; have wider tires than average bikes, and a unique frame geometry that is stable on slippery and unstable riding surfaces. Hence, the bikes can be driven on slippery and unstable riding surfaces.
Moreover, Kootenay Bicycles was able to sell 160 bikes in the past year with the current facility, and can build an additional 50 bikes within the next year. Nevertheless, this would not satisfy the market demand, and Bill believes they can do much more with less inspection time, and someone else handling final assembly of bikes. Also, Kootenay bicycles website is mainly informational, as he does little or no marketing since he believes the bikes sell
themselves.
Consumer Analysis
The main appeal of the Shackelton’s customers “Kroozers” is his conscientiousness. Everything from the details of manufacture, quality of tubing and customization of parts complement the physical characteristics, riding style and habits of each customer. Cam’s customers in Canada mainly buy Kroozers for commuting or winter driving. In America, Kroozers are the choice for desert racing.
Moreover, Shackelton is pleased with the feedback from his customers as they revere quality over price. Kroozer owners frequently comment that the price should be higher because the value received trumps the price paid. And since his customers are pleased, there is a steady demand all year long for his Kroozers, and are not bothered by late deliveries.
Mission vision | | Internal | Owners preferencesLose control/ownership of company. | | External
Increased Store capacity | Other Issues
Potential job loss in future
Lack of managerial skill to operate store | | Financial
Cash influx to fund expansion |
MBH
Final recommendation and reason Cam should agree to Mountain High Bikes proposition and become partners after five years. The resources and capabilities the MBH has can enable him and Bill to produce a lot more bikes, and not worry about the managerial side of the company. His product mix should include only the Ultra models, and frame sets.
If there is enough money from selling an additional 2,500 bikes within the time period, Cam should buy back the outstanding interest by activating the shotgun clause. He should continually check the financial statements to ensure they do not end up in a situation where after five years there is no money to activate the shotgun clause. Or terminate agreement before the five years with enough capital.
Pros
Accounting taken care of, increased store size,
Gain foothold in specialty bikes industry
Efficient manufacturing setting and production support that can cut direct labour by 35 to 40% as well as increase bikes produced to about 500 per year.
Disadvantage, loss of control of firm in the next few years.
Conditions
Cam could seek better terms (4 years). or he can retain control of the firm.
MBH
Reduction in labour hours for up to 35% to 40%
Balanced score card?