The Market Opportunity

You are about to start a new company that will be entering a new segment of the bicycle industry.
Your company will license the technology to build carbon fiber bikes using 3D printing and a new
economical form of carbon fiber. With this new technology, it will be possible to make bicycle parts
anywhere in the world with carbon fiber, a material that is stronger, lighter, and now less expensive
than the light metals. You should lead your executive team to develop this market opportunity.

A New Kind of Bike Shop

Normally, bicycle stores will have 50 to 100 bicycles on display in order to have a male and female
version of each brand/model in at least 3 sizes. With 3D printing, you will need only one copy of each
model for sale. A much smaller outlet will actually be less crowded. You will be able to use the open
space to your advantage to give customers personal attention for fitting the bike to their exact size
requirements.

A New Kind of Production

3D printing will revolutionize production in the bicycle industry. Each bike will be made to the size,
shape, and performance requirements of each customer. From a cost point of view, 3D printing will
eliminate most of the normal inventory in bike stores, at the production facility, and in various
distribution centers spread around the world.

It will also avoid many of the problems with building bikes to forecasted demand. Sadly, forecasts
are notoriously wrong. If you produce bikes to a forecast, you are likely to have too much or too little
inventory of any bike or it is in the wrong place. And, a bike can become obsolete if it sits too long in
storage. A lot of money can be tied up in inventory and storage; all of it will be eliminated by printing
bikes based upon demand.

A particularly attractive aspect of 3D printers is that they represent modular production capacities.
They can be positioned in regional production facilities that are close to the points of demand,
yielding quick response times and lower shipping costs. The 3D printers can also be moved between
production facilities, pulling them from markets with lower-than-anticipated demand and
transferring them to markets with greater-than-expected demand.
All of these features are collectively called responsive, distributed manufacturing, a new kind of
production that shows a lot of promise.

A New Price Point

Perhaps the best part of this innovation is how it will affect the pricing of a carbon fiber bike. Current
carbon fiber bikes are very expensive. The 3D manufacturing process and new carbon fiber will cut
costs substantially, allowing the new bikes to be priced well below the other carbon fiber bikes on
the market. The price range of the new bikes will actually be low enough to compete with higher-
end, metal bikes.

The Target Market

3D-printed, carbon fiber bikes will appeal to the higher end of the conventional bike market. This
subset of customers is more affluent than the typical bike purchaser. They cannot afford the current
high-end carbon fiber bikes, but have coveted them for a long time. Your business will give them the
opportunity to own an elite bike at a price that is affordable, although just barely. The status and
pleasure of riding a carbon fiber bike is more than enough to push even economically-minded
customers to dig deep into their pocketbooks to own one of these bikes. You must determine the
profitability of this niche. If you are able to lower prices and/or add more value, perhaps more bike
riders will switch as well.

Consumer and Business Advantages

The consumer advantages to a 3D-printed, carbon fiber bike will be impressive:

 The bike will be far lighter than a metal bike and, therefore, much easier to pedal;

 The ride will be more comfortable because carbon fiber dampens vibrations from rough
surfaces;

 Riders will experience less fatigue and more comfort because the 3D-printed bike frame will
be custom-built to their gender, size, shape, weight, and performance requirements;

 Riders will feel more energized (they will be working less and be more comfortable);

 The bikes will be much more affordable than currently available carbon fiber bikes; and

 More people will get to ride the latest, greatest, best-looking, carbon fiber bike that only
the most committed, elite riders could justify buying until today.

The business advantages to 3D printing will be just as impressive:

 Production will be streamlined because less equipment and no inventory storage are
required, even an inexpensive warehouse can be a fabrication site;

 Labor costs will be much lower because the 3D printer will create one carbon fiber bike
frame per hour, a task that previously took long hours and involved highly skilled workers;

 Material costs will be much lower because the new carbon fiber is created from a low-cost
polyester that is used in common athletic socks;

 There will be no need for inventory because the bicycles will be custom-built as orders are
received at the bike shop;
  Debt and equity requirements will be far less because there will be no money tied up in
inventory at the production facility, in distribution centers, or in the stores;

 A bicycle shop will be smaller, less expensive, and yet more esthetically pleasing; and

 Consumers will be able to quickly get the perfect bike, resulting in fewer lost sales (more
revenue).

New Company

You will be a totally integrated company that does it all from marketing to production to human
resource management. You will have limited financial resources and complete accounting
responsibility.

As the executive team, you will provide the seed capital (investment money) needed to start your
business up. You can use this money to build a production facility, open sales outlets, and design
brands. You will invest 1,000,000 in each of the first four quarters. An additional 4,000,000 will
become available in quarter 5 from venture capitalists, for a total of 8,000,000.

Your executive team has the next two years (eight quarters or decision periods) to get this company
off the ground. Within this time frame, your firm should become self-sufficient and earn substantial
profits from your operations.

Measuring Success

A balanced scorecard will be used to measure your firm's performance and to compare your results
with those of your competitors. The firm's total business performance will be based upon financial
performance, marketing effectiveness, market performance, investment in the firm's future,
reputation, human resource management, manufacturing productivity, asset management, financial
risk, and creation of wealth.
Your goal is to be the best competitor in the marketplace.

Markets

Your company will be introducing a new line of carbon fiber bicycles into selected markets in North
America (NORAM), Latin America (LATAM), Europe (EUROPE), the Middle-East/Africa region (MEA),
and the Asia/Pacific region (APAC).

The map is divided into 5 regions: North America (abbreviated NORAM); Latin and South America
(LATAM); Europe; the Middle East and Africa (MEA); and Asia and the Pacific (APAC). NORAM's cities
are New York, Toronto, Portland, and Mexico City. LATAM's cities are Bogota, Rio de Janeiro, Buenos
Aires, and Santiago. Europe's cities are Amsterdam, Nantes, Warsaw, and Seville. MEA's cities are
Konya, Marrakech, Johannesburg, and Nairobi. APAC's cities are Bangalore, Hangzhou, Tokyo, and
Melbourne.

Twenty geographic markets have been selected as potential sites for test marketing, four in each
region. Each city represents a different market opportunity. The mix of customers will vary across
each of them, with different price points and potential demand. There are also important cultural
and economic differences that may require different strategies in each region, even by city within a
region. The two common elements among all of these markets are that there are many bicycle riders
in each community and there is a strong interest in promoting bike riding in the area.

Keep in mind that the trading area for a traditional bike store is small, perhaps three miles or five
kilometers across. If you draw a circle with a 1.5-mile or 2.5-kilometer radius around your store, you
will realize just how small your position in the market will be. To serve the whole market within a
city, and certainly within a region, many more bike outlets might be needed.

However, this product line and price point will be able to draw from a much larger trading area,
perhaps two or three times the normal size. Ideally, your sales outlet will attract customers from the
entire metropolitan area.

No one knows how successful this marketing approach will be. Therefore, one of your goals is to
discover if the new bikes will be able to attract enough buyers to make this business profitable,
perhaps very profitable.

The current state of the carbon fiber bicycle market

 The carbon fiber bicycle market is a niche segment of the bicycle industry. Almost all carbon
fiber bikes are very expensive. As a result, sales have been limited to high performance road
and mountain bikes by elite users. Many other riders would love to have the benefits of a
carbon fiber bike, but they have been too expensive to purchase. With the introduction of
moderately priced carbon fiber bikes, all of this could change. If things unfold as expected,
this business could actually be in the introductory stage of the product life cycle.

 Other firms will be entering the market at the same time that you are. In fact, the whole
bicycle industry is interested in 3D printing. Each firm will be testing the market for these
new carbon fiber bikes.

 You will be selling through company-owned sales outlets. You will not be selling through
third-party bike stores at this time. There are too many unanswered questions and it would
be best to retain complete control of this test market. Plus, you may discover that this new
distribution channel will be viable and worthy of expanding.

 All competitors, including your own company, will start with exactly the same resources and
knowledge of the market.

 Your marketing strategy will be tightly focused on direct sales to bicycle users via company-
owned sales outlets.

 During this evaluation phase, you can ignore mainstream bikes. Relatively speaking, your
market visibility and demand will be small. You will take away some business from
traditional bike stores, but you will only have one bike store in any metropolitan market, so
your impact will be small.

 The existing carbon fiber bike producers are also not a problem. If the new 3D printing
process and your marketing program are successful, you will take over this segment of the
market. You are actually a threat to them. It is possible that most consumers will eventually
switch to these new bikes once you determine what consumers want and are willing to pay
for.

Market Segments Among Bicycle Buyers

The bicycle market can be divided into five major market segments - Youth, Work, Recreation,
Mountain, and Speed. Each segment has its own set of needs and wants. Each one also has a price
point where they are willing to consider a purchase, should you be able to satisfy their needs and
wants.

These five segments are portrayed in the accompanying graph. The circles are positioned to indicate
the price and performance requirements of each segment. The size of the segment is portrayed by
the size of the circle.

The Youth segment is focused on recreation and safety. Children are looking for a bike that is fun to
ride, while their parents want a bike that is safe to ride.

The Work segment is looking for practicality above all else. These consumers primarily use a bike to
go to and from work. This segment feels good when they can save money and the environment by
riding a bike, and they like the exercise.

The Recreation segment is looking for fun and a little exercise. These consumers are very sociable
and enjoy biking with friends and family on relatively short excursions. Comfort and ease of handling
are very important.

The Mountain segment wants a bike that can be taken on off-road trails. Consumers in this segment
use a bicycle for sport.

The Speed segment is focused on speed, as the name suggests. It is looking for the lightest, fastest,
most aerodynamic bike on the market.

Quarter 1: Organize the firm

 Name the company.

 Receive 1,000,000 investment from executive team.

 Assign corporate responsibilities to the team.

 Establish personal goals and team norms.

 Contract for a market survey.

Quarter 2: Set up shop

 Receive 1,000,000 investment from executive team.

 Analyze the market survey.

 Establish corporate goals and overall business strategy.

 Choose your primary and secondary target segments.

 Design at least one brand for each target segment.

 Schedule the opening of the first bike shop.

 Decide whether or not to open a web sales center.

 Setup a production facility.

Quarter 3: Go to test market

 Receive 1,000,000 investment from executive team.

 Hire production workers and sales and service personnel.

 Establish employee compensation packages.

 Establish brand price and priority.

 Design an advertising campaign.

 Schedule production.

 Purchase market research.

 Schedule the opening of a new sales outlet.

 Prepare pro forma financial projections.

Quarter 4: Skillfully adjust strategy

 Receive 1,000,000 investment from executive team.

 Review the market, financial and production data from the test market.

 Adjust the firm's strategy and tactics (brand design, pricing, advertising, sales and service
personnel, compensation packages, production) as needed.

 Build your Internet marketing campaign.

 Schedule the opening of a new sales outlet if you choose.

 Improve reliability of your brands by implementing a quality control program.

 Start a program to systematically improve conditions for employees and community

 Prepare pro forma financial projections.

Quarter 5: Invest in the future

 Prepare a business plan and seek investment from venture capitalists of up to 4,000,000.

 Invest in research and development in order to introduce new brand features to the market.

 Increase employee satisfaction (and productivity) by adjusting their compensation packages

and working conditions.

 Substantially expand market coverage by adding new sales outlets.

 Expand fixed production capacity.

 Take next step in quality control program.

 Adjust the firm's strategy and tactics (brand design, pricing, advertising, sales and service
personnel, internet marketing, sales productivity, compensation, production) as needed.

 Prepare pro forma financial projections.

Quarter 6: Expand the market offering

 Study the market, financial, and production data to determine how to better meet customer
needs, motivate employees, improve production economies, add to the bottom line, and
surpass the competition.

 Expand your assortment of brands by introducing the new features developed by your
research and development (R&D) department.

 Continue with market expansion by investing in advertising, employees, new sales outlets,
production capacity, and community.

 Explore licensing opportunities and the development of strategic alliances.

 Start investing in actions to improve the reliability of your production process.

Quarter 7 and on: Refine the business strategy

 Study the market, HR, financial, and production data to determine how to better meet
customer and employee needs and surpass the competition.

 Adjust the firm's strategy and tactics as needed.

This represents the whole of the world you will compete in. From this point forward, you will receive
information as you need it. You will also be given an ever-expanding set of decisions to make. The
sequence follows the way in which an entrepreneurial firm develops a new market in the real world.

Quarter 1: Organize the firm

 Name the company.

 Receive 1,000,000 investment from executive team.

 Assign corporate responsibilities to the team.

  Establish personal goals and team norms.

 Contract for a market survey.

Quarter 2: Set up shop

 Receive 1,000,000 investment from executive team.

 Analyze the market survey.

 Establish corporate goals and overall business strategy.

 Choose your primary and secondary target segments.

 Design at least one brand for each target segment.

 Schedule the opening of the first bike shop.

 Decide whether or not to open a web sales center.

 Setup a production facility.

Quarter 3: Go to test market

 Receive 1,000,000 investment from executive team.

 Hire production workers and sales and service personnel.

 Establish employee compensation packages.

 Establish brand price and priority.

 Design an advertising campaign.

 Schedule production.

 Purchase market research.

 Schedule the opening of a new sales outlet.

  Prepare pro forma financial projections.

Quarter 4: Skillfully adjust strategy

 Receive 1,000,000 investment from executive team.

 Review the market, financial and production data from the test market.

 Adjust the firm's strategy and tactics (brand design, pricing, advertising, sales and service
personnel, compensation packages, production) as needed.

 Build your Internet marketing campaign.

 Schedule the opening of a new sales outlet if you choose.

 Improve reliability of your brands by implementing a quality control program.

 Start a program to systematically improve conditions for employees and community

 Prepare pro forma financial projections.

Quarter 5: Invest in the future

 Prepare a business plan and seek investment from venture capitalists of up to 4,000,000.

 Invest in research and development in order to introduce new brand features to the market.

 Increase employee satisfaction (and productivity) by adjusting their compensation packages

and working conditions.

 Substantially expand market coverage by adding new sales outlets.

 Expand fixed production capacity.

 Take next step in quality control program.

 Adjust the firm's strategy and tactics (brand design, pricing, advertising, sales and service
personnel, internet marketing, sales productivity, compensation, production) as needed.

 Prepare pro forma financial projections.

Quarter 6: Expand the market offering

 Study the market, financial, and production data to determine how to better meet customer
needs, motivate employees, improve production economies, add to the bottom line, and
surpass the competition.

 Expand your assortment of brands by introducing the new features developed by your
research and development (R&D) department.

 Continue with market expansion by investing in advertising, employees, new sales outlets,
production capacity, and community.

 Explore licensing opportunities and the development of strategic alliances.

 Start investing in actions to improve the reliability of your production process.

Quarter 7 and on: Refine the business strategy

 Study the market, HR, financial, and production data to determine how to better meet
customer and employee needs and surpass the competition.

 Adjust the firm's strategy and tactics as needed.

This represents the whole of the world you will compete in. From this point forward, you will receive
information as you need it. You will also be given an ever-expanding set of decisions to make. The
sequence follows the way in which an entrepreneurial firm develops a new market in the real world.

Now that you have a feeling for the business in which you will compete, take a brief look at what is
in store for you in the current quarter and in the near future.

In Quarter 1, the goal is to set up your company. These are the decisions that you must make:

1. Name your company.

2. Organize your team, decide on corporate responsibilities.

3. Purchase a study of your potential customers.

Looking ahead to Quarter 2, you will study the market research and set things in place to start test
marketing in the following quarters. In Quarter 2, you will:

1. Review the market research.

2. Establish corporate goals and strategic direction.

3. Design at least one brand for each target segment.

4. Open a bike store and/or web sales center for future sales.

5. Setup a production facility.

6. Make sure there is at least 300,000 in the cash account and Certificate of Deposit combined.

In Quarter 3, you will complete the development of your business strategy and go to test market.
In Quarter 4, you will receive the results of the test market. This information will allow you to
refine your business strategy and be more successful in the future.

The outlook for the carbon fiber bicycle market is exciting, to say the least. These new bikes are
expected to substantially improve the quality and pleasure of riding for all bikers. With good
products and good distribution, the sky is the limit. Even so, substantial investments must be made
to set up quality brands, sales outlets, human resources, and production.

As your new business begins, your firm faces a compelling variety of political, social, and economic
conditions. In the current and future quarters, Marketplace analysts will issue their assessments of
the market situation through this Newsletter.

The Industry Newsletter will be your best source for current and projected trends in business
conditions.

Industry analysts will not predict how these conditions will play themselves out in future demand.
This will be your responsibility.

YOUR TASK

In the Workspace, you will find the industry news that analysts believe is the most important to your
industry. Make the Industry Newsletter a must read for all members of the executive team as various
economic events may affect your firm's ability to succeed in the market.

DECISION TIP

There are seasonal differences in demand as a result of the normal economic ups and downs of the
year. They vary by region and are quite predictable, having been observed for many years, even
decades.

In the cooler climates, the spring and summer are the best quarters for selling bikes. Winter is a
weak sales period. In the warmer climates, demand is more evenly distributed throughout the year.
There is still some seasonality, but it is less drastic.

In North America and Europe, the second and third quarters are seasons when consumers purchase
the most bikes. The fourth quarter tends to see modest sales. The fifth quarter will have the smallest
number of sales. Asia behaves similarly, but it is less extreme. South America and the Middle East
and Africa tend to have flatter demand patterns. It is important to recognize that their spring and
summer are Quarters 4 and 5 and their winter is in Quarters 3 and 7.

These seasonal differences are portrayed in the seasonality index which appears at the start of each
quarterly newsletter. The index indicates how much demand is likely to increase or decrease relative
to the yearly average, as indicated by the norm of 100. A value of 110% would indicate that demand
should be 10% greater than the norm, all other things being equal. A value of 95 indicates that
demand should be 5% less than the norm.

The black vertical line indicates the current quarter of business. The black line will move from
quarter to quarter while the chart will remain constant.

Q1 Industry News

There are a lot of rumors swirling around the bicycle industry regarding carbon fiber bikes and 3D
printing. These rumors do not involve the large multinational bicycle companies but new startups.

There have been carbon fiber bikes for a long time, but they have always been too expensive for
the ordinary bike riders to consider; they are for elite bicyclists. And, it is not clear what 3D
printing can offer, few have applied the production technology to even bicycle parts, much less a
whole bicycle.

Is this much to do about nothing, or is there a viable business idea here? Newsletter will keep you
informed of developments as they happen. Stay tuned.

Here is our quarterly report on business conditions around the world.

Bicycle sales follow a fairly predictable pattern by region. Sales tend to be higher during warmer
months and lower during cooler months. The chart below indicates the anticipated seasonal
variation by quarter and season. Pay attention to these seasonal variations as you plan your
 business by quarter and region.

Seasonal IndexNORAM, EUROPELATAM, MEAAPACQuarterPercent (%) oflong-term norm of

1006070809010011012345678

nextprevious

A good company name is important in establishing a good first impression. You can use it to
influence the expectations of those who do not know you. However, your competitive behavior and
style of business will be what ultimately define your image and what your name will come to mean.
After all, while the words apple or google have no intrinsic value, Apple and Google have come to
represent highly professional organizations that tend to do things right.

YOUR TASK

What is the image you would like your company to project? In the Workspace, choose a name for
your company that portrays the kind of competitor you would like to be. Keep in mind what the
name may mean to end users, your competition, and potential investors.

By the same token, design or choose a logo that fits the kind of image that you would like to portray
for your company and its brands.
At the top of the human resource pyramid is the executive team. The formulation of a human
resource strategy begins with the formulation of a strategy relative to the management of the
executive team.

As you start up this new organization, there are several critical issues that need to be resolved:

1. What do you want to accomplish in terms of your personal development as you help to lead
this organization?
 2. What role do you want to play within the organization? What functional areas will you
manage?

3. How will the executive team govern itself? There are two aspects to this question:

o How will the team make important decisions? Will it be a leader-driven or a team-
driven decision making process?

o How will all of you work together in team meetings and personal interactions?

The answers to these questions will help you shape the culture of your organization and what you
and your fellow executives put into and receive from working on this new venture.

The culture of your company will be established in the first few meetings. In addition to defining
roles and responsibilities, you need to now decide how you will conduct business and interact:

 Will you require that meetings start on time?

 Will there be an agenda?

 Will everyone have a chance to be heard and be expected to contribute?

 How will the team work together?

 How will the work get done?

 How can conflict be avoided or, at least, managed?

In the Workspace, you will find a number of norms that real managers adopt in the conduct of their
business. These and other issues deserve serious discussion and agreement. They can make a big
difference in your success and how you feel about working together.

YOUR TASK

Choose from the list of norms listed in the Workspace or add your own. Select as many as you wish
to apply.

DECISION TIP

One of the roles of the President or team leader is to make sure that your team's selected norms are
followed or to change them if they do not apply. Like many high-performing organizations, you may
wish to post your norms on the wall whenever you meet.

Decision-making Process

All important decisions should be made by the president after reviewing the relevant information and opinions

All important decisions should be made by a consensus vote of the entire team

All important decisions should be made by the vote of the majority of the team

All important functional decisions should be made by the specialist in that area
Team Norms

Attendance at all meetings is mandatory, unless members inform others in advance of a conflict.

Meetings start and end on time.

Members come prepared for all meetings (having completed all assignments).

Outsiders must be approved before they are allowed to attend meetings.

An agenda is prepared and followed in each meeting.

If a topic is going beyond the allotted time, the team must decide to either table it for later or reconsider the agenda

Members brainstorm solutions to problems, and only critique suggestions after all ideas are on the table.

Everyone has an opportunity to participate in discussions.

Members use active listening techniques and refrain from interrupting each other.

Members minimize or abstain from allowing outside interruptions in the meeting (e.g., visits, phone calls).

Members maintain confidentiality of what is discussed in team meetings.

Members are open to giving and receiving honest feedback to/from each other.

Roles for a timekeeper and meeting facilitator are rotated for meetings.

Running a small business represents a great opportunity to learn about different functional areas, to
experience the challenges of business integration, and to master financial responsibility.

What is it that you want to learn from this experience?

Is winning important to you? Or is having fun more important?

Are you willing to work very hard to win, or do you want to keep the workload manageable?

As a team, you need to know what each person wants from this business experience. Be sensitive to
what others are trying to accomplish. If you have a chance to help another team member accomplish
his or her personal goals, consider giving them that opportunity.

YOUR TASK

In the Workspace, find your name and then select each goal that you would like to accomplish
during the Marketplace simulation. Select as many as you wish.

Finally, pick the one goal that is most important to you.

Agrawal, Rishabh

Agrawal, Rishabh

Goal

Win, be the best competitor in the market

Have fun

Develop leadership skills

Develop teamwork skills

Develop marketing skills

Develop financial skills

Develop accounting skills

Develop manufacturing skills

Develop overall understanding of business

Develop human resource management skills

Develop e-commerce skills

Develop brand management skills

Develop advertising skills

Develop sales management skills

Develop business analytic skills

Develop overall understanding of marketing

Keep workload manageable

Most important goal---Develop leadership skills Develop teamwork skills Develop financial
skillsDevelop accounting skillsDevelop overall understanding of marketing

Arava, Saran

Arava, Saran

Goal

Win, be the best competitor in the market

Have fun
 Arava, Saran

Goal

Develop leadership skills

Develop teamwork skills

Develop marketing skills

Develop financial skills

Develop accounting skills

Develop manufacturing skills

Develop overall understanding of business

Develop human resource management skills

Develop e-commerce skills

Develop brand management skills

Develop advertising skills

Develop sales management skills

Develop business analytic skills

Develop overall understanding of marketing

Keep workload manageable

Most important goal---Develop leadership skills Develop teamwork skills Develop financial
skillsDevelop accounting skillsDevelop overall understanding of marketing

Agrawal, Shashwat

Agrawal, Shashwat

Goal

Win, be the best competitor in the market

Have fun

Develop leadership skills

 Agrawal, Shashwat

Goal

Develop teamwork skills

Develop marketing skills

Develop financial skills

Develop accounting skills

Develop manufacturing skills

Develop overall understanding of business

Develop human resource management skills

Develop e-commerce skills

Develop brand management skills

Develop advertising skills

Develop sales management skills

Develop business analytic skills

Develop overall understanding of marketing

Keep workload manageable

Most important goal---Develop leadership skills Develop teamwork skills Develop accounting
skillsDevelop overall understanding of marketing

Ghosh, Srijeeta

Ghosh, Srijeeta

Goal

Win, be the best competitor in the market

Have fun

Develop leadership skills

Develop teamwork skills

Develop marketing skills

 Ghosh, Srijeeta

Goal

Develop financial skills

Develop accounting skills

Develop manufacturing skills

Develop overall understanding of business

Develop human resource management skills

Develop e-commerce skills

Develop brand management skills

Develop advertising skills

Develop sales management skills

Develop business analytic skills

Develop overall understanding of marketing

Keep workload manageable

Most important goal---Develop leadership skills Develop teamwork skills Develop financial
skillsDevelop business analytic skillsDevelop overall understanding of marketing

Bansal, Tanisha

Bansal, Tanisha

Goal

Win, be the best competitor in the market

Have fun

Develop leadership skills

Develop teamwork skills

Develop marketing skills

Develop financial skills

Develop accounting skills

 Bansal, Tanisha

Goal

Develop manufacturing skills

Develop overall understanding of business

Develop human resource management skills

Develop e-commerce skills

Develop brand management skills

Develop advertising skills

Develop sales management skills

Develop business analytic skills

Develop overall understanding of marketing

Keep workload manageable

Most important goal---Develop leadership skills Develop teamwork skills Develop overall
understanding of businessDevelop business analytic skillsDevelop overall understanding of
marketing

Saini, Tanvi

Saini, Tanvi

Goal

Win, be the best competitor in the market

Have fun

Develop leadership skills

Develop teamwork skills

Develop marketing skills

Develop financial skills

Develop accounting skills

Develop manufacturing skills

Develop overall understanding of business

 Saini, Tanvi

Goal

Develop human resource management skills

Develop e-commerce skills

Develop brand management skills

Develop advertising skills

Develop sales management skills

Develop business analytic skills

Develop overall understanding of marketing

Keep workload manageable

Your finance strategy and decisions will revolve around the source and use of financial resources.
You must carefully manage the available resources in order to maximize the return on investment to
shareholders at all times.

Seed capital

In order to get your new company off the ground, you (and the other members of the executive
team) will need to provide seed capital (investment money). This is the money that you have been
allocating for all the initial expenses related to starting up your company. You will have to build a
production facility, open sales channels, hire sales and service personnel, and design your products
before you begin to see revenues.

Money timeline
Within the first year, you will invest 4 million. You are expected to raise this money by pledging your
own personal assets and finding family members and friends to back you. You will issue 40,000
shares of common stock to yourself (and the other members of the executive team) at 100 per share
in exchange for the 4 million investment.

After your first year in business, you will have the opportunity to approach outside investors for
additional equity funding. In quarter 5, you will be able to receive up to an additional 4 million for
your future development.

In quarter 1 you and your executive team invest 1 million of your money, issuing 10,000 shares at
100 per share. You and your team do the same in quarter 2, then again in quarter 3, and again in
quarter 4. In quarter 5, your team can reach out to venture capitalists for 4 million, and you'll issue
them 40,000 shares at 100 per share. Quarter 6 has no more new investment money.

For additional information, read the Help file section entitled Finance.

As the owners of the company, your team will invest money in your own firm by selling stock to
yourselves. In the first quarter, you will invest 1 million into the firm. An additional 3 million will be
invested over the next three quarters.

This quarter, you sold 10,000 shares of common stock at 100 per share to yourself or your team
members. The money is already available in your checking account. Your firm can use this money (1
million) for all the expenses that will occur this quarter. The unused cash will be carried over to the
next quarter.

Commercial banks and other institutions in the marketplace offer a 3-month certificate of deposit
that allows you to invest cash and earn a 1.5% quarterly interest rate.

If you decide to invest money this quarter, you will be able to withdraw it at the beginning of the
next quarter.

YOUR TASK

In the Workspace, enter the amount your company would like to deposit this quarter. Be sure to
check how much interest you will earn by the beginning of next quarter.
You may decide to transfer some money to another firm. This action is not very common, but it may
be useful especially in later quarters. For instance, you may need to negotiate an R&D licensing deal
where one firm transfers a part of the licensing payment in advance.

YOUR TASK

To transfer a sum of money to another firm, enter the amount of money that you want to transfer to
it in the Workspace. The recipient does not need to make any entry, only the firm making the
payment. The money is transferred in the same quarter in which the transaction is entered. The
payee receives the funds immediately and can spend them in the same quarter the transfer is made.
As soon as the transaction is saved, it will appear in the Accounting Statements under Other Income
for the receiving firm and Other Expenses for the firm making the payment.

Payment to Business Partners

Celeritas

Lecture

Workspace

Company Amount

KINETIX

Veyro Bikes

AeroVelt Bikes

Apex Velo

KarboniQ

Sum of payments: 0

To help you in your accounting and financial planning, your accounting firm has prepared a set of
interconnected financial statements. As you make your business decisions for the current quarter,
the expenses or investments will be posted to the appropriate accounting ledger and your cash flow
statement, income statement, and balance sheet will be adjusted accordingly.
The current quarter financial statements are essentially a budgeting tool. They are adjusted with
almost every business decision you make.

Your accounting firm also serves the role of independent auditor. It has the legal right to refuse to
certify your financial statements if it concludes that you are placing your firm at risk with overly
aggressive expenditures. It will set limits on the amount of spending you can do in any quarter in
order to protect your firm’s equity and reduce the risk of bankruptcy.

You can find more information about Accounting Statements in the Help file.

The current quarter cash flow statement shows changes in all of the balance sheet accounts,
including cash. These changes are then listed as inflows and outflows of cash and are categorized by
operating, financing, or investing activities.

Pay attention to the cash balance at the end of the period. You must end the quarter with a positive
cash balance. If you see a cash balance of 1, it means that your company is projected to run out of
cash and will have to borrow money from the loan shark as an emergency loan. The emergency loan
would appear in the Financing Activities section of the Cash Flow Statement.

Pro Forma Cash Flow

Projection
Quarter 1

Beginning Cash Balance 0

Receipts and Disbursements from Operating Activities

Revenues 0

- Rebates 0

- Production 0

- Research and Development 0

Pro Forma Cash Flow

Projection
Quarter 1

- Quality Costs 0

- System Improvement Costs 0

- Advertising 0

- Internet Marketing Expenses 0

- Sales Force Expense 0

- Store and Web Sales Center Expenses 0

- Web Sales Productivity Expenses 0

- Marketing Research 88,000

- Shipping 0

- Excess Capacity Cost 0

- Income Taxes 0

+ Interest Income 12,000

- Interest Charges 0

+ Licensing Income 0

- Licensing Fees 0

+ Other Income 0

- Other Expenses 0

= Net Operating Cash Flow -76,000

Investing Activities

Fixed Production Capacity 0

+ Sinking Fund 0
 Pro Forma Cash Flow

Projection
Quarter 1

= Total Investing Activities 0

Financing Activities

Increase in Common Stock 1,000,000

+ Borrow Conventional Loan 0

- Repay Conventional Loan 0

+ Borrow Long-Term Loan 0

+ Borrow Emergency Loan 0

- Repay Emergency Loan 0

- Deposit 3 Month Certificate 800,000

+ Withdraw 3 Month Certificate 0

- Dividends 0

= Total Financing Activities 200,000

Cash Balance, End of Period 124,000

nextprevious

The pro forma income statement documents the quarterly revenues, expenses, net income, and
earnings per share each quarter.

In the Workspace, note that the revenues ledger item is zero because you have not made any sales
yet.

nextprevious
Pro Forma Income Statement

Projection
Quarter 1

Gross Profit

Revenues 0

- Rebates 0

- Cost of Goods Sold 0

= Gross Profit 0

Expenses

Research and Development 0

+ Quality Costs 0

+ System Improvement Costs 0

+ Advertising 0

+ Internet Marketing Expenses 0

+ Sales Force Expense 0

+ Store and Web Sales Center Expenses 0

+ Web Sales Productivity Expenses 0

+ Marketing Research 88,000

+ Shipping 0

+ Excess Capacity Cost 0

+ Depreciation 0

= Total Expenses 88,000

Operating Profit -88,000

 Pro Forma Income Statement

Projection
Quarter 1

Miscellaneous Income and Expenses

+ Licensing Income 0

- Licensing Fees 0

+ Other Income 0

- Other Expenses 0

= Earnings Before Interest and Taxes -88,000

+ Interest Income 12,000

- Interest Charges 0

= Income Before Taxes -76,000

- Loss Carry Forward 0

= Taxable Income 0

- Income Taxes 0

= Net Income -76,000

Earnings per Share -8

The current quarter balance sheet provides the current financial status of your firm in terms of its
assets, liabilities, and owners' equity.

Note how your initial investment, the purchase of market research, and the 3-month certificate of
deposit affect your balance sheet.
 Pro Forma Balance Sheet

Projection
Quarter 1

Current Assets

Cash 124,000

+ 3 Month Certificate of Deposit 800,000

Long Term Assets

+ Sinking Fund 0

+ Net Fixed Assets 0

= Total Assets 924,000

Debt

Conventional Bank Loan 0

+ Long-Term Loan 0

+ Emergency Loan 0

Equity

+ Common Stock 1,000,000

+ Retained Earnings -76,000

= Total Debt and Equity 924,000

Corporate

Company Name

Celeritas

Team Norms

Decision-making Process
  The specialist gets a additional vote, decisions are taken based on majority of total number
of votes

Team Norms

 Attendance at all meetings is mandatory, unless members inform others in advance of a

conflict.

 Meetings start and end on time.

 Outsiders must be approved before they are allowed to attend meetings.

 If a topic is going beyond the allotted time, the team must decide to either table it for later
or reconsider the agenda.

 Everyone has an opportunity to participate in discussions.

 Members minimize or abstain from allowing outside interruptions in the meeting (e.g., visits,
phone calls).

 Members maintain confidentiality of what is discussed in team meetings.

 Members are open to giving and receiving honest feedback to/from each other.

 If needed anonymous feedback can be arranged.

Executive Responsibilities

Officer name Primary responsibility Secondary responsibility

Agrawal, Rishabh VP-Accounting and Finance President-Overall Leadership

Arava, Saran VP-Manufacturing VP-Sales Management

Agrawal, Shashwat VP-Human Resources VP-Manufacturing

Ghosh, Srijeeta VP-Sales Management VP-Marketing

Bansal, Tanisha President-Overall Leadership VP-Accounting and Finance

Saini, Tanvi VP-Marketing VP-Business Analytics

Personal Goals

Agrawal, Rishabh

 Develop leadership skills

 Develop teamwork skills

 Develop financial skills

 Develop accounting skills

 Develop overall understanding of marketing

Arava, Saran

 Develop leadership skills

 Develop teamwork skills

 Develop financial skills

 Develop accounting skills

 Develop overall understanding of marketing

Agrawal, Shashwat

 Develop leadership skills

 Develop teamwork skills

 Develop accounting skills

 Develop overall understanding of marketing

Ghosh, Srijeeta

 Develop leadership skills

 Develop teamwork skills

 Develop financial skills

 Develop business analytic skills

 Develop overall understanding of marketing

Bansal, Tanisha

 Develop leadership skills

 Develop teamwork skills

 Develop overall understanding of business

 Develop business analytic skills

 Develop overall understanding of marketing

Saini, Tanvi

 Win, be the best competitor in the market

 Develop leadership skills

 Develop teamwork skills

 Develop marketing skills

  Develop brand management skills

 Develop advertising skills

 Develop business analytic skills

 Develop overall understanding of marketing

Marketing

Buy Initial Market Research

Size: 1,000; Error: 2.85%; Unit Cost: 88; Total Cost: 88,000

Finance

Stock

Name of Price Per Total

Stock Type Owner Shares Share Amount Quarter

Common
Executive Team 10,000 100 1,000,000 1
Stock

Certificate of Deposit

3-month certificate of deposit account for current quarter 800,000

Quarterly interest rate 1.50

Interest to earn 12,000

Payment To Partners

No payments were made.

Use the tactical plan to map out how you will execute your strategy. Before you work on it, finish all
the decisions for this quarter – including demand projection and production simulation. The “Load
Data” button will pull in those decisions for the current quarter. Then fill the rest of the tactical plan
with the decisions your company plans for the future.

Once you have saved your tactical plan, use “Review My Plan” to launch a chat with an AI-powered
member of your company’s board of directors, Mary Smart. She will draw on her prior business
experience to help you spot potential problems.

Tactical Plan

Quarter Quarter Quarter Quarter Quarter

1 Quarter 2 Quarter 3 Quarter 4 5 6 7 8

Segments None Work Work Work None None None None

Targeted Youth Youth Youth
Recreation Recreatio Recreatio
Speed n n
Mountain Speed Speed
Mountain Mountain

Number of
0 2 1 3
New Brands

Names of None Celeritas - Celeritas- Celeritas- None None None None

New Brands C9 RoarA C9-O

Celeritas- Celeritas-
Roar RoarS

Celeritas-
Roam

Brands for None None Celeritas - Celeritas- None None None None
Sale & Price C9 (950) C9-O
(950)
Celeritas-
RoarA Celeritas-
(810) RoarS
(810)

Celeritas-
Roam
(980)

Average
0 0 937 959
Selling Price

Brand N/A N/A N/A N/A None None None None

Tactical Plan

Quarter Quarter Quarter Quarter Quarter

1 Quarter 2 Quarter 3 Quarter 4 5 6 7 8

Feature R&D
Projects

Brand
Feature R&D 0 0 0 0
Expense

Media Plan
100% / 42% /
(% local/% 0% / 0% 0% / 0%
0% 58%
regional)

Advertising
0 0 27,523 225,637
Budget

Internet
Marketing 0 0 0 3,600
Expenses

Web Sales
Productivity 0 0 0 0
Budget

Stores to Be N/A Amsterda Seville Santiago None None None None

Opened m Rio de
Warsaw Janeiro
Nantes

Store
0 217,000 182,000 325,000
Expense

Web Sales N/A None None Rio de None None None None
Centers to Be Janeiro
Opened Warsaw

Web Sales
Center 0 0 0 335,000
Expense

Number of 0 0 6 18
Store Sales
Tactical Plan

Quarter Quarter Quarter Quarter Quarter

1 Quarter 2 Quarter 3 Quarter 4 5 6 7 8

People

Unit Demand
per Store 0 0 22 51
Sales Person

Number of
Web Sales 0 0 0 0
People

Unit Demand
per Web 0 0 0 0
Sales Person

Projected
0 0 134 919 0 0 0 0
Demand

Projected
0 0 125,620 777,610 0 0 0 0
Revenue

Cost of
0 0 92,362 391,081 0 0 0 0
Goods Sold

Average
Production
Worker 0 0 21,195 21,365
Compensatio
n

Average
Sales Person
0 0 23,935 23,935
Compensatio
n

Sales Force
0 0 35,902 107,706 0 0 0 0
Salaries
Tactical Plan

Quarter Quarter Quarter Quarter Quarter

1 Quarter 2 Quarter 3 Quarter 4 5 6 7 8

Total Sales
Force 0 0 40,208 116,937 6,240 0 0 0
Expense

Addition to 0 8 8 8 0 0 0 0
Fixed
Capacity

Investment
in Fixed 0 240,000 240,000 240,000 0 0 0 0
Capacity

Available
Fixed 0 0 520 1,040 1,560 1,560 1,560 1,560
Capacity

Operating
0 0 390 975
Capacity

Maximum No No 1 hour 2 hours No No No No

Overtime per overtime overtime overtime overtime overtime overtime
Day

% Lost
Capacity Due
to 100 100 35 33
Production
Productivity

Production
0 0 134 811 0 0 0 0
Volume

Lost Sales 0 0 0 108 0 0 0 0

Excess
0 0 119 0 0 0 0 0
Capacity

Average Unit 0 0 689 482

Tactical Plan

Quarter Quarter Quarter Quarter Quarter

1 Quarter 2 Quarter 3 Quarter 4 5 6 7 8

Production
Cost

Total
Production 0 0 92,362 391,321 0 0 0 0
Cost

System None None None None None None None None

Improvemen
t Actions

Total Quality
0 0 17,208 76,197
Cost

Total System
Improvemen 0 0 5,000 60,000
t Costs

Total R&D
0 60,000 30,000 90,000 0 0 0 0
Cost

Conventional
0 0 0 0
Bank Loans

Long-Term
0 0 0 0
Loans

Emergency
0 0 0 0
Loan

Total Debt
0 0 0 0 0 0 0 0
Level

Equity 1,000,00 8,000,00 8,000,00 8,000,00 8,000,00

2,000,000 3,000,000 4,000,000
Investment 0 0 0 0 0

Total Assets 924,000 1,662,000 2,297,324 2,335,971