Kootney Bicycle Case

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Case Study:
Kootenay Bicycle Company

Prepared for:

Cam Shackelton

Feb 13, 2007

EXECUTIVE SUMMARY

Kootenay Bicycles (Kootenay) build custom frame or bike in a large metropolitan area in western Canada since 2002. Although sales have been steadily increasing since inception, it has not been successfully translated to profits. Signs of operational inefficiencies, lack of financing and limited expandability limits its growth.

This report analyzes Kootenay’s current strategic alternatives, with a diagnosis of the company at all levels to formulate the best strategic direction the company should undertake. As a result, the following strategic options were considered and Kootenay is recommended to: • Accept MHB alliance proposal after detail review of contract and analysis; • Reject financing proposal from angel investor;

• Reject distribution proposal from retail chain stores;

Operational efficiency is also addressed with a detailed implementation plan. By implementing the strategic and operational recommendations discussed in this report, Kootenay is destined for both short and long term sustainable growth. TABLE OF CONTENTS

INTRODUCTION1
SITUATIONAL ANALYSIS2
Internal Environment2
External Environment2
Financial Analysis3
Strategic Mission3
STRATEGIC OPTIONS4
Strategic Option 1: Independent Growth4
Strategic Option 2: Angel Investor5
Strategic Option 3: Retail chain store6
Strategic Option 4: Mountain High Bike (MHB)7
STRATEGIC RECOMMENDATIONS7
Alliance with MHB7
Revisiting Mission Statement8
OPERATION ISSUES7
Product Mix9
Productivity10
Production Capacity10
Pricing10
Accounting10
Activity Based Costing10
Marketing10
Human Resource Management10
Supply Chain Management10
IT System11
IMPLEMENTATION PLAN13
CONCLUSION16
EXHIBIT 117
SWOT Analysis17
EXHIBIT 218
Financial Data18
Alliance with Mountain High Bike (MHB)18
Financial ratio18
EXHIBIT 319
5 year production projection with MHB19
5 year profit margin projection with MHB19
EXHIBIT 421
GANTT Chart21
EXHIBIT 522
Strategy Map22
REFERENCES23
INTRODUCTION

Kootenay Bicycle Company (Kootenay) has been captured customers’ interest over the past years for its high quality custom-built bicycle; however, a clear strategic direction must be identified in order to ensure continued growth and lead to profitability.

The following report identifies and assesses:
1. Internal and external environment
2. Strategic and business issues currently facing Kooteany 3. Strategic alternatives available to the organization
In addition, this report provides recommendations that: 1. Offer clear direction for growth
2. Support the proposed growth strategy
3. Provide solutions to operational issues

Kooteany’s commitment to Product Leadership and quality products support the target customer needs. Kootenay is known for high quality products, and the recommendations of this report support the continued commitment to quality that is the foundation of the company’s success. A detailed implementation plan follows that outlines how to execute the recommended strategy and addresses key operational issues pivotal to its success on through to fiscal year ended 2009.

SITUATIONAL ANALYSIS

A situational analysis of Kootenay is researched in order to recommend the strategic direction of the company. Exhibit1 provides a complete list of the company’s internal strengths and weaknesses, and its external opportunities and threats. The following are identified as the key factors or issues associating with Kootenay today: Internal Environment

Kootenay’s key strengths are the passions of building custom bike frame in its employee - Shacketlon and Cullen. It has been translated to quality process, clearly...
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