Afm 131 Mikes Bikes Report - Winter 2010 - Sproule

Topics: Bicycle, Road bicycle, Mountain bike Pages: 25 (7034 words) Published: March 26, 2011

Table of Contents
Executive Summary3-4
Yearly Analysis
Final results……………………………………………………………………………………….....17 Strength and Weaknesses17-19
Opportunities and Threats19
Key Determinants of Firm’s Performance20
Recommendations for the Future20
Appendix A: Advertising & Market Share21
Appendix B: SHV result, Sales Revenue & Advertising/Distribution figures22-23 Appendix C: SHV graph, Equity financing, Distribution figures & Capacity Planner24-26 Appendix D: Multi-firm SHV, Profit & Market Share27-29 Appendix E: Production quantity, Quality investment30

Appendix F: Production sales & Awareness and Distribution results31-32 Appendix G: Multi-firm SHV + Report, Profit & Market Share 33-36 Appendix H: Income Statement History37
Appendix I: Balance Sheet History38
Appendix J: Cash Flow Statement39
Appendix K: Gross Margin Report40
Executive summary
To the directors of Mike’s bikes,
GYPSY MAX BIKES is a corporation founded in February 2009 and is located in Waterloo, ON, Canada. The company produces mainly mountain and road bikes. The firm’s objective is to become a leading brand of high quality bikes, a highly recognizable and respected brand that will appeal to mountain bike enthusiasts and professional riders. Our management team made strategic decisions each year to increase shareholder value as much as possible. In 2009, our shareholder value started at $9.29. It increased to $130.22 in six years which represented a 1302% cumulative change, the highest performance in the industry. One of our main strategies was to spend a considerable amount of money in advertising in order to have the highest awareness ratio in the world. This allowed us to attract a considerable amount of new customers willing to spend more money for the quality of the superior brand. In 2009, total product advertising was $1,905,000 which was 2 to 4 times higher than any other competitor. By 2015, advertising expenses increased to $3,425,000 and total product PR was at $1,500,000 more than double the amount spent in other companies. Awareness for mountain bikes started at .32 in 2009 and ended at .33 in 2015. It remained the highest in the industry each year. GYPSY MAX BIKES introduced its first road bike in 2011 with the all new Bolt_2012. The company’s strategy was to become the main producer of road bikes. Based on the competitors lower quality index and their lack of financial strength, there was a much higher chance of them going for youth bikes as the cost of production is much lower. Our focus for the following years was to dominate the road and mountain bike market. The executive team believed the firm would be more profitable than if it were to try and dominate all three markets right away: mountain, youth and road bikes. GYPSY MIKES BIKES introduced youth bikes only later in 2013 when it was very profitable and could afford to penetrate a new market and gain market share. This strategy was very successful as we ended first in the local industry, 5th worldwide and the company’s market share ended at 35.9% in 2015. In the fourth year we had the opportunity to pay out dividends to shareholders. The dividends per share remained by far the highest in the industry each year. The company gave out as much as $12.80 per share in 2015 which helped increase shareholder value dramatically. In addition, the company bought back over 20 percent of the shares issued in the last two years which also drove the stock price higher. The firm faced some tough challenges as the competition in the mountain bike and youth sector was relatively high. Manipulating capacity and maintaining a competitive edge was an important challenge for the company’s success. -------------------------------------------------

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