Analysis Of The Bike Industry In Australia And Evaluation Of Business Model For Harry’s Bikes

Part A: Evaluation of the Business

This particular case study is about the company named Harry’s Bikes that has been in business in Melbourne, Australia for around 12 years. Starting from being a small scale bike retailer, the business has grown considerably throughout the years and the company now deals with various types of bikes manufactured by various reputed companies around the world. The company imports different varieties of bikes from around the world as well as different aftermarket parts and accessories of the bikes. In addition to the varieties in the types of bikes, there are bikes for various age groups available as well as different price ranges.

This report is mainly based on the analysis of the bike industry in Australia that helps to determine how the company is going to perform once the proposed ecommerce website is set up. Moreover, some background analysis of the company has been performed in order to understand the current standing of the company and what does it need to perform even better in the near future. Furthermore, the excel sheet containing sales data of the company has been analyzed and a mock up design has been developed for the proposed new website of the company.

Bike industry is mostly popular in Australia owing a large number of bike users in the country and bike being a popular mode of short distance transport in Australia. In addition to the regular bikes, the demands for sports bikes are also increasing at a significant rate due to the increase in the popularity of bike sports in the country. There are other bike retailers in the country as well who sell different types of bikes at reasonable prices. However, Harry’s Bikes has much competitive advantage due to the fact that it imports bikes from all around the world and hence, the target audience of the company is much bigger than other bike retailers in the country. Moreover, since the company’s motto is to provide bikes to everyone, the prices of the bikes sold by the company are reasonable as the company tries to attract all types of customers with different financial backgrounds as well as requirements. Hence, at the current condition of the industry, Harry’s Bikes has significant competitive advantage over other similar companies in the country. However, this condition might change in the near future with more bike retailers are coming to the market with the use of suitable technology in their information technology system. As a result, it is important for Harry’s Bikes to upgrade their existing technical setup as well as implement more efficient business model to retain the competitive advantage and get a stronger hold on the market in the near future.

As discussed above, a suitable business model needs to be implemented in the current system of Harry’s Bikes in order to retain their competitive advantage as well as gain a stronger hold on the market. There are various business models that may be implemented but the most suitable for the company is franchise model. Franchise business model provides a number of advantages to the company. The first advantage is that the company will be able to develop its own brand name and value that contributes significantly to the business popularity in the market. Another main advantage of franchise model is that it will be easier for the company to import bikes from various manufacturers around the world under one brand name. The final advantage of the franchise model is that the entire operational system will be centralized even if the company decides to open new stores and branches in various parts of the country.

Industry Background

Proposition of certain values is an important part of establishing a specific business system. The values can be of various types that include expenses in project, cost benefit from a project, sales statistics, annual profit and others that can be measuring as specific or variable values. Depending on the type and nature of the business, the value is to be chosen such it is actively related to the overall success of the business. In this particular case of Harry’s Bikes, the main value proposition should include the overall sales of various types of bikes in the country. From the sales data generated by the company, it is evident that while some bikes are much popular, some other bikes have been sold in very low quantities. It is important to sell all the bikers uniformly in order to maintain a flow of revenue as well as help the manufacturers gain profit by the sales of various types of bicycles. In order to reach a benchmark sales value for all types of bikes, the company needs to expand its business and also survey on the popularity of specific types of bikes in different areas of the country. Based on the data, the company should open stores in these locations with specific focus on the most popular bikes in those areas. Without reasonable pricing and sufficient promotion of the bikes in these areas, the target sales value can be achieved. With the introduction of the new ecommerce website, the business is set to be further benefitted and a suitable sales value is expected to be achieved with the condition that the implementation of the new system is successful.

In order to analyze the internal environment of the company, a SWOT analysis has been conducted as follows.

The analysis of the internal environment of the company gives a very clear idea regarding how the business of the company is currently faring and what is the future of the business of the company. While there are some strong opportunities that will drive the organization towards success in the near future, there are some significant threats that the company must overcome in order to achieve success in the business.

In addition to the analysis of the internal environment of the company, it is important to analyze the external environment as well. For this particular purpose, Porter’s 5 Forces Analysis has been used as follows.

The external environment of the company can be analyzed using Porter’s Five Forces as follows.

Bargaining Power of Suppliers – Harry’s Bikes Company has a very strong international links with various reputed bike manufacturers from all around the world. Currently, in Australia, Harry’s Bikes is the leading bike distributor and hence, most of the manufacturers who try to access the Australian market can conduct their business through Harry’s Bikes. Hence, they need the support and the sales generated for Harry’s Bikes for their own growth and so, they need to agree upon suitable terms of monetary contract. As a result, it can be said that bargaining power of the suppliers is generally low for this particular case study.

Business Model and Environment

Threat of Substitutes – There is almost no threats of substitutes in terms of the products because the company already sells all varieties and types of bikes that are in demand in the market. However, there are the threats of substitute organizations who are attached in the same industry as Harry’s Bikes. With time, more and more competitors are growing up with the effective use of technology and more and more loyal customers of Harry’s Bikes are preferring to conduct business with these new organizations. Hence, threat of substitutes is medium.

Bargaining Power of Buyers – The main policy of the company is to enable all the Australians to own and use a bike for short distance travel and recreation and hence, have lowered the prices of the bikes such that they can offer the bikes at a much discounted rates to the customers. Hence, the buyers do not need to bargain for getting the bikes at reasonable prices. Hence, bargaining power of buyers is low.

Threat of New Entrants – Threat of new entrants in the market is significantly high as many new competitors have already come up with much better technical setup in their business operations system. These companies are much more efficient in executing business operations, providing fast and efficient services to the customers and others.

Industrial Rivalry – Industry rivalry till now is more or less moderate as there are few popular bike distributors and sellers in the country. However, in the next 5 years, the industrial rivalry should increase by a significant margin as the number of bike distributors have already grown up around the country and also more companies are coming up with better technical support and more efficient than Harry’s Bikes.

In the attached excel sheet, some sales of data of some of the most popular bikes from the year 2016 have been provided. Following the analysis of the excel sheet, three major trends can be identified, which are as follows.

Trend 1: The low end bikes (with prices within the range of $100 to $200) are the most popular among the customers and have been sold most number of times.

Trend 2: Kids Bikes are most popular in Australia and almost all types of kids bikes have experienced good amount of sales.

Trend 3: Retro bikes are of very low demand and only a few units of the retro bikes have been sold.

The design of the website for ecommerce consists of the following main pages for the customer end.

Home Page: This page is the main dashboard and displays various offers and bike catalogue.

Product Page: This page displays the product selected by the customer for detailed view and checking the price for the bike.

Payment Page: After checking out, the customer has the option to make payment online or pay the cash on delivery of the bike.

The page designs will follow all HCI and web usability principles so that the website is very much visible to a large target audience and will also provide a good user experience while a user is browsing through the website and searching for a bike of his choice.

Conclusion

Harry’s Bikes is a bike distributor and retailer based in Australia. The main motto of the company is to provide bikes to each and every person in the country and hence, the central operating strategy is “peddle power should be affordable for everyone”. While high priced sports bikes are sold by the company, there are also cheap and budget bikes for regular use of the people. Currently, the company aims to open an ecommerce website so that booking of bikes could be done online by the customers. Based on the locations of the customers, the bikes will be delivered to their addresses at minimal or free of cost.

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