Business Overview
Segway Inc. is a personal transporter manufacturer company incorporated in America. It sells its products under the Segway personal transporter (PT) and Segway mini/pro product lines. Founded by Dean Kamen in 1999, Sageway revolutionized personal transportation through its innovative products.
Segway Inc. was acquired by Ninebot in 2015. Since then, the company has continuously improved its product from commercial use by military base, warehouses, police departments, industrial sites and corporates to consumer markets. The company has a patented product which was acquired in 1999.
Since the dawn of human history, mobility has been crucial for human survival. Innovative solutions have been developed over the ages to cater for human mobility. From use of horses to building of aeroplanes, human ingenuity has been leveraged to make movement as efficient as possible (John Walker, 2014).
Despite these advancements, modernization of societies has led to the existing system being inefficient. Cars consume a lot of fuel, need parking space and traffic jams are a nightmare. Aero planes need large tracts of land and are inefficient for short distances. Horses need fields to graze and are prone to diseases. Bicycles increase your risk of injury and require you being fit to cycle over short distances.
Due to the shortcomings of the existing means of transport over short distances, there is an opportunity to develop superior personal transportation systems to cover intercity transportation (Schmitt, 2007). The systems needs to solve the problem of existing solutions and give better value to clients. The current existing problem of intercity travel are:
Traffic jams: for all cities around the world, traffic jams are a menace. The continuous increase in population renders road expansions useless in a short period of time. Cities are growing at alarming rates and car transportation seems like a growth impediment due to time wasted in traffic jams (Porter & Kramer, 2011).
Fuel costs: high fuel costs increase cost of living. Owning a car becomes a liability rather than an asset. Fuel is also an exhaustible source of energy which makes transition to electric source more logical.
Parking space: for those who own cars, they have experienced this nightmare. Some wake up early in the morning just to get parking space. Some double park and end up wasting other people’s time. The cost of parking space is so high in some cities that it makes it illogical to use your car on a daily basis.
Convenience: this applies to users of public transport who have to move in accordance to a predetermined schedule. You have little convenience in planning your time. In case of unreliable public transport systems like in the undeveloped nations, the situation is unbearable.
Pollution: vehicles pollute the environment by releasing exhaust fumes from fuel combustion. The pollution depletes the ozone layer which may shorten existence of human life on earth. The fumes may also be cancerous which exposes us to health risks (Mentzas, Halaris & Kavadias, 2001).
Partial solution have been developed to cover these problems. For example, electric cars have been developed to solve the fuel cost and pollution problem. Carpooling has been established to reduce the issue of traffic jams. Individuals can cycle to avoid looking for parking space.
Problem
Whereas the solutions have been effective, they do not provide a wholesome product that a client can use and meet all the stated needs. Here comes in Sageway with their innovative personal transporter to meet all the client needs.
Developed by Dean Kamen, the Segway personal transporter is a marvel of human ingenuity in solving intercity transportation problem. The Sageway transporter uses the inverted pendulum technology to perform functionality and it is extremely easy to use. The user leans forward to propel the transporter forward and leans backward to reverse the movement.
Segway PT solves the above problems in one solution package (Segway.com, 2018). The transporter is electric, weighs 100 pounds, requires minimal parking space, can travel up to speeds of 20 km/h and can cover up to 39 km before requiring charging. The solution is so revolutionary that Steve Jobs said, ‘it is a big a deal as the PC.’
The business model would entail, targeted customers, value proposition, and channel of delivery, customer relationships, revenue streams, key resources, key activities, key partnerships and cost structure. This will develop the cost structure, revenue generation and day to day operations of the business. The business model would determine the viability of the company.
Targeted customers: the targeted customers are all adults living in cities around the world. The personal transporter can function in different terrains due to the numerous models available for use. The customers would have several options to choose from and find which suits them best.
Value proposition: the value proposition is simple, a one stop solution to intercity transportation problem (Freiberg, Freiberg & Dunston, 2012). No traffic jams, no parking issue, no pollution, no inconvenience. Fast and reliable means of travel across cities. The solution is superior to other personal transport systems since it provides one solution to various problems of intercity transportation.
Channel of delivery: the main channels of delivery would be by word of mouth, online and mainstream media marketing. Word of mouth is the most effective form of marketing if your product is truly superior. Online and mainstream marketing would supplement word of mouth to make prospective clients aware of our product (Ball & Exley, 2010).
Customer relationships: customer satisfaction is one of the company’s key endeavor. On that note, the company would establish licensed dealers and customer support to ensure that our customers get the genuine products and have sufficient channels of communication in case of any query or dispute (Payne & Frow, 2005). In case of any malfunction, the company will take responsibility as long as the client did not damage the product intentionally.
Revenue streams: the company will generate revenue from marking up cost of production of the personal transporters. The company will also generate revenue through selling spare parts of the personal transporters. The company can also generate revenue by franchising the patented product to other vendors who would pay royalty to the company.
Key resources: part of the company’s key resource is the founder Dean Kamen. He developed the product and would be instrumental in pushing it to the market. The employees of the company will also be key resources since they will deliver the product to the end client. The distributorship and dealership network will also be a valuable resource to the company. The network would enable ease reach of customers (Heger, 2007).
Solution
Key activities: the main key activity is the setup of the manufacturing unit of the company. Since the product is already developed, setting up of the manufacturing section would be needed to push product to the market. The next crucial activity would be the setup of the overhead management operations which would cater for operations procedure to deliver the product to the client.
Key partnerships: the main key partnership would be with the product distributors and dealers. They are the one who will push the product to the end client (Adesola, & Baines, 2005). The relationship with the distributors would allow the company to provide sufficient customer care services. The partnership will also allow easy distribution of the products throughout the world. Another key partnership would be providers of manufacturing components. Since the company will outsource other manufacturing components, key partnerships should be established to ensure that no slowdown and delays are caused due to late delivery of manufacturing parts.
Cost structure: the cost structure would be differentiated between fixed costs and variable costs. All overhead expenses of running the company like office rent, factory overheads, and salaries would be fixed costs while variable costs would include day to day manufacturing demands like direct material and direct labor. Total cost of production would be marked up by profit margin to get market price of product.
These are the factors that would make the business successful and differentiate it from other businesses of the same caliber. The critical factors are what is unique about the company.
Patent: the company product has been patented in America hence the Segway Company holds sole rights to production of the product. This makes Segway have a monopoly in producing and selling the personal transporters (Wang et al., 2010) In case of any franchising, the company would make money through royalties making the business sustainable.
Superior product: the company has a superior product in the industry. Although there are other personalized transport systems, Segway personal transporter is superior in design, quality and simplification of use. This edge would make the product more valuable and meets customers’ needs than its competitors. Use of new technology in the product makes it more durable and reliable. The customer would have better and longer service from our product than our competitor’s product.
Management team: the company has a reliable management team which would give it an edge above its competitors. The management team is agile and qualified to deliver a superior product and customer service to the clients. The employee selection criteria enables the company to source for the best fit employees to run the company.
Obesity rate: obesity rate has been steadily rising in developed nations. World Health Organization report indicates that world’s obesity has tripled since 1975. His indicates that difficulty of movement would be an issue in the coming future (Wang et al., 2010). This generates a potential market for personal transporters which would assist individuals to cover short distances.
Founding father: the company has the advantage that the founder is the developer of the product. He has been tinkering with the product since inception of its idea in his mind. He is an added advantage to the company since he will provide insight and foresight on how to further develop the product to meet customer’s needs.
Market study substantiated the viability of the idea. Alternative personal transporters like the scooter, skateboards and self-balancing unicycles have been produced and are already in the market (Schmarzo, 2013). Customer reception of the products has been significant and their business models have succeeded and are profitable.
Segway personal transporter was built on the same premises but the product is superior. The success of its predecessors may be replicated at a grander scale. The only drawback would be if the management and customer service is below par and may cause the customers to shun the product (Chesbrough & Rosenbloom, 2002).
The other supportive factor is that the problems that caused the formation of the previous solution are still existent hence there is sufficient market for all competing products due to the increase of population.
References
Adesola, S., & Baines, T. (2005). Developing and evaluating a methodology for business process improvement. Business Process Management Journal, 11(1), 37-46.
Ball, S. J., & Exley, S. (2010). Making policy with ‘good ideas’: Policy networks and the ‘intellectuals’ of New Labour. Journal of education policy, 25(2), 151-169.
Chesbrough, H., & Rosenbloom, R. S. (2002). The role of the business model in capturing value from innovation: evidence from Xerox Corporation’s technology spin?off companies. Industrial and corporate change, 11(3), 529-555.
Freiberg, K., Freiberg, J., & Dunston, D. (2012). Nanovation: How a little car can teach the world to think big and act bold. Thomas Nelson.
Heger, B. K. (2007). Linking the employment value proposition (EVP) to employee engagement and business outcomes: Preliminary findings from a linkage research pilot study. Organization Development Journal, 25(2), P121.
John Walker, S. (2014). Big data: A revolution that will transform how we live, work, and think.
Mentzas, G., Halaris, C., & Kavadias, S. (2001). Modelling business processes with workflow systems: an evaluation of alternative approaches. International Journal of Information Management, 21(2), 123-135.
Payne, A., & Frow, P. (2005). A strategic framework for customer relationship management. Journal of marketing, 69(4), 167-176.
Porter, M. E., & Kramer, M. R. (2011). The big idea: Creating shared value.
Schmarzo, B. (2013). Big Data: Understanding how data powers big business. John Wiley & Sons.
Schmitt, B. H. (2007). Big think strategy. Harvard Business School Press.
Segway – Simply Moving – Welcome to the Official Website of Segway Europe. (2018). Retrieved from https://www.segway.com/about/our-story
Wang, J., Spalding, E., Odell, S. J., Klecka, C. L., & Lin, E. (2010). Bold ideas for improving teacher education and teaching: What we see, hear, and think.
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