00 IBS 820 Cervelo presentation_FINAL
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Transcript of 00 IBS 820 Cervelo presentation_FINAL
Global Business Development Team
(Samuel Tabi, Jamsheer Abbas, Yafei Wei, Nina Blinova)
Seneca College
April 15, 2016
Cervelo2017
Export to Latvia
What We’ll Cover Today
Why Cervelo?
Company
Bicycle
People
Why Latvia?
SWOT Analysis
Marketing Strategy
Distribution
Financial overview
Risks Mitigation
Implementation Schedule
Concept & Opportunities
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Why Cervelo?
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Professional cyclists andtriathlon racers currently donot have any opportunity topurchase Cervelo bicycles inLatvia.
DTC Jauniba Triathlon club, Triathlon racers ETU
RomānsVainšteins, champion of 2000 UCI Road World Championships
Marco Koshier, IRONMAN racer
Source: Tri2teach.comSource: Sport in Latvia
Company
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Manufactures the fastest and the lightest bicycles in the world
Was established in Toronto in 1995
Provides constant innovation and has professional engineering team
Has 56 distributors worldwide, sales revenue - CAD 11 million (2014)
Helps prominent cyclists successfully participate in all world cycling competitions
Source: Cervelo
https://www.youtube.com/watch?v=arehyOYsFUo&nohtml5=False
Bicycle
BICYCLE:
• Road / Triathlon bicycle
• Materials: Carbon fiber
• Minimal weight
• Maximal stiffness
• Exceptional aerodynamics
• Price: CAD 2,000 -15,000+ (Toronto, Canada)
TARGET CUSTOMERS:
• 18-45+ years old
• Male / Female
• Middle / Upper middle class
• College / University education
• Professional sportsmen / racers (Ironman, ETU)
• Urban citizens
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Source: Cervelo
People
6
HQ
CEO
Country Manager
Latvia
Global Business Development Team
Sportlife, Authorized Distributor in Latvia
Global Distribution
Europe
Phil White
Samuel Tabi
Yafei WeiJamsheer Abbas Nina Blinova
Source: LinkedIn
Why Latvia?
7
Latvia shows significant progress to integrate into EU economy.
Social: Latvians have a strong work ethics and are highly motivated. High interest in healthy lifestyle.
Technological infrastructure and transportation systems are well developed (3 sea ports).
Stable political situation, no border conflicts. Democratic parliamentary republic. 2 million citizens.
Civil law. Legal system comply with EU regulations and provide protection for intellectual property as well.
Environmental: among 10 environmentally best countries of the world (EPI).Source: CIA,
Why Latvia?
9
Authorized Distributor; sport outlet in Riga, famous cycling brands & cycling club.
Import of bicycles in Latvia -40,000 units for CAD 9 million. 25% of Latvians have bicycles;Cycling clubs & cycling events (ETU, EuroVelo)
Great connection to Russia, Belarus, Lithuania;50 from 100 richest people in Latvia are from Russia.
Limited competition - 2 from 7 top competitors are presented in Latvia. Prices: 1,000- 16,000 CAD
Source: Eurovelo
Marketing strategy
12
PRODUCTCERVELO R5 Shimano Dura Ace 9070 Di2
High performance road / triathlon bicycle
Carbon fiber, personalization options
Light, fast and reliable on the road
Lifetime warranty
PRICECAD 11,970 DAT Riga
Premium price strategy
Discounts for 2nd bicycle and spare parts.
PLACEAgreement with Sportlife about Sales and Partnership
Sportlife outlet in downtown of Riga, Latavia
Online (website Cervelo & Sportlife)
PROMOTIONWebsite Cervelo (link to Sportlife)Latvian newspapers / TVBillboardsVenue advertising (ETU events, trade shows)Social Media (Facebook, YouTube)Blogs of triathlon racersDemo bicycles in sport outlet
Primary target market–16,800 Latvians
Potential target market –Russia, Belarus, Lithuania
(1,25 million people)
Source: Cervelo
Freight Forwarding (Canada) • A1 Freight Forwarding Inc.Shipping company (Canada) • Maersk LineTransportation / Customs brokerage (Latvia) • DB Schenker
Distribution
14
Ocean freight (boxes/container) – 48.40 CAD/unit + insurance 22.00 CAD/unit. Prices DAT Riga Incoterms:
1st delivery –February 2, 2017 – 50 bicycles2nd delivery – April 1, 2017 – 50 bicycles3rd delivery – June 1, 2017 – 50 bicycles
Source: Maersk Line
Financial overview
15
Sales Forecast of Cervelo bicycles in Riga, Latvia 2017 - 2019
2017 2018 2019 TOTAL
Units to be sold 150 200 250 600
Sales price (DAT Riga, CAD) 11,970 11,970 11,970 5,280,000.00
Total Sales 1,795,500.00 2,394,000.00 2,992,500.00 7,182,000.00
ITEM 2017 2018 2019
Beginning Cash 20,000.00 45,806.00 213,185.00
Receipts 1,795,500.00 2,394,000.00 2,992,500.00
Expenses 1,769,694.00 2,256,912.00 2,803,715.00
Ending Cash 45,806.00 182,894.00 401,970.00
Cash Flow Budget as at 31st December 2017- 2019
Financial overview
16
Budgeted Annual Income Statement of Cervelo sales in Riga, Latvia, as at 31st December 2017 - 2019, in CAD
ITEM 2017 2018 2019
150 UNITS 200 UNITS 250 UNITS
Sales 1,795,500.00 2,394,000.00 2,992,500.00
Less cost COGS(8,800.00) 1,320,000.00 1,760,000.00 2,200,000.00
GROSS PROFIT 475,500.00 634,000.00 792,500.00
LESS EXPENSES
Selling and Administration 15,000.00 15,000.00 15,000.00
Commission (1,484.00) 222,600.00 286,000.00 357,500.00
Tariffs (4.7%) (413.6) 62,040.00 82,720.00 103,400.00
Shipping cost (48.00) 7,200.00 9,600.00 12,000.00
Insurance (22.00) 3,300.00 4,400.00 5,500.00
Travelling Expense 10,000.00 5,000.00 7,000.00
Advertisement and Promotion 125,000.00 70,000.00 70,000.00
TOTAL EXPENSES 445,140.00 472,720.00 570,400.00
EARNING BEFORE TAX 30,360.00 161,280.00 222,100.00
Income tax (15%) 4,554.00 24,192.00 33,315
NET PROFIT 25,806.00 137,088.00 188,785.00
Risk Mitigation
18
POTENTIAL RISKS MITIGATION MEASURES
Non-fulfilment of obligations by authorized distributor
Preliminary verify credential of potential authorizeddistributor;
Consult with the Canadian Chamber of Commerce andTrade Commissioner in Latvia;
Consider some alternative distributors (Sportland, ZeroSport Outlet).
Cost overruns and delays in distribution
Consider hedging options and insurances (Marine andCargo Insurances, Insurance for Freight Forwarders).
Currency fluctuations Consider hedging; Consider prices in Euro with profit margin about 10-40%.
Lack of recreational bicycles Consider proper market segmentation and dynamicpromotion on Latvian market.
Differentiate products in the future (bicycles R-Series, P-Series; spare parts and accessories; sportswear).
Implementation Schedule
Approval of Business plan
Agreement with Sportlife and outsourcing companies
1st payment & 1st delivery from Toronto to Riga
Advertising campaign in Riga
Monitoring & Controlling - time and payments
Cervelo bicycles in Sportlife’ outlet & closing payment
2nd and 3rd deliveries in 2017
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Concept & Opportunities
21
The Concept Primary target market - 16,800 Latvians. Entry to the market will cost CAD 140,000.00. Authorized Distributor – Sportlife in Riga, Latvia. Export of Cervelo bicycles will be organized by members
of Global Business Development Team (GBDT) withsupport of HQ of Cervelo Cycles Inc.
The Opportunity Profitability of Cervelo’s entry - CAD 25,000 (2017) with the potential growth in the next 2 years.
The Potential Further increase of sales will be achieved by: Deeper market penetration (Russia, Belarus and
Lithuania – 1.25 million potential consumers), Supply of spare parts and accessories, Provision of assembly & maintenance services Product differentiation (bicycles R3, R2, and P/S-series).
2017
LATVIA
56 DISTRIBUTORSWORLDWIDE
Racing bicycles evolution 2016
Bike weight – 667 g
Speed -140+ km/h
Difference between gold and silver Olympic medals –8 milliseconds
1817Bike weight – 16 kgSpeed -16 km/h
1995 2016