BBA 3 -Dream Tyres

7/29/2019 BBA 3 -Dream Tyres

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Dream Tyres

Group 3

Krishika ShahPriyam Kothari

Nischay Gupta


2/30

Vision and Mission

To meet the requirements of all the

consumers

To deliver products of best quality and at

affordable price without compromising on

ethical values


3/30

Goals and Objectives

Market Leader

To be the dream company for employees

To be a brand to reckon with

Maintain high levels of efficiency and quality


4/30

The Name

We wanted to be able to produce the kinds of

bikes which would be the ideal bike for

customers in all segment the kind of bike they

dream about and thus the name DREAM

TYRES


5/30

Year1

We followed a medium Pricing SaleStrategy .

Our aim was to have good sales and for

that we invested good around 1.5 million inadvertising and pr.

We were able to achieve highest SHV of

10.55$ among our competitors and hadhighest PAT and Cash reserve after the first

year.


6/30

Our sales unit stood at 20,114 at the price of

575$

After the first year we realised we had priced

our bike low than our competitors and even

after spending 1.5million in the first year on

advertising and PR , we stood way below

industry Benchmark. That was one of thereason we had inventory worth 5,800 units.


7/30

Year 2

We didnt change the price and kept it at 575$.So to meet the industry standards weincreased our budget on advertising andPR(magazine being the Highest) to 2.4 million.

Since 60% of the mountain bikes were gettingsold in sports stores we gave them the highessupport in the form of 3100$ but the mistake

we made here was decreasing marginsupport.

This time we produced 20,000 units becausewe already had inventory from the last year.


8/30

After the second year. We lost out badly on

sales. We realised it was because all ourcompetitors were playing aggressively and

incurring huge expenditure on PR and gave a

good distribution support and margin.

Since we weren't able to sell as we had

forecasted , our inventory stood high at 7000

units.

We realised keeping price constantly low

aggravated our cash and profit balance.


9/30

Year 3

We learnt from last year and increased theprice to 590$.

Since we had enough cash balance we

repayed debt worth 6 lakh and spent 2.8million on advertising and pr.

We increased distribution support by 200$ in

each store but increased the marginsdrastically.We even spent to improve thequaliy and efficiency of our bike.


10/30

We produced more this time , thinking

increased expenditure would help us sell more

units.

But after results we realised we had spent a

lot in one year. It took a hit on our profit and

cash and our shv also stood low.

We purposely used our full capacity this year

because we knew we were about to launch a

new product next year and didnt wannaspend high on purchasing capacity.


11/30

4th year

We didnt repurchase full equity because wedidnt want a negative balance and paiddividend worth 50$.

We increased price on mountain bike andreduced some expenditure on advertising anPR since we were to launch a new prodcut.

We launched Youth Bike and priced it at 280$since it was high price sensitive and spent 1.3million advertising pr (80% of it being in Tv).


12/30

Our strategy worked , our PAT was the highest

and our cash stood the highest at 8.873

million.(since all the competitors purchased

capacity to launch new product)

Our SHV was descent but we wrong

estimated our sales . We had estimated.Lost

sales of 3400 in mountain bikes and 15,733 in

youth bike.(3 out of the 8 competitors had

launched youth).So after the 4th year we weredoing good in all aspects.


13/30

Year 5

This was the year from where our downfallstarted. We thought not to make any changes thisyear and wait and see what competitors do.

The biggest mistake that we made was , even

after having good cash reserve we didnt makeany product improvement nor launched a newproduct.(all the competitors launched anotherproduct)

We increased the price of yout bike to 330$ andsince we had high lost sales last year weproduced 50,000 of these bikes this year.


14/30

We didnt make any significant changes to ourmountain bike aswell. We had to spend almost 4

million to purchase capacity so we could make 50k ofroad bikes. We even improved our efiifcient and qualitylevel.

After the 5thyear we almost didnt have any cash andwe realised customers had expected some productimprovements or a launch of new product from us.

We had huge inventory in youth bike as instead of lastyear when there were 3 competitors , this year all the 8competitors had a youth bike. But we realised we wereselling the highest in mountain bike segment.

This was the year when out competitors took greatadvantage of the mistakes we did.


15/30

Year 6

In this year our main aim was to have a positivecash balance and work on launching a newproduct.

In the previous year, we ran out of cash andhence had to raise money through equity worth7,00,000.

We learnt from last year and so to meet customer

expectations we launched a bike in road segmentthis year, not making any significant changes toour already launched mountain and youth bike.


16/30

We priced it at 1.750 and incurred only on PR

(high sensitive ) and not on advertising since we

didnt have enough cash. We reduced our capacity a bit since we didnt had

to produce any units for youth bike as there was

enough inventory from last year.We spent huge

on quality as road bike was highly sensitive to it.

Our strategy worked in a way as we got a positive

cash balance but our sales figures in our road bike

was disappointing as we were really low onproduct awareness and distribution.


17/30

Year 7

Our startegy for this year was to improvessales of our already existing products.

We gave dividends worth 200$ and spent

good amount on advertising and PR on roadbike segment as we lacked that in the last

year.

We gave good support margin this year.Weimproved our quality hoping it would lead us

to sell more in road bike segment.


18/30


19/30

Year 8

We followed the strategy of , not increasingour expenditure on pr or advertsing insteadincreasing our distribution margins and

support. For the same , we reduced our mountain bike

and road price marginally and didnt changeprice of our youth bike segment.

We doubled our budged on distributionsupport and gave margin of 32%


20/30

We increased our brand arvertising to

8,00,000.

Our strategy helped us increasing our sales.We were selling highest in mountain segment

and in youth segment too.

We had a cash balance that stood at 3.5million dollars , but what we realised was

most of our competitors had 4 or 5 products

that helped us to frame our strategy for nextyear.


21/30

Year 9

Our strategy was to launch a new product and

capture the youth segment market and focus on

distribution.

We paid the maximum dividend till date at 307$

We increased prices of our old bikes in mountain

segment and youth segment and marginally

reduced advertising and pr expense on them We didnt make any change to our bike in road

bike segment.


22/30

For our newly launched youth product, we

kept the price @ 270$( as the old youth bike

was high priced @ 305$) and spent 1.32

million on advertising and PR.

The Big risk in this year we took was to

increase our increasing our distributionsupport 8 to 9 times than previous years.

DISTRIBUTIO

N OF DREAM

TYRES

DISTRIBUTIO

N SUPPORT

DISTRIBUTIO

N SUPPORT

AVERGAGE

MARGIN

2017 2016 2017

BIKE 18000 1800 30

SPORTS 20000 5100 30

DISCOUNT 26000 2100 30


23/30

We spent huge on efficiency (2 million), 2.2million on purchasing capacity and 2 million onquality.

As a result we had the highest retail sales for theyear , and were paying highest dividend aspercent of share price.

We had accurately produced for the year and

didnt having much of inventory. Our sales for all the bike segments were really

impressive. We were the leader in youthsegment.

But since we had huge expenditure this year ourcash balance at the end was negative 1 million.


24/30

Year 10

With the final year left , our first aim was apositive cash balance and a descent shv withgood sales.

In this year we had option of investing inshares of other companies and borrowingfunds from our competitors.

Although we didnt have good cash balance ,we took a risk of not borrowing anything fromcompetitors and trusting our descisions.


25/30

We didnt invest in shares of other companies aswe wanted to use the available cash for the

betterment and increasing visiblity of ourproducts.

We paid dividend worth 202$ in this year andincreased the prices of all our bikes marginally.

Like last year, we reduced our expenditure onadvertising and pr of old bikes marginally andagain invested heavily on distribution.Themaximum support i.e $42,000 was given to

discount stores as our main focus was on youthbikes.(80% of youth bikes were selling throughdiscount stores).


26/30

We sold capacity worth 5000 units that

pumped in half a million in our company andreduced our expenditure on quality as bikes in

youth segment were not sensitive to quality.

At the end of 10th

year we were satisfied withour results in comparison with the downfall

that started from 5th year onwards.

We again had a good positive cash balance,our PBT was 4 million $ and a descent SHV at

37$


27/30

We didnt have much of inventory at the end

of 10th

year and we attained our goal of beingmarket leaders in the youth segment.

So we realised by focusing on one segment we

were able to do better and by investingheavily on distribution ,it had positive effect

on our sales figures.


28/30

Learning

We learnt that using your resources efficiently

is a must

Strategizing can be done only after doing

adequate research and after defining the

problem areas so that one can proceed

further


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We learnt about the various decisions one

needs to take in a business related to

financing, pricing, cash flow, advertising.

We learnt the importance of team work and

coordination

We learnt our strengths and weaknesses.


30/30

THANK YOU

Documents

BBA 3 -Dream Tyres