Discuss about the Operational Plan of Zero Motorcycles.
Zero motorcycles is an American based organization that was established in the year 2006. The company is involved in manufacturing of electric motorcycles. The company has grown at a fast pace and is a well- known international brand. The company manufactures light- weight and highly efficient motorcycles that are a fun to ride (Zeromotorcycles.com, 2017). The company emphasizes much upon innovation, integrity and result. The company focuses on delivering excellent performance and value to its customers.
However, the wide variety of motorcycles offered by the company into the market of Australia has been facing issues of shortage of investment amount, time and human resources. The following is the operations plan for Zero Motorcycles:
Resource requirement:
Financial resources and human resources are the pillars of setting up a business. Zero motorcycles also requires proper financial and human support to establish its business in Australia (Cao and Yu 2014). However, due to lack of financial and human resources, the company has to find alternatives such as entering into franchisee agreements to establish a profitable business in Australia. The following are the issues faced by the company along with the proposed solutions:
Existing issues of Zero Motorcycles:
Lack of investment money
Lack of time
Lack of human resources
Presence of strong competitors
Figure 1: Major issues faced by the company
(Source: Townsend et al. 2015)
Solution for the issues faced by Zero Motorcycles:
Zero motorcycles face competition from not only electric motorcycle companies but also from fuel- efficient motorcycle companies. The major competitors of Zero Motorcycles in Australia are Harley- Davidson, BMW, Ducati, Honda, Triumph, Kawasaki, Suzuki and Yamaha. The major competitors who manufacture electric motorcycles are Mission Motors, Brammo, Energica, Brutus, Agility motors and KTM. However, the most loved models of Zero Motorcycles by the Australians are Zero SR and Zero FX (Redman 2015).
Figure 2: Market share of Zero motorcycles in Australia
(Source: Zeromotorcycles.com, 2017)
Setting up the key performance indicators is essential for measuring the success of an organization. The following shall be the key performance indicators for Zero Motorcycles:
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· Financial metrics: i) Profit: The success of the company shall be measured in terms of profits that shall be calculated by subtracting all the expenses incurred for selling a product including the commission of the agents and dealers from the amount obtained from sales (Sheng, Zhou and Zhou 2016). ii) Cost: The company shall attempt to reduce its costs for becoming cost effective. iii) Actual revenue vs. target revenue: The actual revenue shall be compared with the projected revenue for ascertaining the success of the company. iv) Sales by region: The entire region of Australia shall be divided into five zones and the sales from each zone shall be measured individually to ascertain the most profitable zone. |
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· Customer metrics: i) Number of customers: The company shall also emphasize upon the number of customers along with the sales figures and profits. ii) Cost of customer acquisition: The company shall divide the total cost of acquisition by the number of acquired customers (new). This shall enable the company to analyze the cost effectiveness of its marketing and advertisement strategies (Ustun, Zayegh and Ozansoy 2013). iii) Customer lifetime value: The company shall evaluate the value received from the customer relationships. iv) Customer retention: The company shall also focus upon the number of customers who are loyal to the company and purchase repeatedly from the company. |
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· Process metrics: i) Product defect percentage: The company shall calculate the product defect percentage by dividing the number of defective products by the quantity of products manufactured in the given time duration. ii) Measure of efficiency: The company shall measure its efficiency by measuring the number of products sold per hour in an area (Weiss et al. 2015). |
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· People metrics: i) Turnover rate: The number of dealers and agents who give up the dealings with the company products shall determine the turnover rate. ii) Number of responses to positions offered: The company shall offer the Australians to be a part of the company by choosing to become dealer or agent of the company and the number of positive responses shall determine the goodwill of the company (Ross 2016). iii) People satisfaction: The number of agents and dealers who are satisfied with the amount of commissions they receive shall determine the people satisfaction level. |
Firstly, the company shall have to find agents and distributors in Australia by giving newspaper advertisements and website advertisement. The second stage involves selecting the suitable and efficient agents and distributors who have the ability to ensure sales. The third stage involves entering into franchisee agreement with the selected dealers and agents for a specific period of time. The fourth stage involves closely monitoring their activities by measuring the quantity of sales made by them. The fifth stage involves measuring the amount of sales and revenue generated from the five zones (Ross 2016). In the sixth stage, the company shall increase the number of agents and distributors in the areas that generate good business for the company. After that, the success of the company shall be measured by comparing the sales of the company with its competitors. Finally the success of the company shall be determined by the total amount of profit obtained within the time period of the franchisee agreement
The financials of Zero motorcycles are built upon several assumptions. The company is to establish its business in Australia however, the company has shortage of funds to establish its business. The balance sheet of the company shows that a majority of the assets are of long- term nature. The only short- term asset is cash and is forecasted to grow at the rate of 5% every year. The liabilities comprise of loans that have exceeded the assets (Mahlia et al. 2014).
The expenses account for 55% of the revenue generated. These expenses include commissions, marketing expenses, utilities and maintenance expenses. The commission is set to be 2% of total amount of monthly sales made by the agents and distributors. A fixed royalty amount shall be provided to the dealers and agents. There shall be a minimum of two dealers in each city of Australia. The marketing budget shall be 5% of the total revenue generated (Williams 2013).
There shall be no cost of setting up a store instead; the franchisees shall bear the cost of storing the products. The only expenses shall be the payment of commissions and royalties to the distributors and the agents. The agents and distributors shall be paid 2% of the sales made by them (Ross 2016).
Figure 3: Expected sales
(Source: Author’s work)
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Monthly units ( Break- even) |
2400 |
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Monthly revenue (Break- even) |
$ 40000 |
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Assumptions: |
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Average revenue (per unit) |
$ 16.67 |
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Average variable cost (per unit) |
$ 2.00 |
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Monthly fix cost (royalty) |
$ 35000 |
Table 1: Break-even analysis
(Source: Author’s work)
The major stakeholders involved shall be the company owners, shareholders, agents, distributors, suppliers and the customers.
Owners: The owners of the company shall continue to be the owners as the company has decided to enter into franchisee agreement with the dealers and agents of Australia. The profits and losses of the company shall be the responsibility of the owners.
Shareholders: The shareholders who have invested in the company shall be entitled to receive their share of dividend.
Agents and distributors: The agents and distributors shall be entitles to receive a fixed royalty amount and a commission of 2% of the total monthly sales (Williams 2013).
Customers: The customers satisfaction is the ultimate objective of the company that shall decide the future of the company. The company shall emphasize upon providing value to its customers.
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Rate of commission |
The rate of commission of the agents and the distributors shall be negotiable and shall depend upon the efficiency of the distributors and the number of units sold by them. The major objective of the company is to increase the number of sales and to make the people of Australia aware about the brand (Weiss et al. 2015). |
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Price in the market |
The company shall offer discounts and other offers to its new customers. Therefore, the price of the products in the market shall be negotiable. The major objective of the company is to attract maximum number of customers and provide them satisfaction. |
References:
Cao, Z. and Yu, P., 2014. Paralleling Simulation of Operations Plan based on Decision Point Controlling. IERI Procedia, 10, pp.209-215.
Mahlia, T.M.I., Wong, K.V., Honnery, D. and Hasan, M.H., 2014. Sensitivity analysis of potential fuel savings by implementation of fuel economy standards for motorcycle. Clean Technologies and Environmental Policy, 16(1), pp.175-182.
Redman, C., 2015. The Impact of Motorcycles on Air Quality and Climate Change: a Study on the Potential of Two-Wheeled Electric Vehicles.
Ross, P.E., 2016. Run silent, run steep. IEEE Spectrum, 53(11), pp.48-53.
Sheng, N., Zhou, X. and Zhou, Y., 2016. Environmental impact of electric motorcycles: Evidence from traffic noise assessment by a building-based data mining technique. Science of the Total Environment, 554, pp.73-82.
Townsend, T.G., Powell, J., Jain, P., Xu, Q., Tolaymat, T. and Reinhart, D., 2015. Operations. In Sustainable Practices for Landfill Design and Operation(pp. 345-359). Springer New York.
Ustun, T.S., Zayegh, A. and Ozansoy, C., 2013. Electric vehicle potential in Australia: Its impact on smartgrids. IEEE Industrial Electronics Magazine, 7(4), pp.15-25.
Weiss, M., Dekker, P., Moro, A., Scholz, H. and Patel, M.K., 2015. On the electrification of road transportation–A review of the environmental, economic, and social performance of electric two-wheelers. Transportation Research Part D: Transport and Environment, 41, pp.348-366.
Williams, C., 2013. Principles of management. South-Western Cengage Learning.
Zeromotorcycles.com. (2017). ZERO MOTORCYCLES – The Electric Motorcycle Company – Official Site. [online] Available at: https://www.zeromotorcycles.com/ [Accessed 4 Aug. 2017].
Zeromotorcycles.com. (2017). Zero Motorcycles Australia – The Electric Motorcycle Company – Official Site. [online] Available at: https://www.zeromotorcycles.com/au/ [Accessed 4 Aug. 2017].
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