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Executive Report on Real Cool Cycles Development strategy 1. Introduction 1.1 Background of Real Cool Cycles Real Cool Cycles is the kind of company that was built from nothing and attempted to maximize economic benefits to the community by producing bike-the "Rock Hopper": In Erehown, where Real Cool Cycles is located, there are two segments to this market: the low cost Leisure segment and the higher cost Adventurer segment. Recently, since imports catered for demand in the Leisure segment, the government banned the importing of bicycles and bicycle components from other countries in all segments except for the low cost leisure segment where a number of bicycles and components were being produced very cost effectively by some third world countries. The government initiated stage two of its master plan. A prohibitive import duty was imposed effectively killing demand for cheap third world imports and leaving both segments available to the local manufacturers. With this change to the bicycle market, the government decided also to privatize the manufacturing companies. Investors who were able to spot a good opportunity and cheap resources snapped up the firms. 1.2 Future development plans of Royal Cool Cycles In this context, Royal Cool Cycles makes plans as the following: Vision: To be " Erehown 's favorite bicycle brand". Mission: To be the leading and foremost producer of bicycle producers in Erehown, offering customers the best value and most advanced developments in bicycle technology from a committed and highly skilled workforce. Goal: To penetrate the local market by implementing competitive development strategies. Objective: To increase sales in the local market by 20 per cent over the next five years. 2. Analytical tools of the report 2.1 Analytical tool of the external environment for Royal Cool Cycles 3. Analysis of the business environment 3.1 Analysis of the external environment 3.2 Analysis of the resources and strategic capability 3.3 Strategic options 3.3.1 Generic Strategies l Low Cost Leadership 3.3.2 Alternative Directions 3.3.3 Choice of the strategic options 4. Analysis of product and the market 4.1 Analysis of market layers for Royal Cool Cycles 4.2 Product mix for Royal Cool Bicycles 4.2.1 Product As for product, Royal Cool Bicycles decided to modify some of its product. Since increase is expected in the leisure segment, some of the product designed for Adventurers would be modified in order to appeal to the Leisure. On the other hand, the existing well known product for adventurers would also be improved by retaining the product's same physical characteristics but simplifying production requirements and lowering costs, which will gain the competitive advantages. 4.2.2 Price Considering the price sensitivity of consumers in each target segments and the price of competing products, prices for the main product is set as the followings: Adventurers: 3500 Leisure: 300 4.2.3 Promotion l advertising Adventurer segment are relatively heavy readers of magazines, while the Leisure segment tend to be relatively heavy readers of newspapers. Both segments watch television. Newspaper advertising is about half as expensive as TV and magazine advertising per person reached. In addition, Adventurers are medium sensitive to the advertising while Leisure is highly sensitive. The situation of the medium is as below: Television: Ersehwon has only one national TV network. Televisio