1. Introduction
Shiro is evaluating two options for starting an eco-friendly city tour business: e-rickshaws and electric bicycles. This report explores both options by considering various factors like market trends, internal and external influences, financial forecasts, and relevant regulations. The goal is to help Shiro make an informed decision that promotes sustainability while achieving profitability in the first year.
2. Analysis of Factors Influencing the Business Decision
| Factor | E-Rickshaw Option | E-Bike Option |
|---|---|---|
| Market Demand | Growing demand in eco-tourism, especially in European and Southeast Asian cities. | Rapid growth in e-bike rentals for eco-friendly, active city tours. |
| Environmental Impact | Low pollution, but still uses batteries for charging. | Very low emissions; relies entirely on rechargeable batteries. |
| Cost of Implementation | High initial cost for purchasing e-rickshaws and renting storage. | Lower initial cost for purchasing e-bikes but need for storage and maintenance facilities. |
| Legislation | Required to comply with local regulations on eco-friendly vehicles. | Must comply with city regulations for electric vehicle use and safety. |
| Target Market | Tourists seeking a comfortable, guided experience with a cultural focus. | Tourists seeking an active, environmentally friendly way to explore. |
| Competition | Few competitors offering e-rickshaw tours in the city, providing a potential niche. | High competition in the e-bike rental market, though it still has significant growth potential. |
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3. Evaluation of Internal and External Resources
| Resource Type | E-Rickshaw Option | E-Bike Option |
|---|---|---|
| Human Resources | Three existing drivers who can be retained. | Additional staff may be required for bike maintenance and tour guidance. |
| Physical Resources | E-rickshaws and a storage yard with charging stations. | E-bikes, storage, and charging stations. |
| Financial Resources | Initial business purchase cost and ongoing operational costs. | Lower start-up cost but ongoing maintenance of bikes. |
4. Financial Forecasts and Analysis
| Financial Data | E-Rickshaw Option | E-Bike Option |
|---|---|---|
| Predicted Sales Revenue | $89,000 | Estimated to be lower due to more competition, possibly $70,000 |
| Fixed Costs | $48,000 (storage) + $21,000 (wages) + $9,000 (insurance) | Likely to be lower for storage and staff costs. |
| Variable Costs | $12 per tour | Likely to be similar or lower per tour due to less vehicle maintenance required. |
| Net Profit (after costs) | Profitability within year one; risk of competition driving prices down. | Lower initial revenue but potential for higher customer volume. |
5. Possible Risks and Alternative Approaches
| Risk | E-Rickshaw Option | E-Bike Option |
|---|---|---|
| High Operational Costs | High fixed costs (storage, wages, insurance). | Lower operational costs but may require frequent repairs. |
| Market Competition | Low competition, but market size is smaller. | High competition, though the market is expanding. |
| Environmental Factors | Batteries need regular charging and maintenance. | E-bikes could be vulnerable to vandalism when parked. |
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6. Legislation and Regulation Implications
Both options need to comply with the city council’s regulation for using eco-friendly vehicles, which requires:
- Use of electric-powered transport only.
- Ensuring safety measures, such as seat belts for e-rickshaws and helmets for e-bike riders.
- Meeting emission standards.
7. Conclusion and Recommendation
Based on the analysis of market demand, cost implications, resources, and potential risks, the e-rickshaw option appears to be more viable for Shiro. The lower competition in the market for eco-friendly, guided city tours with e-rickshaws gives Shiro the opportunity to establish a unique offering that meets both the environmental goals and business objectives of profitability by the end of the first year.
Recommendation: Shiro should opt for the e-rickshaw business, as it provides a niche market with less competition, and the required resources are already available through the existing business for sale.
8. Financial Forecast Summary
| Category | E-Rickshaw Option |
|---|---|
| Sales Revenue | $89,000 |
| Fixed Costs | $79,100 |
| Variable Costs | $12 per tour |
| Profit (estimated) | Profitability by Year 1 |
9. Presentation Slides Outline
- Slide 1: Introduction – Business Objectives and Options
- Slide 2: Market and Environmental Analysis
- Slide 3: Internal Resources and Staffing
- Slide 4: Financial Forecast and Risk Analysis
- Slide 5: Legislation and Compliance
- Slide 6: Conclusion and Recommendation
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