Safety system on motorcycles

Technology factors There is currently a wide range of existing technology which can be used to materialize the product at hand.. 5-Force Analysis Rivalry among Existing Competitors & Thr

Safety System on Motorcycles

Introduction

In 2016, Vietnamese residents suffered approximately 14,000 fatalities caused by road accidents (Thach, 2016) Although this number has fallen recently, traffic accidents remain a problematic issue In

an attempt to help resolve this problem, the authors of this paper come up with an entrepreneurial idea which involves the commercialization of a safety system of motorcycles

The product at hand is inspired by similar systems used on cars To be specific, it is a system of proximity sensors that can detect oncoming vehicles from behind using ultrasonic waves or

electromagnetic field The system will be programmed to trigger vibration at the handle of the equipped motorcycles whenever another vehicle approaches with high speed This way, the driver can react and avoid the incoming potential accident

The purpose of this paper is to provide potential investors with necessary insights of the project Opportunities seen in the environment will be reported using PEST and 5-Force Analysis This will be followed by operational procedures, presented using Value Chain Analysis A financial report of estimated break-even point and income statement will also be provided Lastly, using all analysed factors above, the authors will justify and prove that this project is viable for commercialization

Environment/Landscape

In order to provide a deeper understanding, PEST analysis and Michael Porter’s 5 Forces will be used to justify the decision of developing a Motorbike Safety System

PEST Analysis

Political factors

According to a report written by Mr Nguyen Van Thach, Director of Transport Safety

Department, the Ministry of Transport (MoT) is currently working on implementing several amendments

to the Road Traffic Law These changes will place an emphasis on driver safety and expect to, by 2030, reduce the numbers of road accidents, fatalities and injuries by an annual rate of 3 percent (Thach, 2016) Specifically, it is expected that there will be stricter law enforcement This will be done by improving the effectiveness of traffic police, raising difficulties in driver licensing, regularly inspecting vehicles, etc (Dat, n.d.) It can be seen that the authorities have been well aware of road safety and attempting to ameliorate the issue, which potentially facilitates the development of the idea at hand

In the near future, public awareness of traffic safety can be expected to be relatively higher Specifically, the Vietnamese government is working on establishing a stabilized driving culture This will be done by strengthening propaganda on road safety, improving the quality of traffic-related education in schools and pushing social campaigns that promote a healthy road safety culture (Dat, n.d.)

Economic factors

Statistics from the World Bank show that the economic environment in Vietnam has been improving rapidly for the last 10 years and this trend is expected to maintain in the upcoming years (World Bank, 2019) To be specific, Vietnam’s GDP growth rate has experienced an increase from 5.4%

in 2009 to 7.1% in 2018 (World Bank, n.d.) Theoretically, this is an implication of an emerging business environment, hence a diverse source of investment It can also be interpreted as a reason for positive future outlook of the market and there should be more opportunities for new enterprises (Investopedia, 2019)

Additionally, Vietnam has experienced a similar increase in GDP per capita This figure has also been increasing at a rapid pace, from 4.4% to 6.0% during 2009-2018 (World Bank, n.d.) This implies that individuals within the economy are able to generate increasing incomes during the last 10 years As a result, more disposable income is made, suggesting a growth in consumer spending, which is a positive sign for start-up businesses

The United Nations reported that during 2005-2016, the number of motorcycles registered in Vietnam increases significantly from 16,086,644 to 47,131,928 This is an increase of approximately 193% over 10 years (United Nations, 2018) Besides this, Vietnam ranked themselves as the largest motorcycle markets

in 2018 with a size of 3.39 million-unit sales, up 3.5% compared to the year before (Motorcycle Data, n.d.) Therefore, this can be considered as an emerging and potential market for the authors’

entrepreneurial enterprise

Technology factors

There is currently a wide range of existing technology which can be used to materialize the product at hand As mentioned, the safety system works on the mechanism of outputting a signal and providing reaction by analyzing how long it takes for the signal to return Because of this, there are 2 different signal outputting technology that can be implemented in the system The first one is called ultrasonic transducers As the name suggests, this device transmits ultrasonic waves to the surrounding direction As these waves impact with objects in their way, they bounce back The transducers can calculate the time between transmitting and receiving and decides to alert the driver based on how they are programmed

The second option is electromagnetic sensors These sensors can generate an electromagnetic field around the vehicles and send out an alert whenever something enters it (Stevenson, 2016)

5-Force Analysis

Rivalry among Existing Competitors & Threat of New Entrants

Since this is the first product of this kind in the market, there are currently no competitors However, if the product succeeded more competitors are expected to enter the market This is due to the vast

availability of material and the fact that there is no competitive advantage in technology As it can be observed, the technology required to manufacture a safety system on motorcycles is not rare and can be easily accessed This is an obstacle that must be resolved as the project is carried out

Bargaining Power of Buyers

As discussed, the MoT is attempting to facilitate a healthy driving culture and public awareness will be raised in the near future (Dat, n.d.) As a result, existing motorcycles manufacturers would potentially be interested in adopting and using the authors’ product, as they would be able to mark-up prices while satisfying the upcoming trend Therefore, there are not only opportunities in retail but also in wholesale This paper has already reported Vietnam’s impressive growth of the motorcycle market in previous sections In addition, there is currently a variety of motorcycle manufacturers in the market such as Honda, SYM, Piaggio, etc It is worth noticing that this number has been increasing, as evidenced by the recent entrance of a local brand – Vinfast (Vietnamnet, 2019) Overall, the bargaining power of buyers in this market is relatively weak as consumer availability is high

Threat of Substitute Products

The core value of a safety system on motorcycles is that it keeps the driver safe There are currently many products on the market that serve the same purpose such as helmets, jackets with airbags, elbow protectors, etc However, as a matter of fact, a safety system provides a unique value to customers – to proactively identify and prevent traffic accidents This implies that a competitive advantage over substitute products would be created Thus, the threat of substitute products is not strong at the moment the product is launched

Nature of the Business/Operations

Support Activity

Firm Infrastructure

In this sector, because our business is a start-up business and in the beginning stage, we tend to hire our headquarters and warehouse near 3LP manufacture By doing this, we can enhance transportation efficiency and reduce transportation cost Furthermore, by hiring infrastructure, we reduce our investment fund and have more capital to invest in an IT system which is considered as one of the most important factors to manage our Supply Chain

Human Resource Management

In the Human Resource Management part, we have two main teams to enhance and manage our operation process including financial team and management team Firstly, Financial is the most essential part of a business organization (Hamza, 2016) It will help the business to maintain its sustainability in the

business organization Therefore, it is essential for our business to have a financial team separately to control and deal with statistical number Furthermore, to sustain and manage the growth of our business

and the strategies, the management team is essential to control these terms Our management team also manage the development strategy of employees including recruiting and training

Technology Development

In technology development, our R&D department has been established since the start of our business Our R&D department's main objective is designing and developing our product Furthermore, R&D will also receive a review from the consumer to enhance the perfection of the products

Procurement

In the procurement process, our management team will also undertake this section The first job of this section is researching and analyzing about the information of the supplier and the performance of the manufacturer After finishing the research and analysis, our management team will decide whether to continue to maintain a relationship with that supplier and manufacturer or not These processes will gain

us full control of our supplier and manufacturer Therefore, we can control and sustain our business performance

Primary Activity

Inbound Logistics

When a sustainable supply chain is mentioned, local raw materials are considered as an important factor

to maintain the sustainability of the supply chain (Jennie, 2013) Local raw materials consist of major advantages to help sustain the supply chain by enhancing the most weight and greatest transportation distance With short transportation distance, the supply chain risk, cost, and delay will be reduced significantly Therefore, local raw materials choice is a very good choice for a new business However, the local raw material may not achieve the highest quality or efficiency in cost When purchasing material

is finished, the material will be specialized in the warehouse Then, the management team will manage the quality, cost, quantity through the IT system

Operation

In the beginning stage, with less capital and experience, outsourcing is the best option for a new business Outsourcing options will provide the new business with experience, cost-saving, and management (Flat World Solution, 2019) Therefore, outsourcing is the best option for a start-up business to manufacture their product In our production processes, we will use outsourcing manufacturing to produce our

products Firstly, our R&D department will send the design of our product to our manufacture Then, our manufacturer will produce our product according to our quantity and requirement Next, the quality control will be managed by the manufacturer through our quality control policy which we have signed at the beginning Finally, the product will be packaged and transferred to our warehouse

Outbound Logistics

When the product arrives from the manufactory to the warehouse, our logistics and management team will check the status of the package and the packaging quality Then, if the status and the quality of the packages are qualified, the quantity will be checked and saved to our IT system Next, all the packages will be moved to the warehouse and prepared for delivery Finally, a Just-in-time delivery (JIT) method will be applied to deliver our product to our retailer According to Brian (2018), JIT is an inventory management method which helps facilitate speedier order fulfilment with particular application in raw materials orders and manufacturing With JIT, our inventory will be well-managed in terms of quality and quantity

Service

In our services, we mainly focus on customer care service In our perspective, customers are priceless present to our company In customer care, we have a free trial of our product whenever they come to our main store In this section, we will help them understand more about our product and how to use it in the most efficient way Furthermore, we also provide quarterly maintenance and warranty for 3 years Finally,

we have 1 switch 1 policy which helps the customer to exchange the product if the products are not operating properly

Marketing Sales

In order to the product can reach to our customers, we start to analyze the market for our product Based

on our 5- force Analysis, we don’t have any competitors since this is the first product in this kind of

market Moreover, Vietnamese nowadays start to think and care more about their safety on the road, so this product can reach them through their needs and demand Then, we use social media to promote our product by Facebook or Instagram And promotion will be our first strategy to attract more buyers such as discount 20-25% for the first 100 people

Financials

Break-even analysis

We plan to produce at least 2000 units, which we value on 1,250,000 VND per unit, in the first quarter of the year; and in order to recover all variable and fixed costs, we did some calculations for it First of all, is variable costs which are included: Local Raw Materials, Delivery, Cost of goods sold, Hire a

manufacturer to produce our products, Marketing Sales; and the total of this will be around 1,600,000,000 VND (variable cost per unit: 800,000 VND) Next will be Fixed costs such as Renting a warehouse and office, Employee Salaries, facilities Taxes; and it will take 90,000,000 VND in total

After valuing all the thing, we have some calculations:

 Total variable and fixed costs: 1,600,000,000 + 90,000,000 = 1,690,000,000 vnd

 Price of our product: 1,250,000 vnd per unit

 In order to recover all variable and fixed, we have to sell :

1,690,000,000 / 1,250,000 = 1,352 units

Income Statement

For the first month after starting to sell our product, we forecast that we can sell around 1000 units of the product From that, we have our Income Statement for the first month

Feasibility of the Concept

Based on the information provided in the previous PEST analysis we can state that we have a viable product The current Vietnamese market represents a huge opportunity for this type of technology The number of motorbikes in the country is not only one of the largest in the world but it is also

increasing, so the potential market is huge We can also see how the purchasing power of the Vietnamese population is growing fast, so the number of potential customers will increase over time Finally, we can see how recent political initiatives are trying to increase driver safety, therefore there is

a place for innovative products that can decrease motorbike accidents and improve safety on the road

5 Critical Factors in Opportunity Assessment:

1 Uniqueness:

The use of proximity sensors and haptics has already been used in the transport industry,

specifically in the automobile industry For example, Toyota introduced a back sonar in 1982 in their Toyota Corona (Toyota, n.a) and since then many other brands have joined this technology Today there are proximity sensors kits for cars that help you parking for a really low price Therefore there is not a lot

of innovation needed to start up since the technology already exists The real innovation of our product is the adaptation of this technology to motorbikes and its introduction to the Vietnamese market

2 Investment:

Based on our break-even analysis we need a total of 1.690.000.000 VND (73110 USD approx.) as the initial investment In order to reach this amount, our starting source of investment will be our own money and money from family and friends In case we don’t reach our break-even point during the first quarter we will rely on angels and venture capitalists to continue with our activities

3 Growth of Sales

Given the situation of the motorbikes market in Vietnam, we expect a big growth once the product is known by our customers During our first stage, we will run an initial marketing campaign to get to know the product (Marketing Sales, page 7) and during this stage, the number of sales will increase slowly After we get to know the product to our users in the firsts months we spect exponential growth given the size of the market (Economic factors, page 2) and the increasing concern about safety on the road (Political factors, page 1 & 2)

4 Product Availability

The product is currently in the prototype phase, still, some development will be needed before launching

In order to tell when the product is totally ready for consumers, we will perform multiple iterations of the product to test it at a small scale By using agile methodologies we will be able to respond to customer preferences faster and adapt to change (Manohar, P 2017) This way we will not rush the product into the market