Use the Case Study presented here to answer the questions below. Your answers should be long enough to answer each
question fully and completely and typed the individual question. Use as much space as is needed. Your answers should demonstrate an
understanding of the concept(s) should apply critical thinking and should
provide analysis of the Case Study in light of the concepts(s). You should not just re-iterate what has been
presented in class, but integrate the information and relate it to the Case
Study. Proper APA style must be used for
any citations and references that you use.
Your Exam will be graded on the completeness and accuracy of your
responses and whether you have appropriately tied your responses to the Case
Study. Responses that do not mention the
Case Study will receive very few points, if any. Each question is worth 10 points.
DOMINION TRAIL BIKES
In 1985 Ted Thomas took $6,000 of his savings,
borrowed another $4,000 from his best friend, and opened a bike rental business
in Vienna, VA, adjacent to the Washington & Old Dominion Trail (W&OD)
that goes from Purcellville to Old Town Alexandria (45 Miles) and connects to
the Mt Vernon Trail (18 Miles) and ends at George Washington’s Mt Vernon Estate. He rented a location, bought 10 bikes and opened
his first store in Vienna near an entrance to the W&OD Trail, where there
is also parking, and near the historic Vienna Inn and a number of food and
drink establishments. He has since
opened stores in Old Town Alexandria and Reston, VA, where he sells, rents and
repairs bicycles. The Vienna store is
now his anchor store, and at 5,000 square feet, it is three to five times
larger than his other stores. Ted
estimates he sells around 3,000 new bikes a year. Because of the high use of
the W&OD trail, especially on weekends, he also provides tune up and
maintenance services at all of his stores for the many riders from up and down
In 2012, Ted leased a store in the heart of D.C.,
near the Smithsonian Museums and other tourist attractions. He uses this store to rent bikes to tourists
and residents of the city, and does some repairs to his rental bicycle
inventory in the back of the shop.
Although he has always made money, or he would
not be in business, Ted has seen a decline in bikes sales of about 20 percent
since 2008. He attributes this to the
downturn in the economy and the growth in Internet sales. However, his rental and tune up and repair
business has increased dramatically. Over
the past few years, he realized that he must be more aware of expenses and
decrease them wherever practical in order to preserve profits.
Ted has thinks that the one of the most
important factors is the weather, but has no data to support that thinking. On rainy days, there are few customers in the
stores, while on sunny weekends all of his locations are extremely busy. From spring through fall, Ted keeps all his
stores open seven days a week, while in the winter months he opens his stores
on the weekend when the weather is good for riding. Through observation, Ted figures his highest
sales occur in May, and that June and September are his best months for
rentals. He also sells many bikes during
the holiday season in December, but in January and February, he often wonders
if he should close shop and go to Florida for a couple of months.
Old Dominion Trail Bikes grosses between $5 and
$8 million annually and earns Ted a comfortable six-figure income. Each year, he leaves a considerable amount of
cash in the business so that he does not have to borrow money. He sells a wide variety of bikes (from
tricycles for toddlers to sophisticated racing bikes) and accessories such as helmets,
speedometers, bike racks, repair kits, and clothing. Bicycle sales have decreased to account for 25
percent of revenues. Accessories such as
helmets, bike racks, gloves, and locks amount to another 5 percent. Rentals make up about 35 percent, and repairs
make up the remaining 35 percent.
In recent years, he has noted that customers are
less likely to purchase the high-end road and triathlon bikes, and are
purchasing bikes in the range of $400 to $1,000. The lower priced bikes are also easier to
sell and to keep the cash flow moving.
Most of the rental business is concentrated in the
D.C. store in downtown and the Alexandria store, due to the tourists and
university students located near those stores.
Ted is excited about rentals, as they have a huge profit margin. He can charge as much as $50 a day, which
means the bikes pay for themselves after just a few rentals.
Ted’s expenses include the cost of goods such as
new bikes and accessories, rent and payroll. He negotiates leases for all his locations
except the Alexandria store, which he owns outright. Ted has 15 full-time employees and usually
hires another 15 part-time employees during the busy months and weekends.
Until two years ago, he was spending about
$30,000 a year on advertising in local papers.
Now he uses a simple website and has links on many of the local biking trail
sites to provide information about his various locations, and his advertising
budget is close to zero.
In the late 1990s, Ted over-expanded to six
stores, including a store in Purcellville, VA, and one in Bethesda, MD. The expansion necessitated a warehouse in
Springfield, VA, the hiring of a general manager and considerable overhead
expenses. In a subsequent cost-reduction
effort, Ted closed the Bethesda store, gave up the warehouse and moved his
inventory to the Vienna store, and let the general manager go. Now, he handles all the general management tasks
himself, which affects the time that he has available to plan and develop
Ted further reduces his expenses by working in
the Vienna store two days a week. Since
he has only one staff person in some of his stores, he has to make special
arrangements if that person does not come to work, or takes a day (or week)
He is trying to expand the bicycle repair work, especially
on the weekends, so he will be able to increase revenue from this profitable
aspect of his business. He needs to have
repair capability at each store to maintain the rentals, prepare the new bikes
for sale, and perform the periodic maintenance for the bikes that he has sold,
as well as provide the breakdown repairs and adjustments for the riders on the Trail.
In an effort to increase profits, Ted tries to
get good deals from his suppliers so he can realize a good margin on bike and
accessory sales and repairs. He looks
for situations where suppliers have more bikes in a line than they need and
buys those bikes at a discount for rentals and low-end sales, while maintaining
a rapport with high end suppliers so that he can offer his customers the best
at reasonable prices. By doing so, he
can sell bikes at a lower retail price with on-the-spot delivery while still
realizing a nice profit.
Ted has no bank debt, and has long since repaid
the $4,000 he borrowed from his friend to start the business. He feels that, because he has a diverse
business strategy that addresses the many different aspects of the local bike
business, he will do well in the many different economic climates as long as he
is able to manage his varied business.
He also feels that he is insulated from “substitutes” from the
Electronic world, due to the rental and repair aspects of his business.
- List 3 strategic goals for Ted’s
business and provide an explanation
5 specific types or categories of information that Ted needs to run
his business and explain why
they are important to him.
and explain three
business processes that Ted likely uses in his business and explain how a technology
solution could help each one of them.
- Ted has a website with information
about his stores. Identify and explain two additional ways Ted could use
the internet in his business. Tie each use to a specific e-commerce
business model and explain how
that model applies.
- Explain to Ted what a supply chain management
(SCM) system could do for his business and how it might improve his operations. Be sure to cover the full range of SCM functionality as
it applies to Old Dominion Trail Bikes.
- How could Ted
combine the information he gets from in-store customers with those who
purchase via the website into a single Customer Relationship Management
(CRM) system and what three benefits
would he gain from doing so?
- Ted would like to increase
repair work and rentals as they are the highest profit aspects of his
business and the Internet is not a competitor. What are three specific ways he could use technology to accomplish
- Monitor customer preventive
maintenance and repair work and offer special maintenance programs and
rates to previous customers. Ted is not sure if he should implement an Enterprise
Resource Planning (ERP) solution. Identify and explain three benefits to an ERP for Old
Dominion Trail Bikes. Identify and explain two important
considerations in implementing an ERP.
- If Ted implements an ERP for Old
Dominion Trail Bikes, he will need to know whether the project was a
success. List and explain three
metrics (or measures) he can use to determine whether the project was a
- Since neither Ted nor anyone on
his staff has any experience with information technology, list and explain
five things he should consider or address as he proceeds with his IT