Proposed MBA project title

September 14, 2004 (second thesis idea raw from notes no editing)

Drive the future: a feasibility analysis for a synergistic family of social ventures to build a better world through automotive industry: The Acheson Foundation (Foundation), Hybrid ISP (ISP), Hybrid Media Group (Media), Hybrid Motor Co. (Automaker), Hybrid Auto Group (Dealer), Advanced Real Estate (RE).

NOTE
Verbs from AOM journal
PAST
Indicated, noted, it has been well noted in literature, showed, it is worth reiterating, our findings suggest, we have suggested that, our results suggested,
FUTURE
Might instead explore

CONDUCTING THE FEASBILITY ANALYSIS

Industry Analysis (Which games are we going to play?)

Geopolitical: oil

US
America imports more than half of its oil demand. 34% comes from Latin America, 16% from Canada and 18% from Saudi Arabia.
CHINA
In the past three years demand for oil has increased 1.2 million barrels.
WORLDWIDE RESERVES
Conservative estimates run around 1,000 billion barrels of supply and 100 million in demand per day or 40 billion per year. That works out to about 25 years worth of oil. Whether we look at the conservative or optimistic projections, oil will run out by the end of the millennium.
IMPLICATIONS
In the auto industry, the implication is that every one of the 50 to a projected 100 million cars and light trucks on the planet will be replaced by a new technology (Simanaitis, 2004)

Fortunately the race has begun and the market segment that includes green vehicles is experiencing 100% growth spurred by oil price record highs reached in 2004.

Sociopolitical: grants
Demographics: baby boomers, 68M new drivers
Trends: hybrids

BATTERIES
HEVs have an additional battery that helps the vehicle down the road. American hybrids were 1st sold in 2001 and some have already worn out those battery packs. Simanaitis (2004) identified an un-served aftermarket segment replacing battery packs. He wrote that the secondary market outside of the manufactures value chain will offer reconditioned units at lower prices. On the other hand, he estimated that battery packs may exhibit the same durability of traditional power trains around 150,000 miles (Simanaitis 2004).


Life cycle stage: mature
Barriers to entry: high
Technology: batteries, materials, networking, fuel cells
R&D expenditures: research
Profit margins: research
Primary research from distributors, suppliers, competitors, retailers: interviews

Market (What does the terrain look like?)

Size: 16-17 million vehicles/year
2003 = 43K hybrids and 2004 = 80K???

In a speech for Washington DC’s Chamber of Commerce, Toyota’s CEO, Okuda (2003) spoke of the automotive industry’s future. Although some view the industry as mature, he introduced his projections with increased competition and opportunity. Populations and markets are projected to continue growing including the US which Okuda (2003) projected as a 18-20 million unit market by 2010. Okuda (2003) added that Europe is on a similar path with an equivalent market size. Asia with half of unit sales coming from China is also projected to consume 20 million units (Okuda 2003).



Growth: overal 3% vs segment 100%
Demographics
Customer profile: green
Competitors: Toyota, Honda, Ford
http://www.econetwork.net/
http://www.peaknet.org/
http://www.nedernet.net/
http://www.solarpoweredhost.com/
http://www.sustainablehost.com/

Primary research on the customer: interviews

Idea (Products and Services)

Features and benefits of products and services: green
Development tasks
IP: .coms, Passive Climate Control
Differentiation: green

Management Team

Values: green
Passion: save the planet
Experience: problem
Expertise: ok
Gaps: many

Finance

Start-up capital:

Foundation
ISP
Media
Automaker
Dealer
RE
Assets






PP&E

10,000.00
10,000.00
1,000,000.00
2,100,000.00
3,000,000.00
Expenses






Wages
24,000.00
12,000.00
108,000.00
300,000.00
360,000.00
36,000.00
Sub-contractors

12,000.00
60,000.00


12,000.00
Rent
1,200.00
24,000.00
12,000.00
120,000.00
120,000.00

Fees
1,000.00
1,000.00
2,000.00
10,000.00
5,000.00
2,000.00







Total Start-up costs
26,200.00
59,000.00
192,000.00
1,430,000.00
2,585,000.00
3,050,000.00







Group Start-up costs
7,342,200.00






Working capital

Fixed cost requirements



Break even analysis

Value Chain Analysis

Illustrate the chain
Distribution alternatives and target market segments
Innovation in the chain




PRESENTING THE FEASIBILITY ANALYSIS

Executive Summary


Title Page

Names: The Acheson Foundation (Foundation), Hybrid ISP (ISP), Hybrid Media Group (Media), Hybrid Motor Co (Automaker), Hybrid Auto Group (Dealer), Advanced Real Estate (RE)

Founding Team Member Names: John Acheson, James Acheson, Daemeth Rooney, Troy Hautzenrader, Chris Sozzi, Olivier Lepord

Business Concept

Business
Customer
Value proposition
Delivery
Potential for growth and spinoffs

Industry Analysis

Industry and Target Market analysis
At $20K per unit times Okuda’s (2003) industry projections for 2010, the worldwide industry is valued at $1,200,000,000,000.00 while the US target market segments at $360-400 trillion. Using the US 2004 units sales figures of 17 million units shows a projected 18% increase in unit sales over the next six years. Although a mature domestic market, the size is massive, and the 3% annual growth rate is acceptable at current inflation rates.

Focusing on the hybrid market segment findings was much more exciting. Using the Prius as a barometer, and unit projection at 80m in the US for 2004 and 43K the year before, a growth rate is still 96% only three years after the introductory rate of 276%.

The numbers are elusive because supply cannot keep up with demand and tens of thousands of consumers have already put deposit up to buy 20-30,000 hybrid vehicles.

Niche
There’s no doubt about explosive growth but the size is still a niche market of a projected 100,000 units or $2 trillion at $20K per unit. A larger market exists in the cumulative hybrid vehicles on the road that require service. This suggests that remanufacturing and servicing the cumulative aging fleet is a larger market experiencing a slower growth rate. Even so, the competitors are fragmented mom and pop shops and virtually no aftermarket manufacturers. Batteries or other components that wear out may be another market segement to investigate.



Competitor analysis
Customer
Distribution channels
Entry strategies

Team

Qualifications
How critical tasks will be handled
Gap analysis

Product/Service

Descriptions
Current status
Tasks and timeline
IP owned and to be acquired
Plan for prototype

NOTE
The project proposes a current market segment serving 100,000 hybrid vehicles with aftermarket parts and services after they have left dealer lots.


Financial Plan

Summary of key points
Assumptions
Resource needs assessment
Pro-forma financial statements
Break even analysis

Timeline to Launch (use operations analysis)

Task
Order

Bibliography

Allen, K. R. 2003. Launching new ventures. Boston: Houghton Mifflin Company.

Simanaitis, D. 2004. Fill’er up… but whatever with? And wherever from? Road & Track, Volume 56, Number 2: pg 144.

Hubbard, G. 2004. Business leaders building a better world: the 12th annual net impact conference. Columbia Entrepreneurship Update. Summer 2004: pg. 2.

Okuda, H. 2003. Speeches. North American Press Room. Remarks. Washington, D.C. U.S. Chamber of Commerce
http://pressroom.toyota.com/photo_library/display_release.html?id=sp20030910
Retrieved 9/14/2004 printed on 09/10/2003

Pg. 109, “TABLE 5.2: Feasibility Analysis”
Pg. 112, “TABLE 5.3: Feasbility Analysis Outline”

Appendix

Glossary
Social entrepreneurship: pursuing “double-bottom line venturing opportunities;” focused but not limited to the following industries: “energy, the environment, economic and community development, education, arts, and health (Columbia, 2004);” measuring social impact and social return on investment


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Maps
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