Business Analysis Report: TNV Bike Sales Bankruptcy in 6 Quarters

This report presents a business analysis of TNV bike sales, focusing on the company's bankruptcy within six quarters. The analysis covers market share, revealing TNV's low market penetration compared to competitors like 360 Bicycle shop. It examines market demand across different bike segments and cities. The pricing strategy, characterized by aggressive rebates, is scrutinized alongside the income statement, highlighting volatile pricing, ineffective advertising expenditure, and increasing store expenses. The balance sheet analysis reveals dwindling cash reserves and reliance on emergency loans, leading to the wiping out of net worth. The cash flow statement indicates constant negative operating cash flow. Key financial ratios reflect negative results across the board. The report concludes with potential mitigation measures, including a proper business strategy, effective sales and workforce planning, focusing on profitable segments, prudent lending practices, and investment in infrastructure and R&D.

Business Analysis-Write Up
Introduction
The report presents a business analysis and rationale for the company to go bankrupt in 6
quarters. The game was played by our team and the company went bankrupt in the game in 6
quarters. The report presents a brief summary of the reasons for bankruptcy and possible
mitigation measures.
Analysis
Market Share
Our company is engaged in Bike Sales under the brand TNV and has market share of only
6% compared to other competitors in the market. The largest share has been acquired by 360
Bicycle shop with a market share of 65%. A pie chart of market share of different entities is
presented as under:
Market Demand
Further, the market demand during the period of 6 months has been elaborated as under
through pictorial representation:

Demand by City
The market demand of TNV bikes under different segment is presented as under:
On basis of the above, it may be inferred that TNV has the lowest demand under recreation
and highest demand under speed. Further, the company has not fared well under all three
segments.
Pricing
The pricing model adopted by the team for the three brand of bikes is very aggressive with a
huge rebate given for progressing sales, The price structure of the bikes are as under:
TNV Bike: Price of 1850; Rebate 800; Bonus 100 and Gift 30
TNV: Price of 1750; Rebate 800; Bonus 100 and Gift 30
TNV Bike: Price of 1700; Rebate 650; Bonus 0 and Gift 0
Analysis of Income statement
The income statement reflects that company has not performed well with no profit reported
even in single quarter of 6 quarters played. Pricing structure of the company has been highly
volatile as compared to competitors on account of which huge discounts had to be offered to
customers which is apt from rebate section of financial statement.
The company has a very sharp increase in advertisement during the fourth quarter of the
game. The increase was approximately 70 times to last quarter with an increase in revenue of
just 1.2 times. The said expenditure clearly implies that the advertisement did not bear the
desired results for the company and expenditure just added to the negative financials.
Store expense of the company has also reported a good increase over the quarters which was
in general alignment with the increase in top line of the company.
The company has witnessed a major increase in cost in the fourth quarter which has wiped
out its financials significantly.

Revenue graph
Quarter 1 Quarter 2 Quarter 3 Quarter 4 Quarter 5 Quarter 6
0
200000
400000
600000
800000
1000000
1200000
1400000
Revenues
Revenue Vs Expenditure graph
Quarter 1 Quarter 2 Quarter 3 Quarter 4 Quarter 5 Quarter 6
0
1000000
2000000
3000000
4000000
5000000
6000000
7000000
8000000
Revenue Vs Expenditure
Revenues Total Expenses
Balance sheet Analysis
The company has a dwindling cash reserve in its balance sheet since quarter one which wiped
out the capacity of the company to go for further aggressive planning, TNV company had
taken three times emergency loan once in quarter 4 and other in quarter 5 and 6 to revive the
business. However, the company never witnessed a positive cash flow on account of faulty
business practices, lack of proper management, lack of proper advertisement and discount
policy.

The net worth of the company was wiped out in quarter 4 with huge losses in business. A
brief snapshot of the retained earnings downfall through a pictorial representation is given as
under:
Cash flow statement Analysis
The most disappointing part about the six quarter performance has been the constant negative
operating cash flow. The company never reported a positive cash flow in six quarters which
wiped out the major financial position of the company. To cope with the negative operating,
the financing activity has to be increased so as to maintain and sustain the business. Further,
the investing activities of the company has been stable over the period.
A brief snapshot of the net operating activities of the company is presented as under:
Quarter 2 Quarter 3 Quarter 4 Quarter 5 Quarter 6
-8,000,000
-7,000,000
-6,000,000
-5,000,000
-4,000,000
-3,000,000
-2,000,000
-1,000,000
0
Net Operating Cash Flow
Quarter 1 Quarter 2 Quarter 3 Quarter 4 Quarter 5 Change Quarter 6
-12000000
-10000000
-8000000
-6000000
-4000000
-2000000
0
+ Retained Earnings

Key Financial Ratios
All the key financial ratios of the company had a negative results. A brief snapshot of the key
financial ratios for the company is enclosed in the excel.
Possible Measures
The possible actions that may be taken by the team to revive the company or not to repeat
similar mistakes if game is played again:
a. Proper business strategy: The company has expended significantly at one time and has
reduced the expenditure drastically the other time. Thus, steps shall be taken by the
company to reduce such actions in the future.
b. Proper Sales and Man force planning: The sales of the company increased but not similar
to competitors. Accordingly, the sales mechanism of the company was faulty implying
that offering huge rebates did not attract customers rather a smart sales pitch could have
created wonders for the company;
c. Focussing on most profitable segment of the business: The company has three ranges of
bike and three segments to cater. The company based on results of two quarters should
have focussed on the financials and diverted the business to most profitable segment
instead of carrying out the business in all the three segment;
d. Improper lending and utilisation: The company has carried out stressed borrowing to
survive which further detoriated the business of the company. Also, there has been no
positive cash flow in the six quarters wherein the competitors have started reporting
positive cash flow since third quarter in business.
e. Lack of Proper infrastructure and Research and Development Expense: The Competitor
of the company has expended in a good amount on infrastructure and research and
development expenditure to modify the bike and ease the travel to attract more customer.
Thus, steps should have been taken in this arena to further enhance the business of the
company.
Conclusion
On basis of above, it may be inferred that unplanned business activity and stressed borrowing
bought the downfall of the company. Accordingly, steps should have been taken to achieve
the desired results based on possible measures