Segway Final Powerpoint

Segway Human Transporter

Segway Final PresentationSegway Final Presentation“Can Segway Enter the Tornado?”“Can Segway Enter the Tornado?”

Management 266AManagement 266AProduct Strategy in the Digital EconomyProduct Strategy in the Digital Economy

Charles Chen

Miro Curac

Antonio Gomez

Dwight Huang

Len Tiso


Presentation Overview Introduction Strategic Assessment: Moore Framework Stakeholders Critical Issues Analysis Bayesian Network Analysis Strategic Implications and

Recommendations


Introduction Motor-scooter like device Powered by electric motors Movement by shifting

weight, turning wrist Turning radius of zero Designed by inventor Dean

Kamen (150 patents)


3 Product Models e series - Expeditor (cargo) i series - Industrial (business) p series - Personal (consumer) Commercial models faster, longer

range, heavier Max speed 10.0 - 12.5 mph Maximum distance 14 - 17 miles

(single charge) Device weighs 69 - 95 lbs.


Strategic Assessment: Crossing the Chasm Segway in infancy stage of TALC Discontinuous innovation

Substitute for walking Value proposition (business and consumer)

Technology enthusiasts Amazon.com auction - $100,000 bids

Visionaries Amazon.com - first customer


Strategic Assessment: In the Bowling Alley Whole product solutions to niche segments

Pick on someone your own size Enlist the support of the economic buyer

Government services Post office, police departments

Businesses with warehouses Amazon.com, Michelin, GE Plastics


Strategic Assessment: Inside the Tornado Hypergrowth stage years away Consumers are ultimate target market

Production capacity 40,000 units/month Need to lower price point from $3,000/unit

Media coverage is a double edged sword Builds awareness Overhype sets unrealistic expectations

(e.g. artificial intelligence industry)


Stakeholders Consumers Businesses Government Services Regulatory Authorities Environmental Interests Electric Industry Petroleum Industry Manufacturing Partners


Stakeholders: Consumers & Businesses

Stakeholder Groups Parties InterestsConsumers Individuals

Urban commutersLocal shoppersRecreational users

PleasureIncreased mobilitySocial acceptance

Businesses WarehousesPlantsManufacturing facilities

Increased productivity


Stakeholders: Government and Regulation

Stakeholder Groups Parties InterestsGovernment Services Post office

Police departmentsPark service

Better public serviceIncreased productivity

Regulatory Authorities Federal, state and municipal authoritiesDepartment of Motor Vehicles

Public safety


Stakeholders: Environmental and Electric Industries

Stakeholder Groups Parties InterestsEnvironmental Interests Environmental Protection Agency

Environmental interest groupsEnvironmental preservation

Electric Industry Battery manufacturersPublic utilitiesElectric vehicle manufacturers

Market demand for electricityTechnological advancement ofelectric products


Stakeholders: Petroleum and Manufacturing

Stakeholder Groups Parties InterestsPetroleum Industry Automobile, motorcycle and scooter

manufacturersPetroleum exporters

Market demand for petroleumproducts

Manufacturing Partners Suppliers of Segway Corporate profitability


Critical Issues Analysis

Highlight key issue for each area Political - Regulatory approval Behavioral - Consumer utility Economic - Segmentation Social - Fad or revolution? Technological - Segway imitators


Bayesian Network


Bayesian Network Analysis

Base scenario Tornado viability = 12.10% Reasons for low percentage

Harder to enter Tornado than Bowling Alley Regulatory hurdles Consumer value key Ability to supply Competitive threats


Sensitivity Analysis: Primary Branch Nodes

Market Demand Probability Viability DifferenceBase Scenario – High Demand 20.81% 12.10%Sensitivity Analysis – High Demand 100.00% 46.50% 34.40%Sensitivity Analysis – High Demand 0.00% 3.06% -9.04%

Ability to SupplyBase Scenario – Adequate Supply 56.60% 12.10%Sensitivity Analysis – Adequate Supply 100.00% 16.27% 4.17%Sensitivity Analysis – Adequate Supply 0.00% 6.67% -5.43%

Competitive ThreatsBase Scenario – Low Competition 46.51% 12.10%Sensitivity Analysis – Low Competition 100.00% 16.58% 4.48%Sensitivity Analysis – Low Competition 0.00% 8.20% -3.90%


Sensitivity Analysis: Regulatory IssuesRegulatory Issues Probability Viability DifferenceBase Scenario - Favorable Regulations 26.74% 12.10%Sensitivity Analysis - Favorable Regulations 100.00% 20.12% 8.02%Sensitivity Analysis - Favorable Regulations 0.00% 9.17% -2.93%

Federal ApprovalBase Scenario - Expedited Approval 95.00% 12.10%Sensitivity Analysis - Expedited Approval 100.00% 12.20% 0.10%Sensitivity Analysis - Expedited Approval 0.00% 10.23% -1.87%

State ApprovalBase Scenario - Expedited Approval 60.00% 12.10%Sensitivity Analysis - Expedited Approval 100.00% 13.68% 1.58%Sensitivity Analysis - Expedited Approval 0.00% 9.73% -2.37%

Municipal ApprovalBase Scenario - Expedited Approval 40.00% 12.10%Sensitivity Analysis - Expedited Approval 100.00% 15.88% 3.78%Sensitivity Analysis - Expedited Approval 0.00% 9.58% -2.52%


Sensitivity Analysis: Customer Value

Customer Value Probability Viability DifferenceBase Scenario - High Customer Value 39.62% 12.10%Sensitivity Analysis – High Customer Value 100.00% 19.64% 7.54%Sensitivity Analysis – High Customer Value 0.00% 7.15% -4.95%

Consumer ValueBase Scenario - High Consumer Value 66.68% 12.10%Sensitivity Analysis – High Consumer Value 100.00% 14.15% 2.05%Sensitivity Analysis – High Consumer Value 0.00% 8.01% -4.09%


Sensitivity Analysis: Ability to Supply

Distribution Channels Probability Viability DifferenceBase Scenario – Sufficient Channels 60.00% 12.10%Sensitivity Analysis – Sufficient Channels 100.00% 13.33% 1.23%Sensitivity Analysis – Sufficient Channels 0.00% 10.25% -1.85%

Production CapacityBase Scenario – Adequate Capacity 68.36% 12.10%Sensitivity Analysis – Adequate Capacity 100.00% 13.77% 1.67%Sensitivity Analysis – Adequate Capacity 0.00% 8.48% -3.62%


Sensitivity Analysis: Competitive Threats

Existing Transportation Probability Viability DifferenceBase Scenario - Effective Substitute 20.00% 12.10%Sensitivity Analysis - Effective Substitute 100.00% 11.30% -0.80%Sensitivity Analysis - Effective Substitute 0.00% 12.30% 0.20%

Alternative Electric TransportationBase Scenario - High Threat 62.22% 12.10%Sensitivity Analysis - High Threat 100.00% 10.55% -1.55%Sensitivity Analysis - High Threat 0.00% 14.65% 2.55%


Market Valuation (all units in ‘000s)Comparable Industry: Motorcycle and Bicycle Manufacturing Tornado

Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7Unit Sales Price (000s) $3.0 $2.5 $2.0 $1.5 $1.0 $0.3 $0.3% of Target Production 2% 10% 30% 40% 100% 500% 5000%Units Produced per Year (000s) 9.6 48 144 192 480 2,400 24,000

Revenue 28,800$ 120,000$ 288,000$ 288,000$ 480,000$ 720,000$ 7,200,000$ COGS 19,987$ 83,280$ 199,872$ 199,872$ 333,120$ 499,680$ 4,996,800$ Gross Margin 8,813$ 36,720$ 88,128$ 88,128$ 146,880$ 220,320$ 2,203,200$ Operating Expenses 6,624$ 27,600$ 66,240$ 66,240$ 110,400$ 165,600$ 1,656,000$ Operating Income/EBITDA 2,189$ 9,120$ 21,888$ 21,888$ 36,480$ 54,720$ 547,200$ Depreciation/Amortization -$ 500$ 1,100$ 1,820$ 2,684$ 3,721$ 4,965$ EBIT 2,189$ 8,620$ 20,788$ 20,068$ 33,796$ 50,999$ 542,235$ Interest Expense -$ -$ -$ -$ -$ -$ -$ EBT 2,189$ 8,620$ 20,788$ 20,068$ 33,796$ 50,999$ 542,235$ Income Taxes 766$ 3,017$ 7,276$ 7,024$ 11,829$ 17,850$ 189,782$ Net Income 1,423$ 5,603$ 13,512$ 13,044$ 21,967$ 33,149$ 352,453$

Capital Expenditures 5,000$ 6,000$ 7,200$ 8,640$ 10,368$ 12,442$ 14,930$

FCF (3,577)$ 103$ 7,412$ 6,224$ 14,283$ 24,429$ 342,488$ Discounted FCF (3,111)$ 78$ 4,874$ 3,559$ 7,101$ 10,561$ 128,754$

Preliminary Valuation $2,984,401


Sensitivity Analysis - Expected Valuation

Probability ExpectedScenario of Viability Valuation ($M)Base case 12.10% 361$ Hi Market Demand 46.50% 1,387$ Lo Market Demand 3.06% 91$ Adequate Ability to Supply 16.27% 485$ Inadequate Ability to Supply 6.67% 199$ Weak Competition 16.58% 494$ Strong Competition 8.20% 245$

Preliminary valuation = $2.98 billion


Strategic Implications and Recommendations

Prioritize regulatory approval efforts Municipal approval is key Beta testing with government services

Consider international consumer market first Less automobile oriented urban infrastructure, but less

Segway friendly infrastructure More receptive to cheaper transportation technology

(higher customer value)


Strategic Implications and Recommendations

Continue expanding production capacity Hypergrowth demands rapid scalability

Continue conservative patent protection policy Barrier to entry in a new market Alternative electric transportation threat


The Future?


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Segway Final Powerpoint