A Consultancy Report. Design of an Internationalisation Strategy for CYCL Indive Ltd. and Its Key Product


Seminar Paper, 2018

33 Pages, Grade: 79,0


Excerpt

Table of contents

Introduction

1. Basic contemplations: The targeting
1.1 The identification of an untouched customer segment
1.2 The modified value proposition
1.3 Acknowledgement of Germany as a suitable foreign market

2. Laying the groundwork for the market entry
2.1 Available support on the part of the target country as well as of the supranational EU
2.2 Ancillary processes in support of networking in Germany in the near and distant future

3. Conclusion: Prospective risks and obstacles hampering the given internationalisation approach

References

Appendix

Introduction

CYCL Indive Ltd. is a UK-based, privately held start-up founded in 2014 and specialised in cycling accessories, whereas the WingLights indicator lights embody the company’s primary answer to counteract the omnipresent threat of bicycle accidents in congested urban areas (CYCL Indive Ltd., n.d.-a). Designed as a shockproof, waterproof, easy to install solution with a long battery life, the device is supposed to increase the cyclists’ visibility on the road regardless of the angle, lighting or weather conditions (CYCL Indive Ltd., n.d.-b).

Since its inception, the product was met with a very positive commercial reception worldwide by selling more than 16’000 units, what translated into a turnover of approximately £64’000 after the first fiscal year and, eventually, allowed the firm to break even rapidly (Cunningham, 2017). In the light of received accolades such as placements on the lucrative DTI Sirius initiative and the start-up incubator programme of the University of London for the iterative improvement of the original concept until the current third version of WingLights (CYCL Indive Ltd., n.d.-b), CYCL has steadily sharpened its corporate vision towards an internationalisation approach.

Meanwhile, its ultimate ambition consists in providing the global market with the mentioned item in order to tackle and mitigate the general risk of accidents involving cyclists worldwide.

Obviously, an expansion of a start-up’s commercial scope to that extent is subject to a thorough analysis of a variety of promising, yet heterogeneous target markets, whose legal and economic framework might result in a substantial adaptation of the product to the local marginal conditions. Examples of these actions include measures of compliance to the prevalent industrial norms, auxiliary formalities regarding the status of the patents, trademarks and designs before the official release, etc.

Having this scenario in mind, the given consultancy report revisits the described aspects and introduces them in the context of a selected target market, its specific environment as well as of a newly defined customer segment according to the following structure:

In the first chapter, CYCL’s general offer and the characteristics of the WingLights are scrutinised with the help of the value proposition canvas in order to clarify and justify the existence of potential customer segments, which might have been ignored by the start-up in the past. Following this examination, an appropriate route of internationalisation is drafted, leading to Germany as the near-shore object of investigation in this case.

Afterwards, the focus in the second section shifts not only towards the financial support available within the German target market, but also towards the specifics of other accessible channels including the engagement of the entire EU and its member states. Moreover, practical suggestions are addressed in terms of networking opportunities for which CYCL might opt in order to promote both its middle-term development and long-term internationalisation activities.

With all the gathered insights in mind, the third and final part weighs up CYCL’s current state against possible threats appearing during or after the market entry, including the consideration of protected intellectual property.

1. Basic contemplations: The targeting

1.1 The identification of an untouched customer segment

In the present state, the most important target group for whom the WingLights are being produced is officially outlined as cyclists coping with getting through heavy traffic in metropolitan areas, where hand signals might not suffice to be noticed by the driving public while turning (CYCL Indive Ltd., n.d.-a; Hirst, 2017; Osterwalder & Pigneur, 2010).

When observed through the lens of the value proposition canvas, the key dimensions related to the characterisation of customer groups lead to the following implications (see also figure 1 and table 1 in the appendix):

- In principle, the job that CYCL’s customers are striving for to be done is reaching their destination (point B) from their point of departure (point A) via a ride, which, in the ideal case, should be comfortable, carefree and not necessarily prone to external conditions. Particularly when a cyclist resorts to his vehicle on a routine basis, e.g. as a “seasoned” commuter, this activity might be additionally linked to an emotional, psychological component, where s/he competes with her/himself in terms of discipline and performance under regular time constraints to reach point B punctually. Consequently, s/he feels emotionally more satisfied of her/himself the more the ride went on according to her/his expectations, whereas any impediments on the street might exert a discouraging effect on her/him.
- As alluded in the previous paragraph, an uncertain behaviour of fellow traffic participants might be the source of most frustrations and delays, e.g. by causing an accident or ignoring the hand signals of the bypassing cyclist in a jam. Such customer pains are very likely to accumulate on the further way as a total loss of time and motivation, depriving the entire ride not only of its safety, but also of its joy.
- The WingLights, by implication, come in handy as an aid to alleviate these pains, if not even convert them into gains helping get the job above done. At this point, the most outstanding features of this application are mirrored by its clever and convenient design making the user more visible, and the general accessibility of this item for a reasonable price range of £26.99 to £39.99 (CYCL Indive Ltd., n.d.-c, n.d.-d).

Interestingly, these values may be transferred almost directly to a non-urban niche of cyclists, namely that of bikers organising recreational cycling tours throughout Europe, aimed at leaving a huge distance behind as travelling tourists, either alone or with their friends and/or relatives.

Considering that customer segment pivot, it can be concluded that the WingLights do have the potential to attract a larger mass of real customers. However, this group might be diverse and hence deviate from the original vision and, in turn, prompt a product adaptation to the people’s specific needs (Hirst, 2017; Osterwalder & Pigneur, 2010).

In practice, this divergence can fortunately be deemed minimal in CYCL’s case, as the technique of attaching the indicator lights is universal and almost independent from the shape of the handlebars. Although neither the corporate vision nor the device’s functionality would be substantially affected by changes, it is especially the mode of how the value behind the WingLights needs to be proposed in order to draw the attention among cycling travellers and attain success by addressing them.

1.2 The modified value proposition

In the context of the aforementioned new customer segment, it is not necessarily the features requiring an expansive readjustment, but the promotional message to be conveyed for a fitting placement of the WingLights.

With this in mind, the following dimensions provide the answers to the key questions regarding the corresponding kind of value proposition, the problems and inconveniences to be solved and the needs to be satisfied (see also figure 1 and table 1 in the appendix):

- On the one hand, the WingLights are likely to create several gains for the customers’ benefit.
- Thanks to their clever design, they represent a sensible supplement to the bicycle headlights with regard to both the visibility and illumination of a darker surrounding, whereas other complementary items of the likes of reflectors and vests would not serve this function on their own. It cannot be excluded that their usability as a fixed or magnetic version (CYCL Indive Ltd., n.d.-c, n.d.-d) would exceed the users’ initial expectations if they had to imagine indicator lights for bicycles before actually learning about the WingLights.
- Consequently, the coordination of the riding experience would be facilitated with the help of a well-manufactured tool remaining within the cyclist’s reach to be activated as well as within her/his field of view in traffic situations. Under this higher degree of control, another positive side effect would become apparent in a more relaxed perception on the customer’s part, what would support her/his aspiration for a long, recreational and relieving ride in the nature.
- On the other hand, numerous pains could be relieved, particularly the fear of ruined time schedules for every stage of a trip due to seasonal fluctuations among other contingencies on the road, and the limitations of under-performing solutions such as the aforementioned headlights, high visibility vests, hand signals and reflectors.

Incidentally, it is also relevant to bear in mind that the customer jobs and pains are also redefined in part for a clearer picture. Thus, the main task refers rather to a leisure activity performed while leaving a longer distance behind in a different, more challenging environment, where cities become just halts in between. The entire journey turns into an adventurous exercise in self-optimisation and fulfilment executed over a longer period, at whose end the cycling traveller would like to emerge as an achiever, a mature, cosmopolitan globetrotter, regardless of her/his age.

Nevertheless, the virtue of safety does not lose its validity. On the contrary, the price range of the respective aid might become secondary for some consumers to make a buying decision (see also table 1 and figure 1 in the appendix).

Having concluded that, these aspects determine the train of thoughts informing the next sections about Germany, a selected lead market which has been untouched by CYCL so far.

1.3 Acknowledgement of Germany as a suitable foreign market

The rationale behind the decision in favour of Germany as a focal point is rooted in a variety of factors.

From an internal viewpoint, CYCL’s age, corporate vision and global orientation imply a specific pattern of internationalisation:

- Firstly, the firm fulfils most criteria to be categorised as a born global firm. To be precise, the available information suggests that its motivation is driven both by proactiveness and by a rapid penetration of indicator lights as a “niche” within the global market of cycling accessories (Bell, McNaughton, Young, & Crick, 2003, see table 2 in the appendix). Additionally, it can be claimed that the acquired knowledge and the implemented technology, whose protection was manifested in the form of a patent (CYCL Indive Ltd., n.d.-a), are meant to be extensively exploited in combination with a concentration on “lead” markets and, presumably, a near-simultaneous domestic and export expansion (Bell et al., 2003, table 2 in the appendix).
- Secondly, CYCL’s status as a born global player is bound to a corresponding pathway of a knowledge-based firm. As indicated in the highlighted structure in figure 2 in the appendix, the company is bound to a strong emphasis on its knowledge as a source of competitive advantage under a low state of internationalisation. Considering the latter aspect as well as the already existent niche of indicator lights covered by other competitors distributing their alternatives via common retail platforms of the likes of eBay and Amazon, the present state might make CYCL a representative of a late starter. However, it might be this start-up which could become one of the players with the most recognisable profile in its segment in the future, despite not having been a radical innovator (Johanson & Mattsson, 1988; see figure 3 in the appendix).

As far as Germany is concerned, this near-shore location qualifies as a lead foreign market for the following reasons:

- It is arguably the most industrialised country on the Continent with the highest economic standard and population, situated right in the middle of Europe and surrounded by nine neighbouring national states, which might be supplied in a future best-case scenario (BBC, 2017; Central Intelligence Agency, 2017).
- The popularity of cycling is not solely restricted to sportive activities. Furthermore, it is executed especially in conjunction with travelling either during or beyond the holiday season. In the light of the rephrased gain creators and pain relievers specified in the previous section, the WingLights have the potential to become a natural part of the standard equipment. On the official side, indicator lights have not been included in the comprehensive checklist published by the General German Bicycle Club yet, which comprises every conventional device and essential spare part ranging from locks and inner tubes over frame pumps screws and nuts to bicycle chains and cable controls (Allgemeiner Deutscher Fahrrad-Club e.V., 2011).
- Germany embodies the geographic hub for the majority of the EuroVelo bicycle routes, created through an initiative of the European Cyclists’ Federation in 1995. (Allgemeiner Deutscher Fahrrad-Club e.V., n.d.; European Cyclists’ Federation, 2018; see also figure 4 in the appendix). Additionally, some of the most renowned and largest German cities serve as junctions for several of these routes with their well-developed infrastructure. Therefore, Cologne, Münster, Berlin, Bonn, Hamburg, Düsseldorf, Rostock and Lübeck could come into play as particular locations where CYCL might establish a local subsidiary (European Cyclists’ Federation, n.d.-a, n.d.-b, n.d.-c, n.d.-d, n.d.-e, n.d.-f, n.d.-g, n.d.-h).

In conclusion, it can be said that a commitment in a leading European market could become a crucial learning opportunity for CYCL, apart from an intended entry into the US-American market. From a psychological and entrepreneurial point of view, it is also self-explanatory that the start-up is still lacking the practical knowledge about foreign markets and operations, what can only be solved by gaining direct experience in the target market (Frynas & Mellahi, 2011; Johanson & Vahlne, 2003). Being surrounded by many neighbouring countries, Germany provides such a tempting occasion, which, by having the lessons learned, might enable a continuous and sustainable expansion across the European continent.

2. Laying the groundwork for the market entry

2.1 Available support on the part of the target country as well as of the supranational EU

The sense behind this endeavour is even more justified from the perspective of the possible support offered on the part of German institutions as well as of the entire European Community, whose funds are based on provisions by several governments of its member states.

In this case, two financial channels emerge, which are in line with CYCL’s current stage of a young, growing start-up, its expansion plans and the accompanying coordination of the core value chain activities for an enhanced scale of production: venture capital (VC) and promotional programmes (Deakins & Freel, 2012).

In terms of the first option, the collaborating partners will contribute to an effective synergy if the VC association in question is remarkable for its international expertise and influence speeding up the access to various sources of complementary assets helping push an innovative product of the likes of WingLights (Ardichvili, Cardozo, & Ray, 2003; Fernhaber & McDougall-Covin, 2009). Given that CYCL followed the intention to install a subsidiary in Germany, the firm could consult the services of the following exemplary investors:

- Acton is a Munich-based company with a portfolio including commerce on the B2C level, a space of action encompassing Germany, Europe and North America and an interest in applicants with good prospects of a market-leading position and a working, scalable business model (Acton Capital Partners GmbH, n.d.; Berlin Valley, 2017; Cassala, 2018).
- Astutia Venture, having its headquarters situated in Munich as well, is ready for a co-operation with innovative start-ups in their growing phase through multiple funding rounds over three to five years in exchange for a minority stake (ASTUTIA Ventures GmbH, n.d.; Berlin Valley, 2017; Cassala, 2018).
- Capnamic Ventures/DuMont Ventures, a VC enterprise with offices in Cologne and Berlin, is ready to invest in young and growing start-ups with B2C solutions in the field of mobility (Berlin Valley, 2017; Capnamic Ventures Management GmbH, n.d.; Cassala, 2018) and
- Sirius Venture Partners is a Wiesbaden and Düsseldorf-based provider of venture capital for young start-ups with innovative technologies, products and business models in the field of engineering and life science, among other scientific categories (Fuer-gruender.de, n.d.; Sirius Venture Partners GmbH, n.d.).

Considering the second option, the following incentive programmes are worth a consideration as an auxiliary means:

[...]

Excerpt out of 33 pages

Details

Title
A Consultancy Report. Design of an Internationalisation Strategy for CYCL Indive Ltd. and Its Key Product
College
Sheffield Hallam University
Grade
79,0
Author
Year
2018
Pages
33
Catalog Number
V1010173
ISBN (eBook)
9783346403773
ISBN (Book)
9783346403780
Language
English
Keywords
international business management, expansion strategy, internationalisation, internationalization, united kingdom, germany, market review, market research, start-up, near-shore, innovation
Quote paper
Axel Capalbo (Author), 2018, A Consultancy Report. Design of an Internationalisation Strategy for CYCL Indive Ltd. and Its Key Product, Munich, GRIN Verlag, https://www.grin.com/document/1010173

Comments

  • No comments yet.
Read the ebook
Title: A Consultancy Report. Design of an Internationalisation Strategy for CYCL Indive Ltd. and Its Key Product



Upload papers

Your term paper / thesis:

- Publication as eBook and book
- High royalties for the sales
- Completely free - with ISBN
- It only takes five minutes
- Every paper finds readers

Publish now - it's free