Feasibility Study

Scenario
B-Spoke Bikes is a small bicycle sales and repair business located in a small local shopping street on the outskirts of Swansea. The shop was opened 20 years ago by Dave and Bethan, a couple whose daughter Elen sometimes helps out. Dave and Bethan employ Rhys as a mechanic as well as occasional casual helpers when they are busy. With many years of experience in building and maintaining bikes, those involved in this small family business would like to make full use of their medium sized shop and workshop to set up customised bikes. With experienced sales and mechanics staff in the area who have worked part time over the years, the business could easily expand. However, business in recent years has been slow and most sales have been cheap off the peg mountain bikes. Dave and Bethan are concerned for the future of B-Spoke Bikes as sales in the last year have declined even further, in some months the minimum ?2500 a month sales to cover basic costs have not been achieved. Another current concern is the time Dave and Bethan need to spend on their outdated manual stock control system.
Dave and Bethan are concerned for the future of the shop and are considering a number of options to turn things around. One possibility is to widen sales opportunities to the whole of the UK with a new e-commerce venture and they are considering possible solutions. As well as national sales opportunities, B-Spoke Bikes could sell more specialised machines such as electric bikes giving more profit from an hour?s work customising a bike. Elen is a recent Business Information Technology graduate and she would be willing to spend time creating a customised e-commerce and stock control system for the business. Another solution is to subscribe to a simple template based e-commerce service, although this might not be as flexible. A different strategy to revive the family business would be to rent a city centre showroom. This would cost around ?70,000 per year in rent and business rates.

Draw up a list of stakeholders for this project, giving a brief explanation of the effect of the project on each.

Estimate the costs and benefits of the project, making reasonable assumptions based on the information provided in the above scenario. You must give explanation for all costs and benefits and explain the assumptions made, giving references to information sources. You should base estimates of costs and benefits on your research, but please use consumer prices for costs and benefits: you are not required to investigate trade prices which are not easily available. You should include two versions of your cost benefit analysis ? one for a full featured system in the eventuality that a successful funding bid is accepted and one minimum cost system if the funding bid is unsuccessful. Examples of costs and benefits to be estimated include hardware, development software, hosting, time saved and time taken up developing the system, increased sales,

Using your estimated figures, complete a cost-benefit analysis table for the customised and the template based version of the project over 2 years. Calculate the Return on Investment based on each of the two tables.

Making reasonable assumptions about interest rates, which you should discuss and explain, apply suitable discount factors to your cash flow and discuss the impact of this on the return on investment. Give an evaluation of how the current economic climate might impact on the proposed project?s viability.

Give your analysis of any organisational, ethical and legal issues which might prevent the project from going ahead.

Summarise your financial and organisational analysis, giving your recommendations to Dave and Bethan as to whether an e-commerce project should go ahead and if so which version.
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