EnviroFit International: A Venture Adventure

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4) Low company turnover

Even though Envirofit has a very good product idea, due to the high production cost and low buying power of customers, the profit that can be earned by selling this kit is very less and breakeven will take many years. This does not give a good image for the company in the eyes of private investors. It is crucial to make enough money to ensure the sustainability of the company.

To overcome this problem, Envirofit should ask for additional income from existing microfinanciers. At the initial stage, it is relatively harder to establish a stable financial condition in a company, especially if it introduces new innovative ideas. People do not easily embrace changes. But by time goes by, when a certain product portrays quality and better mileage, customers will certainly start buying it, thus the demand for the product will increase significantly. Therefor, Envirofit should not give up and keep selling retrofit kit with financial aid from current microfinanciers and attract more NGOs to invest in their company.

Evaluation of Entrepreneurial Opportunity

In my opinion, Envirofit should pursue this entrepreneurial opportunity. This is because Envirofit is the first to come up with a kit modified from the originally developed Snowmobiles by Orbital Engine Corporation in Australia. Envirofit used their core technology and fitted it into existing engines and came up with an award-winning product in the Clean Snowmobile Challenge. This new environmentally friendly product attained enough publicity until it receives an offer to be used for motorcycles. This shows that the demand for the product is there and the quality of the product is also very high. It is only matter of finding a proper and continuous financing to commercialize it.

Besides that, Manila government can play an important role in the success of Envirofit kit. In 1999, the Manila government has come up with the Clean Air Act, which requires taxi drivers to use vehicles with a certain emissions standards. Taxi drivers who are relatively poor and earns only about $3-$5 per day finds it hard to comply to the rule. This is because to achieve the mentioned emission standard, they have to buy new four-stroke motorcycles, which are far more expensive to their liking. Thus, by the introduction of a much cheaper Envirofit kit that cost them about US$220, the taxi drivers can overcome the problem of defying the government’s act. Envirofit can use this Act one of the main marketing strategy to approach the customers.

Furthermore, polluted air is a major problem in big cities like Manila that affects both taxi drivers and passengers. Whenever there is a real problem which requires public’s attention, the solution that could be come up by any parties which is relevant will be accepted by the public for the betterment of their life. In this case, when the health of the taxi drivers are degrading, the demand for a product, which can improve their health and also increase their income with a better fuel save product will have a high demand. Moreover, based on the case study, Envirofit does not have a direct competitor. There were only indirect competitors such as Catalytic converters that has its own drawbacks and can be easily surpassed by Envirofit by its unique product. Thus, it is essential for Envirofit to continue this venture.

Short-term implementation

- Firstly, Envirofit should conduct SWOT analysis to find out the strength, weaknesses, opportunities and threats of the company. This can give Envirofit a clearer picture on where is this company heading to and whether its product has demand in the market. By knowing the threats of the company, Envirofit can come up with strategies that can overcome them.

- Envirofit should come up with a business model that satisfies both the company’s interest and also social benefits. Carrying out SWOT analysis can help Envirofit to come out with it. This will also gives the company a good image and attracts potential investors as investors gives importance for a proper business plan. The proposed business plan must comprise both short-term benefits and long-term benefits for the company. Business plan can also be modified from time to time tailored to the changes in market.

- Find angel investors for the company. Angel investors can help to start-up Envirofit by providing enough funding with minimum expectations in return. This is important to manufacture the retrofit kit in a large-scale and commercializing it. By acquiring angel investor, Envirofit also can prevent from having early debts.

Long-term Implementation

Envirofit should pursue partnership with SwissContact and Asian Development Bank (ADB). This is because these both are involved in the Partnership for Clean Air, a local effort that involves NGOs and governments to purify the air in Philippines cities. They have shown great interest in implementing the Envirofit technology. This is a great opportunity to be grasped by Envirofit as one of the main objectives of this company is to combat the environmental damage by dirty two-stroke motorcycles in Asia cities. Strong partnership with such parties can strengthen their cause and effect in producing the retrofit kit. Public will show more trust in products that are recognized and approved by major bodies.