Business Plan CORBIN - PACIFIC

Corbin Pacific, Inc. is a California-based company, whose mission is to produce best motorcycle accessories in the world through innovative designing and high quality manufacturing with a customer oriented approach.

Mike Corbin, Founder and President of the company started this company back in 1968 by producing motorcycle seats in his garage. Over the past three decades, the company has come a long way. It now has more than 90% market share in the motorcycle accessories. Its product line includes motorcycle seats (also called saddles), bags, fenders and other small accessories of a motorcycle. The company has a patent on using 'integrated molding technology' to manufacture motorcycle seats.

In 1998, its annual revenue was over $15 million and employed 154 associates. The company has its offices and manufacturing plant in Hollister, California with a major showroom in Daytona Beach, Florida..

Since its inception, Corbin-Pacific has identified product needs and designed stylish products to fill these needs. New products had fueled the growth and profitability of the company.

The company is very well managed. Its employee turn over ratio is low; there are no layoffs and compensation package given to its employees is one of the best in the industry.

Company's marketing strategy is product driven. There is a lot of emphasis on mass customization. Internet is being used by the company for its marketing and online selling of its products.

Company's financial position is strong. It is supporting Corbin Motors financially and is providing a base for its research and development.

This business plan is based on a Case Study conducted by Harvard Business School (1999). A standard business plan outline (Berry, 2004) has been followed.

1.2 Mission

The company's mission is to produce best motorcycle accessories in the world through innovative designing and high quality manufacturing with a customer oriented approach.

1.3 Keys to Success

It is important that the company continues to produce high quality saddles and accessories for a wide range of street motorcycles, dual sports, quads and scooters. At the same time, the company's further success will depend on venturing into additional products while securing new customers.

Company Profile

2.1 Company Ownership

The company was initially established in 1968 at Gardner, Massachusetts by Mike Corbin, Founder and President of Corbin-Pacific. The company is the top motorcycle seat manufacturer in the world. In 1979, Mike moved to California and established its offices and manufacturing plant at Hollister.

2.2 Business Description

Corbin Pacific, Inc. designs, manufactures and sells motorcycle accessories for motorcyclists who want to upgrade their bikes' original factory equipment. The company has more than ninety percent market share in the U.S. The company has revenue of around $15 million and over 150 employees.

2.4 Company Locations and Facilities

The company has its offices and manufacturing plant at Hollister, California. In addition to that, it has a major showroom in Daytona Beach, Florida. Both these locations are famous for motorcycle races and are considered hub of motorcyclists' activities.

2.3 Overview of Technology and Products

Corbin-Pacific's market leadership is driven by company's skills in several areas including making molded composite (fiberglass) structures. The company has a patent on using 'integrated molding technology' to manufacture motorcycle seats. The process of molding consists of a polyester strand which is combined with fiberglass resin and formed into a polyester mold by hand. As the fiberglass is formed in the mold, metal appendages are woven into the fiberglass to provide structural support. The mold is then sent to a foam machine, closed and filled precisely with the right amount of polyurethane. The filled mold is then clamped shut and the foam rises like bread in about five minutes. The seat and the fiberglass base plate is now removed from the polyester mold and excess material is trimmed from it.

Major products of the company include motorcycle seats (also called saddles), bags, fenders and other small accessories of a motorcycle.

2.4 Future Vision

Mike Corbin, Founder and President of the company, intends operating Corbin-Pacific as the design platform for Corbin Motors. The company has a strong research and development facility available which can be utilized for this purpose.

Market and Competitive Analysis

3.1 Market Segmentation

The company's sole targets are the customers having their personal motorcycles and are desirous of upgrading saddles or other accessories. Although the margins are high when selling retail but the company understands the role of distributors who help expand the company's reach and therefore the company tries to keep a balance in the channels.

3.2 Market Analysis

Sale of motorcycles in the United States was at peak in the late seventies and early eighties. Sale of new bikes had begun increasing again in the late nineties. Sale of motorcycle accessories is directly proportionate to the sale of new bikes. 80% of Corbin's customers are having bikes that are less than 24 months old. In 1998, there were 250,000 heavy bikes sold in U.S. And in the same year, Corbin sold around 100,000 seats.

The market of motorcycles is though not expanding fast but it is maintaining a steady growth rate. Corbin holds over ninety percent of the market share and will continue to enjoy its leading position with no major competitor in near vicinity.

3.3 Market Pricing and Industry Analysis

New motorcycles come with seats which costs the motorcycle manufacturer about $20. Corbin seats and accessories cost much more with retail prices starting at about $300. Motorcycle manufacturers were not interested in installing costly seats which would ultimately increase the cost of motorcycle. This added to the advantage of Corbin and the customers were forced to customize Corbin seats on their motorcycles.

Similarly, motorcycle dealers were also happy to sell Corbin seats and other products as they enjoyed a margin of 35%. The Corbin kept everyone in the industry satisfied.

3.4 Marketing Strategy

The company is marketing driven. Its new products keep driving the company financially. Every year, the company produces...

New products are the major contributing factor in the sales growth.
At one time, company's large percentage of the business i.e. 30% used to come from a single customer. The company started adopting a balanced approach and now no one customer even stands at 10%.

The company keeps a track of every one who calls for certain inquiry. A report is compiled basing on the customers' demands periodically, and accordingly new products are developed which already has a market base.

The company is utilizing its website for marketing. Information about entire product range is available on the site. In addition, the company has also commenced taking online orders which has contributed significantly in its sales growth.

3.5 Marketing Plan

The overall marketing plan of Corbin-Pacific is based on the following fundamentals:

Segments of the market planned to reach.

Distribution channels planned to be used to reach market segments including online channel.

Share of the market expected to be capture over a fixed period of time.

3.6 Website Marketing Strategy

The company is maintaining an attractive web portal. The company website is providing adequate details about its product line. The website also offers online purchasing facility.

Organization and Management

4.1 Organization Structure

The company's management philosophy is based on maintaining a family atmosphere. Mike's philosophy of the structure of the company is different from most. Mike Corbin, being President of the company places himself at the bottom of the pyramid, upside down and everything else is more important than he is.

4.2 Management Hierarchy

Mike Corbin

Founder and President of the Company

Tom Corbin

Vice President (now President of Corbin Motors)

John Ortiz

Chief Engineer

Dave Merrihew

Chief Financial Officer

Vince Zavala

Chief Designer

4.3 Human Resource Policy

Human resource policy of Corbin Pacific reflects Mike Corbin's focus on obtaining long-term commitment of its employees. Salient of the policy are highlighted below:

Although the motorcycle accessories business is seasonal and is based on the sale of new motorcycles. The company rarely had any layoffs.

Corbin Pacific has lowest of turn over in the industry. In 1998, out of 117 associates only three left the company and that too for family concerns. None left for the reason of a better job offer or due to work environment.

The company has a lucrative compensation package. There is an average of 10% annual wage increase with outstanding employees getting almost 100% raise. Corbin associates also have the opportunity to participate in the company's ESOP (Employee Stock Ownership Plan).

Company does not believe in supervisors. Total quality management is maintained through creating sense of responsibility and motivation to work.

Employees of the company are given on-job training.

Finance

5.1 Income Statement

Carbon-Pacific's Income Statements for Fiscal Years Ending 9/30 ($000's)

1998

1997

1996

Revenue

13758

11458

Cost of Goods Sold

Gross Margin

Operating Expenses

Management and Office Wages

Sales Commissions

Advertising and Marketing

Promotions (including shows, meals, etc.)

66

Legal and other Fees

89

Freight Out

Rent

Equipment Rental

55

R& D-Motorcycle

18

14

R& D-Sparrow

62

26

Depreciation

92

All Other Expenses

Total Operating Expenses

Income (Loss) from Operations

94

Other (Income) and Expenses

52

-20

Income before Taxes

-157

Provision for Taxes

-13

-5

31

Income Before Extraordinary Items

-114

83

Extraordinary Items (Hollister Rally)

0

0

Net Income

-144

-50

83

Retained Earning at Beginning of Year

Retained Earnings at End of Year

5.2 Cash Flow Statement

The company's cash flow statements for Fiscal Years Ending 9/30 ($000's)

1998

1997

1996

CASH FLOWS FROM OPERATIONS

Net Income

-144

-50

83

Adjustments to Reconcile Net Income to Net Cash Provided (used) by Operations:

Depreciation

92

Deferred Taxes

-21

21

8

(Gain) Loss of Disposal of Fixed Assets

-26

-46

Decreases (Increases) in Assets:

Accounts Receivable-Trade

-122

Accounts Receivable-Employees

-31

7

2

Accounts Receivable-Triumph

0

0

4

Accounts Receivable-ESOP

-11

0

0

Inventory

-522

-180

58

Deposits

-6

-10

-95

Loan fees-Hollister

-1

0

0

Increase (Decrease) in Liabilities

Account Payable

-379

25

Payroll Taxes Payable

-90

52

-5

Sales Tax Payable

12

12

-13

Income Tax Payable

0

-110

23

Refundable Deposits-Sparrow

68

0

Accrued Wages

0

0

-46

Pension Payable

0

-228

0

Total Adjustable

-382

Net Cash (Used) Provided by Operations

-526

1998

1997

1996

CASH FLOWS FROM…