Scenario (4000 words)

You are working as an assistant in a small advisory service. Shiro who wants to start their own business has asked for advice on two possible options for the future. Shiro has provided you with some information about their business, the market, and the two different options they are considering. 

The business

Shiro studied business and history in college and they speak several languages. Their home city is a popular destination for city breaks. It has many cultural sights that attract visitors of all ages from all over the world. 
Shiro wants to set up a business offering eco-friendly city tours.

The aims and objectives of the business are:

• To promote environmental sustainability
• To be profitable at the end of one year

Market trends

The city council recognizes the need to have a range of transport options for visitors to choose from but it is worried about the effects of pollution, especially from tour buses operating from the city. To address this, the council is only issuing operating licenses to businesses that use eco-friendly vehicles. Shiro has researched two popular methods of eco-friendly transport that they could use for city tours. 

• Auto rickshaws
• Electric bicycles

Auto rickshaws (or tuk tuks) were popular in Asia and Central and South American cities for many years and commonplace in India and many African states. In the last 15 years, these have been replaced by e-rickshaws (e-toks), three-wheel covered pods with small but powerful energy-efficient electric motors that do not create noise or pollution. They are ideal for city tours and short distances travel and popular with visitors as they can carry a guide/ driver, and two passengers with seat belts comfortably at a speed of 10 – 15 km/hr (6-9 mph) and cover a 55 km (34 miles) journey. This has led to an increase in use across Europe and Indonesia, and in India, there were thought to be more than 1.5 e-rickshaws on the street.  

Most electric bicycles/ e-bikes have a peddle-assisted electric drive powered by Li-ion batteries that can be recharged hundreds of times. This allows people to ride with ease at up to 25km/ h (15mph). In 2023, e-bike sales are estimated to reach 40 million units worldwide and the total number of e-bikes in circulation globally to reach 300 million. In a recent survey, the most common reason given for choosing e-bikes as a form of transport was to help the environment. The next reason was health benefits as although e-bikes do some of the work, it still counts as exercise, with riders burning up to 400 calories in an hour. 
Renting an e-bike has become increasingly popular with people of all ages who want an active and environmentally friendly way to see the city. These tours resemble the walking tours that are popular in cities but use an e-bike to explore the sights rather than walk. Although e-bikes can be difficult to ride as a beginner, they are considered safe if the rider considers speed and other rules of the road. Damage to e-bikes mainly occurs through vandalism when parked rather than from accidents.

Option 1: Provide guided city tours using e-rickshaws 

Shiro has seen an established business for sale with an existing customer base. It offers a range of guided city tours using e-rickshaws. Shiro has enough money for the purchase of the business which includes three e-rickshaws but would need to rent a storage yard with electric charging points for these vehicles. 
Customers will pre-book their chosen city tour on the website and the driver will pick them up from their hotel and guide them around the city’s most impressive sights using the e-rickshaw. Shiro will supply illustrated city guides explaining the routes and supply refreshments to all customers.
Shiro will continue to employ the three drivers who have previously worked at the business.  

Option 2: Offering self-guided city tours using e-bikes

Alternatively, Shiro has seen a gap in the market renting out e-bikes to visitors who want to take their own eco-friendly tours of the city. Shiro has enough money to purchase six e-bikes but would need to rent a store in the city center with electric charging points to store and recharge the e-bikes. 
Customers would book rentals online or in-store and collect their e-bikes at the store. Shiro would supply detailed maps of the city with suggested cycling routes and safety advice leaflets to each customer. Shiro would employ part-time staff at the store to help maintain and repair the e-bikes. 

• Demonstrate knowledge and understanding of business decision-making and its importance in the success or failure of an organization
• Apply the concept of business decision-making to a company. 
• Use different strategic frameworks including SWOT and Porter's Five Forces to analyze internal and external factors that determine a business's success.