The Bicycle Company

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The Bicycle Company

Business 101
25 April 2004
One day while sitting in my parlor I came up with a brilliant idea. I wanted to start a business in another country. Living here in the United States, staring a new business was not an extraordinary thing to do.So I decided to challenge myself, and start a business in another country. The country I decided to embark upon was the country of Libya, located in Africa. I knew It was going to take a large amount of work, but I was willing to take the challenge; for that was the whole point of the project. I could not see anything except having a huge deal of success or failure. Next, I had to decide exactly what I wanted to sell. I first thought of selling water, because Libya is a desert. Then I decided that was not such a good choice. In America and other developed countries, maybe. Since I was dealing with Libya, they may be less reluctant to buy a bottle of water. Then the idea came to me; bicycles! Before I go any further I must explain the current condition of Libya.
Before doing anything, I hired a group of individuals I had previously encountered and we began to research various things we needed to know. We first learned that Libya was a politically stable country; only having problems between foreign workers and the authorities. We also found that Libya had no democracy or any political parties at that; basically they were and still are republic. Their laws are based upon their religion; Ghadafis religion.
The basic geography of the country is desert. Many live in the areas near the sea, mainly the better off people. While the poor live mostly in the desert area. By this information I decided to place my business near the coast. An advantage of this was easy access to the ships, docks, etc. Many ships and liners come through the Mediterranean Sea, which a plus.Libyas main exports are Petroleum, natural gases, and gypsum. They do have a moderate amount of livestock, agriculture, etc. Yet, they dont have many natural resources almost like other Arab countries. I took deep thought upon this subject, and came up with a couple of possible problems.
If I were going to market bicycles, I would need to figure out how to get the materials needed into the country from the United States. The reason for this was because Libya does not trade with the United States. So, I decided that I would have to travel to a European country to handle that business. I had to set up a deal to where things I needed from the United States would be shipped to Italy, and I would pick them up there and travel back to Libya. Of course that extra money, but I felt It was worth it.
After my team took care of that problem we tackled a couple more. As I stated earlier, we chose Italy as our trade interceptor. Mainly because Italy has a high trade record with Libya, making up about 40% of the export market and 18% of imports. That was the only way we could possible import/export without no problems with government. Because of Libyas Islamic background, relations with the United States are rigid. That would be considered in my book, as a trade barrier; yet we found a solution for that problem (the above).


After we got started on the preparations we had to have a agreement with the government. In order for us to start a business from another country we would have to pay a special tax. This did not surprise my associates and I, for we previously learned this information. The government was pleased with our idea, the main reason being that it would help boost the economy. If people had cheaper transportation then they would probably travel more often.The tariffs would not necessarily be a problem; just a little expensive. The reason I say expensive is because we will import things from the U.S. to Italy, then we will import the items from Italy to Libya. I thought about it and decided to use revenue from other investments to help pay for the taxes. The things I would need to be imported were parts. It would cost less to ships parts rather than bicycles as a whole. I also decided to help out the economy and hire people to put the bicycles together. The government was pleased with that idea, which wasnt really a revelation, but I was all good and well.
The next thing I had to deal with was quotas. Since I decided to ship in parts I had a problem with that. I could only bring in so much. I thought about it and thought about It. There must be some way to handle this, I was thinking. My team and I decided to go to a local bicycle shop and weigh a bicycle; particularly the one we were going to sell. We multiplied that number by how many bicycles we would need to last us two years. After we did the calculation we estimated how many pounds, because that was type of quota we were given; that we needed. Finally we solved that particular problem. It was a hard thought process, but we solved it.
Another problem we encountered which was not really a problem, just a situation. Since our kind of business was rather new to that particular area, we had to get a make an agreement to insure that we would not take advantage of the people in any way. By that statement I mean Libyan people are not very rich, but seeing that this was a new experience for some, they could be taken advantage of. They basically subsidized my products; in the event of any competitors. We were told that we could not raise prices higher than 15 Dinar (Libyan Currency). That was a task to figure out, mainly because of the fact I was looking at about 20 Dinar. I agreed mainly because I wanted the project to start as soon as possible. It would mean a longer wait to make a profit.
Finally we began to make a little progress. I hired about seven gentlemen; all around the age of 24 or 25. Most of them could speak English enough to explain procedures and processes in putting the bicycles together quickly and efficiently. The were some language barriers, so I had to hire a translator; which was another expense. I soon noticed I was losing more money than I was gaining. This was a major problem; so much the government was noticing. My partners and I were summoned to a meeting with a government official. The meeting was basically telling us how our business was creating a negative trade deficit; adding to the existing one. I forgot to mention that three shipments of materials had arrived already; equaling a total of six years passing. I had not planned this project to be delayed so long. It was soon becoming more of a burden than my associates and I could handle. I was hoping to build it up and be able to watch it grow and bring in extra revenue. Although it was a good idea my associates and I decided mutually to withdraw the project. We felt we were doing the country a favor; for they were not one of the strongest. We also decided to use the leftover materials and set up a bicycle parts shop here in the U.S. Basically, our business failed in just a short while. Although, it never hurts to try something new. Hopefully this will not be our last time.