"Running head: LIT MOTORS1Lit MotorsNameInstitution LIT MOTORS2Lit MotorsPart oneThe founder of the business Kim used several lean start-up methods to discoverthe customers to his business. Firstly, he used the internet testing where customers wereprovided with questionnaire forms and filled details regarding their preferences on thePrototype of C-1 and cargo scooter. Secondly, research agencies and festival tests wereused to advertise the products and gain customer feedback which would be used toimprove the products.Thirdly, showroom test was used to give the customer a feel of theprototypes. As such, it gave the customers not only chance to see and experience theproducts but also test the demand for the final products. Essentially, the founders of Lit Motors assumed that the customers would beattracted by the C-1 due to its ability to protect the user from hit hazards. Consequently,the hit hazard was prevented through covering the user using molded metal sheet and amirror. Additionally, they assumed that the customer would be attracted to the productsdue to the stability of the C-1(Godden & R. Eisenmenn, 2014). On the cargo scooter, theyassumed customers would be interested in using a foldable scooter that would fit in anelevator. That assumption was to ensure the scooters were easy to store hence,eliminating loss of the scooter from theft. As a result, the company was able to validatethe assumptions through the internet, festival and showroom test. They also learned fromthe surveys and incorporated the lessons in their final products.Part twoThe company prototyped their ideas through marketing to access their targetcustomers. Multiple approaches were used which include, internet market, showroomtesting and research agencies, use of celebrities and paid tests. Though the company had LIT MOTORS3planned to use the celebrities to launch their scooters, this did not materialize since it wasnot implemented. The use of paid test to recruits in the coffee shop failed which resultedin the company using marketing research firms (Godden & R. Eisenmenn, 2014). As aresult, it helped the managers to concentrate on better roles.Further, the C-1 prototype provided similar values as a car. The user wasprotected from hazards; the car was easy to park and maneuver in traffic. Therefore, thecargo scooter was easy to store and could be easily loaded on an elevator.Part three. Profit Computation C-1Number of units1,000100,000Sales per piece12,00012,000total sales12,000,0001,200,000,000Less cost ofgoods sold6,400,000600,000,000 Gross Profit5,600,000600,000,000Operatingexpenses15,600,000540,000,000 Net income(10,000,000) 60,000,000LIT MOTORS4Cargo ScooterNumber of units1,000100,000Sales per piece717717total sales717,00071,700,000Less cost of goods sold508,00050,800,000Profit209,00020,900,000Operating expenses107,55010,755,000Net Income101,45010,145,000 Evidently, the company would generate a loss in the first year of operation onselling the C-1 scooter. However, this would change on bulk production hence, makingprofits from the two products. Therefore, the company would not manage to finance the first year’s operationsusing the initial investment of $ 15 Million. Typically, the initial cost would have beenused in making capital investment on the equipment of the company as well as to finance LIT MOTORS5the production costs. In such a case, the total production cost of the C-1 prototype wouldamount to $15,600,000, while the cost of producing the cargo scooter $ 508,000. In total,the company would require $ 16, 108,000. As such the company would need to source anextra $ 1, 608,000 to enable it to commence its production process (Godden & R.Eisenmenn, 2014).Part 4.In conclusion, Kim needs to find less costly raw materials of producing the cargoscooter as it will help to drive down the cost of sales hence, increase the gross profit. Inthe long run, the total net income will increase significantly. "