Feed Resource Recovery Harvard Case Solution & Analysis

Feed Resource Recovery Case Solution

Introduction

An entrepreneur,Shane Eten,got fame in his surroundings because of creative mind. He won numerous awards in business plan competitions such as second distinction at Babson College, second at US Berkeley competition, and second at university of Colorado. After completion of his bachelor’s degree, he started doing job at Angstrom micro systems. After few years of his work and dedication, he switched his job from Angstrom to Candle organization. He loved his job due to the rotational factor andafter getting inspiration from his work, he considered opening up his new company in the same industry. Before that he started doing MBA from Babson College when he was 28 years old.

During that time, he came up with different business ideas, because at Baboon college entrepreneurship remained mostly first option in students mind. The students of Babson College were habitual of jotting down their ideas within a time period of 3 minutes as well as they discussed it with their professors for any opportunity in the future.

He was born in Philadelphia however,he kept on travelling different places with his father as his father was attending medical school.

Later on, his family decided to settle down in Cape Cod,

Massachusetts, and opened their own clinic there. Shane inherited his family characteristics (hard work, and dedication). His father had a dream to make a boat and in order to achieve this dream, his father used to work on every weekend with his son so that his dream could be accomplished.

When he joined candle organization, the company was facing intense competition from its rivals. Due to this, the viability of business was unpredictable, therefore, Shane was responsible to come up with new ideas in making candles, as a result,the sustainability of the company could be ensured. After rigorous market research, he suggested the company to make the candles from soy. Moreover,soy is considered as environment friendly and the cost of production would also be less.

Furthermore, when opening his new business, he made a prototype of waste conversion technology. Many of the investors were willing to invest in his business however, the question remains regarding the distribution of profit.

PROBLEM STATEMENT:

In order to get his project working, Shane and Ryan were confused regarding raising the money for prototypes. As there were only few investors who were supporting this idea for making the prototype therefore,every investor was ready to invest in ready to run business. Around$250,000 were needed to finance this prototype. However, the problem which they faced was identifying the sources in arranging this funding.Moreover, they also had the option of borrowing from friends and family however,it would take time to get funding from them.

Case analysis

Financial analysis (projected)

As per the projected analysis of the company’s future accounts, the revenue was expected to grow at a rate of 100% per year. The revenue would grow from 320000 (year 1) to 24345750 (year 5). The gross margin of the company will grow year over year (YOY) because of greater cost control and production efficiency. Moreover, it would will increase up to 36% of the revenue (Year 5) from -4% of year 1. The net profitability of the company will grow over the years due to the decrease in Cost of Goods sold and other expenses.

The liquidity position of the company identifies the company’s ability to pay its short-term obligations. The current ratio and quick ratio are used to measure the liquidity position of the company. The current ratio of the company will increase from 3.04 (year 3) to 3.45 (year 5).

Source of competition(Short-term and Long-term):

Waste conversion technology was common on short-term however,there was a need to change the business model in this industry. Moreover, in short term there was not as much strong competition because this was the new trend of converting waste into energy. In the long term, Wal-Mart could be the neck to neck competitor in this industry as it is a large multinational.................

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