New Heritage Doll Company Case Study Solution
Section 2: Introduction
The New Heritage Doll Company was formed by Ingrid Beckwith in 1985.The company has been engaged in manufacturing dolls with wholesome theme and unique story. There were 450 employees by 2009 and the company has generated revenues of 245 million.
The objective of the vice president for proposing the project tends to base on the potential to strengthen the division of production as well as to drive the future growth. He needs to produce a compelling project so that the committee would be less likely declining the proposal.
Section 3: Key Facts
The company was formed with the intent to produce dolls with wholesome theme and unique story line so that it would be helping the kids in developing their imagination, and be willing to learn more about American culture history.
In September 2010, few project proposals have been presented to Emily Harris for the upcoming budgeting session of the company. Thus, there are two investment proposals;
- Match my cloth line includes couple of accessories and clothing for the summer. It was hugely prevalent due to the celebrity kids who had worn them. The brand line manager, Marcy McAdams hoped to expand the clothing line by including accessories and cloth of all seasons.
Facts:
This method is hugely popular and already tested. It would bring at least some profit to the company. There was familiarity with the project working as well as the company had expertise in implementing the part of the project.
On the other hand, due to the fickle and inconsistent nature of the fashion sense of kids, there is a need to launch the new line quickly. Also, no one knows that how long it would take time in fetching gains for the company.
- Designing your own doll is the next option available to Harris. In this proposal, he has intended to personalize dolls based on the tastes of customers and to customize them to the personal data of the upcoming future owner. This might attract uncountable existing or new owners to buy or create a new doll. The customer relationship tends to be increased with the personalization. The enthusiasm for the project is also being indicated by the market research amongst a customer group.
Facts:
It is anticipated that this option would increase sales as it is a novel concept, the sales can be accelerated by offering product to new and existing customers. It would also serve well for the motto of the company of creating a unique experience for its customer base.
On the other hand, the bulk amount of investment is required for this proposal, the perfection is required for the purpose of executing this project or else it would result in damaging the reputation of the company and its relationship with its customers.
The project would be accepted on the basis of risk associated with each project and its benefits, also the NPV, IRR and payback period would be calculated. Before commencing further calculation, the cost structure of both projects can be analyzed;
Section 4: Problem Statement
The company has been appraising two of the investment proposals i.e. Match My Doll & Design Your Own Doll projects. The compelling reasons are required onto which the vice president can influence the company in accepting or rejecting the project.
Section 5: Analysis
Part 1
Match my doll clothing line project was initially based on the matching of doll and child clothing and accessories in winter weather. Given its current success, McAdams, the brand manager for the line came up with the proposal of expanding the product line by including cloths for all seasons. As the company is already familiar with the working pattern of the project and the project is the expansion of the existing product line, so the price structure and cost associated with the implementation of the project can easily be estimated and traced with the historical information of the current product. The expansion of the product line is a safer investment as the company has already tested the product which turns out to be quite popular among the targeted customer. Moreover, it will benefit the company by reducing the seasonality effect on sales and earnings of the company, resulting in improved profits. However, due to the changing fashion trends and unpredictable nature of young children the product line needs to be launched as quickly as possible, as it is a risk because no one can predict how long this product line will be beneficial for the company.
The second project is based on the concept of DIY, engaging children to create their own dolls by selecting its features, color, and hair texture etc. This will give them a sense of autonomy and free hand in creating their own dolls. This project will require new software to design dolls and due to lead time challenges, the company will be required to manufacture dolls in-house or outsource them. As this project does not focus on volume, and is based on customized setup, high product cost is expected. As the project idea reflects newness, there is a high chance that it will increase the current sales and will attract new customers and is also linked with the company motto of providing great customer experience. However, there is a risky aspect attached to it as company will be entering in a new territory that requires significant investment and perfection in terms of execution or else it will end up being a disaster for the company and its reputation.
By not considering the financial analysis, the concept of designing your own doll seems to be quite compelling comparatively. Though the project involves various risks, competition has increased but to stay in line with innovation and technology is a necessity for every growing business to sustain in the long run. The company was founded on the basis of innovation as its founder realized that the established toy companies are doing nothing in terms of uniqueness. So she came up with dolls having unique story lines that increased the involvement of children towards dolls. Keeping in view the foundation of the company and its core values DYOD allows young children to express their imagination in a more realistic way while MMDC follows a different route leading children towards the idea of fashionably staying up to date and be in style rather than portraying their real image.....
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