A startup business EZ-learn - Essay Example

?EXECUTIVE SUMMARY This report is about introducing a startup business EZ-learn, its products; snap-learn & audio-learn to children toys and gifts market UK. UK’s Pre-school Education Market is very attractive for EZ-learn. The country’s pre-school educational policies are reflective of the fact that the country has the potential need of products that could integrate efforts to enhance pre-school education and ease learning for kids. Furthermore, a vast majority of UK parents are working; they need easy tools and quick products for learning of little kids. EZ-learn products facilitate learning through activity and play. EZ-learn has adopted a flat structural design for its operations; which is based on five teams; management, product conception and development, marketing, human resource and finance & accounting. The company has identified its strengths, weaknesses along with the opportunities and threats existing in the industry. The SWOT analysis is done under the shadow of PESTEL analysis of the environment. The target market comprises of teachers and parents. The competitive environment is severe as there are so many educational toy firms and learning centers. However, EZ-learn positions itself over two important dimensions; first it identify its products as learning tools and secondly it categorize them as best gift items for kids. The marketing objective of EZ-learn aligns with the marketing mix of Snap-learn. It entails the key 4P strategies. The product strategy addresses the potential need by focusing 3 main areas of quality, functionality and intangible values which are responsible for strong brand development. Pricing strategy focus value pricing and set depth of sales incentives offered. Distribution strategy uses in/direct placement of Snap-learn. For direct distribution EZ-learn uses e-business strategies (online order placement) and for indirect distribution the company has collaborated with SMYTHS retailers. Communication and selling direct marketing efforts for designing promotional campaign; which uses social media networks to transform buzz marketing and below the line activities to stimulate purchase response from the target market. It offers sales incentives for a limited period. As the report proceeds, it entails EZ-learn’s financial statements. They identify the numeric worth of EZ-learn. The operations, logistics, human resource and e-business strategies are also elaborated with detail. Finally the report ends with recommendations to the management and illustration of references and pictures of the products. Contents EXECUTIVE SUMMARY 1 Contents 3 INTRODUCTION TO EZ-LEARN 5 PRODUCT 5 STRATEGIC POSITIONING & EZ-LEARN STRUCTURE 6 Point of Parity, POP: 6 Point of Differentiation, POD: 6 COMPANY STRUCTURE 7 SWOT & PESTEL ANALYSIS 9 POTENCY 9 ACHILLES' HEEL 9 OPPORTUNITY 9 THREATS 9 MARKET & COMPETITIVE ANALYSIS 10 FINANCIALS (CASH FLOW FORECAST 12 CASH FLOW STATEMENT 12 Income Statement 13 VALUATION TECHNIQUES 14 Net Present Value 14 Average Return on Investment 15 INTERNAL RATE OF RETURN 15 FINANCIAL RATIOS 15 MARKETING AND SALES 16 Promotions: 18 OPERATIONS / LOGISTICS/HUMAN RESOURCES/EBUSINESS STRATEGIES 19 OTHER IMPORTANT INFORMATION 20 RECOMMENDATIONS TO MANAGEMENT 20 Bibliography 22 Kaplan, R, & Atkinson, A 1998, ‘Advanced management accounting’, Prentice Hall, vol. 3, pp. 798. 22 Kieso, D, & Weygandt, J 2004, Intermediate Accounting. John Wiley & Sons, New York 22 Mason, C 2001, ‘What Do Investors Look For In A Business Plan?’, International Small Business Journal. Available from: [Accessed 20 March 2012] 22 APPENDIX 23 SALES GRAPH 23 NET INCOME OF THE COMPANY 24 INTRODUCTION TO EZ-LEARN EZ-learn is a company that is aimed to provide easy learning opportunities to mums’, mentors or even caretakers of a toddler or a preschooler. We aim to “simplify learning method” for little kids by developing new techniques and by coordinating elderly way of learning. Our vision and mission for EZ-learn is: EZ-learn is developing most simple ways of learning through consistent efforts of its management panel, which focus on innovative yet easy approaches of learning. The company is determined to cater and address all relevant early kid’s learning issues of mums; and transform products/services to deliver learning efficiency for kids. Our motive is: “Facilitate EZ-learn in a swift and cost-effective manner.” PRODUCT Snap-learn is an early learning toy for kids. It stimulates visual senses of a kid through picture and attractive colorful frame; thus engage him into play. Through a wide range of our snap cards for animals, things, shapes, alphabets and numbers; the baby learns face recognition through display of snap-cards or family and friends’ pictures into snap-learn. Snap-learn offer various benefits to its consumers which are detailed below: It eases attention grabbing for mums/mentors. It eases learning by engaging baby into play. It alleviates memorability of the kid. Snap-learn develop the kids’ retrieval skills. It simplifies recognition of different objects. It facilitates simultaneous learning of color and picture. Its portable facet enables learning anywhere and everywhere. It enables parents/mentors to drive kid’s focus to a particular object easily through eye-catching and colorful snap-learn. Audio-Learn is another EZ-learn product that develops kids’ listening skills and enhances their ability to interpret and react. It coordinates kids’ listening senses with mind and facilitates recall from memory through use of sounds, music or speech. It stimulates listening senses It augments memorability through aural sounds, music and speech. It facilitates proper spell of words for little kids learning words and speech. The sound waves stored in their memory facilitates active recall. Visual learning through snap-learn is aided with aural learning by audio-learn. Eventually, this enables the kid to link pictures with sounds; thus developing his mental abilities to establish relationships and linkages between images and sounds. STRATEGIC POSITIONING & EZ-LEARN STRUCTURE EZ-learn has positioned itself amongst 2 categories: Point of Parity, POP: In this category the company positions itself amongst educational toy companies. The companies which focus kids’ entertainment with an addition of learning feature. Point of Differentiation, POD: The company distinguishes itself as early childhood learning facilitators. Unlike developing mere educational toys, EZ-learn integrates learning techniques and psychological concepts to come up with best methods that facilitate quicker recognition, recall and memorability for little kids. The focus is over learning through activity. It also positions snap-learn over two dimensions i.e. as a learning tool and also as a gift item. The unique selling proposition, USP of EZ-learn is: “EZ-learn anywhere everywhere!” COMPANY STRUCTURE EZ-Learn has a short horizontal structure; which comprises of teams formed on the basis of the type and scope of work. The structure has a primary management team and secondary product conception and development team, PCD; a marketing team, MT; human resource team, HR and the finance and accounts team, FCT. All secondary teams report to the respective coordinators in the management team directly. There are 5 members in the management team; a CEO the head of the company, a manager for PCD, manager for MT, manager for HR and a manager for FCT. These managers are responsible for setting company objectives, planning and developing strategies to meet those objectives, coordinating will respective sub-teams to communicate management plans, take major decisions, identify opportunity and threats for the company and manage the overall internal company affairs. The secondary teams work to disintegrate the management plan into smaller tasks and activities that are required to meet management objectives in a manner that ensures efficiency and economy. PCD, Product Conception & Development team consist of 2 educationists, 2 psychologists and 1 creative designer from visual sciences. They are responsible for developing innovative yet simple techniques for quick ad easy learning of kids. Once the idea is finalized, it is then outsourced for production and packaging. The marketing team consist of 3 members; 1 is coordinator, 2nd is distributor, 3rd is promoter. All three are mutually responsible for developing market driven strategies however each is required to fulfil a separate responsibility. The coordinator is responsible for coordinating with PCD in the first place about the product; price and packaging strategies. Once this phase is finalized the two other members are responsible for implementing strategies for distribution and promotion. The HR team comprises of 2 individuals who are responsible for determining members’ salaries and compensation, incentives, job structure/description and identify skills required, facilitating good employee-employer relationships, determining annual leaves and holidays and dealing with all other relevant employee issues. The finance and accounts department is required is to record company transactions, expenses and income statements, balance sheets etc. They are responsible for forecasting cash flows for the company and analysing demand trends. They coordinate with management to communicate company’s financial position and alter expenses respectively. SWOT & PESTEL ANALYSIS POTENCY EZ-learn will enjoy competitive and formidable position vis a vis competitors. Labour environment in UK portrays stable position. The company focuses low-cost learning programs. The flat structure of the company will lead the firm to operating cost, thus strengthening its financial position. The company enjoys low cost outsourcing production. Unlike other electronic learning tools, the products offered by EZ-learn are safe for little kids. ACHILLES' HEEL The market for educational products is cluttered. Most of the mums are working, thus exhibiting fewer tendencies to devote more time to their little ones. Consumers are increasingly becoming tech-savvy. EZ-learn is operating in a competitive arena and has fierce competition both direct and indirect. OPPORTUNITY There is a great demand for products that ease learning for little learners. Products that facilitate learning anywhere and everywhere. Low-cost learning products facilitate learning across all social classes. Working mums want quicker learning alternatives for their kids. The company’s uncomplicated tools and products support environmental concerns; EZ-learn products are designed to save energy and cost. The legal, economical and political environment is stable in UK. THREATS There is an increasing social shift as women are coming in the main stream and so have less time to encourage activity learning. The company has to internalize the social shift into its strategic planning. There are no markets evidences deduced from market research that ensure profitability. The company has to abide itself to strict laws pertaining to minors in UK. The industry is also facing technology innovations which have greatest potential to pose threats and coming up with breakthrough products for learning. MARKET & COMPETITIVE ANALYSIS The market for EZ-learn is growing, and there exist a great demand for tools and techniques that facilitate quick learning of toddlers. The market requires cost-effective products facilitate learning across all social stratas. Increasingly as mums are getting busy with their professions, they need educational tools that speed up and assist baby learning. Consumers are becoming intensive value seekers, they demand companies to embrace and integrate environmental concerns in their daily business activities. Companies are responsible for saving energy and cost to provide value to their precious consumers. Moreover, mums are depending more over interactive technology for a kids learning. Although this might ease learning to some extent but it loosens the bond of a kid with his mother. The market for educational toys and games is cluttered. The company is facing severe competition from various local and international toy makers that are already functional in educational toys. Many gigantic names of toy industry in UK are mulberrybush.co.uk, the learning centre etc. The learning centre is an organization that provides educational resources for schools, teachers, and parents. It has a diverse assortment of products which doesn’t only include learning toys but also school supplies and classroom furnishings. It caters kids of all ages. It operates to assist learning. It solely possesses online existence and aims to sell educational as well as play products. The price range is moderate-high. Mulberrybush is another big name amongst UK based toy suppliers; which offer a great variety of products from famous brands for kids and their parents. The company specializes in mail order delivery system and maintains a detailed online catalogue. Its main function is selling toys in UK market. The price range for mulberrybush products is from low-moderate-high. It doesn’t have any brick-mortar existence. EZ-learn’s marketing plan is distinct from the marketing plans of traditional toy suppliers: The target market for EZ-learn and mulberrybush comprises of parents, while the learning centre has a broad base of target market which include schools and teachers in addition to parents. Moreover, the target market of competitors is relatively diverse than that of EZ-learn; which has limited its focus to niche market i.e. toddlers. EZ-learn has meticulously focused on the product features and product value sources for parents and their little ones. It has integrated family aspect into its products to induce familiarity and ease learning. On the other hand, the products of competitors are a bit complex for toddlers and they focus on various things simultaneously; therefore their products lack simple learning aspects. Distribution strategy of EZ-learn is direct online marketing and indirect retail channelling. Mulberrybush has used direct distribution strategy through mail-order delivery. The learning centre too has used direct online distribution through online catalogue. EZ-learn has used value pricing and has kept prices low for snap-learn product. The company’s promotional campaign used consumer sales promotions and online promotions to direct efforts to specific group of targets and save cost. FINANCIALS (CASH FLOW FORECAST CASH FLOW STATEMENT Year 1 Year 2 Year 3 Year 4 Year 5   Receipts           Cash sales 425,000 510,000 612,000 734,400 881,280 3,162,680 Cash from investors 250,000           Total Receipts 675,000 510,000 612,000 734,400 881,280 3,162,680               Payments             Salaries and wages 67,500 74,250 81,675 89,843 98,827 412,094 Marketing/promotion 60,000 72,000 86,400 103,680 124,416 446,496 Other expenses 60,000 60,000 60,000 60,000 60,000 300,000 Utilities Expense 25,000 25,000 25,000 25,000 25,000 125,000 Purchases 196,250 220,500 264,600 317,520 381,024 1,379,894 Total Payments 408,750 451,750 517,675 596,043 689,267 2,663,484               Cashflow Surplus/Deficit (-) 266,250 58,250 94,325 138,358 192,013 749,196               Opening Cash Balance - 266,250 324,500 418,825 557,183                 Closing Cash Balance 266,250 324,500 418,825 557,183 749,196   Income Statement Year 1 Year 2 Year 3 Year 4 Year 5 Revenue: Snap-learn 250,000 300,000 360,000 432,000 518,400 Audio-Learn 175,000 210,000 252,000 302,400 362,880 Total Revenue 425,000 510,000 612,000 734,400 881,280 Cost Of Goods Sold Snap-learn (40%) 100,000 105,000 126,000 151,200 181,440 Audio-Learn (55%) 96,250 115,500 138,600 166,320 199,584 Total COGS 196,250 220,500 264,600 317,520 381,024 Gross PROFIT 228,750 289,500 347,400 416,880 500,256 Expenses Marketing Expense* 60,000 72,000 86,400 103,680 124,416 Salaries expense** 67,500 74,250 81,675 89,843 98,827 Utilities expense 25,000 25,000 25,000 25,000 25,000 Other expenses 60,000 60,000 60,000 60,000 60,000 Total Expenses 212,500 231,250 253,075 278,523 308,243 Net Income 16,250 58,250 94,325 138,358 192,013 * Marketing expenses are expected to increase by 20% every year. ** Salaries are expected to grow by 10% every year . VALUATION TECHNIQUES Net Present Value Year 0 Year 1 Year 2 Year 3 Year 4 Year 5 Net Income (250,000) 16,250 58,250 94,325 138,358 192,013 NPV at 10% 88,642 Average Return on Investment Year 1 Year 2 Year 3 Year 4 Year 5 Return 16,250 58,250 94,325 138,358 192,013 PV Of Total Return 190,059 Total Investment 250,000 Average Return on Investment 15.20% INTERNAL RATE OF RETURN IRR = 20.33% FINANCIAL RATIOS Ratios Year 1 Year 2 Year 3 Year 4 Year 5           Net Profit Margin (%) 3.82% 11.42% 15.41% 18.84% 21.79%           Net Profit 16,250 58,250 94,325 138,358 192,013 Sales 425,000 510,000 612,000 734,400 881,280           Return On Investment 6.50% 23.30% 37.73% 55.34% 76.81%             Net Profit 16,250 58,250 94,325 138,358 192,013 Total Investment 250,000 250,000 250,000 250,000 250,000             MARKETING AND SALES The marketing intent of the EZ-learn is to cater the need of developing ideas that facilitates quick and easy learning for little kids. The objectives of the marketing team encompass the following areas: First objective of EZ-learn is to address the existing need of early childhood learning in UK. To offer efficient and effective products that use different simple ideas and techniques to integrate learning with play. Offer products using most relevant sources of distribution, to ease availability for the masses. Promote the products to the entire relevant target market by conducting educational seminars, trade shows. Doing advertising and also by disseminating promotional materials like pamphlets, brochures etc. Ease free trial of products in few schools initially, when a substantial demand for the products is created then they should start charging price for, Snap-learn and Audio-learn, products across the entire target market. Evaluate the demand, acceptance and adoption of EZ-learn products and services across the target market. TARGET MARKET: The target market for EZ-learn products is classified as primary and secondary categories. Teachers and parents constitute the primary and active target market for the company. While kids are EZ-learn’s secondary and passive target markets. MARKETING MIX: The marketing mix of EZ-learn entails the product, price, placement and promotions’ strategies. The nitty gritty details of the company’s marketing strategies are given below: Product: The ideas of the products at EZ-learn are conceived by the production team, o however, the operations are outsourced to Chinese factories. The products include snap-learn and audio-learn. Snap-learn; a set of picture frames, learning cards and a promotional goodie bag. Audio-learn is an audio file which consumers can download from EZ-learn’s official website. It eases the target market to carry the downloaded audio-learn anywhere and everywhere. To ensure portability audio-learn is not available in CDs. Price: The pricing strategy of Snap-learn is based on value pricing which focuses over high product quality and low production cost. The cost of a snap-learn is ?14.99 only. Place: The distribution strategy of EZ-learn products calls for both direct and indirect marketing approach; which means that the products are distributed through retailers as well as by EZ-learn itself. EZ-learn is distributing snap-learn through a great retailer giant SMYTHS, it has 57 brick stores across UK. This would enable EZ-learn to ensure availability and reach to the target market effectively. Besides 3rd party distribution, EZ-learn also conduct direct distribution through company’s official website where snap-learn and audio-learn are available to any potential international customers that are interested in purchasing EZ-learn products; all they have to do is to place an online order at our website. Above and beyond the learning aspect of Snap-learn, it is a great gift for any one as it serves as a picture frame too; therefore it is also promoted and distributed through born gifted an online store. Promotions: EZ-learn’s promotional strategy includes sales promotion and below the line, BTL activities for brand activation and publicity through demonstrations. Besides this the company will promote snap-learn over social networking media. “Experiential Marketing” is a technique that utilizes the concept of creating awareness through demonstration. It has its inherent advantages for the EZ-learn and the target market. The company first distributes product pamphlets and brochures to schools and students. This would create awareness about snap-learn’s arrival in the market and also about its availability at SMYTHS stores and at EZ-learn’s website. Furthermore, the company conducts brand activation campaign at SMYTHS store locations to stimulate purchase response from the target market. The brand activation campaign directs the target audience to the consumer sales promotion program. Consumer Sales Promotion: The EZ-learn offers sales promotion to the prime targets. The communication strategy elaborates that the promotional campaign requires: Immediate type of promotion; A selective set of products will be offered to the selective scope of market i.e. regional basis. The duration of this promotion will last to a months; It offers incentive of 10 pack learning-cards or a free audio-learn cd for first month. OPERATIONS / LOGISTICS/HUMAN RESOURCES/EBUSINESS STRATEGIES EZ-learn’s production operations are outsourced to Chinese factories whose information is shared in the intellectual property section. The company avails logistics service from a well reputed London based organization, which deploy vans and bikes for courier purpose. Human resources team at EZ-learn plays a vital role in managing all employee affairs, from broad based responsibilities to simple tasks. HR team’s primary duty is to manage good relations with internal partners i.e. employees and also ensure goodwill contacts with external partners i.e. suppliers and distributors. The responsibilities of HR team involves departmental development, Human Resource Information Systems (HRIS), employee relations, training and development, benefits, compensation, organizational development, employment, understanding employee requirements and demands, creating grounds for motivation and most importantly company-employee effective communication. The employees are recruited from a variety of sources depending on what skills and competencies are required out of them. Ez-learn is well aware of the importance of electronic commerce in business environment. Therefore, it has developed a virtual value chain for marketing its products effectively. The e-business strategy is devised to assist EZ-learn avail efficient supply management, customer service and relationship management, inventory and service management integration; and tactical operations alignment which enable coordination of geographically dispersed business activities. Moreover, the promotional and distribution aspect of e-business strategy provides EZ-learn social media vehicle for promotion of its products and creating buzz marketing for snap-learn and for the company itself. OTHER IMPORTANT INFORMATION EZ-learn has already applied for acquisition of patents for its products so that they may not be replicated or imitated by competitors. RECOMMENDATIONS TO MANAGEMENT After doing the comprehensive analysis of the industry and business environment of UK, and considering all the relevant factors that might influence the strategic planning, implementation and control of the EZ-learn’s strategies, following are recommendations are proposed to the management of the company. EZ-learn’s must evaluate its efforts which contribute to the its brand equity; and it should make appropriate alterations if required in response to market or technological developments. The company must undertake marketing research to monitor and evaluate market trends (demand, product performance, competition, areas of improvements, consumer satisfaction etc.) over the time. It would give EZ-learn significant marketing insights and would enable the company to make educated decisions based on scientific evidences obtained from the findings of the research. It must analyze the demand overtime and make continuous efforts to enhance the demand for snap-learn and audio-learn. EZ-learn must look for possible improvements in current products and internalize developments for new products. Employees’ team must be evaluated against their performance and needed alterations must be made in systems and structure overtime to maintain edge and differentiation against competitors. Post sale response must be evaluated to track performance of product, consumer compliance and gather feedback. Consultations with the suppliers must be maintained to establish rapport and build strong company confidence. Bibliography Abrams, R, & Kleiner, E 2003, The successful business plan: secrets & strategies, The Planning Shop, Canada. Kaplan, R, & Atkinson, A 1998, ‘Advanced management accounting’, Prentice Hall, vol. 3, pp. 798. Kieso, D, & Weygandt, J 2004, Intermediate Accounting. John Wiley & Sons, New York Lehmann, R 1985, Market Research and Analysis, R.D. Irwin, Columbia University. Mason, C 2001, ‘What Do Investors Look For In A Business Plan?’, International Small Business Journal. Available from: [Accessed 20 March 2012] McKeever, M 2008, How to write a business plan, Nolo, California Porter, M 1980, Competitive strategy: techniques for analyzing industries and competitors, The Free Press, New York. APPENDIX SALES GRAPH NET INCOME OF THE COMPANY Read More