Feasibility. A Guide for Small Business - Research Paper Example

? Feasibility Study Introduction This paper intends to present a feasibility study for an innovative business idea. The innovative business idea is for a toy manufacturing company based at Brooklyn. The toy company intends to deal with the American Greetings Inc (AGI) in the business to business (B2B) market. The feasibility study of B2B market gives a brief view on the product, technology used in the operational process. The study also states the market environment which includes competitions in the market, existing industry and the business model. Apart from this, various other strategies have been stated in the feasibility study including the marketing and selling strategies, production and management requirements along with financial projections for one year of the business plan. Products and Services Considering the present market scenario, the toy company has selected a range of innovative products to deal with AGI in B2B market. The selected product is intended towards the little children of Brooklyn. With this concern, the toy company has selected three distinct categories of toys to be introduced in the market, i.e. Toy A (TA) for the age group of 1 year to 3 years, Toy B (TB) is for the age group of 4 years to 6 years and Toy C (TC) for the age group of 7 years to 10 years. Hence, the toy company will be introducing musical soft toys for the TA product range which will emphasize on the adoption of nursery rhymes and other educational themes rendering due concern towards the mental development of children at this age. The company will further attempt to introduce talking pens for the product line TB and science station educational toys for the product line of TC. The features for the later two product lines, i.e. TB and TC will also be focused towards the continuous development of the children’s psychology and competency to keep pace with the external world. The business idea to offer these product lines will further take into account the requirements of mentally or physically retarded children with the application of automated voice instructions. The market segmentation of toys indicates that demand for toys differ with the age variations of the children. With due regards to the fact the toy company has selected three types of toys for dealing with AGI in B2B market. AGI is fundamentally known for its different types of innovative greetings cards and toys. In this regards, it has been found that AGI serves its consumers with innovative greeting cards; however, the market for innovative toys still remains unexplored by the company (American Greetings, 2012). By analyzing the market it can be stated that the toy company has certain advantages for its product lines in dealing with AGI. AGI is well known for distributing innovative greeting cards and regular toys. However company is noted to have minimum inclusion in the innovative toy segment in comparison to its involvement cards segments. This can offer noteworthy opportunity for the toy company as a supplier of AGI. Technology Introducing new innovative toys in the American market certainly needs modernized technology in its manufacturing unit. While manufacturing toys, the toy company will consider exact technology for selected toys concerning the fact that the requirement varies with different kinds of toys. With this concern, the toy company used basic materials and technologies to manufacture Toy A. The requirements has been planned concentrating on soft baby toys which should be made up of cotton and cloths with attractive color and an electronic device run by battery cell for music. The procedure used for manufacturing Toy A product line is by placing electronic device inside the soft toys so that it is invisible to everyone and stays away from the reach of the children. In similar aspect, different technologies are intended to be used for manufacturing of Toy B product line, with the use of wood or plastic with attractive colors and designs with electronic devices inside it which can speak when the pen is in use and thus can be used by both mentally and physically retarded children as well as the common adolescents. For manufacturing of Toy C product line, the company requires 288 science stations with their place name and an electronic navigator which will help to navigate the station. Market Environment Market environment deals with the mode of strategies which effect organizations in their working process. In this context, the toy company is a manufacturer of distinguished toys intended to deal with its innovative product line with AGI in B2B market of American toy industry. Being interrelated in terms of the supply chain process, the operations of the toy company can be significantly affected due to the operations executed by AGI in its distribution channels. This can be both beneficial as well as disadvantageous for the toy company in terms that as a start up firm the company will be able to attain the brand value of AGI as a leading brand in the global market. However, as the company initially is highly depended on AGI as its sole consumer in the B2B market of America, it is quite likely to witness disadvantages concerning the risks faced by AGI which can later be channelized in its entire distribution process. It is worth mentioning in this context that one of the vital competitive advantages that the toy company can render to AGI is by serving with innovative toys which are yet not included in the product range of the company. With a rapid expansion in the market segment of innovative toys, AGI is quite probable to take interests in the offered product lines enhancing the opportunities of the toy company in its market environment. Competition In every form of organizational environments there are competitions in which the business has to run. Taking into consideration this particular fact, the toy company will have to face its rivals in the supply market of the American toy industry while dealing with AGI with its innovative toys. The competitors for the toy company can be thus regarded as Carlton Cards, Gibson and Papyrus who are currently operating as the major suppliers of AGI (American Greetings, 2012). However, a competitive advantage to be gained by the toy company is that these companies deal with AGI supplying their manufactured tender touch toys and innovative cards; whereas, the toy company intends to deal with its innovative toys thus differentiating its product line in its targeted market segment. As a result, it can be observed that in future these companies can also approach with innovative toys to AGI and the market can become more complex in respect to the present scenario. Industry Scenario In the present scenario, it can be observed that demand for toys is rapidly increasing in the market which is likely to be a noteworthy opportunity for the toy company to penetrate in toy market of America. There are currently 50 companies identified to be operating within the industry and generating revenue from almost 75% of the market share. This indicates the industry to be partly concentrated in nature. This tends to increase the barrier of entry to the industry. However, the industry has been identified to grow even in the hostile situations of economic downturn during 2009, which indicates it to be in a financially reliable position. This presents a significant opportunity for the new entrants like the toy company. The legal barriers are also identified to be flexible which again promotes the entry and growth of new companies within the industry, even though considerable focus is provided towards the licensing of the toy companies. Contradictorily, industry sales and revenue earnings are identified to be seasonal which must be taken into concern as a vital entry barrier by the toy company (Little & King, 2010). Business Model Business model specifies a few significant components in terms of customers, pricing, distributions, satisfying customer needs and distinction of product concentrating on the process by which the company tends to satisfy its operational responsibilities towards these groups. Considering this notion, the toy company has framed its business model in the B2B market of American toy industry. In this context AGI is considered to be the prime customer of the toy company in dealing with innovative toys (Brodie & Coviello, 2001). Based upon the prevailing economic conditions, the toy company has fixed the selling price for its product line on offer as suitable for its desired profit margin as well as for AGI’s in competencies. The raw materials for the manufacturing of the toy products will be consumed from Chinese retailers as this would facilitate in the augmentation of the product’s quality and variety by a certain extent. Moreover, tax exemptions and business customer preferences towards Chinese raw materials can also prove beneficial for the company. It is worth mentioning in this context that the preferences for raw material from China in the US toy industry in rapidly increasing with better opportunities for the supplier companies to grow in the market (Martin, 2007). Marketing and Sales Strategies The strategy implemented by the toy company will concentrate on manufacturing innovative toys for the US based B2B market where the demand for toys are rapidly increasing. The product line will serve with musical soft toys, speaking pens and educational games varying according to the age groups of the children or the end-users. As referring to the demand for toys, the toy company has selected AGI for its business trend because of its goodwill in the US market. As considering the AGI’s brand value, the toy company should determine its price in with due consideration to the interests of the consumer (i.e. AGI) and the business unit itself. The toy company needs to consider this in order to maintain a long term association with AGI and in future to prosper as a major supplier of innovative toys in the market. Furthermore, the promotional process should be planned in effective manner by the toy company so that it should match with the brand image of AGI. This in turn is quite likely to reward with enhanced customer satisfaction in the B2B market which can be certainly attributed as quite essential for any start-up business. Production/Operating Requirements Operational requirements can differ with respect to the nature of the market and its prevailing trend. Thus, the toy company needs to have an infrastructure where the business plant can be set up for the production to run smoothly incurring less costs and witnessing less hazards. In this regards, the toy company will attempt to build its infrastructure in Brooklyn for the purpose of production of new innovative toys to be sold in the US B2B markets. For manufacturing of innovative toys by Toy Company needs to organize its manufacturing unit with expert manpower along with the assistance of modern technology with due regards to the legal requirements such as licensing. Management and Personnel Requirements The toy company requires framing its management in an organized and systematic manner to have better output at present as well as in its future performances. To attain the desired objectives, the toy company needs to frame its business operation in effective departments concerning its operations related to production, marketing and finances. The two main departments for the toy company are the marketing and operational units. To attain efficiency in these departments, the toy company needs to select its human resources with adequate experience proper communication skills in marketing field, innovative ideas in the production unit, and so on. The human resources to be recruited in the firm should also be technologically proficient in making use of modern technologies is also required to built an effective process. Intellectual Property Intellectual properties fundamentally refer to the intangible properties such as creativity, trademark, scientific discovery, industrial design, commercial identity and designation (World Intellectual Property Organization, 2012). One of the most significant intangible assets which the company needs to consider at the initial stage of its commencement is the license. As can be identified with reference to the industry regulations, it can be stated that licensing is terms as a crucial aspect to instigate and operate a business with minimum legal hurdles (Little & King, 2010). Hence, licensing can be referred as the ticket as well as the gate way for a company to start its business process in the American toy industry. With this perspective, the toy company will also attempt to fulfill the basic requirements of licensing to attain the opportunities in the US market. In relation to this the toy company will create an effective design for its infrastructure to promote departmental efficiencies and communication which in turn would reward the company with better cohesion in the work culture. Regulation and Environment Before starting its operations, a company should satisfy a few criteria like regulation and environmental concerns of its native place where the business is introduced. The business process should be commenced strictly without violating any of the prevailing regulations and environmental concerns of the industry. With this regards, the toy company should frame its business in such a way that the regulations and environment is not been affected negatively by its manufacturing operations. For instance, regulation that should be followed by the toy company relate with the rules and regulations of American toy industry. These enforced rules are mostly identified to be concerned with the aspect that the product should be well labeled with the description of its resources used and manufacturing process along with the longevity quality of the product. Toys should be produced with related to education and with due regards to the health of the children. Every product launched in US market is tested by the Quality Testing Committee as a result of which the toy company also needs its products to be manufactured with quality assurance (Hasbro, 2012). In present scenario every community is becoming increasingly concerned about the environmental hazards caused due to industry operations. In this regards, the US government has taken noteworthy steps to generate awareness regarding pollutions and various other social issues including children education (EPA, 2003). With this concern, the toy company should take initiatives to minimize the negative impact on environment likely to be caused due to its manufacturing operations. It will also render deep concern towards mitigating any health hazards towards children which can be caused due to the consumption of the products offered. Financial Projection Projected Cash Flow for the First Year of the Business Conclusion and Recommendations Being a startup company, the toy company should consider performing continuous research with the intention to stay aware regarding the continuous changes occurring in its external environment. This will not only assist the firm to preserve its competencies in the long run to efficiently respond towards market changes through attaining better knowledge regarding the customer preferences and rapid innovations. Furthermore, for the purpose of attaining sustainable growth prospects, the toy company should also render due consideration towards its long term monetary stability which will in turn deliberately assist the organization to plan its future investments and thus attain competitive advantages. Rigorous planning should be considered by the toy company prior to implementing any strategies. Any lacuna while implementing a strategy might in turn prove to be highly risky for the organization in sustaining for the long term. To make this aspect effective the toy company should provide due concern towards utilizing better technology with innovative ideas. However, it should be mentioned that the company can in its future performances plan to expand its business to other countries attracting other major market players of the international toy industry. References American Greetings. (2012). Investors Overview. Retrieved from http://investors.americangreetings.com/ Brodie, N. E. & Coviello, R. J. (2001). Contemporary Marketing Practices of Consumer and Business Firms. Retrieved from http://www.achmadyanu.com/marketing/07.pdf Little & King. (2010). The Transformational Toy Manufacturing Industry. Retrieved from http://www.littleandking.com/white_papers/toy_manufacturing_industry_today.pdf Martin, A., 2007. U.S. toy manufacturers see sales increase amid recalls of Chinese-made products. Retrieved from http://www.nytimes.com/2007/08/15/business/worldbusiness/15iht-lead.4.7128972.html World Intellectual Property Organization. (2012). Understanding Industrial Property. Retrieved from http://www.wipo.int/freepublications/en/intproperty/895/wipo_pub_895.pdf Bibliography Asprey, L & Middleton, M. (2003). Integrative Document & Content Management. United States: Idea Group Inc. Lee, A. C., Lee, J. C. & Lee, C. F. (2009). Financial Analysis, Planning & Forecasting: Theory and Application. Singapore: World Scientific. Zacharakis, A., Spinelli, S. & Timmons, J. (2011). Business Plans that Work: A Guide for Small Business. United States: McGraw-Hill Professional. Read More