Executive Summary

The report examines the introduction of never seen before product called the ‘Hollywood Star’. The product is a toy designed for children between the ages of 8-13. It will generate a lot of buzz in the industry because no toy has been able to fulfill all the functions that this product can. The product consists of a DVD containing episodes of children’s favorite cartoons like Spiderman and Simpson’s. On top of that there will be a script that allows the child to practice acting skills while recording his/her voice using a microphone that will also be part of the assortment. The beauty about this product is that it is entertaining because of the DVDs containing their best superstars; it is also educative because their language skills will be polished through the attached script. The product is also enriching because it will develop the child’s talent in acting.

The Company will use thorough market research to find out what factors influence children within that age the bracket. It will then incorporate these ideas into advertisements done before and after the launch. The launch will be done by a well known child actor who will give them a first hand experience of what the Hollywood Star can do. The production team will consist of a number of professionals like engineers, accountants and drivers. All these members will be recruited after intense scrutiny to ensure that there will be no technical hitches at the onset of production. There will be continuous product improvement by introduction of another similar assortment containing musical instruments instead of a script. Financial and sales forecasts incorporating all the factors amounted to $24, 960.

1.0 Introduction

The Business plan will look at the launch of a new product. Its product name will be Hollywood Star. The product has a number of features that will make it stand out from the rest of the tots currently being offered in the market. The product is meant for children that are between the ages of eight and thirteen.

Barney (1997) ascertains that when introducing a new product in the market there are several issues that need to be addressed: A business should consider all the internal and external factors that will affect production. This can be done through the 4c’s, SWOT analysis and Porter’s five forces. After these issues have been critically examined then the entrepreneur(s) ought to come up with a mission, vision, name goals and objectives of the Company. Also, all legal matters need to be adequately catered for. After this, the entrepreneur ought to consider all of the management issues that will affect the organization. Then segmentation, research, strategy and other marketing issues should be incorporated. On top of this, location and the most important of all a budget must be made for the given product.

2.0 Industry analysis

2.1 Definition of the industry

The Toy industry is one of the most lucrative areas to engage in business in the United States. This is because of the fact that there is a lot of room for creativity in this industry; therefore entrepreneurs can be able to come up with their own products and offer something unique to the market. However, this trait is not something that is possessed by all businesses that enter the industry. This has brought about a lot of replication and imitations. The industry employs a lot of human labor and technology during production and therefore necessitates proper planning before embarking on a project as explained by Barney (1991)

2.2 Size, attractiveness, growth rates and trends in the industry

The industry is a large one; it has been in place for a very long time now. The Toy industry covers the whole country and even goes beyond the countries borders. It should also be noted that the most lucrative toy Companies are not found within the Country and mostly come from Asian countries like Asia and Japan.

The growth rate is also quite high. About fifty years ago, the industry was quite basic, it was not considered as an industry on its own but fell under the luxuries section. But much has changed since then; the economy has grown and parents consider toys as a priority for their children. Increased advertising and aggressive marketing has cause the growth of this sector.

The toy industry has been characterized by growth in market share for relatively new companies in the trade. This means that the intended Company has a high likelihood of surviving in the industry

2.3 Industry segmentation

There are various ways in which the toy market has been segmented. Some of theses are;

Gender segmentation; here, toys are made according to what fits a particular gender. For example, there are toys that are suitable for boys like water guns and cars, while others are suitable for girls like teddy bears and dolls.

Size segmentation; there are some toys in the market that are quite large and macro in nature. One such example is a house which a child can play in. then there are some that are small in size.

Segmentation based on special features; some toys have something unique in them like those ones that can record, play music or make specific moves while others are simply ordinary and have no special features added on to them.

Segmentation based on type; there are some toys that are made after influential people in children’s lives like cartoon characters (Dexter, Simpsons and Mr. Poodle), pop singers like Britney spears and Jessica Simpson or action figures like Spiderman and Superman. They are some that are based on animals or things. For example mobile phones, bears, dogs, balls, musical instruments etc.

2.4 Competitor analysis

The toy industry is one of the most competitive industries in the US market today. Competitors have realized that children are a very responsive market target. Besides this, the market is liberal and Companies need a patent and can start their business. Competition is also stiff because there re a lot of toy imports form Asian countries that are flooding the US market currently.  On top of that competitors are very creative when coming up with marketing ideas.

2.5 Situational analysis

2.51 Porter’s five forces

Porter’s five forces are essential in determining the degree of market penetration of the given Company or the strength of a particular market strategy as stated by Porter (1985). This is done by examining five key areas i.e.

2.511 Degree of rivalry; the new toy Company that will be introduced has to face a high degree of rivalry among other toy producers. To cope with this, the Company will have a unique, creative and solid product that it will be offering. Secondly, the Company will use low prices to boost sales and lastly, it will employ creative marketing ideas to stand out from the rest.

2.512 Threat of substitutes; Porter (1985) explains that threats of substitutes occur when products from another industry have the potential to replace those ones being offered by a specific Company. Fortunately, there are not very many industries that can substitute toys because the main function of toys is as play items for children. However, the entertainment industry through CDs and DVDs has a slight capability of achieving this.

2.513 Bargaining power of buyers; because toy companies in the US are many, yet the target group is the same, buyers have high bargaining power. The Company will use aggressive marketing skills to deal with this.

2.514 Bargaining power of suppliers; suppliers also have relatively high bargaining power. This is because raw materials for production of toys like plastic, paper cuts, glitters and fibers are used by other industries apart from toy companies thus giving suppliers an advantage.

2.515 Risk of new entry; the Company will also face this threat because there are no strict laws that prohibit entry –one simply needs to fulfill their legal obligations like getting a patent.

2.52 SWOT analysis- Anthony (1998) explains that this is done to asses internal and external; factors that affect a Company.

2.521 Strengths; the Company has an exceptional product on offer. Besides this, it will also offer other toys in the future. It will sell its toys at affordable prices, employ creativity in marketing and will maintain high product standards.

2.522 Weaknesses; because the Company will be relatively new, it may not have a strong brand image to fall back on. There are also some financial constraints that it has to deal with initially as there are no profits at the onset of business. The Company will also face competition from well established names in the toy industry like Barbie. But all these will offset once production is underway

2.523 Opportunities; the Company can take advantage of being new in the toy industry to establish itself. It can sell itself as being unique and may thus secure a strong market base. It should also make use of technology in production. Also increasing market share is another opportunity.

2.524 Threats; there have been cases of negative publicity where some toys have been labeled hazardous. Also, the government could impose restrictions on labor and technological use in toy production. Other competitors could copy their product and gain mileage over the Company. But it can deal with this through fulfilling all labor laws and ensuring that all supplies meet their legal obligations as suggested by Anthony (1998).

3.0 Business Issues

3.1 Vision and Mission of the Company

The Company will be called ‘Starsme’.

Its mission statement will be as follows; ‘to establish the Company’s product as the most innovative in the market, create worth in dealerships, promote production efficiency and to instill corporate social responsibility.’

The vision will be to ‘become the leader in toy manufacture in the United States’

The Company’ slogan will be ‘children’s wacky world of make belief!’

3.2 Business Competitive advantage

The Company will be new in the market and has an opportunity to market itself without any prior misconceptions that come with serving for too long in the industry. Besides, the Company has an extra ordinary product that has never been seen before in the toy market. The product to be offered is also multifunctional as it is educative and informative. Besides this, the Company will offer low prices for its products and will adopt high standards in manufacture. Dyer and Ernest (1991) ascertain that a very effective strategy for penetrating markets is through low pricing

3.3 Goals and Objectives

The goals of the Company will be based on the core values of maintaining product standards and enhancing productivity.

To offer high quality of toys that meet set standards for the US market
Engage in continuous innovation during production and marketing
Cultivate a culture of cohesiveness among employees
Continuously increase market share and profits through research and development, technology and

3.4 Performance reviews

Performance appraisals will be conducted depending on the nature of review being done. Overall Company performance will be reviewed on a quarterly basis i.e. after every three months. During this assessment, the Company’s profits will be examined that is both net and gross profit. Performance of the Company’ shares will also be assessed and total revenue will be compared to expenditure and suggestions for improvement to be done.

Performance reviews for departments and specific individuals in the Company will be done on a weekly basis. Special emphasis will go to the production team and the sales team. Members of staff will have specific targets that they are supposed to attain e.g. salespersons will have an amount like $ 2000 which they are supposed to bring to the Company after every week. Revenues collected and sets targets will be compared and differences discussed. The Company will hire external contractors to conduct performance appraisals for specific individuals and departments. Aaker  (1984) explains that when an external member is used results will seem more neutral; than if management conducted the performance appraisals themselves.

3.5 Legal Structure and Ownership

The Company will be limited and will be owned by shareholders. Maltby (2003) ascertains that this means that their liability will be limited by amounts of shares that have not been paid out. Profits are dispensed to shareholders. Also, voting rights will also be granted to those who have shares in the Company regarding maters related to Company ownership. The Company will be managed overly by a Board of Directors who will have well laid out duties and failure to fulfill these responsibilities could lead to court action.

There are a range of benefits that come out of such a scheme of ownership. These include;

It is a flexible model that is well established, the Company will be a separate legal entity

Shareholders will have limited liability; staff can decide to become shareholders too, it increases equity and financial debt and it facilitates innovation and efficiencies for profit making

Maltby (2003) asserts that despite the above benefits of this system of ownership, there are some limitations that will come with this system of ownership. The first is that this model presents some challenges in administration of pension schemes and a framework for accountability needs to be instituted.

3.8 Legal issues

The Company will obtain a license and IP protection. This license will give it the mandate to deal with all types of toys; this will cover the various segments that have been examined in the industry analysis above. The Company will obtain protection from Copyright infringement.

Another legal issue that will need to be addressed is shareholder privilege. There will be a Memorandum and Articles of Association that will guide shareholders on profit distribution as suggested by Maltby (2003) Company legislation will also help in the latter mentioned issue. Initially, the Company will contract for debt finance then it will later offer its shares up for sale after which profits will be given put as dividends.

3.9 Product Development in the future

The Company will start by the main product ‘Hollywood Star’. Then it will venture into similar types of toys through its research and development. After a period of about three years, the Company will expand its brand and will establish a brand family. This will occur after the Company has established itself in the industry; the Company can even obtain a patent for production of other items for children that do not necessarily fall in the toys category.

3.10 Risk analysis

There are a number of issues that have to be addressed prior to starting up the Company. First of all there is the danger that finances will is not enough to carry forward production. The manufacturing industry is an intricate connection of all stakeholders and finances are essential in the coordination of these areas. These may include recruitment of employees, production of the toys, and employment of technology among others. Aaker,  (1984) believes that this can be mitigated through proper budgeting before starting up the project- all the legal, human resource, production, technological and management issues should be well accounted for to minimize chances of ending the project abruptly.

Another risk is poor market response from the target market. This can be dealt with by doing a thorough market research on what appeals to the target market. Then these research findings can be employed in marketing strategies for the Company. The Company will make use of marketing tools that apply to children at that age. This is a suggestion obtained from Grant (2005)

Technical risks; these are another issues that may become a challenge at the onset of production. The product that is to be introduced is a complex product that will need techniques and skills from various professions. Because it will contain DVDs and microphones then it will need telecommunication engineers, it will also need mechanical engineers to assemble the product and sound engineers for installation and records of the script. Combining all these feature may prove to be a difficult task. But the risk can be minimized by employment of well qualified and experienced technicians. The technical crew can borrow ideas from other devices in the market that have similar elements. Production should start on a small scale first, and then if the product reaches acceptable standards its number can be increased.

4.0 Management Team

4.1 People, skills, roles and background

The Company will recruit members from a wide range of professions to work towards the Company’s goals. It will need accountants to take care of budgetary allocations. It will need numerous technicians in the production section. These will be; mechanical engineers, telecom engineers, electricians, plumbers and other people who will contribute towards the direct production of the product.

It will also need innovators who will include script writers, researchers and storytellers to come up with ideas for the script. In addition, other profession will be needed for non production sections of the Company. These are sales persons and sales directors, human resource managers and marketers. Besides this, there will be an IT department to record the entire goings on in departments found within the Company. Lastly, there will be casual laborers to deal with areas that do not require specific skills. Most of them will be found in the assembly/production section while others will be found in procurement, storage and supplies. These include drivers, store keepers, cleaners and guards.

However, since production will start at a small scale, there will be a minimum amount of people. The production team will have the largest number of staff members -fifty. Quinn & Rohrbaugh (1983) suggests such an approach. The Company will also have ten people in each section initially then this will grow with time.

4.2 Organizational structure

The Company will have a hierarchical type of organization structure; in this case there will be number of managers who manage different divisions of administration. Hatch (1993) elaborates that each manager has a group reporting to him it will be done this way because the Company will have a variety of employees. The Company will be undertaking a lot of activities thus there is a lot of diversity in the activities going on.

The advantage of this kind of structure is that it easily defines the responsibilities and roles of each worker. It also gives a great opportunity for developing ones professionalism, which is in line which the mission of the Company. This kind of management structure also gives the employees more opportunities for getting promotions and it has a clear leadership structure as emphasized by Collins (1998).

4.3 Use of external consultants and advisors

The Company will employ their services in the following areas; during performance appraisals to enhance credibility, during recruitment to ensure that credible members of staff are recruitment. When the Company is considering partnerships or other expansion ventures it will be essential that it engages services of consultants. Lastly, the advisors will be necessary when the Company changes type of ownership. For example if it decides to change from being a Company that is limited by shares to one that is limited by guarantee then it should first consult.

5.0 Marketing Plan

5.1 4 P’s

5.11 Price

The main concept behind any price decision is to balance between gratifying the customer’s needs while making profit for the organization also the Company will integrate its objectives. Since the product is new to the market, it must have a lower price to lure consumers. This is what is called tactful introductory pricing and this will be adopted but after establishment, then prices will be raised

5.12 Promotion

The Company will make serious use of advertising to promote the product. Collins (1998) says this is because it will allow the company to penetrate different market groups and it will give the product a lot of mileage. It will also use Public Relations by promoting goodwill among the target market through events, programs for children with needs and charities for needy children for the community.

5.13 Place

The Company will use personal retailing through its own stores. The reason the Company will do the retailing themselves is because there will be personalized service provision, it can get feedback directly from the consumer and eliminate all extra expenses that come with introduction of a chain.

5.14 Product

This will be the most crucial part of the marketing aspect mostly because innovation adds value to a given product according to Grant (2005) The toy will be called ‘Holy-Wood Star’ and it includes microphones, a book and a DVD. The product is basically similar to an acting lesson where the child is acting using the script in the book and his/her voice is recorded as one of the actors in the DVD. The DVD will have different episodes as written in the script. Besides this, the DVD will have prerecorded episodes of the Simpson’s, Barbie, Batman and Spiderman. Because of these additional features that product will be multifunctional. Children can improve their language skills while getting entertainment at the same time. They can also enhance their talents.

5.2 Target group/market segments

The product focuses on children from both genders. These children will be aged between the eight and thirteen years. The market will be segmented into two categories i.e. male and female. There will be toys for boys; these ones will have masculine colors and the script will also be related to what boys like. The same will apply to girls.

5.3 Buyers and influences

Children are mostly influenced by their peers who are in turn influenced by media. This is what the Company will focus on. It will choose moments when all the family members are seated to air its adverts. This will mostly be at dinner time. Children can then nag their parents to buy them Holly-Wood Star. Children also like going to the malls and many posters and promotions will placed in malls.

5.4 Detailed analysis of competing products and advantage over them

There are a number of action figures in the market like Spiderman and Superman. Some companies have prerecorded voices in these toys and these are serious force to recon with. Besides this, there are also some toys in the market that have musical instruments like a small piano. This allows children to enhance their singing talent. Such products are similar to the ‘Hollywood Star’ because they provide one of the functions that the product caters for. Dyer and Ernest (1991) assert that there are a product should stand out.

Most of the products in the market are singular in nature. For example, one may find that there are microphones for children, or scripts for them but no product has come as combination of all the features possessed in the Holy-Wood Star. This product is advantageous over all the others because it is educational, entertaining and allows growth of talents.

5.5 How to launch product

The Product will be launched in all major malls in the Country. This will happen within a period of two months. It will have been advertised on children’s magazines, television and the internet. Then the Company will choose a real life child actor to launch the product. This real life superstar will visit the various malls each weekend for the entire two months. She will read from a chapter in the script and will demonstrate how to use the product.

5.6 Market research

The Company will conduct market research to gain skills on what drives their target market. They will do this through questionnaires and interviews of randomly selected children in stores all over the country. The information collected will then be evaluated and analyzed. This will form the basis of their marketing campaigns

5.7 Strategy for releasing substitute products

At first, the Company will start by the two types of products. This will then be followed by toys that have some recorded musical notes. And a small piano, others will have a flute or small drums. All the above will come with DVDs and guidelines on how to play the instruments. This will help those children who may be talented in other areas other than acting. Al these will be introduced sequentially.

6.0 Operations

6.1 Physical locations, equipment required, how product will be produced

The Company will be located in the state of California. This is because it will be close to targeted market and will eliminate extra expenses that come from transportation. Barney (1997) asserts that operating costs like transportation need to be reduced to enhanced to increase returns.  Besides this, the company can have stores in theses and replenish supplies as soon as they are out.

The Company will require many technological devices. It will require software that can enable recording in the DVDs. There should also be semi conductors, and microchips for recording voices of the actors. The microphones will be bought from another supplier and will simply be assembled with the rest of the parts in ‘Starsme’. It will also require printing presses for compilation of the script. There will be a need for an assembly line. Here the various elements of the toy will be brought together. So there will be need for conveyer belts, punching machines, binders, DVD writers and

There will be incorporation of two aspects of production. The first is through the use of technology. Here most aspects of production will be automated. This will apply to the assembly line. However in the production of the specific features like the script writing, design of DVDs and voice arrangement will be done by individuals.

6.3 Quality control

The Company will have a quality Control section. In this area, there will be guide books that ensure that all aspects of the product comply with international qualities. The product will be checked to ensure that it is safe for use and that there is no danger of harm to the consumer. Sound will be tested to ensure that recording capabilities will have been enabled properly. Overall packaging and compilation will also be checked in this section.

6.4 Delivery of product

To add to the quality of the product, the Company will offer after sale services through delivery. The Company will hire a reputable courier to do this for them i.e. the courier will be fast yet affordable. Besides this, the product will sold at most stores in the country. These include Wal-Mart, Target and others. The Company will run its own stores where customers can purchase directly. The company will open up five of these stores countrywide. Dyer and Ernest (1991) explain that value of products is increased by after sale services.

6.5 Action plan

The following activities will occur in this order;

Purchase of land at the location – 2 weeks
Erecting production buildings and installation of equipments – 6 months
Securing suppliers for microphones, DVDs, recorders, software etc – 1 month
Recruitment of staff using assistance from consultants-2 weeks
Starting up production-continuous
Posting advertisements regarding launch-2 weeks
Product launch-2 months
Normal production of the product- continuous
Performance reviews-quarterly
Staff meetings-done on weekly basis
Launch of new brand-after two years

7.0 Finance

The following is a breakdown of all the sales forecast for the next twelve months. Product A will be a toy for girls, B will be for boys while C will be for either genders.

A

B

C

Price

100

150

200

Growth

30%

12%

3%

Gross Profit

40%

Jan

Feb

Mar

Apr

May

Jun

Jul

Aug

Sep

Oct

Nov

Dec

Total

Product A

12

16

21

27

35

46

60

78

101

131

527

$1,200

$1,600

$2,100

$2,700

$3,500

$4,600

$6,000

$7,800

$10,100

$13,100

$52,700

Product B

13

15

17

19

21

24

27

30

34

38

238

$1,950

$2,250

$2,550

$2,850

$3,150

$3,600

$4,050

$4,500

$5,100

$5,700

$35,700

Product C

12

12

12

12

12

12

12

12

12

12

120

$2,400

$2,400

$2,400

$2,400

$2,400

$2,400

$2,400

$2,400

$2,400

$2,400

$24,000

$5,550

$6,250

$7,050

$7,950

$9,050

$10,600

$12,450

$14,700

$17,600

$21,200

$112,400

Revenue

$0

$0

$5,550

$6,250

$7,050

$7,950

$9,050

$10,600

$12,450

$14,700

$17,600

$21,200

$112,400

COGS

$0

$0

$3,330

$3,750

$4,230

$4,770

$5,430

$6,360

$7,470

$8,820

$10,560

$12,720

$67,440

Gross Profit

$0

$0

$2,220

$2,500

$2,820

$3,180

$3,620

$4,240

$4,980

$5,880

$7,040

$8,480

$44,960

salaries

$10,000

$10,000

$10,000

$10,000

$10,000

$10,000

$10,000

$10,000

$10,000

$10,000

$10,000

$10,000

$120,000

Net Profit

-$10,000

-$10,000

-$7,780

-$7,500

-$7,180

-$6,820

-$6,380

-$5,760

-$5,020

-$4,120

-$2,960

-$1,520

-$75,040

Cash position

-$10,000

-$20,000

-$27,780

-$35,280

-$42,460

-$49,280

-$55,660

-$61,420

-$66,440

-$70,560

-$73,520

-$75,040

Investment

100,000

Net Cash

$90,000

$80,000

$72,220

$64,720

$57,540

$50,720

$44,340

$38,580

$33,560

$29,440

$26,480

$24,960

Dec                                          Total

527

$52,700

238

$35,700

120

$24,000

$112,400

$112,400

$67,440

$44,960

131

$13,100

38

$5,700

12

$2,400

$21,200

$21,200

$12,720

$8,480

$10,000

-$1,520

-$75,040