New Heritage Doll Company Case Essay examples

1841 Words Mar 29th, 2016 8 Pages
NEW HERITAGE DOLL COMPANY
FINA 6278 Case 1

I.

Executive Summary

New Heritage Doll Company is a U.S based children toy manufacturer with a well-known national brand: the New Heritage. With its existing three divisions, New Heritage proposed two potential investment projects in order to expand its business while the doll industry was facing a relatively low growth rate. The first proposal is the Match My Doll Clothing line expansion, which is to expand a new clothing product line aimed at matching doll and child clothing and accessories covering all four seasons. While it has potential benefits with the current fashion trend of dressing the same between dolls and children, the New Heritage is facing a challenge of entering a
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However, even with the potential benefits just described, this so-called Design Your Own Doll project still contains relatively higher risks. The customization, which is the core of this new product line, would increase manufacturing complexity
Moreover, the initial investment would be relatively larger due to the requirement of significant modifications to the firm’s existing technology infrastructure. It also requires modification of the terms of its third-party service agreements in order to ensure a higher level of service development. Such introduction of the new elements make the payback period quite long, and most importantly, this project has possibility to damage the relationship with its best customers.
Comparison of the Two Projects
From the consideration of longer-term growth, to have a new feature of customization would be more preferable as the first proposal has a shortage of dependence on the fickle fashion trend. From the consideration of market familiarity, taking the second proposal would let the company still stay in its main market, while the first one would need the entry to a new field. From the consideration of customer loyalty, the second one has a focus on the firm’s core business and a market segmentation of its loyal customers, which is more possible to enhance the relationship between the firm’s product and its customers.
III. NPV and IRR

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