Overall, going into this simulation, I came up with three general strategies I was going to follow. The first and most obvious was trying to maximize New Heritage Doll firm’s value by selecting some of the most attractive projects based off NPV, IRR, and PI. However, I also aimed to make appropriate selections based on diversifying among the three departments (retailing, licensing, and production) along with diversifying among riskiness for each year. For each year, I was given $8 million dollars to be used on projects. I felt this was a fairly acceptable budget as on average I was able to initiate between 2-4 projects, depending on costs. I began 2009 by selecting three initial projects. These included the Toddler Doll Accessory Line,
Retail …show more content…
In this year, as was the case in 2010, only two projects could be initiated. After the two small risks projects did not meet the expectations predicted, I decided it was time to take a bit higher risk in the hopes it would pay off. My first decision was to acquire an electronic toy maker, Firefly Toy. This was a very risky opportunity as the company was unsure whether the projected synergy between the two firms would result in successful inorganic growth. However, I did see an opportunity as it was expected the acquisition could aid in expanding to the education market. This opportunity was only available this year with a NPV of 16.36 while using a 9% discount rate. The second project was also higher risk, titled, Grow with Me Design. I chose this project with a NPV of $6.84 million, mainly because of the continued growth opportunities available. If successful, this project could help consistently bring in cash flow as children would be able to trade in every twelve months for a new doll to match their age group and skills. I picked this project over Toddlers Music CD which had a similar NPV of $6.26 million because I believed the Grow with Me Dolls were more in line with the company’s identity and could foster higher switching costs for customers once …show more content…
Although, it was another risky endeavor, I decided to implement a Design Your Own Doll project for 2013. Compared to the Grow with Me Doll line, this will allow customers greater creativity to have the doll designed with features similar to them. The projected NPV was also the highest at $9.77 million. In addition to this new design project, a lower cost and less risky project to create an online Virtual Doll Community was initiated. This project has extremely low startup costs and since the budget was strained this year, it was an appropriate project to undertake. In addition, the project had a very impressive profitability index compared to all other projects at 258.93. This project was one of the only projects that could be undertaken due to the budget
Retail …show more content…
In this year, as was the case in 2010, only two projects could be initiated. After the two small risks projects did not meet the expectations predicted, I decided it was time to take a bit higher risk in the hopes it would pay off. My first decision was to acquire an electronic toy maker, Firefly Toy. This was a very risky opportunity as the company was unsure whether the projected synergy between the two firms would result in successful inorganic growth. However, I did see an opportunity as it was expected the acquisition could aid in expanding to the education market. This opportunity was only available this year with a NPV of 16.36 while using a 9% discount rate. The second project was also higher risk, titled, Grow with Me Design. I chose this project with a NPV of $6.84 million, mainly because of the continued growth opportunities available. If successful, this project could help consistently bring in cash flow as children would be able to trade in every twelve months for a new doll to match their age group and skills. I picked this project over Toddlers Music CD which had a similar NPV of $6.26 million because I believed the Grow with Me Dolls were more in line with the company’s identity and could foster higher switching costs for customers once …show more content…
Although, it was another risky endeavor, I decided to implement a Design Your Own Doll project for 2013. Compared to the Grow with Me Doll line, this will allow customers greater creativity to have the doll designed with features similar to them. The projected NPV was also the highest at $9.77 million. In addition to this new design project, a lower cost and less risky project to create an online Virtual Doll Community was initiated. This project has extremely low startup costs and since the budget was strained this year, it was an appropriate project to undertake. In addition, the project had a very impressive profitability index compared to all other projects at 258.93. This project was one of the only projects that could be undertaken due to the budget