BACKYARD PUB: INFLATABLE IDEAS Case Solution And Analysis, HBR Case Study Solution & Analysis of Harvard Case Studies

BACKYARD PUB: INFLATABLE IDEAS Case Study Analysis

Alternate 1- Partner with other firms in the industry:

As the venture requires significant initial investments, which might be difficult to finance through personal savings, considering the CEO is a student and has access to limited sources of finance. Moreover, since, the business is new and there is a lack knowledge in founder about the market, it will be advised to the Thompson to develop a partnership with other established firms in the industry. These firms will provide financial support to the company to support their operations, and expertise of the established business will also enable the founder to make effective strategies in relation to developing a customer base and making other growth strategies. Similarly, it will help the founder in terms of achieving the demanded return of $10,000, as the partner firm will already be profitable and well-established.

Alternative 2- Revise Marketing Plan:

Alternatively, the business can revise its strategy and focus on target customerswith the highest disposable income i.e. target consumers between 45 to 64 years of age. This will allow the business to limit its capital budget as fewer assets and resources will be required. Moreover, the business is recommended to revise its marketing plan and use Canada’s post smart mail marketing option, which involves targeting customers with significant disposable income. As a result of revising the marketing strategy, it is estimated that the advertisement cots will be reduced to $238 in the third years of the venture as compared to current advertisement costs of $2400. The cost is based on the general assumption that 10% of the 7219 households located in Middlesex Canada will be targeted. However, as a result of this, the founder will still not be able to meet the desired return of 20% in the first year. (Annexure, Excel)

Alternative 3- Revise Annual returns:

The founder’s expectation of receiving a 20% return in the first year of operation seems to be unrealistic and unachievable, as usually in the first year of operation, returns are comparatively lower, considering that the business is new and fewer customers have knowledge about the brand. Therefore, it will be advised to the founder to reduce annual return below the 20%.

Recommendation

It will be recommended to the business to develop a partnership with other established firms in the industry, taking under consideration the fact that the owner of the business has a lack of understanding about the relevant industry. Partnership with other firms will help the founder in understanding the business’s operations, ideal markets and customer preferences. Moreover, it will allow the founder to achieve the desired returns as profit margins of the companies operating in the industry appears to be significant. Similarly, it will the entirely depending on founder to obtain sufficient funding to support the business’s operations and access new resources, to make his business more efficient and flourishing.

Action Plan for the Recommendation Provided

Steps	Timeline
Define the objective of the partnership	One week
Establish offering terms	One week
Find a suitable Partner and arrange a meeting	Three weeks
Present your proposal	Four weeks
Negotiate financing structure, management involvement and other terms and conditions	Six weeks
Sign the deal	Three weeks
Documentation	four weeks
Start Operations	Two weeks