New Heritage Doll Company Essay

1. Describe and comp be the business rationales for each of the both pick up proposals chthonic consideration. Which do you feel is the more(prenominal) compelling? Project 1 add My madam C tummyhing business sector ExpansionExpand the successful assure My Doll tog Line to include matching all-season clothing for tween girls and their dolls. Pros legitimate popularity give enable company to maintain premium prices. Company could inject advantage of off-peak discounts offered by some suppliers and contract manufacturers. Would help reduce the seasonality in New Heritages sales and earnings. Project poses moderate fortune about the same as the labor divisions lively business as a whole. ConsCompany has to exploit the opportunity without check into to be able to exploit the current popularity of the original learn My Doll Clothing line. Large outlays for R&D, market research and marketing are needed. Project 2 tendency Your ingest DollTargets existing customers and l eave alone offer customized dolls that the customer could customize to create one-of-a-kind addition to their existing accumulation of dolls. ProsMarket research with focus group indicates that there is a lot of enthusiasm for the product concept. Company volition be able to committee premium prices for this product. Will improve customer loyalty.Will create a unique experience for customers.ConsIncreased manufacturing complexity and expense, involves higher(prenominal) risk. Low production runs and volumes would mean higher fixed costs per unit. Therefore, higher breakeven volume for stray (longer requital period). Would require the company to make significant changes to its existing engine room infrastructure, expand its webhosting capacity and involve legal measure to implement unseasoned third party service agreements to provide better service quality. lengthy development time (including product testing) up to 12 months. Much bigger initial investment required than the first project.The Match My Doll Clothing Line expansion project uses existing infrastructure and technology/ products. It will also fill the gap in the year-round revenues that occur due(p) to the seasonality of demand. This project requires a smaller investment and has a shorter payback period. The creation Your Own Doll project requires a larger investment and will require new equipment, technology and third-party agreements. The business plan and process will become more complicated. This project also has a longer payback period. On the other hand, this project will earn higher returns. both(prenominal) the projects will require some continuing capital expenditures. However, the Design Your Own Doll option will require higher capital expenditures compared to the Match My Doll Clothing Line project. Design Your Own Doll project is expected to make higher returns according to the projections. It also carries a higher risk due to the complexity of operations involved.See attached stable gear for detailed calculations.2. What are the free cash flows that are relevant to analyzing the cardinal projects?3. Match My Doll Clothing Line Free Cash blend (without TV) = $2,091.54 Match My Doll Clothing Line Free Cash move (with TV) = $16,344.40 Design Your Own Doll Free Cash Flow (without TV) = -$1,019.8 Design Your Own Doll Free Cash Flow (with TV) = $24,732.064. What are the NPVs of the two projects? What decision should Emily Harris recommend?5. NPV CalculationMatch My Doll Clothing Line NPV = $7,148.35Design My Doll NPV = $7,285.68Based on the calculations in the above steps, it is hardened that Design My Doll project has a higher NPV and hence would be a better choice, but the first project is less wild and has a shorter payback period and therefore might be more attractive to the board.