Case Study on New Heritage Doll Company
FINA6278 Financial Theory And ResearchCase Study on New Heritage Doll Company: Capital Budgeting Niweina Song Xin Gu Yao-Hsuan Yeh Huiyang Zhou
[pic 1][pic 2]Table of ContentsExecutive Summary Evaluation Logic Conclusion Analysis Pros and Cons of the Recommended Action Analysis of the Match My Doll Clothing Line Analysis of the Design Your Own Doll Line Sensitivity Analysis Executive SummaryEmily Harris, the vice president of New Heritage Doll Company, was going to choose one of the projects to enhance the company’s future production and reputation. One of the projects was called Match My Doll Clothing line, and the other project was Design Your Own Doll line.For the Match My Doll Clothing line, which was designed to produce matching doll and child clothing and accessories, had got a success for the last winter collection. The brand manager thought it was better to release an all-season collection of apparel as soon as possible in order to maintain the hot media exposure and public attention as well as to keep premium prices. The concern for the line mainly lay in the relatively large outlays for R&D, market research and marketing.For the Design Your Own Doll line, which was a new line with purpose to customize the doll based on the customers’ personal data. The new line’s target customer pool was their loyal customer. If the project was successful, it would in turn further cemented customer loyalty. Also, the new technology would enhance the company’s market sharing and reputation. However, the project was quite risky, especially for its high investment in technology infrastructure and research. Moreover, the line had a relatively long development and payback period, which would increase the risk of the profitability. Also, if the project was stumbled for some reasons, it would hurt the relationships with the loyal customers.