Micro Fridge: Case Study

Micro Fridge: Case Study:-

1. Central Issue:

a) How to produce?

b) For whom to produce?

c) If he should go with the Sanyo offer?

d) If he should only use distributors to supply his product to the market or go with house accounts?

e) How much should be the cost of the micro fridge that could fetch him decent % of profit.

2. Objectives to be achieved:

a) To be able to introduce the micro fridge the market with $50000 capital.

b) To convince the dormitories and other targeted customers.

c) To set up a price that earns him return of minimum 15% initially on the selling price.

d) To find a manufacturer that fits his budget.

3. Situation analysis & alternatives available:

Situation analysis:

a) Low capital: Robert Bennett has $50,000 in hand to start up his new business which is not enough.

b) Manufacturing problem: After speaking with few home appliances manufacturers out of which only SANYO and Samsung agreed to manufacture his product provided Bennett pays all the upfront cost of $170,000. Being low on budget Bennett has to think over the offer.

c) Administration, Legal, Patent & other miscellaneous expenses: Besides upfront and basic product cost Bennett has to pay for these expenses as well.

d) Potential buyers: The potential buyers he was targeting were not very sure if they would like to buy the product from an unknown brand like his.

Alternatives available:

a) The electronic circuitry should be patented and later find the buyer of the concept and keep getting a permanent royalty or a flexible royalty on the basis of increase in sales. This way Bennett can retain his job as well as introduce his concept in the market.

b) As Sanyo and Samsung are ready to manufacture the product. Bennett should negotiate with them, if he can pay the upfront cost of $170,000 once the sales start to pick up and pay the per unit cost with a credit period...