You are on page 1of 135

Statement of Authenticity

This business plan is the original work of the undersigned. All facts and figures are authentic. All
contributions from others have been appropriately acknowledged. We have not read, reviewed,
or used any past Core plans in any way in the development of our plan. We did not misrepresent
ourselves to suppliers or to anyone else who contributed information to this plan.
We each understand that the ideas, analysis, and text contained in our plan are the collective
intellectual property of our team
i

Table of Contents
INTRODUCTION
EXECUTIVE SUMMARY vii
CORPORATE SOCIAL RESPONSIBILITY x
INTRODUCTION 1

MARKETING_________________________________________________________________
MARKETING OBJECTIVES 3
ENHANCE PERCEIVED VALUE OF BRAND 3
BUILD FRIENDLY & MEMORABLE BRAND IMAGE 3
ACHIEVE TOTAL AWARENESS OF 60% BY YEAR 5 3
ACHIEVE ACV OF 34% BY YEAR 5 4
MARKET RESEARCH 4
PRIMARY DATA 4
SECONDARY DATA 4
MARKET SEGMENTATION 5
PRODUCT POSITIONING 8
COMMUNICATIONS, BUDGET, & CREATIVE ADVERTISING 8
INTEGRATED MARKETING COMMUNICATIONS SCHEDULE 8
PULL MARKETING: YEAR 1 9
PULL MARKETING: YEAR 2 10
PULL MARKETING: YEAR 3 10
PULL MARKETING: YEAR 4 11
PULL MARKETING: YEAR 5 12
PULL MARKETING: ADVERTISEMENTS 13
PULL MARKETING: PACKAGING 13
PULL MARKETING: PUBLIC RELATIONS 13
PULL MARKETING: ONLINE MARKETING 14
PULL MARKETING: POINT OF PURCHASE 14
PULL MARKETING: CREATIVE EXPENSES 14
PUSH MARKETING: TRADE SHOWS 15
PUSH MARKETING: TRADE MAGAZINES 15
EFFECTIVENESS OF COMMUNICATION 15
CHANNELS AND PRICING 16
CHANNEL CONFLICT 17
SALES VOLUME 18
SALES FORCE 18
SWITCHING POINT CALCULATION 19
MANUFACTURERS REPRESENTATIVES 19
DISCOUNT PROMOTION 19
SALES PROJECTIONS 19
OPTIMISTIC & PESSIMISTIC SCENARIO ANALYSIS 20

OPERATIONS MANAGEMENT_________________________________________________
CUSTOMER REQUIREMENTS & PRODUCT DESIGN 22
TARGET COST 23
MAKE/BUY ANALYSIS 23
SUPPLIERS 24
TRANSPORTATION LOGISTICS 24
ii

FACILITY LOCATION 26
CENTER OF GRAVITY 26
FACTOR MODEL 26
FACILITY LAYOUT 27
ASSEMBLY PROCESS 29
BRAKE PRODUCTION PROCESS 29
HELMET PRODUCTION PROCESS 29
QUALITY ASSURANCE 30
ACCEPTANCE SAMPLING 30
STATISTICAL PROCESS CONTROLS 30
RFID QUALITY INSPECTION 30
CAPACITY & STAFFING 32
ORGANIZATIONAL STRUCTURE 33
MATCHING MONTHLY PRODUCTION WITH DEMAND 34
INVENTORY 35
FINANCIAL IMPACT OF SUPPLY CHAIN DECISIONS 36
IMPACT OF OPTIMISTIC & PESSIMISTIC DECISIONS 37
ENVIRONMENTAL IMPACT OF OPERATIONS 37

INFORMATION SYSTEMS_____________________________________________________
CRITICAL SUCCESS FACTORS & VALUE CHAIN 38
CRITICAL SUCCESS FACTORS 38
VALUE CHAIN 40
SOFTWARE COMPARISONS 41
MARKETING BEST OF BREED COMPARISONS 41
OPERATIONS MANAGEMENT BEST OF BREED COMPARISONS 42
FINANCE & ACCOUNTING BEST OF BREED COMPARISONS 43
FINAL BEST OF BREED SELECTION & MIDDLEWARE 44
ENTERPRISE RESOURCE PLANNING (ERP) SOFTWARE COMPARISONS 44
BEST OF BREED VS. ENTERPRISE RESOURCE PLANNING COMPARISON 46
HARDWARE, TELECOMMUNICATIONS, & EMPLOYEES 47
HARDWARE & TELECOMMUNICATIONS 47
EMPLOYEES 48
ENTITY-RELATIONSHIP DIAGRAM 48
REPORTS 50
RAW MATERIALS DEFECT RATE REPORT 50
FINISHED GOODS DEFECT RATE REPORT 50
PROCESS MODEL 51
WEBSITE DESIGN 51
SEARCH ENGINE OPTIMIZATION (SEO) 52
SEARCH ENGINE MARKETING (SEM) 52
WEB ANALYTICS 52
CONTINGENCY PLAN 53
CORPORATE SOCIAL RESPONSIBILITY 53

FINANCE____________________________________________________________________
FUNDING REQUEST 54
OWNERSHIP POSITIONS 54
PROJECTED NPV & IRR 54
NPV PROFILE & MINIMUM REQUIRED RATE OF RETURN 55
iii

BASE CASE FINANCIALS & COMPARABLE COMPANIES ANALYSIS 55


COMPARABLE COMPANIES 55
INCOME STATEMENT 56
BALANCE SHEET 56
TERMINAL VALUE 57
BREAKEVEN ANALYSIS 57
SENSITIVITY ANALYSIS 57
RISK MITIGATION PLAN 58
PRICE 58
SALES VOLUME 59
AWARENESS & ACV 59
VARIABLE COST 59
FIXED ADMINISTRATIVE & PRODUCTION COST INCREASE 60
REGULATION & POTENTIAL LAWSUIT 60
QUALITY ISSUE 60
COMPETITION 61
LIQUIDITY ISSUE 61
TERMINAL VALUE 61
NATURAL DISASTER & UNEXPECTED OCCURRENCES 61
ECONOMIC DOWNTIME 62
SCENARIO ANALYSIS & SUMMARY STATISTICS 62
PRODUCT UNIQUENESS 64
INVESTMENT PROPOSAL 64

CONCLUSION 65

WORKS CITED xii

EXHIBIT 1: NEW PRODUCT SURVEY xvii


iv

Exhibits

MARKETING
MK Exhibit 1:Parents vs. Grandparents Purchase Intent 6
MK Exhibit 2: Who is More Likely to Buy SmartHelmet 6
MK Exhibit 3: Full Segmentation Tree 7
MK Exhibit 4: Safe vs. Durable Perceptual Map 8
MK Exhibit 5: Word of Mouth Calculations 9
MK Exhibit 6:IMC, Pull Marketing Year 1 9
MK Exhibit 7: IMC, Pull Marketing Year 2 10
MK Exhibit 8: IMC, Pull Marketing Year 3 11
MK Exhibit 9: IMC, Pull Marketing Year 4 12
MK Exhibit 10: IMC, Pull Marketing Year 5 12
MK Exhibit 11: Year 5 Average Weighted Manufacturers Selling Price to Channel 18
MK Exhibit 12: Salary & Commission of KinderHelm Inc.s Salesperson 18
MK Exhibit 13: Commission Paid to Manufacturers Representatives, Years 1-5 19
MK Exhibit 14: Demand Curve Parents 20
MK Exhibit 15: Optimistic & Pessimistic Sales Projections 20

OPERATIONS MANAGEMENT
OM Exhibit 1: Target Cost 23
OM Exhibit 2: Supplier Contact Information 24
OM Exhibit 3: Fulfillment by Amazon Fees 25
OM Exhibit 4: Factor Model 27
OM Exhibit 5: Facility Layout 28
OM Exhibit 6: Process Analysis Diagram 29
OM Exhibit 7: Increase in Demand 32
OM Exhibit 8: Machine Capacity Requirements 32
OM Exhibit 9: Year 3 Employees 34
OM Exhibit 10: Percentage of Shimano Sales 35
OM Exhibit 11: Inventory Levels 36

INFORMATION SYSTEMS
IS Exhibit 1: Oracle JD Edwards EnterpriseOne Total Costing 45
IS Exhibit 2: Raw Materials Defect Reports 50
IS Exhibit 3: Finished Goods Defect Reports 51

FINANCE
FE Exhibit 1: Minimum Rate of Return 55
FE Exhibit 2: NPV Profile 55
FE Exhibit 3: Accounting Breakeven 57
FE Exhibit 4: Optimistic & Pessimistic Assumptions Analysis 62
FE Exhibit 5: Weighted Average NPV & IRR 63

Appendices

MARKETING
MK Appendix 1: Manufacturers Representatives Commissions 66
MK Appendix 2: Focus Group & Interview Summaries 67
MK Appendix 3: Breakdown of Segmentation Tree 68
MK Appendix 4: IMC Schedule. Year 1 68
MK Appendix 5: IMC Schedule, Year 2 69
MK Appendix 6: IMC Schedule, Year 3 69
MK Appendix 7: IMC Schedule, Year 4 70
MK Appendix 8: IMC Schedule, Year 5 70
MK Appendix 9: IMC Cost Breakdown 71
MK Appendix 10: IMC Online Ads 73
MK Appendix 11: Magazine Ads 73
MK Appendix 12: Transit Advertisements 74
MK Appendix 13: Packaging Landrys 74
MK Appendix 14: Packaging 75
MK Appendix 15: Point of Purchase Display 75
MK Appendix 16: Creative Advertisement Smartphone Application 76
MK Appendix 17: Trade Show Booth 76
MK Appendix 18: Trade Show Brochure 77
MK Appendix 19: Sports Equipment Revenue Breakdown 78
MK Appendix 20: Sales Projection Parents 78
MK Appendix 21: Sales Projection Grandparents 79
MK Appendix 22: CSR-Adjusted Purchase Intent 79

OPERATIONS MANAGEMENT
OM Appendix 1: House of Quality 80
OM Appendix 2: International Ocean Lead Time 80
OM Appendix 3: Lead Times 81
OM Appendix 4: Nationwide Rail Map 81
OM Appendix 5: Rail Prices 82
OM Appendix 6: Amazon Partnered Carrier 82
OM Appendix 7: Storage Fee for Amazon 83
OM Appendix 8: Facility Brochure 83
OM Appendix 9: Center of Gravity 84
OM Appendix 10: Employees for Year 1 84
OM Appendix 11: Throughput Times 85
OM Appendix 12: Forecasted Demand 85
OM Appendix 13: Yearly Demand 86
OM Appendix 14: PERT Distribution 86
OM Appendix 15: Inventory Equations 87
OM Appendix 16: Optimistic and Pessimistic Assumptions 87

INFORMATION SYSTEMS
IS Appendix 1: Critical Success Factors 88
IS Appendix 2: Value Chain 89
IS Appendix 3: Marketing Best of Breeds Breakdowns 90
IS Appendix 4: Marketing Best of Breed Decision Matrix 90
vi

IS Appendix 5: Operation Management Best of Breeds Cost Breakdowns 91


IS Appendix 6: Operations Management Best of Breed Decision Matrix 91
IS Appendix 7: Finance/Accounting Best of Breed Decision Matrix 92
IS Appendix 8: Finance/Accounting Best of Breeds Cost Breakdowns 92
IS Appendix 9: Microsoft Dynamics GP Total Costing 93
IS Appendix 10: Microsoft Dynamics GP Costing Assumptions 93
IS Appendix 11: Selected Oracle EnterpriseOne Modules 94
IS Appendix 12: Oracle EnterpriseOne Costing Assumptions 94
IS Appendix 13: Enterprise Resource Planning Decision Matrix 95
IS Appendix 14: ERP vs. BOB Decision Matrix 95
IS Appendix 15: Hardware & Telecommunication Total Costs 96
IS Appendix 16: Entity-Relationship Diagram 96
IS Appendix 17: ERD Entities 97
IS Appendix 18: ERD Access View 98
IS Appendix 19: Process Model 98
IS Appendix 20: Website Landing Page 99
IS Appendix 21: Meta Description 99
IS Appendix 22: Keywords 100
IS Appendix 23: Banner Ad Costs 100

FINANCE
FE Appendix 1: Financial Company Comparable 101
FE Appendix 2: Breakeven Analysis 102
FE Appendix 3: Sensitivity Analysis 103
FE Appendix 4: Summary of Scenario Analysis 104



vii

Executive Summary
The SmartHelmet is a revolutionary childrens bike helmet that not only protects
childrens heads from severe head injuries, but also ensures that they have their helmet with them
while riding their bikes. The SmartHelmet consists of two pieces: a helmet and a brake
attachment piece. Our products core functionality involves utilizing RFID technology in the
bike helmet and the brake. When the helmet is within 2 meters of the brake attachment piece, the
brake releases and allows the bike to be used freely. However, when the helmet is not within 2
meters of the brake attachment piece, the brake remains locked and the bike will not move.
While our closest competitor utilizes RFID technology to allow a parent to safely stop a childs
bike via a remote control, SmartHelmet is the only bike product in the market that combines the
protective qualities of a helmet and the technological benefits of RFID proximity sensor
technology.
The market we will be entering is the protective sports equipment market. Modern helmet
technology has the power to keep children safer and prevent traumatic head injuries that result
from biking accidents. According to the Centers for Disease Control and Prevention, children
and young adults (ages 4-24) account for 60% of all bike related injuries seen in U.S. emergency
rooms. 1 Furthermore, in an abstract presented at the most recent American Academy of
Pediatrics National Conference, a study analyzing bike accidents involving children concluded
that only 11.3% of children were wearing their helmets when the accident took place.2 The best
way to reduce head injuries is by requiring children to wear their helmets. Thus, SmartHelmet
allows parents to have control over whether or not their children have their helmets with them
when they ride their bikes.
As a company, we will need capital to start production. In order to collect this investment,
we expect to receive 25% of our capital needs through friends, family and management, with the
remaining 75% coming from outside investors. Initial working capital will be used to rent space,
purchase manufacturing equipment, and hire workers. We will also use the capital to purchase
information systems and kick-start our marketing efforts for the SmartHelmet.


1
"Bicycle-Related Injuries," Centers for Disease Control and Prevention, 28 May 2013. Web. 23 Nov. 2014.
<http://www.cdc.gov/HomeandRecreationalSafety/Bicycle/>.
2
American Academy of Pediatrics, Only 11 Percent of Children Involved in Bike Accidents Wear a Helmet,
American Academy of Pediatrics. 26 Oct. 2013. Web. 11 Nov. 2014.
viii

The target customers for our product are parents and grandparents of children between
the ages of 5 and 15. We have set four main marketing goals for our company to accomplish
within the first five years of business. Our goals are as follows: enhance the perceived value of
our brand, build a friendly and memorable brand image, achieve total awareness of 60% by Year
5, and achieve an ACV of 34% by Year 5. In order to accomplish these goals, we have
developed both push and pull marketing strategies that utilize the placement of advertisements
and promotional campaigns in magazines, in online blogs, on buses and bus stops in some of the
most active biking cities in the U.S, as well as in trade shows and trade magazines. We plan to
achieve an ACV of 34% by using Amazon as our online selling platform, in addition to relying
heavily on independent retailers, chain stores, and mass merchandisers. This multi-channel
strategy will allow us to reach a large number of customers and cultivate a brand image that
emphasizes our unique approach to childrens bike safety.
Operations management is an extremely important functional area of our business,
especially since SmartHelmets success rests heavily on product design and performance. Our
product design balances the needs of customers with the necessary manufacturing engineering
characteristics in order to deliver a bike helmet that combines safety, durability, and
attractiveness to children. We have found suppliers who will deliver the necessary materials and
fixed assets we need at a reasonable cost, and through both a factor analysis and a center of
gravity calculation, we found an ideal facility in Denver that will maximize our productive
capacity and allow for future expansion. By creating an aggregate plan, we forecasted
appropriate demand for each month and outlined the periods where we will need to add staff and
fixed assets in order to accommodate increases in demand. Lastly, we have created and will
implement acceptance sampling and statistical analysis processes to reduce the amount of
defective finished goods we will manufacture, as achieving a low defect rate is one of our
organizational goals as a manufacturer of a safety product.
In addition, our companys information system links together every functional area.
Through the creation of four critical success factors (CSFs) and their corresponding business
processes, we outlined what organizational goals we hope to achieve. The two primary CSFs
Achieving a 2% and 5% defect rate for finished goods and raw materials respectively, and
increasing sales by 30% in Years 1-3, and 15% Years 4 and 5 will determine the future of
KinderHelm Inc. We conducted extensive research to choose our hardware, software, and
ix

telecommunications requirements that best fit the needs and goals of all other functional areas
and of our company as a whole. Our choice of Oracles JD Edwards EnterpriseOne as our ERP
software provides us with the most versatility to allow for future expansion as SmartHelmets
sales increase.
In terms of financial results, the SmartHelmet represents a relatively low risk investment
with potential for high return. The total required investment is $572,310, which is expected to
yield an NPV of $506,657 with a discount rate of 25% and an IRR of 48.3%. We expect 75% of
the initial investment to come from outside investors and the remainder to come from friends,
family, and management. Starting with sales of $792,664 in Year 1, we hope to reach $3,300,999
by Year 5. Similarly, by assuming a loss of $69,827 in Year 1, we expect to have net income of
$960,310 by Year 5. To adjust for variability in results, we developed a conservative optimistic
case as well as a pessimistic case. Given changes to our most sensitive and uncontrollable
variables, we estimated a weighted average NPV of $463,679 and IRR of 46.4% based on the
weighted average of our free cash flows.
Through the integration of all four of the aforementioned functional areas, SmartHelmet
and KinderHelm Inc. will not only generate returns for investors but will also create value for
society. Our organizational goal as a company is to promote the safety of children while riding
their bikes and to enhance the peace of minds of their parents/guardians, and we strongly believe
that SmartHelmet is the next revolutionary bike safety product.
x

Corporate Social Responsibility


As a company, we will implement two corporate social responsibility (CSR) initiatives in
Years 1-5. The two initiatives include utilizing 90% recyclable packaging and partnering with
various biking advocacy and non-profit organizations to promote wearing helmets and safe bike
riding. The first initiative raises intent to purchase by 0.9% among parents and by 1% among
grandparents. The second initiative raises intent to purchase by 1.7% among parents and by 1.3%
among grandparents. It is also worth noting that we are dedicating the majority of our creative
advertising budget to partnering with biking advocacy groups in Denver during National Bike
Month in May to host various biking events, which will be discussed in greater detail in the
marketing section of our plan.
We chose to pursue recyclable packaging as a CSR initiative because of its
environmental benefits and because it is a trend sweeping through the sports equipment industry.
For example, Recreational Equipment Inc. (REI), one of our potential retailers, is currently
focusing on unpackaging products in an attempt to reduce packing materials, leading to some
of its products simply not having packaging at all.3 In addition to REI, Trek Bicycles, one of our
competitors, uses 70-90% recycled packaging, and when recycled packaging is not available, the
company uses material sourced from certified sustainable forests. 4 As the above proves,
sustainable packaging is becoming a way of life within the sports equipment industry rather than
just a trend. By pursuing a goal of 90% recyclable packaging, we will incorporate this lifestyle
into our business model and decrease our impact on the environment.
Our second CSR initiative, partnering with biking advocacy groups and non-profit
organizations to promote safety in all aspects of biking, stems from the SmartHelmet's focus on
safety. Therefore, working to promote biking safety is a natural fit for our company, as our
product will hopefully be at the forefront of this trend. A few of the groups we are looking at
partnering with are PeopleForBikes, Bike New York, BikeDenver, Youth Educational Sports,
Inc., CYCLE Kids, and the League of American Bicyclists. Not only will working with these
groups allow us to advocate for a safer, more bike-friendly America, it will also give us the
opportunity to raise awareness for our product as it fits in perfectly with the goals of each of


3
Starre Vartan, "Packaging the Future: REI Unpackages Five of Their Popular Products." 21 Dec. 2011.
<http://inhabitat.com/packaging-the-future-rei-unpackages-five-of-their-popular-products/>.
4
Trek Bicycle Corporation, "We Believe in Bikes." 22 Nov. 2014.
<http://www.trekbikes.com/us/en/company/products/>.
xi

these organizations. However, our main goal in partnering with these groups is to increase the
number of helmets worn by children and adults in the U.S.
Our CSRs aim not only to increase our companys public image, but also to promote
safety and environmental awareness. Because we are a part of the biking industry, which places
such a strong emphasis on safety and environmental responsibility, our CSR initiatives are
necessary to our success.
1

Introduction
The SmartHelmet is an interactive childrens bike helmet that uses state of the art
technology to prevent children from riding their bikes without having their helmets.
SmartHelmet is the only helmet in the market that uses proximity sensor technologythe bike
brakes only unlock when the helmet is within 2 meters of the bike. When the helmet is outside of
the 2-meter sensor range, the brakes lock, thus preventing the child from riding the bike.
The technological advances in the radio frequency identification (RFID) industry and its
increasing use in everyday life will have the most profound impact on our product launch. This is
due to the fact that RFID is a rapidly evolving technology, one that has far from reached its full
potential.5 Therefore, we must acknowledge the volatility of this technology and plan
accordingly to ensure our product does not become obsolete the moment it hits the market. In
order to ensure our survival, we will hire an RFID specialist, whose job will be two-fold: first, he
is in charge of syncing all helmet and brake attachments as a worker on the assembly line, and
second, he must be up-to-date on all RFID-related information so that he can readily inform
management if a breakthrough occurs or if an issue arises.
In addition, we found some surprising statistics that illustrate why SmartHelmet is such
an important investment for a childs future safety. Young cyclists are more likely than adult
cyclists to die of head injuries,6 and yet this demographic is the least likely to wear helmets.7
Helmets save lives, but many people, particularly children, are still very reluctant to wear them,
as children 11-19 have the lowest rate of bicycle helmet use at 31%.8 Based on this research,
not only will we market our product as the safest helmet on the market, but we will also take
steps to differentiate ourselves as a company that impacts society in a positive way by taking part
in bike safety campaigns and initiatives that promote wearing a helmet while riding a bike.
The product category in which we will compete, the protective sports equipment industry,
comprises helmets, pads, gloves, and shin guards and yields around $282 million in annual


5
Pat Toensmeier, Report Predicts Major Growth in RFID Market, Industry News. Oct 2013. Web. 16 Nov 2014.
<http://news.thomasnet.com/procurement/2013/10/28/report-predicts-major-growth-in-rfid-market>.
6
Childrens Safety Network, Bicycle Helmet Statistics, Bicycle Helmet Statistics. June 2009. Web. 24 Nov 2014.
<http://www.helmets.org/stats.htm#child>.
7
JT Finnoff and Laskowski, Altman, and Diehl, Barriers to Bicycle Helmet Use, National Center for
Biotechnology Information. U.S. National Library of Medicine, July 2001. Web. 24 Nov. 2014.
<http://www.ncbi.nlm.nih.gov/pubmed/11433083>.
8
Ibid.
2

revenue, 65% of which comes from helmets.9 Our direct competitors include the following firms:
Minibrake, Brontrager, Bern, and Bell, all of whom offer unique, safe, and durable childrens
bike products, as depicted in Intro Exhibit 1:
Intro Exhibit 1: SmartHelmet and its Competitors
Name Price Description Strength Weakness
SmartHelmet $ 60.00 Combination of Automatic design that Since our product is a
helmet and rim brake increases the childrens safety product
equipped with likelihood of children with many technological
proximity sensors. wearing helmets when components, it is more
riding their bikes susceptible to electronic
defects and potential
lawsuits.
Minibrake 109.00 Remote-controlled Parents can stop the This product cannot
brake that allows children from riding perform its function
parents to stop the too fast by controlling without the presence of a
bike with the push of the brake. parent or guardian
a button.
Brontrager $39.99 In-mold composite This product is soft, This product does not
Solstice Youth skeleton, proprietary comfortable, and ensure that children have
Helmet LockDown strap washable; in addition, their helmets with them at
dividers, and a it absorbs moisture. all times when riding their
Micro-Manager II Fit bikes.
System
Bern Nino Zip $45.00 Tough polycarbonate Air channel design This product does not
Mold Helmet shell with air channel provides ventilation ensure that children have
design and expels heat for their helmets with them at
maximum comfort. all times when riding their
bikes.
Bell Faction $45.00 Acrylonitrile This product is This product does not
Helmet butadiene styrene certified for both ensure that children have
hard plastic shell and bicycle and skate use, their helmets with them at
dual density and its smooth, sleek all times when riding their
Expanded design makes it bikes.
Polystyrene foam. attractive to kids.
All of our other competitors, with the exception of MiniBrake, are manufacturers of
assorted biking accessories, and their youth helmets are the products that we will directly
compete with. Unlike our competitors traditional helmets that require supervision to ensure
children actually wear them, our SmartHelmet utilizes the rapidly progressing RFID sensor
technology to offer the unique advantage of safety assurance. For the purposes of our business
plans analyses and conclusions, we define SmartHelmets high-quality as achieving a 5% or
less defect rate for raw materials and a 2% or less defect rate for finished goods while also
empowering our employees to have pride in the work they do. Achieving these goals and
monitoring our progress towards these goals will help ensure that SmartHelmet lives up to the
features and functions it espouses and adds value to society as a whole.


9
Britanny Carter, Protective Sport Equipment Manufacturing in the US., IBISworld, 2014,
<http://clients1.ibisworld.com/reports/us/industry/default.aspx?entid=5324>.
3

Marketing Objectives
Enhance Perceived Value of Brand
While we understand that entering the highly saturated protective sports equipment
industry will be difficult, we are confident that the unique safety features of our bike product will
differentiate it from our competitors, including MiniBrake and Bontrager. 10 According to
IBISWorld, one of the keys to success in this industry is the ability to adopt new technology,
as patented technology can be an advantage when competing with imported products. 11
Therefore, we believe that SmartHelmets utilization of proximity sensor technology will be the
driving force behind enhancing the perceived value of our brand.
Our systematic advertising and promotional campaigns over the next five years will
highlight SmartHelmets value to society, namely emphasizing that it safeguards what matters
most: children. Thus, SmartHelmets slogan Protecting what matters most arose from the
idea that the product gives parents/grandparents a little more peace of mind when their
children/grandchildren embark on their next bike ride.
Build Friendly & Memorable Brand Image
Our second marketing objective involves establishing the SmartHelmet brand image. In
SmartHelmets case, the consumer and customer are two completely different people, as our
product is designed for children (the consumer) but purchased by parents/grandparents (the
customer). Therefore, our goal is to create a brand image that balances fun and safety. While it is
unrealistic to expect our product to be in our target markets evoked sets in the first four years,
we aim to get it there by Year 5.
We want parents/grandparents to feel that their children/grandchildren are safe, but we
also want the children to associate SmartHelmet with the joy of riding a bike. Even though the
entire premise of our product is that children cannot ride their bikes unless they have their
helmets, our brand image will not emphasize any restricting features.
Achieve Total Awareness of 60% by Year 5
We realize it is critical for a small startup company to generate enough awareness in
order to obtain growth in revenues and profits during its early years. In order to achieve our 60%


10
Britanny Carter, Protective Sport Equipment Manufacturing in the US., IBISworld, Pg. 19, 2014
<http://clients1.ibisworld.com/reports/us/industry/default.aspx?entid=5324>.
11
Ibid.
4

awareness goal, we will create a detailed integrated marketing communications (IMC) schedule
to outline our push and pull marketing strategies and their corresponding expenses.
We will place ads in family-oriented magazines, various mom-focused blog sites, as
well as on the backs of buses in select cities to cater to our target market and familiarize the
public with the SmartHelmet brand. We will also establish a strong presence on social media, all
while utilizing search engine marketing techniques to increase our online presence.
Achieve ACV of 34% by Year 5
SmartHelmets sales, to a great extent, depend on its availability in retail stores. We will
work with manufacturers representatives and their resources to gain access to a large number of
independent retailers (See MK Appendix 1). In Year 3, we will begin using our own sales force to
gain access to chain sporting goods stores and mass merchandisers. In Year 5, our goal is to
make SmartHelmet available in the three largest chain sporting goods stores Sports Authority,
Academy Ltd, and Dicks Sporting Goods and the two largest mass merchandisers Target
and Walmart. Obtaining sales in these chain stores, in conjunction with the sales earned via
independent retailers and our online outlets, will help us achieve a total ACV of 34% by Year 5.
Market Research
Primary Data
The most common trend we saw in our recorded responses from the one-on-one
interviews and the focus group involved the price sensitivity of customers. They were not willing
to pay significantly more for the additional benefits our helmet provides, even though they
perceived the quality to be higher (See MK Appendix 2).
Moreover, the role children play in their parents or grandparents purchasing decisions
is larger than we expected. Many of the interviewees suggested that we should expand the color
options of our helmet because children have no desire to wear a helmet they find unappealing.
Therefore, the increased role children play in their parents purchase intent prompted us to
provide the helmet in four colors black, white, pink, and blue.
Secondary Data
The protective sports equipment industry yields around $282 million in annual revenue,
65% of which comes from helmets.12 While the industrys revenue is only expected to grow 0.8%


12
Britanny Carter, Protective Sport Equipment Manufacturing in the US., IBISworld, Pg. 3, 2014
<http://clients1.ibisworld.com/reports/us/industry/default.aspx?entid=5324>.
5

from 2014 to 2019, disposable income continues to rise, implying that consumers are more likely
to purchase price-premium, domestic goods. An increase in health and fitness awareness in the
United States, as well as a modest increase in sports participation over the past five years, will
also contribute to the industrys growth.13
However, competition from low-cost exports in a saturated market has limited the
growth of the products produced in the U.S. Outsourcing is a major trend in this industry,
especially if manufacturers want to stay competitive and take advantage of lower labor costs.14
When analyzing our secondary data, we came across many statistics that support the
importance of wearing a helmet while biking, thus increasing SmartHelmets value to society.
According to an article published in the Journal of Safety Research, Children ages 5-14 years
have the highest rate of bicycle-related injuries in the country.15 While 21 states passed laws
that require young bike riders (typically aged 17 and younger) to wear their helmets while
biking,16 more than half of children in the U.S. do not wear their helmets.17 The arguments in
favor of wearing helmets are overwhelmingly convincing, and we want to capitalize on this
constant demand.18
Market Segmentation
Collecting and analyzing secondary data was important for us to determine
SmartHelmets primary target markets. We used demographic factors to classify and separate our
two chief purchasers parents and grandparents. Since the end users of our product are children,
we determined 5 to 15 to be an appropriate age range to target especially because teenagers 16
and above have more freedom when it comes to riding their bikes.
We began the segmentation process by filtering the American population by households
with household income greater than or equal to $30,000. Since SmartHelmet offers more benefits


13
Britanny Carter, Protective Sport Equipment Manufacturing in the US., IBISworld, Industry Report 2014
<http://clients1.ibisworld.com/reports/us/industry/default.aspx?entid=5324>.
14
Ibid.
15
Ann M. Dellinger. Bicycle Helmet use among children in the United States: The effects of legislation, personal
and household factors. <http://www.sciencedirect.com.ezproxy.bu.edu/science/article/pii/S0022437510000666>.
16
Insurance Institute for Highway Safety. Pedestrians and bicyclists.
<http://www.iihs.org/iihs/topics/laws/bicycle-laws/table-bicycle-helmet-use?topicName=pedestrians-and-bicyclists>.
Ann M. Dellinger. Bicycle Helmet use among children in the United States: The effects of legislation, personal and
household factors. <http://www.sciencedirect.com.ezproxy.bu.edu/science/article/pii/S0022437510000666>.
18
Pacific Institute for Research and Evaluation. Injury Prevention: What Works? A Summary of Cost-Outcome
Analysis for Injury Prevention Programs (2014 Update.
<http://www.childrenssafetynetwork.org/sites/childrenssafetynetwork.org/files/InjuryPreventionWhatWorks2014Up
date%20v9.pdf>.
6

than normal helmets, it is priced higher (retail price for Years 1-5 is $60). Therefore, we are
assuming that households with incomes lower than $30,000 will not be willing to purchase our
product. We chose to target households because it allows us to target mothers, fathers, and single
parents.
We then further divided this segment into households led by parents or grandparents. As
mentioned above, we will only target those households led by parents with children ages 5 to 15
or those led by grandparents with grandchildren ages 5 to 15.
Even though a greater percentage of grandparents than parents would Probably Buy or
Definitely Buy our product at the price they expect it to be sold in retail stores (see MK
Exhibit 1), when we asked who was more likely to buy our product, the overwhelming answer
was parents (see MK Exhibit 2). We attribute this discrepancy to the fact that grandparents are
more willing to spend extra money on a product for their grandchildren, while parents are more
likely to buy safety products for their children because they are generally the primary caretakers.
MK Exhibit 1: Parents vs. Grandparents Purchase Intent
Purchase(Intent
Definitely(Not Probably Probably Definitely
Parents(or(Grandparents Buy Not(Buy Not(Sure Buy Buy Grand(Total
Parents 11.51% 19.42% 28.78% 100.00%
Grandparents 4.55% 18.18% 25.00% % % 100.00%
Grand(Total 9.84% 19.13% 27.87% 36.61% 6.56% 100.00%

MK Exhibit 2: Who is More likely to Buy SmartHelmet

Who You Think is More Likely to Buy This Product


Parents 79.41%
Grantparents 20.59%
Grand Total 100.00%
This data helped us establish parents as our primary segment, which we call Safety
Freaks. Grandparents, or Anxious Ancestors, are our secondary segment as they are less
likely to purchase our product, but nevertheless will increase our products purchase intent and
unit sales, a conclusion that is supported by our survey results.
We used population statistics from the 2012 U.S. Census Bureau to determine category
sizes, including the size of the U.S. population, the percentage of parents in the U.S. population,
and the percentage of children aged 5 to 15. Additionally, we used Peter Franceses The
Grandparent Economy report to determine the number of grandparents in the U.S., which came
7

out to 70 million.19 One assumption we used to determine the percentage of parents with children
aged 5 to 15 and the percentage of grandparents with grandchildren aged 5 to 15 is that there are
1.5 children per parent in the U.S., as illustrated in the 2012 Census (See MK Appendix 3).20
Next, since SmartHelmet is a bike accessory, purchasers of our product will have access
to bikes, thus making bikes and SmartHelmets complementary goods. If a household does not
have access to a bike, it is highly unlikely that this household will buy our product. For this
reason, we further filtered the attributes of our target markets to only include those households
that have access to bikes. Based on a survey conducted by the National Survey of Bicycle and
Pedestrian Attitudes and Behavior average, 57.4% of households with annual income greater
than $30,000 have access to a bike.21 Thus, access to a bike serves as our final determining factor
for our target segments.
MK Exhibit 3: Full Segmentation Tree

In order to generate sufficient revenues and profits, we must correctly target those
segments that are substantial in size, easily reachable, and responsive to our unique selling
proposition. There are a total of 2.83 million households in our Safety Freaks segment and 3.54
million households in our Anxious Ancestors segment. We also assume that our target segments
will grow at the same rate as the total U.S. population, which is 0.8% per year.22


19
Peter Francese. The Grandparent Economy. Grandparents.com, 2014,
<http://www.grandparents.com/grandparent-economy>
20
Rose M. Kreider, America's Families and Living Arrangements: 2012., United States Census Bureau,2014,
<http://www.census.gov/prod/2013pubs/p20-570.pdf >
21
Dawn Royal and Darby Steiger, "Key Findings: Bicyclist Attitudes and Behaviors." National Survey of Bicyclist
and Pedestrian Attitudes and Behavior. Vol. 1. 2008. 32. Web. Pg. 2 file: <///home/chronos/u-
6f07efb8c7eca9d37261516b05c90e721112abaf/Downloads/810971.pdf>
22
"Population Growth (annual %)."Data. The World Bank. Web. 22 Nov. 2014.
<http://data.worldbank.org/indicator/SP.POP.GROW>.
8

Product Positioning
SmartHelmets positioning statement is as follows: For parents and grandparents of
children ages 5 to 15 who want to ensure that their children have their helmets at all times while
biking, the SmartHelmet is a childrens bike product that utilizes proximity sensor technology,
encourages continual safety, and is unlike a generic children's helmet. The safety of children is
the most crucial concern of households in our target segments, as proven by the fact that 176 out
of our 183 survey respondents ranked safety provided by the helmet as very important or
extremely important. Therefore, our companys goal is to make the SmartHelmet the safest
bike helmet on the market. As our perceptual map demonstrates, we are well on our way to
achieving this goal, as potential customers ranked the SmartHelmet highest amongst our main
competitors in terms of safety.
MK Exhibit 4: Safe vs. Durable Perceptual Map

Communications, Budget, & Creative Advertising


Integrated Marketing Communications Schedule (See MK Appendices 4-9)
Our Integrated Marketing Communications (IMC) schedule details what we believe to be
the best possible combination of push and pull marketing strategies for creating awareness within
our two target segments, Safety Freaks and Anxious Ancestors. While the IMC aims to reach
both segments, more effort and money will be put into generating awareness within the Safety
Freaks segment because they are our primary target. The main pull vehicle through which we
will generate awareness is magazine advertisements. Moreover, we will rely heavily on word of
9

mouth to generate awareness within our target segments after Year 1. Based on our calculations,
word of mouth should generate more awareness than the IMC depicts, and therefore we can
count on higher awareness numbers than shown in our IMC schedule.
MK Exhibit 5: Word of Mouth Calculations

Lastly, we believe our push marketing strategy sets us up for success because we will
display the SmartHelmet at three of the largest trade shows within the outdoor recreation and
child accessories industries.23
Pull Marketing: Year 1
In Year 1, we will place four full-color, one-third-page advertisements in Scholastic
Parent & Child at a cost of $50,000 each. This will provide us with a base awareness of 4.6% in
the Safety Freaks segment and 3.7% in the Anxious Ancestors segment. In addition to these
magazine ads, we will use online advertisements, point of purchase displays, fairs and expos,
transit posters, public relations, and creative expenses to reach our target segments and arrive at
11.5% total awareness and 10.6% total awareness for our respective segments.
MK Exhibit 6: IMC, Pull Marketing Year 1


23
Absolute Exhibits, Inc. "Top 100 USA Shows." <http://www.absoluteexhibits.com/Top-100-USA-Shows/>.
10

Pull Marketing: Year 2


Our Year 2 pull marketing expenses will actually decrease by about $250 to $339,118
even though we are not changing any of our marketing vehicles. This decrease occurs because
we will not have to pay for the cost of the trade show booth in Year 2, which will cause a
decrease in the overall cost of creative expenses. We chose not to change any of our marketing
vehicles in Year 2 because we generate word of mouth, which yields a high awareness (as
depicted in MK Exhibit 5 above). Additionally, our online marketing awareness numbers will
increase to 3%, and we will see 1% carryover awareness from Year 1. Combined, this will lead
to an increase in our total Year 2 awareness to 15.5% in the Safety Freaks segment and 15% in
the Anxious Ancestors segment, all at a lower cost to us.
MK Exhibit 7: IMC, Pull Marketing Year 2

Pull Marketing: Year 3


We will increase our pull marketing expenses starting in Year 3, as we expand our transit
marketing into Seattle. This is the only adjustment we will make, but it will affect online and
creative expenses because they are percentages of the pull marketing costs and total marketing
costs respectively (see MK Exhibit 8 below). We chose to increase our pull marketing expenses
in Year 3 because, while word of mouth will generate a significant amount of awareness for us,
we have the capital and we want to maximize sales over our first five years. These changes, in
addition to competitors entering the market, will lead to the awareness numbers increasing to
25.1% for Safety Freaks and 24.1% for Anxious Ancestors.
11

MK Exhibit 8: IMC, Pull Marketing Year 3

Pull Marketing: Year 4


Our pull marketing strategy will undergo three changes in Year 4. We will expand our
transit advertisements into Minneapolis,24 replace our fairs with four new fairs that reach a larger
market, and switch our magazine advertisement from Scholastic Parent & Child to Parents
magazine. While these adjustments will lead to increased pull marketing costs, they will also
lead to increased awareness, which in turn will lead to increased sales. The switch from
Scholastic Parent & Child to Parents will affect the awareness numbers the most, as Parents
reaches a much larger market than Scholastic Parent & Child.25 Parents magazine has a total
circulation of around 2.2 million, while Scholastic Parent and Child circulation is around 1.3
million.26 Once again, while our word of mouth awareness numbers will increase significantly in
Year 4, we feel that an increase in pull marketing expenses is acceptable because our awareness
numbers increase to 30.8% and 29.1% respectively.


24
Rodale, Inc. "America's Top 50 Bike-Friendly Cities." <http://www.bicycling.com/news/advocacy/america-s-top-
50-bike-friendly-cities?slide=1>.
25
Alliance for Audited Media. "MAGAZINE Publishers Statement Six Months Ended June 30, 2013." 30 June
2013. Web. <http://www.meredith.com/mediakit/parents/print/pdfs/Parents-ABC.pdf>
26
Scholastic, Inc. "Scholastic: Parent&Child." <http://www.scholastic-parents.com/pdf/SPC_Print.pdf>.
12

MK Exhibit 9: IMC, Pull Marketing Year 4

Pull Marketing: Year 5


In Year 5, we will replace the New York Bike Expo with the New York Toy Fair. We
chose to make this change because the Toy Fair reaches a larger market, we will have the capital
to participate, and it will increase our awareness numbers. Therefore, by Year 5, our overall
awareness for our segments will be 33.3% and 31.6% respectively.
MK Exhibit 10: IMC, Pull Marketing Year 5
13

Pull Marketing: Advertisements (See MK Appendices 10-12)


Our main banner ad (See MK Appendix 10 Leaderboard) uses primary colors, namely
blue and yellow, to grab the viewers attention. There is reflective symmetry via the sensor
waves to direct the viewers attention to the communication occurring between the bike brake
and the helmet the core functionality of our product. The two lines of copy SmartHelmet is
a childrens bike safety product that utilizes proximity sensor technology. The bike brakes only
unlock when the helmet is within 2 meters of the bike. further explain the products core
function.
Our full color ad (See MK Appendix 11 Full Color) is the only piece of our advertising
portfolio that places the SmartHelmet directly in the context of intended use. The ad displays a
happy young boy sitting on a bike wearing a helmet, with SmartHelmets slogan Protecting
what matters most displayed in the top left corner of the advertisement. Overall, the full color
ad enhances the power of our marketing efforts, especially in Years 1-3, because we will use this
ad to great effect in Scholastic Parent and Child magazine.
Pull Marketing: Packaging
We based SmartHelmets packaging design on helmet packaging that currently exists in
retail stores (See MK Appendix 13). Therefore, our helmet will be placed in a box with an open
face covered in bright, primary colors. This allows both the parents and children to touch the
bike helmet prior to making the final purchase, a valuable part of the decision making process for
a sports equipment product.
Our 100% cardboard box, covered on all four sides with the same blue color as was
used in our banner and 4-color ads, secures both the helmet and rim brake in place with zip ties.
Printed on the front of the box are our company name, logo, slogan, and product name (See MK
Appendix 14). Using consistent colors, images, and fonts will help customers remember
SmartHelmet when exposed to these same images over time, thus relating to our organizational
goal of achieving 60% awareness by Year 5.
Pull Marketing: Public Relations
Throughout our five years of marketing, public relations will cost us $10,000 per year
and generate 1% awareness per year. We will generate awareness by reaching out to magazines
and blogs, with a focus on the parenting, children, and biking areas. The public relations kits that
we will send to these magazines and blogs will consist of sample SmartHelmets, along with a
14

brief description of the product, what our company does, and our CSR initiatives. It is important
that these media outlets know we are not only concerned with making a profit, but also have
goals to improve the community and the environment.
Pull Marketing: Online Marketing
Our online marketing targets three blogs SNEWSnet.com (a trade blog), Cool Mom
Picks, and Family Education and uses Google AdWords in order to gain awareness of up to 7%
in Year 5. The blogs we target will allow us to advertise via banner ads, floating ads, skyscraper
ads, and more. Google AdWords will allow us to increase our ranking on Googles search engine
results based on the amount of money we bid and on certain search words, such as bike helmet
(See IS Appendix 18). Please consult the information systems section for a more in-depth
description of our online marketing plan (pg. 52).
Pull Marketing: Point of Purchase
We will use one consistent point of purchase (POP) display throughout our five years.
Our POP will feature a colorful design and a child riding a bike on top, allowing the display to
echo our advertising goal of colorful simplicity aimed at attracting all potential consumers (See
MK Appendix 15). This display will generate 1% awareness per year and will cost a total of
$20,000 per year. We plan to use our POP displays during April, May, November, and December
because these are prime selling months for bikes,27 as they are in close proximity to two key bike
events: National Bike Month (May) and the winter holidays.28
Pull Marketing: Creative Expenses
We will use two different creative advertising strategies in order to gain a maximum of
2.2% additional awareness in Year 5. Our first creative strategy is the construction of a
smartphone application for children (See MK Appendix 16). The application will be a memory
game, similar to the card game, Concentration. The goal of this marketing strategy is to raise
awareness within the childrens segment because they are our main influencers. If children
discover our product via this app, their parents and grandparents will take notice. The creation of
this application will utilize most of our Year 1 creative advertising budget, but will cost us very
little in Years 2-5.


27
Shimano, Inc. Summary of Financial Results.
<http://www.shimanousa.com/content/Corporate/english/index/financial-infomation/summary-of-financial-
results.html>.
28
The League of American Bicyclists, "League of American Bicyclists."<http://bikeleague.org/bikemonth/>
15

Our second creative advertising strategy involves partnering with bike stores and biking
advocacy groups in Denver during National Bike Month in May to host various events that raise
awareness of both the joys of biking and the safety precautions that must be taken while biking.
Some groups we are hoping to partner with are BikeDenver and PeopleForBikes, and, in Year 5,
USA Cycling, because we are hoping to sponsor some of the childrens events held in the USA
Pro Cycling Challenge. Not only will this strategy increase our awareness numbers, it will also
add to our corporate responsibility initiatives, which in turn will make customers more receptive
to the SmartHelmet. We will only partake in one event in Year 1, as most of our creative budget
will be dedicated to creating our application, but we will participate in two events during Years 2
and 3, and at least three during Years 4 and 5.
Push Marketing: Trade Shows
We plan to participate in three trade shows throughout our five years, starting with
Playtime in New York ($6,975) and Interbike in Las Vegas ($8,820) in Years 1-3. After this
point, we will replace Interbike with the Outdoor Retailer Summer Market in Salt Lake City
($9,450). We chose these trade shows because they are the top trade shows in their respective
industries, meaning that we will generate more awareness, while also attracting the industries
largest players. The reason for the switch in Year 4 is that the Outdoor Retailer expo garners
more national attention and also attracts more exhibitors and industry representatives.29 Our trade
show booth will be the same at each trade show because it fits in with both the childrens toy
industry and the bike industry (See MK Appendix 17-18).
Push Marketing: Trade Magazines
We plan to place advertisements in the same two trade magazines throughout Years 1 to
5, at a cost of $14,420 per year. The two magazines we will advertise in are Dealernews and
Bicycle Retailer, both of which target the bike industry, but still display childrens accessories.
We chose these two magazines because we believe that we must be accepted by the biking
industry if SmartHelmet is ever to become successful.
Effectiveness of Communication
Overall, we will measure the effectiveness of our communications strategies depicted in
the IMC schedule via multiple metrics, including customer relationship management (CRM)


29
Outdoorretailer.com. "Exhibitor List + Floor Plan." Exhibitor List + Floor Plan. Outdoorretailer.com, 2013. Web.
23 Nov. 2014. <http://www.outdoorretailer.com/summer-market/show-info/exhibitor-list-floor-plan.shtml>.
16

software, click-through rate, Google Analytics, and feedback from industry representatives at
trade shows. Our main mode of analysis will come from the CRM module of our ERP software,
which will provide us with information regarding sales. We can use the information this software
generates to analyze if our marketing strategies are affecting sales and make adjustments
accordingly. Additionally, we will use the feedback from industry representatives at the trade
shows to improve our product and our marketing strategies. Lastly, we will use click-through
rate and Google Analytics to measure the effectiveness of our online marketing strategies. Please
refer to the information systems portion of this plan to see a more detailed description of how we
will use these metrics to measure our online marketing effectiveness (pg. 52).
Channels & Pricing
In 2012, the protective sports equipment industry generated $282.3 million in revenue.30
To effectively increase our products market presence, we will adopt a multichannel strategy by
selling through online retailers, independent retailers, chain sporting goods stores, and mass
merchandisers.
We will use Amazon as our online selling platform throughout Years 1-5 because of its
heavy online traffic and relatively lower margin of 35% (versus a 50% margin to independent
retailers). Since Amazon is one of the largest online retailers in the world, its website will raise
the awareness of our product.31 However, we will depend less on this online channel in later
years as we enter chain stores in Year 3 and mass merchandisers in Year 4, since these channels,
together with independent stores, earn 82% of total industry revenue (See MK Appendix 19).
Starting in Year 1, we will cooperate with manufacturers representatives in order to
gain access to independent retailers. Our representatives can reach up to 80% of all independent
stores every year, and eventually 30% of those stores will carry our product. Since independent
retailers account for nearly 23% of industry sales, we will continue our cooperation with them
for all five years via the manufacturers representatives.32
We plan to enter chain sporting goods stores in Year 3, as we will have gained sufficient
market acceptance. We assume that the chain stores we enter will place our product in 50% of

30
Britanny Carter, Protective Sport Equipment Manufacturing in the US., IBISworld, Pg. 19, 2014
<http://clients1.ibisworld.com/reports/us/industry/default.aspx?entid=5324>.
31
Netonomy.NET. Top 5 Largest Online Retailers Who Are These Companies and How Did They Make it to the
Top? <http://netonomy.net/2013/01/30/top-5-largest-online-retailers-who-companies-how-did-they-make-it/>.
32
National Sporting Goods Association. "Sporting goods equipment sales by channel of distribution in the U.S.
from 2008 to 2013." <http://www.statista.com/statistics/201225/sport-equipment-sales-by-channel-of-distribution-
in-the-us-since-2006/>.
17

their stores in Year 3, and 70% in Year 4. We selected our target chain stores based on market
research we conducted on stores in the sporting goods industry in the U.S.33 We aim to enter
Sports Authority in Year 3, Academy Ltd in Year 4, and Dicks Sporting Goods in Year 5. Our
retail margin from chain stores is 45%, and the retail price is $56 because we believe the quantity
we will sell in chain stores will outweigh the price reduction.
We expect our product to be sold in mass merchandisers beginning in Year 4. The fact
that mass merchandisers offer a greater variety of products attracts larger amounts of customers,
providing us with the opportunity to increase awareness of the SmartHelmet. Target is our
preferred mass merchandiser in Year 4, because it is the second largest mass merchandiser in the
protective sports equipment industry.34 We also plan to sell our product in Walmart by Year 5,
after we have built up a strong brand name. The retail price in mass merchandisers will be $54,
along with a retail margin of 40%. The lower margin in conjunction with the lower retail price
lowers our companys manufacturing selling price, but we believe the benefits, namely increased
sales and awareness, offsets the above costs.
Channel Conflict
Once we enter chain stores in Year 3, we estimate that we will lose 20% of the
independent stores that year, along with 25% in Year 4, and 30% for Year 5. The lower retail
prices offered by chain stores and mass merchandisers drive customers away from independent
stores, so less independent stores will be willing to carry our product.
Even though we predict to lose 30% of independent stores by Year 5, we believe actual
channel conflict will be less than expected. Our reasoning behind this is that our bike helmet is a
specialty product, as it offers unique characteristics and benefits to customers. Consequently, a
higher price is reasonable. Thus, we do not believe that we will lose as many sales form
independent stores as expected, since customers who shop at independent stores are generally
searching for specialty products and are more willing to spend extra on high-quality equipment.35


33
National Sporting Goods Association. "Sporting goods equipment sales by channel of distribution in the U.S.
from 2008 to 2013." <http://www.statista.com/statistics/201225/sport-equipment-sales-by-channel-of-distribution-
in-the-us-since-2006/>.
34
Ibid.
35
Britanny Carter, Protective Sport Equipment Manufacturing in the US., IBISworld, Pg. 19, 2014
<http://clients1.ibisworld.com/reports/us/industry/default.aspx?entid=5324>.
18

Sales Volume
Sales from independent retailers will account for 31.5% of our total sales in Year 1 and
will peak at 44.7% in Year 2. However, due in large part to channel conflict, as was explained
above, independent retailers sales decline to 25.5% in Year 5. Once we enter chain stores in
Year 3, 5.1% of our total sales will come from this category. This percentage will gradually
increase over Years 4 and 5 to ultimately reach 17.1% in Year 5. With regard to mass
merchandisers, we aim to enter Target in Year 4, which we predict will generate 7.3% of our
total sales in Year 4. With our planned entrance into Walmart in Year 5, a total of 21.2% of our
sales will come from mass merchandisers.
MK Exhibit 11: Year 5 Average Weighted Manufacturer's Selling Price to Channel

We will sell our product online throughout Years 1-5. Online sales are of great
importance to us in Year 1 because they will comprise 68.5% of our total sales. However, online
sales will decline to 36.3% of total sales in Year 5 as we enter more brick and mortar stores. This
is because our product will become more visible and readily available in-person, as it will be
sold in prominent chain stores and mass merchandisers.
Sales Force
In Years 1 and 2 we will only utilize manufacturer's representatives to sell our product.
Starting in Year 3, we will hire our own salesperson to interact with chain stores and mass
merchandisers. In the base, optimistic, and pessimistic cases, we will have only one salesperson
from Years 3-5. It is this person's responsibility to target and communicate with potential
retailers. Our salesperson will earn a base salary of $75,000 per year plus a commission of 3% of
sales made. This combined method of compensation will offer our salesperson a greater feeling
of job security and safety, since his/her pay does not rely only on the sales he/she generates.
MK Exhibit 12: Salary & Commission of KinderHelm Inc.s Salesperson
19

Switching Point Calculation


Using the base salaries and commission rates earned by the manufacturer's
representatives and our sales force, we were able to calculate the point at which using our own
sales force is less expensive than hiring manufacturers representatives. Supposing our revenue is
x and 10% represents the manufacturers representatives commission rate, we generate the
following equation: 10%x=$75,000+3%x.
The solution, $1,071,429, represents the revenue at which we are no longer supposed to
use the services of manufacturers representatives and instead solely rely on our own sales force.
However, we decided to retain the services of manufacturers representatives over all five years
because we do not expect to have a well-established selling division and because sales to
independent retailers are vital to our company. Therefore, we will employ manufacturers
representatives from Years 1-5, and hire one salesperson in Year 3.
Manufacturers Representatives
Manufacturer's representatives will help us sell our product to independent retailers.
They will be paid solely on commission 10% of the manufacturers selling price to
independent retailers. As a startup company with limited selling experience and business
connections, employing these representative will help us increase our presence in independent
retailers and build up our core competencies, especially in Years 1 and 2.
MK Exhibit 13: Commission Paid to Manufacturers Representatives, Years 1-5

Discount Promotion
After conducting our financial analysis, we found that our NPV is highly sensitive to our
selling price (See FE Appendix 3). A small decrease in price can have a large negative impact on
profits. As a result, we will not offer any discounts on our price.
Sales Projections (See MK Appendix 20-21)
Our base case sales projection forecasts Year 1 sales of $862,332 and Year 5 sales of
$3,249,201, with an average annual growth rate of 30.4%. This sales projection is based on the
revenue-maximizing retail price and purchase intent we obtained from our survey results and
20

demand curve. Our demand curves indicate the same revenue-maximizing retail price for both
target segments, which is $60.
MK Exhibit 14: Demand Curve Parents

Our primary segments purchase intent is 16.8% at the price of $60, after adjustment for
CSR initiatives. Our secondary segments CSR-adjusted purchase intent is 24.7% at the same
revenue-maximizing price (See MK Appendix 22).
Since overlap exists between our two target segments (parents and grandparents could
potentially purchase the SmartHelmet for the same child), we adjusted for this overlap based on
our survey results. When we asked the question, Who do you think is more likely to buy this
product, parents or grandparents? 79.4% of our respondents answered parents. Thus, only a
portion of the revenue from our secondary segment is realizable. Therefore, we will only accept
35% of projected revenue from our secondary (grandparents) segment.
Optimistic & Pessimistic Scenario Analysis
MK Exhibit 15: Optimistic & Pessimistic Sales Projections

In order to predict sales in the optimistic and pessimistic cases, we changed awareness,
ACV, and competition. To understand the impact of awareness on our sales forecast, we changed
the number of impressions required to make a consumer aware. In the pessimistic case, we
assumed it would take 5 impressions to make a consumer aware of our product. In the optimistic
case, we assumed it would take 3 impressions to make a consumer aware of our product.
For protective sports equipment industry, independent retailers and chain stores together
earn almost 50% of total category sales. We made our ACV assumptions based on sales by
21

independent retailers and chain stores. Starting in Year 3, we assume that the loss of sales in
independent stores due to channel conflict will decrease by 10% in each year. This change
increases sales. In the pessimistic case, we assume loss of sales in independent stores due to
channel conflict will increase by 20%. We chose to adjust channel conflict because it is the key
determinant of whether we can maintain our sales in independent stores after we enter chain
stores and mass merchandisers. Also in the optimistic case, in Year 3, instead of entering the
third largest chain store, Sports Authority, we assume we enter the largest one, Dicks Sporting
Goods. In the pessimistic case, we assume our product will enter the fourth largest chain store,
REI, in Year 3, and that we will not enter Sports Authority until Year 5.
As a result, our ACV will increase to 35.4% in Year 5 in the optimistic case, and decrease
to 28.3% in Year 5 in the pessimistic case. We change these variables to fully capture the
possible results of our success in keeping sales in independent stores and entering chain stores,
because it relies not only on salespeoples effort, but also market acceptance and our reputation,
which are highly subjective and unpredictable.
The last key assumption we make is the competition level. The competition level factors
in direct competitors entering the market based on how successful our business becomes. In the
optimistic case, we increase the competition level by 15% from Year 3-5, as our business
becomes more attractive and more competitors enter the market. The opposite holds true for
pessimistic case, in which we expect to face less competition because of our reduced profitability.
Therefore, we assume that competition level decreases by 5% from Year 3-5. We are uncertain at
this point about our competing firms reaction to our business, which is to some degree
dependent on our sales performance.
Taking into consideration all of these assumptions, we come up with sales projections for
optimistic and pessimistic cases. Ideally, in the optimistic case, we will have an average of 11%
increase in sales through five years. Similarly, we will experience an average of 12% decrease in
sales in the pessimistic case. Therefore, we believe that our assumptions about both cases are
realistic, and the results given those assumptions help us develop a better understanding of our
situation.
22

Customer Requirements & Product Design


The SmartHelmet is designed to promote safe bike-riding habits for children at an early
age. As children grow older and ride their bikes without supervision, it is more difficult for their
parents to ensure their children are wearing their helmets. We developed a house of quality
matrix in order to balance customer desires with what was feasible from an engineering
standpoint. The house of quality allows us to weigh customer attributes with engineering
characteristics, as well as compare our product versus competitors on customer attributes. This
helped us to develop SmartHelmets position in the market as well as its key differentiating
factors (See OM Appendix 1).
As with any product, price is essential to SmartHelmets success in retail stores. To find
the revenue maximizing cost we used survey data on our target markets. Our primary target
market is parents, while our secondary target market is grandparents. By comparing pricing data
with purchase intent, we found that revenue would be the greatest at $60 per unit. We believe
that consumers will be willing to pay an above average price in exchange for the added value the
SmartHelmet provides over a typical bike helmet. To deal with the variety of different bikes that
our product can be used on, we decided to manufacture the brake attachment piece. The
attachment piece serves to connect the rim brake to the bike and allows the product to be
customized to fit childrens bikes of different styles and sizes.
While parents/grandparents are the people actually purchasing the SmartHelmet, the
influencers are the children/grandchildren. Since they are the ones actually using the
SmartHelmet, it is important that the product is attractive to them and that they want to wear it.
Because of this important requirement, we thought it would be beneficial to have different colors
for our Helmet in order to make our product more appealing for the user. For the first five years,
we will carry black, white, blue, and pink. Offering these color options will encourage children
to want to use our product and incentivize parents to buy a product they know their children will
wear. At the end of the day, if our product is not being used, its purpose of protecting children is
not being fulfilled.
Many survey respondents were also concerned with the safety of the brakes locking
mechanism around the rear wheel of a bike. The components most responsible for the brakes
locking mechanism are the RFID tag and reader. In order to ensure these components are
working properly, we will test each unit during the manufacturing process. Lastly, our surveys
23

also suggested target consumers wanted a brake that was easily installable and configurable. On
the brake attachment piece, we added an adjustable ring that is placed below the seat of the
childs bike and lowered into position around the back wheel, where it can lock and unlock the
use of the bike. The ring can also be tightened with a screw around the base of the bike seat to fix
its orientation around the back wheel. The ability to tighten the position of the brake on different
positions of the seat bar answers the customer desire for simple, customizable installation.
Target Cost
In order to obtain a target cost for the OM Exhibit 1: Target Cost
SmartHelmet, we started with our retail price of $60.
After the standard 50% retail margin, we arrive at a
manufacturing selling price of $30 per unit. Our
fixed costs per unit are $6 for sales and marketing
costs (20%), $6 for general and administrative costs
(20%), and $3 allocated to profit for our company
(10%). By subtracting the appropriate fixed costs per
unit from the selling price, we achieve a target cost of $15 per unit. We allocated 70% of the
target cost, $10.50, to direct materials and direct labor, while we allocated 30% of our target
cost, $4.50, to manufacturing overhead.
Make/Buy Analysis
We chose to buy helmets because we wanted to focus on our core competency, which
involves the improving the functionality of a traditional bike helmet. However, one piece we will
manufacture is the brake attachment piece that will connect the rim brake to the bike seat.
Manufacturing this piece gives us the flexibility to create a product that can be used on nearly
any bike. This piece will be made out of steel and will be purchased from a supplier in China,
due to its lower costs than domestic competitors. The steel will be cut using a steel cutting
machine to create 6-inch pieces of metal small enough to be processed by the casting machine.
We decided it would be more cost effective to purchase the steel cutting machine from a Home
Depot branch in Denver close to our manufacturing facility, in case sudden issues or
complications arise. In order to make this part, the steel will be casted into the desired mold. The
process manipulates the steel by using extreme heat to form the piece and then cool it to solidify
24

the metal. The casting machine we intend to use will be purchased from Die Cast Machinery
Corporation, located in Waukegan, Illinois.
Suppliers
The SmartHelmet supply chain involves both domestic and foreign players, with the
majority of the raw materials coming from Alibaba suppliers in China. We have decided to
purchase most of the raw material components of the SmartHelmet in order to avoid the high
initial costs associated with investing in machinery, employees, and specialized training. While
domestic suppliers may offer higher quality goods than international suppliers, we do not believe
the benefit of purchasing these high quality goods outweighs the cost of purchasing domestically.
Based on our conversations with international suppliers (see OM Exhibit 2), we found raw
materials that fulfill our requirements in terms of price and quality.
OM Exhibit 2: Supplier Contact Information

Also, almost all of our suppliers are Alibaba Gold Suppliers, which means they have been
vetted and verified to ensure their work is consistent, their labor is legal, and they are properly
certified. Basic materials, such as screws, and packaging materials, including the cardboard box
and tape, will be purchased domestically. Purchasing materials domestically gives us greater
flexibility because lead time is shorter and the costs of shipping these materials overseas would
be unreasonable. We do not want to incur excessive holding costs for materials that we can
easily purchase in the United States and receive within several days.
Transportation Logistics
Our suppliers will transport the most important materials, including the brake, the RFID
sensor and tag, the motor, and the helmet to Long Beach Port, which will take 16.5 days, on
average (See OM Appendix 2). Lead times given by international suppliers include the
transportation of raw materials to the port of Long Beach (See OM Appendix 3). We chose Long
Beach as the entry point into the United States because of its ideal location as not only one of the
25

closest ports to China but also a connection to the rest of the country via the nationwide railroad
(See OM Appendix 4). The infrastructure for both inbound and outbound deliveries allows for an
effective transportation process, including access to nearby rail, air, and road transportation.
When the raw materials arrive at the port of Long Beach, they will first go through
customs, which takes about three days, and will then be loaded onto freight trains. From this
point, it will take about two days to reach Denver, Colorado, using a nationwide railroad. Using
Google Maps, we calculated the distance in miles (approximately 1,113 miles) from Long Beach
Port to Denver, Colorado.36 Using the price per mile, we calculated the total cost of railroad
transportation (See OM Appendix 5). Upon arrival in Denver, the raw materials will be
transported to our facility by trucks, with an average transit time of less than one day, as the
railroad is only a few miles away from our facility.
In order to sell to retailers around the country, we considered handling our own internal
transportation and logistics service but ultimately decided third-party logistics would be the best
option. We will utilize fulfillment by Amazon (FBA) as our third party logistics provider.37 We
chose fulfillment by Amazon because of the large variety of warehouse storage locations they
can provide to our company. Once our finished goods are ready to be shipped, our Chief
Operations Officer will select an Amazon warehouse location to store our product. Our finished
goods will be picked up by Amazon through Amazon Partner Carrier (See OM Appendix 6) and
transported to warehouses we designate. Utilizing FBA will allow us to react more quickly to
fluctuations in OM Exhibit 3: Fulfillment by Amazon Fees

supply chain
demand.
In
addition, the cost
of storing finished
goods will be
$0.48 per cubic foot per month from January to September and $0.64 per cubic foot per month
from October to December (See OM Appendix 7). Once we receive an order quantity from
retailers or directly from Amazon customers, we will relay this information to Amazon, and FBA

36
5360 Washington St, Denver, CO 80216 , Google Maps. <http://www.google.com/maps>.
37
FBA Overview, Amazon.com Help: Fulfillment by Amazon,
<http://www.amazon.com/gp/help/customer/display.html?nodeId=200229160>. Web. 21 Nov. 2014.
26

will use its modes of transportation to deliver our product. There is an order handling cost of
$1.00 per order. Since our finished goods will be large standard size, there is a fixed cost of pick
and pack per unit of $1.02Amazon will pick and pack units of its choosing to send to the
retailer whose order we will fulfill. Based on the weight of the goods Amazon delivers, handling
costs will be $1.34 plus $.39 per pound after 2 pounds.
The greater amount of warehouses Amazon offers around the country will allow our
products to travel to channel retailers faster and more efficiently. Transporting goods via our
own logistics service would require utilizing our own trucks and warehouses as well as hiring
truck drivers, paying them a salary, and accounting for the cost of gas. Therefore, we conclude it
will be more productive for us to use FBA as our third party logistic provider, since it allows us
to focus more on improving the processes of our core business rather than wasting time and
resources on expenses and transportation costs for our own logistics service.
Facility Location
Our manufacturing facility is located at 5360 North Washington Street, in Denver,
Colorado, and we intend to rent Unit A (See OM Appendix 8). Other locations we considered for
our facility included Omaha, Nebraska, due to cheap real estate prices and labor, and Long
Beach, California, near the Port of Long Beach where our raw materials will arrive. However,
Omaha's location and distance to major markets as well as California's expensive real estate and
high labor costs posed obstacles for us.
Center of Gravity
We then conducted a center of gravity analysis in order to find a central location with
respect to our retailers. Center of gravity takes into account the latitude and longitude of various
important locations, along with a weighted factor to choose the best location (See OM Appendix
9). We weighted locations using the number of bike retailers in the region because it correlates
well with the number of active bikers in an area.
Factor Model
Another tool we used to find a versatile location was a factor model. In this analysis, we
used five factors to rate our possible locations, which include real estate prices,38 income rate,


38
Land and Property Values in the U.S, Lincoln Institute of Land Policy Home,
<https://www.lincolninst.edu/subcenters/land-values/land-prices-by-state.asp>. Web. 20 Nov. 2014.
27

number of wholesalers,39 minimum wage, and ability to attract employees.40 We calculated real
estate prices using average price per square foot for each state. This gives us a sense of what to
expect in regards to real estate prices for facilities and potential costs involved with expansion.
We calculated the income rate by using the tax rate; a lower tax rate allows more income to be
made per dollar of sales. Using the Yellow Pages, we found the number of retailers for bike
helmets and products each location offers, since this information impacts the number of

OM Exhibit 4: Factor Model

customers we will be able to reach. Lastly, the ability to attract employees is important in terms
of being able to staff and retain employees in our organization and facility. We used a CNBC
ranking that measured states in a variety of characteristics, such as average education level and
average home value, and then compiled all measurements to create a comprehensive ranking of
states.41
The center of gravity analysis led us to coordinates for an area in Colorado, with our
closest possible manufacturing site located in Denver, Colorado. Our factor model rated Denver
as the most compatible with our needs. In the end, a manufacturing site in Denver offers a central
location and is highly ranked in all of the characteristics we deem important to our business.
Facility Layout
The facility we chose in Denver is a 10,950 square foot industrial space that costs $5.95
per square foot per year. The entire complex contains four units, but we will only be renting Unit
A. The facility consists of a large portion of industrial space as well as office space, two
bathrooms, a kitchen, a maintenance closet, and 4 separate offices. There is also room to store

39
YP.com - Yellow Pages, the New Yellowpages.com, YP.com - Yellow Page the New Yellowpages.com.
<http://www.yellowpages.com>. Web. 21 Nov. 2014.
40
Overall Rankings 2013, CNBC, <http://www.cnbc.com/id/100824779>. Web. 21 Nov. 2014
41
Ibid.
28

incoming raw materials, work in process goods, and finished goods before they are shipped to
retailers. Currently, we only plan to occupy one unit of the building, thus leaving more space for
us to potentially expand if our operations outgrow the current space.
Within the manufacturing space of our facility, we are implementing a U-shaped layout
in order to maximize capacity and efficiency with the fewest number of workers. In the early
years, when demand is relatively small, the U-shaped layout will allow a few workers to work on
multiple stations in order to keep costs down. Also, since our staff consists of only 3 assembly
line workers in Year 1 (See OM Appendix 10), the U-shaped layout allows them to multi-task
and familiarize themselves with all stages of the assembly process, rather than limiting
themselves to only one process. As demand rises, the U-shaped layout will allow us to bring
more workers in and work in one steady space, so as to minimize errors and train the workers to
be knowledgeable in all aspects of production.
OM Exhibit 5: Facility Layout
29

Another key benefit of this layout is that, since our facility includes only one loading
dock, the U-shape layout allows us to start and end the production process at the same spot,
enabling us to make use the loading dock more efficiently. We will store raw materials and
finished goods near the loading door, which allows us to minimize the labor of the warehouse
freight manager in unloading raw material shipments, getting raw materials onto the assembly
line, as well as storing finished goods and loading them onto delivery trucks.
Assembly Process
Brake Production Process
OM Exhibit 6: Process Analysis Diagram
Our assembly process begins
with checking all raw materials
for quality, and then it branches
off into the helmet production
process and the brake attachment
production process. The brake
production process starts when
we cut 20-foot poles of steel with
a metal cutting machine. The
casting machine will heat and
cool the steel to our desired
molded shape for the brake. This
step in producing the brake is our bottleneck, since it takes approximately 48 minutes to produce
20 units of the molded brake attachment piece. The next step involves attaching the rim brake to
the molded brake extension using screws. We then connect the motor, battery casing, and then
the RFID reader to the brake.
Helmet Production Process
While this brake production process occurs, the helmet production process takes place
concurrently. The first step in this process includes cutting open the foam within each helmet,
inserting the RFID tag, and gluing the foam back together. Our products core functionality relies
on the RFID proximity connection, and we must ensure it works. Therefore, once the RFID
readers and tags are attached to the brakes and helmets, there will be one final quality check on
20% of each batch (100 units) to test whether the brake will lock and unlock depending on the
30

distance the helmet is from the bike. After this quality check, the last station will be responsible
for packaging all finished goods and storing them near the loading dock.
Quality Assurance
Ensuring a high-quality product is integral to the success of the SmartHelmet since our
companys mission is to keep children safe while riding their bikes. Quality checks occur before,
during, and after the manufacturing process, and will be the only way to ensure the SmartHelmet
lives up to its safety guarantees. Our most important CSF is to achieve a defect rate of less than
5% for raw materials and 2% for finished goods each year, which can only be upheld if our
product undergoes detailed quality checks and acceptance sampling tests.
Acceptance Sampling
Our acceptance samplings will occur as follows: 20% of each raw material shipment and
each finished good batch (100 helmets of a single color) we receive will be checked for defects
upon arrival to the facility by the warehouse freight manager in Years 1 and 2. In Years 3-5, this
percentage will decrease to 15%, due to the fact that we will gain a better understanding of the
reliability of our suppliers. We will record the number of defects per batch and keep a log of the
percentage of defects from each supplier. Should the supplier not meet our goal defect rate of
5%, we will either work with that supplier to improve their processes or decide on a new supplier
to acquire our raw materials from. With respect to finished goods acceptance sampling, we will
keep a log of the number of defective SmartHelmets we produce. If we do not meet our goal
defect rate of 2%, we will break down the process to find the part that is contributing the most to
the rate.
Statistical Process Controls
Since our goal is to keep defect rate below 2% for finished goods, we will implement
statistical process controls in order to limit defective products should a machine malfunction. We
will purchase the Quality Management module to add to our Oracle ERP system. The system
generates alerts about deviations that may require corrective action. Using this system, our
warehouse freight manager will be able to shut down the entire manufacturing process should
significant deviations occur.
RFID Quality Inspection
The two most important raw materials whose quality we will test are the RFID units and
the helmets. Upon receiving shipments of the RFID units, the RFID-trained worker checks the
31

appropriate sample size for quality, such as the presence of broken pieces and missing
components. Since we receive the helmets already completely manufactured, once the shipments
arrive, we will check the sample size for defective components, such as faulty chin straps,
missing padding, and broken shell pieces. In addition, we will do a stress and impact test on 1%
of each helmet shipment to make sure the helmets conform to legal standards set by the
Consumer Product Safety Commission.42 The stress and impact test will destroy the helmet
tested, but it is worth the cost in order to make sure the helmets are safe and legal.
After we test the raw materials upon the arrival of each shipment, the next quality check
occurs during the manufacturing process. During this check, the RFID tags and readers will be
connected to each other digitally and assigned a specific identification number in order to isolate
a one-to-one relationship between units. After this point in production, the brake attachment
piece and helmet piece of assembly will come together as one SmartHelmet, and we will test the
entire finished good.
We will conduct acceptance sampling to make sure the RFID are connected and
communicate with one another. As mentioned above, we will test 20% of each finished goods
batch in Years 1 and 2, and 15% in Years 3-5. The test will involve determining the range over
which the sensors in the helmet and the brake communicate. The first part of the test involves
selecting an arbitrary distance above 2 meters to check if the brakes locking function works. The
brake should always be locked when the helmet is not within 2 meters of the bike, so our upper
control limit for the test is 10 meters. If the brake is not locked at 10 meters, this indicates a
malfunctioning brake.
The second part of the finished goods test involves testing to see that the brake actually
unlocks within 2 meters. Our lower control limit for this second test is 1.8 meters, meaning that
any brake that does not unlock when the helmet is within 1.8 meters of the bike fails the test. We
chose 1.8 meters because this equates to a height of a little less than 6 feet, which encompasses
the heights of most children ages 5-15, thus ensuring taller children will not activate the locking
feature of the brake while riding the bike. We will use control charts to determine the average
distances over which the brakes unlocking and locking features do not work. Our long-term goal


42
Darren Grant. "The Effect of Bicycle Helmet Legislation on Bicycling Fatalities." Journal of Policy Analysis and
Management 23.3 (2004): 595-611. <http://www.cpsc.gov>. Web. 20 Nov. 2014.
32

is achieving a defect rate of no more than 2% each year, and this can only be possible if our
quality checks are thorough and supported by the collected data described above.
Capacity & Staffing
The process of molding the steel into the brake
attachment using the casting OM Exhibit 7: Increase in Demand

machine is the bottleneck of the Units Demand


production process, taking 48 60,000
minutes to produce 20 units. The 50,000
throughput time for 20 units is 138 40,000

Units
30,000
minutes (See OM Appendix 11). In
20,000
our case, the staffing procedures
10,000
directly track our production -
1 2 3 4 5
forecast. Since on average we
Year
believe it will take 6.9 minutes for
a worker to make one SmartHelmet, a worker should typically be able to produce 1,322 helmets
per month. Demand for our product trends upward throughout our forecast of five years; because
of this, it makes fiscal sense to add more workers incrementally when demand exceeds capacity
instead of using overtime or part-time workers to compensate for increases in demand. We
believe additions in employees and machinery are necessary to accommodate the continual
increase in demand. Therefore, we will add another worker each time capacity exceeds a
multiple of 1,322. The casting process also is limited by the capacity of the casting machine. In
order to know when to add casting machines, we must find the point at which an additional unit
of labor provides less output than an additional unit of capital. We calculated that the optimal
time to add casting machines is at the beginning of Years 3 and 5, respectively, in order to
decrease the time of our bottleneck when demand exceeds capacity.

OM Exhibit 8: Machine Capacity Requirements


33

At the inception of our business, we will start with three manufacturing workers, as well
as one warehouse freight manager, whose job it is to load, unload, keep stock of raw materials
and finished goods, and assist the other workers during various parts of the production process.
Since we are using a U-shaped facility layout, we can compensate any number of workers to be
able to do multiple tasks in a small time frame because all stations are in close proximity with
one another. At the end of the forecasted period, we will employ 11 manufacturing workers.
Our manufacturing employees will be trained in all parts of the manufacturing process, as
it will be necessary for employees to handle more than one operation throughout the production
cycle. It will be the responsibility of the warehouse freight manager to organize and distribute the
manufacturing labor efficiently.
Organizational Structure
In Year 1 we will have 8 employees total. Our CEO will also act as CMO, receiving
compensation of $120,000 in Year 1. This executive will receive a 3% raise every year over the
next four years to account for cost of living expenses.43 We will also have one Chief Technology
Officer (CTO), who is responsible for the information systems and operations management
departments, and one Chief Financial Officer (CFO), responsible for the finance and accounting
departments. The CTO and the CFO will each be paid a $110,000 annual salary, along with a 3%
increase each year.
The three assembly line workers we have for Year 1 each will receive $10 per hour and
will work 40 hours per week and 45 weeks per year. This is above the $8 minimum wage in
Denver, since our aim is to have a low turnover rate. We will have a total of four assembly line
workers in Year 2, five in Year 3, eight in Year 4, and eleven in Year 5 to account for our
increases production. We will also have a warehouse freight manager in Years 1-5, who will
manage the inflow of raw materials and outflow of finished goods, including loading and
unloading trucks. We will also hire two customer service representatives in Years 1 and 2 who
will be paid $15 per hour. Beginning in Year 3, we will add one more customer service
representative, and all three representatives salaries will be $17 per hour.
In Year 3, we will have separate operations and information systems departments, each
with its own chief officer who has a salary of $116,700. We will also have a chief marketing

43
D. Johnson "ERP Software Cost Comparison: On-Premise, SaaS, and Hosted." ERP Cloud News RSS. N.p., n.d.
<http://erpcloudnews.com/2011/03/erp-software-cost-comparison-on-premise-saas-and-hosted/>.Web. 21 Nov.
2014.
34

officer in Year 3 that will be paid $116,700 as well. Year 3 also marks the first time we will hire
our own internal salesperson, accounting for the fact that we enter chain stores at this time. The
salesperson will earn a $75,000 salary, plus a 3% commission rate based on his/her sales. As the
number of employees in our company increases, we are going to have a Human Resources
Manager beginning in Year 3 that will be paid $85,000 per year with the 3% salary increase each
year as well. Apart from the addition of more assembly line workers in Years 4 and 5 and the
inclusion of cost of living expenses factored into the salary increases, there are no other changes
after Year 3.
OM Exhibit 9: Year 3 Employee Layout

Matching Monthly Production with Demand


In order to forecast production, we chose to base our demand on Shimano USAs bikes
sales for the most recent fiscal year 2013.44 We broke the percentages of sales into four quarters:
Q1 accounted for 23% of sales, Q2 accounted for 26% of sales, Q3 accounted for 25% of sales,
and Q4 accounted for 26% of sales. Using Shimano USA as a comparable company for demand,
we used its percentage of sales to determine our monthly forecasted demand (See OM Appendix
12).


44
Summary of Financial Results. Summary of Financial Results. N.p., n.d.
<http://www.shimanousa.com/content/Corporate/english/index/financial-infomation/summary-of-financial-
results.html>.Web. 21 Nov. 2014.
35

OM Exhibit 10: Percentage of Shimano Sales

We are implementing a chase strategy for the first five years. Our goal is to hold a certain
amount of safety stock in order to handle fluctuations in demand. Although this will increase
total costs due to holding costs, it will offset potential losses should we run out of product. In the
last month, we will produce the difference of units between the safety stock and the amount of
ending inventory calculated so that our projected safety stock for the next period can be
accounted for.
Inventory
Inventory is necessary throughout all stages of production in order to meet anticipated
customer demand via anticipation stocks, smooth production requirements caused by seasonal
changes in demand, reduce risks of stock outs, and take advantage of order quantity discounts.
Quantities of inventory held include raw material goods, work in process goods, and finished
goods inventories. The goal is to minimize total ordering and holding costs. We generated
demand for our product using the Marketing Bases Model, with best and worst case numbers
calculated by ACV and Awareness (See OM Appendix 13). Using the Financial Impact of Supply
Chain Decisions45 document as a guide, we calculated the standard deviations of lead time and
demand, assuming a PERT distribution (See OM Appendix 14). With the formulas, (See OM
Appendix 15), we calculated total investment and quantities of raw material, work in process, and
finished goods. Since the helmets are sold in 4 different colors, safety stock increases to
accommodate for this variation. For raw materials, total investment increased for the components
with higher lead times and a need for greater safety stock. In subsequent years, as demand
increases for the SmartHelmet, inventory levels will increase at all stages to accommodate
increases in demand.


45
John Neale. Financial Impact of Supply Chain Decisions, 2009, All of Financial Impact of Supply Decision
document, 2009 <https://smgtools.bu.edu/access/content/group/9c496855-23ac-43c8-b7a9-
65ed8290a5be/OM/Class%20Materials/OM14/The%20Financial%20Impact%20of%20Supply%20Chain%20Decisi
ons.pdf> Web. 21 Nov. 2014
36

OM Exhibit 11: Inventory Levels

Financial Impact of Supply Chain Decisions


There are a few operations decisions that significantly affect our financial statements.
The decisions that are especially important include choices on facility and equipment purchases.
Not only do these decisions create large upfront costs, but they also require continuous costs
throughout production process, since each machine requires a certain number of workers in order
to operate efficiently.
Our manufacturing facility is a 10,950 square foot unit located in Denver, Colorado, and
cost per square foot is $5.95 per month. Appropriated annually, this equals $65,153. Rent
expense is a significant part of our fixed costs, but it is obviously essential to our business. We
believe that the difference in this cost compared to cheaper alternatives in the Midwest are offset
by the advantages that a location in Denver would provide for us. In terms of financial
statements, 80% of the costs are allocated to direct materials, direct labor and manufacturing
overhead, while the other 20% are administrative costs. This results in a total manufacturing
overhead cost of $52,123 and a total office rent cost of $13,031.
We will need to purchase a casting machine in order to facilitate the creation of a
customized metal piece in order make the brake attachment piece of our product. The initial cost
of the casting machine is $37,500. This represents a large fixed cost that will be depreciated
using the straight-line method over the first five years of production, resulting in a depreciation
expense of $7,500 per year. Using a corporate tax rate assumption of 40%, this results in a
depreciation tax shield and increase of free cash flow of $4,500 per year.
In terms of manufacturing workers, we need three workers in our first year, and each will
earn $10 per hour. By paying our employees higher than minimum wage ($8 in Colorado), our
turnover will be low and we will be able to attract more workers to our company. A decrease in
employee turnover will decrease costs of training new employees. All of our manufacturing
37

workers will be full time workers and we expect them to work 40 hours per week. In the case of
a $10 hourly wage, each worker would represent an individual yearly cost of $18,000, assuming
45 workweeks per year, full time. By Year 5, we will employ 11 manufacturing workers. At that
time, all 11 workers will represent an annual cost of $198,000 per year. The annual cost of 11
workers at minimum wage is $158,400. Since the collective costs of employee turnover and
decreases in quality are greater than the difference between the annual cost of compensating our
employees $10/hour, it is the cost-effective, and therefore best, option.
Impact of Optimistic & Pessimistic Decisions
For both the optimistic and pessimistic cases in Operations, we manually changed direct
materials costs. In the optimistic case, we assume the cost decreases by 5%, and in the
pessimistic case, we assume the cost increases by 15% (See OM Appendix 16). As a new startup
company, we do not have much bargaining power to determine our prices. Since these prices are
out of our control, we manipulated these costs because these prices are determined by our
suppliers. Variable cost is relatively sensitive compared to fixed production costs, meaning its
variations have a greater impact on NPV.
Environmental Impact of Operations
As our operations develop, we will be able to implement more environmentally friendly
practices and materials. However, one aspect of our operation that can be sustainable from the
onset involves utilizing cardboard (which has a 91% recycle rate) as our packaging.46 By
recycling one ton of cardboard, we can save 46 gallons of oil, or 390 kWh of energy.47
Analyzing our cardboard and energy usage throughout the year will allow us to present figures in
our annual reports of our increasing contributions to the environment. The more successful we
become as a company, the greener we can become operationally, as we will have more capital to
allocate to environmentally friendly projects.


46
Brent Nau. "Environmental Impact on Recycling Cardboard Boxes."Business 2 Community.
<http://www.business2community.com/infographics/environmental-impact-recycling-cardboard-boxes-
0774979>.Web. 20 Nov. 2014.
47
Select an Area, Recycling Facts & Tips, <http://www.wm.com/location/california/ventura-county/thousand-
oaks/recycle/facts.jsp>.Web. 20 Nov. 2014.
38

Critical Success Factors & Value Chain


Critical Success Factors (See IS Appendix 1)
Defining KinderHelm Inc.s critical success factors (CSFs) is crucial to understanding
what business processes we will implement in order to achieve our organizational goal of
promoting both the bike safety of children and the peace of mind of parents and grandparents.
Our first CSF is to achieve an internal defect rate for finished goods of 2% or less for all five
years, and a defect rate of 5% or less for raw materials for Years 1-5. The most important
business processes related to this CSF involve quality testing and supplier relationship
management. For both finished goods batches and raw material shipments, we plan on
conducting acceptance-sampling tests on 20% of each batch/shipment in Years 1 and 2, and 15%
in Years 3 through 5.
Equally important for this first CSF to be successful is ensuring a low employee turnover
rate so we do not have to waste money re-hiring and re-training assembly line workers. We want
our workers to feel valued, and therefore we plan on paying them $10 per hour, $2 above
Colorados minimum wage. We will also conduct training every six months and formal feedback
sessions twice a quarter to ensure our workers are performing at the highest level possible.
Our second CSF involves increasing sales by 30% each year for the first three years and
15% each year for Years 4 and 5. Increasing sales is directly related to our ACV plan, since ACV
measures distribution of our product. We will sell SmartHelmet in independent stores from Years
1-5. We will enter chain stores in Year 3 and mass merchandisers in Year 4. In Year 2, we plan
to stay in all independent retailers we enter in Year 1, in addition to gaining 15% more
independent retailers. When we enter chain stores in Year 3, our goal is to stay in 95% of the
independent retailers we entered in Years 1 and 2. In Years 4 and 5, we aim to stay in 85% of
Year 3 independent retailers. Maximizing sales from our independent retailers will be crucial,
since they constitute 23% of all sales in the sports equipment industry (See MK Appendix 17),
and we will receive the largest contribution margin from these retailers.48


48
National Sporting Goods Association. Sporting goods equipment sales by channel of distribution in the U.S.
from 2008 to 2013, Statista - The Statistics Portal, 2014. <http://www.statista.com/statistics/201225/sport-
equipmentsales-by-channel-of-
distribution-in-the-us-since-2006/>
39

Secondly, we aim to increase sales by taking part in National Bike Month in May in
Denver, where our manufacturing facility is located.49 We plan to be a part of at least one bike
event during May for Years 1-5. Lastly, we aim to use our $20,000 annual POP budget for Years
1-5 to attract potential customers while they are in retail stores.
Increasing sales also involves financial efficiency because, if our company accurately
forecasts future sales and projected demand, we can decrease the presence of back-orders,
shortages, and unhappy customers. We aim to increase sales in this area by conducting sales
forecasts each month for Years 1-5 to have a better idea of how many finished goods we need to
have on-hand and how many we need to ship to our retailers. Likewise, we will update cash flow
statements every month to ensure we have enough cash to fulfill payments and reinvest money
into marketing campaigns that will raise awareness. Lastly, our goal is to increase Accounts
Payable days by three days each year, on average, in order to have more cash on hand to devote
toward marketing expenses.
Our third CSF is to achieve total awareness (for both target markets) of 20% in Year 1,
25% in Year 2, 45% in Year 3, 55% in Year 4, and 60% in Year 5. This is closely linked to
increasing sales. Increasing awareness can only be achieved if we stick to the agenda provided
by our IMC schedule (See MK Appendices 4-9). Magazine advertisements will be key
investments toward promoting our product idea. Other outlets that will allow us to increase
awareness include transit ads, fairs and expos, and online marketing.
However, increasing awareness is not solely a marketing aspect. By establishing honest
relationships with our suppliers and meeting with them every six months, we can discuss our
common goals and strive for the production of high-quality goods. In addition, our aim is to
maintain at least a 99% service level for Years 1-5 to make sure stockouts are minimized; thus,
SmartHelmets will almost always be in stock at retail stores. By creating a relationship with
Fulfillment by Amazon (FBA), our third-party logistics distributor, we aim to take advantage of
their facilities and established infrastructure so our product is always on shelves at retailers and
there are no backorders or shortages throughout Years 1-5.
Our last CSF involves developing lasting relationships with our customers, which we will
measure via repeat purchase rate, as calculated through our customer relationship management
(CRM) software. Our goal is to obtain a repeat rate for parents of 15% in Years 1-3 and 30% in

49
League of American Bicyclists, National Bike Month.< http://bikeleague.org/bikemonth>
40

Years 4 and 5, and a repeat rate for grandparents of 18% in Years 1-3 and 35% in Years 4 and 5.
We strive to provide high-quality customer service, so we will answer all customer complaints
and questions within one business day. In addition, customer service representatives will undergo
training and quarterly service tests. Our goal is to minimize post-purchase dissonance and
encourage customers to buy the SmartHelmet again. We will send follow-up emails to everyone
who purchases a SmartHelmet two weeks after their purchase to gauge satisfaction and address
any concerns.
Value Chain (See IS Appendix 2)
In order to develop our value chain, we first examined our CSFs to determine the
weighting each area should receive. Because our most crucial CSF focuses on defect rate, which
is solely influenced by operations, we gave operations the highest weight with 33%. Marketing
and sales received the second highest weighting with 20% because they are involved in every
CSF except the one that focuses on defect rate. As these CSFs state, we must utilize a strong
marketing strategy in order to increase awareness, sales, and repeat rate every year. We assigned
service a weighting of 17% because we are expecting a high demand for customer service and
we are relying on this to increase repeat rate. Lastly, we assigned both inbound logistics and
outbound logistics weightings of 15% because, while we are aiming to achieve a service level of
no less than 99% for all five years, these two areas will not impact how successful our business
is to the degree that the other three areas will.
After assigning weightings to the five areas, we determined three business processes
associated with each area that will add value to our product and company. The most important of
these business processes is under the operations area and focuses on using robust design to meet
our target finished goods defect rate of less than 2%. In using robust design, we attempt to ensure
a lower defect rate because our product will be made to be more durable and last longer. In
addition to this business process, the process under marketing and sales that discusses providing
independent retailers with incentives is vitally important to the success of our business. This
process is important specifically because of the landscape of the sports equipment industry:
approximately 23% of sales in this industry come from independent retailers, a percentage that is
41

much higher than most other industries.50 This fact provides us with great motivation to keep our
product in as many independent retailers as possible in order to increase sales and the success of
our business. Lastly, two of our business processes, under inbound and outbound logistics, focus
on using Oracles Agreement Management Module to manage relationships with suppliers, not
only to make our supply chain flow smoother, but also to ensure we are receiving quality raw
materials, which in turn will lower our defect rate.
Software Comparisons
As a small startup company considering many software options, we first examined
whether we would operate on a server or via the cloud. Even though cloud-based operating
systems are still new, Nearly 80 percent of U.S. small businesses intend to be fully adapted to
cloud computing by 2020. KinderHelm Inc. wants to be a part of this revolution because its
benefits, namely economies of scale, and flexibility, are perfect for a startup like us.51
Marketing Best of Breed Comparisons
We focused on finding marketing software that fit our CSFs, specifically the focus on
increasing awareness over five years, which requires strong customer relationship management
(CRM) software. Based on this requirement, we found two marketing best of breed (BOB)
software packages Salesforce Sales Cloud and Salesformics and compared them using the
following criteria: costs, support and response time, scalability, and three main features we
thought were the most important to achieve our CSFs. We gave each criterion a weight out of 1
and ranked the two BOBs attributes on a scale of 1 to 10, 1 being extremely poor and 10 being
extremely good. (This system was used throughout the entire software comparison process). We
then determined a total weighted average for each BOB software and used this in conjunction
with other attributes to assess overall BOB performance.
Starting with costs, Salesforce charges a $250 per user per month subscription fee for the
unlimited plan, which includes upgrade and maintenance costs in addition to unlimited online
training and 24/7 support. Salesformics charges $99 per user per month, but does not offer


50
National Sporting Goods Association. Sporting goods equipment sales by channel of distribution in the U.S. from
2008 to 2013, Statista - The Statistics Portal, 2014. <http://www.statista.com/statistics/201225/sport-
equipmentsales-by-channel-of-
distribution-in-the-us-since-2006/>
51
Joe McKendrick. Four Out Of Five Small Businesses Soon Will Be Run On Cloud, For Many Reasons.
<http://www.forbes.com/sites/joemckendrick/2014/08/15/four-out-of-five-small-businesses-soon-will-be-run-on-
cloud/>
42

training courses (See IS Appendix 3). Furthermore, support is rather limited for Salesformics,
since it operates out of the United Kingdom. Therefore, while Salesforce may cost more, it
provides us with more value, and therefore received a higher ranking (See IS Appendix 4).
Salesformics slightly outperforms Salesforce in the area of social media integration,
which received our highest weighting because it is necessary to raising awareness. Salesformics
ability to integrate with LinkedIn, Eventbrite, Twitter, Buffer, and Constant Contact means that it
is constantly connected to social media, whereas Salesforce only integrates with Google Apps.
Lastly, with regard to lead and account management, Salesformics is strong, as
employees can view detailed information about leads, including activities, campaigns, and
appointments, all in one place.52 Salesforce, however, provides territory management features,
web-to-lead integration, and sales team functionality. 53 Overall, our research revealed that
Salesforce is better suited to our needs as a manufacturing company because it offers more
product-centered features.
Operations Management Best of Breed Comparisons
The two supply chain management BOB software packages we compared were
TradeGecko and Unleashed. If we used TradeGecko, we would purchase the Small Business
Plan in Years 1 and 2, which is $79 per month billed annually. In Year 3 we would transition to
the Business Plan because it allows for ten users, but costs $169 per month billed annually. On
the other hand, Unleashed offers its Business Model, which allows for five users and charges
$159 per month billed annually. In Year 3 we would upgrade to the Enterprise Model, which
allows for unlimited users of the system but costs $9,500 annually for eight users (See IS
Appendix 5).54
With regard to service, TradeGecko offers 24/7 online support along with help blogs,
access to TradeGecko consultant information, and more. Unleashed offers online support via
help blogs, videos, and getting started demos, but additional support comes at a cost of $250 per
hour.55 Unfortunately, if we chose Unleashed, we could only use the online resources because
the others are out of our budget, and this would not provide us with sufficient support.


52
Salesformics. CRM and Marketing Automation Pricing from Salesformics. <http://salesformics.com/pricing/>
53
Salesforce, How to Select the Right Sales Cloud Edition,
<http://www.sfdcstatic.com/assets/pdf/datasheets/DS_SalesCloud_EdCompare.pdf>.
54
TradeGecko, Pricing. <http://tradegecko.com/pricing/?_ga=1.172245547.926555748.1415746473>.
55
Unleashed Software, Pricing Solutions to Suit Your Business, <http://www.unleashedsoftware.com/pricing>.
43

In addition to the above attributes, we compared Unleashed and TradeGecko on three


feature-related attributes: quality control, strong reporting features, and warehouse and inventory
management. As depicted in IS Appendix 6, the most important of these features are quality
control and warehouse and inventory management. We focused on these two features because
they relate most to our defect rate CSF. Beginning with quality control, Unleashed offers real-
time tracking and emphasizes its tracking from pick to pack, meaning all units are accounted
for from the moment they enter the facility to the moment they leave.56 Likewise, TradeGecko
allows for multi-stock adjustments to account for defective goods, and it provides detailed
inventory and stock-on-hand analysis.
With regard to warehouse and inventory management, TradeGecko creates detailed
inventory lists, product statuses, product histories, variants, shipping documentation reports, and
allows for sales order fulfillment information.57 It also syncs stock-on-hand with sales orders and
purchase orders. Conversely, Unleashed has a narrower, simpler focus, specializing in bill of
materials logs. However, the intricacies of our manufacturing process require that we use a more
sophisticated system. Therefore, we choose TradeGecko over Unleashed in the warehouse and
inventory management area, making TradeGecko our overall choice for operations software.
Finance & Accounting Best of Breed Comparisons
Our last BOB comparison involves two accounting software packages: Xero and Zoho
Books (See IS Appendix 7). Xeros Premium Plan is priced at $70 per month for unlimited users,
while Zoho Books is priced at $24 a month with no limit on users (See IS Appendix 8). Both
software packages include minimal implementation costs and are relatively easy to implement,
but Zoho Books charges upgrade costs for add-ons, while Xero provides free upgrades via the
cloud.58 Xero outperforms Zoho Books in scalability, since it offers over 200 add-ons, while
Zoho Books offers only limited add-ons involving PayPal, CRM, Google Apps, and mobile
apps.59

56
Unleashed Software, Features | Inventory Management Software | Unleashed,
<http://www.unleashedsoftware.com/our-product/product-overview>.
57
TradeGecko, TradeGecko Features List. <http://tradegecko.com/wp-
content/uploads/2014/06/tradegecko_featurelist_june14.pdf?submissionGuid=46a1e59a-2c2d-4a48-8525-
fce725487ce1>.
58
Zoho Books, Project Management Tools | Features : Zoho Projects
<https://www.zoho.com/projects/zohoprojects-pricing.html>.
59
Xero, Xero Demonstrates Value of Cloud Ecosystem with Seven Add-on Partners Exhibiting at CeBIT,
<http://prwire.com.au/print/xero-demonstrates-value-of-cloud-ecosystem-with-seven-add-on-partners-exhibiting-at-
cebit-1>
44

The two main features we compared these BOBs on were cash flow management and
integration with warehouse and supply chain management. Xero and Zoho Books are equally
strong with regard to cash flow management, with Xero offering bank feeds, bill tracking,
invoicing, expense claims, and reporting, and Zoho Books also offering invoicing and reporting,
in addition to a client portal. However, Xero outperforms Zoho Books with regard to integration
because Zoho Books does not integrate well with non-Zoho products.60 Xero, on the other hand,
is capable of integrating with over 350 apps and other inventory software packages, such as
Unleashed, making it the best accounting software option.61
Final Best of Breed Selection & Middleware
Our BOB picks are as follows: Salesforce, TradeGecko, and Xero. We will use OneSaas
as our middleware because it integrates Salesforce and Xero. Since Xero integrates with
TradeGecko, our BOBs will be seamlessly connected. We will use OneSaas Unlimited Plan,
priced at $99 per month, because it offers unlimited transactions per month, up to 12 months of
historical data, free setup assistance phone call, and email [response within 2 hours].62
Enterprise Resource Planning (ERP) Software Comparisons
After determining what BOB software we could use, we investigated possible ERP
software packages that would fit our companys needs, settling on two industry-leaders ERPs:
Oracles JD Edwards EnterpriseOne and Microsoft Dynamics GP. The basis for this decision
stemmed from the fact that both ERPs offer substantial customization and scalability.
The first comparison we used to analyze these ERPs was price, starting with Microsoft
Dynamics GP. We discovered that there is a $5,000 license fee (one time cost) for three users
and a recurring cost of $200 per month per user. External research revealed an additional
licensing fee of $3,000 per user and a total cost of $16,000 for customization.63 The overall cost
to implement Microsoft Dynamics GP is $150,568 (See IS Appendix 9), but there are some
important assumptions that must be accounted for, such as an assumed 3% increase per year in
annual purchase price to account for the cost of living and a one-time implementation cost of 25%
of the initial purchase price (See IS Appendix 10).


60
Katherine Miller, Zoho Books Review 2014 | Reviews, Ratings, Complaints, Comparisons,
<http://www.merchantmaverick.com/reviews/zoho-books-review/>.
61
Xero, Pricing Plans. <https://www.xero.com/us/pricing/>.
62
OneSaas, Pricing, <http://www.onesaas.com/pricing/>.
63
CAL Business Solutions RSS, Software List Price, <http://www.calszone.com/pricing-microsoft-dynamics-
gp/software-list-price/>
45

With regard to Oracle, their EnterpriseOne costs, including one-time license costs and
annual service/upgrade costs, are listed online. 64 From this data, we chose the appropriate
modules to fit our companys needs and based our pricing on that (See IS Appendix 11).
Therefore, the total cost for using Oracles EnterpriseOne is $118,653, as is show in IS Exhibit 1.
This number contains various built-in assumptions including a one-time implementation cost of
$11,678, a training cost of $4,671 and $139 in Years 1 and 3 respectively, and a Year 3 upgrade
cost of $1,385 caused by the addition of more modules (See IS Appendix 12).
IS Exhibit 1: Oracle JD Edwards EnterpriseOne Total Costing

Oracles total cost is significantly lower than Microsofts total cost due to the fact that
Oracle permits us to choose the modules we want in our ERP, whereas Microsoft requires us to
buy base modules that we cannot alter and only allows for the addition of extra modules in mass.
The lack of individual customization allowed by Microsoft is a huge drawback.
Not only did Microsoft rank lower than Oracle in terms of costs and customization, it also
ranked lower in two of the three areas that are most important to our CSFs: CRM and supplier
relationship management (SRM). Oracle offers a module, called agreement management, that
is specifically designed to provide companies with enterprise capabilities to manage partner
relationships for your entire supply chain, regardless of partner size.65 This SRM module is key
to our companys success because we will be working with overseas suppliers, which increases
the likelihood of miscommunication and disagreement. If this does occur, having a module that
allows us to easily communicate with our suppliers will be invaluable.
With regard to CRM, Microsoft provides very limited CRM features, including only
orders and returns, help desk, sales force automation, and pricing and discounting. Oracle offers
all of these very basic CRM features and much more, so that we have the option to become very

64
Oracle Corporation, JD Edwards Component Global Price List.
<http://www.oracle.com/us/corporate/pricing/jd-edwards-price-list-070607.pdf>
65
Oracle Corporation, JD Edwards EnterpriseOne Agreement Management - Data Sheet (2012), 2012,
<http://www.oracle.com/us/media/057427.pdf>
46

CRM focused as our company grows.66 This ensures we can understand the needs of our
customers and build long-term relationships with them.
The projected growth of our company is another reason we are choosing Oracles
EnterpriseOne over Microsoft Dynamics GP: scalability. Oracle offers a wider range of modules,
ensuring that, as our company grows, our ERP can grow with us. On the other hand, Microsoft
provides a much simpler ERP, one that our company will grow out of quickly.67
While it may seem like Oracles EnterpriseOne is far superior to Microsoft Dyamics GP,
Microsoft does offer a couple traits that are very attractive to us. First, Microsoft Dynamics
systems are considered easier to integrate, specifically because they offer a user interface that is
simple and familiar. Second, the system provides a strong material requirements planning
module that would be highly beneficial when it comes to scheduling the purchase of supplies and
planning inventory levels.68 However, neither of these traits is strong enough to overshadow the
two overwhelming defects that Microsoft Dynamics GP possesses: 24/7 customer service is not
included,69 and it does not host the ERP at its own facilities, which would force us to buy host
space from a third party. Therefore, we arrived at the conclusion that Oracles EnterpriseOne is
by far the best choice for our ERP software (See IS Appendix 13).
Best of Breed vs. Enterprise Resource Planning Comparison
The final comparison we must perform is between our BOB choices of Salesforce,
TradeGecko and Xero, and our ERP system of Oracles JD Edwards EnterpriseOne.
First, we chose to compare the price of each software, starting with the total cost of the
BOBs and middleware, which came out to $172,140. This far outweighed the price of Oracles
EnterpriseOne, which came to a total of $118,653. While price is not a huge factor in
determining our software because we want to focus primarily on functionality, it was still
beneficial to acquire this information (See IS Appendix 14).


66
Oracle Corporation, JD Edwards Component Global Price List.
<http://www.oracle.com/us/corporate/pricing/jd-edwards-price-list-070607.pdf>
67
Panorama Consulting Solutions, Clash of the Titans 2014: An Independent Comparison of SAP, Oracle, and
Microsoft Dynamics, <http://panorama-consulting.com/resource-center/clash-of-the-titans-2014-sap-vs-oracle-vs-
microsoft-dynamics/>
68
Panorama Consulting Solutions, Clash of the Titans 2014: An Independent Comparison of SAP, Oracle, and
Microsoft Dynamics, <http://panorama-consulting.com/resource-center/clash-of-the-titans-2014-sap-vs-oracle-vs-
microsoft-dynamics/>
69
Microsoft, Tiered Support Plans for Microsoft Dynamics CRM Online, <http://www.microsoft.com/en-
us/dynamics/dynamics-online-support.aspx>.
47

After costs, we looked at the functionality and prowess of the software packages in the
three main functional areas: marketing, operations management, and finance/accounting. The
BOBs, because they are functionality-specific, bested the ERP in the marketing and finance areas,
but tied the ERP in the operations area because EnterpriseOne is operations heavy. While this
was expected, and the performance in each functional area is very important to our ratings, the
BOBs only slightly outperformed the ERP since the ERP is highly customizable.70
Oracles ease of customization, along with its scalability, integration/cohesion, and the
fact that Oracle provides host servers are four invaluable benefits. While the BOBs are easier to
implement and provide minimally better response time and service, they are severely lacking in
cohesion and scalability. Additionally, if we used the BOB software, we would be forced to
purchase host server space from a third party, which is a huge disadvantage because it increases
costs and adds another business with which we must communicate.
Based on this analysis, we determined that Oracles JD Edwards EnterpriseOne ERP is
by far the better choice for our company. While the BOBs may offer slightly higher performance
in the specific functional areas, they are underwhelming when it comes to scalability and
integration/cohesion, two key factors that are necessary if we are to grow our business.
Hardware, Telecommunications, & Employees
Hardware & Telecommunications (See IS Appendix 15)
The hardware we need to run our ERP software includes computers, telephones, an
Internet service provider, router and a VPN. We will purchase Dell Inspiron 20 3000 Series
(Intel) Touch desktops, costing $1,115 each. Our laptop models, Inspiron 17 5000 Series, will
cost $906 each. We chose Dell because it maintains a good balance between price and quality,
while also boasting a lower failure rate over three years (18.3%) than the industry average
(31%).71 Additionally, all of Dells computers come with 500GB 5400 rpm hardware that will be
fast enough to handle the daily business of our startup company.
We will have three printers in total, two in our office and one in our warehouse for Years
1-5. We will use HP Officejet pro X576DW MultiFunction printers that cost $800 each. In the


70
Oracle Corporation, JD Edwards Component Global Price List.
<http://www.oracle.com/us/corporate/pricing/jd-edwards-price-list-070607.pdf>
71
Austin Sands and Vincent Tseng, 1 in 3 Laptops Over 3 Years. SquareTrade. 16 Nov. 2009
<http://www.squaretrade.com/htm/pdf/SquareTrade_laptop_reliability_1109.pdf >
48

long run, this printer will save us money because it uses 50% less cartridge and packaging
material by weight compared with color lasers, while printing up to 70 pages per minute.72
We will use Comcast as our telecommunications and Internet services provider. The cost
of the phone service is based on how many lines and phones we have, with per line costs
equaling $34.95 per month, and each line supporting up to five phones. The phone plan is $29.95
per month, which includes unlimited domestic phone calls.73 We will have eight phones in Years
1 and 2 and 13 phones in Years 3-5. The cost per month for the Internet and calling bundle is
$199.95, yielding a total Year 1 cost of $2,399. In order to increase the signal from the cable to
our warehouse, we will purchase a router from Cisco that costs $215, which includes a 3-year
warranty. The router comes with IP security site-to-site VPN as well as a built-in 4-port Gigabit
managed switch that can transfer the data faster for bandwidth-intensive applications. We will be
using a VPN, specifically the CyberGhost Premium Plus, which provides us with safe access to
the Internet in any part of the U.S.74
We are going to replace all the hardware by the end of Year 3 to account for the
expansion of our business. Depending on how well our hardware performs in Years 1-3, we may
shift brands when it comes time to update our hardware.
Employees (See OM Exhibit 9 & OM Appendix 10)
In Years 1 and 2 we will have one chief technology officer (CTO) who is responsible for
both the information systems and operations management departments. This executives starting
salary will be $110,00 and will increase in Year 2 by 3% to account for the cost of living. In
Year 3 we will split the information systems and operations departments into two separate
departments, each with their own chief executive who earns $116,700 in Year 3. This salary will
continue to increase by 3% per year over Years 4 and 5 to account for the cost of living, resulting
in a Year 5 salary of $123,800 for the chief information systems officer.
Entity-Relationship Diagram (See IS Appendix 16)
When creating our entity-relationship diagram (ERD), we chose operations-based entities
because our most important CSF relates to defect rate. The following entities include elements of


72
Hewlett-Packard Development Company, L.P., HP Officeject Pro X576dw Multifunction Printer.
<http://store.hp.com/webapp/wcs/stores/servlet/PDPStdView?urlRequestType=Base&catalogId=10051&categoryId
=&productId=501693&urlLangId=-1&langId=-1&top_category=&parent_category_rn=&storeId=10151>
73
Comcast Corporation, Business VoiceEdge Plans and Prices.
<http://business.comcast.com/phone/voiceedge/plans-pricing>
74
CyberGhost S.R.L., CyberGhost VPN. <http://www.cyberghostvpn.com/en_us>
49

our supply chain: Supplier, Manufacturing Facility, Finished Good, Logistics, and Retailer (See
IS Appendix 17). The attributes we chose for each entity relate to the amount of materials we
have on hand, ship dates and order dates, actual versus expected arrival times, number of
defective raw materials and finished goods, and order and shipment codes, among others. The
key assumptions regarding our diagram are that finished good refers to one finished
SmartHelmet unit and a batch refers to 100 units of the same color of our product.
We will focus on the most important attributes for each entity that correspond to the
business processes for our CSFs. In the Supplier entity table, the most important attributes
include lead times, raw material shipment codes, and quantity. We want to be able to track the
reliability of our suppliers, which is measured by lead time, in addition to tracking each
individual shipment. The raw material shipment code will serve as the primary key when this
data is entered into Microsoft Access (See IS Appendix 18). We will use this attribute (via a one-
to-many relationship) to connect the Supplier entity to the Manufacturing Facility entity.
The Manufacturing Facility entity contains both raw materials and finished goods
attributes, including the quantity of RFIDs, brakes, and helmets on hand, the finished goods
batch code, and the order code. The most important attribute for this entity is finished goods
batch code, as it links the Manufacturing Facility entity to the Finished Good entity in a foreign
key one-to-many relationship. There is only one finished goods batch code for the Manufacturing
Facility, but there are many finished good batch codes in the Finished Good entity because
multiple finished goods come from the same batch.
Moving onto the Finished Good entity, the main attribute and primary key is the finished
good bar code, because it is a unique identifier for each SmartHelmet. We are also going to use
finished good bar code as the primary key in the Logistics entity so that we can track the
progress of each individual SmartHelmet. This will allow us to link the Logistics entity to the
Finished Good entity in a one-to-one relationship using finished good bar code.
The Finished Good entity is also linked to the Retailer entity via the order code attribute.
The order code is the primary key in the Retailer entity, but it is only the foreign key in the
Finished Good entity because every individual finished good has a specific order code, but this
order code will repeat over many finished goods.
The order code will also link the Retailer entity to the Logistics entity in a foreign key
one-to-many relationship. Since we are using Amazon as our third-party logistics provider, we
50

have access warehouses throughout the country. However, this leads to the possibility that our
product will be shipped from different warehouses to the same retailer because Amazon offers
the option of shipping items of an order individually to speed up delivery, or shipping the entire
order at one time. Since the retailer decides which option to go with, we can assume some
retailers will choose the former, which will lead to multiple shipments of the same order code,
and therefore many of the same order codes within the Logistics entity.
Reports
Raw Materials Defect Rate Report
We used the entities and attributes from the ERD to create a report measuring the defect
rate of raw materials. We will be conducting quality checks for our raw materials when each
shipment arrives at our warehouse.
The below reports for the RFID and helmet raw materials illustrate how we would input
data from a quality check. The quality check examines the helmets and RFID units to ensure they
do not have any broken, missing, or dysfunctional pieces. We will check 20% of raw materials
per shipment in Years 1 and 2, and 15% per shipment in Years 3-5. Updating these spreadsheets
on a monthly basis allows us to continually evaluate the quality of our raw materials shipments.
IS Exhibit 2: Raw Materials Defect Reports

Finished Goods Defect Rate Report


Before we ship our finished goods, we will run acceptance-sampling tests on 20% of the
finished goods in each batch in Years 1 and 2, and 15% in Years 3-5. This test involves
observing whether the brake feature locks or unlocks when the helmet is less than or more than
two meters away from the bike, respectively. If the brake fails either part of this test, then the
finished good is considered defective.
51

The defect rate for each batch will be recorded and monitored. If we find a batch has a
defect rate higher than 2%, we will then test every product in that batch to ensure we only ship
the finished goods that are not defective. We will sum up all of the defective finished goods in
that batch and record it in our database so that we can perform an analysis and improve our
working process to lower the defect rate.
IS Exhibit 3: Finished Goods Defect Report

Process Model (See IS Appendix 19)


The process model we created depicts how the RFID would be checked for quality and
tested to ensure the tag and reader communicate with each other. We created this process model
because it gives a detailed view of the quality check that directly relates to our defect rate CSF.
The data inputted from this process model is used to create the report in IS Exhibit 2.
Upon receipt of the shipment, a stock worker will input this information into our raw
materials database and alert his manager of the shipments arrival. The database will alert a
worker trained in handling RFID technology so that he/she can perform the quality check. This
check consists of making sure there is a connection between the RFID reader and tag. If there is
a connection, the worker will allow the RFID to go into production; if there is no connection, the
worker will immediately alert the warehouse freight manager.
The warehouse freight managers job is to double check the raw materials sent to him/her
to see if there really is a defect present in the raw material. If the manager finds there is no defect
present, he/she will simply send the material back to the worker for a retest. If a defect happens
to be present, the handler will discard the raw material and record this event in the daily report.
Website Design (See IS Appendix 20)
We created the SmartHelmet website (kinderhelm.wix.com/smarthelmet) using wix.com
and incorporated graphically designed models that show customers exactly how our product
52

looks and functions. We designed our website to be kid-friendly, while also ensuring it is
professional enough to attract parents and grandparents. Potential customers may visit our
website to gather information about how our product works, and discover what features
SmartHelmet offers that other bike helmets do not. For current SmartHelmet customers, the
purpose of the website is primarily for replacement and service needs.
Search Engine Optimization (SEO)
One way we are going to increase the flow of visitors to SmartHelmets site is through
the use of free meta descriptions (See IS Appendix 21), that include popular keyword phrases,
such as bike helmets and kids bikes (See IS Appendix 22). The meta description is an
important SEO technique that acts as the hook that initially attracts visitors to our page.
Facebook, Twitter, and Instagram will allow us to spread the word about SmartHelmet
globally. Utilizing social media has two main advantagesGoogles crawlers like pages with
inbound links that attract users to our site, and our company will be able to build strong, ongoing
relationships with customers.75
Search Engine Marketing (SEM)
Two specific investments that we will make to increase traffic to our website include
banner ads and Google AdWords. We plan on using banner ads on the following blogs for Years
1-5: Family Education, Cool Mom Picks, and SNEWSnet.com, a trade blog (See IS Appendix 23).
Banner ads are effective because they are solid introducers to brand messages76 and are often
the first objects that the user sees when he/she opens a webpage. Google AdWords will allow us
to set a budget for displaying ads on Google searches based on our keyword index, as discussed
above. The benefits of using Google AdWords include the ability to advertise globally, measure
how many people click on our website link, and tailor our ads to our target markets.
Web Analytics
We will use Google Analytics to help us determine the number of visitors to our site and
where these visitors are coming from. We can also create customizable dashboards containing


75
Aziz Kharram, Increase Search Engine Traffic by Getting Google to Recrawl Your Site. Sitepoint PTY LTD. 10
Sep. 2014. < http://www.sitepoint.com/increase-search-traffic-getting-site-recrawled-often/>.
76
Tom Gooseman, In Defense of Banner Ads: Everybody Hates Them, but They Work. N.p., 10 Nov. 2014.
<http://adage.com/article/digitalnext/defense-banner-ads-hates-work/295782/>.
53

widgets, where we will analyze metrics related to impressions, bounce rate, and click-through
rate (CTR), which measures clicks as a percentage of impressions.77
We have three website goals we hope to achieve, all of which relate to our CSF of
increasing awareness. Our first goal is to achieve a high rate of customer service through our
website. We will track this by examining the average response time for each customer inquiry.
Our goal is to have every customer receive a response within one business day of making a
request. Third, we aim to achieve a 2% CTR in Years 1 and 2 and 3.5% CTR in Years 3-5. This
is a necessity because CTRs affect our advertisements quality scores, which in turn affect the
positions of our banner ads and keywords on landing pages.78
Contingency Plan
Our contingency plan consists of two items: Oracle Cloud backup and myPCBackup.com.
All data that is stored on Oracles Cloud is backed up by Oracle Cloud Services via replicating
all customer data in physically separate facilities in order to restore full services in the event of
a disaster at a primary site.79 Therefore, we are assuming that all of the data we create while
using our ERP will be backed up by Oracle and will be fully retrievable in the event of a disaster.
However, we are also accounting for the fact that Oracles backup may fail by enlisting
the services of myPCBackup.com, which we will use to backup any critical data created in our
ERP, along with any data not created in our ERP. The cost of myPCBackup.com averages
$1,000 annually, costs we are more than willing to incur for the protection they provide.
Corporate Social Responsibility
Our companys two CSR initiatives are as follows: use 90% recyclable packaging and
form partnerships with biking advocacy groups in order to raise awareness about the dangers of
not wearing a helmet. These two initiatives relate directly to our CSF regarding increasing sales
over the five years because they both lead to an increase in purchase intent amongst our potential
customers. The recyclable packaging initiative raises intent to purchase by 1.9% for both
segments, while the partnership with advocacy groups initiative raises intent to purchase by 3%
for both segments. While neither of these increases are huge, they prove that consumers are more
willing to buy a companys products if they are socially responsible.

77
Google, Inc., Create and Customize Dashboards.
<https://support.google.com/analytics/answer/1068218?hl=en#add_widgets_to_your_dashboard>.
78
Google, Inc., Clickthrough Rate (CTR). <https://support.google.com/adwords/answer/2615875?hl=en>
79
Oracle Corporation. FAQ. Resources. General. Oracle Cloud. N.d. Web. 21 Nov. 2014.
<https://cloud.oracle.com/faq#goto_2>.
54

Funding Request
At the onset of our business, we will need initial investments in fixed assets, working
capital, and operating expenses, totaling $328,929. Furthermore, in order to cover our losses for
the first year, we will need additional investments of $243,381 throughout the first year. This
adds up to a total funding of $572,310, which represents the peak paid-in-capital and total
funding necessary.
Ownership Positions
In order to cover our initial capital requirements, we will rely on investors to provide 75%
of our total funding. We will get the remaining 25% from friends, family, and management. We
believe it makes most the sense to distribute ownership based on capital contribution, so we will
grant 75% control to investors and the remaining to friends, family, and management. This will
also allow us to maintain an equal IRR for each party, which we believe is reasonable due to the
large potential returns for both parties.
Projected NPV & IRR
We use a reasonable discount rate of 25% in our base, optimistic and pessimistic cases. In
our base case, we project our NPV to be $506,657 with an IRR of 48.3%, which is assigned a 50%
probability of occurring. In the optimistic case, the NPV of our project could increase up to
$892,977 with a corresponding IRR of 65.4%. Finally, in the pessimistic case, we calculated the
NPV to be negative $51,495, with an IRR of 22.6%. We assigned both the optimistic and
pessimistic cases a 25% probability of occurring. We will discuss the specific assumptions in the
optimistic and pessimistic cases in a later section, but taking all the cases into consideration, we
arrived at a weighted average NPV of $463,699 and an IRR of 46.4%.
55

NPV Profile & Minimum Required Rate of Return

As we can see from the graph in FE Exhibit 2, FE Exhibit 1: Minimum Rate of Return

NPV will only become negative with a discount rate of Dorel Beta (Google Fin.)80 0.82
49% or higher. Based on our comparable companies Jarden (Google Fin.)81 1.23
betas and current market rates, we found the minimum Average 1.025
rate of return to be 9%, which is much lower than the Risk Free Rate 2.33%
25% assumed. As a disclosure, our company entails Market Risk Premium 6.50%
more risk and volatility than the comparable companies, Minimum Rate of Return 8.99%
making the minimum rate of return an underestimation.
However, at this rate of 9%, we would face an NPV of $1,341,690. In conclusion, we can say
that discount rate does not represent a tangible risk for our company based on the NPV profile.
FE Exhibit 2: NPV Profile

NPV Profile
$3,000,000

$2,000,000
NPV

$1,000,000

$-
0% 10% 20% 30% 40% 50% 60% 70%
$(1,000,000)
Discount Rate

Base Case Financials & Comparable Companies Analysis


Comparable Companies
For comparative purposes, we chose Dorel Industries as our COGS comparable and
Jarden Corporation as our Distribution Channel comparable. Dorel Industries is a large
recreational product manufacturer with a large presence in the bike industry, while Jarden
Corporation manufactures a variety of sports equipment sold through many independent and


80
"Dorel Industries Inc: TSE:DII.B Quotes & News - Google Finance."Dorel Industries Inc: TSE:DII.B Quotes &
News - Google Finance. Web. 23 Nov. 2014.
81
"Jarden Corp: NYSE:JAH Quotes & News - Google Finance." Jarden Corp: NYSE:JAH Quotes & News - Google
Finance. Web. 23 Nov. 2014.
56

chain stores. For detailed key comparable ratios, please see FE Appendix 1 Financial Company
Comparable.
Income Statement
We expect to experience losses of $69,827 in the first year; however, in Year 2 we
anticipate positive net income of $288,259, which will grow at a CAGR of 35.1% over the next
four years.
Both comparable companies had COGS between 71% and 78% of sales over the past
three years, while KinderHelm Inc. will maintain COGS between 30% and 34% of sales. This is
because of the premium price we are able to charge due to our innovative product. However,
expenses such as SG&A and Marketing will be comparatively much higher mainly because of
proportionally high salaries and aggressive marketing efforts in order to break into the industry.
While our comparable companies experience SG&A between 14% and 21%, at KinderHelm Inc.
we expect to keep these ratios between 34% and 69%. Our Income Statement shows a healthy
and stable evolvement, which supports solid future performance and reliable returns.
Balance Sheet
In general, our estimates are based on comparable ratios used as long-term goals until we
achieve certain cash flow normalization. In order to maintain a healthy balance sheet, we
estimate to hold cash levels of 7.9% of sales, which is based on our companys comparable cash
levels ranging between 1.3% and 15.4% of sales.
For days receivable and days accounts payable, we assume conservative scenarios given
our weak bargaining power as a small start-up. For days receivable we assume to start with 68
days which is the highest number of days from both of our comparable companies. This is
because as a small company, clients will demand longer payback periods. Similarly, days
account payable will start at 42 days, which is the smallest amount of days payable experienced
by our comparable in the last three years; as a small company, we expect suppliers to demand a
faster payback period. These estimates improve as our company grows, but we can
conservatively expect to achieve no better than comparative averages by the end of Year 5.
Finally, inventory days are expected to be between 37 and 51 for our company compared
to 87 and 108 from our comparable companies. The reason for our lower levels of inventories is
our smaller size, which allows us to better manage resources and customers. Other than accounts
57

payable, no liabilities are assumed. By keeping conservative estimates and healthy levels of cash,
we can assure investors safer returns.
Terminal Value
For a terminal value we chose the liquidation calculation method for all of our cases
because of two reasons: first, we prefer to take on conservative assumptions; second, we prefer
that terminal value represents a lower proportion of our final valuation. We calculated terminal
value using the liquidation method by subtracting Total Liabilities from Total Assets, which
yields a terminal value of $1,181,308 at Year 5 for our base case. For illustrative purposes, the
perpetuity method, the growing perpetuity method, and the declining perpetuity method yield
terminal values of $3,094,955, $3,516,994, and $2,763,353, respectively, for our base case
(assuming 25% discount rate, 3% growth rate, and 3% declining rate).
Breakeven Analysis
We expect to achieve positive Income and Cash Flow in Year 2. As we can see in FE
Exhibit 3, the margin of safety units in Year 2 is 40.2% for accounting breakeven, and this
margin increases dramatically over Years 3 through 5, arriving at a safety margin of 88.2% in
Year 5. Our NPV breakeven units analysis shows that our sales volume needs to be 16.6% lower
in all years in order to achieve an NPV of zero. Finally, similar to our accounting breakeven, our
cash breakeven starting in Year 2 starts with a safety margin of 44.8% and increases to 91.7% in
Year 5. In conclusion, given our large margins of safety, we can further reassure investors of
positive stable returns with reasonable margins of safety. (See FE Appendix 2).
FE Exhibit 3: Accounting Breakeven

Sensitivity Analysis
After a series of sensitivity analyses using our base case data, we found that the most
sensitive variables in our financial model are selling price, awareness, and ACV, all of which
58

have a sensitivity of less than 20%. Next, we will further elaborate on this analysis and show
possible risk mitigating strategies (See FE Appendix 3).
Our manufacturing selling price is determined by both retail selling price and margin
charged by distinct retailers. Meanwhile, we set the retail selling price as the revenue-
maximizing price based on market survey results, as explained in the marketing section (See MK
Exhibit 14). A merely 12% decrease in selling price will result in an NPV of zero, making price
the most sensitive variable in our model. Specific mitigation plans for potential drops in selling
price will be further discussed in the risk analysis section.
Although awareness directly affects our sales volume, we have limited control over the
actual effectiveness of our media campaign. In the financial model, we calculate annual
awareness based on assumptions about various media channels. Awareness turns out to be the
second most sensitive variable in the sensitivity analysis, since a decrease of 17.2% in awareness
can lead to an NPV of zero.
Equivalently, ACV has the exact same sensitivity of 17.2% as awareness. Similar to
awareness, ACV is calculated using both secondary sources and assumptions. We attribute its
sensitivity to the fact that ACV results are reliant on the effort and capability of manufacturing
representatives and our salesperson. If these supply chain members fail to get our products into
target retailers, our sales volume will be adversely affected.
Small changes in the above three variables can have large impacts on our profitability.
While price is a variable we can set and keep, awareness and ACV are determined by market
conditions. For this reason, we have decided to modify these two variables, among others, in our
scenario analysis in the proceeding sections. In the next section, we will highlight strategies we
used to mitigate the effect of these variables while also discussing other relevant risks for the
business.
Risk Mitigation Plan
1. Price (sensitivity of 12.0%)
Risk analysis: Decrease in the manufacturing selling price will cause our contribution
margin to go down and breakeven point to go up, ultimately hurting our profitability. Such
decreases in price can result from both growing competition and stronger customer buying
power. While we ultimately control the price, we have developed defensive strategies
against an involuntary but necessary decrease in price.
59

Mitigation Plan: We will strive to maintain our high standards for quality and functionality
by conveying this message to both consumers and retailers in our marketing campaigns. In
this way, consumers perceived value of our product will increase, thus lessening the
likelihood that our products price will fall.
2. Sales Volume (sensitivity of 17.0% )
Risk analysis: Sales is our sole source of income that will cover our expenses, yet there is
inherent uncertainty associated with it. Such uncertainty derives from the variety in
purchase intent, awareness, ACV, repeat rates, and repeat units, as any unexpected change
in these variables can negatively affect our sales volume.
Mitigation Plan: We will make an effort to stress our unique safety and customization
benefits in our IMC plan and rely on different media channels, such as magazine and banner
ads, to ensure an increase in awareness over the projected five years. We will also work with
manufacturers representatives to enter chain stores, in addition to hiring one salesperson to
target chain stores and mass merchandisers.
3. Awareness & ACV (sensitivity of 17.2%)
Risk analysis: Awareness and ACV are the most sensitive variables in our financial model,
since they are the most crucial determinants of whether or not we are able to reach our target
markets, and they directly affect our sales volume. However, we must work with retailers to
increase ACV, which increases the level of risk in our media and distribution plans.
Mitigation Plan: We will keep track of the progress of our IMC plan, evaluate its
effectiveness on a regular basis, and make changes in a timely fashion. In addition, by
offering both the manufacturers representatives and our salesperson the financial incentives
to over perform, we will increase our products presence in retailers.
4. Variable Cost (sensitivity of 44.4%)
Risk analysis: Assuming the price of our product remains constant, variable costs will
increase as sales increase, since more units are produced. However, if variable costs per unit
are increasing at a faster rate than sales, we will have a smaller contribution margin,
resulting in a need to produce more units to breakeven.
Mitigation plan: As sales increase, our company will be able to take advantage of greater
quantity discounts from our Chinese suppliers, decreasing the direct material cost per unit.
Variability in direct labor costs will be offset by increased productivity.
60

5. Fixed Administrative Cost Increase (sensitivity of 46.6%) & Fixed Production Cost Increase
(sensitivity of 235.3%)
Risk analysis: If volume and sales increase in subsequent years and exceed the relevant
range, fixed production and administrative costs may increase to accommodate the increased
capacity and the next range of demand. These include increased facility costs, the need to
purchase new machinery, and increased salaries.
Mitigation plan: If the facility cannot accommodate increased production, then our company
will need to expand into neighboring units of our current rental facility or move locations to
minimize costs and avoid disruption of production. As for fixed administrative costs, we can
offer top management share of our company to reduce the cash we need to pay.
6. Regulation & Potential Lawsuit
Risk analysis: The Consumer Product Safety Commission developed a U.S. bike helmet
safety standard that has been in use since March 10, 1999.82 The standard requires all bike
helmets to pass certain tests in order to be certified as safe. Helmets must also withstand a
variety of impact tests and temperature tests. The regulation is a risk because if our helmet
does not pass testing standards, it cannot be legally sold in stores. There is the potential for
lawsuits to arise involving product defects and damages. Furthermore, there is also the
potential for other legal issues to arise, including, but not limited to: disputes with suppliers,
issues with the rental of our facility, internal conflict among employees, etc.
Mitigation Plan: Quality checks are implemented throughout the production process in
order to decrease the likelihood of defective finished goods reaching the end consumer (pg.
30). This will allow our helmets to be safe and to conform to the regulations set forth by the
CPSC. In the case of a legal dispute, this service will be outsourced to an external firm.
7. Quality Issue
Risk analysis: Supplier quality is a risk that could ultimately affect our product. Low quality
materials could affect the protection provided by our product and ultimately make the
product less useful. Production risk can also affect the quality of our product.
Mitigation plan: We will implement quality checks and tests, including acceptance sampling
(pg. 30) to test incoming raw materials and finished goods. We will test 20% of each

82
"CPSC Issues New Safety Standard for Bike Helmets," U.S. Consumer Product Safety Commission., 1 Feb. 1999.
Web. 24 Nov. 2014. <http://www.cpsc.gov/en/Newsroom/News-Releases/1998/CPSC-Issues-New-Safety-Standard-
for-Bike-Helmets/>.
61

shipment/batch in Years 1 and 2 and 15% in Years 3 through 5. Quality checks and tests
ensure that our helmets are not only safer than the industry standard, but also that they live
up to their high-tech functionality and features.
8. Competition (sensitivity of 79.8%)
Risk analysis: We are a small start-up company, unlike most of our competitors, who are
well-established corporations. Even though there are no direct competing products to
SmartHelmet, there is the chance that our competitors may develop similar products once
they recognize our products unique benefits.
Mitigation plan: Gaining strong brand loyalty is the key to defending our market share.
Apart from our emphasis on high quality, we will also continuously enhance our customer
service by efficiently handling queries, complaints, and feedback.
9. Liquidity Issue
Risk analysis: As a startup, we will have little buffer in regards to our credit terms to
suppliers. Because of this and the fact that we will have to offer longer credit terms to our
buyers, we can eventually face a situation where, due to liquidity, we may have no cash.
Mitigation plan: In order to prevent bankruptcy, we will keep relatively larger and constant
shares of cash and try to offer incentives for buyers to pay us back earlier.
10. Terminal Value (sensitivity of 130.9% )
Risk analysis: Terminal value has a relatively low impact on the value of this investment,
since a terminal value of zero would still yield a positive NPV. However, there is a great
possibility that the terminal value will change depending on our performance during the
projected five years, thus significantly affecting returns.
Mitigation Plan: We will be discreet and conservative by adopting the liquidation method to
calculate our terminal value in order to reduce its contribution to our NPV and IRR. Thus,
the NPV of our project will be less sensitive to the change in terminal value.
11. Natural Disaster & Unexpected Occurrences
Risk analysis: The threat of natural disaster is present both where our suppliers are located
in China and where our manufacturing facility is located in Denver, Colorado. In China,
there is the risk of earthquakes, flooding, and typhoons.83 In Denver, there are risks of


83
"Foreign Travel Advice China." China Travel Advice. Web. 23 Nov. 2014. < https://www.gov.uk/foreign-travel-
advice/china>.
62

earthquakes, extreme heat, flooding, hail and lightning, hazardous materials, tornadoes, and
winter storms.84 In dealing with goods in transit, there is the potential for damaged goods as
well as delays in transportation.
Mitigation plan: This risk is mitigated through inventory insurance and manufacturer's
insurance. Disruptions to production are diminished through the holding of adequate safety
stock to meet demand.
12. Economic Downtime
Risk analysis: Trends in industries and the economy can shift the demand for a product and
can ultimately crush even a previously successful business.
Mitigation Plan: In order to protect our company from succumbing to possible economic
downturns, we will try to keep as much cash in the company in order to provide a margin of
safety in the case of an economic crash.
Scenario Analysis & Summary Statistics
In the scenario analysis, we vary FE Exhibit 4: Optimistic & Pessimistic Assumptions Analysis
four key variables in the financial
model, which are awareness, ACV,
competition and direct material cost
(see FE Exhibit 2 - Optimistic and
Pessimistic Assumptions). We chose
these variables to generate the
optimistic and pessimistic scenarios
due to their relatively high sensitivity
as well as our limited control over them. Accordingly, we would like to examine how changes in
these variables will impact our business through scenario analysis. For detailed numbers of the
optimistic and pessimistic scenarios refer to FE Appendix 4.
In the optimistic case, we assume that the number of impressions to create awareness
decreases from 4 to 3, thus we will be able to generate more awareness while keeping the
marketing expenses constant. To raise ACV, we expect 10% less loss in independent stores
owing to channel conflict among independent stores, chain stores and mass merchandisers. Also,


84
"Office of Emergency Management." Potential Threats. Web. 23 Nov. 2014.
<http://www.denvergov.org/PotentialThreats/tabid/391429/Default.aspx>.
63

the largest chain sporting goods store, Dicks Sporting Goods, will carry our product in Year 3,
in contrast with the assumption that our product will only be sold in the third largest chain store
in the base case. In addition, competition will increase by 15%, as more competitors will be
attracted to entering this market due to our success. On the supply side, the cost of direct
materials will decrease by 5%, positively contributing to the contribution margin. As you can see,
we have also assumed a conservative better scenario. Accounting for all of the assumptions in
our optimistic model, we arrive at an NPV of $ 896,977 with an IRR of 65.4%.
In the pessimistic case, we vary the same variables as in the optimistic case, but with
more aggressive changes. For awareness, 5 impressions are needed to create one portion of
awareness. In terms of ACV, we assume that we will experience 20% more loss compared to our
base case in independent stores during Years 3 through 5 because of channel conflict. We also
assume own salesperson can only get our product into the fourth largest chain store in Year 3.
Competition decreases by 5% compared to the base case, as our business gets less attractive.
Nevertheless, direct materials cost is projected to increase by 15%, shrinking the contribution
margin and enlarging the break-even point. In spite of all these negative effects, our financial
model indicates that we are still able to offer investors an IRR of 22.6% but NPV of negative
$51,495. Note that we will have positive cash flow in Year 2 in the pessimistic case, so there is
no need to liquidate immediately after two years of operation.
Given the base case probability of 50% and the optimistic and pessimistic cases
probabilities of 25% each, we reach a weighted average NPV of $463,699 and IRR of 46.4%.
Please refer to FE Exhibit 3 for further detail.
FE Exhibit 5: Weighted Average NPV & IRR
64

Product Uniqueness
One of the main problems faced childrens bike helmet category is that children refuse to
wear them. Standard bike helmets protect childrens heads, but only when the helmets are on.
The SmartHelmet differentiates itself by requiring children to have the helmet with them when
they bike. Parents and grandparents in our target segments will be drawn to SmartHelmets
unique safety benefits, as it helps keep their children and grandchildren safe. Because of this, our
company will be able to generate sufficient revenue and higher NPV, which provide a higher
return for our investors.
Investment Proposal
The SmartHelmet is a revolutionary childrens bike safety product that provides a
multitude of services that a standard bike helmet simply cannot compete with. An investment in
SmartHelmet is not just an investment in a safety product; rather it is an investment in the future
of safety. The technology used in bike helmets has stayed relatively the same over the past few
decades. Innovation in safety helmets has been limited to rethinking and improving on the
components of the helmet, instead of improving on the functionality of the helmet itself.
The SmartHelmet rethinks how a helmet can protect a child and therefore provides a
significant advantage over typical bike helmets. SmartHelmet brings modern day technology to
safety products for children and therefore provides an opportunity for investors to be part of a
step towards the future of childrens bike safety.
From a financial standpoint, KinderHelm Inc. offers investors a relatively safe investment
with a lot of upsides. Using our base case expected cash flows, we believe the net present value
of the KinderHelm Inc. to be worth approximately $506,657 in our base case and $463,699 in a
scenario weighted average basis. We also expect the internal rate of return of the project to be
48.3% in our base case and 46.4% based on our scenario weighted average. Even in our worst
case scenario, we expect the internal rate of return to be 22.6%, which results in a negative NPV
only because of a very conservative 25% discount rate. With acceptable returns on a worst-case
basis and great returns on a base case basis, KinderHelm Inc. is confident that SmartHelmet is a
worthy investment.
65

Conclusion
By fusing the disciplines of marketing, operations management, information systems, and
finance, we expect the SmartHelmet to burst onto the protective sports equipment scene. The
SmartHelmet is an innovative childrens bike helmet that ensures that children have their helmets
while riding their bikes. By simply combining RFID technology, a brake, and a helmet, we are
able to provide a product that will fulfill a customer need that has been around since the
inception of childrens bikes.
Through aggressive promotional and marketing campaigns, we plan to go from selling
33,000 units in Year 1 to over 138,000 units in Year 5, reaching revenues of over $4.7 million.
Through constant surveys and creative marketing campaigns, our marketing division will provide
our operations management and information systems divisions with useful information in order
to better react to both our customers and companys needs. Our operations management division
will then seek to fulfill demand by maximizing the use of our resources, such as materials and
time. Our information systems divisions will provide key support for our business by allowing
for the integration of our values and technology with the rest of the company. Finally, the finance
division will bring all of this together to monitor activities and make key decisions that will help
our business thrive. We believe that by allowing the four core divisions of our business to be in
constant interaction, we will evolve to better fit our customers needs.
We will not only provide our customers with a product that will satisfy their safety needs,
but we will also provide investors with outstanding returns. After an initial total funding of
$572,310, we expect a promising base case NPV of $506,657 and an IRR of 48.3%.
KinderHelm Inc. is not only about the product and the numbers. Our goal is to satisfy the
needs of our customers and provide society with an innovative product aimed at improving the
quality of life. We hope to achieve a culture of innovation. Through the integration of our four
business areas, we will be able to achieve our corporate social responsibility goals, create long
term relationships with our suppliers, provide our clients with solutions, and provide our
investors with safe but extraordinary returns.
66

Appendices

MK Appendix 1: Manufacturers Representatives Commissions

Manufacturer's Representatives Commission

Year 1 Year 2 Year 3 Year 4 Year 5

Commission (in dollars) $31,266 $77,395 $114,682 $120,723 $106,153

% of total
manufacturer's sales 2.61% 3.84% 3.80% 3.15% 2.25%
67

MK Appendix 2: Focus Group & Interview Summaries


Focus Group Conducted on October 01, 2014

Names of people in the focus group

Mazy Zen

Ahznad Megan

Lori May

Key takeaways:

Very sensitive to price: no more than 50 dollars or no more than 5 over a regular priced helmet
Important attributes: safety, security, worry-free, protection, security
Have to make the product appealing to kids, color is extremely important
Before purchase, people will do online and in-store research
Additional features: safety stripes and the GPS tracker
Potential anti-theft feature is a huge thing we need to promote (especially if they forget to bring the bike
lock). And we also need to address the battery life issue if we go by sensor.
Creating good habits, reduce the worry of parents
One-on-One Interviews Takeaways

Key takeaways: Parents

Riding bikes is a form of enjoyment and recreation rather than a way of transportation for their children
Value functionality, safety, fit, cost and high quality
Concerned about how we can make kids actually wear their helmets
Childrens influence on parents is significant; therefore, parents tend to choose helmets with cool designs
so their children are more inclined to wear them
Parents purchase helmets from either big retailers, such as Target and Wal-Mart, or sporting goods stores.
Our current price of $79.99 is too high for some, but just right or low for others
o Therefore, we need to start asking for household income because this could have been a factor that
influenced the price points and we did not account for it
Some parents will search online before purchasing a helmet, but some parents just go to the store and pick
from the shelf
Parents tend to have no strong brand loyalty, especially for first-time purchase; however, they are likely to
continue buying the same brand as long as the helmets do not malfunction
Key takeaways: Grandparents

Generally, grandparents are not as involved as parents in buying sports goods for children and are therefore
our secondary segment
Riding bikes is a recreational activity for grandchildren
Willing to pay extra for a bike helmet if they think it will be safer for their grandchildren, but they would
like to understand how the helmet works
Value safety, durability, style, good design and ability to customize/tons of fun designs
Would like to know about our customer service with regard to broken components
Prefer generic store brands for the younger kids, because they are reliable, affordable, and come in lots of
different styles
o However, grandparents generally buy helmets in a more specialized store for the older kids,
because they are starting to do more dangerous things on their bikes
68

MK Appendix 3: Breakdown of Segmentation Tree

MK Appendix 4: IMC Schedule, Year 1


69

MK Appendix 5: IMC Schedule, Year 2

MK Appendix 6: IMC Schedule, Year 3


70

MK Appendix 7: IMC Schedule, Year 4

MK Appendix 8: IMC Schedule, Year 5


71

MK Appendix 9: IMC Cost Breakdown


72

MK Appendix 9: IMC Cost Breakdown (continued)


73

MK Appendix 10: Online Ads

Leaderboard Banner Ad

v
SmartHelmet
Protecting what matters most
SmartHelmet is a childrens bike safety product that utilizes proximity sensor technology.
The bike brakes only unlock when the helmet is within 2 meters of the bike.

KinderHelm

Regular Banner Ad

My brakes
wont unlock!
v

aasd-
fasd

Thats where I
come in! :)

Protecting what matters most

SmartHelmet
KinderHelm
SmartHelmet is a childrens bike safety product that utilizes proximity sensor technology.
The bike brakes only unlock when the helmet is within 2 meters of the bike.
http://kinderhelm.wix.com/smarthelmet

Skyscraper Medium Rectangle

MK Appendix 11: Magazine Ads

My brakes
wont unlock!

aasd-
fasd

Thats where I
come in! :)
aasdfasd

Protecting what matters most

SmartHelmet
SmartHelmet is a childrens bike safety product that utilizes proximity sensor technology.
The bike brakes only unlock when the helmet is within 2 meters of the bike.

KinderHelm
http://kinderhelm.wix.com/smarthelmet

Four Color Full Color


74

MK Appendix 12: Transit Advertisements

Full Back Super Tail

Tail

MK Appendix 13: Packaging Landrys


75

MK Appendix 14: Packaging

MK Appendix 15: Point of Purchase Display


76

MK Appendix 16: Creative Advertisement Smartphone Application

App Icon

MK Appendix 17: Trade Show Booth


77

MK Appendix 18: Trade Show Brochure


78

MK Appendix 19: Sports Equipment Revenue Breakdown

MK Appendix 20: Sales Projection - Parents


79

MK Appendix 21: Sales Projection Grandparents

MK Appendix 22: CSR-Adjusted Purchase Intent


80

OM Appendix 1: House of Quality

OM Appendix 2: International Ocean Lead Time


81

OM Appendix 3: Lead Times

OM Appendix 4: Nationwide Rail Map


82

OM Appendix 5: Rail Prices

OM Appendix 6: Amazon Partnered Carrier


83

OM Appendix 7: Storage Fee for Amazon

OM Appendix 8: Facility Brochure


84

OM Appendix 9: Center of Gravity

OM Appendix 10: Employees for Year 1


85

OM Appendix 11: Throughput Times

OM Appendix 12: Monthly Forecasted Demand


86

OM Appendix 13: Yearly Demand

OM Appendix 14: PERT Distribution


87

OM Appendix 15: Inventory Equations

OM Appendix 16: Optimistic and Pessimistic Assumptions

-5%
15%
88

IS Appendix 1: Critical Success Factors


89

IS Appendix 2: Value Chain

15% Use EnterpriseOnes Agreement Management module to establish and maintain


exceptional relationships with suppliers in order to ensure quality of goods
Inbound provided is the best possible
Logistics
Use EOQ model to determine optimal raw material inventory and to obtain a
service level of at least 99%
Establish a quality check at suppliers facilities to decrease raw materials defect
rate if our raw materials defect rate goal of 5% is not met after Year 1

Standardize production so product is almost immediately available to


customer will help us meet our 99% service level goal for all 5
33% years
Use robust design of product to meet the 2% target defect rate for
Operations
finished goods
Hire an RFID-specific assembly line worker in Years 1 & 2, and 2 in
Years 3-5 to ensure only 2% defect rate amongst RFID connections
between helmet and brake attachment

Quality checks performed on 20% of finished goods Years 1


& 2, and 15% of finished goods in Years 3-5 to ensure
15% external defect rate of less than .5%
Outbound Operations Manager checks Amazon seller account daily to
Logistics
ensure we are filling all retailer and individual consumer
orders as quickly as possible
Use EnterpriseOnes Agreement Management module to
establish and maintain exceptional relationship with
Amazon in order to obtain maximum 5-business day
delivery starting in Year 3
Increase banner ads by 5% per year in order to
20% increase website traffic, which in turn will increase
Marketing overall awareness
Obtain endorsements from cycling advocacy
& Sales
organizations in order to increase awareness goal
is 15 endorsements by Year 5
Provide independent retailers with incentives in
order to stay in 85% of them gained over the first 5
years, because they account for 23% of sports
equipment industry sales
Respond to customers within 1-
17% business day
3-year warranty on all products, with
Service
an additional year added if customers
complete product survey
Customer service representatives will
take intensive training programs when
hired and will be subject to semi-
annual tests to ensure highest quality
service possible
90

IS Appendix 3: Marketing Best of Breeds Cost Breakdowns

IS Appendix 4: Marketing Best of Breed Decision Matrix


91

IS Appendix 5: Operations Management Best of Breeds Cost Breakdowns

IS Appendix 6: Operations Management Best of Breed Decision Matrix


92

IS Appendix 7: Finance/Accounting Best of Breed Decision Matrix

IS Appendix 8: Finance/Accounting Best of Breeds Cost Breakdowns


93

IS Appendix 9: Microsoft Dynamics GP Total Costing

IS Appendix 10: Microsoft Dynamics GP Costing Assumptions


94

IS Appendix 11: Selected Oracle EnterpriseOne Modules

Module Name Year Area License Price Update & Minimum #


Support Price Users
CRM Foundation 1 CRM $640 $140 5

Sales Force Automation 3 CRM $1,200 $264 5

Sales Order Management 1 CRM $4,595 $1,010 5

Agreement Management 1 Manufacturing & $4,595 $1,010 5


SCM
Apparel Management 1 Manufacturing & $3,995 $879 5
SCM
Inventory Management 1 Manufacturing & $4,595 $1,010 5
SCM
Manufacturing 1 Manufacturing & $4,595 $1,010 5
Management SCM
Quality Management 1 Manufacturing & $1,495 $329 5
SCM
Requirements Planning 1 Manufacturing & $1,495 $329 5
SCM
Transportation 1 Manufacturing & $4,595 $1,010 5
Management SCM
Warehouse Management 1 Manufacturing & $3,450 $759 5
SCM
Procurement & 1 Supply $4,595 $1,010 5
Subcontract Management Management
Financials 1 Financial $4,595 $1,010 5
Management Suite
Financials: Environmental 1 Financial $1,995 $439 5
Accounting & Reporting Management Suite

Health & Safety Incident 1 Health & Safety $50 $11 5


Management
Human Resources 3 Human Capital $185 $41 5
Management
Payroll 1 Human Capital $225 $50
Management

IS Appendix 12: Oracle EnterpriseOne Costing Assumptions


95

IS Appendix 13: Enterprise Resource Planning Decision Matrix

IS Appendix 14: ERP vs. BOB Decision Matrix


96

IS Appendix 15: Hardware & Telecommunications Total Costs

IS Appendix 16: Entity-Relationship Diagram


97

IS Appendix 17: ERD Entities


98

IS Appendix 18: ERD Access View

IS Appendix 19: Process Model


99

IS Appendix 20: Website Landing Page

IS Appendix 21: Meta Description


100

IS Appendix 22: Keywords

IS Appendix 23: Banner Ad Costs


101

FE Appendix 1: Financial Company Comparable


102

FE Appendix 2: Breakeven Analysis


103

FE Appendix 3: Sensitivity Analysis


104

FE Appendix 4: Summary of Scenario Analysis


xii

Works Cited
Absolute Exhibits, Inc. "Top 100 USA Shows." Absolute Exhibits: Trade Show Displays, Booths, and Exhibit
Rentals. Web. 23 Nov. 2014. <http://www.absoluteexhibits.com/Top-100-USA-Shows/>.
Advanstar Communications, Inc. "Dealernews 2015 Media Planner." Dealernews 19.4 (2013): Pp 5. Web.
<http://www.dealernews.com/sites/www.dealernews.com/files/files/2015DealernewsMediaPlanner.pdf>
Alliance for Audited Media. "MAGAZINE Publishers Statement Six Months Ended June 30, 2013." MAGAZINE
(n.d.): n. pag. Meredith.com. 30 June 2013. Web. 23 Nov. 2014.
<http://www.meredith.com/mediakit/parents/print/pdfs/Parents-ABC.pdf>.
Amazon.com, Inc. Amazon.com Help: Fulfillment by Amazon, Web. 21 Nov.
2014.<http://www.amazon.com/gp/help/customer/display.html?nodeId=200229160>.
Ballantine Management Group of Virginia, LLC. "Attend." The Kids Expo. n.d. Web. 22 Nov. 2014.
<http://www.fredericksburgkidsexpo.com/attend.html>.
Bicycleretailer.com. "Bicycle Retailer and Industry News 2015 Media Kit." Bicycle Retailer and Industry News
(2014): n. pag. Web. Pp. 1-2
<http://www.bicycleretailer.com/sites/default/files/downloads/page/2015_MediaKit_sm.pdf>.
Bicycle Helmet Safety Institute. "Bicycle Helmet Statistics." Childrens Safety Newtwork. n.p. June 2009. Web. 24
Nov. 2014. <http://www.helmets.org/stats.htm#child>.
BikeDenver. "The Bike Denver Story." History. n.d. Web. 22 Nov. 2014.
<http://www.bikedenver.org/about/history/>.
BikeNewYork. "Mission." Bikenewyork.org. n.d. Web. 22 Nov. 2014.
<http://www.bikenewyork.org/about/mission/>.
---. "Exhibit at Bike Expo New York." Bike New York. n.d. Web. 22 Nov.2014.<http://www.bikenewyork.org/wp-
content/uploads/2013/09/2014-Bike-Expo-New-York-sell-sheet-FINAL1.pdf>
Brinker, Scott. "Marketing Technology Landscape Supergraphic (2014) - Chief Marketing Technologist." Chief
Marketing Technologist. Chiefmartec.com, n.d. Web. 22 Nov. 2014.
<http://chiefmartec.com/2014/01/marketing-technology-landscape-supergraphic-2014/>.
Caba, Justin. "89% Of Children In Bike Accidents Do Not Wear Helmets." Medical Daily. N.p., 26 Oct. 2013. Web.
23 Nov. 2014. <http://www.medicaldaily.com/89-children-bike-accidents-do-not-wear-helmets-upping-risk-
traumatic-brain-injuries-261024>.
CAL Business Solutions RSS. "Software List Price." CAL Business Solutions RSS. N.p., n.d. Web. 21 Nov. 2014.
<http://www.calszone.com/pricing-microsoft-dynamics-gp/software-list-price/>.
Capital Metro Transportation Authority. "Advertising Info And Rates." Metro. n.d. Web. 22 Nov. 2014.
<https://www.capmetro.org/uploadedFiles/Capmetroorg/Business/Advertise_With_Us/PRM%20131115B%2
0Transit%20Advertising%20Media%20Kit%20Update_revision.pdf>.
Carter, Britanny. Protective Sports Equipment Manufacturing in the US IBISWorld Industry Report OD5324,
August (2014), pp.4. IBISWorld. Web. 8 Novemeber. 2014.
CBR. "10 Best ERP Suites for SMEs." Computer Business Review. n.d. Web. 22 Nov. 2014.
<http://www.cbronline.com/news/tech/software/enterprise-apps/10-best-erp-suites-for-smes-4401603>.
Centers for Disease Control and Prevention. "Bicycle-Related Injuries." Centers for Disease Control and
Prevention. n.d. 28 May 2013. Web. 23 Nov. 2014.
<http://www.cdc.gov/HomeandRecreationalSafety/Bicycle/>.
Chicago Toy and Game Group,"Pricing and Registration." Chicago Toy & Game Fair (ChiTAG Fair). n.d. Web. 22
Nov. 2014. <http://www.chitagfair.com/booth-pricing/>.
CNBC LLC. Overall Business Rankings 2013 , CNBC Web. 21 Nov. 2014.
<http://www.cnbc.com/id/100824779>.
Comcast Corporation."Business VoiceEdge Plans and Prices." Comcast Business. N.p., n.d. Web. 21 Nov. 2014.
<http://business.comcast.com/phone/voiceedge/plans-pricing>.
Comcast Corporation. "Business Internet Plans and Prices." Comcast Business. n.d. Web. 22 Nov. 2014.
<http://business.comcast.com/internet/business-internet/plans-pricing>.
CyberGhost S.R.L. "CyberGhost VPN." n.d. Web. 21 Nov. 2014. <http://www.cyberghostvpn.com/en_us>.
Cyclekids. "Homepage." Homepage. n.d. Web. 22 Nov. 2014. <http://www.cyclekids.org/>.
Dellinger, Ann M. "Bicycle Helmet Use among Children in the United States: The Effects of Legislation, Personal
and Household Factors." National Center for Biotechnology Information, U.S., 23 June 2010. Web. 22 Nov.
2014. <http://www.sciencedirect.com.ezproxy.bu.edu/science/article/pii/S0022437510000666>
xiii

Denvergov.org. "Potential Threats." Office of Emergency Management. n.d. Web. 23 Nov. 2014.
<http://www.denvergov.org/PotentialThreats/tabid/391429/Default.aspx>.
DFW FAIRS & EXPOS L.L.C. "Exhibitor Packages for the DFW Family Expo." Exhibitor Packages for the DFW
Family Expo. n.d. Web. 22 Nov. 2014.
<http://dfwfamilyexpo.org/Exhibitor-Packages.html>.
Emerald Expositions "2015 INTERBIKE EARLY BIRD EXHIBIT SPACE CONTRACT." Interbike.
MANDALAY BAY CONVENTION CENTER. Web. 22 Nov. 2014.
<http://www.interbike.com/static/pdf/IB15_Early_Bird_Contract-AK_forms_F.pdf>
ERP Software Blog. "2013 Pricing And Costs." ERP Software Blog RSS. n.d. Web. 22 Nov. 2014.
<http://www.erpsoftwareblog.com/2012/10/microsoft-dynamics-gp-2013-pricing-and-costs/>.
---. "Exhibitor List + Floor Plan." Exhibitor List + Floor Plan. Outdoorretailer.com, 2013. Web. 23 Nov. 2014.
<http://www.outdoorretailer.com/summer-market/show-info/exhibitor-list-floor-plan.shtml>.
Findthebest.com, Inc., "Compare Exact Globe Next vs Microsoft Dynamics GP When You Need More than
Accounting Software vs Oracle E-Business Suite Hardware and Software, Engineered to Work Together."
n.d. Web.22Nov.s2014. <http://erp-software.findthebest-sw.com/compare/104-165-183/Exact-Globe-Next-
vs-Microsoft-Dynamics-GP-vs-Oracle-E-Business-Suite>.
Finnoff, JT, ER Laskowski, KL Altman, and NN Diehl. "Barriers to Bicycle Helmet Use." National Center for
Biotechnology Information. U.S. National Library of Medicine, July 2001. Web. 24 Nov. 2014.
<http://www.ncbi.nlm.nih.gov/pubmed/11433083>.
Francese, Peter. "The Grandparent Economy." Clinical Nurse Specialist 21.1 (2007):page n. Grandparents,com.
American Grandparents Association. Web. 22 Nov. 2014. <http://www.grandparents.com/grandparent-
economy>.
Google, Inc. "Clickthrough Rate (CTR)." AdWords Help. n.d. Web. 21 Nov. 2014.
<https://support.google.com/adwords/answer/2615875?hl=en>.
---."Create and Customize Dashboards." Analytics Help. n.d. Web. 21 Nov. 2014.
<https://support.google.com/analytics/answer/1068218?hl=en#add_widgets_to_your_dashboard>.
---."Dorel Industries, Inc. Quotes & News-Summary." Google Finance. n.d. Web. 23 Nov. 2014.
<https://www.google.com/finance?cid=675707>.
---. 5360 Washington St, Denver, CO 80216 , Google Maps. n.d. Web. 21 Nov. 2014.
<http://www.google.com/maps>.
---. "Jarden Corporation Quotes & News-Summary." Google Finance. n.d. Web. 23 Nov. 2014.
<https://www.google.com/finance?cid=675707>.
---. "Search Engine Optimization Starter Guide." (n.d.): n. pag. 2010. Web.
<http://static.googleusercontent.com/media/www.google.com/en/us/webmasters/docs/search-engine-
optimization-starter-guide.pdf>.
Gooseman, Tom. "In Defense of Banner Ads: Everybody Hates Them, but They Work." Advertising Age
DigitalNext RSS. N.p., 10 Nov. 2014. Web. 21 Nov. 2014. <http://adage.com/article/digitalnext/defense-
banner-ads-hates-work/295782/>.
Gov.uk."Foreign Travel Advice China." China Travel Advice. n.d. Web. 23 Nov. 2014.
<https://www.gov.uk/foreign-travel-advice/china/natural-disasters>.
Grant, Darren. "The Effect of Bicycle Helmet Legislation on Bicycling Fatalities." Journal of Policy Analysis and
Management 23.3 (2004): 595-611. <http://www.cpsc.gov/>. Web. 20 Nov. 2014.
Hewlett-Packard Development Company, L.P."HP Officejet Pro X576dw Multifunction Printer." HP Official
Store. n.d. Web. 21 Nov. 2014.
<http://store.hp.com/webapp/wcs/stores/servlet/PDPStdView?urlRequestType=Base&catalogId=10051&cate
goryId=&productId=501693&urlLangId=-1&langId=-
1&top_category=&parent_category_rn=&storeId=10151>.
Insurance Institute for Highway Safety. "Pedestrians and Bicyclists." Table: Bicycle Helmet Use. n.d. Web. 22 Nov.
<http://www.iihs.org/iihs/topics/laws/bicycle-laws/table-bicycle-helmet-use?topicName=pedestrians-and-
bicyclists >
Johnson, D. "ERP Software Cost Comparison: On-Premise, SaaS, and Hosted." ERP Cloud News RSS. ERP Cloud
News, 30 Mar. 2011. Web. 21 Nov. 2014. <http://erpcloudnews.com/2011/03/erp-software-cost-comparison-
on-premise-saas-and-hosted/>.
Kharram, Aziz. "Increase Search Engine Traffic by Getting Google to Recrawl Your Site."Business & Marketing.
Sitepoint PTY LTD. n.p. 10 Sep. 2014. n.d. Web. 23 Nov. 2014. <http://www.sitepoint.com/increase-search-
traffic-getting-site-recrawled-often/>.
xiv

Kim, Larry. "Average Click-Through Rate : Learn How Your Average CTR Compares." Wordstream. WordStream,
Inc., n.d. Web. 21 Nov. 2014. <http://www.wordstream.com/average-ctr>.
King County Transit Authority. "Seattle Transportation Rates." Telephone Interview. 27 Oct. 2014.
Knaster Technology Group. "Training." Information Technology Specialists. n.d. Web. 22 Nov. 2014.
<http://www.theknastergroup.com/training/>.
Kreider, Rose M., Jamie M. Lewis, and Jonathan Vespa. America's Families and Living Arrangements: 2012. N.p.:
n.p., n.d. United Census Bureau, Aug. 2013. Web. 22 Nov. 2014.
<http://www.census.gov/prod/2013pubs/p20-570.pdf >
Lamar Advertising Agency. "Billboards, Digital Displays, Transit Advertising Locations & Prices."Lamar. n.d.
Web. 22 Nov. 2014. <http://www.lamar.com/Portland/InventoryBrowser>.
Land and Property Values in the U.S, Lincoln Institute of Land Policy Home,n.d. Web. 20 Nov. 2014.
<https://www.lincolninst.edu/subcenters/land-values/land-prices-by-state.asp>
League of American Bicyclists. "National Bike Month." Home Page. Web. 22 Nov. 2014.
<http://bikeleague.org/bikemonth>.
McKendrick, Joe. "Four Out Of Five Small Businesses Soon Will Be Run On Cloud, For Many Reasons." Forbes.
Forbes Magazine, 5 Aug. 2014. Web. 21 Nov. 2014.
<http://www.forbes.com/sites/joemckendrick/2014/08/15/four-out-of-five-small-businesses-soon-will-be-run-
on-cloud/>.
MetroTransit Authority. "Minneapolis Transportation Rates." Telephone interview. 27 Oct. 2014.
Microsoft. "Tiered Support Plans for Microsoft Dynamics CRM Online." Microsoft Dynamics CRM Online. n.d.
Web. 21 Nov. 2014. <http://www.microsoft.com/en-us/dynamics/dynamics-online-support.aspx>.
Miller, Katherine. "Zoho Books Review 2014 | Reviews, Ratings, Complaints, Comparisons." Merchant Maverick
Zoho Books Review Comments. N.p., 5 Sept. 2014. Web. 21 Nov. 2014.
<http://www.merchantmaverick.com/reviews/zoho-books-review/>
MyPCBackup.com. "Leading Business Backup Service." Leading Business Backup Service. n.d. Web. 21 Nov.
2014. <http://www.mypcbackup.com/business/business-pricing>.
---. Online Backup from MyPCBackup. n.d. Web. 21 Nov. 2014. <http://www.mypcbackup.com/>.
National Sporting Goods Association. "Sporting goods equipment sales by channel of distribution in the U.S. from
2008 to 2013." Statista - The Statistics Portal. June 2014. Web. 22 November 2014.
<http://www.statista.com/statistics/201225/sport-equipment-sales-by-channel-of-distribution-in-the-us-since-
2006/>
Nau, Brent. "Environmental Impact on Recycling Cardboard Boxes."Business 2 Community.
<http://www.business2community.com/infographics/environmental-impact-recycling-cardboard-boxes-
0774979>
Neale, John. Financial Impact of Supply Chain Decisions, 2009, n.d. Web. 22 Nov.
2014.<https://smgtools.bu.edu/access/content/group/9c496855-23ac-43c8-b7a9-
65ed8290a5be/OM/Class%20Materials/OM14/The%20Financial%20Impact%20of%20Supply%20Chain%20
Decisions.pdf>
Newegg, Inc. "Cisco Small Business Multifunction Wireless VPN Router." Newegg.com. n.d. Web. 22 Nov. 2014.
<http://www.newegg.com/Product/Product.aspx?Item=N82E16833150142>.
OneSaas PTY LTD. "Pricing." N.p., n.d. Web. 21 Nov. 2014. <http://www.onesaas.com/pricing/>..
---. "Get Your Business Apps Talking & Sharing Data." OneSaas. Get Your Business Apps Talking & Sharing Data.
n.d. Web. 22 Nov. 2014. <http://www.onesaas.com/>.
Oracle Corporation. "FAQ. Resources. General." Oracle Cloud. n.d. Web. 21 Nov. 2014.
<https://cloud.oracle.com/faq#goto_2>.
---. "JD Edwards Enterprise Agreement Management." (n.d.): n. pag. Oracle Data Sheet. Web. 22 Nov. 2014.
<http://www.oracle.com/us/media/057427.pdf>.
---. "JD Edwards Enterprise Apparel Management." (n.d.): n. pag. Oracle Data Sheet. Web. 22 Nov. 2014.
<http://www.oracle.com/us/products/applications/jd-edwards-enterpriseone/apparel-management-
184740.pdf>.
---. "JD Edwards Enterprise Quality Management." (n.d.): n. pag. Oracle Data Sheet. Web. 22 Nov. 2014.
<http://www.oracle.com/us/media/057223.pdf>.
---. "Oracle Enterprise Resource Planning (ERP) Solutions." ERP Solutions. n.d. Web. 22 Nov. 2014.
<https://www.oracle.com/applications/enterprise-resource-planning/solutions/index.html>.
---. "Oracle Lifetime Support Policies." Oracle. n.d. Web. 22 Nov. 2014.
<http://www.oracle.com/us/support/lifetime-support/index.html>.
xv

Pacific Institute For Research And Evaluation. Injury Prevention: What Works? A Summary of Cost-Outcome
Analysis for Injury Prevention Programs (2014 Update) (n.d.): n. pag. Education Development Center,
2014. Web. 22 Nov. 2014.
<http://www.childrenssafetynetwork.org/sites/childrenssafetynetwork.org/files/InjuryPreventionWhatWorks2
014Update%20v9.pdf >.
Panorama Consulting Solutions. "Clash of the Titans 2014: An Independent Comparison of SAP, Oracle, and
Microsoft Dynamics." n.d. Web. 21 Nov. 2014. <http://panorama-consulting.com/resource-center/clash-of-
the-titans-2014-sap-vs-oracle-vs-microsoft-dynamics/>.
---. "2013 ERP Report." Panorama. n.d. Web. 22 Nov. 2014. <http://panorama-consulting.com/resource-
center/2013-erp-report/>.
PeopleForBikes. "People for Bikes." PeopleForBikes. n.d. Web. 22 Nov. 2014. <http://www.peopleforbikes.org/>.
---."Statistics Library-Participation Statistics Archives." PeopleForBikes. n.d. Web. 22 Nov. 2014.
<http://www.peopleforbikes.org/>.
Pew Research Center. "In the Battle of the Bulge, More Soldiers Than Successes." Pew Research Centers Social
Demographic Trends Project RSS. N.p., 26 Apr. 2006. Web. 24 Nov. 2014.
<http://www.pewsocialtrends.org/2006/04/26/in-the-battle-of-the-bulge-more-soldiers-than-successes/>.
Pober, Kenny. "New York Transportation Rates." Telephone interview. 27 Oct. 2014.
Purch. "Business Online Backup Services Review 2014." 10TopTenREVIEWS. n.d. Web. 22 Nov. 2014.
<http://business-online-backup-services-review.toptenreviews.com/>.
Rodale, Inc. "America's Top 50 Bike-Friendly Cities." Bicycling. n.d. Web. 23 Nov. 2014.
<http://www.bicycling.com/news/advocacy/america-s-top-50-bike-friendly-cities?slide=1>.
Royal, Dawn and Steiger, Darby. "Key Findings: Bicyclist Attitudes and Behaviors." SUMMARY REPORT (n.d.): n.
pag. Metropolitan Planning Organization. Web. 22 Nov. 2014.
<http://www.lakesumtermpo.com/pdfs/bpac/Bicycle_and_Pedestrian_Behavior_Summary_Report.pdf >.
Salesforce. "How to Select the Right Sales Cloud Edition." (n.d.): n. pag. Web. 21 Nov. 2014.
<http://www.sfdcstatic.com/assets/pdf/datasheets/DS_SalesCloud_EdCompare.pdf>.
Salesformics. "CRM and Marketing Automation Pricing from Salesformics." N.p., n.d. Web.
21 Nov. 2014. <http://salesformics.com/pricing/>.
---. "Most Innovative Marketing Automation System Ever? Salesformics Launches From beta." VentureBeat. N.p.,
n.d. Web. 21 Nov. 2014. <http://venturebeat.com/2014/05/07/most-innovative-marketing-automation-
system-ever-salesformics-launches-from-beta/>.
San Francisco Bike Expo RSS. "San Francisco Bike Expo 2014 Bike Shop Pricing and Registration - Race, Ride,
Culture & Vibe." San Francisco Bike Expo RSS. SF BikeExpo, n.d. Web. 22 Nov. 2014.
<http://sfbikeexpo.com/?page_id=6580>.
Sands, Austin. "1 in 3 Laptops Over 3 Years." (n.d.): n. pag. Squaretrade, 16 Nov. 2009. Web. 21 Nov. 2014.
<http://www.squaretrade.com/htm/pdf/SquareTrade_laptop_reliability_1109.pdf>.
Scholastic, Inc. "Scholastic: Parent&Child." Print2015 On-Sale (n.d.): n. pag. Scholastic Parents. Web. 23 Nov.
2014. <http://www.scholastic-parents.com/pdf/SPC_Print.pdf>.
Scholastic, Inc. "2011 Advertising Rates." Parent & Child Magazine. n.d. Web. 23 Nov. 2014.
<http://www.scholastic.com/browse/article.jsp?id=3748129>.
Shimano, Inc. Summary of Financial Results. n.d Web. 21 Nov. 2014.
<http://www.shimanousa.com/content/Corporate/english/index/financial-infomation/summary-of-financial-
results.html>.
SMG. "FE323 FE 7 Ratio Workshop Requirements & Guide". SMGtools. Boston University School of
Management, Web. 24 Nov. 2014.
---.. "FE323 FE Base Case Financial Projection Workbooks". pag. SMGtools. Boston University School of
Management, Web. 24 Nov. 2014.
---.. "FE323 Summary Example of base optimistic pessimistic cases". pag. SMGtools. Boston University School of
Management, Web. 24 Nov. 2014.
---.. "IS323 Midmarket-erp-checklist". SMGtools. Boston University School of Management, Web. 24 Nov. 2014.
---.. "MK323 IMC (Awareness) Tutorial". SMGtools. Boston University School of Management, Web. 24 Nov.
2014.
---. "MK323 - Margins and Markup Tutorial". SMGtools. Boston University School of Management, Web. 24 Nov.
2014.
---. "MK323 Market Research - Questionnaire Results and ACV Workshop". SMGtools. Boston University School
of Management, Web. 24 Nov. 2014.
xvi

---. "MK323 - Sales Projection Tutorial". SMGtools. Boston University School of Management, Web. 24 Nov. 2014.
---.. "OM323 - blank HOQ". SMGtools. Boston University School of Management, Web. 24 Nov. 2014.
---.. "OM323 - Guidelines for Making SM323 Prototypes.docx". SMGtools. Boston University School of
Management, 24 Nov. 2014.
---.. "OM323 - OM14 Supply Chain Design Workshop". SMGtools. Boston University School of Management, Web.
24 Nov. 2014.
---.. "OM323 - Production Planning Workshop". SMGtools. Boston University School of Management, Web. 24
Nov. 2014.
South Florida Bike. Exhibitor Applications-2014 War Memorial Auditorium, n.d. Web. 22 Nov. 2014.
<http://www.southfloridabikeexpo.com/apps.shtml>
Statista.com. "Revenue Leading U.S. Sporting Goods, Footwear & Apparel Retailers 2013 | Statistic." Statista.
Statista.com,2014.Web.23Nov.2014. <http://www.statista.com/statistics/242039/sporting-goods-retailers-in-
the-us-by-revenue/>.
Stock & Foil Inc. "San Diego Kids Expo and Fair." San Diego Kids Expo and Fair. n.d. Web. 22 Nov. 2014.
<http://www.sandiegokidsexpo.com/#!exhibitor-information/ccs6>
Szesztay, Peter. "Consumer Reports for House of Quality." Online interview. 10 Oct. 2014.
The Expo Pros. "California Baby & Kidz Expo." California Baby & Kidz Expo. n.d. Web. 22 Nov.
2014.<http://www.theexpopros.com/cakidzexhibit.html>.
Toy Industry Association, Inc."Who Exhibits?" Who Exhibits? n.d. Web. 22 Nov. 2014.
<http://www.toyfairny.com/App_Themes/toyfair/PDFs/TF15_ExhibitSpaceApp.pdf>
TradeGecko. "Pricing." N.p., n.d. Web. 21 Nov. 2014.
<http://tradegecko.com/pricing/?_ga=1.172245547.926555748.1415746473>.
---. "TradeGecko Features List." n.d. Web. 21 Nov. 2014. <http://tradegecko.com/wp-
content/uploads/2014/06/tradegecko_featurelist_june14.pdf?submissionGuid=46a1e59a-2c2d-4a48-8525-
fce725487ce1>.
Trek Bicycle Corporation. "We Believe in Bikes." Www.trekbikes.com. n.d. Web. 22 Nov. 2014.
<http://www.trekbikes.com/us/en/company/products/>.
Unleashed Software. "Features | Inventory Management Software | Unleashed." n.d. Web. 21 Nov. 2014.
<http://www.unleashedsoftware.com/our-product/product-overview>.
---. "Pricing Solutions to Suit Your Business." N.p., n.d. Web. 21 Nov. 2014.
<http://www.unleashedsoftware.com/pricing>.
USA Cycling, Inc. "Cycling Advocacy Organizations." USA Cycling. n.d. Web. 22 Nov. 2014.
<http://www.usacycling.org/cycling-advocacy-organizations.htm>.
Vartan, Starre. "Packaging the Future: REI Unpackages Five of Their Popular Products." Inhabitat Sustainable
Design Innovation Eco Architecture Green Building Packaging the Future REI Unpackages Five of Their
Popular Products Comments. Inhabitat, LLC., 21 Dec. 2011. Web. 22 Nov. 2014.
<http://inhabitat.com/packaging-the-future-rei-unpackages-five-of-their-popular-products/>.
Veague, Rick. "Best of Breed Vs. ERP." IndustryWeek. IndustryWeek.com, 13 Mar. 2010. Web. 22 Nov. 2014.
<http://www.industryweek.com/companies-amp-executives/best-breed-vs-erp>.
Waste Management, Inc. Recycling Facts & Tips, n.d. Web. 20 Nov. 2014.
<http://www.wm.com/location/california/ventura-county/thousand-oaks/recycle/facts.jsp>.
WordStream, Inc. "Average Click-Through Rate (CTR): Learn How Your Average CTR Compares | WordStream."
WordStream Internet Marketing Software. n.d. Web. 23 Nov. 2014. <http://www.wordstream.com/average-
ctr>.
Xero. "Pricing Plans." Xero Accounting Software. N.p., n.d. Web. 21 Nov. 2014.
<https://www.xero.com/us/pricing/>.
---. "Xero Demonstrates Value of Cloud Ecosystem with Seven Add-on Partners Exhibiting at CeBIT." Xero
Demonstrates Value of Cloud Ecosystem with Seven Add-on Partners Exhibiting at CeBIT. N.p., n.d. Web.
<http://prwire.com.au/print/xero-demonstrates-value-of-cloud-ecosystem-with-seven-add-on-partners-
exhibiting-at-cebit-1>.
Zoho. "Project Management Tools | Features : Zoho Projects." Project Management Tools | Features : Zoho
Projects. Zoho, n.d. Web. 21 Nov. 2014. <https://www.zoho.com/projects/zohoprojects-pricing.html>.
Yes, Inc. "Youth Educational Sports." YES. n.d. Web. 22 Nov. 2014. <http://yesports.org/>.
YP.com. YP.com - Yellow Page the New Yellowpages.com. n.d.Web. 21 Nov. 2014.
<http://www.yellowpages.com>.
xvii

Exhibit 1: New Product Survey







xviii







xix





xx
xxi
xxii
xxiii
xxiv

You might also like