Business Plan on Animation Studio

Prepared For
Dr. A. K. M. Saiful Majid
Course Instructor: Entrepreneurship (W301)
Professor

Prepared By
Shah Shihab Sadman
ZR – 27
BBA 18th Batch
Section A

Institute Of Business Administration

University Of Dhaka

21 January, 2013

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 Letter of transmittal

January 21, 2013

Dr. A. K. M. Saiful Majid

Course Instructor: Entrepreneurship (W301)
Professor
Institute of Business Administration
University of Dhaka

Subject: Letter of transmittal for the Business plan assigned in entrepreneurship course

Dear Sir
Here is the business plan on Business Plan on animation studio “paradigm” which you assigned
us as a requirement of the course Entrepreneurship (W301) offered at the Institute of Business
Administration, University of Dhaka. The business plan includes an overall marketing, financial,
management and operation plan of starting an innovative business. The idea is new in context to
the market scenario of Bangladesh.

The business plan has been prepared under your authorization and direct supervision, with the
purpose of fulfilling the course requirement. No part of this business plan shall be reproduced for
use in any other form of publication in future without your written permission.

I appreciate the opportunity to prepare a business plan that you have given me, which has been a
unique learning experience and the knowledge I have acquired will be of great importance, both
for my future academic purposes and professional life.

Yours sincerely,

Shah Shihab Sadman

ZR - 27
Batch -18th

Institute of Business Administration

University of Dhaka

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Acknowledgement
I would like to thank Professor Dr. A. K. M. Saiful Majid for giving me the opportunity to
conduct such a study. I truly enjoyed writing this business plan because it has given me a chance
to undertake thorough exploration on the fields of animation industry of Bangladesh and global
as well.

It takes not only the effort of the researchers but also the continuous support and cooperation of
the related fields of the topic to carry out an intensive researched business plan on animation
studio in Bangladesh and finding out the potential of it. The business plan was a challenge, but
highly rewarding at the same time. This business plan has increased my knowledge significantly
and has given me the chance to apply what I’ve studied in the class. It has provided us with a
new perspective in regard to innovative ideas, a true eye-opener.

I would like to express my utmost gratitude, again, towards my course instructor, Professor Dr.
A. K. M. Saiful Majid, for his guidance in dealing with the topic issue and for his insights. He
guided me on how I should progress on this topic and taught me necessary things that would help
me complete the business plan. He also provided valuable insight in respect to the structure of
the plan and directed me on the relevance of it to our business plan topic.

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Contents
Executive summary ....................................................................................................................................... 7
1.0 Introduction ...................................................................................................................................... 9
1.1 Paradigm Animations........................................................................................................................10
1.2 Mission .............................................................................................................................................. 11
1.3 Keys to Success ................................................................................................................................. 11
2. Industry Analysis ..................................................................................................................................... 11
2.1. FUTURE OUTLOOK ...........................................................................................................................11
2.2. SWOT analysis .................................................................................................................................. 12
2.3 PESTEL analysis.................................................................................................................................. 13
2.3.1. POLITICAL ANALYSIS OF ANIMATION STUDIO .......................................................................... 13
2.3.2. ECONOMICAL ANALYSIS ANIMATION STUDIO.......................................................................... 13
2.3.3. SOCIAL ANALYSIS ANIMATION STUDIO.....................................................................................14
2.3.4. TECHNOLOGICAL ANALYSIS ANIMATION INDUSTRY ................................................................15
2.3.5. LEGAL ANALYSIS OF ANIMATION INDUSTRY............................................................................. 16
2.3.6. ENVIRONMENTAL ANALYSIS OF ANIMATION INDUSTRY..........................................................17
2.4. Analyzing the Animation industry as per Porters Five Forces .........................................................17
2.5 Industry forecast: Industry life cycle ...............................................................................................19
3. Description of the Venture .....................................................................................................................19
3.1. Products and Services ......................................................................................................................19
3.2. Custom Content Development ........................................................................................................ 20
3.3. Background of entrepreneurs ........................................................................................................ 21
3.4. Company Locations and Facilities .................................................................................................... 21
4.0 Market Analysis..................................................................................................................................... 22
4.1. Market segmentation ......................................................................................................................22
4.2 Target Market Segment Strategy...................................................................................................... 23
4.2.1 Market Needs.............................................................................................................................23
4.2.2 Market Trends............................................................................................................................23
4.2.3 Market Growth ..........................................................................................................................24
4.3 Service Business Analysis .............................................................................................................. 24
4.3.1. Main Competitors .....................................................................................................................25

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5.0 Marketing Strategy and Implementation .............................................................................................25
5.1 Strategy Pyramid...............................................................................................................................26
5.2 Value Proposition..............................................................................................................................26
5.3 Competitive Edge..............................................................................................................................26
5.4 Marketing Strategy ...........................................................................................................................26
5.4.1 PRODUCT.................................................................................................................................... 27
5.4.2 PRICE .......................................................................................................................................... 27
5.4.3 PLACE ......................................................................................................................................... 27
5.4.4 PROMOTION ..............................................................................................................................28
5.5 Product Branding Strategy ................................................................................................................29
5.5.1 Branding strategy.......................................................................................................................29
5.6. Distribution strategy ........................................................................................................................31
5.7. IMC (integrated marketing communication) ...................................................................................32
5.7.1. AIDA .......................................................................................................................................... 32
6.0 Strategic Alliances ................................................................................................................................. 33
7.0 Organizational Plan ...............................................................................................................................34
7.1. Form of ownership:..........................................................................................................................34
7.2 Organizational Structure...................................................................................................................35
7.3 Management Team...........................................................................................................................35
8.0. Risk Assessment ................................................................................................................................... 36
8.1. Overall aspect .................................................................................................................................. 36
8.2.1. Macro-Economic Risk:...............................................................................................................36
8.2.2. Business Model Risk..................................................................................................................37
8.2.3. Geographic Risk.........................................................................................................................37
8.2.4. Financial Risk.............................................................................................................................37
8.2.5. Regulatory and Compliance Related Risk .................................................................................38
8.2.6. Reputation Risk .........................................................................................................................38
8.2.7. Operational Risk........................................................................................................................38
8.2. Risk Factors ...................................................................................................................................... 39
8.3. Contingency ..................................................................................................................................... 40
9.0 Financial Plan ........................................................................................................................................ 40

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 9.1. Initial investment .............................................................................................................................41
9.2. Source of fund.................................................................................................................................. 41
9.3 Important Assumptions ....................................................................................................................41
9.4. Break-even Analysis ........................................................................................................................42
9.5. Projected profit and loss ..................................................................................................................43
9.6. Projected Cash Flow.........................................................................................................................44
9.7. Balance Sheet................................................................................................................................... 45
10.0 Exit strategy ........................................................................................................................................ 46

Table of figures
Figure 1 industry life cycle ..........................................................................................................................19
Figure 2 custom content development....................................................................................................... 21
Figure 3 promotion strategy .......................................................................................................................28
Figure 4 step by step brand formation ....................................................................................................... 30
Figure 5 distribution channel ......................................................................................................................32
Figure 6 AIDA model of IMC........................................................................................................................32
Figure 7 organ gram of Paradigm Animations ............................................................................................36
Figure 8 Break-even analysis (projected).................................................................................................... 42
Figure 9 projected cash flow.......................................................................................................................44

Table 1: SWOT analysis ...............................................................................................................................12

Table 2 Comparison between Competitive Brand Users & Category non-users........................................ 30
Table 3 organizational structure .................................................................................................................35
Table 4 start-up capital breakdown............................................................................................................ 41
Table 5 Pro Forma Cash Flow.....................................................................................................................45
Table 6 Pro Forma Balance Sheet ...............................................................................................................46

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Executive summary
The global animation industry is one of the most consistent performing industries over the course of the
last 25 years. Within that time it has witnessed many changes in dynamics. And the changes are in
motion even now. Although the holy trinity of animation: USA, Japan and Korea still dominate, new
entrants are beginning to venture into their reign in hopes for a greener patch. It is understandable that
new countries are showing interest in the animation industry; after all, it has been growing at a
phenomenal rate of 35% over the last 5 years.

However, Bangladesh so far, has not taken any step to take share of the spoils. Surprising when the
Animation Entertainment segment in this region is estimated at USD 122 Million (CY 2009) and is
expected to show a CAGR of 20% (2009-2013) to reach USD 253 million by 2013. More surprising when
74% of the animation entertainment works in this region is outsourcing work for overseas clients. Even if
the economic benefits are overlooked, it appears almost criminal that such a rich culture has little to no
identity in the increasingly popular visual language of animations.

That is where we get the inspiration of our animation studio – PARADIGM.

Paradigm is an attempt to put Bangladesh on the ever-growing field of animation. With a vision to
create a visual identity for our culture much like the Japanese Anime and with a mission to become the
largest outsourcing service provider in the sub-continent by 2020, paradigm is an attempt to announce
the arrival of Bangladesh in the global animation industry.

Animation is a process under which different drawings of imagined action (called frames) representing a
slight shift in the positioning of content are recorded in such a way that it gives an illusion of motion
when shown at a predetermined rate. In a nutshell, it is a time sequencing of frames to create a
simulation of continuous movement. In this context, as the Bangladeshi Animation Industry is still at its
embryonic state, we will consider the regional animation industry to be the local industry whereas the
Bangladeshi industry shall be mentioned as the domestic industry henceforth.

Animation Industry in Bangladesh (our major competitor) is a highly fragmented market. We have
profiled the leading players across Animation Entertainment, Entertainment VFX, and Custom Content
Development. But being fragmented and constrained to minor actions this competitors are of small
scale and many lack resources to compete with the global animation studio and their capabilities.

The global economy is witnessing significant contraction with an unprecedented lack of availability of
business and consumer credits. This current decrease and any future decrease in economic activity in
the United States and other regions in the world, in which we do business, could significantly impact our
results operationally and financially. The business risks are both inherent and perceived. The business of
entertainment being a High Risk – High Return business does test our patience, commitment and
convictions time and again.

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Animation software is increasingly being used across various market verticals - films, television
broadcasting, video game development, web designing, training and education services, and corporate
communications. Expanding use of animation in training and instruction programs, need for effective
animations in video games, and growing requirements of broadcast and media sector are also important
growth factors.

Bangladeshi companies are trying to improve quality and making attempts to compete
globally with the market leaders in the industry. It is said that the year 2004 is a watershed for the
Indian animation and gaming industry (according to the Bangladesh Chambers of Commerce and
Industry report on the Entertainment Industry). The year was marked by increased use of animation in
the Bollywood segment. According to the FICCI report, the increasing demand for downloads of games
on mobile phones will enhance the opportunities for gaming companies and bring in new entrants.
Several Bangladeshi companies are entering into collaborations with foreign new media companies,
which outsource their work to the Bangladeshi companies. Recently, Toonz Animation floated a
joint venture with First Serve International LLC, a global media company which aims to
produce and distribute top-notch animation programming for the world market. The new venture
will be headed by former Walt Paradigm Animations executive Ed Bordering. In 2004, a Chinese
company also invested in Bangladeshi Games Ltd.

While it is true that Bangladesh’s animation industry is growing at a remarkable pace, the fact remains
that this growth is largely a result of the mushrooming of “studios-for-hire.” In animation feature
films, for example, while Bangladeshi companies carry out the technological animation work, character
design, and storyboarding are done abroad. Bangladesh is yet to become a successful player in concept
creation, the high value-adding segment of the industry which remains a preserve of western firms.
Bangladesh’s advantages of low costs in this industry will be too short-lived, and sooner rather than
later, the country will have to start developing new technologies.

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1.0 Introduction

The rapid advancement of technology has made computer animation available to the masses and the
animation industry is one of the fastest growing industries. The demand for animated entertainment has
expanded with the increase in broadcasting hours by cable and satellite TV along with the growing
popularity of the Internet. In the past, animation series were aimed at children aged nine and below. In
recent years however, TV stations have been producing animation series for teenagers, adults and the
whole family. Animation series like The Simpsons and King of the Hill have been successfully aired on
primetime TV. The major markets include the United States, Canada, Japan, France, Britain and
Germany. Licensing operations for T-shirts, caps and other items have also been a major source of
revenue for animation companies. In Japan, several successful computer games have crossed over and
have become animated series like Pokemon, Monster Farm, Power Stone and Detective Conan. More
broadly speaking, animation is increasingly used in video games, and movies are also increasingly reliant
on animation and computer graphic special effects.

Another key trend we are witnessing is the outsourcing of animation content to Asia. This market is
increasingly being tapped by North American film and television program producers. The major factor
behind this shift of computer animation production to the Asia/Pacific region continues to be the
availability of low cost, powerful computer animation platforms and much lower labour rates in the
Asian and Pacific Rim countries compared to North America and Europe. The bulk of the outsourcing
happens for 2D animation content with some amount of 3D content.

There is a considerable increase in the 2D and 3D animation outsourcing to Bangladesh. Due to the
extremely competitive climate as well as the global slow-down, some of the large studios in the US have
implemented large amounts of layoffs of animators and artists. Bangladesh is slowly emerging as an
alternative to Korea, Philippine and Taipei for animation outsourcing. Bangladesh is also emerging as a
post-production hub for animation. Post production involves a lot of ink, paint and compositing and
scanning work, which is the labour intensive part of the entire process of animation and requires less
skill. Thus we can see that the animation industry in Bangladesh is following a similar evolutionary part
as the software industry. In the early part of the evolution of the Bangladesh software industry, it was
the low value jobs which were shifted to Bangladesh. Over time it is projected that more and more high
value jobs would be outsourced to Bangladesh. For low value post-production works, it is easier for a
studio in the US to outsource its post-production work as probably nothing is going to go wrong.
Bangladesh has one of the lowest labour rates, which makes it an attractive destination for animation
outsourcing.

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1.1 Paradigm Animations

Name of the Business: Paradigm Animations

Logo Design:

Paradigm Animations will be incorporated as a corporation, with principal offices located in

central Dhaka. All operations, from administration to website development, will take place at this
leased office location of approximately 1,000 square feet. The company also plans to establish an
office outside the capital to facilitate, control prices, and monitor the quality of work.

 Breakthrough services: Paradigm Animations will develop a unique animation studio

that will cater Bangladesh with global standards in terms of animation and 3D works
which can be compared and paralleled to Paradigm Animations or DreamWorks studios
works.
 Trademarks. The company plans to register a corporation under the name of Paradigm
Animations and operate under the same name.
 Large markets. Recent studies by Forrester Research Inc. reveal that business-to-
business (B2B) commerce will total $2.7 trillion in revenue by Year 5. The data
emphasize that e-marketplaces will be responsible for 53% of all online business trade.
 Seasoned management. The company's management is highly experienced and
qualified.
 Customers. The company will primarily target small and start-up businesses throughout
the country. The company will also develop plans to negotiate deals with big businesses.

Owners

 Shah Shihab Sadman (Owner)

Ownership Style: Proprietorship

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Nature of business: Profit

Paradigm Animations seeks to grow in the underdeveloped sector of Animation industry that
includes designing and graphical works including content development in media industry and
also becoming a forerunner in the animation film industry.

1.2 Mission

The mission of Paradigm Animations is to become a leader in its industry, utilizing the power of
animation to become the market leader in providing online graphic solutions, website designs,
graphic art designs, and animation film development sector that will unleash the true potential of
the firm. To accomplish this, the company will combine high-quality workmanship with the
lowest costs in the industry.

1.3 Keys to Success

 Establish a well-organized management and a competitive supply chain that will fuel the
entire organization.
 Offer extended hours to serve a larger portion of the buying public than our competitors
do.
 Educate the buying public by merchandising our products with informational/tutorial
signage and literature
 Offer the services of a full time service department to our client base.
 Continually modify the product and service offerings to stay on the leading edge of
technology within our market.
 Exploit the many weaknesses of our local and national competitors to differentiate
ourselves from them.

2. Industry Analysis
2.1. FUTURE OUTLOOK
The growth potential for the industry has already been explained in the industry overview section. In
case of Bioscope Animation Studio, the growth potentials are explained in the action plan for the first
five years. For the later year, it plans to expand its operation more in the original feature film content, as
well as merchandizing (outsourced). After 15 years, we have a plan to start our very own amusement
park. The regional animation industry is currently at a nascent stage, with a miniscule 1% share of the
global animation and gaming industry and ~8% share of the outsourcing work. This industry has
demonstrated its capability in delivering high quality, on time work and holds a promising potential both
from the domestic and the overseas demand market perspective. Increasing no. of co-production deals,

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overseas expansion, increasing focus on IP development, attracting investments from Private Equity /
Other Funds – All these recent developments by Bangladeshi players bode positive for the industry.

Adequate supply of talent will need to be ensured to achieve the promise that this segment holds.
Government grants would also help in improving competitiveness of the industry.

2.2. SWOT analysis

STRENGTH WEAKNESSES
• Growth of English speaking population- • Lack of trained manpower.
competitive advantage.
• Leveraging rich heritage and culture to develop • High retraining costs.
original content.
• Relatively affordable cost of production • Lack of Government support to
compared to other outsourcing countries. encourage original content.
• Change from service model to co-production • Lack of Government intervention to
and Intellectual property creation model. promote the industry.
• Not treated as mainstream career option
by many professionals.
• Lack of focus on R&D.
• High remuneration vis--vis skills.
• Attrition is a major concern area.
• Lack of awareness of the industry
unlike IT industry.

OPPORTUNITIES THREAT
• Strategic alliance of Bangladeshi studios with • Growing competition from China,
foreign companies to share risk and build long Philippines, South Korea etc.
term relationship.
• Bangladeshi companies adopting inorganic • Government intervention in other
growth route to expand their global market share. countries to promote the industry on the
global front.
Table 1: SWOT analysis

Opportunities for the Company to sustain and increase its market value emerge from:

a. Its creative competence;

b. Its technological capability;
c. The scalability of its production capacities;
d. Its ability to deliver high quality at competitive price;
e. Its ability to deliver on time;
f. Its ability to add value to customer needs;
g. Its ability to service large value projects;
h. Increased focus on value creation;

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 i. Operational efficiencies.
j. Its ability to provide innovative financial deals
k. The growing demand for animated products in the television, DTH and Theatrical
space both in the local and global entertainment market
l. The advent of new modes and mediums of entertainment including Mobiles,
Gaming Consoles etc

2.3 PESTEL analysis

2.3.1. POLITICAL ANALYSIS OF ANIMATION STUDIO

• Government Support

Compared to governments in other countries; efforts by the Bangladeshi government to encourage the
sector have been very minimal. The government of South Korea funds animation ventures on a
partnership basis. Bangladesh has a World Bank-funded support programme for the animation industry.
These treaties will lead to sharing of costs by partner nations and also the dispersion of technical know-
how amongst the partner nations.

• New Government Initiatives

The Animation Production Association of Bangladesh recently suggested to the Information and
Broadcasting Ministry of Bangladesh that all TV channels must ensure 10% reservation for local
animated content. The government can further encourage investments and participation in this sector
by providing tax benefits. It can provide grants to Bangladeshi animators for participation in
international conference and for taking up training programs abroad.

2.3.2. ECONOMICAL ANALYSIS ANIMATION STUDIO

Bangladesh’s attractiveness as an animation hub lies in the presence of an English-speaking workforce,
high-quality software engineers, and a large pool of creative talent, good studios and low costs. The cost
of producing a 30-minute 3D animation programme in Bangladesh is US$60,000 compared to
US$250,000-400,000 in the United States and Canada. Bangladesh has a cost advantage compared to
the Philippines, which is another low cost producer of animations. The average monthly salary of an
animation professional in Bangladesh is US$600 compared to US$1,000-US$1,200 in the Philippines. The
cost of outsourcing one hour of animation work to Bangladesh is estimated to be 30% to 40%
of the corresponding costs in leading animation centres in Korea, Taiwan and the Philippines.
Bangladesh’s advantages in low costs have been exploited by many multinational firms and production
studios. The advent of digital animation coincided with the liberalization of the Bangladeshi economy
and India offered the benefits of lower production costs, strong creative and technical skills and a
large English speaking population. This has led to the development of state of the art animation
studios in several Bangladeshi cities, and these studios are collaborating with global entertainment
companies.

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• Lack of Finance

Bangladeshi animation firms cannot match their western counterparts in financial strength. It is pointed
out that state support in the form of tax holidays is crucial for success in the animation business.
Canada, for example, offers major incentives to its studios for developing animation products. However,
financial institutions in Bangladesh have not been much forthcoming in funding projects in animation
and interactive media. The long gestation period before fruition of projects discourages potential
investors. This can be a major hurdle, and it has, in fact, led to the stoppage of a few production
ventures. For example, Jadooworks had to stop production of animated epic of Krishna due to
technical problems and lack of funding. The firm was supposedly on the verge of bankruptcy and this has
led to the retrenchment of about 250 workers. Interestingly, Jadooworks is the same firm which drew
appreciation from Thomas Friedman in an article in February 2004 for employing traditional artistes and
transforming their skills to computerized digital painting – he was arguing that globalization can have
beneficial impact on traditional artists. The experience of Jadoo works underlines the fact that it is still
too ambitious for Bangladeshi companies to single-handedly enter into animation projects. Even
a small project in the animation industry entails a budget of US$30 million, which is not affordable for
Bangladeshi firms.

2.3.3. SOCIAL ANALYSIS ANIMATION STUDIO

• Animation Products for Illiterates

The interactive media and animation industry in Bangladesh has a large domestic market too to tap
on. A field-study based research conducted by one of the authors in July-August 2004 on the
diffusion of ICTs in Bangladesh’s rural areas offers some interesting results in this regard.6 The study
showed that television is a highly popular medium as a source of information in the Bangladeshi
countryside, as it combines visual and audio effects and is less demanding of the cognitive skills of the
user. Almost 35 per cent of Bangladesh’s over 1 billion population is illiterate. There is great demand
from this segment of Bangladeshi population for an innovative medium that facilitate communication
and information sharing, while at the same time, being easily accessible to the masses via the television.
Products of interactive media and animation can fill this demand gap to a large extent; they can be great
tools for education, entertainment and awareness among illiterates in Bangladesh’s rural and urban
areas.

SOCIAL FACTORS AFFECTING ANIMATION INDUSTRY

• The Bangladeshi Animation industry: Facing the manpower challenge

Despite the impressive growth forecasts, the Bangladeshi Animation and Gaming industry will account
for less than two percent of the worldwide market in 2010. Obviously a much larger opportunity exists
beyond what is currently being envisaged and the potential remains high. Bangladesh can participate in
a more significant way in the global Animation market, provided the country has built up
requisite manpower, with the relevant expertise, to fuel its growth. According to analysts, Bangladesh
has the potential to grow its Animation industry to around US$ 1 billion by 2010, but will remain

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restricted to US$ 869 million on account of a looming demand-supply gap in the area of employable
human resources. A similar situation exists in the gaming segment as well, which has the potential to
achieve revenues of US$ 732 million by 2010, but is expected to touch only around US$ 424 million by
that period, owing to the paucity of skilled manpower. The employment statistics for the Bangladeshi
animation and gaming industry during 2006 were as follows:

 Around 16,500 professionals were employed by the Bangladeshi Animation industry during
2006.
 This figure is forecast to increase at a CAGR of 14-15 per cent and exceed 26,000 by 2010.
 There were nearly 150 gaming companies in Bangladesh, employing about 2,500 people.
 This number is forecast to increase at a CAGR of over 50 per cent to exceed 13,000 by 2010,
with the industry revenue forecast to grow nearly ten-fold and reach US$ 424 million.

2.3.4. TECHNOLOGICAL ANALYSIS ANIMATION INDUSTRY

While it is true that Bangladesh’s animation industry is growing at a remarkable pace, the fact remains
that this growth is largely a result of the mushrooming of “studios-for-hire.” In animation feature
films, for example, while Bangladeshi companies carry out the technological animation work, character
design, and storyboarding are done abroad. Bangladesh is yet to become a successful player in concept
creation, the high value-adding segment of the industry which remains a preserve of western firms.
Bangladesh’s advantages of low costs in this industry will be too short-lived, and sooner rather than
later, the country will have to start developing new technologies.

Skills

The animation industry is still young. Bangladeshi cinema is yet to make its mark on the global stage. The
booming animation outsourcing industry is constantly demanding new skills and fresh infusion of new
talent into the industry. As such, it is imperative that we have a healthy pipeline to supply talent to the
industry. Skills required in the animation field can be clubbed under two broad categories, mainly
technical skills and soft skills. Programming expertise, analytical ability, and proficiency on the
software are basic requirements for technical skills. The number of professionals joining the animation
industry has been growing at a compound annual growth rate (CAGR) of 18.2 percent and is expected to
grow at the same rate. Though Bangladesh possesses the manpower with the requisite skill set, what
remains an area of concern is the education imparted to this manpower from the quality perspective.

This has resulted in mushrooming of multimedia institutes. What is interesting is that quite a few
reputed organizations have come forward and started a chain of multimedia institutions for two
reasons. One, they can use the trained professionals for in-house animation development and secondly,
use this education channel for market diversification and penetration. However, companies need to
invest considerable time and money in bringing these students up to the levels where they start earning
revenue for the organization.

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Need For technological training to employees

There are no academic institutes like Bangladeshi Institutes of Technology, Regional Engineering
Colleges, Polytechnics, etc., churning out animators by the thousands. What we have are only fine arts
schools which teach the fundamentals but not the technical skills required for production.
This is a major drawback for the industry in Bangladesh.

Education in new media has to be embedded into the mainstream curriculum. Students have to realize
that they can have a lucrative career as animators, and the governments as well as educational
institutions have to start programmes for their career development. The animation sector will benefit
greatly by giving encouragement to the community of traditional artists as much as to technically
trained professionals. In other words, integration of the rural and urban talent will prove highly
beneficial

2.3.5. LEGAL ANALYSIS OF ANIMATION INDUSTRY

• Intellectual property

Outsourcers have always been concerned with the protection of their intellectual property in
Bangladesh. Bangladesh is one of the few countries which have failed to take stern action against its
infringement. Bangladesh needs to strengthen its IP policy and ensure that companies operating in the
outsourcing sphere take stringent steps to take care of clients’ IP rights.

International Cooperation in the Animation industry

The Bangladeshi government is signing co-production treaties with other countries. Professional
organizations too are trying to promote the Bangladeshi animation sector abroad. ASIFA, Bangladesh,
organizes film festivals, conducts workshops and animation film competitions at the international
level. X-media Lab has been floated to help local, independent digital media producers reach their
ideas successfully to the market with assistance from outstanding international new media
professionals, who act as mentors to the companies and project teams. The second lab held in
Singapore from 17 – 19 November 2005, "Creating Successful Computer Games”, attracted
worldwide response. Bangladeshi developers have also been invited to interact with eight of the best
games people in the world. There is also a plan to do a lab in Bangladesh next year.

What are the opportunities for engagement between Bangladesh, Singapore and other
Southeast Asian countries in the field of interactive media and animation industry? To begin with,
Singapore and Southeast Asia will be an important market for products from Bangladesh’s animation
industry. Singapore has significant expertise in telecommunication and media industry. Harnessing the
favorable trade and investment climate offered by the Comprehensive Economic Cooperation
Agreement between the two countries, firms in Singapore should consider investing in Bangladesh’s
animation and media business. Maya Academy of Advanced Cinematic, a leading player in the
Indian animation industry, is planning to extend its operations to Singapore. It is currently working on a
project for BBC and has also been involved in the video games division.

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Entertainment is one of the fastest growing sectors in Bangladesh-ASEAN relations. The entertainment
industry is expected to grow at a compound annual growth rate of 20 percent from 2002 to 2007. The
entertainment industry, with total revenues of US$3.6 billion in 2002, is projected to grow up to US$8.7
billion by 2007. The Philippines was, until recently, a fast growing animation industry, rich in creative
talent, and it was a major destination for outsourcing by animation firms in the United States. However,
with rise in costs, the animation industry in the Philippines has begun to decline, and Filipino workers in
the industry have been migrating to Bangladesh and Singapore in search of jobs. Bangladesh, the
Philippines, Singapore and even China must realize that there is little to be gained in the animation
industry in the long run by competing with each other on costs. Rather, they should seek avenues for
cooperation, and direct their efforts at acquiring intellectual property rights in this creative industry.

2.3.6. ENVIRONMENTAL ANALYSIS OF ANIMATION INDUSTRY

Ability to scale operations:

Bangladeshi firms are facing a talent shortage which affects their ability to scale up their operations
based on client demands. This also affects the client’s confidence in off shoring large chunks of work.
Though Bangladeshi companies have put in place huge expansion plans, these are often marred by
various reasons. Tie-ups with educational institutes are helping overcome this difficulty.

• Opportunities in Collaborations

Bangladeshi companies are trying to improve quality and making attempts to compete
globally with the market leaders in the industry. It is said that the year 2004 is a watershed for the
Indian animation and gaming industry (according to the Bangladesh Chambers of Commerce and
Industry report on the Entertainment Industry). The year was marked by increased use of animation in
the Bollywood segment. According to the FICCI report, the increasing demand for downloads of games
on mobile phones will enhance the opportunities for gaming companies and bring in new entrants.
Several Bangladeshi companies are entering into collaborations with foreign new media companies,
which outsource their work to the Bangladeshi companies. Recently, Toonz Animation floated a
joint venture with First Serve International LLC, a global media company which aims to
produce and distribute top-notch animation programming for the world market. The new venture
will be headed by former Walt Paradigm Animations executive Ed Bordering. In 2004, a Chinese
company also invested in Bangladeshi Games Ltd.

2.4. Analyzing the Animation industry as per Porters Five Forces

Suppliers:
 The key suppliers in the animation industry are the animation training and education institutes
whose market is expected to grow at the annual rate of 40 % from 2008-12
 About 300,000 students are undergoing animation training in animation areas like film design,
game design, visual effects, wed animation, 2D, 3D.illustration and special effects.

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  For the industry to grow and move up the value chain a critical role will be played by the training
and education institutes which will help professionals acquire technical skills.
 Hence the suppliers have a key role to play in shaping the animation industry in the country

Customers: Bangladesh‘s animation studio are catering to the requirements of various end user
segments such as:

 Feature films
 TV programs
 Advertisement/commercials
 Computer games
 Education
 Multimedia /web design
 Custom Content Development

Animation solutions are also finding a place in niches such as

 Film titling
 Special effects
 Wed entertainment program
 TV broadcast graphics
 3D modelling
 Background development

With the increased scope of using animation in India and increase in demand of animated content,
customers are moving from a high bargaining power to a medium bargaining power

Identification of Fast growing segments

The market share of segment using animation reveals that the highest growth for animation currently
comes from custom content development, followers by animation entertainment, multimedia and
education segments

New Entrants:

Entry barriers are limited by the expertise, skills, technology and investment required for the animation
industry

Hence the threat of new entrants is directly related to the number of training academies and institutes
that open up and provide the relevant skill sets for the industry to exist and thrive and on the
technology to enable animation development

Substitutes All forms of media and entertainment form a part of substitutes for animation industry

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Threat form substitutes are high .A high % of animation work is being used in Animation entertainment
which has direct competition from entertainment industry as a whole .There is a media company who
are vying for the same share of customer attention and viewership

Competition within industry Being a dormant industry competition is still hard to define. But Intensity
of competition will be determined by the technology, manpower, skills, creativity, studio and medium
of reach out to the customer

2.5 Industry forecast: Industry life cycle

Figure 1 industry life cycle

3. Description of the Venture

3.1. Products and Services
Animation Entertainment Service Models
Service Model Description
Integrated Studio – State of the art units that enable production and development of all aspects of
Own Content an animation film, from conceptualization to post-production stage.
Regional Producer: Content / IP belongs to the Regional producer
Integrated Studio -
Foreign Producer: Content / IP belongs to the foreign
Offshore Facility
producer
Regional entities provide services for the labor intensive activities which are
Service Provider
outsourced to them.

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 Animation companies in this region are moving up the value chain, from
providing piece-meal outsourcing services to exploring the co-production
Co-Production model. Typically, the regional studios bring the manpower and infrastructure
to develop the animated content and the international producer will finance
the marketing, distribution etc.
Content Creation Full ownership of content, share in collections, royalty for all licensing and
(IP) merchandizing

The animation entertainment service models lie along different parts of the value chain. Depending
upon the service model that a player adopts, he can be present across the value chain or in certain
specific parts of it. Players also adopt multiple service models: for e.g. the same player may operate on
‘service delivery model’ and ‘co-production’ model, varying from one deal to the other.

Animation Entertainment Revenue Models

Service Model Revenue Model
Revenue Sharing
Co-Production Co-production Model: Changes have been witnessed over a period of time.
Initially the revenue share was based on territorial rights with regional
studios getting continental rights which generally generate less revenue.
Content Creation Currently, coproduction deals are being struck on a global revenue sharing
model.
Work for Hire
Specific activities along the value chain, for example, production, and post
Service Provider
production are outsourced to regional players. Revenues for these activities
are generally realized on a per hour basis. As majority of the outsourcing
happens in the production part most of the regional players realize revenue
Integrated Studio –
on this model only. An integrated studio offshore facility Refers to a captive of
Offshore Facility
a foreign producer.
Revenues from Multiple Streams
Integrated Studio – The integrated studios who own the IP and produce local content can realize
Own Content revenues through various streams. These revenues can be from box office
sales, TV and DVD/home video, merchandizing, and music rights.

3.2. Custom Content Development

Custom Content Development, estimated at ~ 295 USD Million (2009) has grown at 35% p.a. (2005-09)
and is expected to continue its growth at a healthy rate of 23% p.a. (2009- 13) to reach USD 685 Million
by 2013. As per leading players in the industry, >90% of custom content development in this region is
outsourcing work.

Custom Content Development initiates with sourcing of the content and preparation of the script /
storyboard followed by creation of the content and migration of the same on the required platform. The

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platform on which the content finally resides may be a CD / DVD, website, or a Learning management
System depending upon the customer’s requirements.

Figure 2 custom content development

3.3. Background of entrepreneurs

The enterprise will be a partnership business of which one will be the majority shareholder.
Other partners will be working as directors but will have major responsibility on them.

Shareholders name Age Academic experience Financial solvency

Shah Shihab Sadman 22 Undergrad student Solvent
(Owner)

3.4. Company Locations and Facilities

We have chosen a site at in karwan Bazar, Dhaka, and a commercial area for several reasons:

Quite centered between the other commercial areas of Dhaka and for convenience of the
supplier
Safe and plentiful in terms of technological advancements and internet.
Near high-traffic corporations
Beneficial demographics
And most importantly closest to all potential customers that is the different TV
broadcasting networks.

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I am looking at leasing approximately 3000 sq. ft. space, which will allow sufficient room for
setting up the computers and necessary storage and office space. But with further development
space will be renovated.

4.0 Market Analysis

Paradigm will focus on small and start-up business customers in Bangladesh. It plans to
aggressively pursue and acquire customers through direct business promotions and convert them
into repeat paying customers. It will continually strive to provide consumers with more cost-
effective avenues, offering substantial savings rather than just a less money.

Paradigm will also be configured to stay ahead of, and capitalize on, emerging market trends
such as integration of information/markets and increasing sophistication of online offerings. This
will provide a continuously improving, superior customer experience and grow value. There is a
serious benefit deficiency in existing "brick and mortar" Paradigm Animationsestablishments
that create inefficiencies in the ordering and production process. Utilizing the benefits of Internet
selling will eliminate many of these problems and create a lower-cost environment.

4.1. Market segmentation

Market segmentation helps marketers define customer needs and wants more precisely. Paradigm
Animations uses geographic, demographic, and psychographic segmentation to locate their target
market.

 Geographic segmentation refers to a region of a country or the world, market size, market
density, or climate; this is used for the location of Paradigm Animations's theme parks
such as Paradigm Animations land and Paradigm Animations World.

 Demographic segmentation refers to age, gender, income, ethnic background, and family
life cycle; this is used to help determine where to place their chain stores called
the Paradigm Animations Store, where to distribute their movies, and even determines
what kind of movie they should create next.
 Psychographic segmentation is based on personality, motives, lifestyles and
geodemographics; this is also used to help Paradigm Animations determine who is going
to buy more of their products.

Paradigm Animations mainly targets children and their families, it uses the multisegment
targeting strategy which is when a firm chooses to serve two or more well-defined market
segments. Paradigm Animations intrigues people of all ages; whether it is a child, teen, or parent.
For small children, it has its animation films, toys and other goods from their consumer products
division, a segment on their channel called "Playhouse Paradigm Animations," and many more.

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For older kids such as tweens and teens, it has the Paradigm Animations Channel, Radio
Paradigm Animations, their live-action films, and much more. Paradigm Animations's live-action
films attracts adults as well, in order to target adults Paradigm Animations uses a "family
approach."

4.2 Target Market Segment Strategy

The company will be primarily targeting small and start-up businesses in Bangladesh; however
the company plans to negotiate deals with big businesses. Vendors will include printers and
graphic art designers around the world that will be able to help define these markets using the
Paradigm Animation B2B portal. will also focus on large businesses. The advantage with this
market segment is that each job usually offers a higher margin than compared with the small
business segment.

Finally, the company will also address individual needs. This is potentially the largest market;
however, there is a relatively high churn rate in this segment that will require more extensive
marketing efforts to attract new customers. This, in turn, lowers the margin and makes this
segment the least attractive.

4.2.1 Market Needs

Paradigm Animations has chosen to focus on the small business market segment as its primary
customer base because these customers usually have the lowest switching costs, do not have
long-term relationships with other Animations companies, and are the most aggressive in
searching for low-cost Animations services.. The target clientele, though varied, can be
approached in very much the manner according to their needs of

Selection
Value
Service

In addition, new entrée businesses have traditionally been treated poorly and by reversing this
trend, reinforced by ongoing sales training and with unbiased customer interaction through sales
staff, Paradigm Animationscan further exploit the weaknesses of its top local competitors.

4.2.2 Market Trends

The Paradigm Animations industry is currently being driven by traditional time consuming and
expensive Animations studios. Although such companies are known for large selection, their
prices haven’t bottomed out and have been monopolizing, while still remaining financiall y
sound.

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Consumers increasingly expect the Animation studios they deal with to offer a clean, high-tech
and comfortable service, and more personal to explain the ever-increasing levels of technology.
Consumers generally want all this and expect to see prices consistent with the globe. In short,
they want a one-stop experience. Another trend that benefits this industry is that as service for
big multinationals moves to other nations such as the USA (due to lower cost of manufacturing
and online facilities), prices go down and units sold go up, increasing revenue opportunities.

4.2.3 Market Growth

There isn’t much information in numbers about the Animations industry in Bangladesh. But the
local Animation studios have emerged in few corners of the city. They are inefficient in
operation and takes time in delivering large scale works. No instances of large scale animation
studio are in operation and have been seen in the market. So there is a huge scope for market
growth driving the customers to the newly introduced Animation studio.

4.3 Service Business Analysis

The Paradigm Animations Company is a market oriented corporation, meaning they assume that
a sale does not depend on an aggressive sales force but rather on a customer's decision to
purchase a product. These are usually the parents that take their kids to the movies and buy the
merchandise. Paradigm Animationsknows that it's one thing to make a great movie that kids are
excited about but the efforts often fall short if parents don't approve of it.

The driving force of the entire company is the motion pictures and animated cartoons which are
managed by Touchstone, Pixar, Paradigm Animations Pictures, Buena Vista, and Miramax. By
doing so, the company uses its product/service differentiation competitive advantage.

The company will clearly have a very strong and well known "brand-name and image" over
many years. Because of this, selling all of movies will almost never be a problem. As you all
may know, the term marketing mix refers to a unique blend of product, place, promotion, and
pricing strategies (often referred to as the "four Ps") designed to produce mutually satisfying
exchanges with the target market.

The Paradigm Animations Company is very good at the product and placing aspects of the four
Ps. Again, because of their brand name they have the ability to sell their products easily. As new
theatrical productions are released, it allows for new product lines based off the feature’s
characters to be made and sold in strategically placed stores throughout the United States. The
stores are located in malls and super centers, in urban locations in order to for them to be visible
by the public eye.

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The next two Ps are promotion and pricing. The Paradigm Animations Company will promote
their films in almost every way possible varying from McDonald's toys to Billboards and posters
all over buses and trains. Movie ads will be displayed on various websites like YouTube,
Facebook, and Twitter and many more.

The most basic goal of The Paradigm Animations Company other than profit is, “To Make
People Happy”. Its ability to make children as well as parents feel warm-hearted and full of joy
after just one animated movie is what truly makes them successful. advertising with key words
such as "Love", "Magic", and "Happiness" because that's what we are all about. I believe that
this will be our secret to success and true competitive advantage.

4.3.1. Main Competitors

Animation Industry in Bangladesh (our major competitor) is a highly fragmented market. We

have profiled the leading players across Animation Entertainment, Entertainment VFX, and
Custom Content Development. But being fragmented and constrained to minor actions this
competitors are of small scale and many lack resources to compete with the global animation
studio and their capabilities.

The scale of involvement I tend to achieve out marks the existing competing firms by a great
margin with capabilities and output prospects matched by global animation studios like krytech,
Disney. DreamWorks etc.

5.0 Marketing Strategy and Implementation

The objective of Paradigm Animations is to become the leading provider of animation and
content development services. As part of the ongoing strategy, the company plans to:

Create New Services. Capitalize on being one the first animation studio to target the
business market by aggressively introducing new services and promotions.
Build brand recognition. Build brand recognition by promoting the Paradigm
Animations brand through diverse marketing channels, such as online advertising, public
relations, and trade-show participation.
Expand relationships. Expand the company's marketing relationships by aggressively
developing new relationships with leading destination websites and media companies.
This will accelerate customer acquisition and increase usage of our online shop.
Build customer base. Build a customer base and stimulate repeat usage by exposing
customers to products and services that most closely meet their needs.
Expand services. Expand services by creating a range of new services and aggressively
marketing these services to current and future customer bases.

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 Leverage and extend technology. Leverage and extend the company's technology
platform by enhancing the functionality of the Paradigm Animations and B2B. websites
and the technology that supports them. This will be done to improve order flow and
business planning, expands service offerings, facilitate more complete integration with
print vendors, expedite payment processing, and improve the efficiency of the system.

5.1 Strategy Pyramid

Paradigm Animation’s main strategy is to out-serve the competition. It will accomplish this
through strong personal sales/service, educational aspects, and proper product selection.
Programs such as our "100% of purchase price trade up guarantee" and our "You earn, we
are concern" incentive programs will support these areas of concentration. In addition, it intends
to build strong relationships with key consumers who have influence on the purchasing decisions
of others, be they small, medium or large business firms. These individuals are important to the
long-term success of the business. It will take advantage of the great clinics and concerts
provided by our manufacturers and suppliers to bring excitement and energy to our customer
base; it will also bring in local stand-out musicians. It will follow up on these events with call-
backs and surveys to maximize their potential for future sales.

5.2 Value Proposition

Creativity, scalability, competitive pricing and unmatched turnaround capabilities.

5.3 Competitive Edge

The Paradigm Animations Company is a market oriented corporation, meaning they assume that
a sale does not depend on an aggressive sales force but rather on a customer's decision to
purchase a product. These are usually the parents that take their kids to the movies and buy the
merchandise. Paradigm Animationsknows that it's one thing to make a great movie that kids are
excited about but the efforts often fall short if parents don't approve of it.

The driving force of the entire company is the motion pictures and animated cartoons which are
managed by Touchstone, Pixar, Paradigm Animations Pictures, Buena Vista, and Miramax. By
doing so, the company uses its product/service differentiation competitive advantage.

5.4 Marketing Strategy

Paradigm Animations will strive to develop the most recognized and trusted brand for printing
services on the Internet. To expand our customer base and to extend the image of the

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company, we plan to aggressively promote the Paradigm Animations brand through a
combination of online and traditional media advertising, public relations and participation in
trade shows. The company also plans to expand our affiliate and co-branded online website
strategies through agreements with a range of destination websites.

5.4.1 PRODUCT

The product decisions should consider the product's advantages and how they will be leveraged.
Product decisions should include:

Brand name: Paradigm Animations

Brand color: The maroon, black and white theme symbolize the simplicity that is
Paradigm Animations, a complement to one’s business that takes promotes a company by
helping them turn their operation in to graphical works and adding a creative dimension.
The dynamism it provides another company as a service represents the color maroon,
which is the simplicity of its functionality is reflected by yin yan i.e.black and white.
Tagline: “…whre dreams are shaped to reality” symbolizes the magnanimity of the studio
and its brilliance in reflecting human imagination to its closest form of reality.

5.4.2 PRICE

For Paradigm Animations, first movers pricing strategy will be followed which will incorporate
cost leadership pricing strategy as well. This is because the market targeted would be willing to
pay a less price since they are small in size and the serving company is one of the new in its
sector. Since, Paradigm Animations would be the only supplier of such service in the domestic
market, it can avail this advantage for a significant amount of time. The objective of employing
the market skimming pricing is to benefit from high short term profits because the product is new
in the market and for being able to effectively segment the market. Moreover, charging high
prices initially would help Paradigm Animations to build a high quality image for its products. If
there is threat of new entrants in the market, Paradigm Animations can effectively lower its
prices to present a high entry barrier.

5.4.3 PLACE

Place - refers to providing the product at a place which is convenient for consumers to access.
Place is synonymous with distribution. The product needs to be distributed in the market
considering the convenience of its consumers. Convenience takes into account the ease of buying
the product, finding the product, finding information about the product, and several other factors.

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The product will be reached through direct marketing out to the field level straight at the hands
of its consumers. The rationale for the chosen distribution channel is that the targeted audience is
mostly in the rising businesses. Thus to reach this segment direct marketing as well as online
marketing will be used.

5.4.4 PROMOTION

Stage 1: Building the awareness of the product

Since there is no brand of service a business firm to become more efficient in terms of cost in the
market, the consumers are unlikely to be aware of Paradigm Animations and its advantages. In
the first stage of the promotional campaign, necessary steps needs to be taken to generate
awareness about it and its benefits. Strategies that can be implemented to generate awareness are:

1. Online Banner Ads

2. Online Blogs

3. Newspapers And Leaflets

Figure 3 promotion strategy

Publication in the above mentioned sources about the advantages of Paradigm Animations can
generate awareness and curiosity among the target audience.

Duration of strategy: 3 - 4 months

Stage 2: Launch the brand through TVCs and printed advertisements

After the alertness campaign, the brand Paradigm Animations will be launched in the market in.
To generate responsiveness of the existence of the brand several TVCs will be launched, along
with print ads in newspapers.

Duration of TVC and print ad campaign: 4 – 5 months

Targeting large business firms

The large business firms can be reached effectively through seminars and conferences catching
their eyes. Moreover online social networking sites such as MySpace and Facebook could play a
interesting part. Online advertising in such media can generate the necessary buzz for the

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conscious group to gain curiosity about Paradigm Animations. Furthermore, business consultants
and magazines can be potential opinion leaders who can influence the usage of Paradigm
Animations.

Targeting smaller business firms

In order to target the smaller business firms, TVCs and print ads will be designed promoting the
benefit of Paradigm Animations. The cost benefit of using Paradigm Animations will be
highlighted in a series of TVC and print ads. For a more effective reach of the segment, opinion
leaders will be cultivated. Consultants and online blogs would be ideal candidates for the opinion
leaders. This strategy of buzz marketing will be particularly effective against the concerned
people of Bangladesh. Moreover word-of-mouth is another way to spread out the name of this
brand.

Stage 3: Promoting greater usage of Paradigm Animations

To encourage a greater usage of Paradigm Animations it is necessary to demonstrate the target

audience its core competencies. The greater usage will be initiated through arranging business
conferences and seminars to incorporate the product with the business world.

Duration: 3 months

5.5 Product Branding Strategy

5.5.1 Branding strategy
The purpose of our brand strategy is to provide a plan for the systematic development of a strong
coherent brand in order to enhance revenue and profits. The strategy is driven by the principles
of differentiation and sustained consumer appeal. To build a strong brand we need to follow the
following steps:

1. Brand Audit
2. Brand strategy
3. Brand execution

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 Figure 4 step by step brand formation

Brand Audit
Brand Audit: the initiation of a brand starts from selecting the target and getting an insight of the
product in the market. To get a better understanding of the brand we are using a target matrix
which will identify the pros and cons of our brand and align it with its competitors.

Competitive Brand Category non-users

Users

Size/Profile limited large

Decision Criteria or Cost effective Quality
Motivators
Decision Process Willing Diversified
Barriers/Concerns Price and High price and less
preservatives affordability
Brand Importance Moderate Low
Role of price High High
Satisfaction moderate Negligible
Table 2 Comparison between Competitive Brand Users & Category non-users

Currently the trend of going online is alarming. Even a slight reflection of competitiveness leads
people to adapt such services and in some business groups high end service/products have

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become a symbol of core competence. So this will act as a sweet spot for Paradigm Animations
to perform well in the market with an unmet need to be fulfilled by this product.

Brand Strategy
The purpose of the brand equity pyramid is to outline the basic building blocks of a brand should
stand for in order to guide the process of building brand equity. It is the basis for determining
key elements of the brand strategy – brand vision, brand positioning, and brand personality and
brand measurement. Now to build a strong brand strategy the following “brand pyramid” with its
elements have to be defined with respect to our brand. Through this process we will establish a
brand that will deliver high level of satisfaction to the consumers and as a result will create a
resonance in the market leading to high growth and development of the product. But all of it
starts at the base where we need to define our identity, which is stated in brand positioning
statement delivering the true motives of our product.

Brand Execution
Successful branding doesn’t happen without the careful integration of strategy, creative and
execution. Many brands fall short during the brand execution process, when real-world
requirements are not taken into account during the design feasibility stage.

This should provide Paradigm Animations with a distinct competitive edge over the key players
in the industry, which in turn will result in plentiful sales of Paradigm Animations regardless of
its competitors’ promotional movements.

5.6. Distribution strategy

A distribution strategy defines how you are going to move products from point of creation
to points of consumption, in a cost-effective manner. The effectiveness of distribution
coverage and practice is of paramount importance in achieving the desired sales of the
product in this case PARADIGM ANIMATIONS. The product will be reached through a mixed
strategy of direct and indirect marketing strategy to reach out to the field level straight at the
hands of its consumers.

We actually distribute our product in two ways:

1. B2B (Business to Business)

2. B2C (Business to Consumer)

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 Figure 5 distribution channel

The no. 1 channel is an example of B2C (Business to Consumer) and the rest are
B2B(Business to Business) channels. We select a mix of the first and second channel of the
figure that is in other words direct and indirect distribution strategy. Direct strategy will be
applied (manufacturer to consumer) in the early stages when penetrating the market to
promote the sales of PARADIGM ANIMATIONS in the temporary stalls located in and
around sports fields, parks and gymnasiums. As PARADIGM ANIMATIONS would be
implementing skimming pricing initially, retailers would benefit from the high mark ups. Thus,
retailers would be willing to feature PARADIGM ANIMATIONS products and provide a greater
shelf space.

5.7. IMC (integrated marketing communication)

Every single corporation must promote their product or service efficiently in order to capitalize
themselves. In order to do so, the company must use the "promotional mix" which is a
combination of advertising, public relations, sales promotion, and personal selling. After all of
that promotion, the company's foremost and primary goal is to have as many consumers possible.

5.7.1. AIDA
What helps reach this goal is the AIDA concept, which stands for the stages of consumer
involvement with a promotional message. These stages being: attention, interest, desire, and
actions.

attention interest desire action

Figure 6 AIDA model of IMC

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Now, the Paradigm Animations Company has no trouble grabbing the consumers attention due
to their vigorous brand name, and excessive advertising through traditional media such as
television; radio; newspapers; magazines; billboards; transit cards; and of course we couldn't
forget - the internet.

Although Paradigm Animations attracts plenty of consumers, this simple awareness isn't enough
to make a sale, they must create an interest in the product. Through various public relations,
Paradigm Animations captures many of its consumer’s interests. These relations range from
environmental issues, to public health and safety issues, to even educational issues. They are
currently running two educational campaigns called the "Disney's Leadership Experience: The
Inside Track" and "Paradigm Animations Dreamers and Doers Program."

Now that company has captured the consumer's attention and interest, Paradigm Animations
must entice a desire for the product. For Disney's animation films, desire is mostly brought upon
by the emotion the movie trailer gives off. This "emotion" depends on what genre the movie is,
and makes the consumer feel as if they "have" to watch the film. For instance, Disney's live-
action films give off an exciting, want-to-know-what-happens-next kind of feeling. Animation
films on the other hand, give off a heart-warming, family enriched sort of feeling. These feelings
encourage the consumer's desire to purchase tickets for the film.

In regards to action, the Paradigm Animations Company uses "mass communication" which
involves communicating a concept or message to large audiences. Studies have shown that
consumers usually buy products if they hear or read positive reviews on the product by other
consumers as opposed to the actual company. Paradigm Animations has taken note of this and on
it's website it has a section specifically designed for new movie releases, and feedback on these
new releases - this section is called Movies | New & Classic Paradigm Animations Films. Not
only does Paradigm Animations incorporate personal feedback through it's website, but it also
has a Facebook, Youtube, and Twitter page. Indeed, the Paradigm Animations Company has
completely convinced many consumers to take action.

6.0 Strategic Alliances

The company has strategic alliances with Network Systems, Software Developers, and Custom
Designs and Printers. These alliances are valuable to us because they will allow the company to
utilize the knowledge and resources of these firms with no additional cost to the business.
Paradigm Animations plans to also form strategic alliances with search engines such as Yahoo!
and Lycos to promote the website, as well as exploring the possibility of forming strategic
partnerships with content providers such as America Online. The e-marketplaces will become an
enduring reality in the business landscape. While the growth of these venues will spur
continuous change, the company will be participating in these e-marketplaces as buyers.

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Paradigm Animations will begin to experiment with these online marketplaces with a minimum
of 1% of its procurement dollars. This level of effort will enable the company to optimize
purchasing in a dynamic pricing world. There will be the added bonus of also understanding the
different vertical markets so that, when the time comes, we will know where to look to form
strategic alliances

7.0 Organizational Plan

7.1. Form of ownership: Proprietorship (later stage converted to partnership for greater
growth of the business)

Terms of partnership are as followed:

1. Name and address of partnership.

2. Duration of partnership—Partners can point to a specific termination date or include a
general clause explaining that the partnership will exist until all partners agree to dissolve
it or a partner dies.
3. Business purpose—Some consultants recommend that partners keep this section
somewhat vague in case opportunities for expansion arise, while others emphasize clear-
cut and unambiguous entrepreneurial goals.
4. Bank account information—This section should note which bank accounts are to be used
for partnership purposes, and which partners have check-signing privileges.
5. Partners' contributions—Valuation of all contributions, whether in cash, property or
services.
6. Partners' compensation—Determine in detail how and when profits (and salaries, if
applicable) will be distributed.
7. Management authority—What are the operational responsibilities of each partner? Will
partners be able to make some decisions on their own? Which decisions will require the
unanimous consent of all partners? What are the voting rights of each partner? How will
tie votes be resolved?
8. Circumstances under which new partners might be admitted into the partnership.
9. Work hours and vacation.
10. Kinds of outside business activities that will be allowed for partners.
11. Disposition of partnership's name if a partner leaves.
12. Dispute resolution—Stipulates what kinds of mediation or arbitration will be utilized in
the case of disputes that cannot be resolved amongst the partners. This is a way to avoid
costly litigation.
13. Miscellaneous provisions—This portion of the agreement might delineate the
circumstances under which the agreement could be amended, for example.
14. Buy-Sell Agreement.

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The human resources element shall be an essential component in the delivery of the total service.
By envisaging all employees to handle customers well, and by having enthusiastic, capable and
empowered people interacting with its customers, Paradigm Animations intends to build the
competitive advantage of being able to comprehensively meet its customers' needs. There will be
need to evaluate jobs and remuneration packages against market benchmarks to employees for
their agreed and set out tasks so as to ensure they are competitive. These principles extend to
accident, medical, death and Welfare benefits.

7.2 Organizational Structure

The company's management philosophy will be based on responsibility and mutual respect.
Paradigm Animations will maintain an environment and structure that will encourage
productivity and respect for customers and fellow employees. Additionally, the environment will
encourage employees to have fun by allowing creative independence and providing challenges
that are realistic and rewarding. organizational structure is illustrated in the Personnel table
below.

Department Level-3 Level-2 Level-1

Administration Chairman/CEO

Marketing Sales Executive Relationship and Brand Manager

Liaison Communication
Manager

Finance Accountant Assistant Financial Manager

Financial
Manager

Content Graphic and model Software Chief production officer

developers developers engineers

Legal Legal Officials Head of Legal

Table 3 organizational structure

7.3 Management Team

The founder of PrintingMedia.com is passionate about the activities it will promote and offer on
the market. Management style will reflect the participation of the directors/shareholders. The
company intends to respect its community and treat all employees well. PrintingMedia.com will
develop and nurture the company as community. However it realizes that PrintingMedia.com is
not fully conversant in television and as such intends to engage experienced staff as well as
undergo training in order to from a reputable institution.

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 Figure 7 organ gram of Paradigm Animations

8.0. Risk Assessment

8.1. Overall aspect
8.2.1. Macro-Economic Risk:

The global economy is witnessing significant contraction with an unprecedented lack of

availability of business and consumer credits. This current decrease and any future decrease in
economic activity in the United States and other regions in the world, in which we do business,
could significantly impact our results operationally and financially. The business risks are both
inherent and perceived. The business of entertainment being a High Risk – High Return business
does test our patience, commitment and convictions time and again.

The markets are getting increasingly competitive, Technological obsolescence and lack of skilled
& trained human resources demand sustained and enhanced levels of investments in both
depreciating as well as appreciating assets.

Our success is primarily dependent on the audience accepting our products which is extremely
difficult to predict or guarantee. The revenue derived from a feature film does not necessarily
bear any correlation to the production or distribution cost incurred.

The company’s business is dependent on the availability of work for hire projects and/ or ability
to co-produce projects. Unexpected delays in the commencement of work for hire projects or the

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commercial failures in co-production project would have a material adverseeffect on our
financial results. Further, as a result of the global economic infirmity, the markets are
increasingly meandering towards co-financing models of business association, which stipulate
large capital outlay, further necessitating the need for innovative financial structuring of deals.

The business is substantially affected by the prevailing global economic conditions. Increases in
interest rates, inflation, changes in tax, trade, scarcity of credit are some of the factors which
impede the growth of the business. The economic downturn has left no public limited company
unaffected which is reflected in the performance of our stocks. However given the resilience of
the economy in the face of recession as well as its strong fundamentals, the company does not
expect to be significantly affected by this risk in the long terms

8.2.2. Business Model Risk

We currently operate principally on one business segment i.e. 3D animation and our lack of
diversified business could adversely affect us.

Unlike most of the major studios in the international market which are a part of large diversified
corporate group that include Television networks & Cable channels that can provide stable
source of earnings and cash flows that offset fluctuations in their financial performance we are
predominantly dependent on the availability of Work for hire projects and the success of our co-
production deals.

To mitigate the risk in our business model we consciously ensure that we maintain a mix of
"work-for-hire" projects along with ownership of content / intellectual property rights on projects
in addition to strongly exploring the Gaming and Digital asset management.

8.2.3. Geographic Risk

We are significantly dependent on the US & European markets and any change in the nature and
structure of these markets would adversely affect our financials.

We do believe that the US & European markets are adequate enough to provide us with
continuous and sustainable business opportunities for the foreseeable future, the Asian markets
are also warming up to the possibilities of the CGI Industry and we have already made a
headway in establishing strategic relationship with producers of repute in these emerging
markets.

8.2.4. Financial Risk

The production of animated products is capital intensive and our capacity to generate revenues
from our work for hire projects may be insufficient to meet our anticipated cash requirements.

The company’s revenue is predominantly denominated in USD, given the volatility of

theBangladeshiTaka; the financials of the company can swing significantly.

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To mitigate the risk the company has through proactive and effective risk management
techniques entered in forward contracts with its clients. The company has through its strategic
initiatives and sustained reconnaissance established formidable relationship in the financial
markets that facilitate innovative financial arrangement to provide for its capital requirements.

8.2.5. Regulatory and Compliance Related Risk

The Company’s transactions are though predominantly in the US, it also transacts with other
countries. As the Company pursues towards a global reach the risk of ensuring100% compliance
with the regulations and laws also increases.

The Company has an institutionalized structure to ensure regulatory and legal compliance to
mitigate such risks

8.2.6. Reputation Risk

The reputation of an entertainment Company is built on various factors including the Credentials
of the Creative Directors, The Actors, The success of the products as measured through BOX
OFFICE collections etc.

We mitigate such risks by endeavouring towards and ensuring that we work with the most
reputed of Brands, Creatively Competent Directors of Repute and Properties that appeals toa
wide range of audience and has a Long Shelf life.

8.2.7. Operational Risk

We cannot predict the impact the rapidly changing technology or alternative forms of
entertainment may have on us. Animated products are expensive to produce and the uncertainties
inherent in their production could result in the expenditure of significant amounts on projects that
are abandoned or delayed for reasons beyond our control.

We try to mitigate these risks by investing in developing proprietary tools that enable increase in
efficiencies and standardization of processes. We also ensure that we abreast with the changes in
technology and constantly upgrade the capabilities and capacities our human resources as well as
technological resources

The production completion of animated projects is subject to number of uncertainties, including

delays and increased expenditures in lieu of creative and technical difficulties, availability of
talent, cost technology and increase in wages.

As a result the projected production cost at the commencement of the project may increase, the
date of completion may be substantially delayed or the project may even be abandoned by the
producer causing the write off of expenses incurred with respect to the project.

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We mitigate these risks through an effective amalgamation of operational planning
&management, enhancing creative and technological competence as well as good Corporate
Governance

Beginning with the release of Alpha & Omega, we expect that all our films will be produced in
stereoscopy. The company has implemented and would continue to implement changes in its
production processes & systems in order to produce stereoscopic projects. These changes will
increase the cost of producing a project, which may have an impact on the realization of profits.

We rely on technology that we license from third parties, including software. There is no
assurance that these third party technological licenses will continue to be available to us on
commercially reasonable terms or at all. The loss or delay to maintain any of these technology
licenses could result in delays in the completion of a project and could materially adverse our
business, financial conditions or results of operations.

Our success also depends on some key employees including Management personnel’s, Creative
& Technical Personnel’s. We do have employment agreements with these key personnel’s;
however it doesn’t guarantee the continued services of such personnel’s.

8.2. Risk Factors

 Our success is primarily dependent on audience acceptance of our films and animation
series, which is extremely difficult to predict and, therefore, inherently risky.
 Our business is currently substantially dependent upon the success of a limited number of
releases each year and the unexpected delay or commercial failure of any one of them
could have a material adverse effect on our financial results.
 We cannot predict the effect that rapid technological change, emerging distribution
channels or alternative forms of entertainment may have on the motion picture industry
or us.
 Our operating results fluctuate significantly
 We currently operate principally in one business; the production of animated
entertainment, and our lack of a diversified business could adversely affect us.
 The Company has recently developed and is currently in the process of developing a
number of projects that are not feature films, which will involve upfront and ongoing
expenses and may ultimately be successful.
 Animated films are expensive to produce and the uncertainties inherent in their
production could result in the expenditure of significant amounts on films that are
abandoned or significantly delayed.
 Animated films typically take longer to produce than live action films, which increases
the uncertainties inherent in their production and distribution.
 The production and marketing of animated feature films and properties is capital
intensive and our capacity to generate cash from films maybe insufficient to meet our
anticipated cash requirements.

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  The costs of producing and marketing our feature films have steadily increased and may
increase in the future, which may make it more difficult for a film to generate a profit to
compete against other films.
 We compete for audiences based on a number of factors, many of which are beyond our
control.
 We face risks relating to the international distribution of our films and related products.
 To be successful we must continue to attract and retain qualified personnel and our
inability to do so would adversely affect the quality of our films.
 Third party technology may not continue to be available to us in the future.

8.3. Contingency
At any point of time, if the business fails, our contingency plan includes the following:

1. Limiting our operation to outsourced content only. If in any case, that fails, we shall go
for
2. Legal procedures of winding up
3. Selling all hardware to independent PC owners, Cyber Cafes, Gaming Cafes, or Other
multimedia based organizations.
4. Selling software license to freelancer animators or other studios.

9.0 Financial Plan

Funding Requirements and Uses

The company will be raising the cost for the purposes of:

Establishing and organization and office presence within Bangladesh and overseas.
Completing the development of the online print shop
Marketing the website and its services
Provide a world class customer service website

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9.1. Initial investment
PARADIGM
Hardware Cost:
Apple Desktop BDT 110,000
Typical Desktop BDT 30,000
Wacom Tablets BDT 20,000
Other hardware BDT 30,000
Software Cost:
Toon Boom Bulk License BDT 120,000
Adobe Creative Suite Bulk License: BDT 178,000
Windows OS BDT 250,000
Salaries
Artists and graphic designers BDT 15,000 per month
HR manager BDT 10,000 per month
Accounts manager BDT 12,000 per month
Marketing manager BDT 12,000 per month
TOTAL COST Initial setup: BDT 638,000 monthly: BDT 49,000
Table 4 start-up capital breakdown

9.2. Source of fund

The major source of fund will be from personal account and if in dire need loan will be taken
from premier bank as per agreement but under current assumption the startup cost will be bourn
personally.

9.3 Important Assumptions

1. Sales is assumed to grow in the following rates in given sectors

2. Inflation rate is considered to be 8%. All costs are assumed to grow in inflation rate except
for that of hardware (as the mean value tends to be stable over a period of time)
3. Cost of debt is considered to be 13%
4. Cost of equity is considered to be 16%
5. After 5 years, growth rate for calculating terminal value is considered to be 2%
6. A 60% debt and 40% equity structure is assumed
7. The initial long term loan amortization period is 10 years

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9.4. Break-even Analysis

The following chart and table outline the break-even analysis for PrintingMedia.com.

Figure 8 Break-even analysis (projected)

Monthly Revenue Break-even = BDT 900,050

Assumptions:

Average Percent Variable Cost = 15%

Estimated Monthly Fixed Cost = BDT 500,000

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9.5. Projected profit and loss
Pro Forma Profit and Loss

Year 1 Year 2 Year 3

Sales $250,000 $2,910,000 $5,820,000
Direct Cost of Sales $80,000 $125,000 $200,000
Other $10,000 $30,000 $55,000
Total Cost of Sales $90,000 $155,000 $255,000

Gross Margin $160,000 $2,755,000 $5,565,000

Gross Margin % 64.00% 94.67% 95.62%
Expenses
Payroll $173,921 $224,131 $270,652
Marketing/Promotion $429,998 $360,000 $565,000
Depreciation $0 $0 $0
Software/IS expense $90,000 $60,000 $85,000
Contract Labor $26,091 $35,000 $35,000
Legal and $20,002 $10,000 $10,000
Professional expense
Bank charges $2,300 $2,000 $2,000
Rent $30,000 $15,000 $15,000
Payroll Taxes $0 $0 $0
Other $0 $0 $0
Total Operating $772,312 $706,131 $982,652
Expenses
Profit Before Interest ($612,312) $2,048,869 $4,582,348
and Taxes
EBITDA ($612,312) $2,048,869 $4,582,348
Interest Expense $83,535 $63,252 $42,084
Taxes Incurred $0 $496,404 $1,153,984

Net Profit ($695,847) $1,489,213 $3,386,280

Net Profit/Sales -278.34% 51.18% 58.18%

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9.6. Projected Cash Flow

The following table has calculated that the company will have a negative cash outflow during the
first year. However, the company will not begin financing or operations until July, 2014. In order
to offset this supposed outflow, increases in the initial cash requirements in the Start-up table
have been provided. The differences between calculated cash and actual needs will be used for
other start-up costs.

Figure 9 projected cash flow

Pro Forma Cash Flow

Year 1 Year 2 Year 3
Cash Received
Cash from Operations
Cash Sales $62,500 $727,500 $1,455,000
Cash from Receivables $128,267 $1,552,257 $3,675,524
Subtotal Cash from Operations $190,767 $2,279,757 $5,130,524
Additional Cash Received
Sales Tax, VAT, HST/GST $0 $0 $0
Received
New Current Borrowing $0 $0 $0
New Other Liabilities (interest-free) $0 $0 $0
New Long-term Liabilities $0 $0 $0
Sales of Other Current Assets $0 $0 $0
Sales of Long-term Assets $0 $0 $0
New Investment Received $0 $0 $0
Subtotal Cash Received $190,767 $2,279,757 $5,130,524

Expenditures Year 1 Year 2 Year 3

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Expenditures from Operations
Cash Spending $173,921 $224,131 $270,652
Bill Payments $717,104 $1,175,362 $2,096,935
Subtotal Spent on Operations $891,024 $1,399,493 $2,367,587
Additional Cash Spent
Sales Tax, VAT, HST/GST Paid Out $0 $0 $0
Principal Repayment of Current $166,656 $166,656 $166,688
Borrowing
Other Liabilities Principal $0 $0 $0
Repayment
Long-term Liabilities Principal $45,000 $45,000 $45,000
Repayment
Purchase Other Current Assets $0 $0 $0
Purchase Long-term Assets $0 $0 $0
Dividends $0 $0 $0
Subtotal Cash Spent $1,102,680 $1,611,149 $2,579,275
Net Cash Flow ($911,914) $668,609 $2,551,249
Cash Balance $38,086 $706,695 $3,257,944
Table 5 Pro Forma Cash Flow

9.7. Balance Sheet

The following table outlines some key financial information for PrintingMedia.com.

Pro Forma Balance Sheet

Year 1 Year 2 Year 3
Assets
Current Assets
Cash $38,086 $706,695 $3,257,944
Accounts Receivable $59,233 $689,476 $1,378,952
Inventory $14,667 $22,917 $36,667
Other Current Assets $200,000 $200,000 $200,000
Total Current Assets $311,986 $1,619,088 $4,873,563
Long-term Assets
Long-term Assets $0 $0 $0
Accumulated Depreciation $0 $0 $0
Total Long-term Assets $0 $0 $0
Total Assets $311,986 $1,619,088 $4,873,563

Liabilities and Capital Year 1 Year 2 Year 3

Current Liabilities
Accounts Payable $69,489 $99,033 $178,917
Current Borrowing $333,344 $166,688 $0
Other Current Liabilities $0 $0 $0
Subtotal Current Liabilities $402,833 $265,721 $178,917

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Long-term Liabilities $405,000 $360,000 $315,000
Total Liabilities $807,833 $625,721 $493,917
Paid-in Capital $1,080,000 $1,080,000 $1,080,000
Retained Earnings ($880,000) ($1,575,847) ($86,634)
Earnings ($695,847) $1,489,213 $3,386,280
Total Capital ($495,847) $993,366 $4,379,646
Total Liabilities and Capital $311,986 $1,619,088 $4,873,563

Net Worth ($495,847) $993,366 $4,379,646

Table 6 Pro Forma Balance Sheet

10.0 Exit strategy

As the studio is mostly equipment based, for instance computers, high definition cameras and
displays, so all these will have also very good resale value in the market. But that is actually not
the prime exit strategy rather the lender of the last resort. Now let’s focus on the varied option I
have for exit strategy regarding animation studio.

Firstly we can outsource the whole installment as a support unit to any firm for managing the
management information system or even perform IT functions for different firms and
organization. This is a very resourceful option because with the capabilities held by all by the
employees it can be easily switched to any viable IT operating options in the market.

Moreover there is an alternative to switch to different cyber café business or due to large number
of high end computers and displays it can easily be switched to another very profitable and
feasible business of gaming café. But even then the last resort is still selling out which will also
be tough not profitable but with the least of loss action.

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