Mgmt 501 v.lab Boody Report 5

8/12/2019 Mgmt 501 v.lab Boody Report 5

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Business Plan Boody the Bear Playing to learn

Prepared for:

Dr. Craig Wishart

Prepared By:

Islam S. Issa

Amro A. Ali

May 18, 2014


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Boody The Bear - Business Plan 1

Table of Contents

1 Ex ec ut iv e Su m m ary ....................................................................................................................... 3

1.1 Business Opportunity ................................................................................................................ 3

1.2 Current Business Position ......................................................................................................... 3 1.3 Product/Service Description ...................................................................................................... 3

1.4 Financial Potential ..................................................................................................................... 4

1.5 The Request .............................................................................................................................. 4

2 Co m p an y B ac kg ro un d ................................................................................................................... 5

2.1 Business Description ................................................................................................................. 5

2.2 Company History ....................................................................................................................... 5

2.3 Current Position and Business Objectives ................................................................................ 6

2.4 Ownership ................................................................................................................................. 6

3 Pr oduc ts .......................................................................................................................................... 7

3.1 Product Overview ...................................................................................................................... 7 3.1.1 Boody ................................................................................................................................... 7

3.2 Competitive Analysis ................................................................................................................. 8

3.3 Suppliers and Inventory ............................................................................................................. 8

3.4 Research and Development ...................................................................................................... 9 3.4.1 Boody 2.0 ............................................................................................................................. 9

4 Th e In du st ry , Co m p eti ti o n an d Mar ke t ....................................................................................... 10

4.1 Industry Definition .................................................................................................................... 10

2.4 Primary Competitors ................................................................................................................ 11

4.3 Market Size .............................................................................................................................. 11

4.4 Market Growth ......................................................................................................................... 12

4.5 Customer Profile ...................................................................................................................... 12

5 Mark et in g Pl an .............................................................................................................................. 13

5.1 Competitive Advantage ........................................................................................................... 13 5.2 Pricing ...................................................................................................................................... 13

5.3 Distribution Channels .............................................................................................................. 13

5.4 Promotional Plan ..................................................................................................................... 14

5.5 Feedback ................................................................................................................................. 14

6 Op erat in g Pl an .............................................................................................................................. 15

6.1 Location ................................................................................................................................... 15

6.2 Facility ..................................................................................................................................... 15

6.3 Operating Equipment .............................................................................................................. 15


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6.4 Suppliers and Vendors ............................................................................................................ 15

6.5 Personnel Plan ........................................................................................................................ 15

6.6 General Operations ................................................................................................................. 15

7 Man ag em en t, Org an izat io n an d Ow ne rs hi p .............................................................................. 16

7.1 Management/Principals ........................................................................................................... 16

7.2 Organizational Structure .......................................................................................................... 16

7.3 Professional Consultants ......................................................................................................... 16

8 Go als an d St rat eg ies .................................................................................................................... 17

8.1 Business Goals........................................................................................................................ 17 8.1.1 Establish solid business in Egypt ....................................................................................... 17

8.2 Keys to Success ...................................................................................................................... 17 8.2.1 The need to develop creative, educational and engaging toys ......................................... 17 8.2.2 Adopt strict financial controls ............................................................................................. 17 8.2.3 The need to listen to customers, effectively creating feedback mechanism for productimprovement ................................................................................................................................... 17

8.3 Future Plans ............................................................................................................................ 17

9 Fin an ci al A ss um pt io ns ................................................................................................................ 18

9.1 Profit and Loss......................................................................................................................... 18


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1 E XECUTIVE S UMMARY

1.1 Business Opportunity

Boody the bear is a unique concept ready to invade the MENA markets. Boody the bear isan innovative experiential learning toy that perfectly suits knowledge-conscious customers.

The partners, who bring talent, enthusiasm and two entrepreneurial awards to the venture,

are seeking to raise a capital of $100,000 to facilitate the opening and operation of

EduTks.

1.2 Current Business Position

The market for experiential learning products has been building strongly through the recent

years and now appears ready to enter a new, accelerated period of growth. Boody the

bear is the flagship product of EduTks an entrepreneurial venture that is considered

pioneer for experiential learning products in the MENA region.

EduTKs has been operating for almost a year, mainly from Mansoura, and have

successfully produced 2000 units of their flagship product Boody. The companys

ambition to become a valuable market leader in experiential learning toys and spread up to

date education technologies within the MENA region is reflected in their vision:

We will lead the educational toys industry in the MENA region, translating the latest

education technologies into value to our customer

The businesss mission statement is as follows:

EduTKss mission is to spread the culture of learning by fun practicing. The more children

that learn basic functions from our toys, the more successful we are.

1.3 Product/Service Description

Boody is battery powered (using 3 AA batteries) with the ability to deliver 6 different

lessons to kids in both Arabic and English that fits both boys and girls. Lessons include:

The alphabet song (Arabic and English)

If youre happy and Old McDonalds songs

Two Arabic bed time stories

The teddy bear mimics realistic mouth movement that is synchronized with the words in

the songs and stories which engages children and encourages speech comprehension.Boody the bear is also capable of dancing when music is played.


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EduTKs is conscious on child safety and designed their polypropylene cotton with

embossed plush toy to be child safe and with an on/off switch feature. Currently, the teddy

bear only comes in Orange and ships with an educational CD

1.4 Financial Potential

Revenues of EGP 440,000 are expected in the first of year of operations, with 400%

forecasted revenues increase in the second year of operations to reach a value of EGP

1,760,000. With increased efficiency, learning curve and market share, a revenue of EGP

3,520,000 is expected in the third year that represents almost 800% growth from the first

year of operations.

The following graph illustrates the profit and loss projections for EduTks through the first 3

years of operations.

1.5 The Request

EduTks is seeking to raise a capital of $100,000 to cover start-up costs, purchase needed

equipment, and provide working capital until the business can support itself financially. In

return concerned investors will have 30% equity shares in the start-up venture.


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2 C OMPANY B ACKGROUND

Educational Toys & Kits (EduTKs) is a fresh start up company founded in 2013 by four

engineering fresh graduates. The quartet from Mansoura University recognized an

opportunity to introduce smart and interactive toys to the Egyptian market with the aim to

provide education, entertainment, fun and creative spark in their products. As the sole

producer of experiential learning gizmos to the Egyptian market and MENA region,

EduTKs has firm belief that their business will thrive and succeed.

2.1 Business Description

EduTKs operates mainly in Cai ro, selling their kick starter toy Boody - a teddy bear

capable of communicating in two languages: Arabic and English. The 100% cotton teddybear is geared with mechatronics that move the toys head and lips to mimic realistic

speaking lip motion patterns.

Sales of the company products are conducted online and in selective specialty

educational toys stores in the Egyptian capital. The target market for the company is

families with toddlers who are in in their inquisitive and learning phase. Boody, the

companys launch product, is aimed at children older than one year who are in their

language development phase.

EduTKs bases operations in Egypt and cater to Middle-East and North Africa- leveraging

the Arabic language that the product offered supports.

2.2 Company History

The four founders of EduTKs first came

together in their graduation project team.

Ayman Younis, Maram Gamal, Zainab Eid

and Samir Hussein stood out in leadershipand innovation amidst their 10 member team

while working on a smart robotic arm with

industrial applications. The group, named

inspire team, implemented the robotic arm

to follow an image processing algorithm that

identifies the optimal motion path to apply

paint to an object. The project was awarded

a couple of recognition and entrepreneurial awards: the Young Innovator award from

The Inspire team in INJAZ Egypts YoungEntrepreneurs competition


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Nahdet El Mahrousa Association (with a prize of 6000 EGP) and the 6th annual Egypts

Young Entrepreneurs INJAZ competition awa rd. The team received a seed fund from

ExxonMobil Egypt worth 60,000 EGP and 6 months incubation.

Attempting to market the robotic arm to the Egyptian Industrial plants was not fruitful, as

factories targeted by the team either displayed no need of a robotic arm or were satisfied

with operating manufacturing activities with a human task force. The lack of final customer

has evolved the thinking of the four budding entrepreneurs to utilize robotics in providing

educational products that are educational and promotes a culture of playing to learn.

2.3 Current Position and Business Objectives

EduTKs has been operating for almost a year, mainly from Mansoura, and have

successfully produced 2000 units of their flagship product Boody. The companysambition to become a valuable market leader in experiential learning toys and spread up to

date education technologies within the MENA region is reflected in their vision:

We will lead the educational toys industry in the MENA region, translating the latest

education tec hnologies into value to our customer

The businesss mission statement is as follows:

EduTKs s mission is to spread the culture of learning by fun practicing. The more children

that learn basic functions from our toys, the more successful we are.

2.4 Ownership

The company is owned by the founders, with each carrying out a different role:

Ayman Younis is an embedded software engineer and is the CEO of EduTKs.

Maram Gamal holds the position of Vice CEO of EduTKs and is a teaching and

research assistant in the faculty of engineering at Mansoura University

Zainab Eid is a computer engineer who works as the designer for EduTKs

products

Samir Hussein is responsible for Sales at EduTKs and is also a computer

engineer.


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3 P RODUCTS

Boody is a unique product in the MENA region that aims to grab market share of the

estimated $69 million USD educational toy market (Source BI-ME, 2011).

3.1 Product Overview

3.1.1 Boody

The companys flagship and launch product is unique in design and the bears lovable

shape make Boody irresistible to kids. Boody is battery powered (using 3 AA batteries)with the ability to deliver 6 different lessons to kids in both Arabic and English that fits both

boys and girls. Lessons include:

The alphabet song (Arabic and English)

If youre happy and Old McDonalds songs

Two Arabic bed time stories


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The teddy bear mimics realistic mouth movement that is synchronized with the words in

the songs and stories which engages children and encourages speech comprehension.

Boody the bear is also capable of dancing when music is played.

EduTKs is conscious on child safety and designed their polypropylene cotton with

embossed plush toy to be child safe and with an on/off switch feature. Currently, the teddy

bear only comes in Orange and ships with an educational CD. EduTKs highly

recommends the use of rechargeable batteries, as expected run time with normal batteries

is up to 3 hours.

3.2 Competitive Analysis

Currently, there are no other businesses that offer Arabic enabled educational toys with

the features EduTKs offer. EduTKs has the competitive edge to raise awareness andcreate brand loyalty within the MENA area and erect significant barriers to entry for

potential competitors.

On the international level, other products similar to Boody provide a threat if they decide to

offer their toys in Arabic. In particular, Furby poses a significant threat as it topped sales

in Europe in 2013 as an improved emoto -tronic toy. The domestically -aimed robot was

first introduced in the late 1990s and reintroduced in 2012 with apparent intelligence and

capability to develop language. Furby can also interact with each other and grow their

vocabulary of English over time. Furby is owned by Hasbro, a large toy company with

good financial back bone to compete in new markets.

3.3 Suppliers and Inventory

EduTKs rely on an overseas supplier in

China. EduTKs provided design and

specifications with the Chinese

counterpart and produced 2000 unit of

Boody the bear in 2013.

Packaging for the teddy bear is

manufactured locally in Egypt, along with

the educational CD accompanying the toy.

Currently, EduTKs holds their inventory at

Shipment of Boody teddy bears ready forshipment from the Chinese supplier


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two locations: at a warehouse in Mansoura and in a Cairo located rental. The bulk of

inventory is held in Mansoura, while the Cairo located warehouse enables quick delivery to

distribution channels and customers in Egypts capital.

3.4 Research and Development3.4.1 Boody 2.0

EduTKs plan to launch an improved product to market once they have sufficient capital.

Dubbed Boody V2, the teddy bear will include new features that will enhance the

products capabilities including:

Different personalities, colours, languages and sizes. EduTKs aims to support more

languages in their product and offer a more engaging experience to children.

More content. Through downloads, customers will have the capability to access

6000+ songs and stories

Charging capability. The original product had operation time of up to 3 hours using

normal batteries. The improved product supports a socket for charging.

Record and playback for up to 30 seconds can help parents add personal

messages to Boody.

Output to speakers. Now audio is no t limited to the toys speaker only, as the toycan be plugged to external speakers.

Arabic Voice Recognition will enable children to have simple conversations with

Boody the bear, delivering fun and a unique experience that no other toy offers

An interactive pop-up book as an accessory to Boody.


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result of many factors, from advanced technology (toys, TV, video games, internet and

social networking) to parental fears over safety, hygiene and a lack of quality play spaces.

4.2 Primary Competitors

While there are a plenty of educational toys in the Egyptian and MENA markets, we are

not aware of any similar experiential learning toys that provide this type of unparalleled

experience like this provided by EduTKs. EduTKs is an innovative blend of education and

leisure that provides a unique experience of joy to our children while helping them

developing their knowledge in the meantime.

No other business in MENA region focuses on this niche market. This will provide

considerable flexibility in pricing and allow for the creation of a great deal of customer

awareness and brand loyalty, erecting significant barriers to entry for potential competitors.

While no businesses currently devoted exclusively to experiential learning solutions similar

to EduTKs in the MENA market, not very close educational toys are sold at traditional toys

retailers like ToysRUS and BabyShop.

4.3 Market Size

As per the MENA education report prepared by Al Masah Capital Management Limited

(AMCML) The MENA region is expected to absorb approximately 300,000 new pupils peryear during 2010 2015, which is a key demand driver for the regions education sector.

Data from the World Bank suggests the total school-age population in MENA is likely to

grow to 53.6 million pupils in 2015 from 51.8 million in 2010. The primary and secondary

school-age population is expected to expand at a CAGR of 1.2% to 4.5 million pupils and

1.1% to 24.2 million, respectively, over 2010 15. Among GCC countries, the UAE is

expected to experience the strongest growth in the total school-age population, which is

projected to increase at a CAGR of 2.7% to 108,000 pupils during 2010 15. However, in

absolute terms, Saudi Arabia leads with a projected growth of 361,000 in the school-agepopulation over the same period. In MENA (excluding GCC), Libya is estimated to

experience growth in the school-age population, which is likely to expand at a CAGR of

2.0% during 2010 15. However, Egypt is expected to grow the most in absolute terms,

with a 1.0 million rise in the school-age population over the same period.


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4.4 Market Growth

Using the above data with the assumption that there would not be any change in the gross

enrolment ratio, Egypt would experience maximum growth in the student population,

followed by Saudi Arabia, Algeria and the likes as seen in the exhibit below.

4.5 Customer Profile

The main target customers are the parents of the young children in the early years of school and

preschool years. More specifically, young educated millennials families with an appetite to

experiment new experiential educational methods with their children.


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5 M ARKETING P LAN

EduTKs overall marketing strategy will be to educate customers about the benefits of

experiential learning, and to promote the availability through the different selected retail

channels. Customers will be reached through online advertisements, special event

promotions, and word of mouth spread.

EduTKs will target education-conscious, progressive, and generally well-educated and

affluent customers who are interested in trying new products and experiences and are

dissatisfied with the limited selection found in the traditional education industry.

5.1 Competitive AdvantageNo other business in the MENA region focuses primarily on either the experiential learning

toys or the Arabic language content. This will provide considerable flexibility in pricing and

allow for the creation of a great deal of customer awareness and brand loyalty, erecting

significant barriers to entry for potential competitors

Boody the bear will reach target customers mainly through online retail channels and

online advertisement campaigns. These marketing methods are considered very

convenient for young educated millennials that prefer digital methods for everything

including online shopping for such products.

5.2 Pricing

Research in the Egyptian market indicated that educational toys range in prices from as

low as EGP 50 to as high as EGP 700. In that regard, Market penetration strategies are

considered the easiest way to grow in an expanding market. However, this becomes more

difficult as the market matures and competition increases.

The main tactic that can be employed here is to offer very competitive pricing at the earlyyears aiming at increasing the product awareness and winning large initial market share.

Boody the bear is going to be offered at an aggressive discounted price initially of EGP

250. In subsequent phases, this price can be increased to EGP 400.

5.3 Distribution Channels

The primary distribution channels shall be the online retailers like Souq.com, Nefsak.com

and Jumia.com.eg. In addition to selective traditional toys retailers.


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In subsequent phases, additional distributional channels can be added like the online app

stores for getting on demand content for Boody the bear like different educational content

or different language packs.

5.4 Promotional Plan

EduTKs is primarily reaching customers through channels; accordingly the appropriate

promotional strategy will be a pull strategy through investing in online advertisement and

special marketing events in order to build the brand awareness and properly position

Boody the bear value in the minds of end consumers.

Concerning the communication message, EduTKs will focus on its unique selling

proposition which is the high quality experiential learning product that delivers a joyful

learning experience to our children.

5.5 Feedback

Among the important aspects of the marketing strategies, is to listen to the consumers and

channels feedback. End consumers feedback is very important in order to measure the

positioning of EduTKs products and the effectiveness of the employed marketing

programs.

Channel feedback is also very valuable in knowing the insights of the market andconsumers trends. Feedbacks will be collected through distribution channels and through

surveying EduTKs customers directly.

EduTKs will also invest in an interactive online channel on the Facebook through which

EduTKs can better interact with the consumers and collect feedbacks.


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6 O PERATING P LAN EduTKs is located in Mansoura, Dakahlia in Egypt and is the main location for operations.

EduTKs operates from another office in Cairo concurrently. Equipment needed is minimal

and the companys products is repackaged locally and delivered to customers andvendors. The following sections elaborate EduTKs operations.

6.1 LocationLocated in the Helm or dream workspace, EduTKs operates on the 6th floor of el-Bahiyy

building on 19 Teraa Street (Mansoura University district). Concurrently, EduTKs works

from Venture labs at the American University in Cairo New campus in New Cairo- Each

location

6.2 FacilityThe current facilities are not company owned, but provide workspace, internet connection

and capability to meet people and potential investors.

6.3 Operating EquipmentThe co-founders operate on a mobile office basis, using collaboration tools and electronic

communications hosted on their own laptops. The company has invested in design tools

that help in research and design operations.

6.4 Suppliers and VendorsCurrently, specialty stores like Edu-Fun, Premaman & Marisco, Top Toys, Tweety, Kams,

Our babies and Pen & Paper are a few vendors that sell EduTKs experiential learning toy

6.5 Personnel PlanBesides the current roles fulfilled by the cofounders, EduTKs has currently acquired the

services of a part-time sales person that scouts toy shops and corporations that may beinterested in purchasing and selling the company products.

The company plans to expand in future and increase staffing to incorporate their growth

strategy and projected operations when Boody V2 is manufactured and distributed.

6.6 General OperationsEduTKs operates its main office 5 days a week from Sunday to Thursday from 9 am to 9

pm. V-lab office is available to EduTKs from Saturday to Thursday during the University

work hours.


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7 M ANAGEMENT , O RGANIZATION AND O WNERSHIP

The co-founders are experienced in the design and implementation of mechatronics and

intelligent systems. The technical expertise, aligned with EduTKs s partners leadership

skills provide roots for robust management. The following sections discuss the principals of

EduTKs and who they aim to consult with.

7.1 Management/Principals

The four engineering founders of the company have gained extensive exposure to

management operations during their start-up phase. Budgetary control, supplier

contracting, distribution, risk identification and mitigation as well as setting up contingency

for projected plans are but a few of the skills the team gained during their first year ofoperation.

7.2 Organizational Structure

The business is structured as an equal partnership with Ayman Younis holding the title of

CEO, Maram Gamal vice CEO. Zeinab Eid and Samir Hussein operate as designer and

sales manager respectively. Due to the small size the partners also execute technical roles

to develop and research their products. The company has recently hired a part time sales

person that reports to Samir Hussein.

7.3 Professional Consultants

The toy company would benefit from acquiring the professional services of a marketing

consultant. Marketing will assist the company establish a stable foothold in Egypt.


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8 G OALS AND S TRATEGIES

As a pioneer, EduTKs aims to establish and attain major market share within the region.

8.1 Business Goals

8.1.1 Establish solid business in Egypt

EduTKs is intensifying all efforts to stabilize business start-up and nurture business

activities. Egypt is the home country of EduTKs giving the company cultural edge and

market awareness for penetration and distributing their products.

8.2 Keys to Success

EduTKs will focus on three instrumental keys to succeed:

8.2.1 The need to develop creative, educational and engaging toys

The innovation and Arabic support is what segregates EduTKs product from other

experiential learning toys in the marketing. By combining technology and media with high

interactivity, EduTKs provides a one of a kind experience in their toys that is

unprecedented in the MENA market.

8.2.2 Adopt strict financial controls

Finance impacts everything the business does and is essential to be addressed by

management to secure necessary funds for operations and expansion. With poor financial

control the company will manage cost poorly and reduce availability of necessary cash.

8.2.3 The need to listen to customers, effectively creating feedback

mechanism for product improvement

Continuous improvement of products and addressing customer concerns and suggestionsforms a sturdy relationship that encourages loyalty, repeat sales and enhances customer

satisfaction.

8.3 Future Plans

Market expansion in the MENA region

Diversify current products portfolio


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9 F INANCIAL ASSUMPTIONS

This section of the business plan summarizes the financial assumptions used in creating

the projected financial statements.

9.1 Profit and Loss

2014 2015 2016Revenues (EGP) 440,000 1,760,000 3,520,000Other Revenues 0 0 0Total Revenues 440,000 1,760,000 3,520,000Cost of Revenues 170,000 600,000 1,196,800GP 270,000 1,160,000 2,323,200OPEX 223,000 352,340 489,798EBT 47,000 807,660 1,833,402

Tax (20%) 0 161,532 366,680

Net Income 47,000 646,128 1,466,722

Follows is a summary of the assumptions used to forecast the next three years of EduTKs

planned operations Profit & Loss

Sales - Assumptions are based on anticipated sales for EduTKs, until December,

2016

Cost of Sales Assumptions are based on the anticipated cost of revenue as a

percentage of the anticipated sales at approximately 34%

Operational Expenses The following table summarizes the forecasted OPEX for

the coming three years:

Operational Expenses (EGP)Salaries 86,400 112320 146,016Utilities 4,200 4620 5,082Depreciation 0 0 0Office Supplies 2,400 2,400 2,400Office Rental 24,000 26,400 29,040Transportation 6,000 6,600 7,260Marketing 100,000 200,000 300000

Total Expenses 223,000 352,340 489,798


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Follows is a plotting of the different profit & loss forecasted values.

Documents

Mgmt 501 v.lab Boody Report 5