... Financial Theory And Research Case Study on New Heritage Doll Company: Capital Budgeting Niweina Song Xin Gu Yao-‐Hsuan Yeh Huiyang Zhou Table of Contents Executive Summary ...................................................................................................................... 2 Evaluation Logic ............................................................................................................................ 2 Conclusion Analysis ...................................................................................................................... 3 Pros and Cons of the Recommended Action .................................................................................. 4 Analysis of the Match My Doll Clothing Line ................................................................................. 5 Analysis of the Design Your Own Doll Line ...............................................
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...APPROVALBOOK.COM Page 1 New Heritage Doll Company Capital Budgeting Solution NEW HERITAGE DOLL COMPANY CAPITAL BUDGETING SOLUTION New Heritage Doll Company Capital Budgeting Solution a great book which gives a great insight into the workings of a new heritage doll company capital budgeting solution. Clear descriptions of various systems within the new heritage doll company capital budgeting solution. Written from an american point of view but this doesn't really detract from a great book. This is a great book, filled with information for anyone interested in New Heritage Doll Company Capital Budgeting Solution. Great for students or beginners with clear information. I would definitely recommend this New Heritage Doll Company Capital Budgeting Solution book. Here The Access Download Page of NEW HERITAGE DOLL COMPANY CAPITAL BUDGETING SOLUTION : Sign up to download New Heritage Doll Company Capital Budgeting Solution Download or Read Online new heritage doll company capital budgeting solution in PDF format New Heritage Doll Company Capital Budgeting Solution Sign up to download New heritage doll company capital budgeting solution. Date shared: Mar, 20 2015 | Download and Read Online New Heritage Doll Company Case Study Solution Sign up to download New heritage doll company case study solution. Date shared: Mar, 02 2015 | Download and Read Online Heritage Doll Case Solution Sign up to download Heritage doll case solution. Date shared: Mar, 02 2015 | Download...
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...Christopher D. Huff 6/21/2016 Case 2 MBA 6368 New Heritage Doll Company Capital Budgeting Introduction The Vice President of the New Heritage Doll Company’s product division, Emily Harris, has decided to present two capital budget improvement proposals to the company’s capital budgeting committee in October. The purpose of the proposals is to provide the capital budgeting committee with a sound option that will make a positive impact on future company growth without hindering current operations and maneuverability. The purpose of this case is to decide which proposal is the most qualified proposal based on financial metrics and company goals. New Heritage Doll History and Profits Before evaluating each proposal it is important to understand the company New Heritage Doll and the toy industry itself so that we can make better assumptions for the case. New Heritage was established in 1985 by Ingrid Beckwith. Her vision for the company and those that purchased her products was simply to foster and grow a child’s ability to positively view their image and increase creativity. Her doll’s had an immediate impact on the industry which increased demand for New Heritage Doll products. Currently, the company receives operating profit from three divisions. The production division, the most asset heavy division, designs and produces dolls and doll accessories. In 2009, operation profit for the product division was 7.7 million. The retail division offers products through websites...
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...The New Heritage Doll Company is founded in 1985 and has long history. The management of company pay attention to the doll developing girls’ the imagination and self-image. The company tends to create some new products to dominate the market. The U.S. retail sales of dolls totaled $3.1 billion in 2008 while the New Heritage Doll Company’s revenue approximately $245 million of revenue, owning less than 10% of market share. There is good reason to believe that the New Heritage Doll Company has a potential future. Based on this assumption, we assume the New Heritage Doll Company’s g (internal growth rate) is not less than 3%(average growth of U.S. dolls market). The data total case flow of 2021 in Exhibit 1, Exhibit 2 we provided are base on the assumption that the projects will be operated continuity whit a g = 3%. NPV , IRR & PI PV of Total CF | 2010 | 2011 | 2012 | 2013 | 2014 | 2015 | 2016 | 2017 | 2018 | 2019 | 2020 | 2021 | Match My Doll Clothing | (3,020) | (501) | 145 | 533 | 391 | 390 | 389 | 387 | 386 | 384 | 383 | 6,747 | Design Your own Doll | (5,331) | (923) | 285 | (242) | (867) | 727 | 705 | 689 | 674 | 659 | 645 | 11,341 | | | | | | | | | | | | | | The initial expenditures of project Design Your own Doll will is more and the more total cash flow will be provided. We can find that * the NPV of Match My Doll Clothing = 6,615 the NPV of Design Your own Doll = 8,363 The project Design Your own Doll will create...
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...Risk considerations A major concern to be addressed in the New Heritage Doll case study is the risk, the two projects being evaluated having very different risk profiles. The strategy typically employed by New Heritage Company when assessing a projects’ risk is based on customer acceptance, technological uncertainty and high fixed costs. This note suggests an alternate strategy, trying to quantify the strategic growth potential for the New Heritage Doll Company of each project; therefore an integrated risk assessment approach based on both uncertainty and strategic and product positioning advantage delivered by each project will be used for project valuation. The “Match My Doll Clothing Line Expansion” project delivers an increment in the existing market segment by expanding the current warm weather clothing and accessories line, capitalizing on the popularity of the current offering and its premium pricing, having a similar risk profile as the current division business. The “Design Your Own Doll” project would deliver a “one-of-a-kind” doll ownership experience, and is expected to command the premium price associated with a custom doll. But more important, beside the new possibilities opened by the online customization of the dolls for expanding the current New Heritage market segment, the impact of the actual experience delivered by the girl interaction with the software while designing the doll should be further evaluated. This is a gaming-like experience that the project...
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...Business and Management New Heritage DollIn: Business and Management New Heritage Doll New Heritage Doll Company: Capital Budgeting MGT 6060 20 September 2011 Overview Two business proposals from the Production division of the New Heritage Doll Company are being considered for submission to the capital budgeting committee. Only one proposal will be submitted. The proposals are: Match My Doll Clothing Line Expansion and Design Your Own Doll. A systematic process will be used to determine which proposal to recommend. Criteria Include: 1. Comparison of the business cases 2. NPV analysis 3. IRR and payback period analysis 4. Analysis of additional information 5. Recommendation Comparison of the Business Cases Most Compelling Business Case Match My Doll Clothing Line Expansion Match My Doll Clothing Line Expansion is the the most compelling opportunity. This initial recommendation is based solely on a qualitative comparison of the cases and the financial exhibits provided by the brand managers. A SWOT (Strength, Weakness, Opportunity, & Threat) analysis was used to aid the decision process. See Tables 1 & 2 for SWOT analysis. Benefits of the Match My Doll Clothing Line Expansion: * Success of the original line of business * Utilization of the businesses existing strengths * Long term ability for the product to stay up to date and drive business Concerns for the Design Your Own Doll: * High risk associated...
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...------------------------------------------------- New Heritage Doll Co. ------------------------------------------------- Capital Budgeting [Author] New Heritage Doll Company: Capital Budgeting In the case of the New Heritage Doll Company, Emily Harris, Vice President of the company’s production division, is in the process of reviewing and analyzing two capital budgeting proposals within her division. Both proposals intend to spur long-term growth and to strengthen the division’s innovative product lines. Based on various financial and logistical constraints, Harris would only be able to choose one of the projects. The first project, proposed by Marcy McAdams, involves expanding the Match My Doll Clothing Line (MMDC). The second project proposed by Elizabeth Holtz, aims to introduce customization to the existing doll line, Design Your Own Doll (DYOD). In order to correctly identify which project is more compelling and valuable, Harris needs to carefully evaluate the projects based on qualitative and quantitative metrics such as the NPV, payback period, IRR and how well each project is aligned with corporate goals and strategies. When comparing the value of two proposals within a division it is important to not only compare the net present value of the two, but to also consider how each project aligns with the company’s high-level strategies, core competencies and manufacturing capabilities. Unlike the DYOD proposal, MMDC has already established itself as a successful...
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...Risk considerations A major concern to be addressed in the New Heritage Doll case study is the risk, the two projects being evaluated having very different risk profiles. The strategy typically employed by New Heritage Company when assessing a projects’ risk is based on customer acceptance, technological uncertainty and high fixed costs. This note suggests an alternate strategy, trying to quantify the strategic growth potential for the New Heritage Doll Company of each project; therefore an integrated risk assessment approach based on both uncertainty and strategic and product positioning advantage delivered by each project will be used for project valuation. The “Match My Doll Clothing Line Expansion” project delivers an increment in the existing market segment by expanding the current warm weather clothing and accessories line, capitalizing on the popularity of the current offering and its premium pricing, having a similar risk profile as the current division business. The “Design Your Own Doll” project would deliver a “one-of-a-kind” doll ownership experience, and is expected to command the premium price associated with a custom doll. But more important, beside the new possibilities opened by the online customization of the dolls for expanding the current New Heritage market segment, the impact of the actual experience delivered by the girl interaction with the software while designing the doll should be further evaluated. This is a gaming-like experience that the project...
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...4212 SEPTEMBER 15, 2010 TIMOTHY LUEHRMAN HEIDE ABELLI New Heritage Doll Company: Capital Budgeting In mid-September of 2010, Emily Harris, vice president of New Heritage Doll Company’s production division, was weighing project proposals for the company’s upcoming capital budgeting meetings in October. Two proposals stood out based on their potential to strengthen the division’s innovative product lines and drive future growth. However, due to constraints on financial and managerial resources, Harris knew it was possible that the firm’s capital budgeting committee would decline to approve both projects. She also knew that New Heritage’s licensing and retail divisions would promote compelling projects of their own. Consequently, Harris had to be prepared to recommend one of her projects over the other. The Doll Industry Revenues in the U.S. toy and game industry totaled $42 billion in 2008 and were projected to increase by 4.6% per year to $52.5 billion by 2013. The market was divided into two broad segments: video games (48%) and traditional toys and games (52%). The second segment was further divided into infant/preschool toys (14.5%), dolls (14.1%), outdoor & sports toys (12.3%), and other toys & games (59.1%) including arts and crafts, plush toys, action figures, vehicles, and youth electronics. The U.S. market for toys and games was dominated by large global enterprises that enjoyed economies of scale in design, production, and distribution. Revenues...
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...New Heritage Doll Company – Capital Budgeting Harvard Business School – Case 4214 The New Heritage Doll Company’s production division has been has given the responsibility of evaluating two proposals for new projects. The first project expands on a current “Match My Doll Clothing Line”, and the second involves creating a fully customized doll under the “Design Your Own Doll” proposal. Proposal Backgrounds Match My Doll Clothing Line Expansion (MMDCLE) The Match My Doll Expansion includes the further development of an already establish, successful doll line. The original line included limited outfits and accessories for warm weather only. It had become a popular line once celebrity children were photographed wearing the clothing and also when prevalent magazines showcased the items in the trendy clothing sections. The brand manager of this line has expressed her belief that this publicity will help the sales of the new “All Seasonal Collection” clothing take off. The new clothing expands the line from only warm weather apparel to clothing and accessories for all seasons. The supplier prices for the material to produce this clothing is low and will help the bottom line as selling price for the dolls/clothing can be at a premium due to the current buzz around the products. This line will also help end the seasonal sales that New Heritage has been experiencing due sales of only summer related items. The new expansion will however require high research and development...
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...Online Assignment Help For Students MBA FM MODULE ASSIGNMENT 2 MAY 8, 2014 | ADMIN Write a report for the New Heritage Doll Company on which new product they should adopt supporting your argument with full workings. This is an individual project. New Heritage Doll Company Report INTRODUCTION New Heritage Doll Company is a firm that has ventured into Doll production which has sought to extend its brand in order to broaden its market framework and more importantly capitalise on high levels of customer loyalty. The vice president of the Company, Emily Harris is to forward her project proposal to the Budgeting Committee for evaluation. The Vice-president’s objective for proposing the project stood out based on potential to strengthen the Company’s division of production and to drive future growth. Emily Harris has to produce a compelling project to avoid the committee to decline the proposal. Basis of assessment There are two projects between which the company will have decision option to accept or drop the proposal. The method of project evaluation would be based on discounting cash flows (DCFs) and thereafter determining the Net Present value (NPV) of each of the proposed project. The project proposal with the positive and highest NPV would be acceptable for investment. If the project has a positive NPV suggests that such a project is generating more cash than is required to service the debt and to provide the appropriate returns to the firm’s shareholders and...
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...New Heritage Doll Company: Capital Budgeting Case The key issue in the case is which of one of the two projects recommended by the Production Division should the company pursue (if any). Below is the summary of the NPV analysis done for both the Match My Doll Clothing (MMDC) and Design Your Own Doll (DYOD) As seen above the NPV for the MMDC project is $9.587 million and the NPV for the DYOD is $4.833 million. Analysis: Even though the NPV for the DYOD is lower than MMDC, it may be advisable the Company to pursue the DYOD doll as it is a more sustainable product line. The revenue of MMDC is based on trends and it is unlikely for the trend of matching doll and child clothing would continue forever. It is also important to note that historically, Heritage Doll has specialized in manufacturing the dolls and it is not specializing in clothing. Drifting from its core competency could go against the company. On the other hand, research has shown that by enabling the customer to design their own dolls that have features that are similar to their own, the company can create a loyal and sustainable customer base. Manufacturing dolls is also internally consistent with the company’s current strategy of manufacturing dolls rather than clothes. The company can continue to generate revenue by doing what it does best. The key takeaway here is that a positive NPV project should not be considered in isolation but instead should be analyzed in conjunction with the overall strategy of...
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...Online Assignment Help For Students Search SKIP TO CONTENT MBA FM MODULE ASSIGNMENT 2 MAY 8, 2014 ADMIN Write a report for the New Heritage Doll Company on which new product they should adopt supporting your argument with full workings. This is an individual project. New Heritage Doll Company Report INTRODUCTION New Heritage Doll Company is a firm that has ventured into Doll production which has sought to extend its brand in order to broaden its market framework and more importantly capitalise on high levels of customer loyalty. The vice president of the Company, Emily Harris is to forward her project proposal to the Budgeting Committee for evaluation. The Vice-president’s objective for proposing the project stood out based on potential to strengthen the Company’s division of production and to drive future growth. Emily Harris has to produce a compelling project to avoid the committee to decline the proposal. Basis of assessment There are two projects between which the company will have decision option to accept or drop the proposal. The method of project evaluation would be based on discounting cash flows (DCFs) and thereafter determining the Net Present value (NPV) of each of the proposed project. The project proposal with the positive and highest NPV would be acceptable for investment. If the project has a positive NPV suggests that such a project is generating more cash than is required to service the debt and to provide the appropriate returns to...
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...Elhaj New Heritage Doll Company March 16th 2016 Case Memo This case study was very interesting, and challenging because of the choice that had to be made between the two successful companies. The two investment projects New Heritage had to choose between were Design Your Own Doll and Match My Doll Clothing Line Expansion. After studying the case and figuring out some numbers without going to in depth, Match My Doll Clothing Line Expansion was more compelling at first. To begin, I used the total cost of initial expenditures that was given to appraise the two projects in order to see which one was more feasible. The four variables used in table 2 & 3 to find the total cost were initial expense, upfront R&D, plant property and equipment, and the investment in working capital. Design Your Own Doll had a higher total cost of $2291 in capital expenditures. Therefore, Match My Doll was more compelling at first glance since it had less capital invested on it. The capital budgeting decision criteria gives us plenty of information to help with the decision. After looking at variables in the criteria my decision to choose Match My Doll at first reformed toward Design Your Own Doll. Some of the strengths for Design Your Own Doll are its operating profit and its growth in revenue over its ten-year life. The first year after production, Design Your Doll’s growth in revenue was up 139.3%. After year 2015, its growth leveled off to 6% in perpetuity compared to Match My Doll whose...
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...| |Loan Amount: | | |Interest Rate: | | INSTRUCTIONS: Congratulations! Your team is the newest addition to the loan committee at Barsema Hall Investment Bank (BHIB). The CEO of the New Heritage Doll Company has come to BHIB for a potential commercial loan to support future capital expenditures for their production, retail, and licensing divisions over the next five years. Your team has been charged with evaluating their financials and deciding whether to extend the loan, the maximum amount BHIB will lend, and at what interest rate. Review the foreground reading and company financials posted on Blackboard in the ‘Simulation’ section. You may also use other third party resources (i.e. Google searches, etc) if you feel it is helpful, but the materials provided on Blackboard take precedence in the case of conflicting information. Complete the executive summary, qualitative analysis, the financial statement analysis, and all questions in this worksheet using the foreground reading and the financial data for each firm posted on Blackboard. Each discussion response should be complete and self-supporting (one-line responses are not sufficient). You should incorporate relevant information into your responses from the foreground reading...
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