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New Heritage

In: Business and Management

Submitted By cdhuff
Words 1241
Pages 5
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, catalog, and retail stores. The operating profit for the retail division was 4.8 million in 2009. The third and final division is the licensing division, the division generated 14.5 million in operating profit by allowing media sources to use New Heritage Doll themes.
The Toy Industry The summary of the three operating division’s responsibilities and operating profits provides the

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