Hertiage Case

New Heritage Doll Company

Michelle Thomas

Cardinal Stritch University

MBA

February

Executive Summary

Mrs. Harris, the present of New Heritage Doll Company, is thinking about choosing one of the projects to enhance the her company’s future and reputation. One of the company’s projects will be called Match My Clothing Line, and the other Design Your Own Doll.

Match My Doll Clothing was design to produce matching doll and child clothing and accessories, had got success for the last winter collection. The brand manager thought it would be better to release an all-season collection apparel as soon as possible in order to concern for the line mainly lay in the relatively large outlays and market research.

Introduction

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. Design Your Own Doll is a new line with purpose to customize the doll based on the customer’s personal data. The new line target customer pool was their loyal customer. If the project was successful, it would in turn further cemented customer loyalty, also, the new technology would enhance the company’s market sharing and reputation, however, the project was quite risky, especially for its high investment in technology infrastructure and research. Moreover, the line had a relatively long development and payback period, which would increase the risk of the profitability, also if the project was stumbled for some reasons, it would hurt the relationship with the loyal customers.

Key Facts

• Two of the key topics discussed in behavioral finance are the behavioral 
• The company’s doll has the potential to strengthen and the future growth
• Permanent customer loyalty
• Dolls could command a continued selling proposed

Statement of the Problem

A major concern to be addressed in the case is the risk, the two projects being evaluated having very different risk profiles. The strategy typically employed by New Heritage Company when assessing a project risk is based on the customer acceptance, technological uncertainty and high fixed costs. This note suggests an alternate strategy, trying to quantify the strategic growth potential for the company of each project;  therefore an integrated risk assessment approach based on both  uncertainty and strategic and product positing advantage delivered bt each project will be used for project valuation.

Therefore a purely numerical analysis based on the net present value or IRR of these projects using the classic New Heritage Doll  risk assessment strategy may not be sufficient.  The aspects related to the strategic growth potential of the Design  Your Own Doll project may be undermined by its higher breakeven volume; nonetheless the impact of opening a new market segment and delivering yet another time a unique experience for its customers, futher strengthening the new Heritage Doll brand should compensate for its. Justifying a lower risk assessment and a less conservative growth rate.