Question

Assignment # 2 - Individual effort

Video Case Study-- Rise Luggage -- Dragon's Den

BUSN BA532 Spring-Summer 2020    Weight 15% overall    Total possible Points—10

Objective

Please watch the Dragons Den video Rise Luggage video.

This segment is about two brothers who have an entrepreneurial spirit, and have developed a new product for the luggage industry. They need funding to get their product to market and have elected to present to the Dragons Den panel for funding.

Your objective is to write a one-page summary of what you learned from this video. Consider the money that may be required. Consider the distribution channels that they can choose from as presented by the Dragons.

There is no right or wrong answer, however, use your critical thinking skills to demonstrate your understanding of the business decisions the two brothers must make.

• Format- WORD Doc only—Drop Box
• 10 possible points
• Your summary of what you have learned One Page - 8 points
• Grammar, spelling, professional report     - 2 points
• Overall 10 points

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Answer 1

Assignment 2

From the video we can learn about the different funding methods and the different type of distribution channels for launching the new product in luggage industry. If you have a great idea for a new product for the luggage industry and you’re confident that it will be a top seller. Having the necessary capital to get your idea off the ground is important. So, to help your idea become reality, here are some ways you can finance your new product’s launch.

1. Friends and Family Financing

If your new product is the basis of a brand-new business, the first step for obtaining capital for many small businesses is the network of friends and family members. However, it’s important to treat your friends and family as seriously as you would any other lender or investor.

That means developing a detailed business plan, creating a prototype of your new product, drawing up loan documents and paying any loans back with interest.

2. Licensing Your Product Idea to a Big Company

By licensing your concept to a bigger company, you give them the right to manufacture and sell the product, and you take a percentage of the profits. It’s important to enlist the services of an attorney experienced in licensing to protect your interests.

3. Peer-to-Peer Lending

With peer-to-peer financing, you obtain loans from other individuals you find on lending sites. This alternative lending option provides both business and personal loans, and sometimes at lower interest rates than traditional bank loans with less paperwork.

4. Crowd funding

Crowd funding also raises money from individuals, but the funds raised are given as donations as opposed to a loan. In return, these investors typically receive early access to your product, a limited-edition version of the product, or other special treatment.

5. Trade or Vendor Credit

In trade or vendor credit, your suppliers give you an extended time to pay them for the materials you need to make your new product. If you can negotiate 90-day terms, for example, this might provide the funding you need to launch your new product and sell enough of it to pay the vendors back.

6. Pre-Sales

If you have an existing business with regular customers, you may be able to pre-sell them on a new product before you develop it. One strategy to consider is to offer your first customers a substantial discount on the product, which may encourage them to buy in. Once you make enough pre-sales, you may be able to subsidize manufacturing the product and eventually sell it at full price.

7. Subscription Sales

Subscription sales most often work well for products that need to be purchased or replenished on a regular basis, such as cosmetics, personal care products, office supplies, or pet food. By selling monthly, annual, or quarterly subscriptions before the product is made, you may be able to generate enough income to finance production.

8. Purchase Order Financing

In purchase order financing, a lender advances you money based on purchase orders you’ve obtained for your new product from a large customer. You can then use the money advanced to pay for manufacturing the product.

9. Business Line of Credit

You may be able to obtain a business line of credit from your bank or an alternative lender. Similar to a home equity line of credit, a business line of credit enables you to draw from the credit line up to a maximum amount.

You pay back only what you actually use, and as you pay the money back, your line of credit rises back to the maximum again.

Distribution channel

Distribution channel is the series of businesses, sellers, or other intermediaries your products must go through to reach your final consumers. Depending on your business and your products, this series can include wholesalers, brick and mortar retailers, online marketplaces, or shipping companies that take your products directly to consumers. Choosing the right distribution channel is a pivotal decision for your business. What you choose determines how your products are handled, the speed in which they are delivered, and how successful you are at getting your goods into the hands of consumers.

Types of Distribution Channels

While a distribution channel may seem endless at times, there are three main types of channels, all of which include the combination of a producer, wholesaler, retailer, and end consumer.

The first channel is the longest because it includes all four: producer, wholesaler, retailer, and consumer.

The second channel cuts out the wholesaler—where the producer sells directly to a retailer who sells the product to the end consumer. This means the second channel contains only one intermediary.

The third and final channel is a direct-to-consumer model where the producer sells its product directly to the end consumer. This is the shortest distribution channel possible, cutting out both the wholesaler and the retailer.