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 line and driver future growth. However, due to constraints on financial and managerial resources , harries knew it was possible that the firm’s capital budgeting committee would decline promote compelling project of their own. Consequently harris to be prepared to recommend one of her project over the other
The Doll Industry
Revenues in the U.S. toy and game industry totaled $ 42 billion in 2008 and were project to increase by 4.6% per year to $52.5 billion by 2013. The Market was divided into two segment: video games (8%) and traditional toys and games (52%). The second segment was further divided into infant/preschool toys (14.1%) dolls (14.1%) outdoor & sport toys (12.3%), and other toys & games (59.1%) including arts and crafts plush toys, action figure, 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, productions, and distributions. Revenues were highly seasonal; the largest selling season un the united states coincided with the winter holidays period. Within the toy and game segment, U.S. retail sales of dolls totaled $3.1 billion in 2008 and were project to grow by 3% per year to $3.6 billion by 2013 . the dolls category included large, soft, and mini dolls, as well as doll clothing and other accessories . the phenomenon of “age compression” – the tendency of younger children to acquire dolls that had traditionally been designed for older girls –reduced growth in the “baby-dolls” sub-segment. Competition among doll producers was vigorous, as a small number of large producers targeted...