BUSIK4003 - Midland Energy Resources Case Analysis

Topics: Business school, Harvard Business School Publishing, Harvard Business School Pages: 4 (2207 words) Published: April 24, 2014
REVISED: 11/05/10

O NL IN E SI MU LA TIO N F OR EG R OU ND R E A D IN G

Finance: Capital Budgeting
Company and Industry Overview 
The New Heritage Doll Company, based in Sacramento, California, was a privately held company  with  450  employees  and  approximately  $245  million  in  fiscal  2009  revenues.  This  represented  approximately 8% of the $3.1 billion U.S. doll industry, which was projected to grow by 2% annually  to $3.4 billion in retail sales by 2013.  In turn, the doll industry represented a 7.4% share of the total  $42 billion U.S. market for toys and games, which was dominated by global enterprises that enjoyed economies of scale in design, production, and distribution. Revenues were highly seasonal; the largest selling season in the United States coincided with the winter holiday period.  The doll category included large, soft, and mini dolls, as well as doll clothes and other accessories.   The phenomenon of “age compression”—the tendency of younger children to prefer dolls that had traditionally been designed for older girls—reduced growth in the “baby-doll” sub-segment. Competition among doll producers was vigorous, as a small number of large producers targeted similar demographics and marketed their dolls through the same media. Lasting franchise value for a branded line of dolls was rare; the enormous success of Barbie® dolls was an obvious exception. More recently and on a much smaller scale, New Heritage also had created a durable franchise for its line of heirloom dolls. However, the popularity of most doll lines waned after a few years.  New Heritage’s Production Division 

New  Heritage  Doll  Co.  had  three  operating  divisions:  a  doll  and  doll‐accessory  production  division,  a  retailing  division,  and  a  licensing  division.  New  Heritage’s  doll  production  division  designed and assembled dolls, doll accessories, and children’s accessories into finished product and  then  packaged  them  for  shipment.  The ...
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