Review Case Study, “Mayu LLC,” attached In 250 words: The advent and greater expanse of the Internet and availability of communication tools, such as Skype, provides an easier global expansion path f

Review Case Study, “Mayu LLC,” attached

In 250 words:

The advent and greater expanse of the Internet and availability of communication tools, such as Skype, provides an easier global expansion path for entrepreneurs. In the case study, as Mayu considers her endeavor, what are some key points to consider as part of her international business plans?

Review Case Study, “Mayu LLC,” attached In 250 words: The advent and greater expanse of the Internet and availability of communication tools, such as Skype, provides an easier global expansion path f
5/2/23, 6:35 AM Mayu LLC https://prod.reader -ui.prod.mheducation.com/epub/sn_b4dc/data-uuid-f0bdb3e8e76849e191cb079b2064f265 1/34 CA SE 1 1 M AYU LLC IN TR O DUCTI ON 5/2/23, 6:35 AM Mayu LLC https://prod.reader -ui.prod.mheducation.com/epub/sn_b4dc/data-uuid-f0bdb3e8e76849e191cb079b2064f265 2/34 Pag e 5 2 3 A ft er g ra d u ating f r o m co lleg e wit h a B S in bu siness ad m inist ra tio n, K ate Rob er tso n wa s no t seek ing a t r a d it io na l office jo b . I nst ead, sh e wa s l o oking f o r a n ad vent ure, o ne th at wo uld f u lf il l h er nev er-end ing wa nderlu st a nd a ll o w her t o u nl ea sh h er ent repr eneu ria l spir it. S h e jo ined t h e Pea ce Co rps a s a S m all B usiness Dev elopm ent Vo lu nt eer a nd wa s sent t o a r u ra l co mmunit y h ig h in th e And es Mou nt ains of P er u. D uring th e 2½ yea rs th at K ate liv ed in Per u, sh e beca me ena mored wit h t h e co unt ry . A ft er m on th s of t ea ry -ey ed g o od byes, sh e ret urned t o Ch ica go in early 2 0 10 wit h a n id ea . K ate w ou ld cr ea te M ayu L LC, a co mpa ny t h at wo uld sel l h and -k n it f a sh ion accesso ries mad e wit h pu re Per uvia n alpa ca f ib er b y t h e artisa ns wit h wh om K ate wo rk ed in th e Pea ce Co rps. K ate b el iev ed t h at b y est ab lish ing t h is sm all so cia l ent erpr ise, sh e could r em ain connect ed t o h er P ea ce Co rps communit y. T he co mpa ny wo uld no t o nl y pr ovid e ad d it io na l inco me to P er uvia n wo men bu t a lso f u lf il l a m ark et need f o r k ni twea r t h at wa s both o ne- of- a -k ind a nd st ylish . To t est t h e wa ter s, K ate ret urned f r o m t h e Pea ce Co rp s wit h two g ia nt r ice sack s fu ll o f a lpa ca sh awl s, sca rv es, a nd b la nk ets. Seeing t h e po sitive rea ctio ns of f r iend s and f a m ily, K ate d ecid ed t h at st arting M ayu wa s ind eed a n ex cel lent id ea . A s th e dem and wa s th er e and t h e wea th er wa s co ld , sh e dove in hea d fir st wit hou t cr ea ting a f o rm al b u siness plan. O ne yea r l a ter , a s M ayu wa s gro wing , K ate wa s fa ced wit h a nu mber o f ch alleng es and r ea liz ed sh e sh ou ld a nswer a co upl e of q u est ions bef ore m oving a h ea d. 1 . Assu ming d em and co ntinu ed t o g ro w, h ow wo uld sh e sca le oper atio ns in Per u? Sh e had a lr ea dy a ccept ed a f u ll- tim e jo b in Ch ica go a nd wo uld b e wo rk ing o n M ayu o n a pa rt- tim e basis. 2 . H ow wo uld sh e ta k e M ayu f r o m a n in- per son, ev ent -b ased co mpa ny t o a su ccessf ul o n line store if peo ple co uld no t see 5/2/23, 6:35 AM Mayu LLC https://prod.reader -ui.prod.mheducation.com/epub/sn_b4dc/data-uuid-f0bdb3e8e76849e191cb079b2064f265 3/34 and f eel t h e alpa ca f ib er ? Sh e need ed a n onl ine mark et ing stra teg y. 3 . Adm itting t h at f ina nce was no t h er st ro ng su it, K ate w orried th at t h e pr o f o rm a f ina ncia l d ata sh e had ca lcu la ted wer e missing so mething . S h e wa s lo oking f o r f eed back o n what sh e had d one. 4 . W hat f r a ct io n of eq uit y wo uld need t o b e giv en up ass um ing ou tsid e ca pit al wo uld b e so ugh t f o r ex pa nsio n? 5. Sh ou ld sh e pa rtner wit h se ver al ind ivid uals wh o h ad a sk ed her t o h el p th em a lso im port k nit wea r f r o m P er u? Sh e wa nted t o pr otect h er “t ra d e secr et”—t he artisa ns wh o sh e had wo rk ed h ard t o t r a in. 5/2/23, 6:35 AM Mayu LLC https://prod.reader -ui.prod.mheducation.com/epub/sn_b4dc/data-uuid-f0bdb3e8e76849e191cb079b2064f265 4/34 COM PANY AND PRODUCT Mayu , wh ich m ea ns riv er in Quech ua, t h e na tiv e la ng uag e of M ayu ’s Per uvia n artisa ns, i m po rts and sel ls alpa ca a cc esso ries incl uding h and -k nit sca rv es, h ats, sh awl s, wr aps, g lo ves, a nd b la nk ets. M ayu ’s pr o b ono a tto rney inco rpo ra ted t h e co mpa ny as an LLC and M ayu is no w a r eg ist ered t r a d em ark . K ate d ev eloped t h e fo llo wing m issio n fo r t h e co mpa ny : Mayu s tr iv es t o b e th e in du str y lead er in t h e s ale o f hig h -q ual it y , o n e-o f- a-k in d, u lt r a-c las sic al pac a acces so ries . M ayu o ffer s s o cial v al ue b y in creas in g th e liv el ih ood an d c o n tr ib u tin g t o t h e p erso n al an d pro fes sio n al d ev elop m en t o f t h ei r f em ale p ro d u cer s in P er u. A t t h e sam e tim e, M ayu t r an sp ar en tly an d hon es tly ed ucat es A m er ic a n c o n su m er s ab ou t t h e orig in s o f M ayu ’s et hic al fas hio n ac ces so ries . S uper b cu sto m er s er vic e, m utu al -res pec t, an d t r ip le b otto m lin e in it iat iv es (p eo ple, p lan et, p ro fit ) ar e th e el em ents g u id in g M ayu ’s b u sin es s ac tiv it ies . Aft er m any sh opping ex cu rsio ns in Lim a’s m ark et s an d Int ernet r esea rch o n alpa ca a ccesso ries current ly o ffer ed in th e m ark et , K ate def ined t h e uniq ue sel ling pr opo sitions of M ayu ’s pr od u ct s. T he ex clusiv e, st ylish d esig ns wer e hand mad e wit h eco fr iend ly a lpa ca f ib er , wer e fa ir ly t r a d ed ( M ayu is a m em ber of t h e Fair T ra d e Fed eratio n) , a nd wer e of t h e hig hest q u alit y, la st ing a l if et im e. T his pr od u ct o ff er ing wa s dif fer ent f r o m t h e m ass- prod u ced , m ach ine- mad e accesso ries fo u nd in brick -a nd – morta r a nd I nt ernet -b ased sh ops in Per u a nd t h e U nit ed Sta tes. K ate also no ticed t h at m ost o f t h ese prod u ct s w er e no t act ually k nit wit h pu re alpa ca y a rn. I nst ead, t h ey wer e ty pica lly a co mbina tio n of a lpa ca a nd o th er wo ols of l esser q u alit y. A no th er u niq ueness was th at M ayu ’s pr od u ct s used pu rel y Per uvia n m ater ials and l a b or a nd h ad a n int erest ing st ory 5/2/23, 6:35 AM Mayu LLC https://prod.reader -ui.prod.mheducation.com/epub/sn_b4dc/data-uuid-f0bdb3e8e76849e191cb079b2064f265 5/34 beh ind t h em . T he st ory r ef lect ed K ate’ s Pea ce Co rps exper ience and d ir ect r el atio nsh ip wit h t h e artisa ns. 5/2/23, 6:35 AM Mayu LLC https://prod.reader -ui.prod.mheducation.com/epub/sn_b4dc/data-uuid-f0bdb3e8e76849e191cb079b2064f265 6/34 IN D USTR Y AND CURREN T TR END S Clo thi ng a nd Ac ce sso rie s Kate’ s resea rch ind icated t h at t h e dem and f o r cl oth ing a nd accesso ries was driv en by per sona l inco me and f a sh ion tr end s and t h at wo men purch ased a ppr oxim atel y 6 4 it em s of cl oth ing per y ea r. A cco rd ing t o 2 0 10 I B IS W orld Cl oth ing & Accesso ries st ores ind ust ry f o reca sts, t h e ind ust ry wa s va lu ed a t $ 7.0 b il lio n wit h pr ofit s of $ 772 .8 m illio n and o f a ll t h e acc esso ry pr od u ct s so ld , 18 per cent in vo lv ed neck wear, sca rv es, a nd h ats. T he accesso ries mark et h ad seen annu al g ro wt h o f 5 .1 per cent over t h e pr evious 5 y ea rs and wa s ex pect ed t o r ea ch 7 per cent annu al g ro wt h f r o m 2 0 10 t o 2 0 15 . T he m ark et siz e of t h e wo men’ s ou ter wea r a nd cl oth ing ind ust ry h ad co nsist ent gro wt h b et ween 20 03 and 2 0 08. A lt h ou gh t h e recent eco nomic downt urn had im pacted t h e accesso ries mark et a s th e co nsu mer sent iment s ind ex f el l b y 4 .1 per cent d u ring t h e 5/2/23, 6:35 AM Mayu LLC https://prod.reader -ui.prod.mheducation.com/epub/sn_b4dc/data-uuid-f0bdb3e8e76849e191cb079b2064f265 7/34 preced ing y ea rs, t h e ind ex wa s ex pect ed t o r ise by 13. 6 per cent in 20 10 . P er ca pit a d ispo sable inco me in th e U nit ed S ta tes wa s also o n th e rise fr o m it s lo w est v a lu es in 20 08. A s a r esu lt , K ate th ou gh t t h at h er t a rg et m ark et wo uld no t b e sev erely im pacted . Stu dies showed t h at ev en in t im es of eco nomic downt urn, co nsu mer s sh ifted b u ying b eh avio r t o m ore cl assic, f o rev er pieces, wh ich is pr ecisel y wh at M ayu o ffer ed . 5/2/23, 6:35 AM Mayu LLC https://prod.reader -ui.prod.mheducation.com/epub/sn_b4dc/data-uuid-f0bdb3e8e76849e191cb079b2064f265 8/34 Pag e 5 2 4 E -C ommerc e The e- co mmer ce ind ust ry wa s gro wing st ea dil y, h aving a nnu al g ro wt h o f 6 .6 per cent f r o m 2 0 05 t o 2 0 10 a nd a nnu al r ev enu es over $ 93. 8 b il lio n. F ortu na tel y, o nl ine sales wer e ex pect ed t o co ntinu e gro wing a t a n ev en fa st er r a te of 10 .5 per cen t f r o m 2 0 10 t o 2 0 15 . L ooking a t t h ese statist ics, it wa s cl ea r t h at o nl ine ret ail ing wa s a g ro wing m ed ium f o r t h e pu rch ase of specia lt y it em s su ch a s th ose knit b y M ayu ’s artisa ns in Per u. O f a ll o nl ine bu sinesses in 20 10 , 15 per cent wer e cl oth ing a nd a ccesso ries ret ail er s. D ue to incr eased co nnect ivity, po sitive per cept ions of o nl ine secu rit y, a nd ea se of co nd uct ing tr a nsa ctio ns, onl ine compa nies such a s M ayu co uld b e ex pect ed t o b enef it f r o m t h is gro wt h. 5/2/23, 6:35 AM Mayu LLC https://prod.reader -ui.prod.mheducation.com/epub/sn_b4dc/data-uuid-f0bdb3e8e76849e191cb079b2064f265 9/34 Tre nd s Kate knew th at g ro wing a wa reness of f a ir t r a d e and et hica l fa sh ion and t h e recent sig ns of a “g reen rev olu tio n” wou ld b e benef icial t o M ayu . T her e wa s no d ou bt t h at co nsu mer s wer e beco ming m ore respo nsible sh opper s, a nd M ayu o ffer ed a so lu tio n to t h e m ark et ’s incr easing d em and f o r pr od u ct s th at o ffer ed so cia l v a lu e. W ith t h at, t h e co nsu mer m ark et w as d ev eloping a need f o r t r a ns pa rency a nd t r a cea bil it y t h ro u gh ou t su ppl y ch ains, especia lly f o r pr od u ct s fr o m t h e dev eloping wo rld . T he im plem ent atio n o f co rpo ra te so cia l r espo nsibilit y pr ogra m s and est ab lish men t o f no t- fo r-pr ofit a d vo ca cy org aniz atio ns was pr oof t h at t h e 21st -cent ury b u siness env ironm ent wa s ch ang ing , a nd co mpa nies would b e una ble to su rv iv e wit hou t co nsid ering t h e co nseq uences of t h eir beh avio rs. T he M ayu web site co ntained inf orm atio n ab ou t t h e M ayu pr od u ct l if e cy cle, a nd K ate int end ed t o f u rth er ex pa nd th e sit e to a llo w fo r ev en grea ter t r a nspa rency . Acco rd ing t o su rv ey s ad m in ist ered b y t h e Fair T ra d e F ed eratio n, t h e tr end t o wa rd f a ir t r a d e sh opping in th e U nit ed Sates wa s gro wing q u ick ly . B y 2 0 10 , 7 1. 4 per cent o f A m er ica n consu mer s knew ab ou t f a ir t r a d e and 8 8 per cent co ns ider ed th em selves conscio us co nsu mer s. I n 20 09, f a ir t r a d e org aniz atio ns aver ag ed a nn ual sa les of $ 517 ,38 4, co mpa red t o $ 49 9,8 92 in 20 06, a nd 7 2 .4 per cent o f t h ese org aniz atio ns wer e fo r-pr ofit ent ities, sh owing t h at so cia l, m issio n-driv en bu sinesses were va lid su bst itutes fo r t h e tr a d it io na l “ch arit y- b ased ” no t- fo r-pr ofit s. E st ab lish ed f a ir t r a d e co mpa nies wer e gro wing wit h incr easing nu mber s of em ployees and v o lu nt eer s and incr easing im pact in th e co unt ries where th e pr od u ct io n of th eir g o od s to ok pl ace. A s fo r co nsu mer t r end s, A .T . K ea rney ind icated t h at in 20 09, th e m ark et f o r su staina ble pr od u ct s wa s est imated a t $ 118 5/2/23, 6:35 AM Mayu LLC https://prod.reader -ui.prod.mheducation.com/epub/sn_b4dc/data-uuid-f0bdb3e8e76849e191cb079b2064f265 10/34 bil lio n, wh ile, a cco rd ing t o t h e Bost on Co nsu lt ing Gr ou p, f ir m s wit h a “t ru e co mmitm ent t o su staina bil it y” ou tper fo rm ed ind ust ry peer s, especia lly in th e ret ail sect or. T hese tr end s reit erate Am er ica n so ciet y’s desir e to cr ea te po sitive ch ang e th ro u gh pu rch asing h ab it s. The co ncept o f et hica l f a sh ion wa s also g aining m om ent um , wh ich wo uld a lso b enef it M ayu ’s eco -fr iend ly pr od u ct s. T he 20 09 Co ne Consu mer E nv ironm ental S u rv ey , wh ich w as co nd uct ed b y O pinio n Resea rch Co rpo ra tio n, ind icated t h at 34 per cent o f A m er ica n co nsu mer s wer e lik ely t o b u y env ironm entally r espo nsible pr od u ct s and 2 5 per cent m ore A m er ica ns had g rea ter int erest in th e env ironm ent t o d ay t h an th ey d id o ne yea r a g o . A s a r esu lt , t h er e wa s an incr eased ex pect atio n fo r co mpa nies to pr od u ce and sel l env iron m ent ally co nscio us pr od u ct s. S ev ent y per cent o f A m er ica ns ind icated th at t h ey wer e pa ying a tten tio n to wh at co mpa nies were doing wit h r eg ard t o t h e env ironm ent. T his int erest ind icates th at t h e “g reen rev olu tio n” is more th an ju st a pa ssing t r end . A 2 0 08 st udy b y Co nscio us Inno va tio n claim ed t h at pr od u ct s and ser vices th at h el p cu stom er s liv e a su staina ble lif e and fu lf il l t h eir “h elp m e to b e a co nscio us co nsu mer ” desir e wo uld a lso t h riv e. Co nsu mer b eh avio rs fo r pu rch asing cl oth ing a nd g if ts have ch ang ed f r o m pr evious yea rs and a re ex pec ted t o co ntinu e being inf lu enced b y co nscio us ch oices. 5/2/23, 6:35 AM Mayu LLC https://prod.reader -ui.prod.mheducation.com/epub/sn_b4dc/data-uuid-f0bdb3e8e76849e191cb079b2064f265 11/34 P ag e 5 2 5 C omp etit io n A b ro ad r a ng e of co mpet itio n ex ist ed in th e ind ust ry incl uding both o nl ine and b rick -a nd -m orta r sh ops selling a cces sories, a nd wh ile so me item s wer e hand mad e, m ost wer e m ach ine mad e. A ll wer e ava il ab le in a v a riet y o f r a w mater ials, incl uding alpa ca, ca sh mer e, wo ol, a nd co tto n. K ate def ined d ir ect co mpet itio n as onl ine ret ail st ores sel ling a lpa ca a ccesso ries and cl oth ing . T her e wer e a nu mber o f e- co mmer ce sites sel ling a lpa ca a ccesso ries bu t no ne of t h em so ld pr od u ct s as uniq ue as M ayu ’s. T he fo llo wing web sites wer e go od ex am ples of t h e co mpet itio n: M ayu d if fer ent iated it sel f f r o m t h is pr im ary co mpet itio n beca use of t h e qu alit y a nd u niq ueness of it s pr od u ct s. K ate th ou gh t t h at t h e M ayu web site wa s a h ig her ca lib er a nd appea led t o a m ore fa sh ion-fo rwa rd a nd co nscio us cl ient ele. Once custom er s la nd ed o n th e M ayu sit e, t h ey wer e attr a ct ed t o th e st ylish ness, sl eek ness, a nd sim plicit y. T he sit e wa s professio nal, per sona liz ed , a est het ica ll y pl ea sing , a nd m ost im porta nt , u p- to -d ate wit h cu rrent so cia l m ed ia a nd “g reen” sh opping t r end s. W hile M ayu ’s pr ices were co mpa ra b le to t h e co mpet itio n, cu stom er s rec eiv ed g rea ter v a lu e wh en purch asing f r o m M ayu . M ayu pr ovid ed ex cel lent a nd t im ely cu stom er ser vice and a per sona liz ed t o u ch t o po tent ial a nd pa st cu stom ers. E ase of co mmunica tio n wit h M ayu cr ea ted a po sitive sh opping ex per ience, d espit e th e onl ine natu re of t h e bu siness. P er uvia n Co nnect ion— http :/ /w ww.p eru vian co n necti o n .c o m/ A lpa ca D irect — www.alp acad ire ct.c o m Purel y A lpa ca— www.p u re lyalp aca.co m 5/2/23, 6:35 AM Mayu LLC https://prod.reader -ui.prod.mheducation.com/epub/sn_b4dc/data-uuid-f0bdb3e8e76849e191cb079b2064f265 12/34 Kate def ined seco ndary co mpet itio n as onl ine and b rick -a nd – morta r r et ail st ores sel ling k nit wea r m ad e fr o m r a w mater ials su ch a s co tto n, ca sh mer e, s il k, o r wo ol. M ost o f t h ese co mpa nies have an ad va nt ag e over M ayu in th at t h ey a re m ore est ab lish ed a nd t h er efore, h ad g rea ter b ra nd a wa reness and Int ernet pr esence. T hese la rg er co mpa nies have ex cess capit al and b u dget s to spend o n m ark et ing a nd o th er b u siness dev elopm ent a ct ivities. M ayu d if fer ent iated it sel f t h ro u gh it s per sona l st ory a nd so cia l m issio n. K ate wa nted M ayu t o a ppea l to sh opper s int erest ed in suppo rting ind epend ent a nd l o ca l co mpa nies as oppo sed t o t h ose wh o pu rch ased f r o m “b ig-b ox” ret ail er s wh o o ft en la ck ed t r a nspa rency , o rig ina lit y, per sona lit y, a nd et hica l b eh avio r. T he fo llo wing co mpa nies are a m ong t h ose consid ered se co nd ary co mpet itio n: Ant hro po lo gie— w ww.an th ro polo gie .c o m N ord st ro m — www.n ord stro m. co m N eim an M arcu s— www.n eiman marc us. co m 5/2/23, 6:35 AM Mayu LLC https://prod.reader -ui.prod.mheducation.com/epub/sn_b4dc/data-uuid-f0bdb3e8e76849e191cb079b2064f265 13/34 Mark e ting 5/2/23, 6:35 AM Mayu LLC https://prod.reader -ui.prod.mheducation.com/epub/sn_b4dc/data-uuid-f0bdb3e8e76849e191cb079b2064f265 14/34 Ta rg et M ark e t Based o n her r esea rch , K ate pl anned t o t a rg et ed uca ted wo men bet ween th e ag es of 32 a nd 6 2, wh o m ak e up 67 per cent o f t h e accesso ries mark et . T his ra ng e all o wed M ayu t o t a rg et a m ajo rit y o f wo men ag ed 15 –65, wh o r epr esent 9 0 per cent o f to ta l co nsu mer spend ing. K ate ex pect ed t h at t h is mark et wo uld b e m ore so cia lly a wa re and u nd erstand ing o f g lo b al issu es and wo uld b e co nsu mer s th at wer e m ore respo nsible. I t w as sh own th at l u xu ry sh opper s, d ef ined a s co nsu mer s wh o ea rn over $ 10 0,0 00 per y ea r, a re m ore ed uca ted a nd d em and ing so wo rk m ansh ip, l o ng evity, a n d a rtist ry pl ay a l a rg e ro le in th eir pu rch asing b eh avio rs. B eca use Mayu is striv ing t o b eco me an Int ernet b u siness, it h as access to t h e ent ire wo rld . I n ord er t o na rro w its onl ine m ark et ing , K ate th ou gh t sh e sh ou ld f o cu s on th ree Sta nd ard M etro po lit an Sta tist ica l A rea s (S M SA s) —Ch icago , N ew York Cit y, a nd S an Fra ncisco . T he rea sons fo r ch oosing t h ese pa rticu la r cit ies are th at t h ey h ave appr opr iate wea th er a nd la rg e po pu la tio ns of ed uca ted a nd a ff lu ent f em ale co nsu mer s. Ch ica go wa s a na tu ra l st arting po int , a s it is Mayu ’s hom e base wit h ex ist ing r el atio nsh ips. S an Fra ncisco h as a h ig h co ncent ra tio n of so cia lly co nscio us fem ale co nsu mer s and N ew Yo rk Cit y’s inh ab it ant s are fa sh ion fo rwa rd a nd t h e co unt ry ’s t r end setter s. 5/2/23, 6:35 AM Mayu LLC https://prod.reader -ui.prod.mheducation.com/epub/sn_b4dc/data-uuid-f0bdb3e8e76849e191cb079b2064f265 15/34 Pric e M ayu ’s pr icing st ru ct ure is co st-b ased pr icing . K ate used t h e tr a d it io na l ind ust ry m ark u p of b et ween 20 0 a nd 2 50 per cent t o ca lcu la te both wh olesa le an d r et ail pr ices. T he base price th at M ayu pa ys its artisa ns in Per u co ver s la b or, r a w mater ials, a nd tr a nspo rta tio n in Per u. O nc e th e pr od u ct s arriv e in th e U nit ed Sta tes, K ate ad ded o n int erna tio na l sh ipping f r o m P er u a nd cu stom s du ties to g ener ate th e to ta l co st o f ea ch it em ( co st o f go od s so ld ). I n so me inst ances, h owev er, M ayu r eceiv es slig htly lo wer o r sl ig htly h ig her m arg ins th an th e ind ust ry st and ard , depend ing o n th e pr od u ct a nd wh at sh e th ou gh t t h e m ark et co uld pa y f o r ea ch it em . 5/2/23, 6:35 AM Mayu LLC https://prod.reader -ui.prod.mheducation.com/epub/sn_b4dc/data-uuid-f0bdb3e8e76849e191cb079b2064f265 16/34 Dis tr ib ut io n Dist rib utio n wil l b e discu ssed in ter ms of in- per sona l ev ent s, onl ine, a nd wh olesa le. I n -P e rs o n E ve n ts U nt il no w, M ayu ’s grea test so urce of r ev enu e had b ee n fr o m h ig h-end , in- per son week end h olid ay ev ent s. M ayu h ad b een inv ited t o a t l ea st 10 su ch e v ent s and sa les ra ng ed f r o m $ 0 t o $ 2,5 0 0 per ev ent . P articipa tio n fees were usu all y 10 p er cent o f rev enu es. B eca use Kate wo rk ed f u ll t im e, o ne of h er f a m ily m em ber s or h er f u tu re pa rt- tim e em ployee wo uld st aff week day ev ent s in th e fa ll a nd spr ing. M ayu wo uld m ak e itsel f ava il ab le fo r pr ivate “sh opp ing pa rties” th ro u gh ou t t h e Ch ica go area . D uring a pa rty l ik e th is, t h e host wo uld inv ite fr iend s over fo r a n ev ening o f M ayu sh opping . T o ent ice host s to h ave a pa rty , it em s wo uld b e offer ed a t a 10 per cent d isco unt f r o m onl ine prices and h ost s wo uld b e co mpensa ted wit h a g ener ou s M ayu g if t ca rd . 5/2/23, 6:35 AM Mayu LLC https://prod.reader -ui.prod.mheducation.com/epub/sn_b4dc/data-uuid-f0bdb3e8e76849e191cb079b2064f265 17/34 Pag e 5 2 6 O nlin e Alt h ou gh t h e m ajo rit y o f M ayu ’s sa les to ok pl ace du ring h olid ay sh opping ev ent s, K ate’ s go al wa s to incr ease onl ine sa les and d ecr ease her r el ia nce on la b or-int ensiv e and so metim es “hit-o r-m iss” event s. S h e knew it wo uld b e a ch alleng e to sel l h ig h-end pr od u ct s th ro u gh a web site, especia lly wit hou t a wel l- es ta b lish ed b ra nd . T he bea uty o f t h e alpa ca wa s m ost a ppa rent w hen custom er s co uld t o u ch t h e m ater ials and t r y o n th e pr od u ct s. S h e did o ffer swa tch es of t h e alpa ca t o int erest ed co nsu mer s bu t o ver all , t h e big gest pr ob lem wa s driv ing cu stom er s to h er web site wit h a l im ited m ark et ing bu dget a nd co nv incing t h em t h at t h e hig her -pr iced it em s wer e worth t h e inv estment . Kate pu rch ased a so cia l m ed ia pl atfo rm a t $ 1, 000 per y ea r. T hro u gh t h e pl atfo rm , M ayu co uld ef ficient ly t a rg et n um er ou s so cia l m ed ia web sites wit h t h e cl ick o f a b u tto n. T his was an ex cel lent st ra teg y t o b u il d l ink s and incr ease an onl ine pr esence. K ate also m ana ged a b lo g, wh ich wa s pa rt o f t h e M ayu web site. T her e, sh e blo gged a b ou t t o pics rel ated t o P er u, alpa ca, f a ir t r a d e, a nd t h e M ayu st ory ; ph oto s, v id eo s, a rticl es, and o th er pr ose mad e up th e co ntent . I n ad d it io n, K ate knew th at Go ogle AdW ord s wo uld pr ovid e dir ect ion in ter ms of onl ine mark et ing . S h e pa id $ 250 per m ont h o n a sea sona l b asis to a g ro u p of pr ofessio nals wh o wo uld cr ea te an AdW ord s acco unt a nd sh e wo uld h ave to st art wit h a $ 50 0 m ont hly b u dget f o r t h e act ual pa y-per -cl ick a d s. K ate pl anned t o b u y cer ta in ad ver tising b anner s on web sites du ring t h e wint er m ont hs and especia ll y b ef ore th e holid ays. T he co st o f su ch a d s wo uld b e ab ou t $ 10 0 per m ont h; t h is wa s fo r seco nd-tier pu blica tio ns th at h ad so me ty pe of a n eco fa sh ionist a f o llo wing . S h e bu dget ed $ 50 0 per m on th f o r t h e ad s. 5/2/23, 6:35 AM Mayu LLC https://prod.reader -ui.prod.mheducation.com/epub/sn_b4dc/data-uuid-f0bdb3e8e76849e191cb079b2064f265 18/34 Kate alr ea dy h ad a f u nct ioning web site cr ea ted a t a v er y rea sona ble pr ice of $ 1, 000, incl uding 6 m ont hs of sit e ad ju st m ent s and m od if ica tio ns. W eb sit e lo gist ics such a s d om ain names, secu rit y en crypt ion, pa ym ent ser vices, a nd o th er r el ated co sts wer e lo w a nd t h us led t o v er y l o w startu p co sts. T hese mont hly co sts to ta led a b ou t $ 50 . 5/2/23, 6:35 AM Mayu LLC https://prod.reader -ui.prod.mheducation.com/epub/sn_b4dc/data-uuid-f0bdb3e8e76849e191cb079b2064f265 19/34 Whole sa le K ate receiv ed inq uir ies fr o m r et ail er s wh o wer e int erest ed in st ock ing M ayu pr od u ct s, b u t d u ring t h e fir st y ea r, t h e ord er s wer e sm all a nd m arg ins wer e ev en smaller . T he m inim um ord er wa s $50 0 a nd l ea d t im e wa s ty pica ll y no m ore th an 6 week s, d epend ing o n th e tim e of y ea r. B y sl ig htly ch ang ing h er pr ices, K ate bel iev ed sh e co uld incr ease wh olesa le ord er s and th er efore benef it f r o m sa les vo lu m e. T he qu est ion rem ained th ou gh wh ether t h e artisa ns wo uld b e ab le to k eep up wit h t h e incr eased d em and . T he ch ance of d ecr easing t h e pr ice she pa id th e knit ter s in Per u wa s sl im so co sts sa ving s had t o b e fo u nd el sewh ere on th e va lu e ch ain. T o incr ease wh olesa le acco unt s, M ayu pl anned t o h ir e th ree sa les repr esent ativ es, o ne to co ver t h e W est Co ast , a n oth er f o r th e East Co ast , a nd o ne fo r t h e M idwest . R esea rch ind icated th at t h e sa les repr esent ativ es wo uld b e co mpensa ted a t l ea st 10 per cent o f t o ta l sa les. S h e had h ea rd nig htm arish st ories fr o m h er f r iend s ab ou t t h eir ex per iences with sa les repr esent ativ es, so it wa s im porta nt t o f ind t h e per fect o nes who wo uld b est repr esent t h e M ayu l ine. A n a d d it io na l m iddlem an wo uld d ecr ease Mayu ’s pr ofit s fu rth er b u t t o g ain bra nd r eco gnit ion, get t h e pr od u ct s dist rib uted , a nd st art st riv ing f o r v o lu m e, t h e inv estment in a t ea m o f sa les reps was necessa ry , espe cially b eca use Kate co uld no t “po und t h e pa vem ent ” on her o wn. M ayu wo uld a lso co ntinu e to o pen dro p- sh ip arra ng em ent s (a ffil ia te m ark et ing ) wit h o nl ine bou tiq ues th at po sted M ayu ’s pr od u ct s on th eir sit es. W hen a pr od u ct is so ld , M ayu sh ips th e it em f r o m t h e Ch ica go wa reh ou se and is co mpensa ted a d ef ined pr ice, g ener ally 5 5 t o 6 0 per cent o f t h e ret ail sa les pr ice. T hese dro p- sh ip rel atio nsh ips are co nv enient , r isk f r ee, a nd wit hou t co st t o M ayu . 5/2/23, 6:35 AM Mayu LLC https://prod.reader -ui.prod.mheducation.com/epub/sn_b4dc/data-uuid-f0bdb3e8e76849e191cb079b2064f265 20/34 Event ually , K ate pl anned t o pa rticipa te in tr a d e sh ow s su ch a s Ch ica go ’s Sty leM ax t o pl ace Mayu ’s alpa ca a ccesso ries in fr o nt of t h ou sa nd s of r et ail er s. T hese event s co st a t l ea st $ 5,0 00 f o r 4 d ays and pr ofit ab il it y is no t g u ara nt eed . K ate decid ed t o wa it on th ese event s fo r t h e fir st co upl e of y ea rs unl ess she co uld pa rtner wit h a sim ilar sm all b u siness to sh are a b ooth a nd co sts. 5/2/23, 6:35 AM Mayu LLC https://prod.reader -ui.prod.mheducation.com/epub/sn_b4dc/data-uuid-f0bdb3e8e76849e191cb079b2064f265 21/34 Pro mo tio n During it s sh ort l if e, M ayu h ad r eceiv ed f r ee publicit y, wh ich dir ect ly b oost ed sa les. T he co mpa ny wa s m ent ioned o n repu ta b le blo gs and in print pu blica tio ns, a nd wa s co ver ed in l o ca l m ag azines. P ublicist s seem ed t o enj oy t h e M ayu st ory a nd rea der s wer e int rig ued b y w hat K ate had a cco mplish ed in th e P ea ce Co rps. T he pu blicit y d id l ea d t o a d dit io na l sa les bu t o n a sm all sca le. K ate co nsid ered h ir ing h er f r iend , a P R sp ecia list . The ra te fo r t h e sea son wo uld b e $3, 000 wit h t h e ob ject ive to g et M ayu f ea tu red in fa sh ion pu blica tio ns’ h olid ay g if t g u id es. Ther e wa s, o f co urse, no g u ara nt ee th at ed itors wo uld ch oose to fea tu re th e M ayu b ra nd . Mayu im plem ent ed a r ef er ra l pr ogra m t o h el p spr ead need ed word -o f- m ou th sa les. P ast M ayu cu stom er s wer e giv en a $ 25 M ayu g if t ca rd ea ch t im e th ey r ef er red so meo ne wh o p u rch ased so mething f r o m M ayu . 5/2/23, 6:35 AM Mayu LLC https://prod.reader -ui.prod.mheducation.com/epub/sn_b4dc/data-uuid-f0bdb3e8e76849e191cb079b2064f265 22/34 Opera tio ns 5/2/23, 6:35 AM Mayu LLC https://prod.reader -ui.prod.mheducation.com/epub/sn_b4dc/data-uuid-f0bdb3e8e76849e191cb079b2064f265 23/34 Pag e 5 2 7 P e ru K ate knew th at it wo uld b e d if ficu lt t o m ana ge M ayu f r o m h er hom e base in Ch ica go wit hou t f r eq uent v isit s to P er u. F ortu na tel y, sh e wa s ab le to co mmunica te wit h t h e pr od u cer s via t el eph one and o cca sionally b y e- m ail . T he fa ct t h at t h e artisa ns wer e no t co mpu ter l it er ate and d id no t h ave co nsist ent access to cel lu la r ph ones (n ot t o m ent ion th e fr eq uent po wer ou ta g es) m ad e co mmunica tio n a ch alleng e. B y l iv ing in Per u, K ate had l ea rned t o b e both f lex ible and a d apt ab le to t h e P er uvia n oper ating env ironm ent. S h e pl aced o rd er s and d ea lt wit h lo gist ica l issu es wit h t h e desig nated g ro u p lea der , M aria R osem ber g d e H uer ta . A no th er ob st acl e Kate fa ced wa s ens uring t h at t h e pr od u ct s had a cer ta in lev el o f q u alit y a nd co nsist ency. T he Per uvia ns wer e less dem and ing a nd h ad d if fer ent id ea s of wh at co nst ituted h ig h q u alit y. I n ad dit io n, t h e artisa ns wer e fr eq uent ly d ish onest , cl aim ing cer ta in pr od u ct s wo uld a rriv e on a cer ta in d ate, wh en in rea lit y, t h ey h ad no t ev en been knit y et . The nea rest r eg iona l cit y is 3 hou rs by b u s and L im a, t h e ca pit al o f P er u, is an 8-h ou r t r ip fr o m t h e vil la g e wh ere th e knit ter s resid e. T his mea ns t h at M ayu ’s artisa ns have to t r a vel lo ng h ou rs to a ccess th eir b ank a cco unt s and t o send sh ipm ents to K ate fr o m t h e Fed eral E xpr ess off ice. T hey a re alwa ys fa ced wit h t h e risk t h at l a rg e qu ant ities of ca sh o r f inish ed pr od u ct s co uld b e st olen du ring t h e jo u rney . S im ilarly , r a w mater ials h ave to b e ord er ed v ia t h e Int ernet a nd d el iv er ed t o t h e co mmunit y b y o ver nig ht b u s fr o m L im a. T he co st o f t h e ra w m ater ial r a ng es fr o m U S$ 27 t o $ 30 per k il ogra m f o r pu re a lpa ca wo ol a nd is pa id f o r b y t h e artisa n gro u p. T he price v a ria tio n depend s on wh ether t h e fib er is dyed o r na tu ra l a nd pr ices are slig htly su scept ible to g ener al eco nomic co nd itio ns in Per u. K ate and t h e artisa ns jo int ly d ecid e th e pr icing stru ct ure of t h e pr od u ct s an d K ate co mpensa tes th e artisa ns 5/2/23, 6:35 AM Mayu LLC https://prod.reader -ui.prod.mheducation.com/epub/sn_b4dc/data-uuid-f0bdb3e8e76849e191cb079b2064f265 24/34 per u nit pr od u ced . T his pr ice incl udes la b or a nd m ater ial co sts. Kate pa ys th e artisa ns via w ire tr a nsf er a t a r a te of U S$ 11 to $ 85 per it em k nit . T ypica lly , K ate wo uld pa y f o r t h e pr od u ct s up fr o nt so t h e artisa ns wo uld b e ab le to pu rch ase th e ra w m ater ials. W hen it b eca me necessa ry t o sca le, K ate knew th at q u alit y co ntro l, l o gist ics, a nd cr ea ting a so lid o rg aniz atio na l st ru ct ure wo uld b e th e big gest ch alle ng es. S h e th ou gh t sh e co uld h ir e a pa rt- tim e em ployee wh o w ou ld wo rk 5 m ont hs ou t o f t h e yea r and b e co mpensa ted $ 1, 75 0 f o r t h e du ra tio n of t h e po sition. 5/2/23, 6:35 AM Mayu LLC https://prod.reader -ui.prod.mheducation.com/epub/sn_b4dc/data-uuid-f0bdb3e8e76849e191cb079b2064f265 25/34 Pag e 5 2 9 U nit e d St ate s Kate wa s respo nsible fo r o per atio ns in th e U nit ed S ta tes and o ver seeing pr od u ct io n in Per u. F ro m h er h om e, sh e m ana ged th e web site, o nl ine content , so cia l m ed ia, m ark et ing , a nd cu stom er ser vice aspect s of M ayu , a nd a lso a ttend ed sa les ev ent s. S h e cr ea ted a n int ernsh ip progra m a nd b eg an em ploying st udent s on an unpa id, 10 –15 h ou rs per week b asis. A lt h ou gh t im e co nsu ming , K ate fel t t h at t h e use of int erns co uld b e a m utu ally b enef icia l ex per ience and t h at “t wo h ea ds wer e bet ter t h an one. ” O nce prod u ct s arriv ed f r o m P er u, K ate’ s m oth er wa s respo nsible fo r co unt ing , ir oning , a nd t a g ging inv ent ory a nd o u tb ou nd l o gist ics such a s sh ipping a nd h and ling . K ate knew th at h er m oth er wo uld co ntinu e doing t h is fo rev er so sh e pl anned t o h ir e sea sona l hel p fo r 3 m ont hs (N ovem ber t h ro u gh Ja nu ary ). T he pa rt- tim e hel p wo uld b e pa id a b ou t $ 1, 20 0 per m ont h. 5/2/23, 6:35 AM Mayu LLC https://prod.reader -ui.prod.mheducation.com/epub/sn_b4dc/data-uuid-f0bdb3e8e76849e191cb079b2064f265 26/34 Te a m Alt h ou gh K ate wa s receiv ing a d vice fr o m a nu mber o f ind ivid uals, sh e did no t h ave a f o rm al a d viso ry b oard . H er fa th er pr ovid ed h er wit h l eg al a d vice, h er u ncl e wa s a CP A, a nd h er web d esig ner g u id ed h er o n all a spect s of m ana ging a web site. K ate wa nted t o wi den her su ppo rt net work a nd st arted t h ink ing a b ou t co ntra ct ing a pr od u ct d esig ner wh o ex cel led in k nit wea r, a pr ofessio nal ph oto gra ph er, a nd a cl oth ing m od el a s wel l a s a t ea m t h at co uld o p tim ize her web site. S h e kn ew th at it wa s no t in her b u dget t o h ir e any one on a f u ll- tim e basis so sh e decid ed sh e co uld h ir e th e necessa ry h el p on a per -pr oject b asis. K ate is a g o od net work er a nd ex cel s in find ing h ig h- qu alit y h el p at m inim um pr ices. 5/2/23, 6:35 AM Mayu LLC https://prod.reader -ui.prod.mheducation.com/epub/sn_b4dc/data-uuid-f0bdb3e8e76849e191cb079b2064f265 27/34 Mayu’ s Sho rt- T e rm P la n To t a k e M ayu t o t h e nex t l e v el , K ate pl ans to h ir e a f a sh io n desig ner a nd is alr ea dy in contact wit h a wo man wh o specia liz es in knit wea r. T he d esig n fees per co llect ion wil l b e ab ou t $ 5,0 00 a nd incl ude arra ng em ent s wit h a pr ofessio nal ph oto gra ph er, m od el , a nd h air a nd m ak eu p tea m. T he d esig ner will t a k e ca re of t h e cr ea tiv e visio n beh ind M ayu . K ate wil l tr a vel t o P er u per iodica lly t o wo rk wit h t h e artisa ns to cr ea te new collect ions. E ach t r ip to P er u wil l co st a b ou t U S$ 70 0 t o $ 1, 000. 5/2/23, 6:35 AM Mayu LLC https://prod.reader -ui.prod.mheducation.com/epub/sn_b4dc/data-uuid-f0bdb3e8e76849e191cb079b2064f265 28/34 Fina ncia ls T he fina ncia l st atem ent s fo r t h e co mpa ny incl ude a 3- yea r pr o fo rm a inco me st atem ent ( E xh ib it 1 ); th e fir st -y ea r pr o f o rm a inco me st atem ent b y m ont h ( E xh ib it 2 ); and a 3- yea r pr o fo rm a ca sh f lo w statem ent ( E xh ib it 3 ). 5/2/23, 6:35 AM Mayu LLC https://prod.reader -ui.prod.mheducation.com/epub/sn_b4dc/data-uuid-f0bdb3e8e76849e191cb079b2064f265 29/34 EXH IB IT 1 M ayu ’s P ro je cte d 3 -Y ea r In co m e S ta te m en t ( in Do llars ) Yea r 1 Y ea r 2 Y ea r 3 N et sal es 32,0 00 44,8 00 58,2 40 Co st o f g ood s s old 6 ,4 00 8,9 60 11,6 48 G ro ss in come 25,6 00 35,8 40 46,5 92 O per atin g exp enses Adver tis in g (* 5m o.) 2 ,5 00 2,5 00 2,5 00 M ar ket in g & pro m otio n (Ad Word s * 5 m o. & PR ) 6,7 50 6,7 50 6,7 50 So cial m edia p lat form 1 ,0 00 1,0 00 1,0 00 D ues & subscrip tio n (F TF et c.) 3 00 300 300 P ayro ll exp enses Par t-t im e em plo yee p eru 1,7 50 1,7 50 1,7 50 Par t-t im e em plo yee U SA 3,6 00 3,6 00 3,6 00 Pr od u ct d es ig n fees 5 ,0 00 5,0 00 5,0 00 Ad minist ra tiv e exp enses web sit e l og is tic s & des ig n 6 00 700 800 Tra vel to p er u 1,0 00 1,0 00 1,0 00 O ffi ce ex pen ses 5 00 700 900 T o ta l o per atin g exp enses 23,0 00 23,3 00 23,6 00 O per atin g in come 2,6 00 12,5 40 22,9 92 5/2/23, 6:35 AM Mayu LLC https://prod.reader -ui.prod.mheducation.com/epub/sn_b4dc/data-uuid-f0bdb3e8e76849e191cb079b2064f265 30/34 Yea r 1 Y ea r 2 Y ea r 3 In co m e b efore t axes 2,6 00 12,5 40 22,9 92 N et in come 2,6 00 12,5 40 22,9 92 5/2/23, 6:35 AM Mayu LLC https://prod.reader -ui.prod.mheducation.com/epub/sn_b4dc/data-uuid-f0bdb3e8e76849e191cb079b2064f265 31/34 EXH IB IT 2 M ayu ’s P ro je cte d Fir st- Y ea r I nco Q 1 Q2 Ja n uary F eb ru ary M arch Ap ril M ay Ju ne N et sal es 3,5 00 3,0 00 2,0 00 500 500 0 Co st o f g ood s so ld 7 00 600 400 100 100 0 G ro ss in come 2,8 00 2,4 00 1,6 00 400 400 0 O per atin g exp enses Adver tis in g (* 5m o.) 5 00 500 0 0 0 0 M ar ket in g & pro m otio n (Ad Word s * 5 mo. & PR ) 1,3 50 1,3 50 0 0 0 0 So cial M ed ia p lat form 1 ,0 00 0 0 0 0 0 D ues & su bscrip tio n (F TF et c.) 3 00 0 0 0 0 0 P ayro ll exp enses Par t-t im e em plo yee p eru 583 0 0 0 0 0 5/2/23, 6:35 AM Mayu LLC https://prod.reader -ui.prod.mheducation.com/epub/sn_b4dc/data-uuid-f0bdb3e8e76849e191cb079b2064f265 32/34 Q1 Q2 Ja n uary F eb ru ary M arch Ap ril M ay Ju ne Par t-t im e em plo yee U SA 1,2 00 0 0 0 0 0 Pr od u ct d es ig n fees 0 0 0 0 0 0 Ad minist ra tiv e exp enses web sit e l og is tic s & d es ig n 6 00 0 0 0 0 0 Tra vel to p er u 0 0 0 0 0 0 Offi ce ex pen ses 5 00 0 0 0 0 0 T o ta l o p er atin g exp enses 6,0 33 1,8 50 0 0 0 0 O per atin g inco me (3 ,2 33) 550 1,6 00 400 400 0 In co m e b efore tax es (3,233) 550 1,6 00 400 400 0 N et in come (3 ,2 33) 550 1,6 00 400 400 0 5/2/23, 6:35 AM Mayu LLC https://prod.reader -ui.prod.mheducation.com/epub/sn_b4dc/data-uuid-f0bdb3e8e76849e191cb079b2064f265 33/34 EXH IB IT 3 M ayu ’s P ro je cte d 3 -Y ea r C ash F l Do llars ) Yea r 1 Y ea Cash in Cas h s al es 32,0 00 44, To tal cas h in 3 2,0 00 44, To tal cas h a vai lab le 3 2,0 00 44, C ash out in ven to ry 6 ,4 00 8, O per atin g exp enses adver tis in g (* 5m o.) 2 ,5 00 2, M ar ket in g & pro m otio n (Ad Word s * 5 m o. & PR ) 6,7 50 6, So cial m edia p lat form 1 ,0 00 1, D ues & subscrip tio n (F TF et c.) 3 00 P ayro ll exp enses Par t-t im e em plo yee p eru 1,7 50 1, Par t-t im e em plo yee U SA 3,6 00 3, Pr od u ct d es ig n fees 5 ,0 00 5, Ad minist ra tiv e exp enses web sit e l og is tic s 6 00 Tra vel to p er u 1,0 00 1, O ffi ce ex pen ses (t ag et c.) 5 00 5/2/23, 6:35 AM Mayu LLC https://prod.reader -ui.prod.mheducation.com/epub/sn_b4dc/data-uuid-f0bdb3e8e76849e191cb079b2064f265 34/34 Sourc e : T his c a se s tu dy w as p re p are d b y K ate R ob erts o n w ith t h e in te n tio n o f p ro vid in g a b asis f o r c la ss d is cu ssio n. I t w as p re v io usly p u blis hed in R ob ert D . H isric h, In te rn ation al E ntr e p re n eu rsh ip , 2n d e d it io n, SAG E, 2 0 13 , p p. 2 9 9– 310 . Y ea r 1 Y ea Es tim at ed in co m e t ax paym en t 0 To tal cas h o ut 2 9,4 00 32, B eg in nin g c as h b alan ce 5 00 3, En din g c as h b alan ce 3 ,1 00 15, *Ma rk et s iz e e stim ate s a re b ase d o n t w o d eca d es o f a vera g e g ro w th r a te f o r t h e h um an n utr it io so m e c o rre ctio ns t o r e fle ct t h e g ro w in g s h are o f s a lt s u bstit ute s in t o ta l c o n su m ptio n o f s a lt – lik