SECTION 1: CASE STUDY ANALYSIS. (50 MARKS) Case: Fakhro At Home The business proposition: Company Fakhro At Home creates cute, clever products that are intended, in the words of its founder, to "humanize technology." The company already has one hit: Consumers have snapped up more than 9,000 units of a $50 plastic alarm clock. Set the alarm for 6 a.m. When the time comes, the clock wheels itself off your bedside table and rolls around the room, emitting R2D2-like squeaks. Dubbed Clocky, the little robot is manufactured in China and sold online and in design boutiques. The company also has a line of handbags designed to accommodate laptops. The founder: Fakhro designed Clocky as a graduate student in MIT's Media Lab. Fakhro, now 27, left MIT with a master's degree that fall and began considering her options. Licensing the clock seemed like the easiest move, as she had ideas about the product," After finding a manufacturer on AliBaba.com, a Chinese business-to-business website, she went to Hong Kong to oversee production. The first run of 500 clocks sold out almost immediately online. No. of full-time employees: None. The company outsources manufacturing, fulfillment, and some design. In addition to one part-timer, Fakhro's parents have been helping her run the company. Capital raised to date: $80,000 from family Market potential: The market for gadgetry is large, accounting for $145 billion in the U.S. last year, a 13 percent increase from 2005, according to the Consumer Electronics Association. The group estimates that the average American spends $1,200 on electronics annually. Meanwhile, consumers seem to be increasingly willing to pay a premium for design--witness the proliferation of iPods, Razr phones, and Design Within Reach stores. Revenue projections: 2007: $1 million; 2008: $3 million; 2009: $4 million Cash-flow picture: The company broke even in February, after only two months of sales, and Fakhro expects to have cash flow of $650,000 this year. Competition: Knockoffs (copy products) are inevitable. Plus there are similar products, such as the Blowfly Alarm Clock, an invention that shoots a ball into the air when it's time to wake up. Fashionable laptop bags exist, but no company yet dominates the market. Seattle-based LaLa laptop offers a line of laptop handbags starting at $150. Fakhro's bags cost $58. Growth strategy: For expanding retail distribution discussions are ongoing with Brookstone and Target, for selling through these retailers. With the laptop bags, the focus in on design element Challenges: Is it a product, or is it a company? Fakhro says she hopes to have a number of new products launched by 2009, but she's not saying what they will be. New versions of her current EXAMINATION QUESTION BOOKLET DIN: RUW-SNT-T-035 RN: 04 ED: 18/02/2016 Page 3 of 4 offerings are in the works, but with no full-time designers and no sales force it's impossible for Fakhro to guarantee that she'll be able to duplicate Clocky's success. Opportunities: Don't underestimate the power of a single hit product. Five years after the release of the Roomba, iRobot's vacuum cleaner line still accounts for 60 percent of the company's annual sales of $189 million. Meanwhile the Sharper Image has made a business milking one-hit wonders like the Razor Scooter, which accounted for $48 million in sales in 2000.Fakhro At Home's long-term viability may depend on creating brand loyalty. Analyse the case and write a one page business concept statement including the following details: a. Customers or Target Market (12.5marks), b. Business Description (Why Fakhro At Home) (12.5 marks), c. What makes Fakhros At Home Unique (12.5 marks) and d. Management Team (12.5 marks).