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Average is Beautiful: An Opportunity worth Pursuing?

1) What traits do you think an entrepreneur needs to have? By giving suitable examples
explain whether Nickolay has the characteristics like autonomy, innovativeness,
willingness to take risks, proactiveness and competitive aggressiveness to run a start-up
entrepreneurially.

Traits of an entrepreneur

1) Passion: Entrepreneurs aren’t in it for the money. While that may be an added
bonus, the true benefit is doing what they love.
2) Motivation: Entrepreneurs are highly motivated and dedicated towards their idea.
Entrepreneurs know how to communicate their dream and inspire others to join
them on their journey to achieving it.
3) Optimism: An entrepreneur should be goal oriented and also have a purpose for
whatever he/she should do
4) Creativity: Entrepreneurs are creative thinkers and do things differently.
5) Risk takers: Entrepreneurs should not back off from taking risks as it is necessary
to achieve goals.

Nickolay’s character analysis

Autonomy

Nickolay was working as a freelancer which involves autonomy. He developed creative


illustration, some of them created buzz in the internet. After his illustration ‘Average is
beautiful’ got viral, due to the responses he got, he considered it as an entrepreneurial
opportunity to manufacture and sell an average looking doll. He researched the doll industry
and its major players, analysed the competition within the doll fashion category. So, it can be
said that, Nikolay had his way working in autonomy.

Innovativeness

Nickolay understood that the dolls in the market represented more of an unattainable physical
appearance and therefore he worked on the illustration of “Average Is Beautiful” doll,
resembling those proportions of an average 19-year-old American woman, was well received
on online and soon after became a viral sensation.

Willingness to take risks

Nickolay took the decision to move forward with his entrepreneurial work and started the
work by hiring and paying subcontractors to execute his vision. He supported himself
financially throughout entrepreneurial endeavours and also, he secured new clients, retained
his existing ones. He was thinking to give away his freelancer income which shows that he
was willing to take risks.

Competitive aggressiveness
Although he failed in previous business ventures, he has taken up the idea again to become an
entrepreneur. But the real picture can be seen only when he competes with the competitors
and thrives in the industry.

2) Discuss the personal qualities of Nickolay that can help him succeed with his “average is
beautiful” venture using Sarasvathy’s “bird-in-hand” principle of effectual
entrepreneurship which categorises entrepreneurs’ resources into the following three
categories of means:
i) Their identity – who they are (traits, tastes, abilities)

Nickolay is an aspiring entrepreneur who dreamt of being an entrepreneur right from his
childhood. He has traits of passion, motivation and innovation. His tastes vary with the trend
and this is important for an entrepreneur as it gives room for flexibility. Lastly his abilities
highlight one very important thing, the ability to build networks and good working
relationships

ii) Their knowledge base – what they know (education, training, expertise,
experience)

With his marketing degree, I feel his has the right technical background to succeed, but
entrepreneurship hardly every provides training or support for ventures, it is more of a get
things done as you go situation. Expertise wise, I feel Nikolay had well for himself in
building up his reputation as an SME in his chosen field

iii) Their social networks – whom they know (social and professional networks)

From the case analysis, it is evident that Nikolay does know a lot about the virtual/internet
market and has built a considerably impressive network.

3) Identify the critical resources and capabilities each of the following has that could lead
to a sustainable competitive advantage in the “average is beautiful” fashion doll
market: a) Mattel, an industry leader in the fashion doll market and b) an “average is
beautiful” start-up founded by Nickolay.
(Note: Use the VRIN (Value, Rarity, Inimitability and Non-Substitutability) framework you
have learned in the Strategic Management course to analyse the resources and
capabilities)

The results of the analysis is provided in the below table against various
resources/capabilities.
a. Mattel
Mattel is arguably the market leader in the toy industry for decades, thanks to its
portfolio of multiple products and deep understanding of the market needs. Here is the
VRIN analysis for Mattel.

Resources/Capabilities Value Rare Inimitable Non-substitutable


Employees Yes No No Yes

Distribution Network Yes No Yes Yes

Production Capabilities Yes No Yes Yes

Brand Value Yes Yes Yes Yes

Diversity Yes Yes No Yes

Affordable Prices Yes No No Yes

b. Nikolay’s startup:
The “Average is Beautiful” startup founded by Nikolay caters to the niche market
involving portraying of realistic and average dolls. Despite centuries of toy making
and marketing, the incumbent players failed to or ignored this free space; and this
prompted Nikolay to make use of the first moving advantage. This is backed by his
well-founded research that gave him adequate credibility to explore this undertaking

Non-
Resources/Capabilities Value Rare Inimitable substitutable

SEO Marketing Yes Yes Yes Yes

Innovative Products Yes Yes No Yes

Affordable Prices Yes No No Yes

Network of freelancers Yes Yes Yes No

Analytical Design Yes Yes No Yes

4) Conduct a breakeven analysis to determine how many dolls Nickolay would need
to sell to break even.
Workshop Q4&5.xlsx

5) Using the results of the analyses you have carried out, explain which of the
following options Nickolay should choose:
a. Explore the feasibility of a partnership with an established leader in the toy
industry by leveraging their capital and other resources.
b. Identify individuals with skills and financial resources he lacked, bringing
them on as co-founders for a new venture to commercialize his “average is
beautiful” idea?
c. Launch his own “average is beautiful” start-up as a solo entrepreneur? For
this path, what options does Nickolay have to finance the new venture?
d. Ignore the opportunity and continue as a freelancer while waiting for another
entrepreneurial opportunity to emerge.

With regards to the options Nickolay should consider is the second option. He should
identify 3 individuals to bring both the seed money and their expertise and skill. He
should consider a person for operations of the business and one person for handling
the finances and contracts on behalf of Nickolay, and lastly one person should be
hired for incorporation and administrative work. The equity partnership we assumed
is of 2:1:1:1 in favor of Nikolay.

Moreover, the first option to take the giant, Mettel head on is a stupid idea, even
though a partnership with the proposed value proposition will cannibalize the Barbie
sales and eventually Nickolay will end up selling the company to Mattel.
The third option of becoming a solo entrepreneur is not feasible as a long-term
solution, and the requirement of the market sways fast with the trending products and
dolls, and without other people’s help and expertise Nickolay will not be able to
sustain profits. Moreover, the initial seed money required will be very high and the
diversification of business startup risk can only be mitigated through suitable
complementary skills and partners with money.
Since, the business idea is sound and there is also a gap in the needs and the value
offered in the market as researched by Nickolay. With his marketing and viral content
development of the prototypes, fueled by the National media will be very helpful in
growing the business very fast & will generate a lot of demand.