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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

 Entrepreneurs don’t wait for anyone else to take the lead and are risk takers and initiators
by nature. They take lead on an opportunity and don’t need a second offer to pounce on it.
 They are confident and don’t get bogged if the odds are piled against them which is
generally the case.
 Their values are concentrated around not only making money, developing something of
their own and see it succeed is what encourages them. They are highly zealous about their
endeavours.
 Lastly the most important characteristic possessed by an entrepreneur is that of decision
making as a lot of times he/she would be would be expected to take crucial decisions
alone.

Examples from the case to justify Nickolay’s credentials

Autonomy All of the choices he has made and all the forthcoming future
undertakings he is conceiving are not dependent on anybody. These
are all his decisions. Besides, he doesn't permit life circumstances to
direct his choices and attempt and pursues his premonition.

Innovativeness He is novel which is exhibited by his venturing into building


illustrative designs of Barbie with the normal body and thus has a
capability for creativity.

Willingness to His willingness to take risks is high as he is considering the


take risks possibility of setting up his own manufacturing facility and sell and
supply a physical version of his design even though the finances are
not available with him to pursue the venture.

Proactive He proactively tried to figure out the faults and gaps that are
currently present in the doll industry instead of working on anyone’s
research or waiting for someone to come up with something and
leveraging it.

Competitive He understood the selling point of his products and priced the
Aggressiveness product at $25 which was much higher than competitors. He didn’t
let competitors dictate hi pricing strategies and was planning to
compete with them on his own terms.
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:

a. Their identity – who they are Nickolay has wanted to accomplish something of his
(traits, tastes, abilities) own from his childhood, it was his dream. In addition
to this he has already had some unsuccessful business
events which would have given him a lot of idea for
thought and he would have understood the dos and
don’ts of setting up new business endeavors. As
answered in the previous question, we have already
established that he possesses the qualities of
autonomy, innovativeness, willingness to take risks,
proactiveness and competitive aggressiveness which
are huge providers towards his entrepreneurial
accomplishment.
b. Their knowledge base – what Nickolay has a curiosity in the internet and the
they know (education, training, advertising business as a whole. His interest to use
expertise, experience) internet in innovative manners will hold him in good
stead in his new project. Moreover, the knowledge he
has gained through the extensive market research
about the doll industry will also contribute
enormously.
c. Their social networks – whom Nickolay has got great number of contacts in the
they know (social and business particularly, in online columnists to advance
professional networks) something over the web. This will be of incredible
benefit to offer something on the web. He has already
used these contacts to make his designs viral on the
internet and these can be used in future to gather
market feedback and generate word of mouth
marketing for his venture.
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)

a) Mattel

Non-
Resources/Capabilities Value Rare Inimitable
substitutable
Employees Yes No Yes No
Yes (Online
Distribution Network Yes No Yes
Models)
Production
Yes No Yes Yes
Capabilities
Brand Value Yes Yes No No
Diversity Yes Yes No Depends
Affordable Prices Yes No No Depends
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.

b) Average is Beautiful

The “Average is Beautiful” start-up 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
Yes (No
Employees employees as of NA NA No
now)
Distribution Yes (Not the
NA NA No
Capabilities established one)
Yes (No funds as
Capital Funds NA NA NA
of now)
SEO Marketing Yes Yes No No
Innovative Products Yes Yes No Yes
Affordable Prices Yes - High Prices depends No Yes
Network of Yes – Design
Yes No Yes
freelancers and Data
Analytical Design Yes Yes May be Yes
4. Conduct a breakeven analysis to determine how many dolls Nickolay would need to
sell to break even.

Break even Analysis


Fixed cost
Consulting $ 7,500
Doll rendering $ 7,500
Prototype $ 10,000
Mould development $ 28,000
Total FC $ 53,000
Variable cost (per unit)
Manufacturing $ 6
Fulfilment $ 6
Total VC $ 12
Sales Price (per unit) $ 25.00
Breakeven Quantity 4076.9

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.

Based on the break even analysis, we recommend Option C as the breakeven quantity is
4077 which is less than 5000 which is the economies of scale quantity. He can look into
different resources to fund the idea.