Post on 14-Apr-2018
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The Golf Swing Analyzer
Team 1Team members
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Agenda Background and Key Issues
Internal/External Analysis
Alternatives
Assessment and Recommendation
Implementation Plan
Contingency Plan
Conclusion
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Background
Chris Jenkins, Stan Uhm, and TalbotMcInnis are Engineering students atUniversity of Western
Chris and Stan are graduating, Talbothas one more year Project generated interest from the
media, investors, and entrepreneurs
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Background
Golf is a growing form of recreation(2.5% annual growth)
Approx. 21.5% of Canadians golf
Trio must decide on a course of
action quickly to protect idea and toearn income
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Key Issues
Technology Need to develop prototype into
marketable product
Expertise Need to ensure expertise in start-up is
in place
Risk Level of acceptable risk for group
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Key Issues
Value-chain proposition Is the product viable and sustainable?
Do consumers exist?
Start-up Capital How much financing is required.
Where will it be obtained?
Income How long will the partners be withoutincome? Will they need another job?How high is the potential income?
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Key IssuesImportance
UrgencyLow High
LowValue-ChainProposition Technology
HighStart-upcapital
ExpertiseRiskIncome
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Strengths Award-winning engineering project (Ontario and Canadian design competitions) Interest from media, articles in 2
local newspapers, and interest frominvestors and entrepreneurs No product in the market that
provides the same range of information as the Analyzer at anaffordable price
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Internal AnalysisDesign Features: records time and position,displays measurements, affordable, portable,could be used with or without a ball
Images may not reflect actual product.
http://www.thegolfsystem.com/index.htmhttp://www.thegolfsystem.com/index.htm7/27/2019 Golf Swing Analyzer Sample Presentation
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Weaknesses
Engineering students with no bigcapital to invest in a business
Limited experience and connections Golf retail industry is highly
seasonal Need to obtain patent for Canadian
and U.S. jurisdictions Advanced features dependent on
computer
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Opportunities Golf is a growing sport Large number of core golfers Baby boomers are primary market
Leading sport brand for golf analyzer equipment Indoor golf training so that golf is no
longer seasonal Flexible technology with potential for
several uses based on software (ie.Simulator)
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Threats
Idea could be copied before it ispatent protected
Better funded competitors Rapid technological advancement Similar technologies exist
Patent litigation
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Porters 5 Forces MED cheap to develop new technology many technologies already patented
HIGH many alternatives
HIGH several similar products exist easily copied new technologies evolving
LOW individual component parts are cheapand abundant
HIGH numerous competitorsoffering wide variety of features and pricepoints for the consumer
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Estimated Golf Spending inCanada
2006 1998(estimated)
TOTAL $13 Billion $11.30 B
Fees/Membership $7.25 B $6.30 B
Equipment $2.25 B $1.96 B
Travel $1.73 B $1.50 BApparel $1.62 B $1.41 B
Source for Data: Ipsos Reid, The 2006 Golf Participation in Canada Report
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Golf Spending on Equipment
In the USA, approx. 12.5% of allgolf equipment and accessories isfor training purposes.
That means in 1998, Canadiansspent $240 Million on golf trainingequipment.
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Proportion of Golf Dollar Spending in Canada
57%
13%
13%
15%
2%17%
Green Fees Travel Apparel Equipment/Accessories Training Accessories
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Competition Analysis
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Alternatives
Try to develop and market the analyzer independently
Accept offers like Jack Lowes to help
grow a company License the analyzer technology to a firm
like Sports Simulations Inc. and collectroyalties only
License the analyzer technology to a firmlike Sports Simulations Inc. in exchangefor working for them too
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Do it independently
Pros Maintain control Largest share of
profits
Cons Very expensive Inexperienced Riskiest individual
venture Need to raise
capital No short-term
income
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Get partners
Pros Maintain most
control
Large share of profits
Attain some
expertise
Cons Very expensive Inexperienced Risky venture Need to raise
capital
No short-termincome
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License analyzer onlyPros Maintain ownership
of technology Minimal personal
cost Experienced
development team Financing is
irrelevant Can work elsewhereto get guaranteedincome
Cons Give up control Income dependent
on revenue Income timing relies
on product reachingmarket
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License analyzer & work
Pros Maintain ownership
of technology No personal cost
Experienceddevelopment team Guaranteed income Immediate income Financing is
irrelevant Familiar with
technology issues Help grow product
Cons Give up control Work for somebody
else
Minimize maximumincome potential Income dependent
on long-term viabilityof company where
technology resides Unknown scenariosfor leaving thecompany
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Criteria Income
Timeliness and magnitude of compensation Expertise
How much expertise is required or offered by
alternative Risk
How much risk must be shouldered by trio Financing
How financially stable is the alternative Technology
How familiar the alternative is with manufacturing andtroubleshooting the technology
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Decision MatrixCriteria Weight Go it
Alone
Find
Partners
License
Only
License
& Work
Income 0.25 1 1 3 3
Expertise 0.25 1 3 5 5
Risk 0.25 1 3 5 4
Financing 0.15 1 3 5 5
Technology 0.10 1 3 4 4
TOTAL 1.0 1.0 2.5 4.4 4.15
1 (unfavourable) to 5 (favourable)
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Decision
License the technology to a firmsuch as Sports Simulation Inc. or others for royalty fees.
Negotiate a 12 month contract withthe company to work/develop finalproduct or else seek employmentelsewhere.
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Implementation PlanDate Activity Responsible Cash
Flow
June 03 Hire a lawyer.Incorporate numbered company.Sign shareholders agreement.
Uhm, Jenkins,McInnis, Lawyer
($5000)
June 03 Raise capital from family and friends. Uhm, Jenkins,McInnis, Lawyer
$10,000
June 03 Write business plan and prepare a ProForma Statement
Uhm, Jenkins,McInnis
July 03 Seek SBL from bank. Uhm, Jenkins,
McInnis
$50,000
July 03 Identify a patent lawyer.Start Patent application process for USAand Canada.
Uhm, Jenkins,McInnis, Lawyer
($20,000)
July 03 Continue refining prototype for development of productionspecifications.
Uhm, Jenkins ($5,000)
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Implementation PlanDate Activity Responsible Cash
FlowJuly 03 Initiate formal bargaining process
between company and Sports SimulationInc.
Uhm, Jenkins,McInnis, Lawyer
($5000)
Aug 03 Conclude negotiations for patentlicensing with Sports Simulation Inc. Uhm, Jenkins,McInnis, Lawyer
Aug 03 Enter employment negotiations for Uhmand Jenkins with Sports Simulation Inc.
Uhm, Jenkins
Sep 03 McInnis is back to school. McInnis
Sep 03 Uhm and Jenkins start employmentsomewhere at Sports Simulation Inc.
Uhm, Jenkins
Feb 03 Final product to mass manufacture. Uhm, Jenkins
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Implementation Plan
Sources of Financing Family and Friends $10,000 SBL $50,000
Expenses Legal Fees $30,000 Hardware/Software $5000
Salaries $25,000
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Contingency Plan
If negotiations for employment areunsuccessful, Uhm and Jenkins willseek employment elsewhere
If unable to license patent, sellpatent entirely
Failure to find an immediate firm tolicense the patent to, newcompanies will be approached
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Conclusion
To minimize Risk and maximizepotential Income and productExpertise, the product should bepatented and licensed to a sportscompany familiar with thetechnology and the market.
QUESTIONS?
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Appendix
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7 Ps of Marketing
Product Price
Promotion Place Packaging
Positioning People
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American Golf EquipmentSpending
Golf Equipment and Accessories
1992 $2.9 Billion
2003 $9.6 Billion
Specialty and Training Equipment
1992 $400 Million
2002 $1.7 Billion
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Training Equipment Ratio
In 1992,0.4 B / (0.4 B + 2.9 B) = 12.12%
In 2002/2003,1.7 B / (1.7 B + 9.6 B) = 15.04%
Average is 13.58%. Use 12.50% to be conservative.
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Royalty Analysis
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Breakeven Analysis
Depending on the proportion of Labor and General expensesthat go directly into the pockets of the trio, they will need tosell between 3000 and 8000 units per year to earn $50,000each.
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Implied Value by Partner Jack Lowes offer of $10,000 for 5% implies he
thinks the company/idea is worth $200,000currently. This does not cover the costs of patents.
His initial services would be worth around$5000 but he wants 5%. This impliescompany/idea is worth $100,000 currently.
His desire for 5% for raising funds is notcontingent on the amount raised.
Contribution to day-to-day operations for 15% isreasonable. However, is he the right person?