Foxy originals

1. Foxy originals

2. What is the question?

3. What is the question? • Should Foxy Originals expand into the U.S. by way o f trade shows or sales representatives? • Given the additional workload, the owners would expect the expansion to provide a target profit of $100,000.

4. Background • Foxy Originals sells necklaces and earrings in 250 boutiques in Canada. • Three customer segments • Reversible enamel ladies • Bridge ladies • Chain-lovin ladies • U.S. jewelry market is 10 times larger than Canadian market

5. Trade Shows(Benefits and Risks)

6. Trade Shows(Benefits and Risks) • Foxy Originals owners could interact directly with U.S. customers. • Build rapport with customers • Spot trends quicker • Retain control of brand image • Time commitment is substantial • 50 days of prep work • 30 days attending shows • Orders may be geographically dispersed

7. Sales Representatives(Benefits)

8. Sales Representatives(Benefits) • Requires limited time commitment from owners. • Commission-based compensation eliminates the need for fixed cost investment, thereby lowering the company’s risk. • Sales reps can sell to all key retailers in each geographic location, resulting in stronger brand recognition. • Sales reps already have many contacts • Sales reps approach can be easily expanded.

9. Sales Representatives(Risks)

10. Sales Representatives(Risks) • Sales reps already carry 10-15 brands, so how committed will they be to Foxy Originals? • Foxy will lose control of how its brand is portrayed to customers. • Foxy will not have direct interaction with U.S. customers. • Sales reps may have substantial turnover thereby wasting Foxy’s training resources.

11. Let’s build the Inputs Tab in Excel.

12. The Inputs(Sales Data)

13. The Inputs(Sales Data)

14. The Inputs(Trade Show Data)

15. The Inputs(Trade Show Data)

16. The Inputs(Trade Show Variable Cost per Order)

17. The Inputs(Trade Show Variable Cost per Order)

18. The Inputs(Trade show fixed costs)

19. The Inputs(Trade show fixed costs)

20. The Inputs(Sales representative data)

21. The Inputs(Sales representative data)

22. The Inputs(Sales reps variable cost per order)

23. The Inputs(Sales reps variable cost per order)

24. The Inputs(Sales reps fixed costs)

25. The Inputs(Sales reps fixed costs)

26. Let’s build the Trade Shows Tab in Excel.

27. Trade Shows(Contribution Format Income Statements)

28. Trade Shows(Contribution Format Income Statements)

29. Breakeven in orders

30. Breakeven in orders

31. Breakeven in orders

32. Target Profit in Orders

33. Target Profit in Orders

34. Margin of Safety(Minimum Scenario)

35. Margin of Safety(Minimum Scenario)

36. Let’s build the Sales Reps Tab in Excel.

37. Sales Representatives(Contribution Format Income Statements)

38. Sales Representatives(Contribution Format Income Statements)

39. Breakeven in orders

40. Breakeven in orders

41. Target Profit in Orders

42. Target Profit in Orders

43. Margin of Safety(Minimum Scenario)

44. Margin of Safety(Minimum Scenario)

45. What are the revised net operating incomes if the trade show travel costs actually end up being $3,000 per show?

46. What-If Analysis

47. What are the revised net operating incomes if the rental space per rep per month actually ends up being $300 instead of $200?

48. What-If Analysis

49. What are the revised net operating incomes if the actual number of necklaces and earrings per order ends up being 20 and 15, respectively?

50. What-If Analysis(Trade Shows)