Business Case Analysis of 1 Up Toys
(Student’s Full Name)
Business Case Analysis of 1 Up Toys
Ronald Mannak, the founder of 1uptoys, created a company out of a desire to develop cutting-edge toys and gadgets. His friend, Patrick Grasso, decided to enter into business with Mannak. Both Grasso and Mannak invested a total of 24,000 Euros with Mannak having a “55% share” in the company (Smits & Bodewes, 2011, p. 5). In order to get more capital to start the company, Mannak made the decision to sell the idea before developing the products. In June 2006, SilverLit decided to sign a licensing agreement with 1uptoys so that Mannak could develop three electronic music toys, such as air-drums, air-guitar, and boombox.
Mannak attempted to find additional funding but experienced difficulties doing so. He had applied for a bank loan of 225, 000 euros from Rabobank. Mannak had to request that SenterNovem, a Dutch government agency that determines if a start-up company qualified for a bank loan, approved a bank loan. However, Rabobank decided not to continue with the loan granting process.
In December 2006, 1uptoys decided to ask ABN-AMRO for the loan instead. However, SenterNovem did not approve the loan since they would have to do a re-assessment of the bank change. That re-assessment is expected to take at least a month. Nevertheless, the toy company needs the money so that the developers can be paid their wages. Mannak was able to pay them part of their wages with the advance received from Silver in 2006, and it was difficult to motivate his workers to produce at an optimal level. The toy company is only able to receive when the prototypes are ready for April 2007. On the other hand, it would be difficult to do this if the developers cannot be paid their wages since their morale would be low.
Challenges
The challenges that are being faced by the 1uptoys are the following:
Finding innovative ways to get funding for their start-up company
Boosting sales of their products in a highly competitive environment in the global toy industry. The toy industry competes on both “innovation and price” (Smits & Bodewes, 2011, p. 8).
The toy industry is difficult to do well in since sales are seasonal and products have short “life cycles” (Smits & Bodewes, 2011, p. 8).
Boost the morale of the developers so that they can produce efficiently
Hiring additional engineers
Actions
The actions that need to be taken to address these challenges include:
Expose the 1uptoys to innovative ways of securing funding such as crowd-funding. Crowd-funding sites are being used many start-ups to fund their companies. Some crowd-funding sites that can be considered include: KickStarter, Indiegogo, GoFundMe, CrowdRise and CrowdFunder.
Expose 1uptoys to other areas that they can branch out besides creating musical toys, such as the creation of educational video games to facilitate e-learning since more people would find the need to purchase such games on a consistent basis. Furthermore, educational institutions and companies desiring to train their workers will have a desire to purchase products.
Once 1uptoys changes its focus from creating only musical toys, Mannak will find it easier to get more investors to invest in his company. Therefore, it needs to find new investors after it thinks of expanding its product range.
Find ways of re-energizing and motivating current workers and hiring additional ones so at encourage innovation and creativity.
Reference
Smits, A., & Bodewes, W. (2011). 1up Toys Breaking into the Toy Industry. Maastrict: Maastrict Univerity.
