Draftsman Consulting, Inc. Cover Letters Example
2498 Front Street
Sioux Falls, SD 57108
New Heritage Doll Company
98487 Capital Blvd, Ste. 199
Sioux City, IA 51101
Dear Mr. Johnson:
We have completed the evaluation of your company and created the consulting report you requested. We evaluated the expected growth of New Heritage Doll Company and have found it far below the 8% the company experienced despite the increase in the industry over the last few years. Draftsman Consulting, Inc. would like to recommend a complete evaluation of the company’s processes to determine why the growth for 2014 is so low.
The complete report will be sent to you within the next few days. After reading it, you will find elaborations on the information in the following introduction. We are inclined to propose the introduction of one or two new product lines. At that time, feel free to contact us with any questions. We appreciate your business and look forward to hearing from you in the near future.
Frank Estes, consultant
New Heritage Doll Factory
In evaluating the figures for New Heritage Doll Factory for the past three years, it is apparent there is a significant problem in sales. In the year 2012, there was a very acceptable growth of 52.4% and another good year in 2013 with an increase of 22.6%. However, 2014 showed only an 8% increase while the industry grew to $3.6 billion in 2013.
While the popularity of the Barbie doll remains strong, other lines began to flounder. Part of the appeal of the Barbie doll is the ability to purchase accompanying “friends”, wardrobes, and collection dolls meant for display rather than play. The proposal of an expansion of the Match My Doll Clothing line by the brand manager, Marcy McAdams, would align itself with the Barbie doll wardrobe appeal. The total investment of the expansion is estimated to be $3,520,000. In addition to being tax deductible, the investment would increase revenue of the Match My Doll Clothing line and increase promotion of the other products in the catalogue.
The other proposed change is in the Design Your Own Doll product. In review, the cost of implementing this product line would require a total cost of approximately $5,811,000. While this is a substantially higher dollar investment, the payback is essentially much longer and the market is different from the one with Barbie doll popularity. These dolls would cost significantly more and appeal more to children from wealthier families. The novelty of individualizing the doll would wear off as the girl matured and looked less like the doll. In other words, it would fall in neither the category of the most popular dolls due to cost and the collection dolls because it is meant for play use. For these reasons, we recommend more market research before starting production on the Design Your Own Doll product line.
It is not acceptable for the growth rate of 8% to remain static as per projections. While fixed costs will remain essential the same, the cost of total production costs will continue to rise. By incorporating the Match My Doll Clothing line, innovation in the brand name will show the company is responding to the market. While the Barbie doll is challenging competition, a rise in growth should be expected in 2015 after the holiday season. Marketing should be initiated as soon as the line can be shipped to stores. Sales representatives should be encouraged to promote the new line in addition to the standard ones in an effort to push the new product and bring along the others with it.
Finally, it is strongly recommended that steps be taken to maintain or lessen the number of days that payables are outstanding. With working capital changing with the new production line, there is an expected lag between increased costs of production and the influx of income from the new dolls.