Good Case Study About Hilary Andrews And Mankind

Type of paper: Case Study

Topic: Business, Internet, Ebay, Family, Company, Idea, Finance, Customers

Pages: 4

Words: 1100

Published: 2020/12/06

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Hilary Andrews comes from a family of entrepreneurs. Her father ran a building and landscaping company and her sister ran a public relations company. Hilary wanted to be a beauty therapist so she left Sixth Form College to go to a private college ahead of going to work in a beauty salon. However it was not too long before she opened her own salon in Woking, in 1983. But Hilary got bored and felt unhappy with the insecurity of self-employment, so in 1990 she took a teacher training course and then a degree in education, going on to teach beauty and holistic therapy in Farnborough. She then got a job in a company distributing products to the spa industry, working in their mail order department. It was here that she came upon the idea for her business. Men kept asking for advice on products to use on their skin, so she decided to research the emerging market for men’s skin care products. She quickly decided there was a real business opportunity in setting up a mail order company selling just men’s cosmetics. The market for male grooming products was growing rapidly but, more importantly for her idea, many men preferred not to visit shops.
However, Hilary was by now 38 years old and she found the prospect of setting up on her own daunting. Luckily she was able to find a business partner, Paul Jamieson, through a mutual friend. She enthused him with her business idea and he decided he was willing to back her. But more money was needed and the banks and private investors were not convinced. They thought the idea untried and untested and did not believe men would buy grooming products in this way. Not to be put off, Hilary re-mortgaged her house, raising £10 000 and Paul put in £20 000 of his own money. Hilary managed to borrow a further £20 000 from two family members and two friends. With £50 000 of capital, Mankind was launched in 2000.
First Hilary secured the products she wished to sell by entering into distributor agreements for a range of selected products. Then she bought mailing lists and printed some 100 000 catalogues. Friends and family helped stuff the catalogues into envelopes and mail them out. Sufficient sales came from this first mailshot to establish the business and it quickly developed its own mailing list. But it was through developing a website and exploiting the internet market that the business really took off. This was a key decision that allowed it to grow, just as online shopping was becoming popular.
‘We knew there were guys who wanted these products but didn’t want the hassle of going to a shop and speaking to a consultant. The internet has made it easy to buy products that were previously difficult to get and enabled us to give people a lot of information about them. About 99 per cent of our sales are through the internet now. We have watched things develop very quickly in both the male grooming and the internet market. But we have tried to control the growth so we don’t try to run before we can walk. I’m a cautious person who looks at the downside of things.
It’s about being really focused on what you do You have to watch the bottom line constantly. It’s not about starting a business and getting yourself a nice car; it’s about starting a business and having a really solid model that works What motivates me is being successful in an industry I love. It’s a rewarding thing to give people confidence.’

Sunday Times 9 October 2005

QUESTIONS
Which of the character traits of the entrepreneur does Hilary exhibit?
Hilary demonstrates tenacity when he starts businesses with uncertainty while believing that the business will succeed. This is integral in helping entrepreneurs enhance their chances of meeting their goals while outperforming the inevitable mistakes and problems that are bound to face the business. In addition, Hilary demonstrates vision through his ability to identify an opportunity and integrate something that another person has not performed in the field. This is evident from his identification of opportunities in different markets. Entrepreneurs are observed to demonstrate imagination and curiosity in the identification of niches thus enhancing their innovation.

What other influences can you detect?

There is evidently self-belief in Hilary. This is an integral influence in facilitating the choice of an entrepreneur to take a risk. Therefore, entrepreneurs are demanded to show task-specific confidence. This can only be attained through proper market research of the industry that the individual is willing to invest. Moreover, there is a need for flexibility, which is evident in the case above. Hilary s observed to try out a variety of things to enable him to settle on the choice that is most rewarding. This involves the will to attempt investment in a variety of fields.

How much of the success of this venture is down to the right idea at the right time?

Entrepreneurial success is dependent on the ability to identify the correct opportunity at the right time. Thus, the success of the venture is highly dependent on the identification of the right time to invest in a given field. The identification of the right time to invest in a business is integral in facilitating the success of the business. The right time to invest in a business is dependent on effort that is put into the investigation of market forces, market performance and client interests. These features are integral in ensuring the success of a business.

Duncan Bannatyne, Dragon

Duncan Bannatyne is probably the best known entrepreneur in the UK because of his appearances on the BBC TV series Dragons’ Den rather than his achievements as a serial entrepreneur. His life has, however, been a colourful one. He was born in 1949 into a relatively poor family in the town of Clydebank, Scotland. The second of seven children, his father was a foundry-man at the local ship yard. When told that the family could not afford to buy him a bicycle Duncan tried to get a job delivering newspapers for the local newsagents, only to be set the challenge of fi nding 100 people who wanted a newspaper to be delivered. By knocking on doors he collected the names, got his newspaper round and eventually was able to buy his bicycle.
Duncan left school at 15 to serve in the Royal Navy. He served for five years before receiving a dishonourable discharge – after 9 months detention – for threatening to throw an officer off a jetty. He spent his twenties moving from job to job around the UK, including taxi driving and selling ice creams, ending up in Stockton-On-Tees. It was here, in his early 30s, that Duncan’s entrepreneurial career started when, using his personal savings, he bought an ice cream van for £450. He built this business into a fleet of vans selling ‘Duncan’s Super Ices’. Even here he showed entrepreneurial flair. He was innovative – he started using a scoop that speeded up serving and made a shape like a smile in the ice cream, which the children loved. He was good at spotting opportunities – he bought one pitch in a local park for £2000 which gave him profits of £18 000 in one summer. He eventually sold the business for £28 000, but not before he had spotted another opportunity. In the 1980s the government started helping unemployed people by paying their rent. Duncan used his profits from the ice cream business to buy and convert houses into bedsits for rent. He rented to the unemployed, so the rents were guaranteed by the government.
Duncan used the proceeds from the sale of the ice cream business – and almost everything else he owned – to move into residential care homes with a business partner. He took out a bank loan, re-mortgaged his own home and started building up credit card debt. The building costs of the care home were to be financed by a 70 per cent mortgage, but this would only be released when building work was complete and the home was available for occupation. When building costs for the first home spiralled out of control and no more funds were available, he, his partner, friends and family decided to finish the work themselves. The total costs for the care home came to £360 000, and nearly bankrupted Duncan. But the bank then valued the finished home at £600 000, giving a mortgage of £420 000. This meant that Duncan could recover his costs, pay off his debts and still have equity to put into the next care home. Using a mix of retained profits and borrowings, and by offering shares in the company, he expanded the number of homes
When I opened my first nursing home, I had considered newsagents and bed and breakfast establishments but then Margaret Thatcher started to revolutionise care for the elderly I spotted an opportunity. I came to the conclusion that landlords who owned nursing homes could make a lot of money from the scheme. I took advantage and bought a plot of land with a bank loan and set up my first nursing home in Darlington as soon as I could. When that was full, I paid off all my debts, bought another plot and repeated the process until the portfolio included 45 homes.’ The company was called Quality Care Homes and it was eventually floated on the Stock Exchange. Duncan also went into children’s nurseries with the Just Learning chain. In 1996 he sold Quality Care Homes for £26 million and Just Learning for £22 million. By now, however he had expanded into health clubs with the popular Bannatyne’s chain.
‘I remember while I was working in the nursing home industry, I injured my knee and used to travel 30 minutes to a local gym in the North East for exercise and physiotherapy. While working out my knee, I also tried to work out the gym’s business plan. I knew the membership fees and the number of members and I calculated approximately how much the building cost because I sat and counted the number of tiles on the ceiling and equated them to square footage in my nursing homes. I did the necessary sums and worked out that, if I opened my own health club, I would make a 35%-40% return on capital. It was a no-brainer.’

Daily Telegraph 30 July 2009

QUESTIONS

What entrepreneurial character traits can you spot in Duncan?

Duncan is a flexible individual since he is noted to invest in a variety of businesses. In addition, the identification of a business opportunity demands the possession of a flexible entrepreneur character such that the entrepreneur is able to capture the business s opportunity and invest in the business gap. Secondly, Duncan is definitely a risk taker, which is evident from his choice to invest in a business through obtaining a loan after mortgaging his house. Entrepreneurs are required to apply conventional wisdom to enhance their survival in a business. The third trait that is evident in Duncan is his visionary spirit. This is demonstrated by his will and year to expand the businesses that he participates. For instance, he was involved in the expansion of the ice cream business and the real estate housing project. Moreover, his ability to take a risk through the creation of partners is evidently a primary entrepreneurial trait.

EBay

Crucial to success for dot.com firms is the ‘business model’ – how income will be generated. Arguably the most successful model is that of the online auctioneer eBay. eBay was founded by Pierre M. Omidyar in 1995. The company has now expanded worldwide, claiming hundreds of millions of registered users, over 15 000 employees and revenues of almost $8 billion. eBay’s success comes from being nothing more than an intermediary – software running on a web server. Its customers, both buyers and sellers, do all the work. Sellers pay to set up their own auction, buyers use eBay’s software to place their bids, shipping and payment are arranged between the seller and buyer and eBay takes between 7 and 18 per cent of the selling price as commission for letting them use its software. eBay is simply the trading platform. It holds no stocks and its involvement in the trade is minimal. After each transaction the buyer and seller rate each other. Next to each user’s identification is a figure in brackets recording the number of positive comments – thus encouraging honesty and trust? It is a truly virtual business which also sells advertising space.
eBay developed a ‘virtuous circle’ in which more buyers attracted more sellers, which attracted yet more buyers and sellers – called ‘network effects’. At the core of eBay’s business is software rather than people. The company has bought software companies to gain exclusive use of their technologies and make the auction process more efficient. It therefore faces enormous economies of scale in attracting as many auction transactions as possible and, with that in mind, has moved into new areas such as used cars and hosting storefronts for small merchants where ‘buy-it-now’ goods are offered. It has also started to sell private-label versions of its service to companies, for a fee.
In 2002 eBay purchased iBazar, a similar European auction website. It also purchased PayPal, the dominant provider of internet payments in the USA. The two companies are complementary but depend on each other. Indeed, auctions account for almost two-thirds of PayPal’s business. PayPal allows customers to register details of their credit card or bank account with it so that when they buy something on the internet they just enter an e-mail account and an amount. Like eBay, it is fully automated, relying on software rather than people. Like eBay, it also relies on ‘network effects’.
Not all of eBay’s new ventures have been successful. In 2005 it bought the internet phone company Skype, expecting to be able to use this medium as a platform for its main business. However it sold a 65 per cent share in 2009 to Netscape co-founder Marc Andreessen and a group of private equity firms, claiming Skype offered ‘limited synergies’. In 2006, eBay opened its new eBay Express site, which was designed to work like a standard Internet shopping site for consumers with US addresses. It closed in 2008.
The company’s business strategy involves achieving market dominance worldwide. It has already expanded into over two dozen countries including China and India. The only countries where expansion failed were Taiwan and Japan, where Yahoo! had a head start, and New Zealand, where TradeMe is still the dominant online auction site. Another element of its strategy is to leverage the relationship between it and PayPal. eBay’s basic business model generates revenues from sellers. Driving buyers and sellers to use PayPal means eBay also turn buyers into clients. It also means that for each new PayPal registration it achieves via the eBay site, it also earns off-site revenues when the PayPal account is used in non-eBay transactions.
QUESTIONS

Why is eBay’s business model so attractive?

The success demonstrated by eBay’s business model may attributed to the ability to change the fragmented and principally small businesses into global brands. Moreover, the transformation of the businesses is noted to demand minimal financial investment to the users including both the traders and the clients.
The traders are also provided with a better advertising platform where they can advertise a wider range of products and provide the consumer with greater detail at a relatively cheaper cost to other advertising media including the local dailies and the television classified sections. In addition, the consumers are observed to appreciate the greater details provided. Moreover, the concerns regarding fraud have been eliminated through the introduction of a feedback system that incorporates the identification of credible sellers based on the user’s previous transactions. There are also a variety of sellers and buyers that are interacting in the market place thus providing a greater variety for the consumer and a wider market for the traders.

How does PayPal enhance this business model?

PayPal is operated by eBay thus facilitating the payments for the goods bought through the platform. PayPal is noted to charge the clients transaction fees through which it earns revenue. In addition to facilitating transactions, PayPal offers a particularly lucrative feature, buyer protection that guarantees the clients a refund or replacement of the item in case of fraud or invalidity of the item sold through the platform. PayPal allows money conversion thus enabling transactions from all over the world. This enhances the participation of people located in different locations globally.

Why does one element of eBay’s strategy involve market dominance?

There is an increase in dot-coms thus increasing the possibility of an increase I online market places. There are numerous marketplaces that have emerged thus posing a challenge to eBay from the competitors. Thus, there is an increasing demand for eBay to dominate the market to prevent elimination. This is performed through the introduction of new and improved features and functionality of the platform.

Andrew Valentine and Streetcar

Andrew Valentine studied modern languages and anthropology at Durham University. Whilst there, he and a friend set up a student radio station, Purple FM. After graduating he joined the shipping company P&O and worked for them for six years, doing a part-time MBA. But in 2002 Andrew got itchy feet and decided he wanted to set up his own business, rather than work for other people. The problem was he did not have a business idea. So he and a friend, Brett Akker, became partners and set about searching systematically for the right business. They spent 18 months researching many ideas rom organic food to training courses, meeting twice a week, before coming up with the final idea.
‘We looked at hundreds of ideas. We were basically trying to identify gaps, so we were looking at how society was changing and what was missing. Our business had to have potential, be capable of being scaled up and play to our strengths. We kept looking until we found something that matched our criteria.’
The final idea came from something Andrew read about in another country – a car sharing club. By 2009 Andrew and Brett’s company, called Streetcar, had a turnover of £20 million and some 1300 cars based in six UK cities. The idea is that people in towns and cities can rent a car for as little as half an hour, replacing the need to buy. Cars are parked in residential streets and are ready to drive away using an electronic card to open the door and start up.
‘I read about a similar business overseas and immediately thought, what an amazing idea. There were a couple of other companies already running this kind of service in Britain but they weren’t doing it the way we imagined we would be able to do it. We thought we could be more effective.’
Once Andrew and Brett had the idea, they spent four months holding market research focus groups to test out the business model and developing financial projections to estimate the resources they would need. ‘We were satisfying ourselves that not only would it work but that there was enough demand for it.’
Initially called Mystreetcar and based in Clapham, South London, the business was finally launched in 2004 on the back of their savings, £60 000 of outside finance and £130 000 of lease finance to purchase the first eight cars. Initially they did everything themselves, working almost a 24-hour day. They handed out leaflets at train and tube stations in the early mornings, eventually getting family and friends to help, they answered the phone and signed up members, meeting them to show how to use the cars. They even washed and maintained the cars themselves. They offered a 24-hour service to members so, to start with, one of them had to be near to a phone all day, every day. After three months they had 100 members, each having paid a membership deposit and joining fee, so they went out and leased 20 more cars at a cost of £300 000.
The business model has changed slightly now. There is no deposit, just an annual membership fee and cars are rented by the hour, which includes 30 miles of petrol. In 2007 Andrew and Brett gave up 43 per cent of the business to Smedvig, a venture capital company, which invested £6.4 million in Streetcar.
‘Brett and I share a healthy level of permanent dissatisfaction with the service. This means that we are constantly working at making it better and improving everything. I really enjoy the creativity of growing a business.’

Sunday Times 15 November 2009

QUESTIONS

How did Andrew and Brett go about getting their business idea?

There was investigation of the current opportunities in existence. Therefore, Andrew and Bret participated in intensive market research that incorporated the identification of gaps in the society through the examination of the evolving society and the missing aspects including necessary resources in the society.

How did they minimise their risks in setting up the business?

Andre and Bret were involved in intensive market research through holding focus groups in order to test the business model and identify any weaknesses in the proposed business model. In addition, they were able to develop financial projections to develop an extensive plan describing the financial resources demanded for the successful implementation of the business.

Alex Tew and the Million Dollar Homepage

Alex Tew, a Nottingham Trent University student in the UK was only 21 years old when he had his big business idea in 2005. Within months he had set it up – his website that is – the Million Dollar Homepage, www.milliondollarhomepage.com. By January 2006 Alex was a millionaire.
The Million Dollar Homepage is a single web page that is divided into 10 000 boxes, each 100 pixels in size. Alex sold the space to advertisers at $1 for each pixel, with a minimum of 100 pixels. The result is a montage of company logos each with a hyperlink to the advertiser’s website. The site features a web banner with ’a pixel counter displaying the number of pixels sold, a navigation bar containing nine small links to the site’s internal web pages, and an empty square grid of 1 000 000 pixels divided into 10 000 blocks of 100 pixels. Alex promised customers that the site would remain online for five years – that is, until at least 26 August 2010.
The idea for the web page originated from brainstorming and came whilst Alex lay on his bed at home in August 2005:
‘I have always been an ideas person and I have a brainstorming session every night before I go to bed and write things down on a note pad.’

Sunday Times 18 December 2005

The site took just two days to set up and cost £50. Alex sold the first blocks of pixels to his brothers and some friends and used that money to advertise the site. The site address began appearing in internet blogs and chat rooms. Following a press release, a BBC technology programme ran a story on the page in September 2005. This was followed swiftly by articles in newspapers around the world, as well as features on national television. As the site caught on, more and more advertisers signed up – after all $100 was not a lot to pay. By January 2006 he had sold all 1 million pixels – the final 1000 pixels were sold by a 10-day auction on eBay – at which point he closed the site to new entrants and left it on the internet. Alex had become a celebrity millionaire ($1 037 100 to be precise) and the homepage had become a phenomenon, all within a year!
‘From the outset I knew the idea had potential, but it was one of those things that could have gone either way. My thinking was I had nothing to lose, apart from the £50 or so it cost to register the domain and set up the hosting. I knew the idea was quirky enough to create interest The internet is a very powerful medium.
The crucial thing in creating the media interest was the idea itself; it was unique and quirky enough to stand out. I only had to push the idea a bit in the first few days by sending out a press release which essentially acted as a catalyst. This interest coupled with traditional word-of-mouth created a buzz around the homepage, which in turn created more interest.’ Ask the Expert: How to make a Million, FT.com 22 February 2006 (www.ft.com)
QUESTIONS

In your opinion is this a ‘one-off’ business, or can it be replicated?

It can be replicated.
If you think it can, how would you set about it?
I believe that the business can be replicated through the setup of numerous domains that feature different businesses. I addition, the businesses can show greater specialism through the integration of different businesses that feature a domain for a given industry. Thus, I would proposed industrial advertising specialization as the primary mode of replicating the business,

What lessons do you learn from Alex’s success?

I learnt that no idea can be considered useless; hence, brainstorming is integral in ensuring business success. In addition, I learnt that setting up a business does not demand a great investment. Third, advertising is primary in ensuring business success. Finally, that businesses demand honesty from the business owners that are demanded to keep their promises.

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