Review Case Study, “Mayu LLC,” attached In 250 words: The advent and greater expanse of the Internet and availability of communication tools, such as Skype, provides an easier global expansion path f

To t est t h e wa ter s, K ate ret urned f r o m t h e Pea ce Co rp s wit h two g ia nt r ice sack s fu ll o f a lpa ca sh awl s, sca rv es, a nd b la nk ets.

Seeing t h e po sitive rea ctio ns of f r iend s and f a m ily, K ate d ecid ed t h at st arting M ayu wa s ind eed a n ex cel lent id ea . A s th e dem and wa s th er e and t h e wea th er wa s co ld , sh e dove in hea d fir st wit hou t cr ea ting a f o rm al b u siness plan. O ne yea r l a ter , a s M ayu wa s gro wing , K ate wa s fa ced wit h a nu mber o f ch alleng es and r ea liz ed sh e sh ou ld a nswer a co upl e of q u est ions bef ore m oving a h ea d.

1 . Assu ming d em and co ntinu ed t o g ro w, h ow wo uld sh e sca le oper atio ns in Per u? Sh e had a lr ea dy a ccept ed a f u ll- tim e jo b in Ch ica go a nd wo uld b e wo rk ing o n M ayu o n a pa rt- tim e basis. 2 . H ow wo uld sh e ta k e M ayu f r o m a n in- per son, ev ent -b ased co mpa ny t o a su ccessf ul o n line store if peo ple co uld no t see 5/2/23, 6:35 AM Mayu LLC https://prod.reader -ui.prod.mheducation.com/epub/sn_b4dc/data-uuid-f0bdb3e8e76849e191cb079b2064f265 3/34 and f eel t h e alpa ca f ib er ? Sh e need ed a n onl ine mark et ing stra teg y. 3 . Adm itting t h at f ina nce was no t h er st ro ng su it, K ate w orried th at t h e pr o f o rm a f ina ncia l d ata sh e had ca lcu la ted wer e missing so mething . S h e wa s lo oking f o r f eed back o n what sh e had d one. 4 . W hat f r a ct io n of eq uit y wo uld need t o b e giv en up ass um ing ou tsid e ca pit al wo uld b e so ugh t f o r ex pa nsio n? 5. Sh ou ld sh e pa rtner wit h se ver al ind ivid uals wh o h ad a sk ed her t o h el p th em a lso im port k nit wea r f r o m P er u? Sh e wa nted t o pr otect h er “t ra d e secr et”—t he artisa ns wh o sh e had wo rk ed h ard t o t r a in. 5/2/23, 6:35 AM Mayu LLC https://prod.reader -ui.prod.mheducation.com/epub/sn_b4dc/data-uuid-f0bdb3e8e76849e191cb079b2064f265 4/34 COM PANY AND PRODUCT Mayu , wh ich m ea ns riv er in Quech ua, t h e na tiv e la ng uag e of M ayu ’s Per uvia n artisa ns, i m po rts and sel ls alpa ca a cc esso ries incl uding h and -k nit sca rv es, h ats, sh awl s, wr aps, g lo ves, a nd b la nk ets. M ayu ’s pr o b ono a tto rney inco rpo ra ted t h e co mpa ny as an LLC and M ayu is no w a r eg ist ered t r a d em ark . K ate d ev eloped t h e fo llo wing m issio n fo r t h e co mpa ny : Mayu s tr iv es t o b e th e in du str y lead er in t h e s ale o f hig h -q ual it y , o n e-o f- a-k in d, u lt r a-c las sic al pac a acces so ries . M ayu o ffer s s o cial v al ue b y in creas in g th e liv el ih ood an d c o n tr ib u tin g t o t h e p erso n al an d pro fes sio n al d ev elop m en t o f t h ei r f em ale p ro d u cer s in P er u. A t t h e sam e tim e, M ayu t r an sp ar en tly an d hon es tly ed ucat es A m er ic a n c o n su m er s ab ou t t h e orig in s o f M ayu ’s et hic al fas hio n ac ces so ries . S uper b cu sto m er s er vic e, m utu al -res pec t, an d t r ip le b otto m lin e in it iat iv es (p eo ple, p lan et, p ro fit ) ar e th e el em ents g u id in g M ayu ’s b u sin es s ac tiv it ies . Aft er m any sh opping ex cu rsio ns in Lim a’s m ark et s an d Int ernet r esea rch o n alpa ca a ccesso ries current ly o ffer ed in th e m ark et , K ate def ined t h e uniq ue sel ling pr opo sitions of M ayu ’s pr od u ct s. T he ex clusiv e, st ylish d esig ns wer e hand mad e wit h eco fr iend ly a lpa ca f ib er , wer e fa ir ly t r a d ed ( M ayu is a m em ber of t h e Fair T ra d e Fed eratio n) , a nd wer e of t h e hig hest q u alit y, la st ing a l if et im e. T his pr od u ct o ff er ing wa s dif fer ent f r o m t h e m ass- prod u ced , m ach ine- mad e accesso ries fo u nd in brick -a nd - morta r a nd I nt ernet -b ased sh ops in Per u a nd t h e U nit ed Sta tes. K ate also no ticed t h at m ost o f t h ese prod u ct s w er e no t act ually k nit wit h pu re alpa ca y a rn. I nst ead, t h ey wer e ty pica lly a co mbina tio n of a lpa ca a nd o th er wo ols of l esser q u alit y.

A no th er u niq ueness was th at M ayu ’s pr od u ct s used pu rel y Per uvia n m ater ials and l a b or a nd h ad a n int erest ing st ory 5/2/23, 6:35 AM Mayu LLC https://prod.reader -ui.prod.mheducation.com/epub/sn_b4dc/data-uuid-f0bdb3e8e76849e191cb079b2064f265 5/34 beh ind t h em . T he st ory r ef lect ed K ate’ s Pea ce Co rps exper ience and d ir ect r el atio nsh ip wit h t h e artisa ns. 5/2/23, 6:35 AM Mayu LLC https://prod.reader -ui.prod.mheducation.com/epub/sn_b4dc/data-uuid-f0bdb3e8e76849e191cb079b2064f265 6/34 IN D USTR Y AND CURREN T TR END S Clo thi ng a nd Ac ce sso rie s Kate’ s resea rch ind icated t h at t h e dem and f o r cl oth ing a nd accesso ries was driv en by per sona l inco me and f a sh ion tr end s and t h at wo men purch ased a ppr oxim atel y 6 4 it em s of cl oth ing per y ea r. A cco rd ing t o 2 0 10 I B IS W orld Cl oth ing & Accesso ries st ores ind ust ry f o reca sts, t h e ind ust ry wa s va lu ed a t $ 7.0 b il lio n wit h pr ofit s of $ 772 .8 m illio n and o f a ll t h e acc esso ry pr od u ct s so ld , 18 per cent in vo lv ed neck wear, sca rv es, a nd h ats.

T he accesso ries mark et h ad seen annu al g ro wt h o f 5 .1 per cent over t h e pr evious 5 y ea rs and wa s ex pect ed t o r ea ch 7 per cent annu al g ro wt h f r o m 2 0 10 t o 2 0 15 . T he m ark et siz e of t h e wo men’ s ou ter wea r a nd cl oth ing ind ust ry h ad co nsist ent gro wt h b et ween 20 03 and 2 0 08. A lt h ou gh t h e recent eco nomic downt urn had im pacted t h e accesso ries mark et a s th e co nsu mer sent iment s ind ex f el l b y 4 .1 per cent d u ring t h e 5/2/23, 6:35 AM Mayu LLC https://prod.reader -ui.prod.mheducation.com/epub/sn_b4dc/data-uuid-f0bdb3e8e76849e191cb079b2064f265 7/34 preced ing y ea rs, t h e ind ex wa s ex pect ed t o r ise by 13. 6 per cent in 20 10 . P er ca pit a d ispo sable inco me in th e U nit ed S ta tes wa s also o n th e rise fr o m it s lo w est v a lu es in 20 08. A s a r esu lt , K ate th ou gh t t h at h er t a rg et m ark et wo uld no t b e sev erely im pacted .

Stu dies showed t h at ev en in t im es of eco nomic downt urn, co nsu mer s sh ifted b u ying b eh avio r t o m ore cl assic, f o rev er pieces, wh ich is pr ecisel y wh at M ayu o ffer ed . 5/2/23, 6:35 AM Mayu LLC https://prod.reader -ui.prod.mheducation.com/epub/sn_b4dc/data-uuid-f0bdb3e8e76849e191cb079b2064f265 8/34 Pag e 5 2 4 E -C ommerc e The e- co mmer ce ind ust ry wa s gro wing st ea dil y, h aving a nnu al g ro wt h o f 6 .6 per cent f r o m 2 0 05 t o 2 0 10 a nd a nnu al r ev enu es over $ 93. 8 b il lio n. F ortu na tel y, o nl ine sales wer e ex pect ed t o co ntinu e gro wing a t a n ev en fa st er r a te of 10 .5 per cen t f r o m 2 0 10 t o 2 0 15 . L ooking a t t h ese statist ics, it wa s cl ea r t h at o nl ine ret ail ing wa s a g ro wing m ed ium f o r t h e pu rch ase of specia lt y it em s su ch a s th ose knit b y M ayu ’s artisa ns in Per u.

O f a ll o nl ine bu sinesses in 20 10 , 15 per cent wer e cl oth ing a nd a ccesso ries ret ail er s. D ue to incr eased co nnect ivity, po sitive per cept ions of o nl ine secu rit y, a nd ea se of co nd uct ing tr a nsa ctio ns,  onl ine compa nies such a s M ayu co uld b e ex pect ed t o b enef it f r o m t h is gro wt h. 5/2/23, 6:35 AM Mayu LLC https://prod.reader -ui.prod.mheducation.com/epub/sn_b4dc/data-uuid-f0bdb3e8e76849e191cb079b2064f265 9/34 Tre nd s Kate knew th at g ro wing a wa reness of f a ir t r a d e and et hica l fa sh ion and t h e recent sig ns of a “g reen rev olu tio n” wou ld b e benef icial t o M ayu . T her e wa s no d ou bt t h at co nsu mer s wer e beco ming m ore respo nsible sh opper s, a nd M ayu o ffer ed a so lu tio n to t h e m ark et ’s incr easing d em and f o r pr od u ct s th at o ffer ed so cia l v a lu e. W ith t h at, t h e co nsu mer m ark et w as d ev eloping a need f o r t r a ns pa rency a nd t r a cea bil it y t h ro u gh ou t su ppl y ch ains, especia lly f o r pr od u ct s fr o m t h e dev eloping wo rld . T he im plem ent atio n o f co rpo ra te so cia l r espo nsibilit y pr ogra m s and est ab lish men t o f no t- fo r-pr ofit a d vo ca cy org aniz atio ns was pr oof t h at t h e 21st -cent ury b u siness env ironm ent wa s ch ang ing , a nd co mpa nies would b e una ble to su rv iv e wit hou t co nsid ering t h e co nseq uences of t h eir beh avio rs. T he M ayu web site co ntained inf orm atio n ab ou t t h e M ayu pr od u ct l if e cy cle, a nd K ate int end ed t o f u rth er ex pa nd th e sit e to a llo w fo r ev en grea ter t r a nspa rency .

Acco rd ing t o su rv ey s ad m in ist ered b y t h e Fair T ra d e F ed eratio n, t h e tr end t o wa rd f a ir t r a d e sh opping in th e U nit ed Sates wa s gro wing q u ick ly . B y 2 0 10 , 7 1. 4 per cent o f A m er ica n consu mer s knew ab ou t f a ir t r a d e and 8 8 per cent co ns ider ed th em selves conscio us co nsu mer s. I n 20 09, f a ir t r a d e org aniz atio ns aver ag ed a nn ual sa les of $ 517 ,38 4, co mpa red t o $ 49 9,8 92 in 20 06, a nd 7 2 .4 per cent o f t h ese org aniz atio ns wer e fo r-pr ofit ent ities, sh owing t h at so cia l, m issio n-driv en bu sinesses were va lid su bst itutes fo r t h e tr a d it io na l “ch arit y- b ased ” no t- fo r-pr ofit s. E st ab lish ed f a ir t r a d e co mpa nies wer e gro wing wit h incr easing nu mber s of em ployees and v o lu nt eer s and incr easing im pact in th e co unt ries where th e pr od u ct io n of th eir g o od s to ok pl ace.

A s fo r co nsu mer t r end s, A .T . K ea rney ind icated t h at in 20 09, th e m ark et f o r su staina ble pr od u ct s wa s est imated a t $ 118 5/2/23, 6:35 AM Mayu LLC https://prod.reader -ui.prod.mheducation.com/epub/sn_b4dc/data-uuid-f0bdb3e8e76849e191cb079b2064f265 10/34 bil lio n, wh ile, a cco rd ing t o t h e Bost on Co nsu lt ing Gr ou p, f ir m s wit h a “t ru e co mmitm ent t o su staina bil it y” ou tper fo rm ed ind ust ry peer s, especia lly in th e ret ail sect or. T hese tr end s reit erate Am er ica n so ciet y’s desir e to cr ea te po sitive ch ang e th ro u gh pu rch asing h ab it s.

The co ncept o f et hica l f a sh ion wa s also g aining m om ent um , wh ich wo uld a lso b enef it M ayu ’s eco -fr iend ly pr od u ct s. T he 20 09 Co ne Consu mer E nv ironm ental S u rv ey , wh ich w as co nd uct ed b y O pinio n Resea rch Co rpo ra tio n, ind icated t h at 34 per cent o f A m er ica n co nsu mer s wer e lik ely t o b u y env ironm entally r espo nsible pr od u ct s and 2 5 per cent m ore A m er ica ns had g rea ter int erest in th e env ironm ent t o d ay t h an th ey d id o ne yea r a g o . A s a r esu lt , t h er e wa s an incr eased ex pect atio n fo r co mpa nies to pr od u ce and sel l env iron m ent ally co nscio us pr od u ct s. S ev ent y per cent o f A m er ica ns ind icated th at t h ey wer e pa ying a tten tio n to wh at co mpa nies were doing wit h r eg ard t o t h e env ironm ent. T his int erest ind icates th at t h e “g reen rev olu tio n” is more th an ju st a pa ssing t r end .

A 2 0 08 st udy b y Co nscio us Inno va tio n claim ed t h at pr od u ct s and ser vices th at h el p cu stom er s liv e a su staina ble lif e and fu lf il l t h eir “h elp m e to b e a co nscio us co nsu mer ” desir e wo uld a lso t h riv e. Co nsu mer b eh avio rs fo r pu rch asing cl oth ing a nd g if ts have ch ang ed f r o m pr evious yea rs and a re ex pec ted t o co ntinu e being inf lu enced b y co nscio us ch oices. 5/2/23, 6:35 AM Mayu LLC https://prod.reader -ui.prod.mheducation.com/epub/sn_b4dc/data-uuid-f0bdb3e8e76849e191cb079b2064f265 11/34 P ag e 5 2 5 C omp etit io n A b ro ad r a ng e of co mpet itio n ex ist ed in th e ind ust ry incl uding both o nl ine and b rick -a nd -m orta r sh ops selling a cces sories, a nd wh ile so me item s wer e hand mad e, m ost wer e m ach ine mad e. A ll wer e ava il ab le in a v a riet y o f r a w mater ials, incl uding alpa ca, ca sh mer e, wo ol, a nd co tto n.

K ate def ined d ir ect co mpet itio n as onl ine ret ail st ores sel ling a lpa ca a ccesso ries and cl oth ing . T her e wer e a nu mber o f e- co mmer ce sites sel ling a lpa ca a ccesso ries bu t no ne of t h em so ld pr od u ct s as uniq ue as M ayu ’s. T he fo llo wing web sites wer e go od ex am ples of t h e co mpet itio n:

M ayu d if fer ent iated it sel f f r o m t h is pr im ary co mpet itio n beca use of t h e qu alit y a nd u niq ueness of it s pr od u ct s. K ate th ou gh t t h at t h e M ayu web site wa s a h ig her ca lib er a nd appea led t o a m ore fa sh ion-fo rwa rd a nd co nscio us cl ient ele.

Once custom er s la nd ed o n th e M ayu sit e, t h ey wer e attr a ct ed t o th e st ylish ness, sl eek ness, a nd sim plicit y. T he sit e wa s professio nal, per sona liz ed , a est het ica ll y pl ea sing , a nd m ost im porta nt , u p- to -d ate wit h cu rrent so cia l m ed ia a nd “g reen” sh opping t r end s. W hile M ayu ’s pr ices were co mpa ra b le to t h e co mpet itio n, cu stom er s rec eiv ed g rea ter v a lu e wh en purch asing f r o m M ayu . M ayu pr ovid ed ex cel lent a nd t im ely cu stom er  ser vice and a per sona liz ed t o u ch t o po tent ial a nd pa st cu stom ers. E ase of co mmunica tio n wit h M ayu cr ea ted a po sitive sh opping ex per ience, d espit e th e onl ine natu re of t h e bu siness. P er uvia n Co nnect ion— http :/ /w ww.p eru vian co n necti o n .c o m/ A lpa ca D irect — www.alp acad ire ct.c o m Purel y A lpa ca— www.p u re lyalp aca.co m 5/2/23, 6:35 AM Mayu LLC https://prod.reader -ui.prod.mheducation.com/epub/sn_b4dc/data-uuid-f0bdb3e8e76849e191cb079b2064f265 12/34 Kate def ined seco ndary co mpet itio n as onl ine and b rick -a nd - morta r r et ail st ores sel ling k nit wea r m ad e fr o m r a w mater ials su ch a s co tto n, ca sh mer e, s il k, o r wo ol. M ost o f t h ese co mpa nies have an ad va nt ag e over M ayu in th at t h ey a re m ore est ab lish ed a nd t h er efore, h ad g rea ter b ra nd a wa reness and Int ernet pr esence. T hese la rg er co mpa nies have ex cess capit al and b u dget s to spend o n m ark et ing a nd o th er b u siness dev elopm ent a ct ivities. M ayu d if fer ent iated it sel f t h ro u gh it s per sona l st ory a nd so cia l m issio n. K ate wa nted M ayu t o a ppea l to sh opper s int erest ed in suppo rting ind epend ent a nd l o ca l co mpa nies as oppo sed t o t h ose wh o pu rch ased f r o m “b ig-b ox” ret ail er s wh o o ft en la ck ed t r a nspa rency , o rig ina lit y, per sona lit y, a nd et hica l b eh avio r. T he fo llo wing co mpa nies are a m ong t h ose consid ered se co nd ary co mpet itio n: Ant hro po lo gie— w ww.an th ro polo gie .c o m N ord st ro m — www.n ord stro m. co m N eim an M arcu s— www.n eiman marc us. co m 5/2/23, 6:35 AM Mayu LLC https://prod.reader -ui.prod.mheducation.com/epub/sn_b4dc/data-uuid-f0bdb3e8e76849e191cb079b2064f265 13/34 Mark e ting 5/2/23, 6:35 AM Mayu LLC https://prod.reader -ui.prod.mheducation.com/epub/sn_b4dc/data-uuid-f0bdb3e8e76849e191cb079b2064f265 14/34 Ta rg et M ark e t Based o n her r esea rch , K ate pl anned t o t a rg et ed uca ted wo men bet ween th e ag es of 32 a nd 6 2, wh o m ak e up 67 per cent o f t h e accesso ries mark et . T his ra ng e all o wed M ayu t o t a rg et a m ajo rit y o f wo men ag ed 15 –65, wh o r epr esent 9 0 per cent o f to ta l co nsu mer spend ing. K ate ex pect ed t h at t h is mark et wo uld b e m ore so cia lly a wa re and u nd erstand ing o f g lo b al issu es and wo uld b e co nsu mer s th at wer e m ore respo nsible. I t w as sh own th at l u xu ry sh opper s, d ef ined a s co nsu mer s wh o ea rn over $ 10 0,0 00 per y ea r, a re m ore ed uca ted a nd d em and ing so wo rk m ansh ip, l o ng evity, a n d a rtist ry pl ay a l a rg e ro le in th eir pu rch asing b eh avio rs.

B eca use Mayu is striv ing t o b eco me an Int ernet b u siness, it h as access to t h e ent ire wo rld . I n ord er t o na rro w its onl ine m ark et ing , K ate th ou gh t sh e sh ou ld f o cu s on th ree Sta nd ard M etro po lit an Sta tist ica l A rea s (S M SA s) —Ch icago , N ew York Cit y, a nd S an Fra ncisco . T he rea sons fo r ch oosing t h ese pa rticu la r cit ies are th at t h ey h ave appr opr iate wea th er a nd la rg e po pu la tio ns of ed uca ted a nd a ff lu ent f em ale co nsu mer s.

Ch ica go wa s a na tu ra l st arting po int , a s it is Mayu ’s hom e base wit h ex ist ing r el atio nsh ips. S an Fra ncisco h as a h ig h co ncent ra tio n of so cia lly co nscio us fem ale co nsu mer s and N ew Yo rk Cit y’s inh ab it ant s are fa sh ion fo rwa rd a nd t h e co unt ry ’s t r end setter s. 5/2/23, 6:35 AM Mayu LLC https://prod.reader -ui.prod.mheducation.com/epub/sn_b4dc/data-uuid-f0bdb3e8e76849e191cb079b2064f265 15/34 Pric e M ayu ’s pr icing st ru ct ure is co st-b ased pr icing . K ate used t h e tr a d it io na l ind ust ry m ark u p of b et ween 20 0 a nd 2 50 per cent t o ca lcu la te both wh olesa le an d r et ail pr ices. T he base price th at M ayu pa ys its artisa ns in Per u co ver s la b or, r a w mater ials, a nd tr a nspo rta tio n in Per u. O nc e th e pr od u ct s arriv e in th e U nit ed Sta tes, K ate ad ded o n int erna tio na l sh ipping f r o m P er u a nd cu stom s du ties to g ener ate th e to ta l co st o f ea ch it em ( co st o f go od s so ld ). I n so me inst ances, h owev er, M ayu r eceiv es slig htly lo wer o r sl ig htly h ig her m arg ins th an th e ind ust ry st and ard , depend ing o n th e pr od u ct a nd wh at sh e th ou gh t t h e m ark et co uld pa y f o r ea ch it em . 5/2/23, 6:35 AM Mayu LLC https://prod.reader -ui.prod.mheducation.com/epub/sn_b4dc/data-uuid-f0bdb3e8e76849e191cb079b2064f265 16/34 Dis tr ib ut io n Dist rib utio n wil l b e discu ssed in ter ms of in- per sona l ev ent s, onl ine, a nd wh olesa le.

I n -P e rs o n E ve n ts U nt il no w, M ayu ’s grea test so urce of r ev enu e had b ee n fr o m h ig h-end , in- per son week end h olid ay ev ent s. M ayu h ad b een inv ited t o a t l ea st 10 su ch e v ent s and sa les ra ng ed f r o m $ 0 t o $ 2,5 0 0 per ev ent . P articipa tio n fees were usu all y 10 p er cent o f rev enu es. B eca use Kate wo rk ed f u ll t im e, o ne of h er f a m ily m em ber s or h er f u tu re pa rt- tim e em ployee wo uld st aff week day ev ent s in th e fa ll a nd spr ing. M ayu wo uld m ak e itsel f ava il ab le fo r pr ivate “sh opp ing pa rties” th ro u gh ou t t h e Ch ica go area . D uring a pa rty l ik e th is, t h e host wo uld inv ite fr iend s over fo r a n ev ening o f M ayu sh opping . T o ent ice host s to h ave a pa rty , it em s wo uld b e offer ed a t a 10 per cent d isco unt f r o m onl ine prices and h ost s wo uld b e co mpensa ted wit h a g ener ou s M ayu g if t ca rd . 5/2/23, 6:35 AM Mayu LLC https://prod.reader -ui.prod.mheducation.com/epub/sn_b4dc/data-uuid-f0bdb3e8e76849e191cb079b2064f265 17/34 Pag e 5 2 6 O nlin e Alt h ou gh t h e m ajo rit y o f M ayu ’s sa les to ok pl ace du ring h olid ay sh opping ev ent s, K ate’ s go al wa s to incr ease onl ine sa les and d ecr ease her r el ia nce on la b or-int ensiv e and so metim es “hit-o r-m iss” event s. S h e knew it wo uld b e a ch alleng e to sel l h ig h-end pr od u ct s th ro u gh a web site, especia lly wit hou t a wel l- es ta b lish ed b ra nd . T he bea uty o f t h e alpa ca wa s m ost a ppa rent w hen custom er s co uld t o u ch t h e m ater ials and t r y o n th e pr od u ct s. S h e did o ffer swa tch es of t h e alpa ca t o int erest ed co nsu mer s bu t o ver all , t h e big gest pr ob lem wa s driv ing cu stom er s to h er web site wit h a l im ited m ark et ing bu dget a nd co nv incing t h em t h at t h e hig her -pr iced it em s wer e worth t h e inv estment .

Kate pu rch ased a so cia l m ed ia pl atfo rm a t $ 1, 000 per y ea r.

T hro u gh t h e pl atfo rm , M ayu co uld ef ficient ly t a rg et n um er ou s so cia l m ed ia web sites wit h t h e cl ick o f a b u tto n. T his was an ex cel lent st ra teg y t o b u il d l ink s and incr ease an onl ine pr esence. K ate also m ana ged a b lo g, wh ich wa s pa rt o f t h e M ayu web site. T her e, sh e blo gged a b ou t t o pics rel ated t o P er u, alpa ca, f a ir t r a d e, a nd t h e M ayu st ory ; ph oto s, v id eo s, a rticl es, and o th er pr ose mad e up th e co ntent . I n ad d it io n, K ate knew th at Go ogle AdW ord s wo uld pr ovid e dir ect ion in ter ms of onl ine mark et ing . S h e pa id $ 250 per m ont h o n a sea sona l b asis to a g ro u p of pr ofessio nals wh o wo uld cr ea te an AdW ord s acco unt a nd sh e wo uld h ave to st art wit h a $ 50 0 m ont hly b u dget f o r t h e act ual pa y-per -cl ick a d s.

K ate pl anned t o b u y cer ta in ad ver tising b anner s on web sites du ring t h e wint er m ont hs and especia ll y b ef ore th e holid ays.

T he co st o f su ch a d s wo uld b e ab ou t $ 10 0 per m ont h; t h is wa s fo r seco nd-tier pu blica tio ns th at h ad so me ty pe of a n eco fa sh ionist a f o llo wing . S h e bu dget ed $ 50 0 per m on th f o r t h e ad s. 5/2/23, 6:35 AM Mayu LLC https://prod.reader -ui.prod.mheducation.com/epub/sn_b4dc/data-uuid-f0bdb3e8e76849e191cb079b2064f265 18/34 Kate alr ea dy h ad a f u nct ioning web site cr ea ted a t a v er y rea sona ble pr ice of $ 1, 000, incl uding 6 m ont hs of sit e ad ju st m ent s and m od if ica tio ns. W eb sit e lo gist ics such a s d om ain names, secu rit y en crypt ion, pa ym ent ser vices, a nd o th er r el ated co sts wer e lo w a nd t h us led t o v er y l o w startu p co sts. T hese mont hly co sts to ta led a b ou t $ 50 . 5/2/23, 6:35 AM Mayu LLC https://prod.reader -ui.prod.mheducation.com/epub/sn_b4dc/data-uuid-f0bdb3e8e76849e191cb079b2064f265 19/34 Whole sa le K ate receiv ed inq uir ies fr o m r et ail er s wh o wer e int erest ed in st ock ing M ayu pr od u ct s, b u t d u ring t h e fir st y ea r, t h e ord er s wer e sm all a nd m arg ins wer e ev en smaller . T he m inim um ord er wa s $50 0 a nd l ea d t im e wa s ty pica ll y no m ore th an 6 week s, d epend ing o n th e tim e of y ea r. B y sl ig htly ch ang ing h er pr ices, K ate bel iev ed sh e co uld incr ease wh olesa le ord er s and th er efore benef it f r o m sa les vo lu m e. T he qu est ion rem ained th ou gh wh ether t h e artisa ns wo uld b e ab le to k eep up wit h t h e incr eased d em and . T he ch ance of d ecr easing t h e pr ice she pa id th e knit ter s in Per u wa s sl im so co sts sa ving s had t o b e fo u nd el sewh ere on th e va lu e ch ain.

T o incr ease wh olesa le acco unt s, M ayu pl anned t o h ir e th ree sa les repr esent ativ es, o ne to co ver t h e W est Co ast , a n oth er f o r th e East Co ast , a nd o ne fo r t h e M idwest . R esea rch ind icated th at t h e sa les repr esent ativ es wo uld b e co mpensa ted a t l ea st 10 per cent o f t o ta l sa les. S h e had h ea rd nig htm arish st ories fr o m h er f r iend s ab ou t t h eir ex per iences with sa les repr esent ativ es, so it wa s im porta nt t o f ind t h e per fect o nes who wo uld b est repr esent t h e M ayu l ine. A n a d d it io na l m iddlem an wo uld d ecr ease Mayu ’s pr ofit s fu rth er b u t t o g ain bra nd r eco gnit ion, get t h e pr od u ct s dist rib uted , a nd st art st riv ing f o r v o lu m e, t h e inv estment in a t ea m o f sa les reps was necessa ry , espe cially b eca use Kate co uld no t “po und t h e pa vem ent ” on her o wn.

M ayu wo uld a lso co ntinu e to o pen dro p- sh ip arra ng em ent s (a ffil ia te m ark et ing ) wit h o nl ine bou tiq ues th at po sted M ayu ’s pr od u ct s on th eir sit es. W hen a pr od u ct is so ld , M ayu sh ips th e it em f r o m t h e Ch ica go wa reh ou se and is co mpensa ted a d ef ined pr ice, g ener ally 5 5 t o 6 0 per cent o f t h e ret ail sa les pr ice. T hese dro p- sh ip rel atio nsh ips are co nv enient , r isk f r ee, a nd wit hou t co st t o M ayu . 5/2/23, 6:35 AM Mayu LLC https://prod.reader -ui.prod.mheducation.com/epub/sn_b4dc/data-uuid-f0bdb3e8e76849e191cb079b2064f265 20/34 Event ually , K ate pl anned t o pa rticipa te in tr a d e sh ow s su ch a s Ch ica go ’s Sty leM ax t o pl ace Mayu ’s alpa ca a ccesso ries in fr o nt of t h ou sa nd s of r et ail er s. T hese event s co st a t l ea st $ 5,0 00 f o r 4 d ays and pr ofit ab il it y is no t g u ara nt eed . K ate decid ed t o wa it on th ese event s fo r t h e fir st co upl e of y ea rs unl ess she co uld pa rtner wit h a sim ilar sm all b u siness to sh are a b ooth a nd co sts. 5/2/23, 6:35 AM Mayu LLC https://prod.reader -ui.prod.mheducation.com/epub/sn_b4dc/data-uuid-f0bdb3e8e76849e191cb079b2064f265 21/34 Pro mo tio n During it s sh ort l if e, M ayu h ad r eceiv ed f r ee publicit y, wh ich dir ect ly b oost ed sa les. T he co mpa ny wa s m ent ioned o n repu ta b le blo gs and in print pu blica tio ns, a nd wa s co ver ed in l o ca l m ag azines. P ublicist s seem ed t o enj oy t h e M ayu st ory a nd rea der s wer e int rig ued b y w hat K ate had a cco mplish ed in th e P ea ce Co rps. T he pu blicit y d id l ea d t o a d dit io na l sa les bu t o n a sm all sca le. K ate co nsid ered h ir ing h er f r iend , a P R sp ecia list .

The ra te fo r t h e sea son wo uld b e $3, 000 wit h t h e ob ject ive to g et M ayu f ea tu red in fa sh ion pu blica tio ns’ h olid ay g if t g u id es.

Ther e wa s, o f co urse, no g u ara nt ee th at ed itors wo uld ch oose to fea tu re th e M ayu b ra nd .

Mayu im plem ent ed a r ef er ra l pr ogra m t o h el p spr ead need ed word -o f- m ou th sa les. P ast M ayu cu stom er s wer e giv en a $ 25 M ayu g if t ca rd ea ch t im e th ey r ef er red so meo ne wh o p u rch ased so mething f r o m M ayu . 5/2/23, 6:35 AM Mayu LLC https://prod.reader -ui.prod.mheducation.com/epub/sn_b4dc/data-uuid-f0bdb3e8e76849e191cb079b2064f265 22/34 Opera tio ns 5/2/23, 6:35 AM Mayu LLC https://prod.reader -ui.prod.mheducation.com/epub/sn_b4dc/data-uuid-f0bdb3e8e76849e191cb079b2064f265 23/34 Pag e 5 2 7 P e ru K ate knew th at it wo uld b e d if ficu lt t o m ana ge M ayu f r o m h er hom e base in Ch ica go wit hou t f r eq uent v isit s to P er u.

F ortu na tel y, sh e wa s ab le to co mmunica te wit h t h e pr od u cer s via t el eph one and o cca sionally b y e- m ail . T he fa ct t h at t h e artisa ns wer e no t co mpu ter l it er ate and d id no t h ave co nsist ent access to cel lu la r ph ones (n ot t o m ent ion th e fr eq uent po wer ou ta g es) m ad e co mmunica tio n a ch alleng e. B y l iv ing in Per u, K ate had l ea rned t o b e both f lex ible and a d apt ab le to t h e P er uvia n oper ating env ironm ent. S h e pl aced o rd er s and d ea lt wit h  lo gist ica l issu es wit h t h e desig nated g ro u p lea der , M aria R osem ber g d e H uer ta . A no th er ob st acl e Kate fa ced wa s ens uring t h at t h e pr od u ct s had a cer ta in lev el o f q u alit y a nd co nsist ency. T he Per uvia ns wer e less dem and ing a nd h ad d if fer ent id ea s of wh at co nst ituted h ig h q u alit y. I n ad dit io n, t h e artisa ns wer e fr eq uent ly d ish onest , cl aim ing cer ta in pr od u ct s wo uld a rriv e on a cer ta in d ate, wh en in rea lit y, t h ey h ad no t ev en been knit y et .

The nea rest r eg iona l cit y is 3 hou rs by b u s and L im a, t h e ca pit al o f P er u, is an 8-h ou r t r ip fr o m t h e vil la g e wh ere th e knit ter s resid e. T his mea ns t h at M ayu ’s artisa ns have to t r a vel lo ng h ou rs to a ccess th eir b ank a cco unt s and t o send sh ipm ents to K ate fr o m t h e Fed eral E xpr ess off ice. T hey a re alwa ys fa ced wit h t h e risk t h at l a rg e qu ant ities of ca sh o r f inish ed pr od u ct s co uld b e st olen du ring t h e jo u rney . S im ilarly , r a w mater ials h ave to b e ord er ed v ia t h e Int ernet a nd d el iv er ed t o t h e co mmunit y b y o ver nig ht b u s fr o m L im a. T he co st o f t h e ra w m ater ial r a ng es fr o m U S$ 27 t o $ 30 per k il ogra m f o r pu re a lpa ca wo ol a nd is pa id f o r b y t h e artisa n gro u p. T he price v a ria tio n depend s on wh ether t h e fib er is dyed o r na tu ra l a nd pr ices are slig htly su scept ible to g ener al eco nomic co nd itio ns in Per u. K ate and t h e artisa ns jo int ly d ecid e th e pr icing stru ct ure of t h e pr od u ct s an d K ate co mpensa tes th e artisa ns 5/2/23, 6:35 AM Mayu LLC https://prod.reader -ui.prod.mheducation.com/epub/sn_b4dc/data-uuid-f0bdb3e8e76849e191cb079b2064f265 24/34 per u nit pr od u ced . T his pr ice incl udes la b or a nd m ater ial co sts.

Kate pa ys th e artisa ns via w ire tr a nsf er a t a r a te of U S$ 11 to $ 85 per it em k nit . T ypica lly , K ate wo uld pa y f o r t h e pr od u ct s up fr o nt so t h e artisa ns wo uld b e ab le to pu rch ase th e ra w m ater ials.

W hen it b eca me necessa ry t o sca le, K ate knew th at q u alit y co ntro l, l o gist ics, a nd cr ea ting a so lid o rg aniz atio na l st ru ct ure wo uld b e th e big gest ch alle ng es. S h e th ou gh t sh e co uld h ir e a pa rt- tim e em ployee wh o w ou ld wo rk 5 m ont hs ou t o f t h e yea r and b e co mpensa ted $ 1, 75 0 f o r t h e du ra tio n of t h e po sition. 5/2/23, 6:35 AM Mayu LLC https://prod.reader -ui.prod.mheducation.com/epub/sn_b4dc/data-uuid-f0bdb3e8e76849e191cb079b2064f265 25/34 Pag e 5 2 9 U nit e d St ate s Kate wa s respo nsible fo r o per atio ns in th e U nit ed S ta tes and o ver seeing pr od u ct io n in Per u. F ro m h er h om e, sh e m ana ged th e web site, o nl ine content , so cia l m ed ia, m ark et ing , a nd cu stom er ser vice aspect s of M ayu , a nd a lso a ttend ed sa les ev ent s. S h e cr ea ted a n int ernsh ip progra m a nd b eg an em ploying st udent s on an unpa id, 10 –15 h ou rs per week b asis.

A lt h ou gh t im e co nsu ming , K ate fel t t h at t h e use of int erns co uld b e a m utu ally b enef icia l ex per ience and t h at “t wo h ea ds wer e bet ter t h an one. ” O nce prod u ct s arriv ed f r o m P er u, K ate’ s m oth er wa s respo nsible fo r co unt ing , ir oning , a nd t a g ging inv ent ory a nd o u tb ou nd l o gist ics such a s sh ipping a nd   h and ling . K ate knew th at h er m oth er wo uld co ntinu e doing t h is fo rev er so sh e pl anned t o h ir e sea sona l hel p fo r 3 m ont hs (N ovem ber t h ro u gh Ja nu ary ). T he pa rt- tim e hel p wo uld b e pa id a b ou t $ 1, 20 0 per m ont h. 5/2/23, 6:35 AM Mayu LLC https://prod.reader -ui.prod.mheducation.com/epub/sn_b4dc/data-uuid-f0bdb3e8e76849e191cb079b2064f265 26/34 Te a m Alt h ou gh K ate wa s receiv ing a d vice fr o m a nu mber o f ind ivid uals, sh e did no t h ave a f o rm al a d viso ry b oard . H er fa th er pr ovid ed h er wit h l eg al a d vice, h er u ncl e wa s a CP A, a nd h er web d esig ner g u id ed h er o n all a spect s of m ana ging a web site. K ate wa nted t o wi den her su ppo rt net work a nd st arted t h ink ing a b ou t co ntra ct ing a pr od u ct d esig ner wh o ex cel led in k nit wea r, a pr ofessio nal ph oto gra ph er, a nd a cl oth ing m od el a s wel l a s a t ea m t h at co uld o p tim ize her web site. S h e kn ew th at it wa s no t in her b u dget t o h ir e any one on a f u ll- tim e basis so sh e decid ed sh e co uld h ir e th e necessa ry h el p on a per -pr oject b asis. K ate is a g o od net work er a nd ex cel s in find ing h ig h- qu alit y h el p at m inim um pr ices. 5/2/23, 6:35 AM Mayu LLC https://prod.reader -ui.prod.mheducation.com/epub/sn_b4dc/data-uuid-f0bdb3e8e76849e191cb079b2064f265 27/34 Mayu’ s Sho rt- T e rm P la n To t a k e M ayu t o t h e nex t l e v el , K ate pl ans to h ir e a f a sh io n desig ner a nd is alr ea dy in contact wit h a wo man wh o specia liz es in knit wea r. T he d esig n fees per co llect ion wil l b e ab ou t $ 5,0 00 a nd incl ude arra ng em ent s wit h a pr ofessio nal ph oto gra ph er, m od el , a nd h air a nd m ak eu p tea m. T he d esig ner will t a k e ca re of t h e cr ea tiv e visio n beh ind M ayu . K ate wil l tr a vel t o P er u per iodica lly t o wo rk wit h t h e artisa ns to cr ea te new collect ions. E ach t r ip to P er u wil l co st a b ou t U S$ 70 0 t o $ 1, 000. 5/2/23, 6:35 AM Mayu LLC https://prod.reader -ui.prod.mheducation.com/epub/sn_b4dc/data-uuid-f0bdb3e8e76849e191cb079b2064f265 28/34 Fina ncia ls T he fina ncia l st atem ent s fo r t h e co mpa ny incl ude a 3- yea r pr o fo rm a inco me st atem ent ( E xh ib it 1 ); th e fir st -y ea r pr o f o rm a inco me st atem ent b y m ont h ( E xh ib it 2 ); and a 3- yea r pr o fo rm a ca sh f lo w statem ent ( E xh ib it 3 ). 5/2/23, 6:35 AM Mayu LLC https://prod.reader -ui.prod.mheducation.com/epub/sn_b4dc/data-uuid-f0bdb3e8e76849e191cb079b2064f265 29/34 EXH IB IT 1 M ayu ’s P ro je cte d 3 -Y ea r In co m e S ta te m en t ( in Do llars ) Yea r 1 Y ea r 2 Y ea r 3 N et sal es 32,0 00 44,8 00 58,2 40 Co st o f g ood s s old 6 ,4 00 8,9 60 11,6 48 G ro ss in come 25,6 00 35,8 40 46,5 92 O per atin g exp enses Adver tis in g (* 5m o.) 2 ,5 00 2,5 00 2,5 00 M ar ket in g & pro m otio n (Ad Word s * 5 m o. & PR ) 6,7 50 6,7 50 6,7 50 So cial m edia p lat form 1 ,0 00 1,0 00 1,0 00 D ues & subscrip tio n (F TF et c.) 3 00 300 300 P ayro ll exp enses Par t-t im e em plo yee p eru 1,7 50 1,7 50 1,7 50 Par t-t im e em plo yee U SA 3,6 00 3,6 00 3,6 00 Pr od u ct d es ig n fees 5 ,0 00 5,0 00 5,0 00 Ad minist ra tiv e exp enses web sit e l og is tic s & des ig n 6 00 700 800 Tra vel to p er u 1,0 00 1,0 00 1,0 00 O ffi ce ex pen ses 5 00 700 900 T o ta l o per atin g exp enses 23,0 00 23,3 00 23,6 00 O per atin g in come 2,6 00 12,5 40 22,9 92 5/2/23, 6:35 AM Mayu LLC https://prod.reader -ui.prod.mheducation.com/epub/sn_b4dc/data-uuid-f0bdb3e8e76849e191cb079b2064f265 30/34 Yea r 1 Y ea r 2 Y ea r 3 In co m e b efore t axes 2,6 00 12,5 40 22,9 92 N et in come 2,6 00 12,5 40 22,9 92 5/2/23, 6:35 AM Mayu LLC https://prod.reader -ui.prod.mheducation.com/epub/sn_b4dc/data-uuid-f0bdb3e8e76849e191cb079b2064f265 31/34 EXH IB IT 2 M ayu ’s P ro je cte d Fir st- Y ea r I nco Q 1 Q2 Ja n uary F eb ru ary M arch Ap ril M ay Ju ne N et sal es 3,5 00 3,0 00 2,0 00 500 500 0 Co st o f g ood s so ld 7 00 600 400 100 100 0 G ro ss in come 2,8 00 2,4 00 1,6 00 400 400 0 O per atin g exp enses Adver tis in g (* 5m o.) 5 00 500 0 0 0 0 M ar ket in g & pro m otio n (Ad Word s * 5 mo. & PR ) 1,3 50 1,3 50 0 0 0 0 So cial M ed ia p lat form 1 ,0 00 0 0 0 0 0 D ues & su bscrip tio n (F TF et c.) 3 00 0 0 0 0 0 P ayro ll exp enses Par t-t im e em plo yee p eru 583 0 0 0 0 0 5/2/23, 6:35 AM Mayu LLC https://prod.reader -ui.prod.mheducation.com/epub/sn_b4dc/data-uuid-f0bdb3e8e76849e191cb079b2064f265 32/34 Q1 Q2 Ja n uary F eb ru ary M arch Ap ril M ay Ju ne Par t-t im e em plo yee U SA 1,2 00 0 0 0 0 0 Pr od u ct d es ig n fees 0 0 0 0 0 0 Ad minist ra tiv e exp enses web sit e l og is tic s & d es ig n 6 00 0 0 0 0 0 Tra vel to p er u 0 0 0 0 0 0 Offi ce ex pen ses 5 00 0 0 0 0 0 T o ta l o p er atin g exp enses 6,0 33 1,8 50 0 0 0 0 O per atin g inco me (3 ,2 33) 550 1,6 00 400 400 0 In co m e b efore tax es (3,233) 550 1,6 00 400 400 0 N et in come (3 ,2 33) 550 1,6 00 400 400 0 5/2/23, 6:35 AM Mayu LLC https://prod.reader -ui.prod.mheducation.com/epub/sn_b4dc/data-uuid-f0bdb3e8e76849e191cb079b2064f265 33/34 EXH IB IT 3 M ayu ’s P ro je cte d 3 -Y ea r C ash F l Do llars ) Yea r 1 Y ea Cash in Cas h s al es 32,0 00 44, To tal cas h in 3 2,0 00 44, To tal cas h a vai lab le 3 2,0 00 44, C ash out in ven to ry 6 ,4 00 8, O per atin g exp enses adver tis in g (* 5m o.) 2 ,5 00 2, M ar ket in g & pro m otio n (Ad Word s * 5 m o. & PR ) 6,7 50 6, So cial m edia p lat form 1 ,0 00 1, D ues & subscrip tio n (F TF et c.) 3 00 P ayro ll exp enses Par t-t im e em plo yee p eru 1,7 50 1, Par t-t im e em plo yee U SA 3,6 00 3, Pr od u ct d es ig n fees 5 ,0 00 5, Ad minist ra tiv e exp enses web sit e l og is tic s 6 00 Tra vel to p er u 1,0 00 1, O ffi ce ex pen ses (t ag et c.) 5 00 5/2/23, 6:35 AM Mayu LLC https://prod.reader -ui.prod.mheducation.com/epub/sn_b4dc/data-uuid-f0bdb3e8e76849e191cb079b2064f265 34/34 Sourc e : T his c a se s tu dy w as p re p are d b y K ate R ob erts o n w ith t h e in te n tio n o f p ro vid in g a b asis f o r c la ss d is cu ssio n. I t w as p re v io usly p u blis hed in R ob ert D . H isric h,  In te rn ation al E ntr e p re n eu rsh ip ,  2n d e d it io n, SAG E, 2 0 13 , p p. 2 9 9– 310 . Y ea r 1 Y ea Es tim at ed in co m e t ax paym en t 0 To tal cas h o ut 2 9,4 00 32, B eg in nin g c as h b alan ce 5 00 3, En din g c as h b alan ce 3 ,1 00 15, *Ma rk et s iz e e stim ate s a re b ase d o n t w o d eca d es o f a vera g e g ro w th r a te f o r t h e h um an n utr it io so m e c o rre ctio ns t o r e fle ct t h e g ro w in g s h are o f s a lt s u bstit ute s in t o ta l c o n su m ptio n o f s a lt - lik