animation studio business plan

Business Plan on Animation Studio

Prepared For

Dr. A. K. M. Saiful MajidCourse Instructor: Entrepreneurship (W301)

Professor

Prepared By

Shah Shihab SadmanZR – 27

BBA 18th BatchSection A

Institute Of Business AdministrationUniversity Of Dhaka

21 January, 2013

Letter of transmittal

January 21, 2013

Dr. A. K. M. Saiful MajidCourse Instructor: Entrepreneurship (W301)ProfessorInstitute of Business AdministrationUniversity of Dhaka

Subject: Letter of transmittal for the Business plan assigned in entrepreneurship course

Dear SirHere is the business plan on Business Plan on animation studio “paradigm” which you assignedus as a requirement of the course Entrepreneurship (W301) offered at the Institute of BusinessAdministration, University of Dhaka. The business plan includes an overall marketing, financial,management and operation plan of starting an innovative business. The idea is new in context tothe market scenario of Bangladesh.

The business plan has been prepared under your authorization and direct supervision, with thepurpose of fulfilling the course requirement. No part of this business plan shall be reproduced foruse in any other form of publication in future without your written permission.

I appreciate the opportunity to prepare a business plan that you have given me, which has been aunique learning experience and the knowledge I have acquired will be of great importance, bothfor my future academic purposes and professional life.

Yours sincerely,

Shah Shihab SadmanZR - 27Batch -18th

Institute of Business AdministrationUniversity of Dhaka

Acknowledgement

I would like to thank Professor Dr. A. K. M. Saiful Majid for giving me the opportunity to

conduct such a study. I truly enjoyed writing this business plan because it has given me a chance

to undertake thorough exploration on the fields of animation industry of Bangladesh and global

as well.

It takes not only the effort of the researchers but also the continuous support and cooperation of

the related fields of the topic to carry out an intensive researched business plan on animation

studio in Bangladesh and finding out the potential of it. The business plan was a challenge, but

highly rewarding at the same time. This business plan has increased my knowledge significantly

and has given me the chance to apply what I’ve studied in the class. It has provided us with a

new perspective in regard to innovative ideas, a true eye-opener.

I would like to express my utmost gratitude, again, towards my course instructor, Professor Dr.

A. K. M. Saiful Majid, for his guidance in dealing with the topic issue and for his insights. He

guided me on how I should progress on this topic and taught me necessary things that would help

me complete the business plan. He also provided valuable insight in respect to the structure of

the plan and directed me on the relevance of it to our business plan topic.

ContentsExecutive summary ....................................................................................................................................... 7

1.0 Introduction ...................................................................................................................................... 9

1.1 Paradigm Animations........................................................................................................................10

1.2 Mission..............................................................................................................................................11

1.3 Keys to Success .................................................................................................................................11

2. Industry Analysis .....................................................................................................................................11

2.1. FUTURE OUTLOOK ...........................................................................................................................11

2.2. SWOT analysis ..................................................................................................................................12

2.3 PESTEL analysis..................................................................................................................................13

2.3.1. POLITICAL ANALYSIS OF ANIMATION STUDIO ..........................................................................13

2.3.2. ECONOMICAL ANALYSIS ANIMATION STUDIO..........................................................................13

2.3.3. SOCIAL ANALYSIS ANIMATION STUDIO.....................................................................................14

2.3.4. TECHNOLOGICAL ANALYSIS ANIMATION INDUSTRY ................................................................15

2.3.5. LEGAL ANALYSIS OF ANIMATION INDUSTRY.............................................................................16

2.3.6. ENVIRONMENTAL ANALYSIS OF ANIMATION INDUSTRY..........................................................17

2.4. Analyzing the Animation industry as per Porters Five Forces .........................................................17

2.5 Industry forecast: Industry life cycle ...............................................................................................19

3. Description of the Venture .....................................................................................................................19

3.1. Products and Services ......................................................................................................................19

3.2. Custom Content Development ........................................................................................................20

3.3. Background of entrepreneurs ........................................................................................................21

3.4. Company Locations and Facilities ....................................................................................................21

4.0 Market Analysis.....................................................................................................................................22

4.1. Market segmentation ......................................................................................................................22

4.2 Target Market Segment Strategy......................................................................................................23

4.2.1 Market Needs.............................................................................................................................23

4.2.2 Market Trends............................................................................................................................23

4.2.3 Market Growth ..........................................................................................................................24

4.3 Service Business Analysis ..............................................................................................................24

4.3.1. Main Competitors .....................................................................................................................25

5.0 Marketing Strategy and Implementation .............................................................................................25

5.1 Strategy Pyramid...............................................................................................................................26

5.2 Value Proposition..............................................................................................................................26

5.3 Competitive Edge..............................................................................................................................26

5.4 Marketing Strategy ...........................................................................................................................26

5.4.1 PRODUCT....................................................................................................................................27

5.4.2 PRICE ..........................................................................................................................................27

5.4.3 PLACE .........................................................................................................................................27

5.4.4 PROMOTION ..............................................................................................................................28

5.5 Product Branding Strategy................................................................................................................29

5.5.1 Branding strategy.......................................................................................................................29

5.6. Distribution strategy ........................................................................................................................31

5.7. IMC (integrated marketing communication) ...................................................................................32

5.7.1. AIDA ..........................................................................................................................................32

6.0 Strategic Alliances .................................................................................................................................33

7.0 Organizational Plan ...............................................................................................................................34

7.1. Form of ownership:..........................................................................................................................34

7.2 Organizational Structure...................................................................................................................35

7.3 Management Team...........................................................................................................................35

8.0. Risk Assessment ...................................................................................................................................36

8.1. Overall aspect ..................................................................................................................................36

8.2.1. Macro-Economic Risk:...............................................................................................................36

8.2.2. Business Model Risk..................................................................................................................37

8.2.3. Geographic Risk.........................................................................................................................37

8.2.4. Financial Risk.............................................................................................................................37

8.2.5. Regulatory and Compliance Related Risk .................................................................................38

8.2.6. Reputation Risk .........................................................................................................................38

8.2.7. Operational Risk........................................................................................................................38

8.2. Risk Factors ......................................................................................................................................39

8.3. Contingency .....................................................................................................................................40

9.0 Financial Plan ........................................................................................................................................40

9.1. Initial investment .............................................................................................................................41

9.2. Source of fund..................................................................................................................................41

9.3 Important Assumptions ....................................................................................................................41

9.4. Break-even Analysis ........................................................................................................................42

9.5. Projected profit and loss ..................................................................................................................43

9.6. Projected Cash Flow.........................................................................................................................44

9.7. Balance Sheet...................................................................................................................................45

10.0 Exit strategy ........................................................................................................................................46

Table of figuresFigure 1 industry life cycle ..........................................................................................................................19Figure 2 custom content development.......................................................................................................21Figure 3 promotion strategy .......................................................................................................................28Figure 4 step by step brand formation .......................................................................................................30Figure 5 distribution channel ......................................................................................................................32Figure 6 AIDA model of IMC........................................................................................................................32Figure 7 organ gram of Paradigm Animations ............................................................................................36Figure 8 Break-even analysis (projected)....................................................................................................42Figure 9 projected cash flow.......................................................................................................................44

Table 1: SWOT analysis ...............................................................................................................................12Table 2 Comparison between Competitive Brand Users & Category non-users........................................30Table 3 organizational structure .................................................................................................................35Table 4 start-up capital breakdown............................................................................................................41Table 5 Pro Forma Cash Flow.....................................................................................................................45Table 6 Pro Forma Balance Sheet ...............................................................................................................46

Executive summaryThe global animation industry is one of the most consistent performing industries over the course of thelast 25 years. Within that time it has witnessed many changes in dynamics. And the changes are inmotion even now. Although the holy trinity of animation: USA, Japan and Korea still dominate, newentrants are beginning to venture into their reign in hopes for a greener patch. It is understandable thatnew countries are showing interest in the animation industry; after all, it has been growing at aphenomenal rate of 35% over the last 5 years.

However, Bangladesh so far, has not taken any step to take share of the spoils. Surprising when theAnimation Entertainment segment in this region is estimated at USD 122 Million (CY 2009) and isexpected to show a CAGR of 20% (2009-2013) to reach USD 253 million by 2013. More surprising when74% of the animation entertainment works in this region is outsourcing work for overseas clients. Even ifthe economic benefits are overlooked, it appears almost criminal that such a rich culture has little to noidentity in the increasingly popular visual language of animations.

That is where we get the inspiration of our animation studio – PARADIGM.

Paradigm is an attempt to put Bangladesh on the ever-growing field of animation. With a vision tocreate a visual identity for our culture much like the Japanese Anime and with a mission to become thelargest outsourcing service provider in the sub-continent by 2020, paradigm is an attempt to announcethe arrival of Bangladesh in the global animation industry.

Animation is a process under which different drawings of imagined action (called frames) representing aslight shift in the positioning of content are recorded in such a way that it gives an illusion of motionwhen shown at a predetermined rate. In a nutshell, it is a time sequencing of frames to create asimulation of continuous movement. In this context, as the Bangladeshi Animation Industry is still at itsembryonic state, we will consider the regional animation industry to be the local industry whereas theBangladeshi industry shall be mentioned as the domestic industry henceforth.

Animation Industry in Bangladesh (our major competitor) is a highly fragmented market. We haveprofiled the leading players across Animation Entertainment, Entertainment VFX, and Custom ContentDevelopment. But being fragmented and constrained to minor actions this competitors are of smallscale and many lack resources to compete with the global animation studio and their capabilities.

The global economy is witnessing significant contraction with an unprecedented lack of availability ofbusiness and consumer credits. This current decrease and any future decrease in economic activity inthe United States and other regions in the world, in which we do business, could significantly impact ourresults operationally and financially. The business risks are both inherent and perceived. The business ofentertainment being a High Risk – High Return business does test our patience, commitment andconvictions time and again.

Animation software is increasingly being used across various market verticals - films, televisionbroadcasting, video game development, web designing, training and education services, and corporatecommunications. Expanding use of animation in training and instruction programs, need for effectiveanimations in video games, and growing requirements of broadcast and media sector are also importantgrowth factors.

Bangladeshi companies are trying to improve quality and making attempts to competeglobally with the market leaders in the industry. It is said that the year 2004 is a watershed for theIndian animation and gaming industry (according to the Bangladesh Chambers of Commerce andIndustry report on the Entertainment Industry). The year was marked by increased use of animation inthe Bollywood segment. According to the FICCI report, the increasing demand for downloads of gameson mobile phones will enhance the opportunities for gaming companies and bring in new entrants.Several Bangladeshi companies are entering into collaborations with foreign new media companies,which outsource their work to the Bangladeshi companies. Recently, Toonz Animation floated ajoint venture with First Serve International LLC, a global media company which aims toproduce and distribute top-notch animation programming for the world market. The new venturewill be headed by former Walt Paradigm Animations executive Ed Bordering. In 2004, a Chinesecompany also invested in Bangladeshi Games Ltd.

While it is true that Bangladesh’s animation industry is growing at a remarkable pace, the fact remainsthat this growth is largely a result of the mushrooming of “studios-for-hire.” In animation featurefilms, for example, while Bangladeshi companies carry out the technological animation work, characterdesign, and storyboarding are done abroad. Bangladesh is yet to become a successful player in conceptcreation, the high value-adding segment of the industry which remains a preserve of western firms.Bangladesh’s advantages of low costs in this industry will be too short-lived, and sooner rather thanlater, the country will have to start developing new technologies.

1.0 Introduction

The rapid advancement of technology has made computer animation available to the masses and theanimation industry is one of the fastest growing industries. The demand for animated entertainment hasexpanded with the increase in broadcasting hours by cable and satellite TV along with the growingpopularity of the Internet. In the past, animation series were aimed at children aged nine and below. Inrecent years however, TV stations have been producing animation series for teenagers, adults and thewhole family. Animation series like The Simpsons and King of the Hill have been successfully aired onprimetime TV. The major markets include the United States, Canada, Japan, France, Britain andGermany. Licensing operations for T-shirts, caps and other items have also been a major source ofrevenue for animation companies. In Japan, several successful computer games have crossed over andhave become animated series like Pokemon, Monster Farm, Power Stone and Detective Conan. Morebroadly speaking, animation is increasingly used in video games, and movies are also increasingly relianton animation and computer graphic special effects.

Another key trend we are witnessing is the outsourcing of animation content to Asia. This market isincreasingly being tapped by North American film and television program producers. The major factorbehind this shift of computer animation production to the Asia/Pacific region continues to be theavailability of low cost, powerful computer animation platforms and much lower labour rates in theAsian and Pacific Rim countries compared to North America and Europe. The bulk of the outsourcinghappens for 2D animation content with some amount of 3D content.

There is a considerable increase in the 2D and 3D animation outsourcing to Bangladesh. Due to theextremely competitive climate as well as the global slow-down, some of the large studios in the US haveimplemented large amounts of layoffs of animators and artists. Bangladesh is slowly emerging as analternative to Korea, Philippine and Taipei for animation outsourcing. Bangladesh is also emerging as apost-production hub for animation. Post production involves a lot of ink, paint and compositing andscanning work, which is the labour intensive part of the entire process of animation and requires lessskill. Thus we can see that the animation industry in Bangladesh is following a similar evolutionary partas the software industry. In the early part of the evolution of the Bangladesh software industry, it wasthe low value jobs which were shifted to Bangladesh. Over time it is projected that more and more highvalue jobs would be outsourced to Bangladesh. For low value post-production works, it is easier for astudio in the US to outsource its post-production work as probably nothing is going to go wrong.Bangladesh has one of the lowest labour rates, which makes it an attractive destination for animationoutsourcing.

1.1 Paradigm Animations

Name of the Business: Paradigm Animations

Logo Design:

Paradigm Animations will be incorporated as a corporation, with principal offices located incentral Dhaka. All operations, from administration to website development, will take place at thisleased office location of approximately 1,000 square feet. The company also plans to establish anoffice outside the capital to facilitate, control prices, and monitor the quality of work.

Breakthrough services: Paradigm Animations will develop a unique animation studiothat will cater Bangladesh with global standards in terms of animation and 3D workswhich can be compared and paralleled to Paradigm Animations or DreamWorks studiosworks.

Trademarks. The company plans to register a corporation under the name of ParadigmAnimations and operate under the same name.

Large markets. Recent studies by Forrester Research Inc. reveal that business-to-business (B2B) commerce will total $2.7 trillion in revenue by Year 5. The dataemphasize that e-marketplaces will be responsible for 53% of all online business trade.

Seasoned management. The company's management is highly experienced andqualified.

Customers. The company will primarily target small and start-up businesses throughoutthe country. The company will also develop plans to negotiate deals with big businesses.

Owners

Shah Shihab Sadman (Owner)

Ownership Style: Proprietorship

Nature of business: Profit

Paradigm Animations seeks to grow in the underdeveloped sector of Animation industry thatincludes designing and graphical works including content development in media industry andalso becoming a forerunner in the animation film industry.

1.2 Mission

The mission of Paradigm Animations is to become a leader in its industry, utilizing the power ofanimation to become the market leader in providing online graphic solutions, website designs,graphic art designs, and animation film development sector that will unleash the true potential ofthe firm. To accomplish this, the company will combine high-quality workmanship with thelowest costs in the industry.

1.3 Keys to Success

Establish a well-organized management and a competitive supply chain that will fuel theentire organization.

Offer extended hours to serve a larger portion of the buying public than our competitorsdo.

Educate the buying public by merchandising our products with informational/tutorialsignage and literature

Offer the services of a full time service department to our client base. Continually modify the product and service offerings to stay on the leading edge of

technology within our market. Exploit the many weaknesses of our local and national competitors to differentiate

ourselves from them.

2. Industry Analysis

2.1. FUTURE OUTLOOKThe growth potential for the industry has already been explained in the industry overview section. Incase of Bioscope Animation Studio, the growth potentials are explained in the action plan for the firstfive years. For the later year, it plans to expand its operation more in the original feature film content, aswell as merchandizing (outsourced). After 15 years, we have a plan to start our very own amusementpark. The regional animation industry is currently at a nascent stage, with a miniscule 1% share of theglobal animation and gaming industry and ~8% share of the outsourcing work. This industry hasdemonstrated its capability in delivering high quality, on time work and holds a promising potential bothfrom the domestic and the overseas demand market perspective. Increasing no. of co-production deals,

overseas expansion, increasing focus on IP development, attracting investments from Private Equity /Other Funds – All these recent developments by Bangladeshi players bode positive for the industry.

Adequate supply of talent will need to be ensured to achieve the promise that this segment holds.Government grants would also help in improving competitiveness of the industry.

2.2. SWOT analysis

STRENGTH WEAKNESSES• Growth of English speaking population-competitive advantage.

• Lack of trained manpower.

• Leveraging rich heritage and culture to developoriginal content.

• High retraining costs.

• Relatively affordable cost of productioncompared to other outsourcing countries.

• Lack of Government support toencourage original content.

• Change from service model to co-productionand Intellectual property creation model.

• Lack of Government intervention topromote the industry.• Not treated as mainstream career optionby many professionals.• Lack of focus on R&D.• High remuneration vis--vis skills.• Attrition is a major concern area.• Lack of awareness of the industryunlike IT industry.

OPPORTUNITIES THREAT• Strategic alliance of Bangladeshi studios withforeign companies to share risk and build longterm relationship.

• Growing competition from China,Philippines, South Korea etc.

• Bangladeshi companies adopting inorganicgrowth route to expand their global market share.

• Government intervention in othercountries to promote the industry on theglobal front.

Table 1: SWOT analysis

Opportunities for the Company to sustain and increase its market value emerge from:

a. Its creative competence;b. Its technological capability;c. The scalability of its production capacities;d. Its ability to deliver high quality at competitive price;e. Its ability to deliver on time;f. Its ability to add value to customer needs;g. Its ability to service large value projects;h. Increased focus on value creation;

i. Operational efficiencies.j. Its ability to provide innovative financial dealsk. The growing demand for animated products in the television, DTH and Theatrical

space both in the local and global entertainment marketl. The advent of new modes and mediums of entertainment including Mobiles,

Gaming Consoles etc

2.3 PESTEL analysis

2.3.1. POLITICAL ANALYSIS OF ANIMATION STUDIO• Government Support

Compared to governments in other countries; efforts by the Bangladeshi government to encourage thesector have been very minimal. The government of South Korea funds animation ventures on apartnership basis. Bangladesh has a World Bank-funded support programme for the animation industry.These treaties will lead to sharing of costs by partner nations and also the dispersion of technical know-how amongst the partner nations.

• New Government Initiatives

The Animation Production Association of Bangladesh recently suggested to the Information andBroadcasting Ministry of Bangladesh that all TV channels must ensure 10% reservation for localanimated content. The government can further encourage investments and participation in this sectorby providing tax benefits. It can provide grants to Bangladeshi animators for participation ininternational conference and for taking up training programs abroad.

2.3.2. ECONOMICAL ANALYSIS ANIMATION STUDIOBangladesh’s attractiveness as an animation hub lies in the presence of an English-speaking workforce,high-quality software engineers, and a large pool of creative talent, good studios and low costs. The costof producing a 30-minute 3D animation programme in Bangladesh is US$60,000 compared toUS$250,000-400,000 in the United States and Canada. Bangladesh has a cost advantage compared tothe Philippines, which is another low cost producer of animations. The average monthly salary of ananimation professional in Bangladesh is US$600 compared to US$1,000-US$1,200 in the Philippines. Thecost of outsourcing one hour of animation work to Bangladesh is estimated to be 30% to 40%of the corresponding costs in leading animation centres in Korea, Taiwan and the Philippines.Bangladesh’s advantages in low costs have been exploited by many multinational firms and productionstudios. The advent of digital animation coincided with the liberalization of the Bangladeshi economyand India offered the benefits of lower production costs, strong creative and technical skills and alarge English speaking population. This has led to the development of state of the art animationstudios in several Bangladeshi cities, and these studios are collaborating with global entertainmentcompanies.

• Lack of Finance

Bangladeshi animation firms cannot match their western counterparts in financial strength. It is pointedout that state support in the form of tax holidays is crucial for success in the animation business.Canada, for example, offers major incentives to its studios for developing animation products. However,financial institutions in Bangladesh have not been much forthcoming in funding projects in animationand interactive media. The long gestation period before fruition of projects discourages potentialinvestors. This can be a major hurdle, and it has, in fact, led to the stoppage of a few productionventures. For example, Jadooworks had to stop production of animated epic of Krishna due totechnical problems and lack of funding. The firm was supposedly on the verge of bankruptcy and this hasled to the retrenchment of about 250 workers. Interestingly, Jadooworks is the same firm which drewappreciation from Thomas Friedman in an article in February 2004 for employing traditional artistes andtransforming their skills to computerized digital painting – he was arguing that globalization can havebeneficial impact on traditional artists. The experience of Jadoo works underlines the fact that it is stilltoo ambitious for Bangladeshi companies to single-handedly enter into animation projects. Evena small project in the animation industry entails a budget of US$30 million, which is not affordable forBangladeshi firms.

2.3.3. SOCIAL ANALYSIS ANIMATION STUDIO• Animation Products for Illiterates

The interactive media and animation industry in Bangladesh has a large domestic market too to tapon. A field-study based research conducted by one of the authors in July-August 2004 on thediffusion of ICTs in Bangladesh’s rural areas offers some interesting results in this regard.6 The studyshowed that television is a highly popular medium as a source of information in the Bangladeshicountryside, as it combines visual and audio effects and is less demanding of the cognitive skills of theuser. Almost 35 per cent of Bangladesh’s over 1 billion population is illiterate. There is great demandfrom this segment of Bangladeshi population for an innovative medium that facilitate communicationand information sharing, while at the same time, being easily accessible to the masses via the television.Products of interactive media and animation can fill this demand gap to a large extent; they can be greattools for education, entertainment and awareness among illiterates in Bangladesh’s rural and urbanareas.

SOCIAL FACTORS AFFECTING ANIMATION INDUSTRY

• The Bangladeshi Animation industry: Facing the manpower challenge

Despite the impressive growth forecasts, the Bangladeshi Animation and Gaming industry will accountfor less than two percent of the worldwide market in 2010. Obviously a much larger opportunity existsbeyond what is currently being envisaged and the potential remains high. Bangladesh can participate ina more significant way in the global Animation market, provided the country has built uprequisite manpower, with the relevant expertise, to fuel its growth. According to analysts, Bangladeshhas the potential to grow its Animation industry to around US$ 1 billion by 2010, but will remain

restricted to US$ 869 million on account of a looming demand-supply gap in the area of employablehuman resources. A similar situation exists in the gaming segment as well, which has the potential toachieve revenues of US$ 732 million by 2010, but is expected to touch only around US$ 424 million bythat period, owing to the paucity of skilled manpower. The employment statistics for the Bangladeshianimation and gaming industry during 2006 were as follows:

Around 16,500 professionals were employed by the Bangladeshi Animation industry during2006.

This figure is forecast to increase at a CAGR of 14-15 per cent and exceed 26,000 by 2010. There were nearly 150 gaming companies in Bangladesh, employing about 2,500 people. This number is forecast to increase at a CAGR of over 50 per cent to exceed 13,000 by 2010,

with the industry revenue forecast to grow nearly ten-fold and reach US$ 424 million.

2.3.4. TECHNOLOGICAL ANALYSIS ANIMATION INDUSTRYWhile it is true that Bangladesh’s animation industry is growing at a remarkable pace, the fact remainsthat this growth is largely a result of the mushrooming of “studios-for-hire.” In animation featurefilms, for example, while Bangladeshi companies carry out the technological animation work, characterdesign, and storyboarding are done abroad. Bangladesh is yet to become a successful player in conceptcreation, the high value-adding segment of the industry which remains a preserve of western firms.Bangladesh’s advantages of low costs in this industry will be too short-lived, and sooner rather thanlater, the country will have to start developing new technologies.

Skills

The animation industry is still young. Bangladeshi cinema is yet to make its mark on the global stage. Thebooming animation outsourcing industry is constantly demanding new skills and fresh infusion of newtalent into the industry. As such, it is imperative that we have a healthy pipeline to supply talent to theindustry. Skills required in the animation field can be clubbed under two broad categories, mainlytechnical skills and soft skills. Programming expertise, analytical ability, and proficiency on thesoftware are basic requirements for technical skills. The number of professionals joining the animationindustry has been growing at a compound annual growth rate (CAGR) of 18.2 percent and is expected togrow at the same rate. Though Bangladesh possesses the manpower with the requisite skill set, whatremains an area of concern is the education imparted to this manpower from the quality perspective.

This has resulted in mushrooming of multimedia institutes. What is interesting is that quite a fewreputed organizations have come forward and started a chain of multimedia institutions for tworeasons. One, they can use the trained professionals for in-house animation development and secondly,use this education channel for market diversification and penetration. However, companies need toinvest considerable time and money in bringing these students up to the levels where they start earningrevenue for the organization.

Need For technological training to employees

There are no academic institutes like Bangladeshi Institutes of Technology, Regional EngineeringColleges, Polytechnics, etc., churning out animators by the thousands. What we have are only fine artsschools which teach the fundamentals but not the technical skills required for production.This is a major drawback for the industry in Bangladesh.

Education in new media has to be embedded into the mainstream curriculum. Students have to realizethat they can have a lucrative career as animators, and the governments as well as educationalinstitutions have to start programmes for their career development. The animation sector will benefitgreatly by giving encouragement to the community of traditional artists as much as to technicallytrained professionals. In other words, integration of the rural and urban talent will prove highlybeneficial

2.3.5. LEGAL ANALYSIS OF ANIMATION INDUSTRY• Intellectual property

Outsourcers have always been concerned with the protection of their intellectual property inBangladesh. Bangladesh is one of the few countries which have failed to take stern action against itsinfringement. Bangladesh needs to strengthen its IP policy and ensure that companies operating in theoutsourcing sphere take stringent steps to take care of clients’ IP rights.

International Cooperation in the Animation industry

The Bangladeshi government is signing co-production treaties with other countries. Professionalorganizations too are trying to promote the Bangladeshi animation sector abroad. ASIFA, Bangladesh,organizes film festivals, conducts workshops and animation film competitions at the internationallevel. X-media Lab has been floated to help local, independent digital media producers reach theirideas successfully to the market with assistance from outstanding international new mediaprofessionals, who act as mentors to the companies and project teams. The second lab held inSingapore from 17 – 19 November 2005, "Creating Successful Computer Games”, attractedworldwide response. Bangladeshi developers have also been invited to interact with eight of the bestgames people in the world. There is also a plan to do a lab in Bangladesh next year.

What are the opportunities for engagement between Bangladesh, Singapore and otherSoutheast Asian countries in the field of interactive media and animation industry? To begin with,Singapore and Southeast Asia will be an important market for products from Bangladesh’s animationindustry. Singapore has significant expertise in telecommunication and media industry. Harnessing thefavorable trade and investment climate offered by the Comprehensive Economic CooperationAgreement between the two countries, firms in Singapore should consider investing in Bangladesh’sanimation and media business. Maya Academy of Advanced Cinematic, a leading player in theIndian animation industry, is planning to extend its operations to Singapore. It is currently working on aproject for BBC and has also been involved in the video games division.

Entertainment is one of the fastest growing sectors in Bangladesh-ASEAN relations. The entertainmentindustry is expected to grow at a compound annual growth rate of 20 percent from 2002 to 2007. Theentertainment industry, with total revenues of US$3.6 billion in 2002, is projected to grow up to US$8.7billion by 2007. The Philippines was, until recently, a fast growing animation industry, rich in creativetalent, and it was a major destination for outsourcing by animation firms in the United States. However,with rise in costs, the animation industry in the Philippines has begun to decline, and Filipino workers inthe industry have been migrating to Bangladesh and Singapore in search of jobs. Bangladesh, thePhilippines, Singapore and even China must realize that there is little to be gained in the animationindustry in the long run by competing with each other on costs. Rather, they should seek avenues forcooperation, and direct their efforts at acquiring intellectual property rights in this creative industry.

2.3.6. ENVIRONMENTAL ANALYSIS OF ANIMATION INDUSTRYAbility to scale operations:

Bangladeshi firms are facing a talent shortage which affects their ability to scale up their operationsbased on client demands. This also affects the client’s confidence in off shoring large chunks of work.Though Bangladeshi companies have put in place huge expansion plans, these are often marred byvarious reasons. Tie-ups with educational institutes are helping overcome this difficulty.

• Opportunities in Collaborations

Bangladeshi companies are trying to improve quality and making attempts to competeglobally with the market leaders in the industry. It is said that the year 2004 is a watershed for theIndian animation and gaming industry (according to the Bangladesh Chambers of Commerce andIndustry report on the Entertainment Industry). The year was marked by increased use of animation inthe Bollywood segment. According to the FICCI report, the increasing demand for downloads of gameson mobile phones will enhance the opportunities for gaming companies and bring in new entrants.Several Bangladeshi companies are entering into collaborations with foreign new media companies,which outsource their work to the Bangladeshi companies. Recently, Toonz Animation floated ajoint venture with First Serve International LLC, a global media company which aims toproduce and distribute top-notch animation programming for the world market. The new venturewill be headed by former Walt Paradigm Animations executive Ed Bordering. In 2004, a Chinesecompany also invested in Bangladeshi Games Ltd.

2.4. Analyzing the Animation industry as per Porters Five ForcesSuppliers:

The key suppliers in the animation industry are the animation training and education instituteswhose market is expected to grow at the annual rate of 40 % from 2008-12

About 300,000 students are undergoing animation training in animation areas like film design,game design, visual effects, wed animation, 2D, 3D.illustration and special effects.

For the industry to grow and move up the value chain a critical role will be played by the trainingand education institutes which will help professionals acquire technical skills.

Hence the suppliers have a key role to play in shaping the animation industry in the country

Customers: Bangladesh‘s animation studio are catering to the requirements of various end usersegments such as:

Feature films TV programs Advertisement/commercials Computer games Education Multimedia /web design Custom Content Development

Animation solutions are also finding a place in niches such as

Film titling Special effects Wed entertainment program TV broadcast graphics 3D modelling Background development

With the increased scope of using animation in India and increase in demand of animated content,customers are moving from a high bargaining power to a medium bargaining power

Identification of Fast growing segments

The market share of segment using animation reveals that the highest growth for animation currentlycomes from custom content development, followers by animation entertainment, multimedia andeducation segments

New Entrants:

Entry barriers are limited by the expertise, skills, technology and investment required for the animationindustry

Hence the threat of new entrants is directly related to the number of training academies and institutesthat open up and provide the relevant skill sets for the industry to exist and thrive and on thetechnology to enable animation development

Substitutes All forms of media and entertainment form a part of substitutes for animation industry

Threat form substitutes are high .A high % of animation work is being used in Animation entertainmentwhich has direct competition from entertainment industry as a whole .There is a media company whoare vying for the same share of customer attention and viewership

Competition within industry Being a dormant industry competition is still hard to define. But Intensityof competition will be determined by the technology, manpower, skills, creativity, studio and mediumof reach out to the customer

2.5 Industry forecast: Industry life cycle

Figure 1 industry life cycle

3. Description of the Venture

3.1. Products and ServicesAnimation Entertainment Service Models

Service Model DescriptionIntegrated Studio –Own Content State of the art units that enable production and development of all aspects ofan animation film, from conceptualization to post-production stage.Integrated Studio -Offshore Facility Regional Producer: Content / IP belongs to the Regional producerForeign Producer: Content / IP belongs to the foreignproducerService Provider Regional entities provide services for the labor intensive activities which areoutsourced to them.

Co-Production Animation companies in this region are moving up the value chain, fromproviding piece-meal outsourcing services to exploring the co-productionmodel. Typically, the regional studios bring the manpower and infrastructureto develop the animated content and the international producer will financethe marketing, distribution etc.Content Creation(IP) Full ownership of content, share in collections, royalty for all licensing andmerchandizingThe animation entertainment service models lie along different parts of the value chain. Dependingupon the service model that a player adopts, he can be present across the value chain or in certainspecific parts of it. Players also adopt multiple service models: for e.g. the same player may operate on‘service delivery model’ and ‘co-production’ model, varying from one deal to the other.Animation Entertainment Revenue Models

Service Model Revenue Model

Co-Production Revenue SharingCo-production Model: Changes have been witnessed over a period of time.Initially the revenue share was based on territorial rights with regionalstudios getting continental rights which generally generate less revenue.Currently, coproduction deals are being struck on a global revenue sharingmodel.Content CreationService Provider Work for HireSpecific activities along the value chain, for example, production, and postproduction are outsourced to regional players. Revenues for these activitiesare generally realized on a per hour basis. As majority of the outsourcinghappens in the production part most of the regional players realize revenueon this model only. An integrated studio offshore facility Refers to a captive ofa foreign producer.Integrated Studio –Offshore FacilityIntegrated Studio –Own Content Revenues from Multiple StreamsThe integrated studios who own the IP and produce local content can realizerevenues through various streams. These revenues can be from box officesales, TV and DVD/home video, merchandizing, and music rights.3.2. Custom Content DevelopmentCustom Content Development, estimated at ~ 295 USD Million (2009) has grown at 35% p.a. (2005-09)and is expected to continue its growth at a healthy rate of 23% p.a. (2009- 13) to reach USD 685 Millionby 2013. As per leading players in the industry, >90% of custom content development in this region isoutsourcing work.

Custom Content Development initiates with sourcing of the content and preparation of the script /storyboard followed by creation of the content and migration of the same on the required platform. The

platform on which the content finally resides may be a CD / DVD, website, or a Learning managementSystem depending upon the customer’s requirements.

Figure 2 custom content development

3.3. Background of entrepreneurs

The enterprise will be a partnership business of which one will be the majority shareholder.Other partners will be working as directors but will have major responsibility on them.

Shareholders name Age Academic experience Financial solvencyShah Shihab Sadman(Owner)

22 Undergrad student Solvent

3.4. Company Locations and Facilities

We have chosen a site at in karwan Bazar, Dhaka, and a commercial area for several reasons:

Quite centered between the other commercial areas of Dhaka and for convenience of thesupplierSafe and plentiful in terms of technological advancements and internet.Near high-traffic corporationsBeneficial demographicsAnd most importantly closest to all potential customers that is the different TVbroadcasting networks.

I am looking at leasing approximately 3000 sq. ft. space, which will allow sufficient room for

setting up the computers and necessary storage and office space. But with further development

space will be renovated.

4.0 Market Analysis

Paradigm will focus on small and start-up business customers in Bangladesh. It plans toaggressively pursue and acquire customers through direct business promotions and convert theminto repeat paying customers. It will continually strive to provide consumers with more cost-effective avenues, offering substantial savings rather than just a less money.

Paradigm will also be configured to stay ahead of, and capitalize on, emerging market trendssuch as integration of information/markets and increasing sophistication of online offerings. Thiswill provide a continuously improving, superior customer experience and grow value. There is aserious benefit deficiency in existing "brick and mortar" Paradigm Animationsestablishmentsthat create inefficiencies in the ordering and production process. Utilizing the benefits of Internetselling will eliminate many of these problems and create a lower-cost environment.

4.1. Market segmentation

Market segmentation helps marketers define customer needs and wants more precisely. ParadigmAnimations uses geographic, demographic, and psychographic segmentation to locate their targetmarket.

Geographic segmentation refers to a region of a country or the world, market size, marketdensity, or climate; this is used for the location of Paradigm Animations's theme parkssuch as Paradigm Animations land and Paradigm Animations World.

Demographic segmentation refers to age, gender, income, ethnic background, and familylife cycle; this is used to help determine where to place their chain stores calledthe Paradigm Animations Store, where to distribute their movies, and even determineswhat kind of movie they should create next.

Psychographic segmentation is based on personality, motives, lifestyles andgeodemographics; this is also used to help Paradigm Animations determine who is goingto buy more of their products.

Paradigm Animations mainly targets children and their families, it uses the multisegmenttargeting strategy which is when a firm chooses to serve two or more well-defined marketsegments. Paradigm Animations intrigues people of all ages; whether it is a child, teen, or parent.For small children, it has its animation films, toys and other goods from their consumer productsdivision, a segment on their channel called "Playhouse Paradigm Animations," and many more.

For older kids such as tweens and teens, it has the Paradigm Animations Channel, RadioParadigm Animations, their live-action films, and much more. Paradigm Animations's live-actionfilms attracts adults as well, in order to target adults Paradigm Animations uses a "familyapproach."

4.2 Target Market Segment Strategy

The company will be primarily targeting small and start-up businesses in Bangladesh; howeverthe company plans to negotiate deals with big businesses. Vendors will include printers andgraphic art designers around the world that will be able to help define these markets using theParadigm Animation B2B portal. will also focus on large businesses. The advantage with thismarket segment is that each job usually offers a higher margin than compared with the smallbusiness segment.

Finally, the company will also address individual needs. This is potentially the largest market;however, there is a relatively high churn rate in this segment that will require more extensivemarketing efforts to attract new customers. This, in turn, lowers the margin and makes thissegment the least attractive.

4.2.1 Market Needs

Paradigm Animations has chosen to focus on the small business market segment as its primarycustomer base because these customers usually have the lowest switching costs, do not havelong-term relationships with other Animations companies, and are the most aggressive insearching for low-cost Animations services.. The target clientele, though varied, can beapproached in very much the manner according to their needs of

SelectionValueService

In addition, new entrée businesses have traditionally been treated poorly and by reversing thistrend, reinforced by ongoing sales training and with unbiased customer interaction through salesstaff, Paradigm Animationscan further exploit the weaknesses of its top local competitors.

4.2.2 Market Trends

The Paradigm Animations industry is currently being driven by traditional time consuming andexpensive Animations studios. Although such companies are known for large selection, theirprices haven’t bottomed out and have been monopolizing, while still remaining financiallysound.

Consumers increasingly expect the Animation studios they deal with to offer a clean, high-techand comfortable service, and more personal to explain the ever-increasing levels of technology.Consumers generally want all this and expect to see prices consistent with the globe. In short,they want a one-stop experience. Another trend that benefits this industry is that as service forbig multinationals moves to other nations such as the USA (due to lower cost of manufacturingand online facilities), prices go down and units sold go up, increasing revenue opportunities.

4.2.3 Market Growth

There isn’t much information in numbers about the Animations industry in Bangladesh. But thelocal Animation studios have emerged in few corners of the city. They are inefficient inoperation and takes time in delivering large scale works. No instances of large scale animationstudio are in operation and have been seen in the market. So there is a huge scope for marketgrowth driving the customers to the newly introduced Animation studio.

4.3 Service Business Analysis

The Paradigm Animations Company is a market oriented corporation, meaning they assume thata sale does not depend on an aggressive sales force but rather on a customer's decision topurchase a product. These are usually the parents that take their kids to the movies and buy themerchandise. Paradigm Animationsknows that it's one thing to make a great movie that kids areexcited about but the efforts often fall short if parents don't approve of it.

The driving force of the entire company is the motion pictures and animated cartoons which aremanaged by Touchstone, Pixar, Paradigm Animations Pictures, Buena Vista, and Miramax. Bydoing so, the company uses its product/service differentiation competitive advantage.

The company will clearly have a very strong and well known "brand-name and image" overmany years. Because of this, selling all of movies will almost never be a problem. As you allmay know, the term marketing mix refers to a unique blend of product, place, promotion, andpricing strategies (often referred to as the "four Ps") designed to produce mutually satisfyingexchanges with the target market.

The Paradigm Animations Company is very good at the product and placing aspects of the fourPs. Again, because of their brand name they have the ability to sell their products easily. As newtheatrical productions are released, it allows for new product lines based off the feature’scharacters to be made and sold in strategically placed stores throughout the United States. Thestores are located in malls and super centers, in urban locations in order to for them to be visibleby the public eye.

The next two Ps are promotion and pricing. The Paradigm Animations Company will promotetheir films in almost every way possible varying from McDonald's toys to Billboards and postersall over buses and trains. Movie ads will be displayed on various websites like YouTube,Facebook, and Twitter and many more.

The most basic goal of The Paradigm Animations Company other than profit is, “To MakePeople Happy”. Its ability to make children as well as parents feel warm-hearted and full of joyafter just one animated movie is what truly makes them successful. advertising with key wordssuch as "Love", "Magic", and "Happiness" because that's what we are all about. I believe thatthis will be our secret to success and true competitive advantage.

4.3.1. Main Competitors

Animation Industry in Bangladesh (our major competitor) is a highly fragmented market. Wehave profiled the leading players across Animation Entertainment, Entertainment VFX, andCustom Content Development. But being fragmented and constrained to minor actions thiscompetitors are of small scale and many lack resources to compete with the global animationstudio and their capabilities.

The scale of involvement I tend to achieve out marks the existing competing firms by a greatmargin with capabilities and output prospects matched by global animation studios like krytech,Disney. DreamWorks etc.

5.0 Marketing Strategy and Implementation

The objective of Paradigm Animations is to become the leading provider of animation andcontent development services. As part of the ongoing strategy, the company plans to:

Create New Services. Capitalize on being one the first animation studio to target thebusiness market by aggressively introducing new services and promotions.Build brand recognition. Build brand recognition by promoting the ParadigmAnimations brand through diverse marketing channels, such as online advertising, publicrelations, and trade-show participation.Expand relationships. Expand the company's marketing relationships by aggressivelydeveloping new relationships with leading destination websites and media companies.This will accelerate customer acquisition and increase usage of our online shop.Build customer base. Build a customer base and stimulate repeat usage by exposingcustomers to products and services that most closely meet their needs.Expand services. Expand services by creating a range of new services and aggressivelymarketing these services to current and future customer bases.

Leverage and extend technology. Leverage and extend the company's technologyplatform by enhancing the functionality of the Paradigm Animations and B2B. websitesand the technology that supports them. This will be done to improve order flow andbusiness planning, expands service offerings, facilitate more complete integration withprint vendors, expedite payment processing, and improve the efficiency of the system.

5.1 Strategy Pyramid

Paradigm Animation’s main strategy is to out-serve the competition. It will accomplish thisthrough strong personal sales/service, educational aspects, and proper product selection.Programs such as our "100% of purchase price trade up guarantee" and our "You earn, weare concern" incentive programs will support these areas of concentration. In addition, it intendsto build strong relationships with key consumers who have influence on the purchasing decisionsof others, be they small, medium or large business firms. These individuals are important to thelong-term success of the business. It will take advantage of the great clinics and concertsprovided by our manufacturers and suppliers to bring excitement and energy to our customerbase; it will also bring in local stand-out musicians. It will follow up on these events with call-backs and surveys to maximize their potential for future sales.

5.2 Value Proposition

Creativity, scalability, competitive pricing and unmatched turnaround capabilities.

5.3 Competitive Edge

The Paradigm Animations Company is a market oriented corporation, meaning they assume thata sale does not depend on an aggressive sales force but rather on a customer's decision topurchase a product. These are usually the parents that take their kids to the movies and buy themerchandise. Paradigm Animationsknows that it's one thing to make a great movie that kids areexcited about but the efforts often fall short if parents don't approve of it.

The driving force of the entire company is the motion pictures and animated cartoons which aremanaged by Touchstone, Pixar, Paradigm Animations Pictures, Buena Vista, and Miramax. Bydoing so, the company uses its product/service differentiation competitive advantage.

5.4 Marketing Strategy

Paradigm Animations will strive to develop the most recognized and trusted brand for printingservices on the Internet. To expand our customer base and to extend the image of the

company, we plan to aggressively promote the Paradigm Animations brand through acombination of online and traditional media advertising, public relations and participation intrade shows. The company also plans to expand our affiliate and co-branded online websitestrategies through agreements with a range of destination websites.

5.4.1 PRODUCT

The product decisions should consider the product's advantages and how they will be leveraged.Product decisions should include:

Brand name: Paradigm AnimationsBrand color: The maroon, black and white theme symbolize the simplicity that isParadigm Animations, a complement to one’s business that takes promotes a company byhelping them turn their operation in to graphical works and adding a creative dimension.The dynamism it provides another company as a service represents the color maroon,which is the simplicity of its functionality is reflected by yin yan i.e.black and white.Tagline: “…whre dreams are shaped to reality” symbolizes the magnanimity of the studioand its brilliance in reflecting human imagination to its closest form of reality.

5.4.2 PRICE

For Paradigm Animations, first movers pricing strategy will be followed which will incorporatecost leadership pricing strategy as well. This is because the market targeted would be willing topay a less price since they are small in size and the serving company is one of the new in itssector. Since, Paradigm Animations would be the only supplier of such service in the domesticmarket, it can avail this advantage for a significant amount of time. The objective of employingthe market skimming pricing is to benefit from high short term profits because the product is newin the market and for being able to effectively segment the market. Moreover, charging highprices initially would help Paradigm Animations to build a high quality image for its products. Ifthere is threat of new entrants in the market, Paradigm Animations can effectively lower itsprices to present a high entry barrier.

5.4.3 PLACE

Place - refers to providing the product at a place which is convenient for consumers to access.Place is synonymous with distribution. The product needs to be distributed in the marketconsidering the convenience of its consumers. Convenience takes into account the ease of buyingthe product, finding the product, finding information about the product, and several other factors.

The product will be reached through direct marketing out to the field level straight at the handsof its consumers. The rationale for the chosen distribution channel is that the targeted audience ismostly in the rising businesses. Thus to reach this segment direct marketing as well as onlinemarketing will be used.

5.4.4 PROMOTIONStage 1: Building the awareness of the productSince there is no brand of service a business firm to become more efficient in terms of cost in themarket, the consumers are unlikely to be aware of Paradigm Animations and its advantages. Inthe first stage of the promotional campaign, necessary steps needs to be taken to generateawareness about it and its benefits. Strategies that can be implemented to generate awareness are:

Publication in the above mentioned sources about the advantages of Paradigm Animations cangenerate awareness and curiosity among the target audience.

Duration of strategy: 3 - 4 monthsStage 2: Launch the brand through TVCs and printed advertisementsAfter the alertness campaign, the brand Paradigm Animations will be launched in the market in.To generate responsiveness of the existence of the brand several TVCs will be launched, alongwith print ads in newspapers.

Duration of TVC and print ad campaign: 4 – 5 months

Targeting large business firms

The large business firms can be reached effectively through seminars and conferences catchingtheir eyes. Moreover online social networking sites such as MySpace and Facebook could play ainteresting part. Online advertising in such media can generate the necessary buzz for the

1. Online Banner Ads

2. Online Blogs

3. Newspapers And Leaflets

Figure 3 promotion strategy

conscious group to gain curiosity about Paradigm Animations. Furthermore, business consultantsand magazines can be potential opinion leaders who can influence the usage of ParadigmAnimations.

Targeting smaller business firms

In order to target the smaller business firms, TVCs and print ads will be designed promoting thebenefit of Paradigm Animations. The cost benefit of using Paradigm Animations will behighlighted in a series of TVC and print ads. For a more effective reach of the segment, opinionleaders will be cultivated. Consultants and online blogs would be ideal candidates for the opinionleaders. This strategy of buzz marketing will be particularly effective against the concernedpeople of Bangladesh. Moreover word-of-mouth is another way to spread out the name of thisbrand.Stage 3: Promoting greater usage of Paradigm AnimationsTo encourage a greater usage of Paradigm Animations it is necessary to demonstrate the targetaudience its core competencies. The greater usage will be initiated through arranging businessconferences and seminars to incorporate the product with the business world.

Duration: 3 months

5.5 Product Branding Strategy

5.5.1 Branding strategyThe purpose of our brand strategy is to provide a plan for the systematic development of a strongcoherent brand in order to enhance revenue and profits. The strategy is driven by the principlesof differentiation and sustained consumer appeal. To build a strong brand we need to follow thefollowing steps:

1. Brand Audit

2. Brand strategy

3. Brand execution

Figure 4 step by step brand formation

Brand Audit

Brand Audit: the initiation of a brand starts from selecting the target and getting an insight of theproduct in the market. To get a better understanding of the brand we are using a target matrixwhich will identify the pros and cons of our brand and align it with its competitors.

Competitive BrandUsers

Category non-users

Size/Profile limited large

Decision Criteria orMotivators

Cost effective Quality

Decision Process Willing Diversified

Barriers/Concerns Price andpreservatives

High price and lessaffordability

Brand Importance Moderate Low

Role of price High High

Satisfaction moderate NegligibleTable 2 Comparison between Competitive Brand Users & Category non-users

Currently the trend of going online is alarming. Even a slight reflection of competitiveness leadspeople to adapt such services and in some business groups high end service/products have

become a symbol of core competence. So this will act as a sweet spot for Paradigm Animationsto perform well in the market with an unmet need to be fulfilled by this product.Brand StrategyThe purpose of the brand equity pyramid is to outline the basic building blocks of a brand shouldstand for in order to guide the process of building brand equity. It is the basis for determiningkey elements of the brand strategy – brand vision, brand positioning, and brand personality andbrand measurement. Now to build a strong brand strategy the following “brand pyramid” with itselements have to be defined with respect to our brand. Through this process we will establish abrand that will deliver high level of satisfaction to the consumers and as a result will create aresonance in the market leading to high growth and development of the product. But all of itstarts at the base where we need to define our identity, which is stated in brand positioningstatement delivering the true motives of our product.Brand ExecutionSuccessful branding doesn’t happen without the careful integration of strategy, creative andexecution. Many brands fall short during the brand execution process, when real-worldrequirements are not taken into account during the design feasibility stage.

This should provide Paradigm Animations with a distinct competitive edge over the key playersin the industry, which in turn will result in plentiful sales of Paradigm Animations regardless ofits competitors’ promotional movements.

5.6. Distribution strategyA distribution strategy defines how you are going to move products from point of creationto points of consumption, in a cost-effective manner. The effectiveness of distributioncoverage and practice is of paramount importance in achieving the desired sales of theproduct in this case PARADIGM ANIMATIONS. The product will be reached through a mixedstrategy of direct and indirect marketing strategy to reach out to the field level straight at thehands of its consumers.

We actually distribute our product in two ways:

1. B2B (Business to Business)

2. B2C (Business to Consumer)

Figure 5 distribution channel

The no. 1 channel is an example of B2C (Business to Consumer) and the rest areB2B(Business to Business) channels. We select a mix of the first and second channel of thefigure that is in other words direct and indirect distribution strategy. Direct strategy will beapplied (manufacturer to consumer) in the early stages when penetrating the market topromote the sales of PARADIGM ANIMATIONS in the temporary stalls located in andaround sports fields, parks and gymnasiums. As PARADIGM ANIMATIONS would beimplementing skimming pricing initially, retailers would benefit from the high mark ups. Thus,retailers would be willing to feature PARADIGM ANIMATIONS products and provide a greatershelf space.

5.7. IMC (integrated marketing communication)Every single corporation must promote their product or service efficiently in order to capitalizethemselves. In order to do so, the company must use the "promotional mix" which is acombination of advertising, public relations, sales promotion, and personal selling. After all ofthat promotion, the company's foremost and primary goal is to have as many consumers possible.

5.7.1. AIDAWhat helps reach this goal is the AIDA concept, which stands for the stages of consumerinvolvement with a promotional message. These stages being: attention, interest, desire, andactions.

Figure 6 AIDA model of IMC

attention interest desire action

Now, the Paradigm Animations Company has no trouble grabbing the consumers attention dueto their vigorous brand name, and excessive advertising through traditional media such astelevision; radio; newspapers; magazines; billboards; transit cards; and of course we couldn'tforget - the internet.

Although Paradigm Animations attracts plenty of consumers, this simple awareness isn't enoughto make a sale, they must create an interest in the product. Through various public relations,Paradigm Animations captures many of its consumer’s interests. These relations range fromenvironmental issues, to public health and safety issues, to even educational issues. They arecurrently running two educational campaigns called the "Disney's Leadership Experience: TheInside Track" and "Paradigm Animations Dreamers and Doers Program."

Now that company has captured the consumer's attention and interest, Paradigm Animationsmust entice a desire for the product. For Disney's animation films, desire is mostly brought uponby the emotion the movie trailer gives off. This "emotion" depends on what genre the movie is,and makes the consumer feel as if they "have" to watch the film. For instance, Disney's live-action films give off an exciting, want-to-know-what-happens-next kind of feeling. Animationfilms on the other hand, give off a heart-warming, family enriched sort of feeling. These feelingsencourage the consumer's desire to purchase tickets for the film.

In regards to action, the Paradigm Animations Company uses "mass communication" whichinvolves communicating a concept or message to large audiences. Studies have shown thatconsumers usually buy products if they hear or read positive reviews on the product by otherconsumers as opposed to the actual company. Paradigm Animations has taken note of this and onit's website it has a section specifically designed for new movie releases, and feedback on thesenew releases - this section is called Movies | New & Classic Paradigm Animations Films. Notonly does Paradigm Animations incorporate personal feedback through it's website, but it alsohas a Facebook, Youtube, and Twitter page. Indeed, the Paradigm Animations Company hascompletely convinced many consumers to take action.

6.0 Strategic Alliances

The company has strategic alliances with Network Systems, Software Developers, and CustomDesigns and Printers. These alliances are valuable to us because they will allow the company toutilize the knowledge and resources of these firms with no additional cost to the business.Paradigm Animations plans to also form strategic alliances with search engines such as Yahoo!and Lycos to promote the website, as well as exploring the possibility of forming strategicpartnerships with content providers such as America Online. The e-marketplaces will become anenduring reality in the business landscape. While the growth of these venues will spurcontinuous change, the company will be participating in these e-marketplaces as buyers.

Paradigm Animations will begin to experiment with these online marketplaces with a minimumof 1% of its procurement dollars. This level of effort will enable the company to optimizepurchasing in a dynamic pricing world. There will be the added bonus of also understanding thedifferent vertical markets so that, when the time comes, we will know where to look to formstrategic alliances

7.0 Organizational Plan7.1. Form of ownership: Proprietorship (later stage converted to partnership for greatergrowth of the business)

Terms of partnership are as followed:

1. Name and address of partnership.2. Duration of partnership—Partners can point to a specific termination date or include a

general clause explaining that the partnership will exist until all partners agree to dissolveit or a partner dies.

3. Business purpose—Some consultants recommend that partners keep this sectionsomewhat vague in case opportunities for expansion arise, while others emphasize clear-cut and unambiguous entrepreneurial goals.

4. Bank account information—This section should note which bank accounts are to be usedfor partnership purposes, and which partners have check-signing privileges.

5. Partners' contributions—Valuation of all contributions, whether in cash, property orservices.

6. Partners' compensation—Determine in detail how and when profits (and salaries, ifapplicable) will be distributed.

7. Management authority—What are the operational responsibilities of each partner? Willpartners be able to make some decisions on their own? Which decisions will require theunanimous consent of all partners? What are the voting rights of each partner? How willtie votes be resolved?

8. Circumstances under which new partners might be admitted into the partnership.9. Work hours and vacation.10. Kinds of outside business activities that will be allowed for partners.11. Disposition of partnership's name if a partner leaves.12. Dispute resolution—Stipulates what kinds of mediation or arbitration will be utilized in

the case of disputes that cannot be resolved amongst the partners. This is a way to avoidcostly litigation.

13. Miscellaneous provisions—This portion of the agreement might delineate thecircumstances under which the agreement could be amended, for example.

14. Buy-Sell Agreement.

The human resources element shall be an essential component in the delivery of the total service.By envisaging all employees to handle customers well, and by having enthusiastic, capable andempowered people interacting with its customers, Paradigm Animations intends to build thecompetitive advantage of being able to comprehensively meet its customers' needs. There will beneed to evaluate jobs and remuneration packages against market benchmarks to employees fortheir agreed and set out tasks so as to ensure they are competitive. These principles extend toaccident, medical, death and Welfare benefits.

7.2 Organizational Structure

The company's management philosophy will be based on responsibility and mutual respect.Paradigm Animations will maintain an environment and structure that will encourageproductivity and respect for customers and fellow employees. Additionally, the environment willencourage employees to have fun by allowing creative independence and providing challengesthat are realistic and rewarding. organizational structure is illustrated in the Personnel tablebelow.

Department Level-3 Level-2 Level-1Administration Chairman/CEO

Marketing Sales ExecutiveLiaison

Relationship andCommunication

Manager

Brand Manager

Finance Accountant AssistantFinancialManager

Financial Manager

Contentdevelopers

Graphic and modeldevelopers

Softwareengineers

Chief production officer

Legal Legal Officials Head of LegalTable 3 organizational structure

7.3 Management Team

The founder of PrintingMedia.com is passionate about the activities it will promote and offer onthe market. Management style will reflect the participation of the directors/shareholders. Thecompany intends to respect its community and treat all employees well. PrintingMedia.com willdevelop and nurture the company as community. However it realizes that PrintingMedia.com isnot fully conversant in television and as such intends to engage experienced staff as well asundergo training in order to from a reputable institution.

Figure 7 organ gram of Paradigm Animations

8.0. Risk Assessment

8.1. Overall aspect

8.2.1. Macro-Economic Risk:

The global economy is witnessing significant contraction with an unprecedented lack ofavailability of business and consumer credits. This current decrease and any future decrease ineconomic activity in the United States and other regions in the world, in which we do business,could significantly impact our results operationally and financially. The business risks are bothinherent and perceived. The business of entertainment being a High Risk – High Return businessdoes test our patience, commitment and convictions time and again.

The markets are getting increasingly competitive, Technological obsolescence and lack of skilled& trained human resources demand sustained and enhanced levels of investments in bothdepreciating as well as appreciating assets.

Our success is primarily dependent on the audience accepting our products which is extremelydifficult to predict or guarantee. The revenue derived from a feature film does not necessarilybear any correlation to the production or distribution cost incurred.

The company’s business is dependent on the availability of work for hire projects and/ or abilityto co-produce projects. Unexpected delays in the commencement of work for hire projects or the

commercial failures in co-production project would have a material adverseeffect on ourfinancial results. Further, as a result of the global economic infirmity, the markets areincreasingly meandering towards co-financing models of business association, which stipulatelarge capital outlay, further necessitating the need for innovative financial structuring of deals.

The business is substantially affected by the prevailing global economic conditions. Increases ininterest rates, inflation, changes in tax, trade, scarcity of credit are some of the factors whichimpede the growth of the business. The economic downturn has left no public limited companyunaffected which is reflected in the performance of our stocks. However given the resilience ofthe economy in the face of recession as well as its strong fundamentals, the company does notexpect to be significantly affected by this risk in the long terms

8.2.2. Business Model Risk

We currently operate principally on one business segment i.e. 3D animation and our lack ofdiversified business could adversely affect us.

Unlike most of the major studios in the international market which are a part of large diversifiedcorporate group that include Television networks & Cable channels that can provide stablesource of earnings and cash flows that offset fluctuations in their financial performance we arepredominantly dependent on the availability of Work for hire projects and the success of our co-production deals.

To mitigate the risk in our business model we consciously ensure that we maintain a mix of"work-for-hire" projects along with ownership of content / intellectual property rights on projectsin addition to strongly exploring the Gaming and Digital asset management.

8.2.3. Geographic Risk

We are significantly dependent on the US & European markets and any change in the nature andstructure of these markets would adversely affect our financials.

We do believe that the US & European markets are adequate enough to provide us withcontinuous and sustainable business opportunities for the foreseeable future, the Asian marketsare also warming up to the possibilities of the CGI Industry and we have already made aheadway in establishing strategic relationship with producers of repute in these emergingmarkets.

8.2.4. Financial Risk

The production of animated products is capital intensive and our capacity to generate revenuesfrom our work for hire projects may be insufficient to meet our anticipated cash requirements.

The company’s revenue is predominantly denominated in USD, given the volatility oftheBangladeshiTaka; the financials of the company can swing significantly.

To mitigate the risk the company has through proactive and effective risk managementtechniques entered in forward contracts with its clients. The company has through its strategicinitiatives and sustained reconnaissance established formidable relationship in the financialmarkets that facilitate innovative financial arrangement to provide for its capital requirements.

8.2.5. Regulatory and Compliance Related Risk

The Company’s transactions are though predominantly in the US, it also transacts with othercountries. As the Company pursues towards a global reach the risk of ensuring100% compliancewith the regulations and laws also increases.

The Company has an institutionalized structure to ensure regulatory and legal compliance tomitigate such risks

8.2.6. Reputation Risk

The reputation of an entertainment Company is built on various factors including the Credentialsof the Creative Directors, The Actors, The success of the products as measured through BOXOFFICE collections etc.

We mitigate such risks by endeavouring towards and ensuring that we work with the mostreputed of Brands, Creatively Competent Directors of Repute and Properties that appeals toawide range of audience and has a Long Shelf life.

8.2.7. Operational Risk

We cannot predict the impact the rapidly changing technology or alternative forms ofentertainment may have on us. Animated products are expensive to produce and the uncertaintiesinherent in their production could result in the expenditure of significant amounts on projects thatare abandoned or delayed for reasons beyond our control.

We try to mitigate these risks by investing in developing proprietary tools that enable increase inefficiencies and standardization of processes. We also ensure that we abreast with the changes intechnology and constantly upgrade the capabilities and capacities our human resources as well astechnological resources

The production completion of animated projects is subject to number of uncertainties, includingdelays and increased expenditures in lieu of creative and technical difficulties, availability oftalent, cost technology and increase in wages.

As a result the projected production cost at the commencement of the project may increase, thedate of completion may be substantially delayed or the project may even be abandoned by theproducer causing the write off of expenses incurred with respect to the project.

We mitigate these risks through an effective amalgamation of operational planning&management, enhancing creative and technological competence as well as good CorporateGovernance

Beginning with the release of Alpha & Omega, we expect that all our films will be produced instereoscopy. The company has implemented and would continue to implement changes in itsproduction processes & systems in order to produce stereoscopic projects. These changes willincrease the cost of producing a project, which may have an impact on the realization of profits.

We rely on technology that we license from third parties, including software. There is noassurance that these third party technological licenses will continue to be available to us oncommercially reasonable terms or at all. The loss or delay to maintain any of these technologylicenses could result in delays in the completion of a project and could materially adverse ourbusiness, financial conditions or results of operations.

Our success also depends on some key employees including Management personnel’s, Creative& Technical Personnel’s. We do have employment agreements with these key personnel’s;however it doesn’t guarantee the continued services of such personnel’s.

8.2. Risk Factors Our success is primarily dependent on audience acceptance of our films and animation

series, which is extremely difficult to predict and, therefore, inherently risky. Our business is currently substantially dependent upon the success of a limited number of

releases each year and the unexpected delay or commercial failure of any one of themcould have a material adverse effect on our financial results.

We cannot predict the effect that rapid technological change, emerging distributionchannels or alternative forms of entertainment may have on the motion picture industryor us.

Our operating results fluctuate significantly We currently operate principally in one business; the production of animated

entertainment, and our lack of a diversified business could adversely affect us. The Company has recently developed and is currently in the process of developing a

number of projects that are not feature films, which will involve upfront and ongoingexpenses and may ultimately be successful.

Animated films are expensive to produce and the uncertainties inherent in theirproduction could result in the expenditure of significant amounts on films that areabandoned or significantly delayed.

Animated films typically take longer to produce than live action films, which increasesthe uncertainties inherent in their production and distribution.

The production and marketing of animated feature films and properties is capitalintensive and our capacity to generate cash from films maybe insufficient to meet ouranticipated cash requirements.

The costs of producing and marketing our feature films have steadily increased and mayincrease in the future, which may make it more difficult for a film to generate a profit tocompete against other films.

We compete for audiences based on a number of factors, many of which are beyond ourcontrol.

We face risks relating to the international distribution of our films and related products. To be successful we must continue to attract and retain qualified personnel and our

inability to do so would adversely affect the quality of our films. Third party technology may not continue to be available to us in the future.

8.3. ContingencyAt any point of time, if the business fails, our contingency plan includes the following:

1. Limiting our operation to outsourced content only. If in any case, that fails, we shall gofor

2. Legal procedures of winding up3. Selling all hardware to independent PC owners, Cyber Cafes, Gaming Cafes, or Other

multimedia based organizations.4. Selling software license to freelancer animators or other studios.

9.0 Financial Plan

Funding Requirements and Uses

The company will be raising the cost for the purposes of:

Establishing and organization and office presence within Bangladesh and overseas.

Completing the development of the online print shop

Marketing the website and its services

Provide a world class customer service website

9.1. Initial investmentPARADIGM

Hardware Cost:Apple Desktop BDT 110,000

Typical Desktop BDT 30,000Wacom Tablets BDT 20,000Other hardware BDT 30,000

Software Cost:Toon Boom Bulk License BDT 120,000

Adobe Creative Suite Bulk License: BDT 178,000Windows OS BDT 250,000

SalariesArtists and graphic designers BDT 15,000 per month

HR manager BDT 10,000 per monthAccounts manager BDT 12,000 per month

Marketing manager BDT 12,000 per monthTOTAL COST Initial setup: BDT 638,000 monthly: BDT 49,000

Table 4 start-up capital breakdown

9.2. Source of fundThe major source of fund will be from personal account and if in dire need loan will be takenfrom premier bank as per agreement but under current assumption the startup cost will be bournpersonally.

9.3 Important Assumptions

1. Sales is assumed to grow in the following rates in given sectors

2. Inflation rate is considered to be 8%. All costs are assumed to grow in inflation rate except

for that of hardware (as the mean value tends to be stable over a period of time)

3. Cost of debt is considered to be 13%

4. Cost of equity is considered to be 16%

5. After 5 years, growth rate for calculating terminal value is considered to be 2%

6. A 60% debt and 40% equity structure is assumed

7. The initial long term loan amortization period is 10 years

9.4. Break-even Analysis

The following chart and table outline the break-even analysis for PrintingMedia.com.

Figure 8 Break-even analysis (projected)

Monthly Revenue Break-even = BDT 900,050

Assumptions:

Average Percent Variable Cost = 15%

Estimated Monthly Fixed Cost = BDT 500,000

9.5. Projected profit and lossPro Forma Profit and Loss

Year 1 Year 2 Year 3Sales $250,000 $2,910,000 $5,820,000Direct Cost of Sales $80,000 $125,000 $200,000Other $10,000 $30,000 $55,000Total Cost of Sales $90,000 $155,000 $255,000

Gross Margin $160,000 $2,755,000 $5,565,000Gross Margin % 64.00% 94.67% 95.62%ExpensesPayroll $173,921 $224,131 $270,652Marketing/Promotion $429,998 $360,000 $565,000Depreciation $0 $0 $0Software/IS expense $90,000 $60,000 $85,000Contract Labor $26,091 $35,000 $35,000Legal andProfessional expense

$20,002 $10,000 $10,000

Bank charges $2,300 $2,000 $2,000Rent $30,000 $15,000 $15,000Payroll Taxes $0 $0 $0Other $0 $0 $0Total OperatingExpenses

$772,312 $706,131 $982,652

Profit Before Interestand Taxes

($612,312) $2,048,869 $4,582,348

EBITDA ($612,312) $2,048,869 $4,582,348Interest Expense $83,535 $63,252 $42,084Taxes Incurred $0 $496,404 $1,153,984

Net Profit ($695,847) $1,489,213 $3,386,280Net Profit/Sales -278.34% 51.18% 58.18%

9.6. Projected Cash Flow

The following table has calculated that the company will have a negative cash outflow during thefirst year. However, the company will not begin financing or operations until July, 2014. In orderto offset this supposed outflow, increases in the initial cash requirements in the Start-up tablehave been provided. The differences between calculated cash and actual needs will be used forother start-up costs.

Figure 9 projected cash flow

Pro Forma Cash FlowYear 1 Year 2 Year 3

Cash ReceivedCash from OperationsCash Sales $62,500 $727,500 $1,455,000Cash from Receivables $128,267 $1,552,257 $3,675,524Subtotal Cash from Operations $190,767 $2,279,757 $5,130,524Additional Cash ReceivedSales Tax, VAT, HST/GSTReceived

$0 $0 $0

New Current Borrowing $0 $0 $0New Other Liabilities (interest-free) $0 $0 $0New Long-term Liabilities $0 $0 $0Sales of Other Current Assets $0 $0 $0Sales of Long-term Assets $0 $0 $0New Investment Received $0 $0 $0Subtotal Cash Received $190,767 $2,279,757 $5,130,524

Expenditures Year 1 Year 2 Year 3

Expenditures from OperationsCash Spending $173,921 $224,131 $270,652Bill Payments $717,104 $1,175,362 $2,096,935Subtotal Spent on Operations $891,024 $1,399,493 $2,367,587Additional Cash SpentSales Tax, VAT, HST/GST Paid Out $0 $0 $0Principal Repayment of CurrentBorrowing

$166,656 $166,656 $166,688

Other Liabilities PrincipalRepayment

$0 $0 $0

Long-term Liabilities PrincipalRepayment

$45,000 $45,000 $45,000

Purchase Other Current Assets $0 $0 $0Purchase Long-term Assets $0 $0 $0Dividends $0 $0 $0Subtotal Cash Spent $1,102,680 $1,611,149 $2,579,275Net Cash Flow ($911,914) $668,609 $2,551,249Cash Balance $38,086 $706,695 $3,257,944

Table 5 Pro Forma Cash Flow

9.7. Balance Sheet

The following table outlines some key financial information for PrintingMedia.com.

Pro Forma Balance SheetYear 1 Year 2 Year 3

AssetsCurrent AssetsCash $38,086 $706,695 $3,257,944Accounts Receivable $59,233 $689,476 $1,378,952Inventory $14,667 $22,917 $36,667Other Current Assets $200,000 $200,000 $200,000Total Current Assets $311,986 $1,619,088 $4,873,563Long-term AssetsLong-term Assets $0 $0 $0Accumulated Depreciation $0 $0 $0Total Long-term Assets $0 $0 $0Total Assets $311,986 $1,619,088 $4,873,563

Liabilities and Capital Year 1 Year 2 Year 3Current LiabilitiesAccounts Payable $69,489 $99,033 $178,917Current Borrowing $333,344 $166,688 $0Other Current Liabilities $0 $0 $0Subtotal Current Liabilities $402,833 $265,721 $178,917

Long-term Liabilities $405,000 $360,000 $315,000Total Liabilities $807,833 $625,721 $493,917Paid-in Capital $1,080,000 $1,080,000 $1,080,000Retained Earnings ($880,000) ($1,575,847) ($86,634)Earnings ($695,847) $1,489,213 $3,386,280Total Capital ($495,847) $993,366 $4,379,646Total Liabilities and Capital $311,986 $1,619,088 $4,873,563

Net Worth ($495,847) $993,366 $4,379,646Table 6 Pro Forma Balance Sheet

10.0 Exit strategyAs the studio is mostly equipment based, for instance computers, high definition cameras anddisplays, so all these will have also very good resale value in the market. But that is actually notthe prime exit strategy rather the lender of the last resort. Now let’s focus on the varied option Ihave for exit strategy regarding animation studio.

Firstly we can outsource the whole installment as a support unit to any firm for managing themanagement information system or even perform IT functions for different firms andorganization. This is a very resourceful option because with the capabilities held by all by theemployees it can be easily switched to any viable IT operating options in the market.

Moreover there is an alternative to switch to different cyber café business or due to large numberof high end computers and displays it can easily be switched to another very profitable andfeasible business of gaming café. But even then the last resort is still selling out which will alsobe tough not profitable but with the least of loss action.

animation studio business plan

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