Beautiful Legs by Post. Class vote. How many of you would invest in this venture? Would invest Wouldn’t invest. Career choices. MeasureNew ventureJob Salary nowSmall$60-70k Salary 5 yearsDepends on success$100-150k Long-term rewardsCapital gainStock options
Beautiful Legs by Post
Salary 5 yearsDepends on success$100-150k
Long-term rewardsCapital gainStock options
Work hours7 days a week5 days a week
Describe the opportunity that exists for BLBP in terms of the 3 M’s
1.Beautiful Legs by Post
2.2 Directors' Compensation and Share of Ownership
During the three moth test phase both directors are forgoing all compensation. On
completion of the first round of financing the directors will each be paid a basic salary of
£25,000 per annum with no benefits-in-kind. This is significantly lower than the market
level which INSEAD graduates command.
Until the first round of financing, each director will own 50% of Beautiful Legs by post,
having each made an equity investment of £5,000.
As a potential investor is there anything which might be a red flag in this passage?
2.Beautiful Legs by Post
1.6 Competitive Advantage
We will have the advantage of being the first mover. We will be the first to locate the
buyers of high quality tights and will be able to keep them by offering an efficient
and reliable service through a Monthly Order Program. For a new entrant, since many
potential customers will be our customers, their "hit-rates" will be reduced. This
means that the cost of acquiring clients becomes prohibitive. New entrants cannot
gain market share through price reductions since quality is perceived to be reflected
Identify three things should concern an investor in this passage (there are more than three)?
“1.9 Exit Strategy
We seek to have a saleable business by the end of the third year. The potential purchaser
is likely to be a trade buyer, either from the hosiery or mail-order business. Hosiery
companies are currently fighting for market share and this would give them another
distribution channel closer to the customer. A mail-order house would be interested in
our client base since it will contain names of active purchasers of a quality item. These
names could be used to launch new products.”
What would concern you about this statement as a potential investor?
“1.10 Proposed Offering
The offering will comprise of Ordinary Salaries (1 pound par value) and short-term
debenture stock. Under the business plan's assumptions, there will be one round of
financing. We are asking outside investors to purchase 20% of the company for 80,000
pounds, and to loan 30,000 pounds in the form of debenture stock that will be repayable
in six months.”
What, if anything, seems wrong with this offer from the perspective of potential investors? Keep in mind that half the class said they would invest.
6.Beautiful Legs; Direct Marketing Letter (see also section 4.2 if necessary, p 12)
We have chosen a well-known French hosiery company founded in 1829 called Dore
Dore to be our supplier. They have a number of advantages compared to the others that
we considered. They are willing to supply marketing material, such as samples and discounted
- They are able to supply goods in small lot sizes. Production runs with special packaging require a minimum order of 2,000 units as opposed to the industry average of 24,000 units.
- They have an excellent reputation for quality, especially in France
- They are willing to supply us on a weekly basis.
- Lead times are short. They can deliver within 5 working days of receiving an order, and the transportation time is less than 24 hours
- They wish to enter the British fine gauge hosiery market. They are established as high quality suppliers of men's and children's socks
- We have negotiated credit terms of 60 days, with a discount of 2.75% for payment within 30 days.
- They supply socks to other mail-order companies and thus have experience of our industry.
Thinking strategically (ie Porter), what concerns, if any, would you have with their choice of supplier and why? (be specific with the framework language)