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Business Plan on Animation Studio

Prepared For
Dr. A. K. M. Saiful Majid Course Instructor: Entrepreneurship (W301) Professor

Prepared By
Shah Shihab Sadman ZR 27 BBA 18th Batch Section A

Institute Of Business Administration University Of Dhaka 21 January, 2013


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Letter of transmittal January 21, 2013 Dr. A. K. M. Saiful Majid Course Instructor: Entrepreneurship (W301) Professor Institute of Business Administration University of Dhaka Subject: Letter of transmittal for the Business plan assigned in entrepreneurship course Dear Sir Here is the business plan on Business Plan on animation studio paradigm which you assigned us as a requirement of the course Entrepreneurship (W301) offered at the Institute of Business Administration, 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 to the market scenario of Bangladesh. The business plan has been prepared under your authorization and direct supervision, with the purpose of fulfilling the course requirement. No part of this business plan shall be reproduced for use 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 a unique learning experience and the knowledge I have acquired will be of great importance, both for my future academic purposes and professional life. Yours sincerely,

Shah Shihab Sadman ZR - 27 Batch -18th Institute of Business Administration University of Dhaka

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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 Ive 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.

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Contents
Executive 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 Page 4

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 Page 5

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

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

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Executive summary
The global animation industry is one of the most consistent performing industries over the course of the last 25 years. Within that time it has witnessed many changes in dynamics. And the changes are in motion even now. Although the holy trinity of animation: USA, Japan and Korea still dominate, new entrants are beginning to venture into their reign in hopes for a greener patch. It is understandable that new countries are showing interest in the animation industry; after all, it has been growing at a phenomenal 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 the Animation Entertainment segment in this region is estimated at USD 122 Million (CY 2009) and is expected to show a CAGR of 20% (2009-2013) to reach USD 253 million by 2013. More surprising when 74% of the animation entertainment works in this region is outsourcing work for overseas clients. Even if the economic benefits are overlooked, it appears almost criminal that such a rich culture has little to no identity 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 to create a visual identity for our culture much like the Japanese Anime and with a mission to become the largest outsourcing service provider in the sub-continent by 2020, paradigm is an attempt to announce the arrival of Bangladesh in the global animation industry. Animation is a process under which different drawings of imagined action (called frames) representing a slight shift in the positioning of content are recorded in such a way that it gives an illusion of motion when shown at a predetermined rate. In a nutshell, it is a time sequencing of frames to create a simulation of continuous movement. In this context, as the Bangladeshi Animation Industry is still at its embryonic state, we will consider the regional animation industry to be the local industry whereas the Bangladeshi industry shall be mentioned as the domestic industry henceforth. Animation Industry in Bangladesh (our major competitor) is a highly fragmented market. We have profiled the leading players across Animation Entertainment, Entertainment VFX, and Custom Content Development. But being fragmented and constrained to minor actions this competitors are of small scale 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 of business and consumer credits. This current decrease and any future decrease in economic 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 both inherent and perceived. The business of entertainment being a High Risk High Return business does test our patience, commitment and convictions time and again.

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Animation software is increasingly being used across various market verticals - films, television broadcasting, video game development, web designing, training and education services, and corporate communications. Expanding use of animation in training and instruction programs, need for effective animations in video games, and growing requirements of broadcast and media sector are also important growth factors. Bangladeshi companies are trying to improve quality and making attempts to compete globally with the market leaders in the industry. It is said that the year 2004 is a watershed for the Indian animation and gaming industry (according to the Bangladesh Chambers of Commerce and Industry report on the Entertainment Industry). The year was marked by increased use of animation in the Bollywood segment. According to the FICCI report, the increasing demand for downloads of games on 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 a joint venture with First Serve International LLC, a global media company which aims to produce and distribute top-notch animation programming for the world market. The new venture will be headed by former Walt Paradigm Animations executive Ed Bordering. In 2004, a Chinese company also invested in Bangladeshi Games Ltd. While it is true that Bangladeshs animation industry is growing at a remarkable pace, the fact remains that this growth is largely a result of the mushrooming of studios-for-hire. In animation feature films, for example, while Bangladeshi companies carry out the technological animation work, character design, and storyboarding are done abroad. Bangladesh is yet to become a successful player in concept creation, the high value-adding segment of the industry which remains a preserve of western firms. Bangladeshs advantages of low costs in this industry will be too short-lived, and sooner rather than later, the country will have to start developing new technologies.

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1.0 Introduction
The rapid advancement of technology has made computer animation available to the masses and the animation industry is one of the fastest growing industries. The demand for animated entertainment has expanded with the increase in broadcasting hours by cable and satellite TV along with the growing popularity of the Internet. In the past, animation series were aimed at children aged nine and below. In recent years however, TV stations have been producing animation series for teenagers, adults and the whole family. Animation series like The Simpsons and King of the Hill have been successfully aired on primetime TV. The major markets include the United States, Canada, Japan, France, Britain and Germany. Licensing operations for T-shirts, caps and other items have also been a major source of revenue for animation companies. In Japan, several successful computer games have crossed over and have become animated series like Pokemon, Monster Farm, Power Stone and Detective Conan. More broadly speaking, animation is increasingly used in video games, and movies are also increasingly reliant on animation and computer graphic special effects. Another key trend we are witnessing is the outsourcing of animation content to Asia. This market is increasingly being tapped by North American film and television program producers. The major factor behind this shift of computer animation production to the Asia/Pacific region continues to be the availability of low cost, powerful computer animation platforms and much lower labour rates in the Asian and Pacific Rim countries compared to North America and Europe. The bulk of the outsourcing happens 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 the extremely competitive climate as well as the global slow-down, some of the large studios in the US have implemented large amounts of layoffs of animators and artists. Bangladesh is slowly emerging as an alternative to Korea, Philippine and Taipei for animation outsourcing. Bangladesh is also emerging as a post-production hub for animation. Post production involves a lot of ink, paint and compositing and scanning work, which is the labour intensive part of the entire process of animation and requires less skill. Thus we can see that the animation industry in Bangladesh is following a similar evolutionary part as the software industry. In the early part of the evolution of the Bangladesh software industry, it was the low value jobs which were shifted to Bangladesh. Over time it is projected that more and more high value jobs would be outsourced to Bangladesh. For low value post-production works, it is easier for a studio 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 animation outsourcing.

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1.1 Paradigm Animations


Name of the Business: Paradigm Animations Logo Design:

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

Breakthrough services: Paradigm Animations will develop a unique animation studio that will cater Bangladesh with global standards in terms of animation and 3D works which can be compared and paralleled to Paradigm Animations or DreamWorks studios works. Trademarks. The company plans to register a corporation under the name of Paradigm Animations and operate under the same name. Large markets. Recent studies by Forrester Research Inc. reveal that business-tobusiness (B2B) commerce will total $2.7 trillion in revenue by Year 5. The data emphasize that e-marketplaces will be responsible for 53% of all online business trade. Seasoned management. The company's management is highly experienced and qualified. Customers. The company will primarily target small and start-up businesses throughout the country. The company will also develop plans to negotiate deals with big businesses.

Owners Shah Shihab Sadman (Owner) Ownership Style: Proprietorship


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Nature of business: Profit Paradigm Animations seeks to grow in the underdeveloped sector of Animation industry that includes designing and graphical works including content development in media industry and also 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 of animation 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 of the firm. To accomplish this, the company will combine high-quality workmanship with the lowest costs in the industry.

1.3 Keys to Success


Establish a well-organized management and a competitive supply chain that will fuel the entire organization. Offer extended hours to serve a larger portion of the buying public than our competitors do. Educate the buying public by merchandising our products with informational/tutorial signage 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 OUTLOOK
The growth potential for the industry has already been explained in the industry overview section. In case of Bioscope Animation Studio, the growth potentials are explained in the action plan for the first five years. For the later year, it plans to expand its operation more in the original feature film content, as well as merchandizing (outsourced). After 15 years, we have a plan to start our very own amusement park. The regional animation industry is currently at a nascent stage, with a miniscule 1% share of the global animation and gaming industry and ~8% share of the outsourcing work. This industry has demonstrated its capability in delivering high quality, on time work and holds a promising potential both from the domestic and the overseas demand market perspective. Increasing no. of co-production deals, Page 11

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
Growth of English speaking populationcompetitive advantage. Leveraging rich heritage and culture to develop original content. Relatively affordable cost of production compared to other outsourcing countries. Change from service model to co-production and Intellectual property creation model.

WEAKNESSES
Lack of trained manpower. High retraining costs. Lack of Government support to encourage original content. Lack of Government intervention to promote the industry. Not treated as mainstream career option by many professionals. Lack of focus on R&D. High remuneration vis--vis skills. Attrition is a major concern area. Lack of awareness of the industry unlike IT industry.

OPPORTUNITIES
Strategic alliance of Bangladeshi studios with foreign companies to share risk and build long term relationship. Bangladeshi companies adopting inorganic growth route to expand their global market share.

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

Government intervention in other countries to promote the industry on the global front. Table 1: SWOT analysis

Opportunities for the Company to sustain and increase its market value emerge from: a. b. c. d. e. f. g. h. Its creative competence; Its technological capability; The scalability of its production capacities; Its ability to deliver high quality at competitive price; Its ability to deliver on time; Its ability to add value to customer needs; Its ability to service large value projects; Increased focus on value creation;
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i. Operational efficiencies. j. Its ability to provide innovative financial deals k. The growing demand for animated products in the television, DTH and Theatrical space both in the local and global entertainment market l. 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 the sector have been very minimal. The government of South Korea funds animation ventures on a partnership 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 knowhow amongst the partner nations. New Government Initiatives The Animation Production Association of Bangladesh recently suggested to the Information and Broadcasting Ministry of Bangladesh that all TV channels must ensure 10% reservation for local animated content. The government can further encourage investments and participation in this sector by providing tax benefits. It can provide grants to Bangladeshi animators for participation in international conference and for taking up training programs abroad. 2.3.2. ECONOMICAL ANALYSIS ANIMATION STUDIO Bangladeshs 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 cost of producing a 30-minute 3D animation programme in Bangladesh is US$60,000 compared to US$250,000-400,000 in the United States and Canada. Bangladesh has a cost advantage compared to the Philippines, which is another low cost producer of animations. The average monthly salary of an animation professional in Bangladesh is US$600 compared to US$1,000-US$1,200 in the Philippines. The cost 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. Bangladeshs advantages in low costs have been exploited by many multinational firms and production studios. The advent of digital animation coincided with the liberalization of the Bangladeshi economy and India offered the benefits of lower production costs, strong creative and technical skills and a large English speaking population. This has led to the development of state of the art animation studios in several Bangladeshi cities, and these studios are collaborating with global entertainment companies.

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Lack of Finance Bangladeshi animation firms cannot match their western counterparts in financial strength. It is pointed out 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 animation and interactive media. The long gestation period before fruition of projects discourages potential investors. This can be a major hurdle, and it has, in fact, led to the stoppage of a few production ventures. For example, Jadooworks had to stop production of animated epic of Krishna due to technical problems and lack of funding. The firm was supposedly on the verge of bankruptcy and this has led to the retrenchment of about 250 workers. Interestingly, Jadooworks is the same firm which drew appreciation from Thomas Friedman in an article in February 2004 for employing traditional artistes and transforming their skills to computerized digital painting he was arguing that globalization can have beneficial impact on traditional artists. The experience of Jadoo works underlines the fact that it is still too ambitious for Bangladeshi companies to single-handedly enter into animation projects. Even a small project in the animation industry entails a budget of US$30 million, which is not affordable for Bangladeshi firms. 2.3.3. SOCIAL ANALYSIS ANIMATION STUDIO Animation Products for Illiterates The interactive media and animation industry in Bangladesh has a large domestic market too to tap on. A field-study based research conducted by one of the authors in July-August 2004 on the diffusion of ICTs in Bangladeshs rural areas offers some interesting results in this regard.6 The study showed that television is a highly popular medium as a source of information in the Bangladeshi countryside, as it combines visual and audio effects and is less demanding of the cognitive skills of the user. Almost 35 per cent of Bangladeshs over 1 billion population is illiterate. There is great demand from this segment of Bangladeshi population for an innovative medium that facilitate communication and information sharing, while at the same time, being easily accessible to the masses via the television. Products of interactive media and animation can fill this demand gap to a large extent; they can be great tools for education, entertainment and awareness among illiterates in Bangladeshs rural and urban areas. SOCIAL FACTORS AFFECTING ANIMATION INDUSTRY The Bangladeshi Animation industry: Facing the manpower challenge Despite the impressive growth forecasts, the Bangladeshi Animation and Gaming industry will account for less than two percent of the worldwide market in 2010. Obviously a much larger opportunity exists beyond what is currently being envisaged and the potential remains high. Bangladesh can participate in a more significant way in the global Animation market, provided the country has built up requisite manpower, with the relevant expertise, to fuel its growth. According to analysts, Bangladesh has the potential to grow its Animation industry to around US$ 1 billion by 2010, but will remain Page 14

restricted to US$ 869 million on account of a looming demand-supply gap in the area of employable human resources. A similar situation exists in the gaming segment as well, which has the potential to achieve revenues of US$ 732 million by 2010, but is expected to touch only around US$ 424 million by that period, owing to the paucity of skilled manpower. The employment statistics for the Bangladeshi animation and gaming industry during 2006 were as follows:
Around 16,500 professionals were employed by the Bangladeshi Animation industry during

2006. 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 INDUSTRY While it is true that Bangladeshs animation industry is growing at a remarkable pace, the fact remains that this growth is largely a result of the mushrooming of studios-for-hire. In animation feature films, for example, while Bangladeshi companies carry out the technological animation work, character design, and storyboarding are done abroad. Bangladesh is yet to become a successful player in concept creation, the high value-adding segment of the industry which remains a preserve of western firms. Bangladeshs advantages of low costs in this industry will be too short-lived, and sooner rather than later, 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. The booming animation outsourcing industry is constantly demanding new skills and fresh infusion of new talent into the industry. As such, it is imperative that we have a healthy pipeline to supply talent to the industry. Skills required in the animation field can be clubbed under two broad categories, mainly technical skills and soft skills. Programming expertise, analytical ability, and proficiency on the software are basic requirements for technical skills. The number of professionals joining the animation industry has been growing at a compound annual growth rate (CAGR) of 18.2 percent and is expected to grow at the same rate. Though Bangladesh possesses the manpower with the requisite skill set, what remains 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 few reputed organizations have come forward and started a chain of multimedia institutions for two reasons. 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 to invest considerable time and money in bringing these students up to the levels where they start earning revenue for the organization. Page 15

Need For technological training to employees There are no academic institutes like Bangladeshi Institutes of Technology, Regional Engineering Colleges, Polytechnics, etc., churning out animators by the thousands. What we have are only fine arts schools 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 realize that they can have a lucrative career as animators, and the governments as well as educational institutions have to start programmes for their career development. The animation sector will benefit greatly by giving encouragement to the community of traditional artists as much as to technically trained professionals. In other words, integration of the rural and urban talent will prove highly beneficial 2.3.5. LEGAL ANALYSIS OF ANIMATION INDUSTRY Intellectual property Outsourcers have always been concerned with the protection of their intellectual property in Bangladesh. Bangladesh is one of the few countries which have failed to take stern action against its infringement. Bangladesh needs to strengthen its IP policy and ensure that companies operating in the outsourcing 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. Professional organizations too are trying to promote the Bangladeshi animation sector abroad. ASIFA, Bangladesh, organizes film festivals, conducts workshops and animation film competitions at the international level. X-media Lab has been floated to help local, independent digital media producers reach their ideas successfully to the market with assistance from outstanding international new media professionals, who act as mentors to the companies and project teams. The second lab held in Singapore from 17 19 November 2005, "Creating Successful Computer Games, attracted worldwide response. Bangladeshi developers have also been invited to interact with eight of the best games 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 other Southeast 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 Bangladeshs animation industry. Singapore has significant expertise in telecommunication and media industry. Harnessing the favorable trade and investment climate offered by the Comprehensive Economic Cooperation Agreement between the two countries, firms in Singapore should consider investing in Bangladeshs animation and media business. Maya Academy of Advanced Cinematic, a leading player in the Indian animation industry, is planning to extend its operations to Singapore. It is currently working on a project for BBC and has also been involved in the video games division. Page 16

Entertainment is one of the fastest growing sectors in Bangladesh-ASEAN relations. The entertainment industry is expected to grow at a compound annual growth rate of 20 percent from 2002 to 2007. The entertainment industry, with total revenues of US$3.6 billion in 2002, is projected to grow up to US$8.7 billion by 2007. The Philippines was, until recently, a fast growing animation industry, rich in creative talent, 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 in the industry have been migrating to Bangladesh and Singapore in search of jobs. Bangladesh, the Philippines, Singapore and even China must realize that there is little to be gained in the animation industry in the long run by competing with each other on costs. Rather, they should seek avenues for cooperation, and direct their efforts at acquiring intellectual property rights in this creative industry. 2.3.6. ENVIRONMENTAL ANALYSIS OF ANIMATION INDUSTRY Ability to scale operations: Bangladeshi firms are facing a talent shortage which affects their ability to scale up their operations based on client demands. This also affects the clients confidence in off shoring large chunks of work. Though Bangladeshi companies have put in place huge expansion plans, these are often marred by various 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 compete globally with the market leaders in the industry. It is said that the year 2004 is a watershed for the Indian animation and gaming industry (according to the Bangladesh Chambers of Commerce and Industry report on the Entertainment Industry). The year was marked by increased use of animation in the Bollywood segment. According to the FICCI report, the increasing demand for downloads of games on 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 a joint venture with First Serve International LLC, a global media company which aims to produce and distribute top-notch animation programming for the world market. The new venture will be headed by former Walt Paradigm Animations executive Ed Bordering. In 2004, a Chinese company also invested in Bangladeshi Games Ltd.

2.4. Analyzing the Animation industry as per Porters Five Forces

Suppliers:
The key suppliers in the animation industry are the animation training and education institutes whose 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.

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For the industry to grow and move up the value chain a critical role will be played by the training and 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 to the requirements of various end user

Customers: Bangladeshs animation studio are catering


segments 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 currently comes from custom content development, followers by animation entertainment, multimedia and education segments New Entrants: Entry barriers are limited by the expertise, skills, technology and investment required for the animation industry Hence the threat of new entrants is directly related to the number of training academies and institutes that open up and provide the relevant skill sets for the industry to exist and thrive and on the technology to enable animation development Substitutes All forms of media and entertainment form a part of substitutes for animation industry Page 18

Threat form substitutes are high .A high % of animation work is being used in Animation entertainment which has direct competition from entertainment industry as a whole .There is a media company who are vying for the same share of customer attention and viewership Competition within industry Being a dormant industry competition is still hard to define. But Intensity of competition will be determined by the technology, manpower, skills, creativity, studio and medium of 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 Services
Service Model Integrated Studio Own Content Integrated Studio Offshore Facility Service Provider Animation Entertainment Service Models Description State of the art units that enable production and development of all aspects of an animation film, from conceptualization to post-production stage. Regional Producer: Content / IP belongs to the Regional producer Foreign Producer: Content / IP belongs to the foreign producer Regional entities provide services for the labor intensive activities which are outsourced to them.

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Co-Production

Content Creation (IP)

The animation entertainment service models lie along different parts of the value chain. Depending upon the service model that a player adopts, he can be present across the value chain or in certain specific 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. Co-Production Service Model

Animation companies in this region are moving up the value chain, from providing piece-meal outsourcing services to exploring the co-production model. Typically, the regional studios bring the manpower and infrastructure to develop the animated content and the international producer will finance the marketing, distribution etc. Full ownership of content, share in collections, royalty for all licensing and merchandizing

Content Creation Service Provider

Integrated Studio Offshore Facility Integrated Studio Own Content

Animation Entertainment Revenue Models Revenue Model Revenue Sharing Co-production Model: Changes have been witnessed over a period of time. Initially the revenue share was based on territorial rights with regional studios getting continental rights which generally generate less revenue. Currently, coproduction deals are being struck on a global revenue sharing model. Work for Hire Specific activities along the value chain, for example, production, and post production are outsourced to regional players. Revenues for these activities are generally realized on a per hour basis. As majority of the outsourcing happens in the production part most of the regional players realize revenue on this model only. An integrated studio offshore facility Refers to a captive of a foreign producer. Revenues from Multiple Streams The integrated studios who own the IP and produce local content can realize revenues through various streams. These revenues can be from box office sales, TV and DVD/home video, merchandizing, and music rights.

3.2. Custom Content Development


Custom 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 Million by 2013. As per leading players in the industry, >90% of custom content development in this region is outsourcing 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 Page 20

platform on which the content finally resides may be a CD / DVD, website, or a Learning management System depending upon the customers 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 Shah Shihab Sadman (Owner) Age 22 Academic experience Financial solvency 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 the supplier Safe and plentiful in terms of technological advancements and internet. Near high-traffic corporations Beneficial demographics And most importantly closest to all potential customers that is the different TV broadcasting networks.

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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 to aggressively pursue and acquire customers through direct business promotions and convert them into repeat paying customers. It will continually strive to provide consumers with more costeffective avenues, offering substantial savings rather than just a less money. Paradigm will also be configured to stay ahead of, and capitalize on, emerging market trends such as integration of information/markets and increasing sophistication of online offerings. This will provide a continuously improving, superior customer experience and grow value. There is a serious benefit deficiency in existing "brick and mortar" Paradigm Animationsestablishments that create inefficiencies in the ordering and production process. Utilizing the benefits of Internet selling 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. Paradigm Animations uses geographic, demographic, and psychographic segmentation to locate their target market.

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

Demographic segmentation refers to age, gender, income, ethnic background, and family life cycle; this is used to help determine where to place their chain stores called the Paradigm Animations Store, where to distribute their movies, and even determines what kind of movie they should create next. Psychographic segmentation is based on personality, motives, lifestyles and geodemographics; this is also used to help Paradigm Animations determine who is going to buy more of their products. Paradigm Animations mainly targets children and their families, it uses the multisegment targeting strategy which is when a firm chooses to serve two or more well-defined market segments. 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 products division, a segment on their channel called "Playhouse Paradigm Animations," and many more.
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For older kids such as tweens and teens, it has the Paradigm Animations Channel, Radio Paradigm Animations, their live-action films, and much more. Paradigm Animations's live-action films attracts adults as well, in order to target adults Paradigm Animations uses a "family approach."

4.2 Target Market Segment Strategy


The company will be primarily targeting small and start-up businesses in Bangladesh; however the company plans to negotiate deals with big businesses. Vendors will include printers and graphic art designers around the world that will be able to help define these markets using the Paradigm Animation B2B portal. will also focus on large businesses. The advantage with this market segment is that each job usually offers a higher margin than compared with the small business 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 extensive marketing efforts to attract new customers. This, in turn, lowers the margin and makes this segment the least attractive.
4.2.1 Market Needs

Paradigm Animations has chosen to focus on the small business market segment as its primary customer base because these customers usually have the lowest switching costs, do not have long-term relationships with other Animations companies, and are the most aggressive in searching for low-cost Animations services.. The target clientele, though varied, can be approached in very much the manner according to their needs of Selection Value Service In addition, new entre businesses have traditionally been treated poorly and by reversing this trend, reinforced by ongoing sales training and with unbiased customer interaction through sales staff, 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 and expensive Animations studios. Although such companies are known for large selection, their prices havent bottomed out and have been monopolizing, while still remaining financiall y sound.
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Consumers increasingly expect the Animation studios they deal with to offer a clean, high-tech and 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 for big multinationals moves to other nations such as the USA (due to lower cost of manufacturing and online facilities), prices go down and units sold go up, increasing revenue opportunities.
4.2.3 Market Growth

There isnt much information in numbers about the Animations industry in Bangladesh. But the local Animation studios have emerged in few corners of the city. They are inefficient in operation and takes time in delivering large scale works. No instances of large scale animation studio are in operation and have been seen in the market. So there is a huge scope for market growth 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 that a sale does not depend on an aggressive sales force but rather on a customer's decision to purchase a product. These are usually the parents that take their kids to the movies and buy the merchandise. Paradigm Animationsknows that it's one thing to make a great movie that kids are excited 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 are managed by Touchstone, Pixar, Paradigm Animations Pictures, Buena Vista, and Miramax. By doing 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" over many years. Because of this, selling all of movies will almost never be a problem. As you all may know, the term marketing mix refers to a unique blend of product, place, promotion, and pricing strategies (often referred to as the "four Ps") designed to produce mutually satisfying exchanges with the target market. The Paradigm Animations Company is very good at the product and placing aspects of the four Ps. Again, because of their brand name they have the ability to sell their products easily. As new theatrical productions are released, it allows for new product lines based off the features characters to be made and sold in strategically placed stores throughout the United States. The stores are located in malls and super centers, in urban locations in order to for them to be visible by the public eye.

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The next two Ps are promotion and pricing. The Paradigm Animations Company will promote their films in almost every way possible varying from McDonald's toys to Billboards and posters all 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 Make People Happy. Its ability to make children as well as parents feel warm-hearted and full of joy after just one animated movie is what truly makes them successful. advertising with key words such as "Love", "Magic", and "Happiness" because that's what we are all about. I believe that this 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. We have profiled the leading players across Animation Entertainment, Entertainment VFX, and Custom Content Development. But being fragmented and constrained to minor actions this competitors are of small scale and many lack resources to compete with the global animation studio and their capabilities. The scale of involvement I tend to achieve out marks the existing competing firms by a great margin 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 and content 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 the business market by aggressively introducing new services and promotions. Build brand recognition. Build brand recognition by promoting the Paradigm Animations brand through diverse marketing channels, such as online advertising, public relations, and trade-show participation. Expand relationships. Expand the company's marketing relationships by aggressively developing 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 exposing customers to products and services that most closely meet their needs. Expand services. Expand services by creating a range of new services and aggressively marketing these services to current and future customer bases.
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Leverage and extend technology. Leverage and extend the company's technology platform by enhancing the functionality of the Paradigm Animations and B2B. websites and the technology that supports them. This will be done to improve order flow and business planning, expands service offerings, facilitate more complete integration with print vendors, expedite payment processing, and improve the efficiency of the system.

5.1 Strategy Pyramid


Paradigm Animations main strategy is to out-serve the competition. It will accomplish this through 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, we are concern" incentive programs will support these areas of concentration. In addition, it intends to build strong relationships with key consumers who have influence on the purchasing decisions of others, be they small, medium or large business firms. These individuals are important to the long-term success of the business. It will take advantage of the great clinics and concerts provided by our manufacturers and suppliers to bring excitement and energy to our customer base; it will also bring in local stand-out musicians. It will follow up on these events with callbacks 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 that a sale does not depend on an aggressive sales force but rather on a customer's decision to purchase a product. These are usually the parents that take their kids to the movies and buy the merchandise. Paradigm Animationsknows that it's one thing to make a great movie that kids are excited 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 are managed by Touchstone, Pixar, Paradigm Animations Pictures, Buena Vista, and Miramax. By doing 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 printing services on the Internet. To expand our customer base and to extend the image of the
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company, we plan to aggressively promote the Paradigm Animations brand through a combination of online and traditional media advertising, public relations and participation in trade shows. The company also plans to expand our affiliate and co-branded online website strategies 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 Animations Brand color: The maroon, black and white theme symbolize the simplicity that is Paradigm Animations, a complement to ones business that takes promotes a company by helping 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 studio and 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 incorporate cost leadership pricing strategy as well. This is because the market targeted would be willing to pay a less price since they are small in size and the serving company is one of the new in its sector. Since, Paradigm Animations would be the only supplier of such service in the domestic market, it can avail this advantage for a significant amount of time. The objective of employing the market skimming pricing is to benefit from high short term profits because the product is new in the market and for being able to effectively segment the market. Moreover, charging high prices initially would help Paradigm Animations to build a high quality image for its products. If there is threat of new entrants in the market, Paradigm Animations can effectively lower its prices 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 market considering the convenience of its consumers. Convenience takes into account the ease of buying the product, finding the product, finding information about the product, and several other factors.

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The product will be reached through direct marketing out to the field level straight at the hands of its consumers. The rationale for the chosen distribution channel is that the targeted audience is mostly in the rising businesses. Thus to reach this segment direct marketing as well as online marketing will be used.
5.4.4 PROMOTION Stage 1: Building the awareness of the product

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

1. Online Banner Ads 2. Online Blogs 3. Newspapers And Leaflets


Figure 3 promotion strategy

Publication in the above mentioned sources about the advantages of Paradigm Animations can generate awareness and curiosity among the target audience. Duration of strategy: 3 - 4 months
Stage 2: Launch the brand through TVCs and printed advertisements

After 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, along with 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 catching their eyes. Moreover online social networking sites such as MySpace and Facebook could play a interesting part. Online advertising in such media can generate the necessary buzz for the
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conscious group to gain curiosity about Paradigm Animations. Furthermore, business consultants and magazines can be potential opinion leaders who can influence the usage of Paradigm Animations.
Targeting smaller business firms

In order to target the smaller business firms, TVCs and print ads will be designed promoting the benefit of Paradigm Animations. The cost benefit of using Paradigm Animations will be highlighted in a series of TVC and print ads. For a more effective reach of the segment, opinion leaders will be cultivated. Consultants and online blogs would be ideal candidates for the opinion leaders. This strategy of buzz marketing will be particularly effective against the concerned people of Bangladesh. Moreover word-of-mouth is another way to spread out the name of this brand.
Stage 3: Promoting greater usage of Paradigm Animations

To encourage a greater usage of Paradigm Animations it is necessary to demonstrate the target audience its core competencies. The greater usage will be initiated through arranging business conferences and seminars to incorporate the product with the business world. Duration: 3 months

5.5 Product Branding Strategy


5.5.1 Branding strategy

The purpose of our brand strategy is to provide a plan for the systematic development of a strong coherent brand in order to enhance revenue and profits. The strategy is driven by the principles of differentiation and sustained consumer appeal. To build a strong brand we need to follow the following steps: 1. Brand Audit 2. Brand strategy 3. Brand execution

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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 the product in the market. To get a better understanding of the brand we are using a target matrix which will identify the pros and cons of our brand and align it with its competitors. Competitive Brand Users Size/Profile Decision Criteria or Motivators Decision Process Barriers/Concerns Brand Importance Role of price Satisfaction limited Cost effective Willing Price and preservatives Moderate High moderate Category non-users

large Quality Diversified High price and less affordability Low High Negligible

Table 2 Comparison between Competitive Brand Users & Category non-users

Currently the trend of going online is alarming. Even a slight reflection of competitiveness leads people to adapt such services and in some business groups high end service/products have
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become a symbol of core competence. So this will act as a sweet spot for Paradigm Animations to perform well in the market with an unmet need to be fulfilled by this product.

Brand Strategy

The purpose of the brand equity pyramid is to outline the basic building blocks of a brand should stand for in order to guide the process of building brand equity. It is the basis for determining key elements of the brand strategy brand vision, brand positioning, and brand personality and brand measurement. Now to build a strong brand strategy the following brand pyramid with its elements have to be defined with respect to our brand. Through this process we will establish a brand that will deliver high level of satisfaction to the consumers and as a result will create a resonance in the market leading to high growth and development of the product. But all of it starts at the base where we need to define our identity, which is stated in brand positioning statement delivering the true motives of our product.

Brand Execution

Successful branding doesnt happen without the careful integration of strategy, creative and execution. Many brands fall short during the brand execution process, when real-world requirements are not taken into account during the design feasibility stage. This should provide Paradigm Animations with a distinct competitive edge over the key players in the industry, which in turn will result in plentiful sales of Paradigm Animations regardless of its competitors promotional movements.

5.6. Distribution strategy


A distribution strategy defines how you are going to move products from point of creation to points of consumption, in a cost-effective manner. The effectiveness of distribution coverage and practice is of paramount importance in achieving the desired sales of the product in this case PARADIGM ANIMATIONS. The product will be reached through a mixed strategy of direct and indirect marketing strategy to reach out to the field level straight at the hands of its consumers. We actually distribute our product in two ways: 1. B2B (Business to Business) 2. B2C (Business to Consumer)

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Figure 5 distribution channel

The no. 1 channel is an example of B2C (Business to Consumer) and the rest are B2B(Business to Business) channels. We select a mix of the first and second channel of the figure that is in other words direct and indirect distribution strategy. Direct strategy will be applied (manufacturer to consumer) in the early stages when penetrating the market to promote the sales of PARADIGM ANIMATIONS in the temporary stalls located in and around sports fields, parks and gymnasiums. As PARADIGM ANIMATIONS would be implementing skimming pricing initially, retailers would benefit from the high mark ups. Thus, retailers would be willing to feature PARADIGM ANIMATIONS products and provide a greater shelf space.

5.7. IMC (integrated marketing communication)


Every single corporation must promote their product or service efficiently in order to capitalize themselves. In order to do so, the company must use the "promotional mix" which is a combination of advertising, public relations, sales promotion, and personal selling. After all of that promotion, the company's foremost and primary goal is to have as many consumers possible.
5.7.1. AIDA

What helps reach this goal is the AIDA concept, which stands for the stages of consumer involvement with a promotional message. These stages being: attention, interest, desire, and actions.

attention

interest

desire

action

Figure 6 AIDA model of IMC

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Now, the Paradigm Animations Company has no trouble grabbing the consumers attention due to their vigorous brand name, and excessive advertising through traditional media such as television; radio; newspapers; magazines; billboards; transit cards; and of course we couldn't forget - the internet. Although Paradigm Animations attracts plenty of consumers, this simple awareness isn't enough to make a sale, they must create an interest in the product. Through various public relations, Paradigm Animations captures many of its consumers interests. These relations range from environmental issues, to public health and safety issues, to even educational issues. They are currently running two educational campaigns called the "Disney's Leadership Experience: The Inside Track" and "Paradigm Animations Dreamers and Doers Program." Now that company has captured the consumer's attention and interest, Paradigm Animations must entice a desire for the product. For Disney's animation films, desire is mostly brought upon by 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 liveaction films give off an exciting, want-to-know-what-happens-next kind of feeling. Animation films on the other hand, give off a heart-warming, family enriched sort of feeling. These feelings encourage the consumer's desire to purchase tickets for the film. In regards to action, the Paradigm Animations Company uses "mass communication" which involves communicating a concept or message to large audiences. Studies have shown that consumers usually buy products if they hear or read positive reviews on the product by other consumers as opposed to the actual company. Paradigm Animations has taken note of this and on it's website it has a section specifically designed for new movie releases, and feedback on these new releases - this section is called Movies | New & Classic Paradigm Animations Films. Not only does Paradigm Animations incorporate personal feedback through it's website, but it also has a Facebook, Youtube, and Twitter page. Indeed, the Paradigm Animations Company has completely convinced many consumers to take action.

6.0 Strategic Alliances


The company has strategic alliances with Network Systems, Software Developers, and Custom Designs and Printers. These alliances are valuable to us because they will allow the company to utilize 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 strategic partnerships with content providers such as America Online. The e-marketplaces will become an enduring reality in the business landscape. While the growth of these venues will spur continuous change, the company will be participating in these e-marketplaces as buyers.
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Paradigm Animations will begin to experiment with these online marketplaces with a minimum of 1% of its procurement dollars. This level of effort will enable the company to optimize purchasing in a dynamic pricing world. There will be the added bonus of also understanding the different vertical markets so that, when the time comes, we will know where to look to form strategic alliances

7.0 Organizational Plan


7.1. Form of ownership: Proprietorship (later stage converted to partnership for greater
growth of the business) Terms of partnership are as followed: 1. Name and address of partnership. 2. Duration of partnershipPartners can point to a specific termination date or include a general clause explaining that the partnership will exist until all partners agree to dissolve it or a partner dies. 3. Business purposeSome consultants recommend that partners keep this section somewhat vague in case opportunities for expansion arise, while others emphasize clearcut and unambiguous entrepreneurial goals. 4. Bank account informationThis section should note which bank accounts are to be used for partnership purposes, and which partners have check-signing privileges. 5. Partners' contributionsValuation of all contributions, whether in cash, property or services. 6. Partners' compensationDetermine in detail how and when profits (and salaries, if applicable) will be distributed. 7. Management authorityWhat are the operational responsibilities of each partner? Will partners be able to make some decisions on their own? Which decisions will require the unanimous consent of all partners? What are the voting rights of each partner? How will tie 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 resolutionStipulates 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 avoid costly litigation. 13. Miscellaneous provisionsThis portion of the agreement might delineate the circumstances under which the agreement could be amended, for example. 14. Buy-Sell Agreement.

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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 and empowered people interacting with its customers, Paradigm Animations intends to build the competitive advantage of being able to comprehensively meet its customers' needs. There will be need to evaluate jobs and remuneration packages against market benchmarks to employees for their agreed and set out tasks so as to ensure they are competitive. These principles extend to accident, 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 encourage productivity and respect for customers and fellow employees. Additionally, the environment will encourage employees to have fun by allowing creative independence and providing challenges that are realistic and rewarding. organizational structure is illustrated in the Personnel table below. Department Administration Marketing Level-3 Sales Executive Liaison Level-2 Relationship and Communication Manager Assistant Financial Manager Software engineers Head of Legal Level-1 Chairman/CEO Brand Manager

Finance

Accountant

Financial Manager

Content developers Legal

Graphic and model developers Legal Officials

Chief production officer

Table 3 organizational structure

7.3 Management Team


The founder of PrintingMedia.com is passionate about the activities it will promote and offer on the market. Management style will reflect the participation of the directors/shareholders. The company intends to respect its community and treat all employees well. PrintingMedia.com will develop and nurture the company as community. However it realizes that PrintingMedia.com is not fully conversant in television and as such intends to engage experienced staff as well as undergo training in order to from a reputable institution.
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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 of availability of business and consumer credits. This current decrease and any future decrease in economic 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 both inherent and perceived. The business of entertainment being a High Risk High Return business does 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 both depreciating as well as appreciating assets. Our success is primarily dependent on the audience accepting our products which is extremely difficult to predict or guarantee. The revenue derived from a feature film does not necessarily bear any correlation to the production or distribution cost incurred. The companys business is dependent on the availability of work for hire projects and/ or ability to co-produce projects. Unexpected delays in the commencement of work for hire projects or the
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commercial failures in co-production project would have a material adverseeffect on our financial results. Further, as a result of the global economic infirmity, the markets are increasingly meandering towards co-financing models of business association, which stipulate large capital outlay, further necessitating the need for innovative financial structuring of deals. The business is substantially affected by the prevailing global economic conditions. Increases in interest rates, inflation, changes in tax, trade, scarcity of credit are some of the factors which impede the growth of the business. The economic downturn has left no public limited company unaffected which is reflected in the performance of our stocks. However given the resilience of the economy in the face of recession as well as its strong fundamentals, the company does not expect 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 of diversified business could adversely affect us. Unlike most of the major studios in the international market which are a part of large diversified corporate group that include Television networks & Cable channels that can provide stable source of earnings and cash flows that offset fluctuations in their financial performance we are predominantly dependent on the availability of Work for hire projects and the success of our coproduction 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 projects in 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 and structure of these markets would adversely affect our financials. We do believe that the US & European markets are adequate enough to provide us with continuous and sustainable business opportunities for the foreseeable future, the Asian markets are also warming up to the possibilities of the CGI Industry and we have already made a headway in establishing strategic relationship with producers of repute in these emerging markets.
8.2.4. Financial Risk

The production of animated products is capital intensive and our capacity to generate revenues from our work for hire projects may be insufficient to meet our anticipated cash requirements. The companys revenue is predominantly denominated in USD, given the volatility of theBangladeshiTaka; the financials of the company can swing significantly.
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To mitigate the risk the company has through proactive and effective risk management techniques entered in forward contracts with its clients. The company has through its strategic initiatives and sustained reconnaissance established formidable relationship in the financial markets that facilitate innovative financial arrangement to provide for its capital requirements.
8.2.5. Regulatory and Compliance Related Risk

The Companys transactions are though predominantly in the US, it also transacts with other countries. As the Company pursues towards a global reach the risk of ensuring100% compliance with the regulations and laws also increases. The Company has an institutionalized structure to ensure regulatory and legal compliance to mitigate such risks
8.2.6. Reputation Risk

The reputation of an entertainment Company is built on various factors including the Credentials of the Creative Directors, The Actors, The success of the products as measured through BOX OFFICE collections etc. We mitigate such risks by endeavouring towards and ensuring that we work with the most reputed of Brands, Creatively Competent Directors of Repute and Properties that appeals toa wide 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 of entertainment may have on us. Animated products are expensive to produce and the uncertainties inherent in their production could result in the expenditure of significant amounts on projects that are abandoned or delayed for reasons beyond our control. We try to mitigate these risks by investing in developing proprietary tools that enable increase in efficiencies and standardization of processes. We also ensure that we abreast with the changes in technology and constantly upgrade the capabilities and capacities our human resources as well as technological resources The production completion of animated projects is subject to number of uncertainties, including delays and increased expenditures in lieu of creative and technical difficulties, availability of talent, cost technology and increase in wages. As a result the projected production cost at the commencement of the project may increase, the date of completion may be substantially delayed or the project may even be abandoned by the producer causing the write off of expenses incurred with respect to the project.

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We mitigate these risks through an effective amalgamation of operational planning &management, enhancing creative and technological competence as well as good Corporate Governance Beginning with the release of Alpha & Omega, we expect that all our films will be produced in stereoscopy. The company has implemented and would continue to implement changes in its production processes & systems in order to produce stereoscopic projects. These changes will increase 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 no assurance that these third party technological licenses will continue to be available to us on commercially reasonable terms or at all. The loss or delay to maintain any of these technology licenses could result in delays in the completion of a project and could materially adverse our business, financial conditions or results of operations. Our success also depends on some key employees including Management personnels, Creative & Technical Personnels. We do have employment agreements with these key personnels; however it doesnt guarantee the continued services of such personnels.

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 them could have a material adverse effect on our financial results. We cannot predict the effect that rapid technological change, emerging distribution channels or alternative forms of entertainment may have on the motion picture industry or 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 ongoing expenses and may ultimately be successful. Animated films are expensive to produce and the uncertainties inherent in their production could result in the expenditure of significant amounts on films that are abandoned or significantly delayed. Animated films typically take longer to produce than live action films, which increases the uncertainties inherent in their production and distribution. The production and marketing of animated feature films and properties is capital intensive and our capacity to generate cash from films maybe insufficient to meet our anticipated cash requirements.
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The costs of producing and marketing our feature films have steadily increased and may increase in the future, which may make it more difficult for a film to generate a profit to compete against other films. We compete for audiences based on a number of factors, many of which are beyond our control. 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. Contingency
At 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 go for 2. Legal procedures of winding up 3. 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

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9.1. Initial investment

Apple Desktop Typical Desktop Wacom Tablets Other hardware

PARADIGM Hardware Cost:


BDT 110,000 BDT 30,000 BDT 20,000 BDT 30,000 BDT 120,000 BDT 178,000 BDT 250,000 BDT 15,000 per month BDT 10,000 per month BDT 12,000 per month BDT 12,000 per month Initial setup: BDT 638,000 monthly: BDT 49,000

Toon Boom Bulk License Adobe Creative Suite Bulk License: Windows OS Artists and graphic designers HR manager Accounts manager Marketing manager TOTAL COST

Software Cost:

Salaries

Table 4 start-up capital breakdown

9.2. Source of fund


The major source of fund will be from personal account and if in dire need loan will be taken from premier bank as per agreement but under current assumption the startup cost will be bourn personally.

9.3 Important Assumptions


1. 2.

Sales is assumed to grow in the following rates in given sectors 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. 4. 5. 6. 7.

Cost of debt is considered to be 13% Cost of equity is considered to be 16% After 5 years, growth rate for calculating terminal value is considered to be 2% A 60% debt and 40% equity structure is assumed The initial long term loan amortization period is 10 years

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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

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9.5. Projected profit and loss


Pro Forma Profit and Loss Year 1 $250,000 $80,000 $10,000 $90,000 $160,000 64.00% $173,921 $429,998 $0 $90,000 $26,091 $20,002 $2,300 $30,000 $0 $0 $772,312 ($612,312) ($612,312) $83,535 $0 ($695,847) -278.34% Year 2 $2,910,000 $125,000 $30,000 $155,000 $2,755,000 94.67% $224,131 $360,000 $0 $60,000 $35,000 $10,000 $2,000 $15,000 $0 $0 $706,131 $2,048,869 $2,048,869 $63,252 $496,404 $1,489,213 51.18% Year 3 $5,820,000 $200,000 $55,000 $255,000 $5,565,000 95.62% $270,652 $565,000 $0 $85,000 $35,000 $10,000 $2,000 $15,000 $0 $0 $982,652 $4,582,348 $4,582,348 $42,084 $1,153,984 $3,386,280 58.18%

Sales Direct Cost of Sales Other Total Cost of Sales Gross Margin Gross Margin % Expenses Payroll Marketing/Promotion Depreciation Software/IS expense Contract Labor Legal and Professional expense Bank charges Rent Payroll Taxes Other Total Operating Expenses Profit Before Interest and Taxes EBITDA Interest Expense Taxes Incurred Net Profit Net Profit/Sales

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9.6. Projected Cash Flow


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

Figure 9 projected cash flow Pro Forma Cash Flow Year 1 Year 2 Cash Received Cash from Operations Cash Sales Cash from Receivables Subtotal Cash from Operations Additional Cash Received Sales Tax, VAT, HST/GST Received New Current Borrowing New Other Liabilities (interest-free) New Long-term Liabilities Sales of Other Current Assets Sales of Long-term Assets New Investment Received Subtotal Cash Received Expenditures Year 3

$62,500 $128,267 $190,767 $0 $0 $0 $0 $0 $0 $0 $190,767 Year 1

$727,500 $1,552,257 $2,279,757 $0 $0 $0 $0 $0 $0 $0 $2,279,757 Year 2

$1,455,000 $3,675,524 $5,130,524 $0 $0 $0 $0 $0 $0 $0 $5,130,524 Year 3


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Expenditures from Operations Cash Spending $173,921 $224,131 Bill Payments $717,104 $1,175,362 Subtotal Spent on Operations $891,024 $1,399,493 Additional Cash Spent Sales Tax, VAT, HST/GST Paid Out $0 $0 Principal Repayment of Current $166,656 $166,656 Borrowing Other Liabilities Principal $0 $0 Repayment Long-term Liabilities Principal $45,000 $45,000 Repayment Purchase Other Current Assets $0 $0 Purchase Long-term Assets $0 $0 Dividends $0 $0 Subtotal Cash Spent $1,102,680 $1,611,149 Net Cash Flow ($911,914) $668,609 Cash Balance $38,086 $706,695 Table 5 Pro Forma Cash Flow

$270,652 $2,096,935 $2,367,587 $0 $166,688 $0 $45,000 $0 $0 $0 $2,579,275 $2,551,249 $3,257,944

9.7. Balance Sheet


The following table outlines some key financial information for PrintingMedia.com. Pro Forma Balance Sheet Year 1 Year 2 Assets Current Assets Cash Accounts Receivable Inventory Other Current Assets Total Current Assets Long-term Assets Long-term Assets Accumulated Depreciation Total Long-term Assets Total Assets Liabilities and Capital Current Liabilities Accounts Payable Current Borrowing Other Current Liabilities Subtotal Current Liabilities

Year 3

$38,086 $59,233 $14,667 $200,000 $311,986 $0 $0 $0 $311,986 Year 1 $69,489 $333,344 $0 $402,833

$706,695 $689,476 $22,917 $200,000 $1,619,088 $0 $0 $0 $1,619,088 Year 2 $99,033 $166,688 $0 $265,721

$3,257,944 $1,378,952 $36,667 $200,000 $4,873,563 $0 $0 $0 $4,873,563 Year 3 $178,917 $0 $0 $178,917


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Long-term Liabilities Total Liabilities Paid-in Capital Retained Earnings Earnings Total Capital Total Liabilities and Capital Net Worth

$405,000 $807,833 $1,080,000 ($880,000) ($695,847) ($495,847) $311,986 ($495,847)

$360,000 $625,721 $1,080,000 ($1,575,847) $1,489,213 $993,366 $1,619,088 $993,366

$315,000 $493,917 $1,080,000 ($86,634) $3,386,280 $4,379,646 $4,873,563 $4,379,646

Table 6 Pro Forma Balance Sheet

10.0 Exit strategy


As the studio is mostly equipment based, for instance computers, high definition cameras and displays, so all these will have also very good resale value in the market. But that is actually not the prime exit strategy rather the lender of the last resort. Now lets focus on the varied option I have for exit strategy regarding animation studio. Firstly we can outsource the whole installment as a support unit to any firm for managing the management information system or even perform IT functions for different firms and organization. This is a very resourceful option because with the capabilities held by all by the employees it can be easily switched to any viable IT operating options in the market. Moreover there is an alternative to switch to different cyber caf business or due to large number of high end computers and displays it can easily be switched to another very profitable and feasible business of gaming caf. But even then the last resort is still selling out which will also be tough not profitable but with the least of loss action.

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