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!!!!!!Navigator Management Inc.

MGMT450-130 Professor Jade Lo

Final Paper Option B - Entrepreneur

Due: 12/10/12 !!!!!!!!!!!!!!!Group Members:

Pat McGann (pxm23@drexel.edu) Shaun Menkhaus (sjm83@drexel.edu)

Daniel Pyne (dp444@drexel.edu) Milos Rujevic (mdr46@drexel.edu)

Maddie Zelicoff (mrz28@drexel.edu) Nina Monzo (nmm58@drexel.edu) !! !!!!

Table of Contents !

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I. Description.........................................................................................................3 !II. External Environments & Factors......................................................................5 !III. Competitive Advantage.....................................................................................9 !IV. Current Problems...........................................................................................11 !V. Goals..............................................................................................................14 !VI. Proposed Strategy.........................................................................................15 !VII. Pre-Financial Projections..............................................................................17 !VIII. Appendices...................................................................................................19 !IX. Bibliography...................................................................................................21 !!!!!!!!!!!!!!!!!!!!!!!!!

Navigator Management Inc. !Description:

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Navigator Management is a web-based company that owns, operates, and

maintains a web portal for colleges and universities. The website our company

sells is www.universitynavigator.com. It is an interactive website where users can

access various information about their college from one navigable web site. The

website will contain many different informational sections to choose from, via

tabs.

Upon entering the website, the user will be asked to locate their college or

university through searching by state and city. After choosing their college the

website will remember this selection for future log-ins. After this information is

processed, the user will enter the “homepage” of whichever university they

chose. This homepage will contain many different tabs from which to browse, and

will also contain some content. The content on this page will include, but is not

limited to, the most current news about the school, the five most recent local

news stories, the current weather at the school, and then past and present

athletic events with scores included for past events. When first entering the

university homepage, the user would identify whether they were a student,

alumni, faculty/staff, or parent. From that selection, the homepage changes to

adapt to the user’s position.

On the student homepage there are tab selections that include links where

the student can search for various information needed on the page. The first tab

will include a “University Information” link. Under this tab there are sub-tabs . The

first sub-tab will include links to the other colleges within the university (if

applicable). The next option will be a link to the academic calendar, which

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includes information to students such as school holidays and application

deadlines. The next sub-tab will include a section providing a list of the classes

being offered for each term (term master schedule). Next will be a link to a rating

site used by the students to rate professors and classes. For example, our

website would link to Koofers (an interactive website that provides students with

information about classes and professors). The next sub-tab will show the

students’ current class schedule, grades, and upcoming assignments posted by

professors. The last sub- tab will be a general information link about the college,

with drop down options including tuition, room and board, and rankings.

“Campus Life” will be the next main tab. This section will include drop

down tabs as well, such as campus housing. The second sub-tab would be an

off-campus housing section that would link the user to another internally

generated page. This page would include a list of off-campus housing around the

college and a rating system showing the opinions of different houses, landlords,

and realtors. This page is interactive for students because they can input their

opinions when they visit the site. The next sub-tab will be a sports tab, which will

include a link to the athletic web site, and a series of blogs where people can

chat about the university’s sports. Fourth will be a link to a page that displays all

of the restaurants that are around the campus. Included in that tab are the

restaurant’s information, rating, and menu. The fifth sub-tab will include a section

for panhellenic groups on campus; it will link the student to the fraternity or

sorority’s website and include a section where people can blog and find out

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information about each group. The last sub-tab will include an online campus

map. This will conclude the “Campus Life” sub-tabs.

The next main tab will be labeled “Night Life”. The first sub-tab will include

a list of places to visit, this includes bars, theatres, concert venues, pro sporting

events, and restaurants. The second section will be a “Specials” tab. This section

will include a calendar with the different specials going on at any venue that day.

The third sub-tab will include a blog about where people are going on any given

night, and give people an opportunity to promote there. The next main tab on the

homepage will be the “Classifieds” tab. This will direct people to a page where

students can sell their old books, furniture, tickets, etc. There will be a final main

tab that links the student to their email.

When logging in as a teacher, the tabs will change to their needs; such as

gradebooks, student messages, adding lectures or assignments, and class

calendar. When logging in as an alumni or parent, the homepage will show

upcoming campus events, academic calendars, and links to personal and billing

information.

!External Environments & Forces:

Porter’s Five Forces of the Industry is a model used to identify the specific

strengths and weakness of the company as compared to the industry as a whole.

The weak points can be used by the company to recognize areas that need to be

improved, while the strong points are places that the company should try to

continue their success. “Rivalry”, the first force in this model, recognizes the

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competitive nature of the industry with regard to the number of competitors and

the similarities of the products and services they offer. The “Threat of New

Entrants” is a term used to describe how easy or hard it is to become a new

player in this industry. “Threat of Substitutes” recognizes the switching costs and

trade-offs of a user changing from this service or industry to a different, but

sufficient, service or industry. The next force is “Buyer Power”, which relates to

the leverage that the buyer has in reducing the prices of the product or service

offered in the industry. “Supplier Power” is the last force and helps to portray the

level of influence the supplier has on setting their price for materials or goods to

the firm. Together, these five forces help to establish a useful model for

companies to evaluate, not only their industry, but also how they stand in their

industry.

Rivalry between competitors is one of the most important aspects of

business and relates to each one of the forces in the model. In the website

industry, we will be facing a high level of rivalry since websites are fairly cheap

and easy to start. There are many other competitors already such as the specific

university’s website, various local news and weather sites, and sports websites.

There are even sites that combine a lot of these areas, such as CSN Philly. The

area that we are aiming to exploit is that none of these other websites combine

all of the topics (school, weather, news, sports, movies, dining, nightlife, and

housing) that we are planning to include. Along with this combination, we are

trying to make each user’s homepage very customizable and as local as they

want. As of now, there are no websites explicitly directed to the small niche

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market of college students that contain all of the aforementioned areas, and we

plan to use this to our advantage.

The threat of new entrants is another facet of the model that is extremely

high in this industry. Once our idea is brought to the market and hopefully

recognizes some success, it will be reasonably simple to replicate. Website

hosting is cheap and copyrights are somewhat limited in how much they can

protect the owner. Also, new additions to already established competition, such

as different Facebook and mobile apps, are increasing significantly and

becoming more popular to users. To attempt a safeguard against people stealing

our ideas, we plan to establish exclusive rights deals with the universities that we

promote as well as a customizable mobile app and online interface.

Along with new entrants, we must also deal with the threat of substitutes

that may adapt in an attempt to draw market share away from our industry and

our website. In this industry, we face the competition of people receiving their

news and event information from print, such as newspapers, magazines, and

campus flyers. Since the Internet has became so prevalent, a lot of these

mediums have adapted and now provide online versions of their print

publications. For example, every newspaper or magazine now has a website

and more and more campus information is sent through e-mail and not flyers

around campus. As this sector continues to adapt to the new landscape, we will

be forced to compete with them in terms of the quality and timeliness of our

material. We feel that a customizable, seamless integration of the typical sites

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that a college student uses will provide us the edge needed to protect against

these threats.

The buyer power in the online website industry is very unique since most

sites are free to use. For this reason, the buyer has little influence on the price of

the website, especially since our website will be completely free to the user.

Buyer power is still prevalent in our industry because the switching costs

between website services are so low that we must make sure that we provide

quality information and customer service. Since there are countless other

websites similar to ours, the buyers have the power and ability to leave for very

any reason, such as a bad experience with customer service, so we must make

sure that we pay very close attention to seemingly trivial events like this.

The last force in this model is supplier power, which is low in this industry

since there are so many capable suppliers of the information that we need for the

site. Besides access to the college information (which will be the hardest

supplier to acquire), the other topics of the site have numerous outlets that can

be used for information. Due to the rapid advancement of technology, these sites

are fairly standardized. It would be very rare for one site to try to strong-arm us

into high prices, simply because we could move on to the next site for cheaper

and comparable information. A thorough analysis of possible suppliers would

give us a bargaining advantage that should allow us to drive down price and

drive up product quality.

The general environment of the website industry is always changing.

There are several external factors that may pose possible threats to our

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company. First, there are concerns with security risks pertaining to the user’s

information especially with regard to their school information and password

protected data. We must maintain high levels of security, which could be costly,

both up-front and as we continue to grow, but is certainly necessary to establish

a reputable and successful company. These security risks will pertain to “anyone

whose intellectual property can turn a profit or confer an advantage”, according to

PR Log. To protect our user’s information, we must stay at the forefront of this

conflict which will be a necessary cost. Another possible factor that may arise is

the shift from computer usage to mobile phone usage. Although we plan to

produce a mobile app, we could see a decline in profitability, similar to Facebook,

since it is harder to generate mobile ad revenue than computer based revenue.

Over 50% (488 million out of 901 million users) access Facebook through a

mobile device. We are expecting similar usage rates for our services and must

try to place ourselves in a position to take advantage and of this trend. In the

growing industry of news and social websites, we feel that there will always be

aspects of the external environment that we must overcome. To do so, we will

stress user feedback and customization, as well as continuously evaluating the

industry outlook for possible opportunities and threats.

!Competitive Advantage:

In order to compete in our industry it is essential that we reach our specific

target market successfully and use specific resources to gain a competitive

advantage over our competition. We need to have real time data, a strong team

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of developer, a user-friendly interface, mobile application, and social media

channels.

The initial target market that we plan on focusing on is colleges and

universities, starting out in the Philadelphia region. We plan to start out with

Drexel University because of our background and contacts we have here. From

there move on to University of Pennsylvania, Temple University, St. Joseph’s

University, LaSalle University, and Villanova University. Looking long term our

plans involve penetrating the market for high schools and corporations in the

area, all of which is depending on our level of early success. To be more specific

the target users we are focusing on is students, faculty, alumni, and parents. We

want to meet the needs of each and every one of these target users. Our

different users will have various needs and we want to make sure we meet all

their specific needs.

In order to meet the needs of our target users the most important aspect

of our site is the user friendly interface. In analyzing our competition the greatest

flaw they have is that it is hard to navigate through the sites and find what you

need. Our site will allow our user to access the information they need with ease.

This will motivate our users to return to our site and use it as their primary portal.

We will rely on our creative abilities as well as the strong team of developers that

will be working on this. We are going to hire experienced developers that our

dedicated to making our site technologically advanced, user friendly, and secure.

Having a secure site that is always running at full capacity will help retain our

customers.

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Real time data flow is another capability that will give us the competitive

advantage over the competition by having up to date information and statistics

that all students find useful. This real time data will be constantly updating in

direct correlation to the events and activities within the college or university. Also,

this will enable faculty and parents to view real time statistics that they need or

want to see. These will not only be viewable through our site, but also with the

mobile application we will implement. Mobile is one of the fastest growing

industries and the number of applications for smartphones are projected to triple

by 2015. Mobile usage is rapidly increasing while computer usage is steadily

decreasing. Given this, we need to adapt to this trend and have the most up to

date and advanced application. Our application will be both iOS and android

compatible so that we can reach a majority of the mobile market.

Similar to the mobile boom comes the increasing use of social media in

our society. Over the past several years social media has changed from the “the

next new thing” to a huge part of our society and lives. The social media

platforms we will implement are Facebook, Twitter, and Instagram. Through these

channels we will reach a majority of our target market who are social media

users. We will have a team dedicated handling our social media, updating live

information every day. They will be easily accessible directly through our website

as well as the mobile application.

Current Problems:

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As with any start-up there are a significant amount of problems and

challenges when trying to enter the industry. First, this industry is very

competitive and there are many other websites dedicated to doing what

Navigator Management Inc. will be trying to incorporate in its overall platform.

Some of the external factors are that, it will be challenging competing with sites

like campusfood.com and koofers.com who offer an individual service we plan to

offer as part of a package service. Generating interest in a site that streamlines

many different tools will also be tough, and we will need to make sure we have a

great marketing team as well as a plan to develop user based content. Another

factor that will present a challenge is forming license agreements with schools to

be able to use their logos, schedules, faculty directories, and other information

that we will need to integrate into our site. Finally, the site is very unique, so we

have to make sure that we are always staying up-to-date with our news, new

deals, new ratings, and all of our content in general. It will also be important that

we make sure we are always continuing to make the site easier to use for

students.

There are also a number of internal factors that will present challenges to

our website’s development. First, we must acquire innovative and diligent

employees to make sure that we are staying on top of the industry, and not being

surpassed by a company creating an easier or more valuable platform than ours.

Second, we need to make sure that our platform is something that college

students will find extremely valuable and want to use. This will require us to do a

lot of research and testing with current college students to figure out what they

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would find helpful and useful. Finally, funding is a very important internal factor.

We need to make sure that we have appropriate estimates of growth, cash flows,

and costs of operation. We will need to make sure our estimates are realistic and

based on competitors within the industry. Also it will be important for us to figure

out how expenses will rise with a growing amount of users and content, and

figure out how much money we will need to get our website up and running. It is

important for us to have our financial projections accurate because it is likely we

will need to present them to outsiders when we are looking for funding, and they

will want to see that we have solid financial projections.

Revenue generation and brand awareness are two large factors when

starting a business. In order to generate initial brand awareness we will start with

a single college,Drexel University, and we will have a “road show” type

presentation where we will introduce it to students, faculty, IT managers, and

local businesses we would like to include to the website. This will generate our

initial brand awareness. We plan on doing this at the 6 large philadelphia schools

in our first year. (Temple, Penn, Drexel, La Salle, St. Joes and Villanova) After the

initial presentation we will have promotional items like posters, key chains, and

tee-shirts that we will give out to students to promote them to go onto our site.

Once we have students visiting the site, we will use a sign-in system with points

given to students for providing content to the website. The more content students

provide the more points they will accumulate. We will provide coupons and

promotional items as incentives for students to contribute. Once we have a

steady stream of students going on to the site each day we will start generating

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revenue by advertisements on the website. This will be our initial and probably

most lucrative stream of revenue. (See Pre Financial Projections, also see

Appendix I & II) After we can prove that we have enough traffic on our websites,

we will charge businesses fees for when people purchase their products from our

website. For example, when a student decides to rent from a property they found

advertised on our website, we would charge the realtor a fee for connecting the

two parties. This should help us generate a very steady stream of revenue.

!Goals:

Our goals for Navigator Management Inc. are very straightforward. Within

a year of starting we hope to achieve many things. First and foremost, we need

to gain clients. Navigator Management Inc. hopes quickly sign on as many

clients as possible to make our site as useful as possible. In order to obtain said

clients, we will need to gain market presence. Our goal is make Navigator

Management Inc. a name that everyone knows. We plan to do this by using

Facebook, Twitter, and other campus resources to make sure every student,

teacher, and small business owner is aware of our service. The more people

involved with our service makes it that much more useful so it is very important

that our brand is recognizable.

Another important goal is to make sure we have a sophisticated revenue

model to ensure our success. Navigator Management Inc. will rely on paid ads

to create revenue in the stages of our business. Depending on the success of

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the company there is a possibility of licensing our produce to Universities that

wish to deploy their own version of it.

Once we have the finances and support that we need Navigator

Management Inc. strives to do many things for the Universities we serve. Our

main priorities are to make an all-in-one service to make navigating college life

as easy as possible, from checking your final grades, to seeing a calendar of

homework due dates, to ordering a pizza.

In the long run we hope to have a more comprehensive product. We

understand that as with any startup it is sometimes hard to penetrate the market

but with our unique product we realize that we have an advantage. We hope to

gain enough capital and recognition that we can really fine tune our site to be the

number one site students visit regarding their education and social life.

Navigator Management Inc. will help students stay up to date on what’s

happening around campus, see all of their assignments and coursework in one

place, and be able to easily register for classes. We also hope that faculty

members find ease of use in our site and are able to incorporate it into their

lesson plans and administrative tasks. Navigator Management Inc. will make is

possible to teachers to track grades and progress of individual students, manage

multiple classes, and easily communicate with students. Overall, Navigator

Management Inc. seeks to help smooth out any kinks in our system in order to

provide the highest quality service to create an engaging and accessible learning

environment for students.

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Proposed Strategy:

Our firm will be innovative and flexible. This will lead us to low

bureaucracy and high rate of innovation. As an innovative firm that is adaptable

to market outlook we will distinguish ourselves from the competition. Initially we

will have a intensive approach in order to obtain a fairly large proportion of the

market, which will help us with brand management. Since the firm is web based,

it will use the most advanced technology available on market to deliver

meaningful service to customers and bring down the costs, benefiting the firm.

As the position of a new web-based firm is not so favorable, due to market

forces such as high competition and general perception of online customers, all

services should be free. We will look for partners to develop our business. Our

mission is to make a large marketing campaign focused on reaching our target

market. Our most important factor of success will be the effective management,

we will closely monitor our progress and performance from the beginning and

make the effective decisions.

The marketing campaign will have two parts, online and campus based. It

will start in Philadelphia mainly concentrating on:

1. Drexel University 2. La Salle University

3. University of Philadelphia 4. Temple University

5. Saint Joseph’s University 6. Villanova University !

The online section will include ads on Facebook, Twitter, and Google Ads

specifically targeting students of above listed universities. With this advertising,

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our costs will be cut. This will be highly effective compared to old style

advertising.

The campus based part is compiled of two phases. The first phase has a

time limitation of 3 months. In this phase we will use role models to promote our

website. They will have to compete with each other based on leads they brought

to the website. Every week we will give the best promoter the gift, such as a

gadget with the Navigator Management Inc. logo. This phase will give us a

recognizable brand image. In the second phase we will start mass marketing on

every campus promoting our website, and will do give-a-ways, such as a free t-

shirt for every new user.

Our pricing strategy is to give a free service to end-user in the beginning,

and gain a large user-base while generating income from advertisement. Once

we gain a fairly large proportion of market and establish a good brand

recognition, we will add extra features that will be available to end-users at a low

fee. This will provide revenue increase, and allow us to generate enough capital

for further expansion.

!Pre-Financial Projections:

The financials of this company will be unusual because this site is very

unique. Revenue for this company will be almost entirely from advertisements. In

the first year we estimate revenues to be close to $297,000 (see Appendix I).

This number is difficult to estimate, because of the unknown potential traffic of

the website. The first year will be dedicated primarily to research & development

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and marketing. We anticipate revenues to go up to 100% the second year, 300%

in the third year, and then keep a steady rate of 200% for the next two years.

Different companies around campuses will be eager to advertise on our website

once the appropriate traffic is generated.

In the first year or two we’re predicting negative cash flows. We anticipate

the need to have at least two programmers at an estimate of $80,000/year each.

The purchase of the site will cost another $20/year for the website and another

$10,000/year for necessary hosting. We expect this will remain steady for the first

five years, seeing as we will purchase a large amount of hosting in the initial

start-up. Another necessary expense will be the cost of the research team. The

research team will be responsible for gaining the information from the different

universities, that is not available for the programmers already. We estimate in the

initial stages we will need at least two people for the research team. We

anticipate a salary of $45,000/year for these individuals. We also estimate the

need for a marketing team. Their initial job will be to take our website’s

“roadshow” to various universities and try to sell it to the university’s IT

managers. Once purchased by the university the marketing team will be

responsible for generating traffic for our page, and once enough is established,

their responsibilities will shift to selling advertisement space. We estimate the

need for another two employees in year 1 with a salary of $45,000/year each. We

will need to rent an office for the employees to work. We estimate the cost of

renting the office at $20,000/year. Finally we will also require office equipment

such as laptops, phones, desks, etc. We are estimating this cost as an additional

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$25,000/year for the first year. Depreciation on our net fixed assets will be an

estimated 20% per year. (See Appendix II).

!Appendices

!Appendix I !Revenue Model: !Estimated User's Year 1 = 64,500 (University Undergraduates -Philadelphia area) Estimated users per day = 21,500 (1/3*64,500) Estimated Views Per Month = 645,000 (21,500 *30) Estimated Pages visited = 3,225,0000 (5*645,0000) Estimated ads per page at 2 = (3,225,000 *2) = 6,450,000 Estimated Click per ad = .156 = (6,450,000 *.156) = 986,850 Revenue per click at $.30 = (986,850*.3) = $296,055 Revenue Year 1 = ~$296,000 !!!Appendix II !Cash Flows Year 1 ! Revenue $ 297,000 Cost of Services $ 29,700 Gross Profit $ 267,300 Less: Admin Exp $ 182,000 Mktg Exp $ 339,000 $ 521,000 EBITDA $ (253,700) Less: Depreciation $ (22,500) Less: Debt Service $ (13,500) EBT $ (279,700) Less: Taxes @ 35% $ 0 Net Income $ (279,700) !!

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Year 2 ! Revenue $ 594,000 Cost of Services $ 59,400 Gross Profit $ 534,600 Less: Admin Exp $ (182,000) Mtg Exp $ (239,000) $ 421,000 EBITDA $ 113,600 Less: Depreciation $ (22,500) Less: Debt Service $ (13,500) EBT $ 87,600 Less: Taxes @ 35% $ (30,660) Net Income $ 56,940 !!Year 3 !

Revenue $ 1,188,000 Cost of Services $ 118,800 Gross Profit $ 1,069,200 Less: Admin Exp $ (182,000) Mtg Exp $ (139,000)

$ 321,000 EBITDA $ 748,200 Less: Depreciation $ 22,500 Less: Debt Service $ 13,500 EBT $ 722,200 Less: Taxes @ 35% $ 252,770 Net Income $ 469,430 !!!!!!!!!!!!!!!

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