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digitext Anna Whatman Carol Fung Cathleen Kurz Ahmed Alabbas


Table of Contents Product Production 

5

Harassment and Workplace Violence Policy 

14

Competition 

20

Inventory Turnover 

28

20

Insurance 

28

Product Description 

5

Target Market and Competitive Situation 

5

Product Workflow 

14

Competitor Strategy 

21

Rent 

28

Target Market 

5

Design of Work Systems 

15

Implementation/Forecast and Goals 

22

Depreciation 

28

Potential Competitors 

5

15

Marketing and Positioning Strategy 

23

Competitive Situation 

5

Amortization 

28

Possible Setbacks 

6

Workflow



14

Project Management  Scheduling  Location Planning and Analysis 

Competitor Information 

15

Product/Service Strategy 

23

Break-Even Analysis 

28

15

Promotion Strategy 

23

Assumptions 

29

References 

31

Appendix 

35

Company Structure 

6

Facilities Comparison 

16

Pricing Strategy 

24

Team Members 

7

Facilities and Equipment Costs 

16

Information and Feedback 

25

Job Descriptions 

8

Facilities Layout 

16

Corporate Positioning Strategy 

25

10

Capacity 

16

Performance and Control 

25

Organization Charts 

11

Production Inventory 

16

Financial Goals 

26

Employee Evaluation 

11

Personnel Requirements and Training 

17

Start Up Costs 

26

Benefits

11

Research & Development 

17

Lease vs. Purchase Decisions 

26

12

Costs 

17

Sources of Capital 

26

18

Financing and Interest Rates 

27

Co-Founders 



Insurance 

Maintenance and Replacement 

Salaries 

13

Policies and Procedures 

13

New Venture Planning

Health and Safety 

13

Target Market 

Training Manual 

13

2



Purchasing Patterns 

18

Sales Forecasts and Analysis 

27

19

Accounts Receivables 

27

20

Accounts Payable 

28

Appendix A: Potential Client Information 

35

Appendix B: Competitor Information 

38

Appendix C: Facilities Layout 

39

Appendix D: DigiText Internal and External SWOT  40 Appendix E: Competitor SWOT Analysis 

41

Appendix F: Forecast Timeline 

44

Appendix G: Organizational Charts 

44

3


Product Production Product Description The product that our company is offering is a digital textbook, which focuses on an increased use of multimedia and interactivity. It is not an eTextbook, although it does integrate online elements. These elements are not vital to the use of the text. Some features that we will include in our textbooks are as follows: highlighting, notes, bookmarking, ability to print specific sections, links to important information in the text, links to online materials (websites, further data, YouTube videos, etc.), videos, quizzes, and more. Clients, textbook publishers, will choose which features they require. Costing for the textbook will be based on the amount of time it takes to produce as well as our companies’ expenses. If a client requires a feature that we do not currently offer, costing would be decided at the time according to the difficulty of the programming of that feature.

Although there are many more textbook publishers in Canada, we have focused on four potential clients. We have chosen Nelson Education Ltd., McGraw–Hill Ryerson, Pearson Canada Inc., and Oxford University Press Canada. For a detailed analysis on each potential client, please see Appendix A.

Potential Competitors There are several competitors already on the market. However, the current competitors are focused on eTextbooks. We are focusing on a textbook that allows users to access and make use of interactive elements while offline. Some aspects may require the Internet, such as links to websites, but it will be available offline, unlike the majority of the competitor’s eTextbooks. Our major competitors are CourseSmart, Kno, and CourseLoad. For a detailed analysis on each of our core competitors, please see Appendix B.

Competitive Situation

Target Market

There is an established eTextbook market; however the majority of competitors are less than four years old. None of the competitors focus on offline digital textbooks with a high level of interactivity. Therefore, we will be able to create a place for ourselves within the current market.

Our company is a digital textbook development company. We work directly with textbook publishers to turn their static printed textbooks into multimedia, interactive digital textbooks. These textbooks will have links to online material. However, they will be based mostly on offline content which means that the student will be able to study from their textbook at any time, just as they

Over the next 2 to 3 years, we expect that competition will increase dramatically with the constant advances in technology. As technology advances, it will likely decrease in cost as well, causing the barrier to enter into the market to decrease. This decrease will make it easier for new companies to become potential competition.

Target Market and Competitive Situation

4

would with a printed text.

5


In order to maintain our market share, we will build strong relationships with our customers. This will be done through our high quality products and our dedicated sales force. Furthermore, we will continue to research and develop new features and improve our textbooks. By continuously offering great customer service, and dedicating ourselves to continually advancing and improving our products we will differentiate ourselves from our competitors.

Possible Setbacks Before work on each textbook is started, a meeting between the typesetters and the programmers will occur in order to determine how and where each interactive element will be added. This will prevent bottlenecks in production and ensure clear communication between the two departments. An inefficiency that we spotted is that programmers will have to wait for the typesetters to complete typesetting before they begin their work on the book. In order to remove this inefficiency, the programmers will focus on research and development in order to improve their work processes in their downtime. Another inefficiency occurs when the typesetters complete a textbook seven days before the programmers. In order to eliminate this, the typesetters, two of the co-founders, will also be responsible for administrative tasks and customer support. By addressing these possible bottlenecks and setbacks at an early stage, we are able to plan around them and keep our competitive edge.

Company Structure At the beginning of our startup, we will require seven employees including the four company founders, two programmers and IT manager, whose responsibilities have been outlined in the 6

Job Description. In year 2, after we begin to turn a profit and begin to acquire more contracts, we plan to hire a seasonal, parttime typesetter (possibly a university student) to help with the owners’ load, a part-time mid-range skill level programmer (for programming as well as research and development) and a parttime proofreader. In year 3, we will promote our most successful programmer to the lead programmer position, take on the parttime IT manager and programmer as full-time, hire another typesetter at part-time, hire one full-time sales representatives and as well as a receptionist. A full-time production manager will also be hired in year 3 in order to take over the scheduling of jobs and managing the programmers, typesetters, and proofreader. This will allow Anna and Cathleen to focus on broader administrative tasks. In order to fill these positions, we would make job postings on websites such as Kijiji, Monster.ca, jobsearch.ca, the Service Canada website and the Ryerson University career bank. The salary of each position would depend greatly on their expertise, experience and the funds available to the business. Impressive applicants will be communicated to by phone to inform them of our interest. This will eventually lead to a preliminary in-person interview with our Human Resources Manager. Should the first interview go well, the Human Resources Manager will contact the candidate and invite him or her to a second interview where the manager or lead of the department will be present. Finally, should both of these interviews be deemed successful, a final call will be placed to the applicant with the job offer. In year one, there will be no real division of the company into departments as there are only 7 employees. However, in year 3, there will be a production department and sales department. The production department will be further broken down into a

typesetting department and programming department. The cofounders will still have authority over all employees but there will be more direct lines of authority to ensure that the cofounder concerned with that area of the business will be the first line of command.

Team Members

several co-workers. Her experience working with others, training individuals, typesetting, and financial background will help to support her in the position of Production Manager and Manager of Finance for DigiText. Carol Fung

Ahmed Alabbas is a fourth year Graphic Communications Management major and Marketing minor at Ryerson University. Hired two years ago by Bowne of Canada, he continues to fulfill his duties as project manager following the merger with RR Donnelley. During his time at RR Donnelley (formerly Bowne), Ahmed has coordinated filings and typesetting of various financial documents, including mergers and acquisitions, mandatory disclosure documents for both the United-States and Canadian markets. Ahmed’s experience in managing customer accounts and customer service provides him with a strong background that will support his position as Sales Manager for DigiText.

Carol Fung is a fourth year at Ryerson University working towards a Bachelor of Technology and a minor in Professional Communication. She will graduate in June 2012. For her thirdyear internship, she worked at Quad/Graphics Canada Inc as a Production Coordinator Intern in the creative department. She assisted in all areas of creative production coordination such as assisting the creative team for proofs and verifying information from the clients. She was responsible for content management, which verifies and manages the client supplied content in the database to respective projects. She was also responsible for delegating work for designers and managing dates and resources to get the job done efficiently and effectively. Her experience in team delegation provides her with a strong background that will support her position as Marketing Manager and Director of Human Resources for DigiText.

Anna Whatman

Cathleen Kurz

Anna Whatman is a fourth year Graphic Communications Management student. She will be graduating in June with a Bachelor of Technology and a minor in Entrepreneurship and Innovation. During her third year internship, she worked at Ryerson University as a Research Assistant. She was responsible for researching, and reading technical publications. She assisted with collection of data as well as analyzing of data. Prior to her internship, she worked as a typesetter for Commerce Press. Not only did she typeset, she was also responsible for training

Cathleen Kurz is a soon-to-be graduate at Ryerson University with a Bachelor of Technology and a minor in Entrepreneurship and Innovation. For her third-year internship in Graphic Communications Management, she worked at Signs Alive in Oakville as a Print Production Intern. At this position, she was responsible for the operation, maintenance and troubleshooting of wide-format digital printers. She was also responsible for the training and management of new employees in the finishing department. Before that she worked as a typesetter for

Ahmed Alabbas

7


Commerce Press, a small printing company located in Toronto. Her experience in managing employees as well as a typesetter provides her with a strong background that will support her position as Production Manager and Research and Development Manager for DigiText.

Job Descriptions Typesetters

the year. The IT Manager will be reporting to Cathleen Kurz, Research and Development Manager/Production manager, in Year one. Year One/Two: The IT Manager will be hired on as a part-time employee at this time at $20/hour. Year Three: In the third year, the IT Manager will be hired on as a full-time employee and will have a salary of $50,000. Proofreaders

Typesetters will be in charge of inputting text from the provided documents into the digital textbook files. They will also be reflowing text around the new interactive inserts that our programmers will be adding to each digital textbook. Additionally, they will be assisting the Research and Development Manager with further development of the product. Typesetters will be reporting to Cathleen Kurz, Research and Development Manger/ Production Manager, in year one.

The proofreader will be responsible for checking the outputted documents for accuracy and any errors such as orphans, improperly flowed text, or anything that is simply incorrect. They are to recheck corrections to make sure that they have been accurately completed. Furthermore they are to perform quality control by checking overall consistency, style and pagination.

Year One: Two of the co-founders, Anna and Cathleen, will be doing the typesetting.

Year Two/Three: A proofreader will be hired at $12.50/hour on a part-time basis.

Year Two: An additional part-time typesetter, most likely a student, will be hired at $12.50/hour to reduce workload.

Programmers

Year Three: Another part-time typesetter will be hired, bringing the total typesetters to four. IT Manager The IT Manager will be in charge of maintaining and repairing servers, computer equipment and making sure all applications are updated on a regular basis. The will be assisting as technical support for all staff. Additionally, they will be responsible for installing and maintaining new software acquired throughout 8

Year One: Typesetters will act as proofreaders during this time.

Programmers will be responsible for implementing the interactive components into our digital textbooks. During off times of the production schedule, they will be assisting with the research and development of the product. They will report to the Lead Programmer, come year three. Year One: Two programmers will be hired with a salary of $40,000 per year. Year Two: A third programmer will be hired part-time at $20/

hour. Year Three: The third programmer will be hired on full time. Between the three programmers, the best performing and most knowledgeable will be promoted to Lead Programmer. Programmers’ salaries will be increased to $55,000. Lead Programmer The Lead Programmer will be responsible for coordinating the programmers. They must make sure that all interactive components are completed properly and that the additions are being made in a timely manner. They must be capable of supervising staff as well as have the strongest computer skills of the three programmers. Year One: There is no Lead Programmer. Year Two: There is no Lead Programmer. Year Three: The best of the three programmers will be promoted to Lead Programmer. Their salary will be $65,000. Accountant We will be outsourcing our tax returns to Daniel J. Whatman Charted Accountant. He will charge a flat rate of $1,000 for our corporate tax return as long as our company is responsible for bookkeeping. Year One/Two: Outsourced. Year Three: Possible reduction of price to $800. This depends on the interaction of our company with the accountant. We have continued to list it as $1,000 as the drop in price is unknown. Receptionist

The Receptionist will be responsible for administrative tasks such as answering telephone calls, greeting clients, bookkeeping, setting appointments, data entry, and other common office tasks. They will be required to present themselves in a professional manner, as they will be representing DigiText to the outside world. Until year three, Anna will be responsible for bookkeeping and all other tasks will be divided amongst the founders. The receptionist will report to Carol Fung, Marketing Manager. Year One/Two: Tasks divided amongst the founders. Year Three: A receptionist will be hired full time with a starting salary of $35,000. Production Manager The Production Manager will be in charge of maintaining all staff involved with the production of our Digital Textbooks, this includes typesetters and programmers. They will be responsible for making certain that deadlines are reached. Furthermore they must have problem solving skills, which will aid them in dealing with conflicts amongst people, schedules, and any issues that may arise. They must also direct and suggest alternatives in order to develop the best solution to meet the customers needs. The Production Manager will answer to the co-founders. Year One/Two: This will be handled by Cathleen and Anna. Year Three: The Production Manager will be hired in year three with a salary of $55,000. Sales Representatives Sales Representatives will be responsible for managing and developing existing clients. They will also be responsible for

9


acquiring new clientele. They will be the bridge between the company and the client. They are to achieve maximum sales profitability, growth and market penetration. It will also be their responsibility to be familiar with our product so that they may properly assist customers and demonstrate the product. They will report to Ahmed.

Year Three: The salary will be increased to $58,000. Research and Development Manager

Year One/Two: Ahmed will, with the help of Carol, be responsible for these tasks until year three.

The Research and Development Manager (R/D Manager), manages and directs the research and development of new interactive elements as well as improvements of on our current digital textbooks. They will need to use a wide degree of creativity and management skills to properly complete their job.

Year Three: One Sales Representatives will be hired with a salary of $40,000. Ahmed will remain Sales Manager.

Year One/Two/Three: This title will be held by Cathleen, with a final salary of $58,000.

Manager of Finance

Co-Founders

The Manager of Finance will be responsible for handling all financial needs of DigiText. They will be responsible for the creation of financial plans, budgets, and expensive. Furthermore, they will be responsible for bookkeeping and payroll. They will also be in contact with the Accountant.

The following are tasks distributed among the co-founders:

Year One/Two/Three: This title will be held by Anna, with a final salary of $58,000. Marketing Manager The Marketing Manger will oversee all marketing, advertising, and promotion. They will establish marketing strategies to meet the objectives of DigiText. Furthermore, they will work with the Research and Development Manager to evaluate customer research, market conditions, competitor data, and implement marketing plan changes as needed. Year One/Two: The Marketing Manager will have a salary of $30,000.

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Anna Whatman - Co-Founder/Production Manager/ Manager of Finance • Responsible for external competitive analysis • Assigning tasks to employees and team delegation • Creation of financial plans, budgets, and expenses • Typesetting the digital textbooks • Bookkeeping of finances and payroll Carol Fung - Co-Founder/Marketing Manager/Director of Human Resources • Developing a costing plan and estimation for customers • Developing a customer education plan • Assigns tasks to the marketing team and team delegation • Responsible for managing human resources • Responsible for generating advertisements and promotion for the company

Cathleen Kurz - Co-Founder/Production Manager/ Research and Development Manager • Responsible for the logistics concerning the selection of an office including price, location, and size • Typesetting the digital textbooks • Leading the team on research projects and gathering/ analyzing relevant data • Helping with customer support and administrative tasks when typesetting work is complete Ahmed Alabbas - Co-Founder/Sales Manager • Responsible for generating advertisements and promotion for the company • Responsible for contacting and building strong relationships with clients both potential and established • Assigns tasks to the sales team and team delegation • Helping with customer support and administrative tasks

Organization Charts See Appendix G for Organization Charts for year 1 and 3.

Employee Evaluation Our company will have measures in place in order to evaluate employees based on certain attributes related to their job responsibilities. For example, programmers will be evaluated based on the quality and speed of their work while salespeople will be evaluated based on sales quotas and quality of customer service. With this in mind, customer feedback will be an important part of our organization and we will provide them with many avenues to get their thoughts and feelings back to us.

These include meetings, online forms, and verbal feedback with sales representatives. Finally, feedback emails are also welcome and appreciated from our clients. Our plan is to conduct “informal” evaluations every three months in the first year of business as this will be the crucial time to ensure that we are being as efficient and profitable as possible. This will include a three month probation period for all our new recruits. This trial period will ensure our assessment and evaluation of the employee to determine if he or she is suitable for long term employment within the organization. These evaluations will also provide employees with a chance to form workplace performance goals that can be tracked. Feedback from other employees will also help us to track the worker’s performance. A formal employee evaluation will occur at the end of the year and we will ensure that employees are well aware of when their evaluations are to take place and the informal reviews will let them know if they are on track. These formal meetings will involve the employee’s supervisor as well as the co-founders of the company. We will also provide employees with complete information on how they will be evaluated and will also provide them with opportunities to rate themselves in order to get their opinion on how well they think they are performing.

Benefits In terms of benefits for our full and part-time employees, we have determined that full-time employees would get benefits and that part-time employees would not get benefits in their contract. However, they may be given the option to purchase insurance and flexible add-ons. This will give them access to

11


cheaper insurance as a result of group insurance purchased from Manulife Financial. In order to claim their insurance, forms can be accessed on the website, where employees can print and mail or sign up for direct deposit (Manulife Financial, n.d.). Additionally, they are given access to sign-up and view their benefits and claims online. The group insurance covers two main components, health and dental care. According to Manulife Financial, drugs compose of approximately 70% of health care expenses; thus, proper coverage for plan members is fundamental. Drug coverage can be chosen based on two plans, prescription or prescribed drug plan. The main difference between these two plans is the ability to claim nonprescription drugs as part of the coverage. Prescribed drug plan allows users to claim prescription drugs and non-prescription drugs with a drug identification number that are prescribed by physicians, while prescription drug plan lacks this component (Manulife Financial, n.d.). By having proper drug coverage, this could assist in controlling costs that may affect the health safety of the plan members. Employees will be given the option to select the level of coverage for dental depending on their requirements. Manulife Financial provides five levels of coverage ranging from basic, supplementary basic, dentures, major restorative and orthodontic services. The minimum coverage amount for all dental coverage is $500. The maximum amount differs from basic and supplementary basic services which is unlimited per calendar year to orthodontic services which is $3,000 per lifetime (Manulife Financial, n.d.). Depending on the plan member with children, they may choose to select orthodontic services to cover for a portion of the costs. Additionally, the health care plan can cover vision care expenses, 12

but only covers to a certain amount. The vision care would include some coverage for glasses, optometrist, and a portion of laser eye surgery. Employees can purchase flexible add-ons to their health care and dental coverage, which they can also include to cover for chiropractic care, physiotherapy and much more.

Insurance Employees will be eligible for worker’s compensation when employees are injured at work or contract a disease at work (WorkRights, 2007). This may vary depending on the severity of the injury or illness. According to WorkRights.ca, a worker can receive up to 85% of their wages because of the injury or illness, compensated for their health care costs, independent living allowance for paying some of their costs of living if they are severely and/or permanently disabled. Our company will follow all of the rules and regulations outline in the Ontario Workplace Safety and Insurance Act including compensating an injured worker for their full days wage on the day that they are injured. Worker’s compensation will help to support the employee with partial or full wages during the time that they are off work due to their injury or disease (WorkRights, 2007). Our company will also ensure that there is at least one person in the building certified in First Aid who will be available to provide First Aid to injured employees before a registered nurse, doctor or paramedic arrives (if necessary). We will take workplace injuries seriously and ensure that supervisors are aware of the situation and, if possible, move towards improving the workplace or equipment to ensure that further injuries do not occur. We will also be responsible for paying the cost of transporting the employee to a hospital or doctor’s office, if

necessary (WorkRights, 2007). Our employees will be responsible for providing the doctor with a detailed account of the accident in order to allow the doctor to complete the required medical report for Worker’s Compensation Benefits (WCB). Our company will also strive towards providing employees with ergonomic workstations to reduce problems such as back and neck strain, arthritis, headaches, chronic pain, and other injuries. All of the facilities will be cleaned appropriately in order to reduce the risk of disease and prevent the spread of illnesses.

Salaries Please see separate book, Financial Plan - Documents, for HR Salary Spreadsheet. Salary increases will mostly occur in year 3 when we are an established and successful company in the industry. The most noticeable salary increases will occur for the programmers and the owners as they will have been with the company for the longest period of time at a full-time position. The increase in salary is used as a thank you to the original team for staying faithful to the business even at the beginning when revenue and cash flow is unstable and unknown. The increase in salaries is also in place to support the living costs of employees as inflation and cost of living increases. We will also be open to discussing raises with employees and will use performance measures and quotas to gauge how well the employee is performing. A meeting with the co-founders and the employee in question will then take place to determine whether or not to approve the raise request.

Policies and Procedures In order to have consistency within a company, policies and procedures are required in day-to-day operational activities. These provide clarity to employees when dealing with accountability

issues or activities that are crucial to the company. These include health and safety, training procedures, legal liabilities, harassment and workplace violence and regulatory requirements or issues that have serious consequences.

Health and Safety It is a requirement of the Canada Labour Code that all Canadians be entitled to a healthy and safe environment. The purpose of a health and safety manual is to prevent work-related accidents and diseases in the company under federal or provincial jurisdiction. The sections outlined in this manual will include: • Prevention – This section will outline what to do in the event of an accident, how to protect yourself, and hazardous substances; • Employees – This will outline employee rights, duties, and the complaint resolution process; • Employers – Pertaining to responsibilities, supervision and training, and health and safety committees; • Compliance policy – Explaining measures to ensure that employers and employees fulfill their duties, the role of health and safety officers, the appeals process, and the interpretation of policies and Operations Program Directives. (Human Resources and Skills Development Canada, 2011)

Training Manual This will consist of a booklet of instructions that are designed to improve and explain the performed job or task. It is particularly useful for employees who have just joined the team and need the reassurance that their work is performed in a correct and appropriate manner. A training manual is particularly useful as: • An introduction to the employee’s position prior to the training orientation • An outline followed by the new recruit during the entire training period 13


• A reference document for all employees in the company • A tool to employees that will give them a chance to practice in a simulated environment where clients are not affected. In order to get our new hires familiar with their positions, they will be trained by senior management to ensure they feel comfortable with the tasks that are asked of them. The training manual is designed in a way to provide all the necessary functions of the position and to meet our employee’s individual needs on a recurring basis (Intulogy Ltd, 2010).

Harassment and Workplace Violence Policy

• Detail employee responsibility with regards to this subject matter • Specify contact information of where to report such acts • Outline the important steps to take in the event of violence at the workplace (Hood, 2004)

Workflow Start: Getting Information Enter Information in Database

• Details on what actions are considered as sexual harassment • Ways to prevent and be protected from class harassment • Employee responsibility with regards to this subject matter

Proof Back from Client

We are committed to the safety of our employees in the workplace. Any form of threats, threatening behaviour or acts of violence against employees, visitors or any individuals or property at a Company facility or sponsored activity will not be tolerated. DigiText subscribes to a zero-tolerance policy with regards to violence in the workplace. The purpose of this guide will be to: • Define workplace violence • Provide examples of what can be considered as a threatening act of violence • Explain what measures will be taken if anyone is suspected of taking part in this type of behaviour 14

Programmers: Begin Work

Meeting Typesetters: Begin Work First Proof - Sent to Client for Approval

Second Proof - Sent to Client for Approval Proof Back from Client Corrections are made Final Proofs are made

No End: Product is Finalized

Methods analysis will be important for our company because technology is constantly evolving, therefore, changing how jobs are completed. The operation would be analyzed using flow process charts which examines the sequences of the operation and would determine where improvements could be made. Consulting with employees during this process is crucial for the implementation of the improved method and will ensure greater understanding and productivity (Stevenson & Hijati, 2001). Work measurement determines how long it should take to do a job and will be crucial to the production of our digital textbooks as it directly affects our productivity, profitability, and cash flow. Our sales force will be responsible for estimating the production time required and delivery date. The production manager will map out the job processes at the production meeting for each book based on a standard time (discussed further in Capacity) (Stevenson & Hijati, 2001).

Corrections are made

More Corrections?

Specialists are essential to our company as the job positions have a very narrow scope especially the IT manager and programming positions. Highly specialized jobs result in high productivity, job satisfaction, and low unit costs (Stevenson & Hijati, 2001). Our programming and typesetting teams will be self-directed because they have the most knowledge on their respective subjects and it will increase teamwork and involvement. Moreover, this will reduce the number of required managers, and increase productivity, worker satisfaction and quality as employees are personally invested in decisions (Stevenson & Hijati, 2001).

Product Workflow

It is DigiText’s policy that every employee is entitled to work in a respectful workplace. Workplace harassment is prohibited by law and is seen as a severe infringement upon an employee’s personal dignity and employment status. Any abusive comments or actions will not be tolerated and will clearly be illustrated in our policy. This also includes any form of sexual harassment that arises between anyone, coworkers, managers, customers and vendors. This manual will outline:

Design of Work Systems

Extra Proof - Sent to Client Yes

Corrections are made

Project Management To initiate each new textbook/product, we will begin with a team meeting. The typesetters and programmers will be gathered for a

meeting, which will discuss all of the steps that need to be taken to complete the new product. This meeting is estimated to take no more than half the working day; the exact length of the meetings will fluctuate depending on the length of the textbook and the amount of interactivity to be added. These meetings will allow the entire team to be on the same page when it comes to the creation of the textbook and will eliminate misunderstandings.

Scheduling Please see separate book, Financial Plan - Documents, for startup and capacity Gantt chart schedule.

Location Planning and Analysis Our company will support normal business hours of Monday to Friday from 9:00 am to 5:00 pm. The location that we chose to house our business is an office/ warehouse building at 7631 Bath Road in Mississauga, Ontario. We consulted with a business owner, Tony Kurz, who leases office building space, in order to determine that we would need 2,000 square feet of office space for our business. After comparing it to two other locations in the area, we decided it was the best one because it was one of the least expensive, has the most available office space (for expansion), and does not require a 30 day notice to rent. The location of our business is not as critical compared to retail companies as we are not involved in the distribution of the product. Therefore, we do not have to be located close to the end consumers, as the distribution of the product is the role of the publishers. However, this location will be beneficial to us as we will be located in the GTA close to most of our potential customers. We will also be surrounded by a large population which will allow us greater hiring options and we will not have to pay the high rent associated with downtown Toronto. This location would also make transportation 15


easy for employees as it is near three major highways and two GO train lines. The entire available office space in the building is 8,700 square feet which would allow us for room to expand should we need more space for a growing workforce.

communication between all employees. The separate office spaces will allow for private work stations for the owners.

Facilities Comparison

Our business will rely on gaining contracts with large publishers. Therefore, our sales force will be focused on customer support and retention rather than gaining new customers. That being said in the startup stage, our sales force will be focused on cold calling and personal meetings with potential clients. As a service, our company would not be susceptible to production and machine capacity limitations. However, our internal network, Internet connection, and computers would act as a limitation depending on their construction and reliability.

Criteria

7631 Bath Road Rental cost/year $9000 Operating $5,760 expenses/year Total Cost $14,760 Available office 8,749 sq.ft. space Occupancy Date Immediate

7615 Bath Road $9000 $5,760

6300 Viscount Road $10,000 $7,260

$14,760 5,825 sq.ft.

$17,260 5,031 sq.ft.

30 day notice Immediate

*All assuming 2000 sq.ft. of office space.

Facilities and Equipment Costs Please see separate book, Financial Plan - Documents, for Startup Expenses.

Facilities Layout Please see Appendix C for our Facility Layout and associated pictures. We consulted a fourth-year Architecture student, Michael Stofko, to aid in the design of the layout of our building. This layout will provide clients with a comfortable reception area and a boardroom to discuss project specifics. The employees have access to a breakroom and kitchen, two washrooms, a storage room, a print room and their open-concept workspace area. The open-concept allows for concise 16

Capacity

Physical limitations would include the amount of clients that our sales force could meet within one day (travel times), the amount of pages that typesetters can complete, and the amount of added features that our programmers could work on. We estimate that starting with one sales person would limit them to one or two client meetings a day depending on their distance. With two typesetters, they could complete 200 to 400 pages in one day and with two programmers they could add features to 20 chapters in five to ten business days. Assuming that an average textbook is 18 chapters and 900 pages, it would take our team 10 days to complete the production of one textbook. After sending the completed project to the client, it will take them one week to review it. The process of editing and client approvals will take another week meaning the final product will take one month to produce.

Production Inventory We do not require an inventory for production in the classic sense. We will only need basic office inventory such as printer paper, pens, staples, and so forth. Our product will be stored on computers and

servers, eliminating the need for physical storage. We will require server space, increasing the amount as our clients increase, to store our products during production.

Personnel Requirements and Training At the beginning of our startup, we will require six employees including the three company founders whose responsibilities have been outlined in the Company Structure. After we begin to turn a profit and begin to acquire more contracts, we plan to hire two part-time typesetters (possibly university students) to help with the owners’ load, a full-time receptionist position, a full-time editor, and one to two more mid-range skill level programmers with one who would focus on research and development. In order to fill these positions, we would make job postings on websites such as Kijiji, Monster.ca, jobsearch.ca, and the Ryerson University career bank. The salary of each position would depend greatly on their expertise, experience and the funds available to the business. In addition to this, we would also change our IT manager to full time. Training programs would be on-going and would focus on the evolution of technology and how each of our employees could utilize new advancements in order to increase productivity and quality. Cross-training would also be enforced and would occur based on the schedules and availability of the employees. We expect the commute for our employees to take around 45 minutes to an hour. The commute will vary depending on their choice of transportation such as public transit including GO trains and the TTC.

focus primarily on research and development. The goal of the research and development department will be to allow us to stay abreast of the competition and increase the content and quality of our product. At the beginning, the three owners would be responsible for researching new technologies. However, as cash flow increases, we plan to hire a programmer who would dedicate some of their time to research and development. Most of the research gathered would be secondary research but the Manager of Research and Development would be responsible for primary research products and translating the information into tangible improvements that will improve the company.

Costs Production Cost of One Textbook (First Year) Job Description Programmer x 2 Production Editing Typesetter x 2 Production Editing

Total Wages/ hour

Total Time*

Total Cost

$40/hr $40/hr

10 days 5 days

$3,200 $1,600

$30/hr** $30/hr**

3 days 5 days Total Cost

$720 $1200 $6720

*Not including overhead costs **Assuming 8 hour work days ***For the first year, the owners (typesetters) will not be taking a salary

Research & Development As a business heavily reliant on technology, it is critical that we 17


Production Cost of One Textbook (Second Year) Job Description Programmer x 3 Production Editing Typesetter x 3 Production Editing

the server and computers.

Total Wages/ hour

Total Time*

Total Cost

$60/hr $60/hr

7 days 3 days

$3,360 $1,440

$42.50/hr $42.50/hr

2 days 3 days Total Cost

$680 $1,020 $6,500

*Not including overhead costs **Assuming 8 hour work days A third, part-time student, typesetter will be hired at $12.50/hour. A strong relationship with the client and an understanding of their needs would reduce the required editing and consultation time to three days. The production cost of each textbook would increase in year two due to an increasing staff size and because the owners will begin to take a salary. That being said, the process will be much faster with more employees working on a single book and the number of orders from clients will increase resulting in greater cash flow.

Our breakdown programs will rely on operators (all employees) who will be capable of performing minor repairs on the equipment as well as a repair person (IT Manager) who is well trained and readily available to diagnose and correct problems (Stevenson & Hijati, 2001). The computers and software that we purchase at startup will be obsolete in three years. Replacement of all the employees’ computers and software will be very important as our industry relies heavily on keeping up with new technology to stay ahead of the competition. Our Internet package will have to be upgraded in year three when we hire more employees in our third year of business as our Internet usage will increase greatly with more users and more projects being sent to us from clients. The car used for the Sales and Promotion Manager transportation will have to be replaced in four years as it will be nearing twenty years of age. Regular car maintenance will occur at least once a year.

New Venture Planning Our company will be assessed on its feasibility and profitability using the business model framework shown below (Telco 2.0, n.d.).

Maintenance and Replacement Preventative maintenance will be the responsibility of all the employees as it is critical for reducing breakdown maintenance. Planned inspections of each computer station by the IT Manager will occur every month which will include hard drive clean ups, virus scans, as well as the removal of dust from the computer towers. The IT Manager will also perform regular maintenance to computers once a week and will be responsible for breakdown maintenance of 18

Our capabilities allow us to perform the activities needed for our

supply chain and are provided by all of our employees. The Supply Chain section is when our company takes the work provided to us and creates the product for the customer and all costs incurred at this stage are recorded. The value we promised our customers is then fulfilled in the Value Proposition stage with our product and customer service. The interactions and service with our customers in the Value Proposition stage builds the framework for our Customer Relationships. After, we deliver our product to the customers through the Distribution Channel. Revenue is recorded both when the customer orders the product (see Pricing Strategy for details) and after the product has been delivered to the customer. By comparing our costs to complete the job and the revenue received from the customer, we will be able to determine whether the job, and the company as a whole will be a success or a failure. The benefits of our business model is that it requires minimal investment and resources and focuses on building strong relationships with large corporations within the industry. This business model will help us to determine whether or not our company will survive. We plan to achieve a profit by the end of the first year but we are able to adapt and enhance our business model if this is not the case. Our focus is on building customer relationships and promoting and developing customer loyalty. By building connections within the industry, we will be able to acquire contracts and change the digital textbook market. This strategy will allow us to spend less on marketing as retaining customers is much more cost effective then acquiring new customers. This will allow us to focus most of our marketing costs on meeting with potential customers for personal selling and will also allow us to meet with current customers in order to reinforce strong bonds and loyalty. This strategy will also help to market our brand and product through word of mouth and third party testimonials. Please refer to Appendix E for an internal SWOT analysis.

Target Market Please see Appendix A for a profile of our target customers. DigiText takes printed textbooks and creates highly interactive digital alternatives that are specially created to help today’s students learn. However, DigiText’s end customers are not the students themselves, though they are the end-user. DigiText markets directly towards publishing companies responsible for the printing and creation of the textbooks. Distribution would be entirely done by, and controlled by, the publisher after DigiText has completed the text. As the product DigiText provides is not physical, the location of our company in comparison to the location of our proposed clients is not important. However we have chosen to, during the initial launch of the company, focus on the four top Canadian textbook publishers. The top four publishers are conveniently located within the GTA— this will allow easy face to face meetings if desired. They will not be a requirement however, meaning that taking on international or publishers across the country will not be a problem. The four publishers that we believe will be the best potential clients for DigiText are Nelson Education Ltd, McGraw-Hill Ryerson, Pearson Canada Inc., and Oxford University Press Canada. A brief description of each company follows. Located in Scarborough, Nelson Education offers a wide variety of resources for students in elementary and post-secondary, as well as professionals already in the workplace. They also have a French education publishing sector called Modulo that is used as an educational resource for French first-language and French immersion students up to university level learning. Founded in 1888, McGraw-Hill has more than 280 offices in 40 countries (The McGraw-Hill Companies, n.d.). McGraw-Hill in Canada is located east of Toronto in Whitby, and is known as McGraw-Hill Ryerson. They distribute a wide range of products 19


for students and professionals. They develop teaching and learning solutions that they believe best suits the needs of people in the 21st century (The McGraw-Hill Companies, n.d.). This involves not only textbooks but online references as well. They also offer services that promote the connection of students and professionals through their McGraw-Hill Higher Education sector. Another major client would be Pearson. Located in North York, they focus on education, consumer publishing and business information in their publishing. It is a world-wide company with offices in over 60 countries, including 3 locations across Canada. Pearson is the parent company to many well respected publishing brands including Penguin and Prentice Hall. They offer fiction and non-fiction on top of their educational resources provided in digital and print format that cover the entire Canadian curriculum. Currently, North American accounts for 71% of ebook sales worldwide and around 23% of that market can be attributed to students and researchers (Cole, 2008). According to numerous sources, the ebook market is expected to grow exponentially in the next couple of years due to increased access to devices that display them and technology savvy kids reaching an independent consumer age (Coker, 2010). This is a great outlook for the economic climate for ebook publishers as the market is still in its growth phase. This means that new comers still have a great opportunity to make large profits. Recently in North America, there was an economic recession and many people are still recovering and do not have the income to spend on non-essential goods. This provides an edge to electronic textbooks as they are usually less expensive than their print counterparts making them more desirable for people with a tight budget. In Canada, there was an increase in university enrollment for the 2008/2009 of 3.7% over last year. Ontario saw enrollment increase by 0.5% and Quebec by 0.4%. A growing amount of university students is essential for business and it is clear that locating in Ontario, where there are the most universities in Canada, is a good 20

business decision (Statistics Canada, 2011). A study done by the organization for Economic Co-operation and Development states that Ontario University enrollment is expected to continue growing at least until 2030 (where the study ends) which again provides a positive outlook for our business idea (OECD, 1998). Overall, we believe that this is a good business opportunity as the ebook market is on the rise and the number of students in Canadian universities is increasing each year providing us with an excellent growing market.

Purchasing Patterns As we will be creating educational textbooks, the purchase times of our customers will be heavily reliant on the schedule of higher educational facilities. We believe that we will see an influx of business several months before each new semester. Purchasing would be highest during the months prior to the fall semester. We estimate that it will be our busiest time, however the months prior to the winter semester, as well as the spring/summer semesters will see their own smaller batch of orders. Furthermore, it is quite possible we will see periodic requests to digitize textbooks throughout the year.

Competition Competitor Information The digital textbook market is currently an expanding market—there are several options for students, universities, and publishers to turn to. DigiText has found that its current competition is CourseSmart, Kno, and CourseLoad. Each company has different strengths and weakness that make them a unique threat to DigiText, as well as presents different opportunities for DigiText to advance within the market. All of the current competition for DigiText only offers digital textbooks that are available online, and does not function properly or at all while offline. This presents a large opportunity for DigiText

as we are focusing on digital textbooks that function primarily in an offline environment. Each competitor has an established customer base, however as they offer different options and because their consumer is usually the student, DigiText has the ability to make a mark in the market. CourseSmart is the competitor with the strongest foothold in the market. It was founded by Pearson, Cengage Learning, McGrawHill Education, the Bedford, Freeman & Worth Publishing group and John Wiley and Sons. This has given the company a large advantage as it works heavily with these publishers and has strong ties to them through the foundation and creation of the company. CourseSmart is located in San Mateo, California. It was also the first in the industry to develop and launch an iPhone app, an iPad app, and an android app. CourseSmart offers the largest amount of digital textbooks currently available. However, they only offer ebooks and their textbooks have limited interactivity. This will allow DigiText to improve upon what they currently offer and gain CourseSmart’s current customer base, or to work together with the company to work with these publishers. The competitor with the most interactive elements and the largest threat to DigiText technology wise is Kno Inc. Kno Inc is a digital textbook company formed with the intention of making learning engaging, efficient, and social for students. Kno was founded by Kno was founded by Osman Rashid and Dr. Habib in 2009. Osman has previous experience in the textbook industry as he was cofounder of Chegg. This gives Kno an advantage as they already have experience and knowledge within the textbook and software industry. The company is located in Santa Clara and is run by a small group of dedicated individuals. Currently Kno offers the largest amount of interactive elements for their textbooks. However, they still only offer online textbooks that do not function without Internet access. Finally, DigiText’s third competitor is CourseLoad. CourseLoad was

originally established in 2000 but due to lack of interest was shut down. It relaunched in 2009. The company focuses on marketing to universities. They take textbooks that the university is interested in and digitize the textbooks for the university. They are currently only offering textbooks for Indiana University, and are looking to expand. There are no specifics available as to what kind of digital text they offer, however they take existing textbooks and digitize them for universities. This would likely create a more expensive text than what DigiText would be able to produce. For further information on DigiText’s competitors please see appendix B for competitor information and appendix E for a SWOT analysis.

Competitor Strategy In order to dominate the industry and beat out our competition, DigiText will focus on customer needs for reliability, efficiency, responsiveness, and profitability. Our competitive strategic plan involves the following: • A focus on personal selling and direct marketing that fosters the growth of customer relationships and loyalty. • Customer education and readily available information in order to keep customers up-to-date. • Thorough follow-up after the job has been completed to ensure that the customer is happy with their product and service. • Working with the client to improve their product and service and implement better strategies. • Open communication that allows the customer to open up about their expectations, fears, needs and ideas. Customer education and personal selling will be costly as they require a lot of time input from the sales team. Developing an integrated system that will keep customers up-to-date on product 21


development and information will also require some investment, but after it has been created costs for maintaining it will be minimal. Although the costs to ensure great customer service may be high, our company recognizes the importance of customer loyalty and satisfaction to profitability. Our long term competitive strategic plan is focused on continual improvement of both product and technology as well as our customer service and responsiveness. Research and development will be a main focus for this strategy which will allow us to determine inefficient and non-value added processes and eliminate them. It will also inform us about how technology is developing and will allow us to enhance our product to take advantage of these innovations. With that being said, there may be new legislation in Canada that potentially allows some information from textbooks to be shared amongst students without infringement of copyright laws. This may result in a loss of profits for our main customers as the revenue gained from professors and teachers paying for giving parts of a textbook to their students will be almost eliminated. In order to combat this, our company must be focused on efficiency in order to keep our costs and therefore prices low. The lower costs to make a digital textbook will make our product more appealing than a physical textbook.

expectations. During this time, we will begin to show prototypes to potential clients in order to introduce them to our product and land contracts with interested parties. By the third month of development, we hope to have a contract with one large corporation to begin to work later that year and by the fourth month one smaller publisher. Our launch will then take place at the end of September 2012 when all of our planning and research as well as our software platform is completed. Production of the digital textbooks for our two clients will then begin. With this strategy, we except to achieve our goal of a contract with 1 major and 3 minor publishers. Our quality product along with our excellent customer service will encourage business and create customer loyalty. We expect to see a profit in year two as our contracts allow us to pay off all initial start-up costs. The first year will be focused on attending to customer needs and personal selling which will cost the company a lot of money and will not leave a lot of cash flow or profitability. By the second year, we hope to have contracts set up which will reduce the amount spent on personal selling and will allow us to turn a profit.

Please see Appendix F for our Timeline.

After our company has grown and the industry knows of our product and its quality and benefits (3-4 years), we will increase our prices in order to accommodate a larger employee base, office space, and more resources. However, this plan will also coincide with our plan to drop upfront collateral costs in order to prevent threatening our relationships with current customers. We will also communicate our reasons for increasing prices to our customers in order to promote trust and loyalty.

We plan to begin the hiring process in May of 2012 which will allow time to begin software development of our digital textbook platform as well as for acquisition and renovation of office space. We will allow for a lot of time to not only develop our software and website, but also allow time for testing to ensure that it is working to our

Competition already exists and we have profiled them but as technology advances and changes, so too will our competition. Product and research development will be an essential part of our company as our product relies heavily on technology which is constantly improving. This research will also focus on keeping track of the competition and monitoring how they are changing and

Implementation/Forecast and Goals

22

improving their product. By adopting a competitive strategic plan and studying the progress made by competitors and technology, we will be able to ensure that our product is ahead of the curve. As our company grows and matures we expect our goals to change in order to accommodate and work with the changes within our company. Our first goal is to hire more personnel in year 2, including typesetters, a proof-reader, and more programmers. In year 3 we plan to move our IT manager to full time, hire more typesetters, a production manager, a receptionist, a salesperson, and promote one of the programmers to a lead programmer position. With growth, we expect to hire more employees in year 4 and beyond and will change our hiring needs to match increased demand. With a larger workforce, we plan to invest into expanding our office space in year 4-5 to accommodate them.

Marketing and Positioning Strategy Product/Service Strategy As customers grow and change, we will continuously adapt our product to customers through our research and development team. Their continuous effort to search for a better solution to make our product better, such as more user-friendly, with more value-added features, will allow our company to succeed. Meetings will be held weekly to ensure that we are on the right track and that our targets and goals are being met. In order to gain customers, we plan to penetrate the market by introducing customer service plans. Our customer service plans will be provided through our sales team by traveling to the customer’s location for their convenience. We will educate them through our sales staff about our product, its added value, and the demand from their target market Education will be essential for our company as we

are selling a new product in an existing market and must ensure that customers know of its benefits versus their current products. We will also provide customers with an online service that connects them to the status of their job and its progress as well as other important information that allows them to stay up-to-date with their products. On top of this they will also be able to contact us with any questions, comments or concerns they may have and we will work with them personally to ensure that they are confident in the product they are receiving. Meetings with the client will also be set up to ensure that the finished product meets all of their needs. Products in the existing market only provide a similar product but with the limitation of no online service. Their customers require Internet access in order to use the product/service. Our product/ service could be used offline and would be cross-compatible which is fundamental for accessibility purposes. We provide direct clients with lower production costs than the publishing of physical textbooks as well as links back to their own sites for increased traffic and ad revenue. Our web service that allows them to have up-to-date information about their product will also provide clients with peace-of-mind and trust in our company. Excellent customer service will also provide value to our customers as it ensures that the product meets their expectations and that all of their concerns are taken care of. Educating them will also allow them to better understand our product and processes and increase their perceived benefits. Education will also increase trust between the customer and our company which will also increase customer loyalty. These long-term relationships with customers ensure that we will continue to have contracts which will yield more profit in the long term and will gain us more clients through word-of-mouth advertising and referrals.

Promotion Strategy Information about our company will mostly be distributed through 23


our sales force’s contact with the industry and customers. As we are targeting the large textbook publishing companies, general advertising campaigns will not be as effective as targeted personal selling. By connecting directly with potential customers we will be able to make a name for ourselves and achieve “top of mind positioning” in the digital textbook market. However, this strategy will be costly as it requires a large time investment from the sales person as well as a lot of time travelling and customizing the sales pitch to appeal to each company. This type of personal selling also requires a lot of background research to ensure that the sales person is knowledgeable about the company and does not waste time asking time-wasting questions. With that being said, this strategy is crucial and beneficial to our company as one contract with one large company can lead to many more if they are happy with our product and can lead to an increased client base through referrals.

percentage costing. We request 20% upfront payment from the customer and then the rest upon completion of the digital textbook. This form of pricing acts as collateral and also ensures that the work done will be paid for. If the customers decide that they do not want the product at any specific time, the time and resources from our employees would not be wasted. This also provides the customer for a reason to stick with the product, as they have already made a deposit. This also provides us with cash flow to fund the resources that we need to complete the project.

In order to distribute information about our company to smaller publishers, we will create an online marketing campaign. This will be very cost effective as we have experience with all of the programs required to create advertisements and distribution on the web is cheap and can reach a wide variety of audiences in many different areas. In order to make it effective, include testimonials from our larger companies. We will also promote a different payment plan for the smaller companies which will be more affordable (see Pricing Strategy). We will also visit trade shows that will allow us to connect with many publishers in a short amount of time and will allow for personal selling.

In the first year we expect this pricing strategy to attract one large publisher and three smaller ones.

Through these methods, we will emphasize the benefits of digitally enriched textbooks over the physical and plain digital textbooks. We will provide statistics from the survey to show that this is an indemand product and will be a fundamental tool to education.

Pricing Strategy The type of pricing strategy that we will adopt would be a fixed 24

As a new service, the 20% deposit may intimidate many customers as they could be uncertain of the product and its quality. In order to combat this obstacle, we must provide them with great customer service and education about our product to reassure them as well as provide a quality product.

The main obstacle with this pricing option is that companies may be unwilling to pay a collateral amount with a relatively new and unproven product. However, after we have proven our product and service to be exceptional within the industry, these fears will disappear. The collateral payments also allow us to maintain a positive cash flow while working on labour and resource intensive products. After our company has grown to a larger size with more resources, more clients, and increased brand/product awareness within the industry (3-4 years), we will decrease the upfront payment to 15% for large companies and 10% for smaller companies. This will attract new customers who were not willing to pay the previous amount. Additionally, with more resources and cash flow, the lost 5% will not have a large impact. Our price per digital textbook would depend on the amount of time spent by both the typesetters and the programmers as well as the

overhead costs incurred for the period. We would estimate the total time it would take each time to complete the project and quote the customer for that cost plus a 20% profit. When researching, we determined that the average cost of wages for producing a digital textbook would be around $4,800 for labour costs and $1,400 for overhead costs which would come to the price of $6,480 per digital textbook for the customer. This would mean that larger corporations would pay $1,296 up front and smaller companies would pay $972.

Information and Feedback Information about our company will mostly be distributed through our salespeople as they have the strongest contact with the industry and customers. More information will also be distributed through our website to our customers and potential clients who would use this information to make their purchasing decisions. Information about each client’s digital textbook and order will be available to them on this website in a personal portal. Transactions will take place both on the web for smaller publishers as well as in person for the larger companies. We will also introduce a customer feedback survey both on the web and in person to allow customers to voice their opinions so that we know where we can make improvements. If a client has a lot of concerns then we will arrange for a personal meeting that will go over how we can make improvements to better suit their needs. At the beginning this process may be costly but it will ensure that our customers are happy and will continue to buy our product and will increase referrals.

Corporate Positioning Strategy The goal for our company is to be a quality leader in the digital textbook market. Currently all of the competition offers interactivity in an online form and DigiText wishes to break into the market with an offline form—making it easier and better for students to effectively use. DigiText does not market directly to the students,

or universities. Instead we are a business-to-business company. As previously stated we market directly to the publishers, giving them an affordable and technologically advanced alternative to the competition. DigiText will use personal selling—directed towards publishers of textbooks within the higher education community. Furthermore, DigiText will have a website, allowing for publishers to seek out DigiText if they are looking for a fresh digital textbook alternative. These strategies will allow DigiText to gain market traction and continue to improve past the competition.

Performance and Control In order to monitor our company’s performance and ensure that our targets and goals are met, we will create a schedule that will highlight our monthly targets and yearly goals. By creating realistic and measurable goals, it will be easier to track our progress and ensure success. This goal schedule will also be made available to all staff in order to motivate them and guarantee that they are onboard with our goals. Weekly meetings will ensure that our progress towards our goals are tracked and monitored correctly and will allow us to assess our progress. As our business grows and changes, so too will goals and targets. Tracking these goals will be even more important as the team changes, and ensuring that everyone is focused on the same goals will be essential to success. As mentioned before, our main goals in year two and onward are to increase our workforce with more typesetters and programmers in order to increase productivity and output. Technology will also increase and the cost to enter the market will drop which will open the door for more competition. In order to stay ahead of our competition, offering a fairly priced product with enhanced features and great customer service will be essential. If we are able to offer this to clients, then competition will be put at risk. At this point, we expect that competition will offer us a buyout or to attempt to sell to our clients. This is where control and performance will be most crucial in order to progress towards 25


continued growth. Our services will be constantly expanding and evolving due to technological advancements which will help us enhance our products. Within the next 2-5 years we see our company expanding and controlling prices while maintaining its devotion to product quality and customer service.

Financial Goals Start Up Costs DigiText will incur many start-up expenses within the first year of implementation. These are divided through technology, building and furniture. Since our business will be run out of our Mississauga office, our manufacturing supplies will consist of office provisions such as server hardware, computer accessories and software, as well as domain registration and hosting privileges. The computer hardware is the most expensive item since we will require seven devices for our employees. In addition, server costs will be our second highest expense due to the IT expertise and installation costs required during the set up. Also, Adobe and Microsoft Office rights will also be multiplied by seven and six respectively due to their usage on the majority of our computers. Our estimated total start up costs is $78,401.08. This amount also includes any software technology development needed throughout the initial stages of implementing our business concept. To see a detailed analysis of our startup costs, please refer to separate book, Financial Plan - Documents, for more details.

Lease vs. Purchase Decisions When choosing a building for the business, we decided to lease a building located in Mississauga. This decision reduces our liability 26

and allows us to focus our capital on other functions of our business. As it is a start-up business, we will be leasing for the first three years. This is beneficial since we would not need to worry about selling the building when choosing to move to a new location. In addition, by renting instead of buying, we can also sublet the building midlease should we find a good deal on another building and chose to make the leap and purchase. Also, the rent expense incurred is tax deductible, which also proves to be advantageous. After the third year, depending on the expansion of our team, we may choose to look into buying our own building. This will allow for us to relocate our entire team, which will be a good capital investment. This is remove all rental costs incurred from leasing. Instead, we will have a mortgage loan on this building space, which is also tax deductible. And since the building will be ours, we can choose to stay as long as we want in this location. However, if we do not feel that our company is able to maximize usability of the building during the three year leasing, we may not invest in buying a new building as there is no opportunity to build up equity and there are other fees associated, such increased rental rates and taxes. Our equipment would also be purchased as leasing causes them to be more expensive as a result of interest. Since electronic equipment, such as servers, computers and printers, currently fit our budget, we would purchase them.

Sources of Capital DigiText will initially have access to $200,000 worth of capital. Each founding partner of DigiText will provide an equal investment. Approximately 40% of this funding will be used for initial start-up costs. The remainder of the costs will be used to cover any loss that may occur throughout year one of the company. Any funding remaining will be used to further research and development within the company.

Financing and Interest Rates According to the current start-up projections as well as expenses and revenues, DigiText will not require any external funding.

Sales Forecasts and Analysis DigiText expects to sell the majority of their textbook services during the months leading up to the fall semester of university (September). It is assumed that these months will be the busiest as it is a new school year and a new semester. We also expect to sell a moderate amount of eTextbooks in the fall months as publishers prepare for the winter semester. The months leading up to and shortly after the spring semester will yield the least amount of demand for our product as the number of students (and therefore demand for textbooks) decreases. Our company will be fully operational starting on October 2012. In the first year, we plan to acquire one large company and three smaller companies as clients. As explained in the Marketing Plan, we will have the capacity to produce 24 e-textbooks in one year but will only expect to sell 15 of these. We expect our sales for the first year to be distributed as such: Month Sales of Books

1 1

2 1

3 1

4 1

5 1

6 1

7 1

8 2

9 2

10 2

11 2

12 1

In our second year, we will have expanded our workforce with a third part-time typesetter and programmer as well as a proofreader. We expect this addition to our team to increase our capacity to 30 e-textbooks in one year. Due to our increasing exposure and contracts with current clients, we will expect to sell 24 e-textbooks. Our second year goal is to acquire two large companies and five smaller companies as clients. We expect our sales for the second year to be distributed as such:

Month Sales of Books

1 2

2 2

3 2

4 2

5 1

6 1

7 1

8 3

9 3

10 3

11 2

12 2

During our third year, we will see the greatest additions to our team including a production manager, one salesperson, a lead programmer, another typesetter as well as a receptionist. This will greatly affect our productivity and will also increase our sales and marketing efforts. Taking this into account, we would have the capacity to make around 50 e-textbooks in the year but we will expect to sell 43. This is congruent with our third year goal to acquire three large companies and eight smaller companies. We expect our sales for the third year to be distributed as such: Month Sales of Books

1 4

2 4

3 3

4 3

5 3

6 2

7 3

8 4

9 4

10 5

11 4

12 4

To see a more detailed breakdown of our projected sales, please see separate book, Financial Plan - Documents, for more details.

Accounts Receivables Our accounts receivables will be made up of the 20% deposit required when an eTextbook is ordered from us and the remaining cost of the product when it is finished and given to the client. In our first year, our goal is to acquire one large publishing company as a customer and three smaller companies. We predict that at least half of our sales will come from the large company with the remaining sales divided almost evenly between the smaller companies. As we gain more clients, both large and small, we predict that over half of our sales will come from the larger publishing companies. Our payment plan will allow for a 15 day period for the companies to pay for our product before charging a 5% interest rate. Our small amount of customers combined with our personal selling approach 27


will result in a strong relationship with our customers. However, we realize that not all payments will not be able to be paid on time and to account for this we will account for bad debts at 5% of our sales.

Accounts Payable Our largest expense for accounts payable will be the biweekly payments for employee pay cheques. Other accounts payable would include Internet and phone services, utilities, rent and accounting service. All accounts payable will be paid at the end of each month. To see a full breakdown of our accounts payable, please see separate book, Financial Plan - Documents, for Income Statement.

Rent The location that we chose to house our business is an office/ warehouse building at 7631 Bath Road in Mississauga, Ontario. We consulted with a business owner, Tony Kurz, who leases office building space, in order to determine that we would need 2,000 square feet of office space for our business. After comparing it to two other locations in the area, we decided it was the best one because it was one of the least expensive, has the most available office space (for expansion), and does not require a 30 day notice to rent. It will cost $9,000 per year, which equates to $750 per month in expenses. To see a facilities comparison, please see page 14 for more details.

Inventory Turnover

Depreciation

As we are dealing with an electronic product, we require no physical inventory to produce it and therefore we will not be concerned with inventory turnover.

The items that will be depreciated would be equipment, such as computers and servers. As technology improves, the computer hardware bought at startup will depreciate. Costing at $14,000, these will depreciate at using a straight line method over three years at a rate of $555.55 a month.

Insurance Our largest expense with regards to our insurance will be the flexible health insurance plans that we will offer to our employees. On average, health insurance will cost our business around $2000 a month. Our liability insurance will cost around $3 per $1,000 of our sales, meaning an average cost of $80 per month in the first year, $125 in the second year and $230 in year three. Insurance coverage will cost our company around $3500 a year or $292 a month. And finally we will also have renter’s insurance that will cost around $350 a year or $30 a month.

28

Amortization DigiText will purchase a patent for our eTextbook software for $10,000. The value of the patent will be amortized over 25 years (the life of a patent in Canada) meaning that it will amortize by $35 a month or $400 a year.

Break-Even Analysis To calculate the break-even amount in units, the fixed costs for DigiText are operating expenses and the startup costs. With a combined total fixed cost of $104,920.47, a break-even amount of 9 units are required.

Break-Even in Units =

fixed costs (unit price – unit cost)

Break-Even in Units =

$104,920.47 ($20,000.00 – $7,640.08)

Break-Even in Units = 8.49 ≈ 9 units

Assumptions In order for this report to be an accurate representation of DigiText’s finances, several assumptions have to be made. First of all, assuming that the company gains the clients mentioned prior, sales will increase. As our gross sales are derived from the product’s monetary value, we assume that the product is reasonably priced. We also assume that with a budget of $20,000 over a span of 12 months for advertisement is sufficient. We assume that utilities are a flat rate compared to a time-of-use (TOU) rate. We assume that with an increase of employees would increase in telephone expenses as additional lines are required. We also assume that employees will work with the wages suggested in the plan. Based on calculations derived from Cameron Easey (n.d.), we assume that the insurance rates are correct. We also assume that maintenance costs of $250 per month will be sufficient to cover all equipment issues. We also assume that the cash flow is accurate. Therefore, we do not need a loan from the bank as the startup amount of $200,000 is sufficient to maintain the company. However, we assume a 5% rate for bad debt and miscellaneous expenses for any unexpected issues. We also assume that hiring begins at the start of the year to maintain accurate payroll amounts throughout the months. In addition, we will assume that travelling done by employees, such as salesperson, will fluctuate based on the busier times of the year. 29


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Appendix Appendix A: Potential Client Information Company Identification Name: Nelson Education Ltd. Address: Nelson Education 1120 Birchmount Road Scarborough, ON M1K 5G4 Canada Ownership/Leadership Team: Greg Nordal: President and CEO Michael Andrews: Chief Financial Officer James Reeve: Senior Vice President and Managing Director, Higher Education Division Susan Cline: Senior Vice President, Media and Production Services Marlene Nyilassy: Senior Vice President, People and Engagement Chris Besse: Senior Vice President and Managing Director, School Division Jean Bouchard: General Manager, Groupe Modulo Inc. History: Nelson is Canada’s leading educational publisher. They pride themselves on providing innovative products and solutions for all learners. They are owned by OMERS Capital Partners and certain funds of APAZ Partners. Stature and Credibility of the Company Size: 350 employees Sales Volume: $201,711,000 Stability: OMERS was established in 1962. Credit Rating: A 34

Product Design Offering: Nelson Education Ltd. is involved in the Canadian publishing industry. They are specifically involved in K-12, Higher Education, Professional Learning and Business, Industry and Government markets. Nelson is looking into creating more interactive digital textbooks as the current offerings are not making use of the current capabilities of computers and mobile devices (such as tablets). Quality: The quality of the textbooks that Nelson creates are exceptional. However, they do not have highly interactive digital versions of their textbooks. This presents us with an opportunity to take them on as a client. Company Identification Name: McGraw-Hill Ryerson Address: McGraw-Hill Ryerson Limited 300 Water Street Whitby, ON L1N 9B6 Ownership/Leadership Team: Talia M. Griep: President of McGraw-Hill’s International Publishing Group J. Mark DesLauriers: Partner at Osler, Hoskin and Harcourt LLP Susan M. Armstrong, C.A., ICD.D: Director of McGraw Hill Ryerson Elizabeth O’Melia: Senior Vice-President and Treasurer for The McGraw-Hill Companies, Inc. H. Ian Macdonald: President Emeritus and Professor of Economics and Public Policy at York University and Director of the Master of Public Administration Program. Manon R. Vennat: Principal of Manon Vennat & Associates. 35


David Swail: President and Chief Executive Officer

26 Prince Andrew Place Don Mills, Ontario M3C 2T8

History: McGraw-Hill Ryerson was created by the merging of two well established publishing companies: The Ryerson Press and McGraw-Hill Book Company. The Ryerson Press was founded by Egerton Ryerson, and was originally known as the Methodist Book and Publishing House. It later took Ryerson’s name and was added to McGraw-Hill’s name when the company purchased The Ryerson Press.

Ownership/Leadership Team: Dan Lee: VP Further Data is Unavailable

Stature and Credibility of the Company Size: 170 employees on location, 215 corporate employees Sales Volume: $201,711,000 Stability: OMERS was established in 1962. Credit Rating: A

History: Pearson is a leader in education, education technology, and consumer publishing. They are an international company, located in over 60 countries. They own many publishing brands, such as: Penguin, Viking, Prentice Hall, and Allyn and Bacon.

Product Design

Stature and Credibility of the Company Size: 300 employees at the New Market location, 34,000 employees based in more than 60 countries. Sales Volume: $57,632,000 Stability: Established in 1998 Credit Rating: C

Offering: Nelson Education Ltd. is involved in the Canadian publishing industry. They are specifically involved in K-12, Higher Education, Professional Learning and Business, Industry and Government markets. Nelson is looking into creating more interactive digital textbooks as the current offerings are not making use of the current capabilities of computers and mobile devices (such as tablets). Quality: The quality of the textbooks that Nelson creates are exceptional. However, they do not have highly interactive digital versions of their textbooks. This presents us with an opportunity to take them on as a client. Company Identification Name: Pearson Canada Inc. Address: Main Office 36

Distribution and Operations 195 Harry Walker Parkway North Newmarket, Ontario L3Y 7B3

Product Design Offering: Pearson publishes textbooks elementary, high school, postsecondary, and computer technology. Pearson currently offers eBook versions of their textbook through coursesmart reader. Quality: The current eBooks require a connection to the Internet. They do not offer a high level of interactivity (they allow addition of notes, highlighting, copying and printing). The downside to this is that a student can only access the text when they are online. Furthermore, it does not take advantage of all of the possible interactive aspects available. Company Identification

Name: Oxford University Press Canada Address: Oxford University Press Canada 8 Sampson Mews, Suite 204 Don Mills, ON M3C 0H5

their textbooks. The digital version is only a PDF and has no interactive elements. All interactive elements are only accessible through their website.

Ownership/Leadership Team: Matt Adamson: Associate Director, Trade Sales Group Geoff Forguson: VP/Director, Finance and Operations Sophia Fortier: VP/Director, Higher Education Division Wendy Moran: Associate VP/Director, Creative Services Davide Steele: VP/Director, School Division David Stover: President Julie Wade: Associate Director, ESL Department History: Oxford University Press is a department of University of Oxford. It is one of the oldest publishing houses in the world. It is not a company and therefore is not publicly traded. It focuses on publishing works that further education and research. Stature and Credibility of the Company Size: 100 employees Sales Volume: $57,632,000 Stability: Oxford University Press Canada was established in 1904. Credit Rating: A Product Design Offering: Oxford University Press publishes textbooks for elementary schools, higher education institutes, reference/trade, and ELT. As previously stated their goal is a company is not to make money but to further education in every facet possible. Quality: Oxford University Press currently offers a digital version of 37


Appendix B: Competitor Information Company Identification Name: Kno Address: Kno Inc 5155 Old Ironside Dr Santa Clara, CA 95054 United States of America Ownership/Leadership Team: Osman Rashid: Co-Founder and CEO Babur Habib: Co-Founder and CTO David Staus: VP Products Ahsan Jameel: VP, Program Management Office Don Morrison: VP, Business Development Manoo Urs: VP eCommerce and Cloud Engineering Ousama Haffar: Vice President of Marketing History: Kno was founded by Osman Rashid and Dr. Habib. Osman has previous experience in the textbook industry as he was co-founder of Chegg. They are a software education company that wants to shake up the higher education market by making learning engaging, efficient, and social for students. Stature and Credibility of the Company Size: Not Available Stability: Founded in May of 2009 Product Design Offering: Kno offers digital textbooks for higher education purposes. Currently they have software for the iPad, Facebook (beta), and web browsers (beta). Quality: 38

Kno’s textbooks require an iPad at the moment as their other platforms are all in beta. This limits the amount of students who will be able to use their service. Some of the features their textbooks offer are as follows: Highlighting, Zooming in on images, Notes, Smart links (to maps, videos, images, formulas, and important concepts), Quiz me (this turns all diagrams into quizzes), and sharing features. Their features are the most similar to what we plan to offer. We will be going above and beyond their current offerings, making some features available in an offline manner. Company Identification

Product Design Offering: CourseLoad creates eTextbooks for universities. They hope to cut down on the expensive costs of printed textbooks as well as make use of multimedia elements, collaboration online, and interactivity.

Appendix C: Facilities Layout

Quality: The specific features of the eTextbooks are not listed. It appears that they depend on what the university wants. It appears that their textbooks are only available online.

Name: CourseLoad Address: 351 West Tenth Street, Suite 250 Indianapolis, IN 46202 United States of America Ownership/Leadership Team: Michael Levitan: Chief Executive Officer, Founder Don Scifres: Senior Vice President, Operations Alan R. Dennis, Ph.D.: Senior Vice President, Research and Business Development, Co-Founder Jason O’Brien: Chief Technical Officer Cheryl Steele: Vice President of Sales

Above: Location of building relative to major transportation. Below: A picture of the front of our building.

History: CourseLoad was originally founded in 2000 but due to lack of interest was shut down. It relaunched in 2009. The company focuses on marketing to universities. They take textbooks that the university is interested in and digitize the textbooks for the university. They are currently only offering textbooks for Indiana University, and are looking to expand. Stature and Credibility of the Company Size: Not Available (stated as rapidly growing) Stability: Shutdown once in 2000, was relaunched in 2009 39


Appendix D: DigiText Internal and External SWOT Internal Factors

Strengths

Weakness

Internal Factors

Strengths

Weakness

Management

Two founders with entrepreneur minor and entrepreneurial background in the family. Both families may be relied on to help the business if needed. One running an ink based company, the other is a self employed charted accountant.

Lack of management experience with providing a digital service.

Finance

A small office combined with smart planning of resource use saves many expenses and overhead costs.

Limited financing available in beginning of startup makes spending and upgrading difficult until a profits are made.

Experience in voluntary management positions, such as project leader or co-president of university affiliate groups. Offering

Marketing

Product following trend in the market while offering more features than competitors.

Product will be hard to explain to those without technological knowledge.

Product takes advantage of the fact that the top four competitors only offer ebooks. DigiText offers comprehensive offline textbooks with only minor online aspects.

Product will require several months of coding before it will be viable.

Knowledge of industry allows marketing efforts to be targeted and efficient.

Limited funds available at start-up for marketing activities, as well as limited experience marketing a digital company to publishers.

Past experience within marketing courses allows knowledge gained to be used within the workforce. Personnel

40

Lack of personal experience starting a business and running a business without some form of guidance.

Initial hiring of personnel will be enough to cover the gaps of knowledge within the partners. This leaves a small well-rounded team.

As the company grows more staff must be hired to allow efficient expansion of the company. There is currently not enough staff to allow for a large amount of growth.

Financial bookkeeping will be completed by the partner with the strongest financial knowledge and experience—limiting the expense of accounting. Familial relationship with charted accountant allows for decreased rate on tax returns. Manufacturing

Team has experience with typesetting and the revision process. Manufacturing of product uses electricity and time. Only minimal overhead will be required as manufacturing of product is done through digital means.

Product Development

Lots of opportunities to grow the product once the initial application/ software has been developed and the basic value-added items have been determined.

Each product must be customized for each company. If a company requests a new interactive element it will require a great deal of time and research.

External Factors

Opportunity

Threats

Consumer/Social

The end-user of our products are university level students. The market for these students continues to grow within Canada. There is also a large market for expansion internationally as increased enrollment in postsecondary students is seen.

Digital textbooks are still considered new within the industry. Many end-users may not be aware of all of the benefits the product provides. Education of the end-user will be the job of our clients. If not done properly students may not see the need to purchase digital textbooks and our clients will cease to purchase from us.

Competitive

Our products can be used offline and will only have minimal online requirements, such as a link to a website. All competitors currently only offer ebooks, some of these books do not function without the use of the internet.

Competition have established companies and software and have a large portion of the market already.

Technological

Hand picked, and eager experienced programmers will allow for a powerful platform for DigiText, as well as many interactive elements.

Product is heavily reliant on technology which requires a large technological investment that must be upgraded as technology advances.

Partners have little to no experience programming. Several months are required to program the initial platform for the product. More time will be needed allow for different platforms and interactive items to be used.

A strong focus on research and advancements with all members of DigiText will allow for technology to continually move forward—not permitting stagnation. Economic

Legal/Regulatory

Due to the recession, as well as decreased economy for countries not being effected by a recession, students are looking for ever cheaper textbook options.

Recession is causing many companies to not spend money and invest in new technologies as freely. Canada is introducing laws that will allow people to share materials from digital texbooks without breaking copyright laws.

Appendix E: Competitor SWOT Analysis Competitor A: CourseSmart Internal Strengths

Internal Weaknesses

• CourseSmart was founded by Pearson, Cengage Learning, McGraw-Hill Education, Bedford, Freeman & Worth Publishing, and John Wiley and Sons. It was created in response to the need in the market for digital textbooks from these publishers. As it was founded by multiple publishers it already has a strong foothold in the publishing industry. • CourseSmart was the first in the industry to develop and launch an iPhone App, an iPad App and an Android App. Due to this they have a strong head start on the competition, including DigiText. • CourseSmart currently has the highest offering of digital textbooks from one competitor, on the market today.

• The textbooks that CourseSmart currently offers are through any web browser, and many mobile devices and tablets. Students must be connected to the Internet to view and use the textbooks offered. This means that if a student does not have an Internet connection they will be unable to use their digital text. • The interactivity of CourseSmart’s textbooks are quite limited. They only allow note taking, highlighting, and printing. Any extra content is separate from the text itself. • CourseSmart only appears to offer higher education textbooks. They do not make digital textbooks for secondary education.

Strategy

Strategy

CourseSmart currently is our largest competitor to date. However, they appear to be creating digital textbooks only for the original publishers that founded the company. It does not seem that they are expanding. This does not make their strengths unimportant to DigiText. We plan on building a platform for our textbooks to be viewed on computers, smart phones, as well as tablets. The advantages that will remain will be the publishers that they are currently working with. As we plan to create much more integrated and interactive textbooks it might be possible for our company to work with CourseSmart and their publishers to improve upon their texts, as it is unlikely the founding publishers will simply leave CourseSmart to work with DigiText.

Course Smart only offers etextbooks. DigiText will be creating textbooks that work offline, as well as online. The majority of the content will be available offline. It will only be links to websites or videos that are not embedded in the document that will require the use of the Internet. Furthermore we plan on having a great deal more interactivity available to the end user than CourseSmart offers. This will successfully allow DigitText to provide superior digital textbook solutions to publishers.

41


Opportunities For DigiText

Threats For DigiText

• As mentioned in the weaknesses section, CourseSmart does not have a highly interactive digital textbook offering at the moment. Instead they have limited interactivity and require individuals to have an Internet connection. DigitText will be creating highly interactive digital textbooks which will be vastly superior to the current offerings of CourseSmart. These superior textbooks will make it possible to open communication between CourseSmart and DigitText—a partnership between the company will increase the amount of customers as well as the amount of potential profit.

• If CourseSmart is unwilling to partner, or work with DigiText it will mean several large publishing companies will no longer be able to be potential customers and therefore no longer be of a potential benefit, financially, to DigiText. • CourseSmart appears to be a company that continually moves forward and improves. It is quite possible that during the initial set-up of our company they will improve the interactivity of their current textbooks. This will made it more difficult for DigiText to enter the market.

Competitor B: Kno Inc. Internal Strengths

Internal Weaknesses

• Kno was founded by Osman Rashid and Dr. Habib. Osman has had previous experience within the textbook industry as he was the co-founder of Chegg. • Kno’s digital textbooks are highly interactive. They currently offer a wide variety of features for their digital textbooks, including: highlighting, zooming on images, notes, smart links (videos, images, maps, formula, important concepts), a tool that turns diagrams into quizzes, and social sharing features. • Kno has created a platform which, although in beta, allows for a great deal of sharing between students. The sharing through social media will cause students to be able to learn easier and more effectively. They are not afraid to push forward into the unknown and meet unmet needs of the end user.

• Currently Kno’s textbooks are only available online, and while using an iPad. They are testing different platforms, such as facebook. However, these platforms still do not address the problem of studying with no Internet connection. • Kno only offers digital textbooks for the higher education market. At the moment there are no plans for them to expand beyond undergraduate level.

Strategy Kno is our second largest competitor. They offer the most similar textbook interactivity to our own. However their textbooks are not available in an offline form. The focus on creating an environment where students can collaborate and share. Our focus is on the interactivity and creating a powerful offline alternative to the current online textbooks.

42

Strategy The strategy applied to CourseSmart will be quite similar to the one applied to Kno. The main difference will to make certain that the interactivity we plan to offer is superior to what Kno has available at the moment—furthermore it is vital for DigiText to stay ahead of Kno’s interactivity. This will be done through a strong research and development team.

Opportunities For DigiText

Threats For DigiText

• As mentioned in the weaknesses section, CourseSmart does not have a highly interactive digital textbook offering at the moment. Instead they have limited interactivity and require individuals to have an Internet connection. DigitText will be creating highly interactive digital textbooks which will be vastly superior to the current offerings of CourseSmart. These superior textbooks will make it possible to open communication between CourseSmart and DigitText—a partnership between the company will increase the amount of customers as well as the amount of potential profit.

• If CourseSmart is unwilling to partner, or work with DigiText it will mean several large publishing companies will no longer be able to be potential customers and therefore no longer be of a potential benefit, financially, to DigiText. • CourseSmart appears to be a company that continually moves forward and improves. It is quite possible that during the initial set-up of our company they will improve the interactivity of their current textbooks. This will made it more difficult for DigiText to enter the market.

Competitor C: CourseLoad Internal Strengths

Internal Weaknesses

• CourseLoad was formed well in advance of all of our other competition. The company was the original digital textbook company. This has allowed it time to improve and learn about the market, as well as set the bar. • CourseLoad markets directly to universities and allows facility to choose what options they desire for their digital textbooks. This means that a professor can choose any text and have it digitized to fit their standards.

• Although CourseLoad was the first company to create digital textbooks and has been involved in the industry for many years, the company disbanded for a period of time before starting in 2009 again. This may have caused bad Carma with clients at the time. • CourseLoad markets directly to universities and professors, meaning that their services will increase the cost of the textbook more than working with the publisher would.

Strategy

Strategy

Although CourseLoad is a digital textbook company they have a very different set of core customers. They appear not to work with the publisher, but instead work with the universities. DigiText’s research and development team will make certain that textbooks include the most desired interactive technologies by questioning and learning from students, as well as instructors.

DigiText strives to create digital textbook options that will allow for cheap, affordable, alternatives to competitors and to the printed version of the text. Due to our direct relationship with publishers we will be able to help keep the processes affordable to students. CourseLoad’s digital textbooks will be a much more expensive alternative to our own.

Opportunities For DigiText

Threats For DigiText

• As CourseLoad only works with universities, and at the moment only one, it is possible that DigiText can take this time to increase our market share. CourseLoad has experience in some areas but they are very focused on direct selling, which DigiText can take advantage of by spreading to as many publishers as we can. A university will no longer require CourseLoad if the majority of their textbooks have already been digitized.

• CourseLoad does not present a major threat to DigiText—unless they begin to partner with the publisher and professors. This would create a more reasonably priced customized text. However it would most likely cost more than the textbooks created by DigiText would.

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Appendix F: Forecast Timeline May 2012

June 2012 • Acquisition of office space • Renovations begin • Personal selling to large publishing corporations • Internet Marketing • Software Development

• Begin hiring programmers • Personal selling to large publishing corporations • Internet Marketing • Software Development

May 2013

May 2014

• 1 year goal of 1 major and 3 minor publishers as customers • Hiring a part-time typesetter • Increasing wages

• Growth of customer base to 2 major and 5 minor publishers as customers • Hiring of more staff to increase productivity

July 2012

August 2012 • Contract with one smaller publisher • Internet Marketing • Personal Selling • Renovations to building conclude • Hiring of employees

• Contract with one major publisher • Internet Marketing • Personal selling • Software development concludes

September 2012 • Finish hiring process • Internet Marketing • Personal Selling • Training of Staff • Move into building • Launch of Service

May 2015 • Growth of customer base to 3 major and 8 minor publishers as customers • Possible price adjustments • Hiring of more staff as needed to increase productivity • Increasing research into new and innovative ways to create digital textbooks

Organization Chart - Year 3 Co-Founders Cathleen Kurz

Anna Whatman

Carol Fung

Ahmed Alabbas

Co-Founder/Research and Development Manager

Co-Founder/Manager of Finance

Co-Founder/ Marketing Manager/ Director of HR

Co-Founder/ Sales Manager

Sales Department

IT Manager

Production Manager

Receptionist

IT Department

Production Department

Office Administration

Sales Rep 1 Sales Department

Proofreader

Appendix G: Organizational Charts

Production Department

Organization Chart - Year 1 Co-Founders

Cathleen Kurz

Anna Whatman

Carol Fung

Ahmed Alabbas

Co-Founder/Production Manager/Research and Development Manager

Co-Founder/Production Manager/Manager of Finance

Co-Founder/Marketing Manager/Director of HR

Co-Founder/ Sales Manager

Typesetting Department Typesetter 1 Typesetting Department Typesetter 2 Typesetting Department

Lead Programmer

Sales Rep 2

Programming Department

Sales Department

Programmer 1 Programming Department Programmer 2 Programming Department

44

IT Manager

Programmer 1

Programmer 2

IT Department

Programming Department

Programming Department

Programmer 3 Programming Department

45


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