Introduction
When business people are analyzing business organizations, they take into consideration several factors that would be critical to determine expected risks and gains. About opportunities in business, many factors could be utilized to result in profitable ventures. However, in most cases, individuals are faced with the challenge of overcoming any obstacles that may hinder the successful operations of new ventures.
This paper aims at achieving four goals vis-a-vis the case study. First, it identifies the factors that created the opportunity in the case study. Second, it determines the obstacles that Reiss had to overcome to make the most of the opening. Third, it discusses the approaches that he adopted to overcome the challenges. Finally, it estimates the amount that the entrepreneur made from the venture, using income statements for Trivia Inc. and R&R.
Factors that created the opportunity
It is notable that “Trivial Pursuit” was designed in Canada in the early 1980s. After two years, sales of the game were strong, although it was mainly promoted through the word of mouth. Thus, one of the best factors that led to the business opening was the relatively high rate of growth of the game about annual sales. Another factor was the absence of a similar product in the US market. At the time Reiss was thinking about the product, very few entrepreneurs had adopted it in America. However, it is evident that it was exemplified by a high wholesale price of $19.00, but retail prices varied from $29.95 to $39.95.
It is essential to point out that the prices were about two hundred percent to three hundred percent more expensive than those of board games. The relatively high probability of businesses in the US adopting trivia games was another reason that made Reiss realize the huge opportunity in the envisaged undertaking. It was expected that firms would be involved in the production and marketing of similar products, which would result in increased demand and sales. It is clear that the only trivia that was in the US market in 1983 was “Trivial Pursuit”. One of the entrepreneur’s friends proposed that television would be a perfect topic.
As a result, Reiss saw that it would be a great potential for advertising. He stated that many American families watched television for over 7 hours in a day. Also, he hypothesized that the approach would be an excellent PR opportunity. Lastly, there was a huge potential for collaborating with TV Guide, which would be important to add strength and interest in the venture. TV Guide was an established magazine that was typified by excellent sales of about 72 million copies every month. The exemplary sales could imply that the magazine was the most popular publication in the US market, which would greatly market the new game business in the nation.
Obstacles that had to be overcome
Research shows that new businesses and/or business mergers and acquisitions are characterized by challenges, which could lead to both short-term and long-term negative impacts. Therefore, management teams must adopt approaches that would solve the identified problems. In the context of the case study, the following challenges could be isolated: low popularity of trivia games in America, limited funds, and licensing.
How Reiss overcame the obstacles
Reiss was such an adept business person who knew that he could only reap the benefits of his venture after he could deal with challenges that exemplified it. Thus, he used different strategies to ensure that he succeeded. About the low popularity of the game in the new market, he assumed that once it was introduced, then large manufacturers would produce and market it, resulting in high demand and excellent sales. The game was produced in large numbers by October 1983. That led to high demand from consumers, which could not be met by one manufacturer. As a result, another major manufacturer started to offer trivia games in early 1984. There were relatively high demand and popularity for the game products.
For the entrepreneur to solve the challenge of limited funds, he understood that he could not be in a position to afford the advertising budgets of some of the largest game producers. Some of them used about $1 million to advertise games. Thus, he thought that he could team up with other entities who could handle the publicity of the venture. Specifically, he approached the management of TV Guide, which could be critical to advertising trivia games.
About the challenge of licensing, which was mandatory in the toy industry, Reiss thought that he could collaborate with an established brand that could add value to the business undertaking. After TV Guide reviewed the proposal developed by Reiss, it opted to be involved in licensing the product, and not manufacturing it. Thus, he solved the challenge by approaching a potential partner.
How much Reiss pocketed
In every business, an investor or investors need to assess the amount of money that is generated during a given period. In this context, it would be important to determine the actual amount of money that was made by the entrepreneur. However, two-income statements would be required. The first income statement would belong to Trivia Inc., which was owned 50/50 by Reiss and his associate. The second statement would be for R&R, which was 100% owned by Bob Reiss.
Figure 1. An income statement for Trivia Inc. for the year ended 31 December 1984.
Figure 2. An income statement for R&R Company for the year ended 31 December 1984.
The income statements show that Bob Reiss made huge profits from his company (R&R) and the partnership he had with Kaplan. He shared a net profit of $200,000 equally with his business associate. On the other hand, he made $1,554,755 through R&R Company, which was involved in distributing trivia game products.
Conclusion
In conclusion, the business opportunity required some strategic approaches to reap from it. Bob Reiss applied various strategies to deal with obstacles in the case study. Through his prudent strategic management skills, he was able to pool resources together. He executed a business idea that was successful in the US market.