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Dragonfly Corporation

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Dragonfly Corporation

I. Opportunity Evaluation

At first, Dragonfly appears to be a feasible business opportunity. Thompson's proposition meets two of the key components of a successful venture: a market need of an upscale store serving Seattle's teenage segment, and low competition in the local area. However, these elements do not provide Dragonfly with the competitive advantage required to successfully dominate the market. Its products (teenage clothes and accessories) do not differentiate from its few competitors. Further, the clothes and accessories were sold at fairly high price points. The Thompson failed to develop a new value curve that offers product superiority and value to their customers. At this time, Dragonfly does not offer a value proposition or benefit that will make its market segment to pay the cost for switching to Dragonfly. Unless the Thompson implement a new value innovation marketing strategy that offer benefits such quality, better prices, and/or convenience, Dragonfly will not be able to gain the market share required to increase sales and competitive advantage.

II. Business & Marketing Strategy

The business goal of Dragonfly is to become a thriving chain of retail stores targeting the upscale teenage market, initially in Seattle. As a result of vigorous due diligence, Dragonfly believes that it is very well positioned in the underserved teenage market, but their strategy is weak. At the very beginning of the Dragonfly venture, the Thompson's elected to lease a space in the Crossroads Mall, which is described as an older mall that is being renovated; the fact that they did that shows that they were not cognizant of the most important aspect of retail: the location. The risks here are large. This is because of several factors such as (a) Dragonfly is very delinquent on the rent at their initial location, (b) inventory has increased year-over-year since Dragonfly's inception, (c) gross sales are down from the prior year, even with a new location, and (d) Crossroads Mall and Bellevue Strip are within a 4 mile radius of each other, which puts them further at default according to their lease. At this point, Dragonfly needs to negotiate a settlement with their landlord that releases them from section 27 of the lease and allows them to vacate the premises (with past-due payments to be made, plus a separation fee) so that they can focus on the store with better location. Also, sales and inventory levels need to be presented by store (not combined numbers) in order to have a clear picture of the situation.

III. Management

IV. Analysis and Recommendations

Unfortunately once launched, Dragonfly's original store didn't live up to the expectations; the sales were insufficient, margin too



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