Ramon Ecung's Personal Blog

A scope statement is a document that details a project’s deliverables and describes it’s major objectives (Wikipedia). This document is essentially a high-level overview of what the entire project will encompass (including what it will not cover).

In order to develop a project scope document, certain key pieces of information need to be discovered. These include (Wikipedia):

• The project name
• The project charter
• The project owner, sponsors, and stakeholders
• The problem statement
• The project goals and objectives
• The project requirements
• The project deliverables
• The project non-goals (what is out of scope)

In order to develop the information contained within the project scope, key stakeholders should be involved with the project. By having stakeholders involved, you increase the odds of the project being a success by getting multiple sources of input. A project can be completed successfully, but if it doesn’t meet the users needs, it won’t be used, and the time and other resources used to complete the project will have been wasted.

A good project name needs to be descriptive of the project (Stallsworth). A project name like “ASP.NET 3.5 Traffic Monitoring and Routing Website for Building A” is a much better name than “Website Project”. This helps instantly identify key information about the project immediately. In my experience, I find it’s much easier if you come up with an acronym or nickname for a project as well.

In my opinion, the most important part of the scope statement is the problem statement, project deliverables, and the non-goals. These three sections of the document state what the project is designed to solve, how it will solve the problem specifically, and what the project won’t address. It’s important to state what the project will not cover so you know if another project is needed to address a stakeholder’s needs or if they’re critical enough to involve in the current project.

After the project scope has been finalized, it should be signed off on by the stakeholders to provide accountability and to ensure all key users in the project fully understand what the outcome will be. If the scope needs to be changed in the future, all stakeholders need to meet again to discuss the changes and sign off if the changes are warranted (Stallsworth).

In my experience, it is critical to manage the flow of communication between stakeholders and the project management team. I’ve seen situations where a stakeholder would communicate directly with a software developer to ask for features or changes that will improve their workflow, but having the developer work on unapproved changes takes time off of the approved goals and causes confusion.

“Scope Statement – Wikipedia, The Free Encyclopedia”. Wikipedia.org. 2/22/2010 <http://en.wikipedia.org/wiki/Scope_Statement>.

Stallsworth, Eric. “How to Write A Scope Statement”. BrightHub. 2/22/2010 <http://www.brighthub.com/office/project-management/articles/2491.aspx>.

The biotech industry is notoriously hard to fund a startup when you have little to no proven successes. Capital is hard to come by when it may take $1B over 15 years before the investors start to see any returns if the product is approved for the intended use. Here we will examine a hypothetic situation to analyze how to best market a drug once it’s been funded and developed. Take this situation for example:

The Entrep-Pharma Co. has created a drug that is very effective in reducing complications in heart attack patients. Here’s what we know about the product and the market. Among the 700,000 highest risk patients annually, the rate of complications and deaths from complications from using the current treatment is reduced 16% with the new drug treatment. 112,000 lives saved. A complication costs a hospital on average $8000. Medical insurance does not reimburse hospitals for costs stemming from such complications. Cardiologists have been using the existing treatment, Warfin, for years and are comfortable with it. It takes about 30 minutes for Warfin to be effective and must be closely monitored in the meantime. Your new drug, AngioMax, works almost immediately and does not need monitoring. Pharmacists in the hospitals have been under pressure by administrators to keep their drug budgets down. Warfin costs about $2 per dose. To recover the development cost of your new drug, AngioMax, Entrep-Pharma would need to charge somewhere between $200 and $400 per dose.

In determining the lowest price Etrep-Pharma Co. can charge for it’s AngioMax drug, it’s useful to have a baseline to compare to. There are two main costs involved with the Wafrin drug: the unit cost and the ancillary costs that come about with the 16% complication rate. The unit cost of Wafrin assuming only one dose is needed per patient per year is $1.4M. The ancillary cost of Wafrin is $8,000 times 16% of the total number of users, which is $896M. This comes to a total cost per year of $897.4M.

Even if Entrep-Pharma Co. charges the high range of their pricing estimate per dose (assuming one dose per year) it will cost $280M per year for 700,000 patients. The major benefit of AngioMax is that the number complications that arise from it are not statistically significant, thus there is no correlated complications from the drug. Assuming that $200 a dose for the drug is the break even price because it is the low end of the estimate, if they charge $400 per dose, they would make a profit of $140M. Even if you assume $300/dose is the break even price, the drug would make $70M profit annually.

Now that there is a baseline to compare the two product costs, it’s plain to see that in terms of total cost, AngioMax is the cheaper solution, which also means they can charge more than $400 for the drug and still be lower than Wafrin’s total cost. In this situation, I believe that the main benefit of AngioMax is that it does not require human interaction while administering the dosage. This reduces human errors, and allows AngioMax to be safer.

Entrep-Pharma Co.’s target market is any of the 700,000 high risk people that need this type of medicine. Their management team needs to take a two pronged approach in order to allow each of those customers to be able to afford the medicine. First, they should sit down with the major players in the healthcare industry to show them how they can reduce hospital’s costs by more than 50% by introducing this drug and absorbing the cost. They also need to work with the insurance companies to get this drug covered because of it’s lack of side effects and it reduces the cost of future care.

They should price their product based on cost and their target consumer. They should sell the product to end customers (distribute the product to pharmacies and provide a coupon system) that cannot afford the drug and reduce the price so they are selling at a loss. This will lower taxes and increase federal funding the company can use to repay investors. It will also increase goodwill towards the company. They should also sell the drug above cost ($600 a dose is a good compromise between profit and undercutting the true cost of Wafrin) to hospitals. This is where they will make their profit.

If the end consumer ends up needing to pay for this medicine, Entrep-Pharma Co. should target wealthy older individuals that are at risk for heart problems. They can use mass media marketing to get the message that they’re number one in safety and having a healthy recovery, and how dangerous other (read: Wafrin) drugs are.

I recently read a case study for a small and growing business called UndergroundHipHop.com I obtained from Ivey Publishing.

UndergroundHipHop.com is a company started by a college undergrad student in his dorm room. The company started out as a project of passion that lead to a large online community that all had interests in underground hip hop music. Adam Walder, the owner, decided to capitalize on his user base by selling CD’s from his website. He later branched out into having a retail outlet to sell his merchandise, although it only accounted for 12% of annual revenues. Walder faces a critical juncture because his company had primarily used internal funding for projects, it was debt free, but this had a limiting effect on the growth of the company.

Walder started with a website where he shared his passion with the world. Once he realized he could do better than the companies that were in the underground hip hop scene, he realized he could serve the community and turn a profit at the same time. As the company matured by having an online store with 36,000 visitors a day, a popular retail outlet and many other opportunities that it could take Walter’s business to the next level, he decided that he didn’t want to run an online warehouse the rest of his life (Wesley, 13).

Walder’s passion is to spread the genre of underground hip hop to those that love it. He explored many expansion possibilities that encompass his vision:  digital downloading of music and starting an undergroundhiphop.com magazine.

Walder obviously has passion for his job and enjoy’s being his own boss as many entrepreneurs do. Unfortunately,  this caused some possible problems in his business. One glaring problem is that he resisted adding programmers to develop the code that ran his website (Wesley, 9). This limited the amount of features and bug-fixes the website could have, which may have stunted his unique daily views. This also kept his ideas “inbred” by not having outside technology enthusiasts bring new and innovative ideas to the table. The time that he spent programming also meant that he was not pursuing other opportunities such as the satellite radio station or an UndergroundHipHop.com magazine.

Even though Walder did not come from a business background, he did a very good job bootstrapping his organization by running a “warehouse” out of his dorm room, using free services to host his website initially, and by programming the site himself (Wesley, 5). He used his personal finances at first to pay for hosting and content, and slowly he was able to use the company’s positive cash flow as a source of investment capital. He kept the company debt free (no long-term liabilities) which makes businesses more attractive to investors, and he had a track record of success.

He chose to keep investors out of the business primarily because he was scared to give out an equity stake in the company, and because he didn’t want to be burdened with debt obligations. Walder had chances to get capital infusions from various sources including a wealthy family friend and he turned them down (Wesley, 13). Walder wanted to know that the capital he received from an outside source would not incur losses. Being risk adverse can be a good thing, but not when it paralyzes you into a state of non-action.

A financial analysis is essential when reviewing a company’s financial statements in order to objectively analyze the company and to gain insights that figure comparisons can’t provide. Here are some financial ratios followed by their analysis:

• Current Ratio: 7.4
• Quick Ratio: The company has more in inventory than it does total current assets, this would normally be a bad thing, but depending on inventory turnover and considering this company as a going concern are things that must be considered
• Average Collection Period: 0
• Accounts Receivable Turnover: 0
• Inventory Turnover: 2.2
• Asset Turnover: 2.95
• Debt Ratio: .37
• Debt to Equity Ratio: .42
• Profit Margin: .44
• Return on Assets: 2.95
• Return on Equity: 4.7

It’s hard to tell too much about the company and how well it’s doing without comparing the numbers to the industry averages. We are able to infer a few facts about the company’s business model/operations from these numbers though. They are holding more than enough assets to cover their liabilities if they all came due as of the date on the balance sheet. This ratio is so high, they can probably take on more debt to grow more aggressively (hire programmers, web designers, pay for exclusive content, ect) and still be solvent. They hold a respectable profit margin on sales as well. Forty-four cents on the dollar is profit. Again, to tell is this is a good or bad number, we will need to compare it to the industry average. They have no collections on their balance sheet because they don’t have any accounts receivable. This is normal in a retail market that sells to consumers directly. If they sold to distributors, they would then generally offer terms such as Net 30 which means the net of the balance is due in 30 days.

There’s something that is completely inexcusable to me which is the amount of cash-on-hand they have. According to their  Balance Sheet, they have a negative cash balance, and I don’t see any other area where they might have cash stored. This means that they might buy their items net 30, and expect to sell other items within that 30 day period to pay off the newer items. This makes me very uncomfortable (a business model similar to this was created by Charles Ponzi, and perfected by Bernie Madoff, et al.), although they seem to make it work having $1.1M in sales, and $500k in profit.

Adam Walder’s passion is spread the genre of underground hip hop to as many people that want it as possible. There are two ways that he can spread the word about the genre without accepting too much risk into the organization: adding the capabilities to sell music digitally, and through licensing the content to start a broadcast station in partnership with a satellite radio station. He already has relationships with the copyright holders of the music and they trust and respect him (which is a bonus because you like to do business with those you like and trust), so extending his business into these outlets will lower the cost to consumers, increase margins, increase mindshare of the genre and of UndergroundHipHop.com, and provide more exposure to Walder’s talent.

Wesley, David. “UndergroundHipHop.com”. London, Ontario, Canada: Ivey Management Services, 2007.

If you’ve been unlucky enough to be given an 0×8007232B error when you’re trying to activate your Windows operating system, you know how frustrating it can be.

The simple fix for this issue is to find the link to change your product key (on Server 2008, right click on the computer icon, then choose properties and it will be at the bottom of the window), choose the option to change your product key, but then type in the same one that came with your product.

Try activating again and you should be good to go!

I’m currently setting up a development server with Windows 2008 64-bit on it and the drivers for my Linksys LNE100TX weren’t working (even from the disk!). After a few hours of searching, I found a post on the Linksys support forums that provides an answer:

Hello Everyone.

I’m sure many of you are as frustrated as I am that Linksys has yet to provide Vista 64-bit drivers for the LNE100TX. I happen to work in the IT field and frankly there is no excuse for this. Vista has been out for two years now, and most people are buying the 64-bit version of the OS. Even more frustrating, this card is still being sold in retail outlets as a current item, WITH NO VISTA DRIVERS! Yes, it’s almost unbelievable. Which is why I have decided to take matters into my own hands, since apparently, Linksys is doing jack to resolve the situation.

After doing some research, I found that the LNE100TX uses the same hardware as the “Infineon an983b”. However, the 64-bit drivers are virtually impossible to find. After exhaustive research, I found out that Windows Update has 64-bit drivers for the an983b, not for Vista, but XP 64-bit. Luckily, these drivers work for Vista 64-bit as well. I have tested these drivers and they work perfectly with the LNE100TX running in Vista 64-bit. Personally, I’ll never buy another Linksys product for as long as I live, but for those of you that have already made the mistake… I have provided the drivers on my personal website, so you don’t have to search through Microsoft’s hellishly user unfriendly update site.

Download LNE100TX Vista 64-bit compatible drivers:

http://rook.netne.net/s/lne100tx-64bit.zip

http://www.filefront.com/15094629/lne100tx-64bit.zip

Enjoy!

Source: http://forums.linksysbycisco.com/linksys/board/message?board.id=Wired_Adapters&thread.id=1273

Now I have Server 2008 connected to my network, and I can finish setting it up!

NOTE: This driver should work on any 64-bit operating system.

Many things go into knowing your target market which can be summed up if you know the four P’s: product, price, place, and promotion. Every company needs to at least have a very general idea about these categories before going to market or they’ll be sorely unprepared should any unexpected situations occur. This goes for companies that sell products (and services) from eggs to cars.

In 2008, a Swiss watchmaker Romain Jerome produced a watch that retailed for $300,000 USD that only told the wearer whether it was day or night (Frank, 2). Most people would balk at such a product, but Jerome must understand his target market because the watch sold out 48 hours after it’s launch (Frank, 9).

I’m sure most of his customers did not buy the item to tell if it was day or night which is a function any timepiece can perform. His customers purchased the item for three main reasons that all stem from the augmented product qualities:

• The technology in the watch is superior to most (the unit has two tourbillons, a device which counteracts the Earth’s gravitational field which negatively effects a watches performance (Frank, 3))
• The materials in the watch are rare (it’s made with steel salvaged from the Titanic (Frank, 3))
• The timepiece is unique and attracts attention (the unit was only in production for a limited amount of time)

All of these reasons are closely related and goes beyond the core and actual product: they all provide excuses for the owner to talk about it and “show off”. It’s closely related to why people buy a BMW over a Toyota, or a Bently over a BMW. They give the owner a certain social status and attention that certain people enjoy.

A similar product was released on the iPhone app store. It was a product called “I Am Rich”, which retailed for $1,000 USD (Wagenseil, 3). The application simply displays an image on the screen. The application is completely useless except to remind you that you are rich enough to own it (Wagenseil, 8). Apparently 8 people purchased the application before the Apple removed it from the App Store (Fox News, 1).

Jerome’s company perhaps understood the marketing mix better than one would think at first glance. They could have made the watch in a very limited quantity (for example, 5 units) and put out press releases that he had such a watch for sale. He gained free publicity for the unit by news outlets that his potential customers pay attention to even if they didn’t buy that particular watch. Because the watch sold out, people are still talking and writing about it, which keeps his name in the public’s awareness when they think of quality. And because the watch sold out, it looks like his high priced item has so much demand, that if I can afford a cheaper unit with Jerome’s name on it, a potential customer may think themselves lucky to own one.

In all, it’s a great strategy to gain public awareness and sell lower priced items (which may have a much higher margins). The customers that actually valued the watch at $300,000 got a great work of art, and at that price, I doubt they had to check their bank account before they wrote the check.

Wagenseil, Paul. “‘I Am Rich’ iPhone Application Retails for $1000″. Fox News. 2/15/2010 <http://www.foxnews.com/story/0,2933,398903,00.html>.

“‘I Am Rich’ iPhone App Removed After 8 Bought It”. Fox News. 2/15/2010 <http://www.foxnews.com/story/0,2933,399461,00.html>.

Frank, Robert. “The $300,000 Watch That Doesn’t Tell Time”. The Wall Street Journal. 2/15/2010 <http://blogs.wsj.com/wealth/2008/04/25/the-300000-watch-that-doesnt-tell-time/tab/article/>.

Blockbuster was one of the nations premiere video rental retail stores until recently. With the advent of the internet and online shopping, customers are more willing to use their credit card online to consume “all you can eat” entertainment rentals. Blockbuster’s CEO James Keyes has said that Netflix is taking “demand out of the market” of video rental retail locations (Sandoval, 4) which could be why Blockbuster’s stock is down 72.66% year over year, and down 96.15% over five years (Google Finance).

Because there is a lack of demand in Blockbuster’s main market, they must find a way to compete in related markets in order to regain it’s profitability (Blockbuster expected to post a loss of 193 million in 2009 (Sandoval, 3)). One way to do that is to compete directly with online dvd rental services such as Netflix head to head by beating them in either price or adding to the core product (which will determine the actual product) of media rental by adding unique selling points such as online rentals, HD rentals, and other added benefits.

Blockbuster may be cannibalizing it’s retail store sales, but currently their retail stores are a huge cost center. Not only that, but the retail media rentals have reached a saturation point. They have planned to shut down many of their stores and decided to replace them with kiosks and build their online infrastructure. This will reduce the hemorrhaging of cash they’re currently facing and help compete in the market that is currently growing. If they can utilize the goodwill in their brand, they might be able to become profitable in the future.

Blockbuster is trying to turn it’s image around. Right now they face consumer attitudes that they are expensive and that needing to drive to a retail outlet is more inconvenient than having movies shipped, or visiting a rental kiosk located at a store that the consumer visits often. They are changing these perceptions by competing in the online space, as well as opening their own kiosks. They are leveraging the fact that they are one of the only online/kiosk suppliers that also has retail stores by allowing customers to return movies to their stores and also by letting them exchange a limited number of movies in the store so a consumer doesn’t have to wait for the mail.

Blockbuster is targeting consumers that might not have been in their stores to actually rent a movie but are comfortable giving payment information online: definitively a younger demographic. Their old market segment of “anyone that wants to watch a movie without paying for it” has changed to “users that want to rent a movie the traditional way” (which I feel is now an older demographic) has split into their current demographic plus “users that are comfortable streaming video online” (a younger demographic), “users that value selection and are comfortable online” (a younger demographic) and also “users that value convenience over selection of titles”. They value that approach because it allows them to connect with their consumers in a method that gives the consumer the ultimate choice.

Sandval, Greg. “Netflix has Blockbuster on the ropes” C-Net News 2010 C-Net 11 Frb. 2010 <http://news.cnet.com/8301-31001_3-10449940-261.html>

“Google Finance: Blockbuster”. Google. 2/12/2010 <http://www.google.com/finance?q=blockbuster>.

Previous Market Segments
Previous to 2004, RIM’s devices were slanted towards corporate and business users starting with it’s Inter@ctive Pager 900 (Ziegler, 5). It’s mobile phone product lines didn’t become popularized until email became a mission critical application. RIM saw the potential in email and grew it’s business along with the popularization of the then nascent technology.

New Market Segments
RIM’s first cellular unit that was directed at mass market consumers was the BlackBerry 7100 released in 2004 (Ziegler, 38). They were trying to capitalize on ordinary users that enjoyed the features of a corporate device (calendaring, email, tasks, ect) but didn’t have a corporate environment (Exchange/Windows Server, ect).

Differences Between the Segments
The two market segments they’re catering to are on opposite ends of the spectrum even though they have overlapping qualities. Business users (their original niche) need constant access to email and calendaring applications to be more productive and provide added value to their organization. Consumers enjoy the same features that business users do, but they “require” features such as cameras, social media applications, and entertainment.

Risks of Acquiring Their New Segment
By opening up to a new market segment, RIM is hoping to not only gain more consumers (Silver, 11), but to get younger consumers used to using their platform so when they have a choice of platforms to use in a corporate environment their unique selling points and purchase their profitable software and hardware platform.

RIM must be careful in opening up it’s mobile devices to other markets because they can easily be judged by the same consumers they want to woo as being negative if their handset’s features are not judged positively. Consumers judge products differently than business users. If they don’t get the features they want, whether business users care about those features or not, they will shun the product and perhaps the company. The bigger threat is that RIM will lose money on it’s investment in the consumer market as well as losing mindshare if their products are not adopted.

Bibliography:
Ziegler, Chris “Ten Years of BlackBerry” engadget.com Dec 28, 2009. Feb 9, 2010 <http://www.engadget.com/2009/12/28/ten-years-of-blackberry/>

Silver, Sara “BlackBerry’s Consumer Push is Coming at a Price for RIM” Mar 30, 2009. Feb 9, 2010 <http://online.wsj.com/article/SB123836687235267447.html>

CSMi has a wide portfolio of healthcare products. One product is an electronic health records system (EHR) that tracks injuries, treatments, and all related information called SportsWare. They sell to a variety of market segments of which are listed below.

Primary Segments
Schools – The SportsWare product is sold primarily to high schools and colleges/universities although any organization that has has athletes such as middle schools, ect.

Physical Therapy Offices – SportsWare is used by physical therapists and athletic trainers to track a person’s injury history and add treatments for a specific injury when a person comes to their office.

Sports Teams – The SportsWare application is used by athletic organizations such as professional sports teams to track their player’s injuries and report statistics and track treatments performed by athletic trainers.

Secondary Segments
Light Users – SportsWare comes in two tiered packages – Basic and Plus. The basic allows users to track minimal information needed to run their operations and is currently priced at half of the Plus package.

Heavy Users – Users that need to be able to track detailed information including a user’s insurance information, product inventory, and other advanced features use the Plus package.

Analysis
CSMi has done a good job of making sure that they understand their user’s needs in developing their software package. They’ve also sub-divided their market segments to provide added value to their clients. They understand that not all users need the advanced features built into their software, so instead of losing those clients, they reduced the feature-set of the application and sell it at a discounted rate. CSMi makes it very easy for users to upgrade to the Plus version at any time just by entering a different license key. This helps grow revenues off of the fixed cost of developing the software.

CSMi has currently targeted the athletic field with their EHR software. They can open up their software to a greater amount of potential users (more market segments) by changing terminology in their application and allow it to be used in more industries than just athletics. This would require a minimal amount of reprogramming which can be released with the next major version of the software.

Syntex is a discount high definition LCD maker that generates revenues by undercutting their name brand competitors. Their low prices and feature sets that are comparable to their competition are their unique selling points (USP). Every company has a marketing plan whether it’s formal or not. Let’s analyze Olevia’s use of the four P’s: Price, Promotion, Place, and Product.

Price
Syntex’s pricing strategy reflects their need to gain market share. They provide low cost TV sets that rival their premium competitors. They also discount their products below cost at times to drive sales. They realize word of mouth promotion about their USPs will drive sales and increase their mindshare.

Promotion
Syntex is using paid and non-paid indirect advertising by using mass market advertising and by being promoted by news stories about their low prices. They rely on non-paid advertising by word of mouth to build their brand and drive sales.

Place
The use of retailers to sell their merchandise is an effective choice because they can sell more units in a transaction. They can minimize the risk by using a JIT supply chain management structure. They also minimize risk by not holding inventory and utilizing external suppliers and manufacturing units to keep salary costs down.

Product
Syntex’s TVs core product is a display device that allows the viewer to watch television and other input devices. Their actual products include models that have different feature-sets like different input methods, features like QAM tuners, and picture-in-picture. Their augmented product includes warranty. Their value-added-resellers such as Best Buy offer services like installation and delivery. This allows the manufacturers to remove this cost from their balance sheet, allows the resellers to add value to their customers, and provide the end-customer with a valuable service.

Importance of Branding
Syntex needs to build the Olevia brand as quickly as possible to move their products to a demand based pricing scheme. They can utilize the prestige model to improve margins, much like Samsung did 15 years ago. (Darlin, 22)

Source: http://www.nytimes.com/2007/02/12/technology/12olevia.html?_r=1&th=&emc=th&pagewanted=print