musyokiness

Strategic Management Audit & Shark Tank

1. Identify the key relevant points of a strategic management audit report (SMA) of a specific company

a) Prepare an outline and/or set of bullet points no longer than 2 pages you would use to do the audit

2. Shark Tank episodes

Report on one case where the Sharks invested in the company and one in which they did not; in both explain the reasons

On one of the episodes of Shark Tank, specifically Season 11 episode 18, they decided to invest in Bad Birdie company. They design golf apparel like polo shirts with a distinctive design and colorful prints. Jason Richardson, the creator of Bad Birdie was looking for an investment of $300,000 in exchange for 10 %equity in the company. Richardson pitched his product as “Most polos out there don’t have the sauce. They’re boring, vanilla, unmemorable and Safe,”. “All of these golf brands are laying up, making the same shirts our grandpas wore. We knew something had to change.” Also presented its attributes like moisture-wicking, anti-odor, anti-microbial and some protection from the sun. One key question they ask to all business owners is how much in revenue they’ve done so far, Bad Birdie since they’ve been in business for a few years their revenues exceeds $1 million. He did receive an offer from Kevin O’Leary but he wanted 30% and then Robert Herjavec offered 25%. Richardson decides to go for Herjavec offer but not before proposing a putting contest, that if Robert loses he needs to lower the equity by 5%. Shark Herjavec lost and Bad Birdie got a great deal of $300,000 at 20% equity. The reasons his idea was a success was because of the way he led his business and how much revenue he’s making due to his innovative marketing strategy.

On season 9 episode 23 of Shark Tank, Tony Chan, owner of “CoolPeds” would pitch the sharks his company’s product. The product was an electric scooter that you can attach luggage to. This idea was rejected by many reasons that were proposed by the sharks. Before we talk about the reasons for rejection, let’s talk about the company for a little. CoolPeds was founded by Tony Chan and was funded at the beginning through several “IndieGoGo campaigns'' from 2015-2017. As of the time the show aired, the company had done about $500,000.00 in online sales for 18 months and was selling the scooters at $399. The scooter is lightweight and boasts a lot of power for its weight and size. He was asking for $250,000.00 for a 5% stake. His presentation was energetic and you can tell the passion he had but ultimately there were some glaring issues with the business model. At the time, to produce the scooters, it cost around $170.00 and he was selling it for $399.00 which left little margin for distribution once sales picked up. Either the price of manufacturing would need to be lowered, or the price of the scooter would need to be raised to accommodate for this. The other issue at the time was relating to the legal aspects of the scooters in airports. Since 9/11, there have been heavier restrictions on what you can bring on an airplane, specially those items that work with rechargeable batteries such as the scooter. Tony did not provide a clear answer to this and almost dismissed the question. This is something overly concerning to investors because it would mean that the main target audience cannot be reached because of legal restrictions. What I believe was the big issue that caused the sharks to back away from this was the second product. The second product was the electric car. Based on the presentation, the real reason for the electric luggage scooter was to help start up the electric car side of the business. Combining both products was a horrible choice since there were already some unknowns with the scooter but now to add in the electric car, it made it even more confusing for the investors. Now that the sharks knew the scooter came with the car, they of course rejected the pitch because it seemed that not even Tony had a very clear idea of how to market both products and how they would come alongside one another.