Case Assignment: R&R Case Creativity and Entrepreneurship

Que 1. What are the factors that created the opportunity?

Ans- Bob has prior experience as a consultant in the gaming industry. He also worked in the
gaming industry and with his abilities he increased sales up to $ 12,000,000 in a short period of
3 years. His experience helped him to understand nuances of business which helped him to find
opportunity due to the rise of Trivial Pursuit in Canada.TV Guide liked the idea of working with
a small guy, not a big company, because they were entrepreneurial themselves. Mr. Annenberg
got fully involved with the game; it was the monetary benefit from the venture that interested
TV guide .Bob’s network in his earlier business helped him to arrive at the theme of television
as a topic in the board game. It was this theme which was particularly responsible for the
enormous success of Trivia.TV games had the broadest national appeal as an average American
spent seven hours watching television. Kaplan was responsible for other business advice and
guidance. Association with him brought Reiss in contact with Swiss Colony and Hellen Factoring
who were the other partners in Trivia Inc.

Que 2.What was the obstacles? How did he overcome them?

Ans -The industry was highly cyclical in nature. Four weeks prior to Christmas were major
contributor to sales.R&R was a name unknown to the customers and the retailers so there
would not be full acceptance of their product. It was solved by collaborating up with TV Guide
which gave them the much needed credibility. At the same time TV Guide could be associated
with prestigious retailers like Toys ‘R ‘Us, Bloomingdale and Marshall Field. The fixed cost
component of developing the product was between $30,000 and $50,000 but additional
$300,000 was needed to finance the first production run. The funds would be needed until the
initial payments from sales arrived a few months later. Reiss though about raising money from
the VCs or from the strongest among his manufacturer’s representatives in the toy business.
Finally he went to his long-time friend Kaplan who had a sizeable net worth. Then there was the
problem of financing the accounts receivable. There was the fear that the bills of some of the
smaller stores carrying the game would be difficult to collect since R&R was not having the
resources to follow up closely on its collections. So they decided to use Heller Factoring to
check credit, guarantee payment, collect the money and pay Trivia Inc. all for a fee of 1% over
sales. The special paper stock on which the game was printed was in short supply and generally
long lead times were needed to obtain them. Kaplan had a vast experience in printing and his
numerous contacts helped them to secure press time and paper supplies in short notice. There
was the problem of assembly and shipping. Swiss Colony for which Bob Reiss had been a long-
time consultant agreed to do it. JIT basis was used by Trivia Inc. to make all its suppliers send
the different components to Swiss Colony where they would put the boards, dice, and
questions in the boxes, package and ship them. Selling the game was another obstacle. Mass
merchandisers accounted for more than 70% of the market. The stores in turn had to place
some minimum purchase orders. This was a win-win situation for both the parties. Bobb
launched a PR campaign for free media publicity in which he sent 900 press kits to media
houses.Trivia inc launched a four stage marketing plan.

Que 3. Would the approach have worked for Parker and Bradley?

Ans- A out of box approach was developed in developing the TV guide Trivia game. There was
no separate question development team, this saved costs. Questions and answers were written
on books and not on cards. This made the process convenient and cheap and popularity among
consumers. Operational costs were saved hugely as Kaplan used his own office for handling the
day to day work. He was the only one full time employee at trivia. Thus $ 50000 was saved.
Capital costs were also decreased as Kaplan lent his line of credit to purchase supplies for Trivia
Inc. Suppliers supplied the commodities to Swiss Colony on a JIT basis and Swiss Colony would
assemble them at a minimal charge and send them to Trivia. All these reduced the costs of
Trivia by lowering the financing period by 30 %. Hellen factoring also provided services at a fee
as low as 1 %. Through these processed the cash flow was always positive for the company. The
names of the stores that kept the “TV based board game” were published in the TV Guide. This
required minimum placement of offers by them from Trivia. TV Game was the largest circulated
magazine in US. Some customer pulling facts were also published on the magazine. All these
resulted in high purchases at no promotional cost. So the above proposition was a twin profit
for both retailers and Trivia, both saving heavy expenses. There was intense competition; each
player reduced the price of its products. Retailers sold board games for around $ 15 and the
company suffered huge losses. On the other hand, even at this price the retailers of Trivia
enjoyed some profits. Thus cash flows were always positive for the company and there were no
bad debts. Companies as Parker Bros. or Milton Bradley had expensed of $ 250,000 for
promotion and development. They would not incurred heavy bad debts in the 1983-85 and
would have closed their product lines, whilst Trivia was thinking on whether to start another
board game based on different content.