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Micro Fridge Group 5 - Section A - SM-II

Microfridge Inc. was founded as a partnership by Bob Bennett and two cofounders after Bennett had a disagreement with management at his previous company, Star Technologies, about innovation. They developed the idea of a combined microwave oven and refrigerator called a Microfridge after previous ideas were rejected. They targeted their product towards college dorms, military bases, and hotels. Starting with $5000 in market research and $35,000 of initial funding, they proved demand through an initial 1700 unit order and expanded through loans and a $4 million investment round, allowing them to acquire competitors and expand their product line and distribution.

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Shashank Gupta
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215 views14 pages

Micro Fridge Group 5 - Section A - SM-II

Microfridge Inc. was founded as a partnership by Bob Bennett and two cofounders after Bennett had a disagreement with management at his previous company, Star Technologies, about innovation. They developed the idea of a combined microwave oven and refrigerator called a Microfridge after previous ideas were rejected. They targeted their product towards college dorms, military bases, and hotels. Starting with $5000 in market research and $35,000 of initial funding, they proved demand through an initial 1700 unit order and expanded through loans and a $4 million investment round, allowing them to acquire competitors and expand their product line and distribution.

Uploaded by

Shashank Gupta
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPTX, PDF, TXT or read online on Scribd
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Micro Fridge

Group 5 | Section A | SM-II


SUBMITTED BY:
GOURAV BALDEWA 14P016
PRACHI MOHAN 14P033
RISHABH SOOD 14P039
SHASHANK GUPTA 14P046
SRISHTI JAIN 14P050
VAIBHAV KHATRI 14P059

FOUR MODELS

Apt example of Opportunist Model where employees


gather their own thoughts and resources and venture
into new businesses

En
tre
pr
en
eu
rs
hi
p
Tu
Idea
rb
Generation
ul
en
InternalceFinance

Path of Entrepreneurship

Proof of Concept
External Finance
Expansion
IPO

Entrepreneurship Turbulence
Bob Bennett works with Star
Technologies Sells high speed
processors
Disagreement with management
over direction company was taking
Wants to innovate and come up
with a new business

Idea generation
Proposed new idea of combined Microwave oven
and refrigerator to GE deal didnt go through
Encountered lack of willingness from American
manufacturers while Samyan lost its retails
partner (Sear)
Partnership generated synergy for both

Products
MicroFridge for colleges, motels and military
MicroMart Placed in motel lobbies to increase their
revenue
Microbar Used as mini bar in hotel rooms

Internal Finance
Invested $5000 for market survey

Found colleges student to be most suitable target audience

Founded company Microfridge Inc in partnership

Bennett - $35000 - 60% stake


Two Cofounders - $12500 20% stake each

Tried to finance 1st order through letter of credit from


Korean trading company but deal was called of

Eventually Raised capital through High interest loans

Proof Of Concept
First order came for 1700 units
Capital needed was $ 170000 for tooling and $ 100 per unit sold to be given
to Samyan
This was the first possible sales hit for the company in the market: One of the
first steps to glory
Sold over 4000 units to distributors who in turn sold to various colleges

But actual sales were only 1000 units to the customers


Distributors panicked and tried reaching out to their earlier relations but MF
avoided that
Hence forth company adopted a direct selling model and the graph was only
looking up

Market
Colleges
(55% Revenue)
1.25 million dorm rooms in 1877
colleges

Military
(25% Revenue) 280,000
military barracks at 200 military
bases across U.S

Hotels 2 million hotel rooms


with no restaurant services

Few assisted living apartments

Colleges
Campus installation
Campus rental
Schools to give
orders with
advanced cheques.
Company Rental

Every room has a


Microfridge. Rent
increased by $50
Either sold to schools at $
399 or rented at $100 per
year for 5 years.
Schools earn by charging
students $ 130 per room
Run by Microfridge itself
Complete installation,
maintainance by
microfridge
Costs higher to company
at $160 per annum

Competition
Existed from regional refrigerator rental
companies
Microfridge made its 1st acquisition and was
closing in on 2nd
Increased reach and penetration
For new rental customers it gained MF replace 6000
refrigerators with Microfridge

No company existed with similar product and


structure so Micro fridge could easily dominate
market for nest 5-7 years

Alternate Suppliers
Looking for multiple supplier for sourcing to reduce over
dependency on Samyan
Struck a deal with Daewoo which supplied Microwaves
at $83 as compared to $100 of Samyan
Few issue in multiple sourcing
Assembling the microfridge became a tough task due to diferent
suppliers for refrigerator and oven
Samyan RnF would not accept delivery of Microwaves made by
Daewoo

Set up 4 warehouses to ship product to customers

External Finance
More investment required as they
wished to introduced new products to
cater to home away from home
market
Received $4 million from institutional
investor selling 20% stakes

SWOT Analysis
Strengths

Weakness

First Mover
Advantage
Focused customer
base
Management
dedicated to
customer service

Lack of internal
resources

Opportunities

Threats

Untapped market,
can be captured
completely making
it hard for
competition to
enter

Possible entry by
bigger players
Fewer students
living on campus

Thank You

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