Creativity Innovation and New Venture Creation for RunnersPro

The aim of the assignment is to carry out an evaluation and assessment of a new startup product by the venture fund “RunnersPro”-Innovation for Athletes. The product addresses the key fact about the use of the same by the Athletes and Sportsman in the various form of sports. The product development in the context of the market analysis, industry view and approach of the same analysis helped us evaluate the context and future viability of the product.

Running head: CREATIVITY INNOVATION AND CREATIVITY
RunnersPro
Name of the Student:
Name of the University:
Author’s Note:

1CREATIVITY INNOVATION AND NEW VENTURE CREATION
Executive Summary
The aim of the assignment is to carry out an evaluation and assessment of a new startup product
by the venture fund “RunnersPro”-Innovation for Athletes. The product addresses the key fact
about the use of the same by the Athletes and Sportsman in the various form of sports. The
product evaluation in the context of the market analysis, industry view and approach of the same
analysis helped us evaluate the context and future viability of the product. The product
RunnersPro will be an fitness product one of its kind where the users would be able to access
much advanced and pro technological features and innovations like live tracking, health
monitoring and additive features like enabled SOS service in the product for the use in case of
emergency. The viability of the product in the context of market, industry overview, analysis of
the product and the key financial evaluation will give us a forecast whether the product
development will be profitable or not. The same will be analyzed via the use of the risk
assessment tools like scenario analysis in order to forecast and asses the various possibility
scenario at which the product will land up.

2CREATIVITY INNOVATION AND NEW VENTURE CREATION
Table of Contents
1.0 Introduction...........................................................................................................................4
1.1 Type of Business....................................................................................................................4
1.2 Report Ethics.........................................................................................................................5
2.0 Market needs and opportunity:..................................................................................................6
2.1 Market growth and profitability potential:............................................................................8
3.0 Idea Generation..........................................................................................................................9
Ideas for Product Strategies.........................................................................................................9
(a) Product Merchandising/Displays/Availability: (Creative Idea description)..........................9
(b) Delivery of the Products: (Creative Idea description).........................................................10
4.0 Idea evaluation and selection...................................................................................................10
4.1 Analysis and evaluation of the creative ideas......................................................................10
4.2 Justification of the idea........................................................................................................11
5.0 Market Feasibility....................................................................................................................12
5.1 Analysis of the Types of Innovation....................................................................................12
5.2 Degree and Scope of Innovation..........................................................................................13
5.3 Analysis of Market Potential, Scope and Viability for Value Creation..............................14
6.0 Organizational Feasibility........................................................................................................15
7.0 Financial Feasibility.................................................................................................................16
7.1 Analysis of Key Inputs........................................................................................................16

3CREATIVITY INNOVATION AND NEW VENTURE CREATION
7.2 Model Output.......................................................................................................................18
7.3 Key Factor Analysis........................................................................................................18
7.4 Sensitivity Analysis.........................................................................................................21
8.0 Growth and sustainability potential:........................................................................................22
8.1: Analysis for identification of venture’s scalability.............................................................22
8.2 Identification of growth strategies:......................................................................................22
8.3 Funding strategies:...............................................................................................................24
8.4 Key sources of competitive advantage:...............................................................................24
8.0 Conclusion...............................................................................................................................25
Reference.......................................................................................................................................27
Appendix........................................................................................................................................31

4CREATIVITY INNOVATION AND NEW VENTURE CREATION
1.0Introduction
In the era of growing and modernizing economy, it is important for everyone to be
upgraded to technological and innovational changes that may provide each one get access to
better technology and efficient product. The Product developed for the Venture fund is a Pro and
an active product that will be an innovative product for the athletes. The product will offer with
various kinds of advanced feature to the athletes and fitness enthusiast. The product will offer an
all-round provided feature for the sport fitness from health care tracking, medical update of the
user, location tracker, direction navigation feature along with the option of the save our self
(SOS) to be used in the case of emergency. The product is different from other various smart
watches like the Fit bit. The runners pro will be working on solar energy and so is quite different
from other products in the market. The venture capital will be focusing on the product
innovation, which would comprise of the features mentioned (Peltola, Vainio & Nieminen,
2015). The product development will comprise of the different stage of product development.
The principal and the main customers for the product will be the sports enthusiast who actively
take part in marathon, cycling, jogging and running (Triaa, Gzara, & Verjus, 2016).
1.1 Type of Business
The product “Runners Pro” will be an innovative product for the sports enthusiast and
sports lover who actively take part in various kinds of sports and physical activities. Tracking the
health condition to overall medical update of the user of the product will be updated. Blood
pressure, heart beat rate to water content level in the body of the user will determined by the
smart wearable product, which is in the form of a wrist band (Lawton, 2017). Currently there are
products that give the opportunity for the sportsman the facility of navigation and direction
facility but the advanced pro product will give an all-round facility for the users. From health,

5CREATIVITY INNOVATION AND NEW VENTURE CREATION
condition to medical update the product will cover different aspect of requirement of the
sportsman (Duckworth & Duckworth, 2016). The fitness and the sports industry has always
thought for an all-round technological product that can give exposure to the sportsman and help
them and technology come together for better innovative way of dealing with problems. The
product RunnersPro will be dealing with various kind of technological innovation that will cater
to various kind of sportsman in there various field of activities from cycling to marathon the
products aims at covering various aspect of sportsman in their field (Kuenkel & Aitken, 2015).
The market size for the product is estimated to be around 5-6% of the New Zealand population
who actively take part in the physical activities. The product will not have any kind of direct
competition, as any other company or organization does not develop the product (Carayann,
Sindakis & Walter, 2015). The product though experiences indirect competition from other
products like “Fitbit” that provides medical and physical activity record, but RunnersPro will
provide an all-round update and support not only in the field of physical activity to medical
update but will also have a enabled GPS system that will provide the navigation help and an
enabled save our soul (SOS) option. The sensors enabled in the product will automatically track
down the heart beat rate and the calorie burned during the activity. The product will be shock
proof, water resistant and will provide an all-round use for events and matches as the live update
of the sportsman will be updated based on the inbuilt Wi-Fi programmer in the same. The
product will also have additive features like voice assistant and will let us know about the
temperature of the surroundings (Yeh, Lee & Pai, 2015).
1.2 Report Ethics
The report ethics will help the venture capital guide about the policy under, which the
venture capital will be operating. The venture capital will be operating as per the mentioned rules

6CREATIVITY INNOVATION AND NEW VENTURE CREATION
and regulation of the same. The product development to innovation will be dependent and based
on the different stages and the feasibility of the same will be assessed using the risk assessment
tool so that the product feasibility and the assessment is forecasted (Frank, Mashevskaya &
Ermolina, 2016). The viability of the product in the context of market, industry overview,
analysis of the product and the key financial evaluation will give us a forecast whether the
product development will be profitable or not as per the rules and guidelines of the company.
2.0 Market needs and opportunity:
Customer wants:
RunnersPro operates as the software powered watch that would take off as the most
innovative fitness application in the growing world of technologies. The market of fitness
equipment has witnessed growing demand from the consumers in both the developed and
developing nations (Malhotra & Peterson, 2014). The increasing awareness regarding the health
and fitness and government initiatives for promoting the better health are treated as some of the
factors that drive the global fitness market for watch.
The consumers have emphasised on the cardiovascular health, strength training
equipment and other equipment for maintaining the fitness. Based on the end user it is
categorized into the home consumer, health clubs, gyms and other commercial users that are
further categorized as the medical centres and public institutions. It is expected that the global
increase in the fitness consciousness of the consumer and the level of health awareness have
significantly resulted in the demand for fitness watch (Chernev, 2018). The trend is considered to
be higher in the urban areas and the market is anticipated to experience steady growth in the
semi-urban areas of the developing economies.

7CREATIVITY INNOVATION AND NEW VENTURE CREATION
Higher price of the fitness watch acts as the major factor in limiting the growth of the
fitness market of watch (Philip, 2017). A considerable amount of demand has been witnessed
among the consumers in upgrading to fitness pro products offering wide range of significant
fitness allowance for the professionals towards more health centred lifestyle.
Competition:
There are key players in the market that provides an in depth analysis of the fitness watch
market with the present trends and future estimations to elucidate the imminent investment
compartments (Weinstein & Pohlman, 2015). RunnersPro provides the competitive edge is their
ability to licence and use the intellectual property of the company that takes into the form of
numerous international patents. RunnersPro is innovative in the sense that watch is only fitness
equipment that enables the users to stand while doing strength exercise. The software enabled
watch would provide the users in conducting the specific upper or lower body workout
(Marshall, 2014). The company would however face an indirect competition from the Fitbit as
the watch provides the record medical and physical activities. RunnersPro however would
provide an all-round update and would lend support in the areas of physical activities records
with medical update and GPS enabled system that would offer navigation help with SOS options
for the users as well.
The competitive edge of the product is that it is enables the automatic tracking of the
heartbeat rate and the amount of calories burned all through the activities. The product would be
shock proof, water resistant and would offer the consumers with the all-round events that
matches up with the live updates of sportsman (Hutchinson et al., 2015). There are presently
ample of fitness watch producing companies in the market and numerous already released

8CREATIVITY INNOVATION AND NEW VENTURE CREATION
applications in the app store. However, the competitive advantage of RunnersPro would provide
the users with the logical health care scenarios.
2.1 Market growth and profitability potential:
The market of fitness equipment is anticipated to experience increased growth because of
the increased demand from the consumers. The watch industry has witnessed continuous change
in the consumer demand and the fitness applications have turned out to be highly reasonable
(Bresler & Lubbe, 2014). RunnersPro sees this as the opportunity to use the current volume of
purchases to target the consumers.
Considering the review of Flurry in 2017, it is noticed that fitness watch industry has
witnessed growth. Applications incorporated in the watches emphasises on the utilities and
productivity reflected a 149% growth in the users over the year (Foxall, 2014). It is understood
that increase in the consumer smartphone, tablets, watches and computer is driving increased use
of fitness applications among the consumers. The watch focuses on the sports, health and
wellness witnessed moderate increase of 49%. It cannot be termed as surprising that sports,
health and wellness category is increasing at the slower pace however the analyst have predicted
a disruptive change in the health care system as greater care is delivered virtually.
The industry analysis suggest that the end user segment have witnessed an upsurge in the
health and clubs because of the growth in the rate of obesity with higher health consciousness
among the consumers (Wagner & Eggert, 2016). This segment is anticipated to experience
growth at a noteworthy rate because of the growing health awareness and favourable
demographics has been witnessed primarily among the domestic consumers.

9CREATIVITY INNOVATION AND NEW VENTURE CREATION
The market analysis has suggested that the domestic consumers are the second highest
contributors of the revenue towards fitness equipment in the market by the end users. The
segment has the greater amount of penetration in the New Zealand and it is anticipated to
experience health rate of growth all through the country (Baker & Saren, 2016). The fitness
watch is anticipated to remain active in the market all through the forecasted period based on the
account of the higher penetration in the developed market of New Zealand.
3.0First Idea Generation
3.1 Ideas for Product Strategies
(a) Product Merchandising/Displays/Availability: (Creative Idea description)
Creative Idea 1: The merchandising of the product will be primarily done via ecommerce sites.
These websites will be included in form of shop-nz-website, warehouse, walkerandhall and
Amazon. The availability of the product online will be more attractive to the potential buyers and
there will be more scope for the availability of attractive discount options through coupons
codes. The merchandising of the products is done based on the simplicity of the navigation in the
pages, realistic images, Excellent Customer Services and providing secure easy payment
methods (Swenson et al., 2018). The merchandising of “Runners Pro” watch will begin with
describing the features of the product. This will include
 GPS
 Shock resistance
 Solar charging
 Real time translation
 Walkie-talkie feature

10CREATIVITY INNOVATION AND NEW VENTURE CREATION
 Application Control
Creative Idea 2: The second idea for the watch will include real-time translator, which will be
able to translate the message passed by the runner to the respective authority of sports event. In
addition to this, it will include several types of other unique features such as walkie-talkie app
will allow real-time conversation with the event management members (Gao et al. 2018).
Moreover, all the features present in “Runners Pro” will be controllable via android application.
(b) Delivery of the Products: (Creative Idea description)
The customer will be able to check the product in the catalogue in the website of the
company in which the RunnersPro has featured thee products. The same accessible in the mobile
platform. Once the customers have placed the order there will be adequate options to start
processing the orders along with quality check and then only handing it over to the courier. The
partner of the courier decides on the weight and volumetric weight of each batch before placing
for the final delivery. Once the parcel reached the nearest delivery the package of the delivery is
checked for the damages. The product is further seen to be handed over to the delivery couriers
for a delivery at the door step. The customers placing the order will be identified to be having
multiple number of options to clear the payments for the service. These options will be depicted
to be raging from both cash payment, cards and payment apps. The service delivery aspect will
be identified with presence of “Runners pro” watch in in e-commerce store, dedicated retail
outlets and third-party electronic retailers (Ling, Ringrose & Markan, 2016).

11CREATIVITY INNOVATION AND NEW VENTURE CREATION
4.0 Idea evaluation and selection
4.1 Analysis and evaluation of the creative ideas
The depiction of the creative ideas will be seen under the ITIL services and the
management team will be able to review the requirement as per the process availability
requirements. The evaluation of the creative ideas will be based on the opportunity for the
facility of navigation and direction and an all-round platform for the users. In addition to this, it
needs to be also inferred that the accessibility of the products in all types of mobile and PC
platforms will add to the overall USP (Garvey, Weingardt & Weingardt, 2017). It needs to be
depicted that the customers will be able to read the services as per likert scale of measurement
(Kaye et al., 2017). This will include
1= “Highly satisfied with the product”
2= “Satisfaction level met with certain issues”
3= “non-satisfaction with minor problems
4= “non-satisfaction with major problems”
Creative Idea Pros Cons Cost
Vs.
Benefit
Rate
(1-10)
Ease of
Executio
n (1-10)
Revers
ibility
(1-10)
Creative Idea #1:
Enabling and applying
the watch with various
Adding Superior
value with
inclusion of various
Requires
extensive
inputs for
4 5 3

12CREATIVITY INNOVATION AND NEW VENTURE CREATION
features like GPS,
Shock resistance,
Solar charging, Real
time translation,
Walkie-talkie feature,
Application Control
features will enable
the watch with
better connectivity
and application of
technology.
the
application
and making
of the
applications
.
Creative Idea 2: The
second idea for the
watch will include
real-time translator,
which will be able to
translate the message
passed by the runner
to the respective
authority of sports
event.
It will include
several types of
other unique
features such as
walkie-talkie app
will allow real-time
conversation with
the event
management
members.
All the
features
present in
“Runners
Pro” will be
controllable
via android
application
which will
make
operation
cost high.
5 6 3
4.2 Justification of the idea
The idea evaluation and selection will be reliant on different forms of contingency plans
which will be beneficial in testing the various features of the product on a regular basis. For

13CREATIVITY INNOVATION AND NEW VENTURE CREATION
instance, in the online delivery scenario the company will be creating a relevant provision for
recovery tome between orders. This will allow the company maintaining the stock in online
inventory. Moreover, the components of the different aspects of the study will be taken into
consideration as per the infrastructure components aimed at redundancy aspect. The management
will also proceed with the relevant approach of component failure impact analysis (CFIA) and
service outage analysis for determination of the type of a problem (Zhang & Harrison, 2015).
The idea of the core concept of the business needs to be identified as per the provision created
for the right infrastructural needs. This will be allowed to ensure unnecessary avoidance of cost
which will effective in better recovery of the products in a more expensive platform. It needs to
be also seen that the availability of the management process will go hand- hand with the support
for the incident management, service level management and continuity of the IT services. The
infrastructural idea for the monitoring software will be associated to the diagnostic capability
which will be able to automatically report to any critical issue detected in the product. The ideas
for the business will show the venture capital will be focusing on the product innovation aspect
and specific updates. The innovative features like the presence of GPS, shock resistance and
solar charging are seen to be benefitting in terms attracting more customers (Clawson et al.,
2015)
The difference as per the production and sale price per unit profit will be considered with
the important factors of production. Therefore, the company will consider the implementation of
the various types of concepts such as standard expectations which will be beneficial as per the
competitive strategies. Moreover, the value-added measurements were also effective in terms of
the educational aspects, for letting the users know about the and national movement towards
accountability and evaluation (Loscalzo, 2017).

14CREATIVITY INNOVATION AND NEW VENTURE CREATION
5.0 Market Feasibility
5.1 Analysis of the Types of Innovation
 Incremental Innovation: Incremental innovation is the small innovative changes that the
companies brought in the existing product. In case of RunnersPro, the incremental
innovative features are the introduction of SOS system, live location tracking, medical
updates, rate of heart beat and others. These are incremental features of RunnersPro. So
of the other features needs to be considered with the presence of GPS, Shock resistance,
Solar charging, Real time translation, Walkie-talkie feature and Application Control
(Ritala & Hurmelinna‐Laukkanen, 2013).
Disruptive Innovation: Disruptive innovation is an innovation that leads to the creation of new
market along with value network and upset the existing market. In case of RunersPro, the
product will be able in creating new market for the company with its new features by disrupting
the market for the old products (Christensen, Raynor & McDonald, 2015).
Breakthrough Innovation: Breakthrough innovation can be considered as the innovation in the
company that pushes the products to the next level. It needs to be mentioned that the unique
innovative features of RunersPro push the concept of smart watch in the next level and it can
well be considered as a breakthrough innovation (Kaplan & Vakili, 2015). A Series of small
innovation and upgrades in the existing products and services of the company can be the key
strength of the company in the breakthrough innovation. Implementation of the various
customized services of the company in the form of breakthrough innovation will be helping the
company. Application of gesture control technology in the smart watch and inclusion of various
controlling Applications.

15CREATIVITY INNOVATION AND NEW VENTURE CREATION
Sustaining Innovation: Sustaining innovation can be considered as an incremental innovation
that enables the companies in sustaining the existing product. This innovation also helps in the
development of a new market for the companies with the innovative product. In the context of
RunersPro, it can be seen that the added innovative features of RunersPro helps in the
sustainability of the product in the new as well as in the existing market (Noppers et al., 2014).
Others: The above discussion indicates towards the fact that the new added features of
RunersPro will help the company in the establishment of new market in the most sustainable
manner.
5.2 Degree and Scope of Innovation
Degree of innovation is an important factor and it can be considered as the innovative
improvements in the existing products or new products that help in improving the performance
of the new product (Mas-Tur & Soriano, 2014). The presence of this same aspect can be seen for
RunersPro. The above discussion indicates towards the fact that RunersPro have some innovative
and unique features installed that enhance the degree of innovation to the company. The degree
of the scope of innovation is high for RunersPro as it has the features that the other smart
watches do not have in the market. The presence of all these aspects increases the degree of
innovation of RunersPro.
5.3 Analysis of Market Potential, Scope and Viability for Value Creation
Target market attractiveness and profit potential: The target audience will be the consumers
who will be willing to the latest fitness band in the market and stay updated with the technology.
The primary reasons will also include promotion of a healthy lifestyle and the audience
supporting and practicing the same. The aids to motivation will also be considered with men and

16CREATIVITY INNOVATION AND NEW VENTURE CREATION
woman aged 25-44 years and mainly ranging in a permanent income levels, management
employment levels and college degrees. Therefore, the target audience will not only be the
individuals who are health conscious but also concerned about fashion as well (Weinstein, 2013).
Point-of-difference and consumer value addition: The important consideration for
differentiating the features of the product will be seen with two creative ideas formulated for
runners pro. Firstly, this will include more customer attraction from availability of features such
as GPS, SOS and solar charging. Secondly, the value addition will be seen with features such as
real-time translation, walkie-talkie service and application control.
Likely Consumer Adoption: The initial adoption by the customers will be depicted with
individuals having a permanent job, students, fitness conscious and athletes. In the beginning
stage the consumers may face some difficulties in adopting the product due to the presence of
some major advanced features. Due to this, the consumers may face confusion about the fact that
whether they need the product or not. However, with the help of effective marketing strategies
and promotion, the company can avoid the situation.
6.0 Organizational Feasibility
One of the major ways for the analysis of the organizational strengths, weaknesses along
with external environmental opportunities and threats is to conduct the SWOT analysis where all
these aspects are taken into consideration. The following table shows the SWOT analysis of
RunnersPro:
Strengths Weaknesses
o Innovation is a major strength of
RunnersPro as the customer can get
some major innovative features in this
o RunnersPro is one such product where
the company does not know whether
the customers really need this product

17CREATIVITY INNOVATION AND NEW VENTURE CREATION
watch like healthcare tracking,
medical tracking, SOS and others.
o Sportsperson from different age
groups can easily use RunnersPro due
to its user friendly features.
o It will be easily for the company to
market the product due to its
differentiated features (Armstrong et
al., 2014).
or not. It can be considered as a
weakness.
o It is new at market and thus, may take
time to gain popularity. It may also
lead to low profitability.
Opportunities Threats
o RunnersPro is the first smart watch
having all these unique features
together and it provides the
opportunity to the company to be the
market leader in this segment.
o The growing demand for the quality
application processor like RunnerPro
can provide the company with the
major opportunities to expand the
business in order to gain high
profitability.
o RunnersPro will create business
opportunity for the company by
changing the needs and preferences of
the customers.
o This type of revolutionary products
like RunnersPro takes time to get
accepted by the target customers and
this aspect can demoralize the
company to be persistent with the
product. Thus, acceptance can be a
major threat for the company along
with the product.
o Lack of up-gradation with the
continuously changing technology can
be considered as another major threat
for RunnersPro as it can make the
product backdated (Armstrong et al.,
2015).
Competitive Gap Analysis
Competitive Gap Explanation Strategies to Address the Gaps
Absence of Brand Existence The brand and the product Various Marketing and Sales

18CREATIVITY INNOVATION AND NEW VENTURE CREATION
will be new in the market so
relevant strategies and
marketing activities needs to
conducted for the know-how
about the product.
Activity including the better
services will be the key
strategies in addressing the
same.
Product Portfolio The product portfolio the
company will be limited so it
is necessary that the
company introduces various
types of services and
products in the long-term
Innovation and studying the
market research data about the
demand and needs of the
customers will be the key
strategy for addressing the same.
7.0 Financial Feasibility
7.1 Analysis of Key Inputs
Cost Structure: The key input used in the model used in the financial model used for the
venture capital helped us determine and asses the forecast for the same. The cost structure of the
product will be around 300$ per unit, which would be able at the best price for the customers in
New Zealand. The Cost will be inclusive of the charger and the main unit.
Target Market Size and Opportunity for Growth rate: The key target market for the product
will be around 5-6% of the New Zealand population (Smartwatches forecast to dominate
wearables market by 2022, 2019). The consumers will takes actively part in the physical activity
and sports activity will be the key target and group of consumers for the product. The

19CREATIVITY INNOVATION AND NEW VENTURE CREATION
opportunity for the product will be dependent on the usage and the review of the product by the
sport industry and the common group users of the same. However, it is key to note that after
assessing the market and the industry we think that the product has the growth potential to
deliver and grown 10% on an annual basis in terms of increasing revenue for the venture capital.
Consumer Purchase Quantity, Size and Preference: The purchase quantity for the product
will be on a single basis, the same will be for every customer so targeting a larger customer base
and spreading awareness in the form of the usage, and the benefit of the product will be useful
for the venture capital. The preference for the product will also be dependent on the service the
product provides and the
Requirement for Resources: The resources required for the same for the analysis of the
financial model were the several kinds of expenses that will be marked as the key factor for the
model evaluation. The expenses were accounted and analyzed based on the product so that the
distribution is easy.
EXPENSES (Overhead) FY-1 FY-2 FY-3 FY-4 FY-5
Premises (RENT & RATES) 20,000 20,000 20,000 20,000 20,000
Salaries 10,000 10,500 11,000 11,500 12,000
Accountant Fees 5,000 6,000 7,000 8,000 9,000
Payroll Tax 3,800 4,200 4,500 4,700 4,900
Supplier contracts 15,000 16,250 17,500 18,750 20,000
Sales and Marketing 13,000 14,250 15,500 16,750 18,000
Postage & Telephone 900 1,200 1,500 1,800 2,100
Designing of Boucher 1,200 1,600 2,000 2,400 2,800
Designing of Logo 1,800 2,100 2,450 2,600 2,850
Interest on loan 10% 20,000 20,000 20,000 20,000 20,000
Market survey 1,200 1,450 1,700 1,950 2,200
Preliminary expenses 1,500 1,750 2,000 2,250 2,500
Lease payments 10,000 10,500 11,000 11,500 12,000

20CREATIVITY INNOVATION AND NEW VENTURE CREATION
Price: The price for the product is decided to be around $300 that will be an all inclusive rate for
the New Zealand customers. The price of the product is expected to remain constant for the first
few years as the product RunnersPro will face competition from other developed competitors
like Fitbit that has its smart watch priced at around 200-400 dollars.
Promotion: The promotional expenses incurred by the company will be around 8-10% of the
total revenue and the same will be in the same range for the following financial year. The
promotional expenses will be the key events that will mark the success of the product in terms of
increasing revenue for the product.
7.2 Model Output
7.3 Key Factor Analysis
Sales Forecast: The sales forecast for the company was done based on the given business and
macro-economic condition under which the venture capital will be operating. The sales forecast
for the venture capital for the product Runner’s Pro is said to be increasing as the business of the
RunnersPro is forecasted to be increasing.
Year 0 1 2 3 4 5
Expected Revenue 480,000 528,000 580,800 638,880 702,768
(b) Cost of goods Sold 264,000 290,400 319,440 351,384 386,522
(1) SALES FORECAST
Depreciation Schedule: The depreciation schedule for the fixed assets of the company will be at
the different rate of depreciation for the fixed assets of the company such as Plant and
Machinery, Software Assets and Sensors and Detectors.

21CREATIVITY INNOVATION AND NEW VENTURE CREATION
(3) DEPRECIATION SCHEDULE
Year 0 1 2 3 4 5
Fixed Assets
Plant and Machinery 30000 27,000 24,000 21,000 18,000 15,000
Software Assets 45000 36,000 28,800 23,040 18,432 14,746
Sensors and Detectors 22500 18,000 14,400 11,520 9,216 7,373
Total book values (i.e. net fixed assets) 0 81,000 67,200 55,560 45,648 37,118
Annual Depreciation
Plant and Machinery-10% straight line 3,000 3,000 3,000 3,000 3,000
Software Assets - 20% reducing balance 9,000 7,200 5,760 4,608 3,686
Sensors and Detectors-20% reducing balance 4,500 3,600 2,880 2,304 1,843
Total Amount of Depreciation 16,500 13,800 11,640 9,912 8,530
Cash Flow Analysis
The cash flow analysis for the product was made depending on the key factors of the venture
capital and by dividing the Cash Flow analysis into two main parts such as total cash inflows and
total cash outflows for the venture capital from the product.

22CREATIVITY INNOVATION AND NEW VENTURE CREATION
Preop
Year 0 1 2 3 4 5
Net CASH INFLOWS
Cash from Sales 480,000 528,000 580,800 638,880 702,768
Directors loans 200,000 200,000 200,000 200,000 200,000 200,000
Capital Employed 125,000 150,000 200,000 250,000 300,000 350,000
Other cash inflows
TOTAL CASH INFLOW 325,000 830,000 928,000 1,030,800 1,138,880 1,252,768
CASH OUTFLOWS
Payments for materials 264,000 290,400 319,440 351,384 386,522
operating expenses ( ) 0
Premises (rent, rates) 0 20,000 20,000 20,000 20,000 20,000
Salaries 0 10,000 10,500 11,000 11,500 12,000
General expenses 0 1,800 2,100 2,450 2,600 2,850
Interest and bank charges payable 0 20,000 20,000 20,000 20,000 20,000
Lease payments 0 10,000 10,500 11,000 11,500 5000
Corporation Tax 40,140 47,925 53,373 59,624 66,629
Market survey costs 0 1,200 1,450 1,700 1,950 2,200
Other preliminary expenses 0 1,500 1,750 2,000 2,250 2,500
capital expenditure
Plant and other capital expenditure 0 22,500 25,000 27,500 35,000 45,000
financing repayments
Loan repayments 50,000 50,000 50,000 50,000
TOTAL CASH OUTFLOWS 0 391,140 479,625 518,463 565,808 612,701
Cash flow summary
NET CASHFLOW FOR PERIOD 325,000 438,860 448,375 512,337 573,072 640,067
OPENING CASH BALANCE 0 325,000 763,860 1,212,235 1,724,572 2,297,644
CLOSING CASH BALANCE 325,000 763,860 1,212,235 1,724,572 2,297,644 2,937,711
(2) CASHFLOW FORECAST

23CREATIVITY INNOVATION AND NEW VENTURE CREATION
Profit and Loss Account: The profit and loss was forecasted for the venture capital after
accounting for the same using the expected revenue and the expenses accounted for the venture.
7.4 Sensitivity Analysis
The sensitivity analysis for the product was analyzed for the RunnersPro under three scenarios
and in each case, the revenue and expenditure analysis was analyzed for the RunnersPro product.
Under the base case scenario, the product was evaluated based on the expected and true value of
Preop
Year 0 1 2 3 4 5
Revenue 0 480,000 528,000 580,800 638,880 702,768
Cost of sales 0 264,000 290,400 319,440 351,384 386,522
Gross profit 0 216,000 237,600 261,360 287,496 316,246
Gross Margin 386,340 416,175 456,263 499,758 547,301
Expenses/overheads
Premises (rent, rates) 20,000 20,000 20,000 20,000 20,000
Wages and salaries 10,000 10,500 11,000 11,500 12,000
General expenses 1,800 2,100 2,450 2,600 2,850
Accountant Fees 5,000 6,000 7,000 8,000 9,000
Payroll Tax 3,800 4,200 4,500 4,700 4,900
Utilities 15,000 16,250 17,500 18,750 20,000
Sales and Marketing 13,000 14,250 15,500 16,750 18,000
Postage & Telephone 900 1,200 1,500 1,800 2,100
Repairs and Maintainance 1,200 1,600 2,000 2,400 2,800
Preliminary expenses 1,500 1,750 2,000 2,250 2,500
Lease Payments 10,000 10,500 11,000 11,500 12,000
Total expenses/overheads 82,200 77,850 83,450 88,750 94,150
Profit before tax 133,800 159,750 177,910 198,746 222,096
Tax @ 30% 40,140 47,925 53,373 59,624 66,629
Before tax net margin 28% 30% 31% 31% 32%
Profit after tax 93,660 111,825 124,537 139,122 155,467
Transfer to reserves 133,800 159,750 177,910 198,746 222,096
ROC 75% 75% 62% 56% 52%
(4) PROFIT AND LOSS FORECAST

24CREATIVITY INNOVATION AND NEW VENTURE CREATION
the product revenue and expenses and the actual amount to be realized (Appendix 1). The worst-
case scenario was evaluated under the scenario of 10% down turn in the revenue and rise in the
expense of the company by around 10%. The optimum case scenario was evaluated under the
scenario with a 10% upside in the revenue (Zhang, Tadikamalla & Shang, 2016).
8.0 Growth and sustainability potential:
8.1: Analysis for identification of venture’s scalability
Replicability: RunnersPro replicability of the product is minimal. The product in itself is a
unique with blend of new features that is yet to be provided by other competing fitness watch
producer in the market (Nordhielm et al., 2014). As the product is not replicable, selling the
products in the attractive vertical market would enable new marketing boundaries with growing
number of consumers are increasingly valuing the convenient access to use the product.
Customizability: The product can be customized to suit the need of the customers. The product
offers customers to change the mode of the watch from sporty mode to regular mode. The
regular mode would provide the customers with the access to time, weather and UN index.
Extendibility: The watch offers extendibility of battery power as the consumers can use the
watch for a minimum of 24 hours. The power saving mode would provide customers with
increased use (Kotler et al., 2017). Furthermore, the venture is anticipated to extend its operation
beyond the boundaries of New Zealand particularly the Australian market. Within the two years-
time the business aims to access the wider markets particularly the consumers that are involved
in specific sporting activities.
8.2 Identification of growth strategies:
Market Penetration:

25CREATIVITY INNOVATION AND NEW VENTURE CREATION
The country reflects the greater penetration for the fitness watch across the world based
on the account of greater rate of obesity and greater health consciousness. Furthermore, the
number of health clubs and memberships are also increasing at a greater rate (Wagner & Eggert,
2016). Adopting the fitness watch with the advanced features is higher in comparison to the Asia
pacific countries. The increasing rate of obesity rates and the greater spending on the fitness
watch is anticipated to drive the market of the fitness watch in the region. In addition to this, the
penetration strategy will be considered with introducing an economy version of the band which
can be availed by individuals not having a permanent source of income. Moreover, the
penetration pricing will aim at launching with a minimise price than their competitors.
Vertical Integration:
The business would be anticipated to vertically integrate into these markets. By virtue of
the fact that the product is outside the traditional industry of fitness equipment and due to the
size of the company the producers are able to purchase the raw materials directly from the
importer and the manufacturer (Baker & Saren, 2016). Whereas, these companies inside the
vertical market is more difficult and widespread in terms of recognizing and contacting the good
source of sales.
Product development:
RunnersPro is the new and unique form of training fitness watch. The product
development is cantered towards the proper equilibrium with the central nervous system. This
would be accomplished in the watch to enable the end user to have the specific weight exercise
and standing posture to be maintained is also incorporated in the product.

26CREATIVITY INNOVATION AND NEW VENTURE CREATION
8.3 Funding strategies:
Debt Funding: The funding strategy would be based on the debt financing. In other
words, the business would take loan from the banks and financial instructions. Debt financing
can be basically referred as the amount of money to be borrowed to run the business (Chernev,
2018). The debt financing would provide the business with greater accessibility of the funds to
meet the operating requirements.
8.4 Key sources of competitive advantage:
Product:
The competitive advantage will not only be seen in terms of distinct features of the watch
but also with the fashion quotient associated with a product. Furthermore, the economy pricing
model will act as a key source of competitive advantage. Some of the other initiatives will be
offered by making the product available in Flash discounts or flash sales in e-commerce
websites. RunnersPro would provide its customers with the distinctly designed software build
watch for better diversity, enjoyment and superior result. The fitness watch is programmed to
motivate the client and attain the result as anticipated. The programs are formulated to attract the
sportsperson, elderly people, young and middle age consumers with close supervision of the
personal training with more economical costs. The product is designed in a manner to being fit
that results in attracting more clients with less time off at work.
Price:
The pricing strategy that is applied by the RunnersPro is based on the competitive
strategy of market pricing (Marshall, 2014). As the clients in the industry usually looks for the

27CREATIVITY INNOVATION AND NEW VENTURE CREATION
value and they are aware the fitness watch would offer better service leading to industry standard
pricing.
Distribution:
The market strategy would also comprise of private presentation to the distribution. The
company would distribute its products to the large retailers that would ultimately deliver the
product to the end user. The distributors are considered useful for the business because their sales
effort would ultimately lead to increased sales.
8.0 Conclusion
The viability of the product RunnersPro in the context of market, industry overview, analysis of
the product and the key financial evaluation has given us a forecast whether the product
development will be profitable or not. The same was analyzed via the use of the risk assessment
tools like scenario analysis in order to forecast and asses the various possibility scenario at which
the product will land up. However it was crucial to note that the base case scenario the worst and
the optimum case scenario during the evaluation showed that the product can give a good
standing up in the market even if the product due to some of the factors are not able to meet up
the condition and parameters set up. The conditions and the parameters helped us carefully
analyze the SWOT analysis of the product from the context of venture capital. The competition
of the product was very low and the target consumer’s base is expected to increase given the
product type and the feasibility of the same. Thus, we really hope that the product will bring out
some good technological changes and innovation for the product make it attractive for the
sportsman by helping them in their physical activities.

28CREATIVITY INNOVATION AND NEW VENTURE CREATION

29CREATIVITY INNOVATION AND NEW VENTURE CREATION
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Appendix
1) Base Case Scenario
Year 0 1 2 3 4 5
Expected Revenue 480,000 528,000 580,800 638,880 702,768
(b) Cost of goods Sold 264,000 290,400 319,440 351,384 386,522
Preop
Year 0 1 2 3 4 5
Net CASH INFLOWS
Cash from Sales 480,000 528,000 580,800 638,880 702,768
Directors loans 200,000 200,000 200,000 200,000 200,000 200,000
Capital Employed 125,000 150,000 200,000 250,000 300,000 350,000
Other cash inflows
TOTAL CASH INFLOW 325,000 830,000 928,000 1,030,800 1,138,880 1,252,768
Initial CASH OUTFLOWS 500,000
Payments for materials 264,000 290,400 319,440 351,384 386,522
operating expenses ( ) 0
Premises (rent, rates) 0 20,000 20,000 20,000 20,000 20,000
Salaries 0 10,000 10,500 11,000 11,500 12,000
General expenses 0 1,800 2,100 2,450 2,600 2,850
Interest and bank charges payable 0 20,000 20,000 20,000 20,000 20,000
Lease payments 0 10,000 10,500 11,000 11,500 5000
Corporation Tax 40,140 47,925 53,373 59,624 66,629
Market survey costs 0 1,200 1,450 1,700 1,950 2,200
Other preliminary expenses 0 1,500 1,750 2,000 2,250 2,500
capital expenditure
Plant and other capital expenditure 0 22,500 25,000 27,500 35,000 45,000
financing repayments
Loan repayments 50,000 50,000 50,000 50,000
TOTAL CASH OUTFLOWS 500,000 391,140 479,625 518,463 565,808 612,701
Cash flow summary
NET CASHFLOW FOR PERIOD -175,000 438,860 448,375 512,337 573,072 640,067
OPENING CASH BALANCE 0 -175,000 263,860 712,235 1,224,572 1,797,644
CLOSING CASH BALANCE -175,000 263,860 712,235 1,224,572 1,797,644 2,437,711
(1) SALES FORECAST
(2) CASHFLOW FORECAST

34CREATIVITY INNOVATION AND NEW VENTURE CREATION

35CREATIVITY INNOVATION AND NEW VENTURE CREATION
2) Worst Case Scenario
Preop
Year 0 1 2 3 4 5
Revenue 0 4,80,000 5,28,000 5,80,800 6,38,880 7,02,768
Cost of sales 0 2,64,000 2,90,400 3,19,440 3,51,384 3,86,522
Gross profit 0 2,16,000 2,37,600 2,61,360 2,87,496 3,16,246
Gross Margin 3,86,340 4,16,175 4,56,263 4,99,758 5,47,301
Expenses/overheads
Premises (rent, rates) 20,000 20,000 20,000 20,000 20,000
Wages and salaries 10,000 10,500 11,000 11,500 12,000
General expenses 1,800 2,100 2,450 2,600 2,850
Accountant Fees 5,000 6,000 7,000 8,000 9,000
Payroll Tax 3,800 4,200 4,500 4,700 4,900
Utilities 15,000 16,250 17,500 18,750 20,000
Sales and Marketing 13,000 14,250 15,500 16,750 18,000
Postage & Telephone 900 1,200 1,500 1,800 2,100
Repairs and Maintainance 1,200 1,600 2,000 2,400 2,800
Preliminary expenses 1,500 1,750 2,000 2,250 2,500
Lease Payments 10,000 10,500 11,000 11,500 12,000
Total expenses/overheads 82,200 77,850 83,450 88,750 94,150
Profit before tax 1,33,800 1,59,750 1,77,910 1,98,746 2,22,096
Tax @ 30% 40,140 47,925 53,373 59,624 66,629
Before tax net margin 28% 30% 31% 31% 32%
Profit after tax 93,660 1,11,825 1,24,537 1,39,122 1,55,467
Transfer to reserves 1,33,800 1,59,750 1,77,910 1,98,746 2,22,096
ROC 75% 75% 62% 56% 52%
(4) PROFIT AND LOSS FORECAST

36CREATIVITY INNOVATION AND NEW VENTURE CREATION
Preop
Year 0 1 2 3 4 5
Net CASH INFLOWS
Cash from Sales 432,000 475,200 522,720 574,992 632,491
Directors loans 200,000 200,000 200,000 200,000 200,000 200,000
Capital Employed 125,000 150,000 200,000 250,000 300,000 350,000
Other cash inflows
TOTAL CASH INFLOW 325,000 782,000 875,200 972,720 1,074,992 1,182,491
CASH OUTFLOWS 500,000
Payments for materials 237,600 261,360 287,496 316,246 347,870
operating expenses ( ) 0
Premises (rent, rates) 0 22,000 22,000 22,000 22,000 22,000
Salaries 0 11,000 12,100 13,310 14,641 16,105
General expenses 0 1,800 1,980 2,178 2,396 2,635
Interest and bank charges payable 0 20,000 20,000 20,000 20,000 20,000
Lease payments 0 10,000 11,000 12,100 13,310 5000
Corporation Tax 31,593 38,727 43,140 48,024 53,426
Market survey costs 0 1,320 1,452 1,597 1,757 1,933
Other preliminary expenses 0 1,500 1,650 1,815 1,997 2,196
capital expenditure
Plant and other capital expenditure 0 22,500 24,750 27,225 29,948 32,942
financing repayments
Loan repayments 50,000 50,000 50,000 50,000
TOTAL CASH OUTFLOWS 500,000 359,313 445,019 480,861 520,317 554,108
Cash flow summary
NET CASHFLOW FOR PERIOD -175,000 422,687 430,181 491,859 554,675 628,383
OPENING CASH BALANCE 0 -175,000 247,687 677,868 1,169,726 1,724,401
CLOSING CASH BALANCE -175,000 247,687 677,868 1,169,726 1,724,401 2,352,784
(2) CASHFLOW FORECAST
3) Optimum Case Scenario

37CREATIVITY INNOVATION AND NEW VENTURE CREATION
Preop
Year 0 1 2 3 4 5
Net CASH INFLOWS
Cash from Sales 528,000 580,800 638,880 702,768 773,045
Directors loans 200,000 200,000 200,000 200,000 200,000 200,000
Capital Employed 125,000 150,000 200,000 250,000 300,000 350,000
Other cash inflows
TOTAL CASH INFLOW 325,000 878,000 980,800 1,088,880 1,202,768 1,323,045
CASH OUTFLOWS 500,000
Payments for materials 290,400 319,440 351,384 386,522 425,175
operating expenses ( ) 0
Premises (rent, rates) 0 18,000 18,000 18,000 18,000 18,000
Salaries 0 10,000 10,000 10,000 10,000 10,000
General expenses 0 1,800 1,800 1,800 1,800 1,800
Interest and bank charges payable 0 20,000 20,000 20,000 20,000 20,000
Lease payments 0 10,000 10,000 10,000 10,000 5000
Corporation Tax 47,220 56,478 63,479 71,294 79,971
Market survey costs 0 1,200 1,450 1,700 1,950 2,200
Other preliminary expenses 0 1,500 1,500 1,500 1,500 1,500
capital expenditure
Plant and other capital expenditure 0 22,500 25,000 27,500 35,000 45,000
financing repayments
Loan repayments 50,000 50,000 50,000 50,000
TOTAL CASH OUTFLOWS 500,000 422,620 513,668 555,363 606,066 658,646
Cash flow summary
NET CASHFLOW FOR PERIOD -175,000 455,380 467,132 533,517 596,702 664,399
OPENING CASH BALANCE 0 -175,000 280,380 747,512 1,281,029 1,877,731
CLOSING CASH BALANCE -175,000 280,380 747,512 1,281,029 1,877,731 2,542,130
(2) CASHFLOW FORECAST