Financial Entrepreneurial Assignment
24 Pages7458 Words167 Views
Added on 2019-12-04
Financial Entrepreneurial Assignment
Added on 2019-12-04
ShareRelated Documents
Financial entrepreneurialinitiatives1
Table of ContentsRosetta Stone .......................................................................................................................................31. Describe the key features of Rosetta Stone's business model and its strategy............................32. Advantage and disadvantage of Rosseta stone undertaking an IPO............................................43. Market-Multiples approach to identify range of prices for an IPO.............................................64. Application of Market-Multiple approach to arrive at a suitable share price for IPO.................75. Reasonable rate of return on an investment in Rosetta Stone......................................................86. Apply a Free Cash Flow model to Rosetta Stone to arrive at valuation......................................97. Deciding an offer price for Rosetta Stone's IPO........................................................................11REFERENCES...................................................................................................................................122
ROSETTA STONE Initial public offering refers to business initiatives which is carried out to list its stock on apublic stock exchange for the first time. In other words, it can be said that first sale of stock madeby the company to the public is known as initial public offerings (Boulton and Campbell, 2016).Present project report will apply both market-multiple approach and free cash flow valuation modelto decide suitable share prices for Rosseta Stone's IPO. It is a public company which operates insoftware development industry. Company develops language, software and other language-learningsolution products for the customers. 1. Describe the key features of Rosetta stone’s business model and its strategyRosseta Stone's has cloud-based business model in which company focuses to developlanguage learning solutions and software to provide deeper knowledge into the educationtechnology. It comprises both C.D Rom and online services to consumers, corporate clients, foreigninstitutes etc. It use advanced and upgraded technologies to help learners to learn different kind oflanguages. Key acquisition of Rosseta Stone are Vivity Labs Inc, Tell Me More, Livemocha andLexia Learning which helps to increase its revenue to a major extent (Crook, 2013). Acquisition ofLexia enhance Rosetta Stone's potential by adding more on literacy products and expertise (Sohn,2013). Over the time, its model relies upon its sales force to maintain strong relationship with thecorporate clients and enhance their satisfaction level. It expands its market with the key partners,Books-A-Million and London Drugs, Sprial Toys etc (Rosseta Stone expands North American retailpresence with the key partners, n.d.). Recently, it creates a partnership with Speak for the futureperiod (Rosetta Stone becomes key partner of Speak to the future, 2014). It drive value by recruitingskilled and highly experienced sales force and providing innovative language-learning solutions tothe corporate clients. Its customer segments includes individual, governmental agencies, armedforces, educational institutions and corporate clients as well. Its revenue stream includes sales ofinnovative and language learning software of latest version and licensed the products. Till 2009,Rosseta Stone's business model is to provide interacting language learning software to the domestic(US clients) as well as foreign customers and international institutions. The model focuses onselling language-learning software which comprises both online and CD Rom to the consumers. Itsonline subscriptions enable company to charge very high prices so as to increase their revenue,market share and profitability to compete effectively. Porter’s 5 forces:Bargaining power of suppliers: Similar kinds of inputs are used by all the companies intheir operations while distribution channel is diverse. However, suppliers are competing with each3
other to deliver their goods and services; therefore, bargaining power of suppliers is high. Bargaining power of customers: Customer prefer Rosetta Stone’s product because of bestquality and also they have limited choice available; henceforth, their bargaining power iscomparatively low. Threat of rivalry: Rosetta Stone has very less number of competitors such as Memrise,Fluenz, Livemocha etc. therefore, it can be said that company is not facing intense level ofcompetition in the market. Threat of substitutes: Substitue that are providing by the other companies is of inferiorquality and also limited in number. Thus, it becomes clear that threat of substitute is low. Threat of new competitors: Geographic factors limit the competition level in the industry,henceforth; threat of new entrepreneurs is less. Contrary to this, its strategy is to enhance its competitive strength by developing new andinnovative products and software which enable people to learn new languages. Moreover, it makescontinuous improvement through investment in research and development activities. Along withthis, Rosetta Stone focuses on the most prolific devices like Samsung, Chrome Book, iPhone, iPadetc. to grab larger market share across the globe (Seave, 2014). Its strategy is highly concerned withincreasing business turnover and yield as well to compete effectively in the market place. Itsstrategic focus is to maintain better control over material, cash availability, and relationship with theclients, introduction of new software and learning solutions and making growth of Kiosks,Enterprise and Education business (E&E), etc. Moreover, it focuses to distribute services more ononline and expand its product portfolio (Hall, 2015). Recently, it launched Kids reading, brainfitness, innovative devices, apps etc. to increase its product offerings and increase its customer base.Its market strategy is to focus on enhancing the level of consumer satisfaction by advertising onGoogle, display ads and other search ads. Contrary to this, its competitive strategy is focuses onenterprise resource centre and attracting high number of multinational institutions and foreignclients (Four reason for a business language strategy, 2015). Moreover, its strategic focus is todeliver value to the shareholders by the use of share buy-back program. 4
5Illustration 1: Rosseta Stone's business strategy
According to the presented chart, it can be seen that Rosseta Stone give highest priority toinnovative platform, expand distribution and leverage brand to reach success. In such respect, itsleverage brand pay focus on bringing awareness in the selected market and strengthen the brandposition. However, its innovative platform greatly focus on improvement of customer benefitsthrough taking into account rich data, integrated live, multi devices, adaptive and community aswell. On the contrary to this, its distribution strategy aims at gathering larger revenue through newalliances in various market segments, online and mobile services as well. Apart from this,Pedagogy, Widgets, Speech, community and live features are the core competencies of RossetaStone. From the presented diagram, it can be seen that quality consumer services, onlineexperience, institutional services and digital services are the main area of strategic focus of RossetaStone which enable firm to accomplish their target goals. 2. Advantage and disadvantage of Rosseta stone undertaking an IPOInitial public offering, shortened to IPO is regarded as the process of offering its equityshares to the public for the first time, hence, can be said as process of going public. It is a processthrough which an unlisted company list its stock and thereby, it can issues shares in the market forthe public subscription. The process to listing Rosetta Stone's equity shares on a recognized stockexchange to trade it publicly, requires a number of stages which company needs to undertake,6
End of preview
Want to access all the pages? Upload your documents or become a member.
Related Documents
Financial Entrepreneurial - Assignmentlg...
|21
|5090
|168
Financial Entrepreneurial Initiatives: Rosetta Stone IPOlg...
|18
|3798
|165
TABLE OF CONTENTS Rosetta Stone Financial entrepreneurial initiativeslg...
|14
|4029
|425
200910 Financing Enterprises Assignmentlg...
|14
|3462
|69
Paper Media Digital Marketing Consulting - Presentationlg...
|19
|1106
|25