New Venture Creation February 23, 2000 Submitted to: Brent Mainprize Fax International, Inc.
Description of the Business Opportunity Is it a New Combination? The product offering provided by Fax International is meeting the excess demand by establishing relationships and utilizing existing technology to meet the needs of a new market. Under the Five Areas of Discovery the company would be "opening a new market" by providing facsimile services to Japan and Europe. Although, since the technology is simply and improvement over an existing service offered the venture is ranked as medium in this category which could be seen as a potential weakness.
Is There a Product-Market Match? The Japanese telecommunications market is completely different than the US market and quite difficult to enter as a small US company. Japanese customers prefer to work with established Japanese organizations. FAX International will be able to meet the needs of the market by entering into a joint venture agreement with a large Japanese firm that already has access to the target customers in Japan.
The company has also met the demands of the customers by providing them with a network that is not only seven times faster than the AT&T switch-voice network but is also able to provide up-to-the-minute information on the status of the customers' documents as they move through the network. As a result, the level of the company's product-market match was high helping the venture's profile move towards one of high potential.
Are There Margins? Once the minimum efficient volume level of 7,000,000 minutes of traffic/year is achieved the company will earn a 50% gross margin on their sales revenue. As seen in FAX International's Year 1 Assumptions and Ratios table the company will achieve this 50% gross margin by May 1992. In addition, by July 1993 the company will...