IMAGE FX

							             IMAGE: FX
            RISK REDUCTION

                     Advisor: Miss Mansfield
Kathy Barasch · Rich Chen · Danny Chung · Spencer Gottlieb · Lynn Hurley
   Leya Linberg · Daniel Mak · Mary O’Sullivan · Anish Thakkar · Pawan
                                  Thakkar
                   Kayleigh Wettstein · Zack Vertsman
RISK REDUCTION ISSUES

       Budget Proposal
    Patents and Licensing
Corporate Module Risk Analysis
     Target Risk Analysis
 Competitive Markets Analysis
          BUDGET PROPOSAL
 Computer Workstations          $75,000
 Business Insurance             $1,200
 Payroll                        $750,000
 Licensing Fees                 $400,000
 Patent Processing Fees         $20,850
 Patent Attorney                $155,988
_____________________________________________
TOTAL:                           $1,382,188
             PATENT ATTORNEY
   Maintain office in Washington, D.C. to conduct
    research at USPO.

   Furnished office rental as per Washington Post
    classified ad dated 1/6/04:
      “BAILEYS XROADS --Ofcs. Furn, DSL, centr loc,

       ample prkg. Recap area/confirm [ideal for lawyers].
       Starting at $499.”

   $499 a month X 12 = $5,988 a year
          PATENT APPLICATION
   Prior art search found several patents Image: FX will need to
    recognize in their patent application to avoid infringement

From the United States Patent and Trademark Office (USPTO)
      Polarizing Film and Polarizing Composites:
       Patent # 5,926,310      7-20-1999
      Plastic Lens Systems, Compositions, and Methods:
       Patent # 6,634,879 B2 10-21-2003
      Finishing Agents and Method of Manufacturing the Same:
       Patent # 5,645,633      7-8-1997
      Method of Manufacturing Polarized Spectacle Lens:
       Patent # 6,650,473 B2 11-18-2003
                        LICENSING
Based on information obtained from a teleconference with
         Sandra Matalonis, NEOSE Technologies

   In-Licensing
       Gaining permission to use an invention, design or
        technique belonging to another organization
             License it ”in” to your company
             Pay a royalty, typically a percentage of a sale
   Out-Licensing
       License your design or technique to another
        organization who wants to use your idea as part of
        something they are producing in return for a royalty
         LICENSING OVERVIEW
                       Licensor
             (ie. "owner" of the technology)
 Formalizes the transfer of technology between
themselves and the licensee
 Owner of the technology permits the other party to
share the rights to use the technology
 If the other party uses such technology without the
consent of the owning party, they risk a law suit
against themselves for infringement.
       POTENTIAL LICENSING
           PROBLEMS
   Image: FX has not taken into consideration the
    need to gain permission to use certain
    materials and methods necessary for the
    production our product.
   Without licensing agreements Image FX risks
    future legal liability.

              Major Problem Areas
        Plastics – Lenses – Nose Pads – Screws
         SLA (Stereo Lithographic Apparatus)
       Assembling and Manufacturing Methods
  CORPORATE MODULE
    RISK ANALYSIS

           Finance
      Human Resources
SAP / Information Technologies
  Research & Development
          Marketing
             FINANCE MODULE
   Finance predicts an inability to sustain operating
    expenses
   Expected time frame for achieving profit is 5 years
      Loss of revenue during time period



    PREDICTED BUSINESS OPERATIONS PROFIT
              YEAR 1: - $11 million
              YEAR 2: - $ 4 million
              YEAR 3: - $ 3 million
                FINANCE MODULE
               RECOMMENDATIONS
   Finance should reduce their operating
    expenses
   Target is providing a twenty million dollar
    stimulus package
       This money will only provide an artificial profit for
        the first years of the company
   The expected time frame for turning a profit
    is within a five year margin. However,
    there is loss of revenue during this period
    in which the company is just beginning
                SAP/IT MODULE &
               RECOMMENDATIONS
                     Short-Term Risks
   Viruses and system hackers
   Network and ISP failures
   Scheduling problems
   Hardware and software malfunctions

                      Recommendations
   Employment of specialized repair personnel
   Back-up software and hardware
   Portion of annual profits are set aside for problems in the
    future
              MARKETING MODULE
   Commercials
      Airing commercials during sports games may create a
       limited audience
      Target consumers [17-35 yrs. old] may be a narrow and
       inappropriate consumer base
      Teens often watch more sports events than the target
       consumers
   Posters
       If shown in only Target stores, print-ads may not reach their full
        potential
   Magazines
       Magazines may not be read by potential customers
                  MARKETING
               RECOMMENDATIONS
   Target consumers between ages of 13 and 35
   Posters should be hung near transportation
    sites
       subways, the beach, train stations, sports arenas,
        airports, cruise ships, magazines
   Advertise in magazines that appeal to people
    of the target range
       Time, Cosmopolitan, Maxim, Vogue, Glamour,
        People/Teen People, Seventeen
        R&D MODULE & SOLUTIONS
                              Risks
   Design of sunglasses may not be appealing to both consumers
    and Target Corporation
   Research flaws may lead to a defective, unfeasible and
    unprofitable product
       Products may not be tested in the proper environment
   R&D may overlook key problems with the prototype

                          Recommendations
   Survey people who fall into our “Target” market
   Conduct a thorough analysis of how to properly test products
   R&D should consider presenting a full report to Target with
    all potential prototype flaws
             HUMAN RESOURCES
            MODULE & SOLUTIONS
     Sexual Harassment
       A policy packet will be distributed to all employees
        regarding sexual harassment
       Image: FX has a NO TOLERANCE policy
       The company defines what is considered sexual
        harassment and outlines what actions will be taken in
        response to any reports of harassment

     Discrimination [gender, race, age, etc.]
        The Equal Employment Opportunity Commission
         (EEOC) protects employees from discrimination
        Gender, race, and age are NOT required during the
         application process.
        Applicants are hired by a panel of employees who review
         criteria papers filled out by the interviewer.
          TARGET RISK ANALYSIS
   Website
     Difficult to maneuver and the search option is
      inconclusive
     When searching for “sunglasses”, a product that Target
      sells, no results appeared
     This is detrimental to the Image: FX Corporation because
      the World Wide Web is a useful portal for retail sales

   Customer Service (via telephone)
      Risk Reduction made various calls to local Target stores
       and received minimal, at best, customer service
      By being associated with a corporation that does not
       value customer service via telephone, Image: FX’s image
       may be unfavorably altered
             TARGET RISK ANALYSIS
   Internal Competition
      Target currently sells lines of sunglasses, which would
       force Image: FX to compete for Target’s customers
      Target has not yet announced whether they would remove
       all other sunglass lines from their stores

   Price Competitiveness
       All other sunglass lines sold at Target are priced more
        reasonably than Image: FX’s projected initial prices
       The average price for the sunglasses sold at all Target locations
        is approximately $15
            17% of the price Image: FX is planning to sell its sunglasses
           COMPETITITIVE MARKETS
                 ANALYSIS
   External
       In looking at the sunglass prices of our competitors, our
        prices do not reflect the average cost of similar products
        offered by other department stores. It is the opinion of the
        risk reduction group that this will be a detriment to
        Image: FX

   Internal
       In all Target locations, the price range for sunglasses sold
        is $9.99-$21.99, which is much cheaper than the
        ImageFX brand sunglass. When comparing sunglasses,
        customers will be more inclined to purchase a pair that
        are more reasonably priced for the quality of the
        merchandise
THE END