Case Objectives and Use
The Aerial Chair™ has yet to gain broad acceptance in the marketplace. Craig Hines, the chairs creator, must decide the future of this business opportunity: (1) was this just a fun hobby; (2) could the Aerial Chair™ achieve profitability in the broad market; (3) would a niche strategy generate sufficient profits? The case introduces the student to a classical entrepreneur who is passionate about his product and desperately wants it to be a market success. The case challenges the student to: (1) identify typical entrepreneurial characteristics and how they can impact business development; (2) perform an internal and external analysis of a new venture; (3) understand the challenges of estimating new market demand and assess the reasonableness of demand projections; and (4) develop appropriate strategies and tactics to guide an entrepreneur. The case is designed for undergraduate and graduate courses in Entrepreneurship, New Venture Planning, New Product Development, and Small Business Management.
Case Synopsis
In 1996 Craig Hines sold his first Aerial Chair™. The chair was a design that he personally developed and manufactured in a small shop in Montana. He originally developed the Aerial Chair™ out of curiosity, and for his own personal use. The concept became his passion, so he began trying to find customers for his product. Product interest was sporadic and material costs drove the price up to a premium level. In December 2000, the Aerial Chair™ was still not a commercial success, and many of Craig’s marketing attempts had failed. He was faced with the decision of how to best create a viable business around the Aerial Chair™ product.
Craig Hines never wanted to be influenced by external factors that might hinder his creativity in developing and promoting the Aerial Chair™; therefore, he never developed a functioning business plan. The industry in which he was attempting to enter was already established with several direct competitors, and many substitute products. Given the high manufacturing cost and inventory requirements, mass distribution outlets seemed unlikely to carry the Aerial Chair™. Although Craig had learned a great deal through trial and error, he still remained unsure of the demand for the Aerial Chair™. This uncertainty regarding demand, the high material costs, and the difficulty accessing distribution channels, convinced Craig that his current ad hoc approach to building a company would not create the successful company he envisioned.
The authors developed the case for class discussion rather than to illustrate either effective or ineffective handling of the situation. The case, instructor’s manual, and synopsis have been submitted to the North American Case Research Association (NACRA) for its annual meeting, October 30 – November 1, 2008, Durham , NH. All rights are reserved to the authors and NACRA. © 2008 by Christopher M. Scherpereel and Kathryn S. Savage. Contact person: Christopher M. Scherpereel,
The W. A. Franke College of Business, Northern Arizona University, PO Box 15066, Flagstaff, AZ 86011-5066, 928-523-7831, chris.scherpereel@nau.edu. The authors developed the case for class discussion rather than to illustrate either effective or ineffective handling of the situation.
NOTE: For copies of this
paper, please contact Chris Scherpereel at
Chris.Scherpereel@nau.edu.
08-10 June 2008
