Entrepreneurship

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COMM 320 – Entrepreneurship
Final Exam / Fall 2020
Please answer ALL the questions below regarding the case that starts on the following page.
1) Entrepreneurial Mind (5 points)
Assess Greg Benson as an Entrepreneur, noting the psychological motivations of entrepreneurial
behaviour, and the common themes, attitudes, and ways of thinking of successful entrepreneurs
as applicable to him. (Maximum of 400 words)
2) Entrepreneurial Process (5 points)
Please briefly describe the Timmons Model and apply it to the case. Make recommendations to
Greg Benson on how he should proceed. (Maximum of 400 words)
3) Financing (5 points)
Greg Benson has successfully raised money through family and friend to start Loll Designs, but
will need to consider some financing in order to continue growing. Describe and make
recommendations to him on how he should look for more financing, and of the various issues he
should consider. (Maximum of 400 words)
4) Growth (5 points)
Assess Loll Designs strategy of growth in the context of the Ansoff model (based upon
knowledge of product and/or market). Provide recommendations to Greg Benson on how he
should manage the implications of further growth. (Maximum of 400 words)
5) Social Entrepreneurship (5 points)
Assess Loll Designs in the context of social entrepreneurship typology of ventures and provide
recommendations to them on how they might proceed in the future. (Maximum of 400 words)
Please answer ALL FIVE (5) questions.
Please remember to put your name and student ID number on your exam, and to submit it in a
Word file before 17h00 (5pm) on Friday December 11, 2020.
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Case – Loll Designs
Based on: Recycled Milk Jugs Become Chairs for Lollygaggers: Loll Designs Walks the Talk
By: Ahmed Maamoun
SAGE Publications: SAGE Business Cases Originals (2019)
Adapted, modified and condensed by Ronald J. Abraira (December 2020) for academic purposes
Introduction
In mid-January 2017, Greg Benson, the CEO and co-founder of Loll Designs, sat in his home
office reading about plummeting oil prices. His company, based in Duluth, Minnesota, designed
and manufactured durable, all-weather, outdoor furniture and accessories with recycled plastic,
mostly from single-use one-gallon milk jugs (plastic milk containers, in some countries more
commonly called plastic milk bottles). Using thoughtful, original designs and unique materials,
Loll Designs created innovative, fun, and high-quality products that were proudly crafted.
Greg’s entrepreneurial endeavors dated back to 1997 with the creation of TrueRide, a designand-
build contractor specializing in custom municipal skate parks. The TrueRide crew designed,
built, installed, and serviced more than 450 custom skateboard parks across the United States
during a 10-year period. In 2007, Greg started Loll Designs as an outdoor furniture company for
the “modern Lollygagger.” Best known for its modern Adirondack chair. Loll Designs mission
statement was “We enhance people, the planet, and our company in everything we do.” Loll
Designs produced more than 200 different products sold at retail stores domestically and overseas.
Loll Designs products could also be found in corporations, restaurants, libraries, and cruise ships.
With the main ingredient used in all of his products – plastic resin – being a byproduct of oil, Greg
quickly realized what the plummeting oil prices meant for his company: a low expense for virgin
plastic. The opportunity set Greg’s business instinct tingling as he pondered how to take
advantage of it. Also, with roughly 20 years of experience as an entrepreneur Greg was intrigued
with new growth opportunities. He thought of other consumer products that could be made,
perhaps related to the kitchen, and he even thought about entering new markets such as the
industrial and agricultural markets that used plastic components. His thoughts also turned to his
three children, who were now becoming young adults themselves and displayed the same
entrepreneurial energy he had as a young man.
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A Snapshot of Loll Designs
Greg Benson graduated from the University of Minnesota with a degree in literature in 1997. He
sought an opportunity to pursue his passion for the outdoors while working for himself. He, his
brother Dave, and his friend Tony Ciardelli founded TrueRide, a skate park manufacturing
company. The company was established in Minnesota and between 1997 and 2007 they built over
450 big municipal skate parks for cities across the country. The trio raised all of the financing
needed using their own funds and with some investment from family and friends.
Greg and his two partners manufactured the ramps from recycled plastic in Minnesota, shipped
them to sites, and then put them together to form the skate parks. However, with the idea of being
creative with a sustainably reused product, the thought of having leftover scraps did not sit well
with him. “We had waste,” said Greg. “You build this park and end up with these small plastic
pieces. So we contemplated what we should do with that waste.”
The plastic material they used was sourced for durability, longevity, and no-maintenance and,
hence, was not cheap. Looking at both the economical and the sustainable ramifications of throwing
the scraps in a dumpster was the impetus, in 2005, for the origination of two new companies:
Epicurean Cutting Surfaces, which produced kitchen cutting boards and tools, and Loll Designs,
which produced outdoor furniture. In other words, leftovers from skate ramps were manufactured
into two new companies or product lines. In 2007, the founding trio sold TrueRide after 10 years
of ramp building, and concentrated on their new businesses. They used the funds from the sale of
TrueRide to pay off the original investors and to fund their new ventures. Greg managed Loll
Designs, while his brother and Tony oversaw Epicurean. By the end of 2016, Epicurean’s product
mix included 350 kitchen products that were sold in 60 countries.
The naming of Loll Designs came about when their in-house graphic designer was trying to find
a synonym for “relax” and came across the term “Lollygagger.” According to Dictionary.com, to
Lollygag is to sit, stand, or be lazy. Greg was struck with the idea that he wanted “to make outdoor
furniture for the modern Lollygagger.” To Greg this is someone who is really active, who works
hard, but also wants to relax hard and enjoy his/her time outside. Loll Designs vision statement
summarized this theme, “Loll Designs inspires people to appreciate the outdoors.”
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Originally, the company used recycled post-industrial plastic (scrap that had been diverted or
recovered during the manufacturing process, like that from TrueRide), but by the end of 2007,
Loll Designs began sourcing post-consumer plastic (material that had been used by consumers
and diverted or recovered from waste destined for a landfill). This was when Loll Designs really
started to take shape as a green (environmentally aware) company. An estimated eight recycled
one-gallon milk jugs went into each pound of a Loll Designs Adirondack Chair, which equaled
about 400 milk jugs per chair. Plus, the chair’s recycled material was also 100% recyclable, so
its purpose could change again into another useful product when the chair was no longer usable.
Loll Designs’ corporate office, manufacturing facility, and showroom were in Duluth, Minnesota.
Although Loll Designs did not compete on price, sales had always grown since the company’s
inception. Sales in 2016 were a little over $10 million, and the company only employed 50 people.
Approximately half of Loll Designs sales were to companies, like Yahoo headquarters, public
libraries, restaurants, and cruise ships. Room and Board (roomandboard.com), a Minnesota-based
retailer, accounted for 20% of sales. Another 20% came from direct online orders, and 10% were
overseas sales, via independent distributors.
Sustainability and Green Initiatives
Greg had always been passionate when it came to sustainability. “Profit,” “people,” and “planet”
were three intertwined dimensions in any decision he made. Loll Designs mission statement
couldn’t be clearer: “We enhance people, the planet, and our company, in everything we do.”
Informing the “profit” dimension was the idea that growth and profits were part of being
sustainable to stay in business. In commitment to the “people” dimension, Loll Designs paid
above-average wages. “We are competing with other businesses in town that are hiring people,
hence our pay, benefits, and other intangible things that make people come and work for us and
stay with us have to be competitive,” Greg said, regarding the company’s HR philosophy. He
was known for coming up with ideas to motivate his employees while helping the environment.
For example, Loll Designs paid employees to ride bikes to work for a two-fold benefit: to cut
back on fossil fuel and to have healthier employees. However, the “planet” dimension was the
core of Loll Designs business model, as exemplified in their operations.
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Green/Eco-friendly Operations
Loll Designs was hinged on reuse, from designing and manufacturing products that were 100%
recycled and 100% recyclable to maintaining a zero-waste production facility. Greg was also
continually looking for ways to take the company’s green ideals to a new level. One of Loll
Designs most recent ideas was reusing the heat that was generated during the manufacturing
process. Winters in northern Minnesota were to be taken seriously, and Loll Designs understood
this fact well. Heat was a natural byproduct of their manufacturing process that was generated
from two main sources: the computer numerical control (CNC) vacuum hold-down system (i.e.,
vacuums that hold down parts for the CNC cutting), and the CNC dust collection system. Heat
from the CNC machine vacuums and dust collection system was captured in an enclosed
mechanical room. The control unit regulated where the hot air was distributed, which was in the
shop (winter mode) or out through the roof (summer mode). Previously, this heat had been simply
pumped outside. “The mechanical room was balanced around 90°F with dumping the excess heat
outside or inside the building in winter, producing enough British thermal units (BTUs) to heat
the entire production facility,” said Greg. “The shop could be up to 90 degrees if they wanted, but
the production crew usually likes it at 65.” Although the company had an external heating system,
it wasn’t needed. Reusing Loll Designs waste heat was just another way in which it demonstrated
its mission and commitment to the environment. In all of this analysis Greg also became aware
of the variety of industrial applications and systems that use plastic components.
The Urge to Give Back
In early 2016, Loll Designs announced a $60,000 donation, to be spread equally among three
local outdoor nonprofits: Duluth Climbers Coalition, Duluth XC Ski Club, and Cyclists of Gitchee
Gumee Shores (COGGS). From 2008 to 2016, as part of its commitment to the community, Loll
Designs had contributed more than $362,000 in financial support for improved access to the
outdoors, with a focus on legacy outdoor projects. “It’s exciting to see how our contribution can
help transform Duluth’s outdoor infrastructure,” Greg stated, adding “we know our commitment
inspires others to do the same. These organizations are not only great stewards of their resources,
but they also help improve the community where we choose to live and work.”
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Recycled Raw Materials
Loll Designs products are made from recycled milk jugs. Due to safety concerns related to
bacterial and chemical contamination as well as strict Food and Drug Administration (FDA)
guidelines, milk jugs that are reclaimed must be turned into non-food items, such as children’s
toys and, in this case, Loll Designs outdoor furniture. More than 100 million jugs have been
reclaimed by the company since 2007. “We know there are eight milk jugs in a pound of material,
and we know how many pounds of material we purchased over the last 10 years,” said Greg,
adding “this figure is growing, as we are always buying plastic.”
But, how do you go about turning almost 400 milk jugs into one Adirondack chair? Let’s start
with the discarded plastic containers. Plastic recyclables are sorted at the recycling facility by
plastic type. For example, ketchup bottles and yogurt containers are made of PP (polypropylene).
Detergent bottles and milk jugs are made of HDPE (high-density polyethylene), and soda bottles
are made of PET/PETE (polyethylene terephthalate). The plastic is then baled—put into a
compactor that compresses the individual containers into one unit. The bales are sold to
reclaimers – companies that help process plastic so it can be recycled into other products – who
shred the plastic into small flakes. These flakes are washed, dried, and sorted into natural-colored
flakes (like the ones from the milk jugs used by Loll Designs) and colored flakes (such as those
from detergent bottles). The flakes are then melted and processed into pellets. The pellets are sold
to companies that process the pellets into products, such as large sheets of plastic. These sheets
can be used to make products like the Loll Designs furniture.
Efficient Logistics
How to ship the final product has been on Greg’s mind from day one, and he has firm views on
the financial implications of different methods, saying “when you make a product, you have to be
able to ship it. If you ship a chair in a box, you ship a lot of air. Dimensions really create the
shipping weight of the product. It costs more to ship an assembled chair because there is more
volume. Our goal is to ship everything flat.” Loll Designs designed a process to allow the customer
to put the chair together. Although the packaging and assembly system looked simple, it took a
few years to perfect it.
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A Zero-Waste Facility
All of Loll Designs outdoor furniture is made from 100% recycled plastic. But, like all
manufacturing facilities, it generates waste. The difference between Loll Designs and many other
manufacturers is that it recycles this waste. As of 2010, the process is as follows: Loll Designs
uses CNC machines to cut recycled plastic sheets into furniture components by reading the
company’s 3D design files. (For several years, before the company started to use CNC machines,
employees had cut out the furniture parts by hand.) Small plastic chips and extra chunks of plastic
are residual by-products of each plastic sheet. Greg liked to use the analogy of making cut-out
cookies to illustrate the process, comparing the plastic to cookie dough. With cookies, there is
always extra dough after you’ve stamped the rolled-out dough, no matter how hard you try
strategically to make the best use of all of the dough. However, leftover cookie dough scraps can
be placed on the cookie sheet for baking without being in a cut-out pattern – similarly, leftover
scrap from cutting the furniture parts from plastic could be recycled elsewhere.
Each month, Loll Designs sends approximately 30,000 pounds of scrap to Choice Plastics, an
industrial scrap plastic recycler in Mound, Minnesota. Choice Plastics recycles Loll Designs
waste into agricultural drainage tubing that offers environmentally friendly viable green
alternatives to using concrete and steel pipes. “The fact that our waste could be turned into another
product (just as Loll Designs could turn used milk jugs into outdoor furniture) is truly a wonderful
thing,” commented Greg, adding “it’s a continuous reuse and rebirth of the material.” Greg also
noted all of the plastic tubing used in agricultural processes and wondered about entering this
market on occasion.
National and Local Competitors
The North American outdoor furniture market has been growing at a constant rate over the past
few years. Due to various factors leading to overall market growth, this market was expected to
increase roughly 4% by the year 2021. The rise in demand for outdoor furniture has been due to
rising consumer interest in both landscaping and outdoor renovation and decorating.
Loll Designs operates within a very specific, “niche” market, placing it in a unique position.
Given its manufacture of outdoor furniture that both offers a high quality “premium” product and
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is produced from recycled materials, its typical consumer profile is quite specific. Indications
show that there is definite potential for positive growth for companies operating within the outdoor
furniture industry; for example, a growing customer base, changing psychographics (consumers’
psychological profile), and a thriving economy.
Along with a market this size comes key competition on both a local and national scale. Given
its consumer base, Loll Designs direct competition differs slightly from that of other companies.
Nationally, some key competitors include companies such as IKEA, Brown Jordan, Forever
Patio, Harmonia Living, and Polywood, while, locally, Loll Designs faces competition from
companies such as By-the-Yard. These national and local companies compete in terms of the
production and pricing of the quality products that they sell. Consumers who want to purchase a
high-end piece of furniture would most likely consider all of these choices and alternatives.
IKEA, Brown Jordan, Forever Patio, and Harmonia Living are not direct competitors (in relation
to some consumers), since they do not sell furniture produced from recycled materials. The
products that these retailers sell would fall under the category of substitute products to Loll
Designs unique product offering
Consumer Segments
Loll Designs regards environmentally conscious people as one of its primary target markets.
Catering to them requires utmost care. This demographic is willing to spend extra money to obtain
sustainably oriented products, and they look for companies that put great care into every aspect
of the product. All of the green marketing activities that separate Loll Designs from other outdoor
furniture producers, such as planting trees, using recycled ingredients, and investing in local
communities, cater to its target market’s values and beliefs.
When researching Loll Designs target market, Greg found one of the fastest growing green
market segments was “True Blues” – people who are passionate about environmental causes and
use their purchasing behavior to support change, even if it costs them more. This segment, Greg
believed, was the core of his customers. Other identified market segments were “Greenback
Greens” and “Sprouts,” those who also appreciate environmentally conscious businesses but tend
not to be active promoters of these types of businesses.
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While identifying Loll Designs best consumers based on attitudes towards sustainability made
sense to Greg, he was torn between segmenting consumers on the basis of their attitudes rather
than on the basis of their behavior. He had read another article about a behavioral segmentation
alternative developed by the Natural Marketing Institute (NMI) that identified five market
segments that green marketing organizations should evaluate. According to this article,
“LOHAS” consumers are those who led “lifestyles of health and sustainability.” They see
environmental issues as interconnected, and this includes how products are manufactured and
how employees are treated; “Naturalites” are specifically focused on the personal health and
wellness benefits of sustainably oriented products, and buy green products because they believe
them to be of higher quality; “Conventionals” are practical consumers who appreciate seeing the
benefits of their sustainable actions (e.g., saving money by using less electricity); “Drifters” are
not particularly conscious about environmental issues and remain price sensitive, but are willing
to support environmentally friendly businesses if it doesn’t cost them more; and, finally, the
“Unconcerned” are unaware of green choices and have no motivation to consider the
environmental impacts of their behavior.
Greg wasn’t sure which structure would best define Loll Designs target segments, but knew that
the right appeals could turn environmentally conscious segments (whether the Roper attitude or
the NMI behavioral segments) into loyal customers. However, he also knew that the premium
price of his product could make Loll Designs the target of “Grousers,” “Apathetics,” “Drifters,”
or the “Unconcerned,” who often regarded green marketing as a scam, designed to take more
money from the consumer.
The main demographic for Loll Designs customer base tends to be:
• aged 35+ years, female, likely married;
• located in the Southern and coastal states;
• a professional, or in an occupation that provides higher disposable income
• educated to bachelor or master’s level; and,
• with a household income of over $150,000.
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Decision Time
Greg Benson was comfortable with Loll Designs mission, vision, and performance. However, he
wondered if it made sense to switch to virgin plastic if prices were to fall to less than the price
for recycled milk jugs. Given that plastic is derived from refined petroleum, the plastic industry
is directly influenced by oil prices. The benchmark figure Greg kept in mind was $50/barrel of
oil; for most of 2016, oil prices hovered around there. At that price point, plastic manufacturers
are able to crank out virgin plastic pellets at $600-650 a ton (27-29 cents/lb.) The national average
for post-consumer natural high-density polyethylene (HDPE) from curbside collection and
recycling programs in 2016 was 30 cents/lb.
Greg quickly did the math in his head: a “penny” (1 cent) saved in plastic lowers the cost of
making an Adirondack chair by 2 dollars. There was no disputing the fact that there might be an
opportunity with lower oil and plastic prices. How should Greg respond to it? He was faced with
a dilemma: he had positioned his company as green and caring, a company that “walked the talk”
– should he make an exception and ditch the milk jugs for now, until oil prices went up again, or
should he stick to his current business model? Also, what about new products and new markets?
Could he see Loll Designs entering the industrial or agricultural market segments? These
segments had enormous potential but were different from the consumer markets. These markets
would require new machinery, and a bigger team of employees.
Greg also had other things to consider as well, as his three children were young adults now and
expressed a real interest in the business. They wanted to be more involved in the future of Loll
Designs. In particular, they discussed the future use of plastics in manufacturing and how it could
be done in an environmentally responsible way. Their father Greg and Uncle Dave had always
impressed them with stories of the entrepreneurial adventures dating back to building the TrueRide
custom skate parks.
Greg knew it was decision time on the Future of Loll Designs.

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