2)

The first and most obvious note of caution I would provide to Brain based on the case scenario is to eliminate the guesswork from his plan/proposal. He should know, not believe, that there is a market for CD rentals, and should have an empirical method of predicting rentals-per-customer in order to reasonably guess at his revenues. The issue of expenses is also not addressed at all; licensing and production costs will be astronomical at the outset, and no mention of original capital is made in his business proposal. There are also the many situation-specific problems with the fundamental product concept -- CDs are already falling out of favor with consumers, being replaced with digital music files that are less corruptible and more easily transported in addition to being cheaper to produce and to purchase. Finding a market...

He should conduct broader and more scientific consumer polls -- not just obtaining the opinions of his friends -- concerning the willingness to rent CDs, the most effective price point that consumers would be willing to pay for rentals, and other features such as desired rental length, etc. He should also conduct research concerning the cost of mp3 albums transferred digitally -- which provide the same full-album listening experience as CDs with less hassle -- and possible rental programs that might already exist or are planned with such technologies. Understanding the market and the competition are absolute necessities.