The industry chosen is the handicraft industry and the reasons for selecting the same are as follow:
India’s art and craftsmanship is considered to be the best in the world. Abundant skilled labour in the industry – (approximately 41 lakhs). Raw materials for most arts and crafts are available locally. Possess a variety of crafts ranging from art metal ware to bamboo and jute products. Wave of oriental fashion Huge potential with large retail chains Tourism being seen as a vehicle of growth
Owing to lack of or inadequate data and information on world production and import of handicrafts, it is difficult to make an exact assessment of the size of the global market for handicrafts. Handicrafts accounting for the world imports consist of both genuine handmade handicrafts and similar machine made substitutes. The handicrafts sector is dominated by the imports of works of art, carpets and wood wares followed by basket wares, embroidery and the base metal decorative articles. The Handicrafts sector is one of the star performers among the thrust products identified by the Government of India for export promotion and growth. As a result, exemption is given on sales tax and incentives are given on power connection etc. The business is to be located in Rajasthan.
Business Opportunities in Rajasthan
Rajasthan is the most preferred State for investments in certain sectors. Easy availability of raw resources and skilled labour, makes it the natural choice for handicraft based industries. Tourism is a thriving and vibrant industry in Rajasthan. The State attracts one third of the tourists coming into India. The flourishing tourism industry helps the development of handicraft industry simultaneously because of the variety and quality of products and the demand in the international and domestic market.
This location has been selected due to the following reasons: Availability of raw materials and skilled labor in Rajasthan Land is cheap Water not required for manufacturing process. Abu road is an industrial area and is located close to Mount Abu which is a famous tourist destination Heavy influx of tourists every year at Mount Abu Has a lake called Nakki Lake which can fulfill the minimal water requirements
Elements of the marketing strategy
The target market: – The company plans to reach the middle class and the upper middle class of the society. Market segmentation: – After identifying the target market the company will be manufacturing and developing products that appeal to that section of market. Mass production: – The company will have a single marketing plan to mass-produce the products at the plant located in Rajasthan. The four P’s of marketing mix includes product, price, promotion and place. The following shows how the company is planning to use the marketing mix to promote and sell the products.
a. Product mix
Variety: – There will be a lot of variety in the products in terms of design, colour etc. There will be items like bracelets, anklets, necklaces, rings etc. from which anything can be selected by the customer according to his or her choice or need.
Quality: – The quality of the products will be superior and of international standards as the company will also be exporting them.
Design: – There will be a variety of designs in each category of jewellery.
Sizes: – The products will be available in different sizes and shapes as per the specification of the clients and also according to the demand.
Features: – Guaranteed and unbreakable beads and stones of different colours, different sizes and shapes for all occasions and for all age groups will be one of the company’s USPs.
Brand name: – The brand name of our company is Fine Jewels collection
Packaging: – The jewellery will be given in small velvet pouches with the brand name on it. This will be given in case of rings, bracelets etc. In case of necklaces and in case of big items, velvet boxes will be given.
Services: – Services like after sales services will be provided to the clients and if there is any defect or fault in the product it would be repaired or replaced free of cost.
b. Price mix
List price: – The prices of are products will be given on the list .i.e. is when they are sold directly to the retail outlet they are priced according to the list price. Discounts: – Special cash discounts will be given to our clients and also discounts for bulk purchases to retailers. Payments: – Cheque, credit cards as well as cash payment will be the accepted modes of payment. Credit cards will be useful in case of international transactions. Credit terms: – Credit facility of 15 days will be given on purchases only to our retailers.
c. Promotion mix
Advertising: – Product advertisements will be given in local newspapers, distribution of pamphlets and through word-of-mouth awareness. Advertisements will also be given on radio but after one or two years.
Sales focus: – Sales focus will be on all age groups and towards the middle class and the upper middle class of the society.
Direct market: – Some of the products will directly be sold to the market. Our main outlets will be in Mumbai and Rajasthan.
d. Place mix
Channels: – The different channels which will be used by the company are – retail outlets and through different distributors and also by export. The products will also be displayed in exhibitions.
Coverage: – The coverage area would be mainly exporting outside India to different countries, as well as Mumbai and Rajasthan.
Location: – The location will be two outlets in Mumbai, one outlet in Rajasthan. And others will be exported to different countries. Handicrafts are exported to more than 100 countries. There is a great gap between demand and supply in countries like USA, Singapore and Malaysia. Hence, there is always a need for new entrants to fill this gap.
The reasons for the outlet at Mumbai are as follows: Mumbai is the fashion capital of India. The target market for our product is the upper middle class and middle class. Products are designed keeping the target customer in mind. Mumbai has the highest number of shoppers in India
Competition is generally from developing nations like Indonesia and China. The major competition is from Far Eastern countries. In such countries, competitors generally resort to mass producing goods in order to cut costs. Countries like China also resort to “dumping” of cheap goods into economies. This leads to serious losses for Indian small scale industries are such cheap mass-market goods eat into the still dormant domestic market of handicrafts in India. There are also issues like use of child labour in India and strict labour laws abroad which might restrict exports to some countries. However, Fine Jewels will ensure theses things are considered before going into production.
The business as mentioned earlier will have six partners. The structure will be a flat one. They will be equal partners who will bring in the capital necessary for the starting of business. The financial projections are already given above regarding the use of the initial capital. The partners will look and run the business in equal measure.
Amount of Capital Required The initial investment of the firm is proposed to be Rs. 22 lacs. The company being involved in the handicraft products has no investment to make in plant and machinery.
Generation of Capital
The required capital is being partly brought in by six partners and partly being arranged from the bank. The partner’s contribution is Rs 2,00,000 each that is in all RS. 12,00,000 are brought by the partners. The remaining 10,00,000 is taken from the bank as Working Capital loan.
Utilization of Capital
The capital will be utilized in the following ways: Investment in Land & Building admeasuring 1200 Sq ft (30×40) is Rs 11,00,000/- Investment in Furniture & Fixture Rs 2,00,000/- Tools & Equipments Rs 5,000/- Working Capital Rs 8,95,000/-
Interest will be paid at the rate of 10% p.a., to the bank, i.e. 1,00,000 p.a., as finance charges. No interest is given to the partners for their capital investment in the Company.
Since we produce 1660 units per month we can achieve Break Even Point in 8.33 month (1660 x 8.33 = 13831 units). This is because by that time we will have reached the necessary target of production for the break even