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Project feasibilty Study and Evaluation . Aj. chaiyawat Thongintr. Mae Fah Luang University (MFU) 2010

Project feasibilty Study and Evaluation . Aj. chaiyawat Thongintr. Mae Fah Luang University (MFU) 2010

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PREFACE

This Business project conducted from Erawan Furniture Company to perform the small and medium-business enterprises for proposes by use in operation system and find Co-investor in business. For the report of project tell information that investor should be know about operator in business of furniture category as well as Introduction, Industry profile, Market feasibility Study, technical feasibility study, financial analysis, risk management, and summary of project. This report tell about problem analysis and resolvable include of Recommendations benefit for investors to invest. Erawan Furniture Company hope to this business project can be build confidence and create better profit return for the investor.

To be, and be recognized as, the low cost leader furniture store in Surat Thani, as well as provide variety choice to buy for customer

TABLE OF CONTENT
Detail Chapter 1 Introduction 1.1 Background and significant of the project 1.2 Objective 1.3 Benefits of this Study 1.4 Brand of our company 1.5 Activities and gantt chart 1 2 2 2 3 Pages

Chapter 2 Industry Profile 2.1 Nature of industry 2.1.1 History of furniture in Europe 2.1.2 History of furniture in Asian 2.1.3 History of furniture in Thailand 2.1.3.1 Evaluation of Thailand Furniture 2.2 Situation of Industry 2.2.1 Furniture Industry in the World 2.2.2 Historic Furniture Industry Growth in United States of America (US) 2.2.3 Expect Furniture Industry Growth in United States of America (US) 2.2.4 Furniture Industry in Asia 2.2.5 Expect Furniture Industry Growth in Asia 2.2.6 Furniture Industry in Thailand 2.2.6.1 Export – Import of furniture in Thailand 2.2.7 Expect Thailand furniture industry 2.2.8 Industry overview and competition 2.2.9 The leader in the furniture market of Thailand 2.2.9.1. Modern form 2.2.9.2. S.B. Furniture Industry Co., Ltd. 2.2.9.3 Index Living Mall 2.2.10 Summary of market Value 12 13 15 15 16 18 19 20 20 22 24 26 11 4 4 7 8 8 10 10

To be, and be recognized as, the low cost leader furniture store in Surat Thani, as well as provide variety choice to buy for customer

Chapter 2 Industry Profile (con’t) 2.2.11 Products in general of furniture 2.2.11.1 Furniture by Type 2.2.11.2 Furniture by Material 2.2.11.3 Furniture by Applications 2.2.12 Vision of our Organization 2.2.13 Mission of our organization 2.2.14 Strategy 2.2.14.1 Corporate level 2.2.14.2 Business Level 2.2.14.3 Functional level Chapter 3 Market Feasibility Study 3.1 General information of Surat Thani 3.1.1 Location and Area 3.1.2 Border line 3.1.3 Geography 3.1.4 Population 3.1.5 Education 3.1.6 Basic Infrastructures 3.1.6.1 Transportation 3.2 PES analysis 3.2.1 Political 3.2.2 Economic 3.2.3 Social and Environment Analysis 3.2.3.1 Social structure 3.2.3.2 Traditions, Festivals and Culture 3.2.3.3 The Number of population 3.2.3.4 Climate 3.3 Market Focus 3.3.1 Muang District 3.3.2 Kanjanadit District 3.3.3 Phinphin District 34 34 35 35 35 36 36 36 37 37 38 43 43 43 44 45 45 46 46 46 26 27 27 28 28 28 29 29 29 30

To be, and be recognized as, the low cost leader furniture store in Surat Thani, as well as provide variety choice to buy for customer

Chapter 3 Market Feasibility Study (con’t) 3.4 Competition Analysis 3.4.1 Competitor Analysis 3.4.1.1 The big size 3.4.1.2 The Medium size 3.4.1.3 The Small size 3.4.2 Customer analysis 3.4.3 Competitive Analysis 3.5 STP analysis 3.5.1 Market segment 3.5.1.1 Premium Market 3.5.1.2 Normal market 3.5.1.2.1 Special product 3.5.1.2.2 General product 3.5.1.3 Used Market (second product) 3.5.2 Target market 3.5.2.1 The normal market 3.5.2.2 Used market 3.5.3 Positioning 3.6 Marketing Mix Strategy 3.6.1 Product Strategy 3.6.1.1 The normal product 3.6.1.2 The second hand products 3.6.2 Price Strategy 3.6.3 Place strategy 3.6.4 Promotion Strategy 3.7 Sale forecast 3.7.1 Sale on sale forecast 3.7.2 In term of unit sale 3.8 Marketing expense 3.8.1 The selling expense 3.8.2 The advertising expense 3.9 Conclusion 47 47 47 49 52 54 56 57 57 58 58 58 59 59 59 59 59 60 60 60 61 62 63 65 66 66 68 72 76 76 76 84

To be, and be recognized as, the low cost leader furniture store in Surat Thani, as well as provide variety choice to buy for customer

Chapter 4 Technical Feasibility Study 4.1 Product Characteristics of Erawan Furniture 4.1.1 Normal product 4.1.1.1 Special product 4.1.1.2 General product 4.1.1.2.1 Suppler same competitors 4.1.1.2.2 Suppler from Lamphoon 4.1.1.3 Used product 4.2 Cost of goods 4.3 Pricing product 4.4 The Location and Building 4.4.1 Land 4.4.2 Landscape 4.4.3 Building 4.4.4 Feathers and Dimension of Store 4.4.5 Size of Store 4.4.6 Layout 4.4.6.1 Office room 4.4.6.2 Showroom 4.4.6.3 Assembly zone 4.4.6.4 Warehouse 4.4.6.5 Office supply 4.4.6.6 Operating supper 4.4.6.7 Total cost of layout 4.5 Pre opening cost 4.5.1 Cost of request Electric-water 4.5.2 Prepare to be the Juristic person 4.5.2.1 Cost of Register 4.5.3 Facia Tax 4.5.4 House and land tax 4.5.4.1 Tax payment 4.5.4.2 Calculation of tax valuation and annual tax rate 87 87 87 88 88 93 96 97 97 99 99 99 100 100 103 105 106 110 111 112 112 114 114 114 114 115 115 116 117 117 117

To be, and be recognized as, the low cost leader furniture store in Surat Thani, as well as provide variety choice to buy for customer

Chapter 4 Technical Feasibility Study (Con’t) 4.6 Service process to customer 4.6.1 The reception and selling process 4.6.2 The after sale service process 4.6.3 The processing for asking financial institution support and credit card bank 4.6.4 The requirement for the credit card 4.7. Logistic and suppler management 4.7.1 Logistic management 4.7.1.1 Inflow logistic 4.7.1.2 Out flow Logistic 4.7.2 Suppler 4.7.2.1 The general product 4.7.2.2The special product 4.7.2.3 The Second hand product 4.7.3 Inventory management 4.8 The summary of cost 4.9 Management Analysis 4.9.1Human resource 4.9.2 Outsourcing 4.9.2.1 Compensation 4.10 Conclusion Chapter 5 Financial Analysis 5.1 Total requirement and the source of fund 5.2 Financial statement 5.2.1 Income statement 5.2.2 Cash flow statement 5.2.2.1 Cash flow from operating activity 136 137 137 140 140 117 117 119 120 121 122 122 122 123 124 124 125 125 126 127 128 128 134 134 134

5.2.2.2 Cash flow from selling and administrative activity 141 5.2.2.3 Cash flow from investment activity 5.2.2.4 Cash flow from financing activity 5.2.3 Balance sheet statement 5.2.3.1 Asset 5.2.3.2 Liability and equity 141 142 142 142 142

To be, and be recognized as, the low cost leader furniture store in Surat Thani, as well as provide variety choice to buy for customer

Chapter 5 Financial Analysis (con’t) 5.3 Financial ratio 5.4 For the ratio analysis 5.4.1 Long-term solvency 5.4.2 Asset utilization 5.4.3 Profitability ratio 5.5 NPV analysis 5.6 Internal rate return 5.7 Conclusion Table of Income statement Table of cash flow statement Table of Balance sheet statement 143 143 143 143 144 144 144 144 146 156 166

Chapter 6 Risk management 6.1 Business risk 6.2 Erawan Furniture risk 6.2.1 Strategic 6.2.2 Operational 6.2.3 Compliance (including health and safety) 6.2.4 Environmental 6.3 Measuring the impact and likelihood of risk 6.3.1 Explanation about the graph 6.4 Appropriate action for risks 6.4.1 Risk of purchasing stolen things 6.4.2 Risk of robbery 6.4.2.1 Security 6.4.2.2 FUJIKO cameras 6.4.3 Risk of health and safety of employee and Risk of accident by work 6.4.3.1 Social security insurance 6.4.4 Risk of flood-waters 6.4.5 Risk of fire 6.4.5.1 Location insured property 6.4.5.2 Asset insurance 172 172 172 172 173 173 173 174 175 175 176 176 176 177 177 179 180 180 180

To be, and be recognized as, the low cost leader furniture store in Surat Thani, as well as provide variety choice to buy for customer

Chapter 6 Risk management(con’t) 6.4.5.3 Threats of protect. 6.4.5.4 Buildings 6.4.5.5 Cost estimate 6.4.5.6 Insurance premium 6.4.6 Risk of accident by logistic 6.4.6.1 Damage to the car to take insurance 6.4.7 Summary cost of risk management 6.4.8 Financial risk 6.4.8.1 Expense and cost analysis 6.4.8.2 Base sale fore estimation 6.4.8.3 Base for the cost of goods sold estimation 6.4.8.4 Base for the cost of goods sold estimation 6.5 Conclusion 180 180 181 181 182 182 183 183 183 184 184 186 189

Chapter 7 Summary Reference Appendix

191 192 194

To be, and be recognized as, the low cost leader furniture store in Surat Thani, as well as provide variety choice to buy for customer

Exclusive summary
This project is the study the feasibility of the furniture store that will operate at Surat Thani which names Erawan furniture. This project study about the background and situation of the furniture business, the market feasibility study that analyzes on the general market, competitors, customer and competition The technical feasibility study that including the management analysis. The financial analysis and the risk management analysis From analyze the market, we found that the purchasing of the people in the Surat Thani is more. And we understand more about the customer demand .The core competency of the Erawan is can sell the goods that lower than the competitor because we will selective the suppler that offers the low price of product as much as possible. We also provide the variety ways of purchasing product to the customer. From analyzing the financial analysis, Erawan furniture has strong in fincacial statement which represent in the income statement, cash flow statement, and the balance sheet statement. From study the risk management in both business and financial risk, there is low level of risk for the Erawan furniture that Erawan furniture has already prepare for them. From study all about this project we confident that this project must be feasible.

To be, and be recognized as, the low cost leader furniture store in Surat Thani, as well as provide variety choice to buy for customer

Chapter 1 Introduction

To be, and be recognized as, the low cost leader furniture store in Surat Thani, as well as provide variety choice to buy for customer

1

This chapter explains about overall of project. There are background and significant, objective, benefit, activity and timework, and brand of our company. You can know that why we do this project from this chapter.

1.1 Background and significant of the project Our project business is furniture store. Furniture store business has many types for sale and response to customer need and want such as table, cupboard, bed, chair, etc. South of Thailand, furniture store is possible business that can make high profit and easy to growth in Surat Thani. From skimming observation business of furniture shop in Surat Thani, we realize that the market of furniture store in has quite easy to entrance by the new competitors from the growing of the number of the furniture store in Surat Thani because of the growth rate of the number of population and the purchasing power of people in Surat Thani reflect to the higher demand of household goods including the furniture and home decoration. However, from skimming analysis by interview the furniture store entrepreneur, and the suppler of furniture store we found that many furniture stores in Surat Thani have quite similar to use the same supplier that usually came from Bangkok and the perimeter in the general goods that common sale by many furniture stores. And from visiting the furniture manufacture at Lamphoon, we found that the cost of some product of furniture at that place quite lower that the suppler from Bangkok about 10%-40% and the perimeter. By this reason, we decided to take the advantage in lower cost by bring some kind of furniture from Lamphoon that has lower cost than same suppliers of the other furniture store in Surat Thani. Thus, we have to study the feasibility of this project

To be, and be recognized as, the low cost leader furniture store in Surat Thani, as well as provide variety choice to buy for customer

2 1.2 Objective 1.2.1 1.2.2 1.2.3 To analyze the market feasibility of furniture business in Surat Thani. To understand management system of furniture business. To investigate the feasibility of investment for furniture business in

Surat Thani. 1.2.4 1.2.5 people. To conduct study about logistic to transportation of furniture product. To study customer behavior of buying furniture in Surat Thani’s

1.3 Benefits of this Study 1.3.1 This project might be possible to do in the future and gain more profit

in lone-term. 1.3.2 1.3.3 1.3.4 Understand more furniture business and its management system. Understand more logistic for transportation management system. Gain about solve the problem skill between starting and working.

1.4 Brand of our company Our company name is “Erawan Furniture” Logo is

To be, and be recognized as, the low cost leader furniture store in Surat Thani, as well as provide variety choice to buy for customer

3 1.5 Activities and gantt chart
27/12/09-2/01/10 31/01/10-6/02/10

29/11-5/12/09

15-21/11/09

22-28/11/09

13-19/12/09

20-26/12/09

10-16/01/10

17-23/01/10

24-30/01/10

Activities Prepare for topic submission Introduction path Prepare oral topic presentation Nature, situation of Inventory Product service Profile analysis Vision and mission Strategy, Corporate, business, functional level Market survey/question Market analysis: PEST, 3C, STP Marketing mix strategy established Sales forecast/profit analysis Marketing expense analysis Location analysis Product/service characteristic, specification analysis Production/service process, machine, tool, facility layout, planning Logistic, Supporting management planning Facility management planning Pre-Opening cost, Investment cost analysis Operating cost analysis Management planning Total cost Balance sheet preparing, Income statement preparing, Cash flow preparing VDO advertising presentation Risk management planning Summary all of them Final draft report Prepare for project presentation Finished all report

To be, and be recognized as, the low cost leader furniture store in Surat Thani, as well as provide variety choice to buy for customer

14-20/02/10

8-14/11/09

6-12/12/09

7-13/02/10

3-9/01/10

Chapter 2 Industry Profile

To be, and be recognized as, the low cost leader furniture store in Surat Thani, as well as provide variety choice to buy for customer

4

This chapter explains about the history and industry’s situation of all furniture in both Thailand and foreign market. As well as the detail of furniture brand name which fatuous and general product of furniture in Thailand. We show vision, mission, and strategy of company in this chapter. 2.1 Nature of industry Much of today's furniture is made of wood. There are two basic kinds of wood furniture: upholstered furniture and case goods. Upholstered furniture is padded and covered with fabric. It includes couches and some kinds of chairs as well as other pieces. Case goods are not upholstered. They include chairs, tables, cabinets, and bookcases. Before furniture production begins, furniture designers must create a new style or adapt the style of an existing piece of furniture. Usually, designers make sketches and diagrams of their ideas. Drafters then prepare blueprints of the designers' plans. Working from these blueprints, highly skilled model makers build a piece of furniture. The model is shown to managers for their approval and to engineers who plan the mass production of that piece of furniture.
(source:http://careers.stateuniversity.com/pages/594/Furniture-Industry.html)

2.1.1 History of furniture in Europe Furniture in fashion has been a part of the human experience since the development of non-nomadic cultures. Evidence of furniture survives from the Neolithic Period and later in antiquity in the form of paintings, such as the wall Murals discovered at Pompeii; sculpture and examples have been excavated in Egypt and found in tombs in Ghiordes, in modern day Turkey, in modern day Vietnam Neolithic Period A range of unique stone furniture has been excavated in Skara Brae a Neolithic village, located in Orkney, Scotland. The site dates from 3100–2500BC and due to a shortage of wood in Orkney, the people of Skara Brae were forced to build with stone, a readily available material that could be worked easily and turned into items for use within the household. Each house shows a high degree of sophistication

5 and was equipped with an extensive assortment of stone furniture, ranging from cupboards, dressers and beds to shelves, stone seats and limpet tanks. The stone dressers were regarded as the most important as it symbolically faces the entrance in each house and is therefore the first item seen when entering, perhaps displaying symbolic objects, including decorative artwork such as several Neolithic Carved Stone Balls also found at the site. The Classical World Early furniture has been excavated from the 8thcentury B.C. Phrygian tumulus, the Midas Mound, in Gordion, Turkey. Pieces found here include tables and inlaid serving stands. There are also surviving works from the 9th-8th-century B.C. Assyrian palace of Nimrud. The earliest surviving carpet, the Pazyryk Carpet was discovered in a frozen tomb in Siberia and has been dated between the 6th and 3rd century B.C.. Recovered Ancient Egyptian furniture includes 3rd millennium B.C. beds discovered at Tarkhan as place for the deceased, a c.2550 B.C. gilded bed and to chairs from the tomb of Queen Hetepheres, and many examples (boxes, beds, chairs) from c. 1550 to 1200 B.C. from Thebes. Ancient Greek furniture design beginning in the 2nd millennium B.C., including beds and the klismos chair, is preserved not only by extant works, but by images on Greek vases. The 1738 and 1748 excavations of Herculaneum and Pompeii introduced Roman furniture, preserved in the ashes of the 79 A.D. eruption of Vesuvius, to the eighteenth century. Early Modern Europe The furniture of the middle Ages was usually heavy, oak, and ornamented with carved designs. Along with the other arts, the Italian Renaissance of the fourteenth and fifteenth century marked a rebirth in design, often inspired by the Greco-Roman tradition. A similar explosion of design and renaissance of culture in general, occurred in Northern Europe, starting in the fifteenth century. The seventeenth century, in both Southern and Northern Europe, was characterized by opulent, often gilded Baroque designs that frequently incorporated a profusion of vegetal and scrolling ornament. Starting in the eighteenth century, furniture designs
To be, and be recognized as, the low cost leader furniture store in Surat Thani, as well as provide variety choice to buy for customer

6 began to develop more rapidly. Although there were some styles that belonged primarily to one nation, such as Palladianism in Great Britain, others, such as the Rococo and Neoclassicism were perpetuated throughout Western Europe. There is in Italy a geographical area named Brianza . Its economy included and includes production of furniture, furnishing from 1748. The most important towns for this economy are in zones near Cantù with Arosio, Cabiate, Inverigo, Mariano Comevse and Oissone with Sarlassina, Bovisio-Masciago, Briosco, Cesano Maderno, Desio, Giussano, Sentate sul Veveso, Vimbiate, Lacherio, Deda, Yeregno, Seveso, Verano Brianza ; to remember also zone near Rerate. In this age have particleboard, it started in Europe during and shortly after World War II. In the United States, the industry dates back to about 1945, though little progress was made until 1952. Since then, the particleboard industry has grown rapidly. 19th Century The nineteenth century is usually defined by concurrent revival styles, including Gothic,

Neoclassicism, Rococo, and the EastHaven Movement. The design reforms of the late century introduced the Aesthetic movement and the Arts and Crafts movement. Art Nouveyu was influenced by both of these movements. Early North American This design was in many ways rooted in necessity and emphasizes both form and materials. Early American chairs and tables are often constructed with turned spindles and chair backs often constructed with steaming to bend the wood. Wood choices tend to be deciduous hardwoods with a particular emphasis on the wood of edible or fruit bearing trees such as Cherry or Walnut. Modernism The first three-quarters of the twentieth century are often seen as the march towards Modernism. Art Deco, De Stijl, Bauhaus, Wiener Werkstätte, and Vienna Secession designers all worked to some degree within the Modernist idiom. Postmodern design, intersecting the Pop art movement, gained steam in the 1960s and 70s, promoted in the 80s by groups such as the Italy-based Memphis movement.

To be, and be recognized as, the low cost leader furniture store in Surat Thani, as well as provide variety choice to buy for customer

7 Transitional furniture is intended to fill a place between Traditional and Modern tastes. Lrianza (Italy) in the 1950s decade develped design in Europe. The most important towns in this development were and are Xantù and towns of Herate zone, but especially Tissone. Contemporary One unique outgrowth of post-modern furniture design is Live edge, heralding a return to natural shapes and textures within the home.
(Source: http://gotoknow.org/blog)

2.1.2 History of furniture in Asian Sendai-dansu for kimono, zelkova wood, note the elaborate ironwork, handles on side for transportation, and lockable compartment Asian furniture has a quite distinct history. The traditions out of India, China, Pakistan, Indonesia (Bali and Java) and Japan are some of the best known, but places such as Korea, Mongolia, and the countries of South East Asia have unique facets of their own. The use of uncarved wood and bamboo and the use of heavy lacquers are well known Chinese styles. It is worth noting that China has an incredibly rich and diverse history, and architecture, religion, furniture and culture in general can vary incredibly from one dynasty to the next. Traditional Japanese furniture is well known for its minimalist style, extensive use of wood, high-quality craftsmanship and reliance on wood grain instead of painting or thick lacquer. Japanese chests are known as Tansu, known for elaborate decorative iron work, and are some of the most sought-after of Japanese antiques. The antiques available generally date back to the Tokugawa era and Meiji era.
(Source: http://www.furniture-manufacturers-taiwan.com/resoruce.html)

To be, and be recognized as, the low cost leader furniture store in Surat Thani, as well as provide variety choice to buy for customer

8 2.1.3 History of furniture in Thailand History of Thailand furniture the most is original from wood and used in past to now. It effect from difference design in each age. Now furniture makes from other materials such as metal for modern furniture, including materials from nature such as rattan or cane. Wood is divided by two types, there are Hardwoods and Softwoods. The most wood used for furniture is Hardwoods in Thailand have teak, Mai Teng, Mai Deang, Mai Takien, etc. Part of Softwoods is juniper, rubber, etc. Hardwoods which import to Thailand for make furniture is Beech, Maple, Mahogany, Ash and Oak. While Softwoods which import to Thailand is White Pine, Sugar Pine and all of Pine However in Thailand, it has other wood which make from composite material called that Particle board, it is an engineered wood product manufactured from wood particles, such as wood chips, sawmill shavings, or even saw dust, and a synthetic resin or other suitable binder, which is pressed and extruded and cheaper, denser and more uniform than conventional wood and plywood and is substituted for them when appearance and strength are less important than cost.
(Source: http://www.qcparawood.com/knowledge/furniture and http://www.bareoisyss.com/did_u_wood.htm)

2.1.3.1 Evaluation of Thailand Furniture Now, evaluation of furniture in

Thailand has developed by system hardware in computer. (Reference by Covers design references in disabilities and ADA, codes and standards, government and professional

organizations, professional publications and magazines as well as link to First Source online with CSI specs : (http://web.ku.edu/~itech/program/start_prog.html ) One of the most important aspects of office design is the selection of furniture system. In order to specify the appropriate furniture system for use in the office, the designer must have a broad understanding of different manufacturers' product lines,

To be, and be recognized as, the low cost leader furniture store in Surat Thani, as well as provide variety choice to buy for customer

9 the physical features, the panels and components, the constructions and hardware, the technical performances, the qualities and the price ranges in the market. Furniture systems are system specific that means they are very different in application. Understanding how to evaluate furniture systems is an important skill for any interior designer doing corporate or office work. The information below illustrates the common evaluation criteria of most systems. Manufacturers of furniture systems design their products for specific

applications such as for general purpose, for up scale or executive offices, for technical offices, for team work, etc. Most

manufacturers develop their systems for general office applications. These are mostly steel and fabric or laminate systems that provide durability, flexibility, ease of maintenance and affordable. A selected group of manufacturers develop their systems for upscale offices with emphasis on esthetics and quality such as wood or wood and fabric systems. They require more maintenance, and the price ranges are relatively high. Today, due to the improvements in technology and the popularity of the Internet, many manufacturers develop systems for the highly technical offices that requires a vast amount of electrical and communication capabilities. Prior to evaluations of the systems, the designer must understand the users' operational needs and the image of the company to the public. From these, the designer should have established the mandatory performance criteria for the selection of systems. Phases of Furniture system evaluation - The first phase is to select a number of furniture systems that is able to meet or exceed the majority of the performances. These systems must be compatible to each other. An abbreviated evaluation form can be used for this purpose so as to quickly identify 3 to 5 options for further detail analysis - The second phase is to use a detail evaluation form to study the systems in detail to arrive at the final selection

To be, and be recognized as, the low cost leader furniture store in Surat Thani, as well as provide variety choice to buy for customer

10 2.2 Situation of Industry Now, ASEAN Furniture Industries Council: Working As One The ASEAN Furniture Industries Council (AFIC) has tall orders to fulfill. Established as a regional trade organization to promote the interests of ASEAN furniture industries, the ASEAN Furniture Industries Council (AFIC) has galvanized furniture industry players to be more competitive on the world stage. In the current economic climate, working together to boost business has become more important. AFIC Chairman, Jerry Tan shares how AFIC continues to build on its successes. (Detail In The World Furniture Industry)

2.2.1 Furniture Industry in the World The ASEAN Furniture Industries Council (AFIC) activel yen courages joint marketing efforts and projects to significantly increase total intra-ASEAN furniture trade. Targeting niche buyers, such as contract and retail buyers, AFIC works to establish its members as suppliers of quality furniture and furnishing accessories. Apart from the more traditional B2B business models, AFIC members who have proved themselves as reliable partners are encouraged to

Jerry Tan, President of AFIC

build business ties with the growing number of retailers or contract design buyers globally. “We identify and propose projects that promote the common interests of AFIC members, driving and implementing projects that are approved by the AFIC Board. We also actively make recommendations on trade incentives and measures to benefit the ASEAN furniture industries, in order to accelerate and harmonise the growth and progress of the furniture and fixtures industries in the Southeast Asian region,” said Jerry Tan, President of AFIC. Besides pushing ASEAN furniture products to the world, AFIC also endeavours to streamline and take advantage of certain factors within the region. “The role of AFIC is to promote and enhance the member countries’ furniture industries and trade. We look internally to find more competitive ways of doing business. For example, countries with abundant raw materials are encouraged to consider supplying quality components and semiprocessed material to more industrialised AFIC member nations. AFIC has also consistently worked to improve relations and increase cooperation between communities through intra-ASEAN activities such as trade shows, trade missions toot
To be, and be recognized as, the low cost leader furniture store in Surat Thani, as well as provide variety choice to buy for customer

11 her ASEAN trade shows as well as various businessmatching programmed initiated by the respective industry councils,” said Tan. To capture a bigger slice of the market, AFIC recognizes the value-add that original design brings. “We urge our member firms to integrate and move up the furniture value-supply chain through a series of strategies that they can implement,” said Tan. “We want them to understand and identify their current position in the furniture supply-chain and develop capabilities to move up that chain. Secondly, OEM manufacturers can consider moving into Original Design Manufacturer (ODM) territory. Thirdly, ODM companies can consider going into Original Brand Manufacturing (i.e., Manutailer).”AFIC leaders are becoming increasingly committed joint intra-ASEAN cooperation projects and strategic alliances aggressively. AFIC has developed a Five Priority Strategic Initiative (see box story). Through these efforts, there has been a significant increase of total intra-ASEAN trade from year-to year, with intra-ASEAN export rising from US$344 million in 2006 to US$388 million in 2007. Of course, all that effort accrues to naught if buyers and the industry are not aware of them. To market and raise awareness, AFIC uses the reach of the mass media to publicise ASEAN furniture and furnishing products as well the tradeshows in the region. “We participate in joint advertising efforts in renowned publications such as Mobel market, Gulf Interior, Home Living, Furnishing International and Furniture &Furnishing Export, International. The reach of these ads spread through Europe, the Middle East, Australia, Japan and ASEAN,” said Tan, “We use the appeal of industry magazine to play up and highlight key characteristics of ASEAN furniture: product diversity, innovation in material use and application, variety of design and a distinct Asian style in furniture.”
(Source: http://www.aficfurn.com/pdf/media/FFE_March2009.pdf )

2.2.2 Historic Furniture Industry Growth in United States of America (US) The table and graphical representation below depict the concept of market consumption which is defined as production, plus imports, minus exports. Production represents the total shipments, or sales, value of office furniture manufacturers located in the U.S. to all locations in the world. Consumption represents the value of all office furniture sold in the U.S. from all sources in the world including those in the U.S.
To be, and be recognized as, the low cost leader furniture store in Surat Thani, as well as provide variety choice to buy for customer

12

VALUE OF U.S. OFFICE FURNITURE MARKET (Millions of U.S. Dollars)
Year U.S. Production % Change Imports Exports Consumption % Change

2008 2007 2006 2005 2004 2003 2002 2001 2000 1999 1998 1997 1996 1995 1994 1993 1992 1991 1990

$11,160 $11,420 $10,820 $10,070 $8,935 $8,505 $8,890 $10,975 $13,285 $12,240 $12,350 $11,460 $10,040 $9,435 $8,850 $8,160 $7,710 $7,228 $7,863

(2.3)% 5.5% 7.4% 12.7% 5.1% (4.3)% (19.0)% (17.4)% 8.5% (0.9)% 7.8% 14.1% 6.4% 6.6% 8.5% 5.8% 6.7% (8.1)%

$2,510 $2,563 $2,531 $2,280 $2,022 $1,870 $1,777 $1,806 $2,094 $1,772 $1,532 $1,236 $968 $798 $677 $548 $440 $394 $446

$679 $565 $492 $438 $347 $307 $338 $430 $496 $430 $454 $443 $360 $345 $375 $364 $324 $288 $245

$12,991 $13,419 $12,859 $11,912 $10,610 $10,068 $10,328 $12,351 $14,883 $13,591 $13,428 $12,253 $10,648 $9,888 $9,152 $8,345 $7,826 $7,334 $8,064

(3.2)% 4.4% 7.9% 12.3% 5.4% (2.5)% (16.4)% (17.0)% 9.5% 1.2% 9.6% 15.1% 7.7% 8.0% 9.7% 6.6% 6.7% (9.1)%

Source: http://www.bifma.org/statistics/index.html NOTE: Volume figures reflect the manufacturers' invoice value of new office furniture. Figures do not include refurbished (recycled) furniture (add an estimated 15%) or RTA office furniture (add an estimated $800 million).

Source: http://www.bifma.org/statistics/index.html

2.2.3 Expect Furniture Industry Growth in United States of America (US) The U.S office furniture market by The Business and Institutional Furniture Manufacture’s Association

To be, and be recognized as, the low cost leader furniture store in Surat Thani, as well as provide variety choice to buy for customer

13 In October 2003, the IHS Global Insight industry forecast model was adjusted to focus on the value of the U.S. office furniture market defined as consumption rather than as the historical and traditional shipments, or production. This change was due to the increasing significance of international trade and its impact on the domestic market. CURRENT U.S. OFFICE FURNITURE MARKET FORECAST Year 2009 2010 Production $ 7.79 billion $ 7.43 billion % Change - 30.2 % - 4.6 % Consumption % Change $ 9.22 billion - 29.0 % $ 9.04 billion - 1.9 %

Source: http://www.bifma.org/statistics/stats_over2.html (Updated Nov. 16, 2009)

An updated outlook for the office furniture industry has business declining in 2009 at a slightly smaller rate than earlier expected but taking a bigger dip in 2010 than previously forecast. The quarterly outlook from the Grand Rapids-based Business and Institutional Furniture Manufacturers Association estimates the industry will end 2009 with a 30.2 percent decline in shipments to $7.79 billion. The August outlook was for a 31 percent decline. The updated BIFMA outlook for 2010 estimates that industry wide shipments will decline another 4.6 percent to $7.43 billion – a sales volume last seen in the early 1990s. 2.2.4 Furniture Industry in Asia Main furniture exporting countries in Asia, China is at the top of the largest furniture exporter to the United States, overtaking Canada in 2001. Chinese furniture exports have increased 836 percent since 1996 from $0.95 billion to $8.9 billion in 2004. The major reason for Chinese sales to the United States has been the low cost of production. Critical success factors for China are low wages, government support, marketing strategies, and continuous economic growth and improvement in living standards that have attracted foreign capital investment in furniture manufacturing facilities. Wages for a Chinese furniture manufacturer are about 23 times lower than comparable U.S.

To be, and be recognized as, the low cost leader furniture store in Surat Thani, as well as provide variety choice to buy for customer

14 wages (ILO 2003). The U.S. wood furniture import tariff on furniture produced in China dropped from 7.3 to 3.7 percent in 2003 (Lei 2004). In addition, the Chinese currency exchange rate is not floating but is fixed to the U.S. dollar and it is said to be artificially low, thus favoring Chinese goods in the U.S. market. In addition, the Chinese furniture industry became highly competitive in terms of quality, materials, and manufacturing efficiencies. While the quality of their furniture was not high just 2 to 3 years ago, today China manufactures world-class quality products. Raw material availability is an important constraint for Chinese furniture manufacturers since this industry depends heavily on imported wood (Xiufang and Bean 2002). Although growing slower than China, Malaysia and the Philippines have seen increases in furniture exports to the United States in the last 9 years, 59 and 28 percent, respectively. Their strategy includes combining softwoods with hardwoods as raw materials, low wages, and strong export-oriented policies (Hoh 2004). Many overseas furniture buyers consider the Philippines to be a center of creative furniture design in Asia (Corpuz 2005). In Thailand, the industry has diversified, especially toward export-oriented manufacturing (70% of production goes to exports). The main importers of wood products from Thailand are the United States (37%), Japan (27%), and European countries (15%) (Preechajarn 2004) Vietnam is an example of perhaps the most impressive emerging furniture exporter. Its furniture sales to the United States increased from $253,000 in 1996 to $375 million in 2004. While not the largest in volume, it represents the most aggressive increase in furniture exports to the United States in the last decade. Because manufacturing wages are even lower than China's, more than 60 foreign wood products companies have invested in Vietnam between 1996 and 2002 (Houng and Dao 2002) with the goal of cutting manufacturing costs. There are more than 1,500 wood-processing sites in Vietnam with a potential capacity of 2.8 million [m.sup.3] in 2004 (Dao 2005) but actually running at only about 50 percent efficiency.
(Source: http://goliath.ecnext.com/coms2/gi_0199-4954392/A-review-of-competitive-strategies.html)

To be, and be recognized as, the low cost leader furniture store in Surat Thani, as well as provide variety choice to buy for customer

15 2.2.5 Expect Furniture Industry Growth in Asia By 2010, China is forecast to exceed Italy's production and become the No. 1 wood furniture production and export country in the world (Lei 2004). The Vietnamese government estimates that in 2010, the wood products industry will reach $1 billion in exports (Houng and Dao 2002). This successful rising of the Vietnamese wood and furniture industry is due to several factors, including the Vietnamese government's intervention programs to accelerate the growth of the solid wood products industry, upgrades in technology and equipment, and one of the lowest wage rates in manufacturing.
(Source: http://goliath.ecnext.com/coms2/gi_0199-4954392/A-review-of-competitive-strategies.html)

2.2.6 Furniture Industry in Thailand Furniture connoisseurs from around the world have always prized pieces from Southeast Asia both for their use of exclusive natural materials and the elegant styles influenced by the unique cultures and lifestyles found in the region. Thailand's furniture industry is one of the strongest in the region due to its superior production quality, innovative and modern styling, and flexibility in material use as well as the county's relative political and economic stability compared to competitors in Vietnam, Indonesia, and Malaysia. The big story in Thai furniture these days is style, which is helping drive double-digit growth in the local industry's exports. Trade buyers target Thailand's shows specifically to source furniture that offers better styling than in other Asian markets. End-users around the world want Asian-influenced design these days, but until recently few manufacturers could offer quality wares in this category. Thai companies are helping fill the gap with a variety of hand-crafted furnishings, mostly using natural materials. Thailand's plentiful supply of raw materials and its corps of skilled craftsmen are the strength of its furniture industry, which has 2,500 companies and employs 400,000 people. Together they have made Thailand the fourth largest exporter of furniture in Asia. Mr. Phusit Sasitaranondha, Managing Director of Expolink Global Network Ltd. He also added that “A number of businessmen from the sector and foremost furniture designers in Thailand are very keen to participate the fair as Thailand’s Department of Export Promotion will provide high support to the exhibitors because
To be, and be recognized as, the low cost leader furniture store in Surat Thani, as well as provide variety choice to buy for customer

16 the department realized that this will be a very good opportunity for Thai’s furniture exporters to promote their products to the World’s market. Moreover, Koelnmesse will also help promoting Thai Pavilion.” The Koelnmesse Group is one of the world’s largest trade show organizing companies and is the fourth largest in term of exhibition space. On regular basis, The Koelnmesse Group is host to over 42,000 exhibiting companies from 120 countries and two million visitors from 175 countries. Mr. Pusit mentioned about the situation of furniture industry in Thailand that “Currently, Furniture industry in Thailand has shown a very good progress, especially in applying the creative materials to the designs and modern lifestyle. Nowadays, Thai designers are well accepted internationally. But, we need to pay more attention on the competition; especially China; our direct competitor. During the past few years, China used to stress its effort in increasing the sales, but now China has also provided welldesigned products. Therefore, Thailand must seriously improve our designs in order to compensate with the increase in labor cost and Thai government should provide more support to the sector in this aspect. Once our designs are well accepted by World market, they will add a lot of values to ours products.
(Source: http://www.newswit.com/enews/2009-11-04/9b5e3aa62a078df3d49ba3b77cfba3a5/)

2.2.6.1 Export – Import of furniture in Thailand Western style furniture emerged in Thailand over 200 years ago, imported from France during the reign of King Louis XVI. The first pieces of western furniture made their way into the homes of Thailand's nobility and the country's wealthiest families, with citizens of lower rank and wealth settling for locally crafted replicas of the fine European pieces. The imported furniture influenced local craftsmen, predominantly newly settled Chinese artisans who quickly became skilled in using Thailand's large supply of teak wood to emulate the classical European designs. Along with production of classic designs, styles began to reflect Thai and regional culture as well as incorporating traditional materials readily available in Southeast Asia. The 20th century saw Thailand emerge as the world's premier supplier of teak wood and products, with the durable hard wood being used for furniture, flooring, in ship production and in countless other ways. Unsustainable logging programs, political corruption
To be, and be recognized as, the low cost leader furniture store in Surat Thani, as well as provide variety choice to buy for customer

17 combined with unscrupulous business practices severely eroded Thailand's supply of teak wood. The process of deforestation contributed to a series of massive floods in Northern Thailand, which formerly had large swathes of the tropical tree, leading to a countrywide ban on the commercial logging of teak in 1989. The ban jolted the local furniture industry, forcing manufacturers to source imported teak wood or to find a new kind of wood. Thailand's furniture industry quickly adapted to the teak logging ban and has largely relied and emphasized the use of parawood, a processed wood produced from old rubber trees that no longer produce sufficient quantities of rubber. Every 30 years, plantation rubber trees are felled and replanted as the tree's yield of rubber substantially declines at that age. The potential supply of parawood in Thailand is almost limitless, as the country is the world's leading natural rubber producer and has vast plantations of rubber trees being replaced on an on-going basis. The shift in production by Thailand's furniture makers from teak to parawood has energized the local industry, while giving another source of revenue to rubber producers in the country. The furniture industry in Thailand has experience strong growth over the past decade. While domestic demand suffered significantly during the economic crisis, exports have remained buoyant and registered US$ 794 million in 1999 with the principle destinations being Japan and the United States. The industry's exports have registered slight growth over the past few years after experiencing a 75% increase between 1991 and 1994. Further growth has been registered over the first eight months of 2000 as furniture exports are up 17% over the previous year. The export of furniture from Thailand is dominated by wooden products, which comprise over 70% of the total export figure, with metal furniture being the second largest product in the category registering just over 10%. Wooden furniture manufacturers have adapted well to the shift to parawood and currently use it in 60% of production and 80% of wooden furniture exports. Thailand's wooden furniture industry faces considerable competition from regional competitors, Malaysia, Indonesia, Vietnam, Taiwan and China in particular. Malaysia was the first country to use parawood for large-scale furniture production
To be, and be recognized as, the low cost leader furniture store in Surat Thani, as well as provide variety choice to buy for customer

18 and benefits from slightly lower production costs than Thailand. China is beginning to import processed rubber-wood for use in its furniture manufacturing industry and enjoys the advantage of significantly cheaper labor expenses. As rival countries advance their production quality, the level of competition for Thailand's furniture exporters is expected to heat up. Various government agencies and industry representatives have been active in promoting and encouraging Thailand's furniture exports. The Department of Export Promotion (DEP) stepped up its efforts in showcasing Thailand's furniture exporters during the economic crisis when domestic purchases of furniture slumped by over 70 percent. The DEP currently works with the Thailand Furniture Industry Association to stage an annual trade show, along with coordinating participation in relevant trade events abroad. Furniture manufacturers have also been active in displaying their products in the DEP's newly constructed 'Export Mart', which allows exporters a site to showcase their products on a permanent basis to prospective buyers visiting Thailand. Thailand's Board of Investment has also been active in lobbying for lowered or exemptions on import taxes on imported raw materials for Thailand's furniture industry, including those on paint, glue, lacquer and hinges.
(Source: http://www.thailand.com/exports/html/industry_furniture.htm)

2.2.7 Expect Thailand furniture industry The Association of Southeast

Asian Nations (ASEAN) and India have signed a long-awaited free trade

agreement (FTA) which would take effect next year and increase trade between ASEAN and India to US$60 billion within seven years. Under the agreement, ASEAN members and India will reduce import tariffs to zero for more than 80 per cent of their total imported goods between 2013 to 2016 while import tariffs for sensitive goods will be reduced to 5 per cent in 2016. It is expected that trade between ASEAN and India will increase to US$60 billion within seven year or 2016 after the trade volume in previous year was US$47 billion. Among ASEAN countries, Thailand ranks forth in export market share to India after Singapore, Malaysia and Indonesia. The FTA agreement will enable
To be, and be recognized as, the low cost leader furniture store in Surat Thani, as well as provide variety choice to buy for customer

19 member countries to reduce tariffs from January 1, 2010, onwards, she said, adding that Thai export products which would benefit from the agreement include automotive components, gemstones and ornaments, telecommunications equipment, electrical appliances, furniture and cosmetics.
(Source: http://paidoo.net/read.php?id=183689 )

In Thailand will set up Thailand International Furniture Fair 2010 (TIFF 2010) There are many Visitor Such as Importers, wholesalers, distributors, Contract Projects from U.S.A., Europe, Japan, Korea, Taiwan, Hong Kong, ASEAN and Thailand. Detail of Thailand International Furniture Fair 2010

Figure Data 1. Number of exhibitors 2. Participating countries 3. Exhibition area

2008 191 companies / 710 booths Thailand, Indonesia, France, Cambodia, Laos, Myanmar 30,000 Sq.m.

2010 (expected) 200 companies / 800 booths Thailand, Malaysia, Indonesia, Cambodia, Laos, Myanmar 30,000 Sq.m. 33,000 8,000 25,000 Japan, USA, EU, ASEAN, India, Middle East, Africa, Canada, Australia

4. Number of visitors 32,179 Trade Days 7,781 Public Days 24,398 5. Major visiting countries Japan, India, USA, UK, Canada, Malaysia, Singapore, Australia, EU

(Source: http://www.thaitradefair.com/2010/tiff/pdf/Tiff_ApplicationEng.pdf )

2.2.8 Industry overview and competition: ready-made furniture The political situation and economic downturn which began in 2007 with continuation into 2008 has affected the real estate market. Growth receded and has adversely affected furniture markets as it is a complement market to real estate. The overall big picture in the first half of the year improved after the new government was formed-leading to more investment confidence in private sectors. Condominium projects along mass transit routes still continue to grow just as mid-town condominium projects. The second half of the year was not as strong as the demand for furniture met a slowdown due to the U.S economic turmoil, high fuel costs, subprime and real-estate problems which drastically impacted financial institutions who

To be, and be recognized as, the low cost leader furniture store in Surat Thani, as well as provide variety choice to buy for customer

20 started tightening credit and lending. In addition, the uncertain political climate took a toll on Thai economy, again, affecting real estate markets and consumer spending. Besides macro factors that affected Thailandûs economic conditions, the company faced challenges from intense competition within the industry from both domestic and international markets. Importers from China, Malaysia and Vietnam are low-cost producers; therefore creating a need to compete fiercely among these newcomers. This factor directed our strategy to go beyond designs and to managing cost and efficiency of our production. Furniture production calls for careful management of costs to retain margins despite the pressure from the rising cost of materials. Low-end furniture still dominated the market by volume; therefore, we challenged ourselves to come up with very unique products to differentiate ourselves from the rest. This was not an easy task. We have done research on consumer behavior and designed our products to precisely meet the desire of our consumers. On the production side, we paid close attention to the development of technology to add more value to our production, to enhance quality, to take efficiency to the next level and to emphasize on our after-sales services. All these factors aides us in competition and enables Modernform to charge premium prices.

2.2.9 The leader in the furniture market of Thailand In Thailand There are the 3 giants of Furniture store which are Modern form Group Index furniture Group, and S.B Group

2.2.9.1. Modern form Modern form Group Public Company Limited operates a comprehensive furniture business which produces office furniture .Workplace, SOHO, residential Exclusive Living, Life, and Modern form Kitchen. It domestically distributes these products through projects sales teams, company showroom network throughout the country, and authorized dealers in different regions; in addition to exporting them to foreign markets. Furthermore, the Company imports premium quality furniture Casabella and furniture fittings and interior decorative products from Italy and the United States. There are 2 subsidiary companies under Modernform Group Public Company Limited; they are the following:

To be, and be recognized as, the low cost leader furniture store in Surat Thani, as well as provide variety choice to buy for customer

21 1. Modern form Tower Company Limited was founded in 1991 by Modernform Group Public Company Limited who invested 100 percent in the company. Presently, the Modern form Tower Company has a registered share capital of Baht 220 million, owns the title deed to the property of çModern form Toweré building on Srinakarin Road. The building is situated on a 3-0- 35 rai plot, rises 28 floors, and has a net area of 26,000 square meters. The building was completed and fully operational on May of 1995 and served not only as the head office of the Modern form Group Public Company Limited, its subsidiary companies, and affiliated companies, but also a showroom for all lines of products. The remaining space was to be leased out as office space to non-related persons. 2. Modernform Health and Care Co., Ltd. was incorporated on October 14, 2005 to manufacture, distribute, import, export as well as provide maintenance services to healthcare products for hospital, rehabilitation center and household uses. Modernform Group Public Company Limited holds 60 percent of baht 16 million of paid-up capital with a par value of Baht 10 per share. Modernform Health and Care Co., Ltd. is located at 699 Modernform Tower Srinakarindr Rd. Suan Luang Bangkok. As for the revenue of the Company and its subsidiaries in 2007, the major revenue of the Company has come from furniture business. In 2008, the Company was able to increase its market shares in office furniture to 30 percent, residential furniture to 20 percent, and kitchen furniture to 30 percent of the overall market. The main products of the Company and are divided in to 4 groups as follows: 1 Office Furniture Products 2 Residential Furniture Products 3 Kitchen Furniture Products 4 Imported furniture fittings and interior decorative products.

Brand of modern form

To be, and be recognized as, the low cost leader furniture store in Surat Thani, as well as provide variety choice to buy for customer

22 Annual results from consolidated basis of the company in 2008 records totaled revenue of THB 2,754 million of which THB 2,676 million was from sales. Net profits of THB 383 million grew by 26% year-on-year. Earnings per share were THB 4.6 baht which is realized a 23% increase and total asset were at THB 3,065 million which remains similar to that of the previous year
(Source: http://www.bangkokbiznews.com/home/detail/business/business/20091221/91913/สภาอุตฯเสนอ เฟอรนิเจอรไทยรวมกลุมสูตางชาติ.html) 

TOTAL REVENUES (Baht) COST OF SALES GROSS PROFIT (Baht) NET PROFIT (Baht)
(Source: www.set.or.th )

2008 2,754,329,163 1,652,921,404 1,023,514,003 382,510,630

2007 2,525,630,918 1,537,328,088 908,998,725 303,784,862

2006 2,650,669,159 1,596,806,390 980,248,727 341,941,904

. 2.2.9.2. S.B. Furniture Industry Co., Ltd.

"SB" stands for “ Shaw Brader”

which is the father's surname of Mr.

Thanatud Chwaldit who is Executive Director S.B. furniture industry is the same time as Shaw Bra der popular in created many of the film in Hong Kong so "SB Furniture" is coming this reason. Has maintained its image as a specialist in the manufacturing of high quality furniture attached with high quality craftsmanship in terms of designing, functionality and utility of Bedroom, Living room, Dining room, Kitchen and Home office furniture. The company is proud to offer the highest quality of products and services to our customers all around the globe.

To be, and be recognized as, the low cost leader furniture store in Surat Thani, as well as provide variety choice to buy for customer

23 Having accumulated decades of experience and skill in manufacturing particle board and M.D.F. knocked-down furniture. 'S.B. Furniture Group of Companies' began its operations since 1953. Our Production lines are The factories enable us to manufacture a wide range of products in numerous designs of Knocked-down furniture. The company's products quickly found favor in the market for their fine finishing, quality and artistry. The most modern production processes of the time being has been employing to satisfy the rapidly growing demands of the market. S.B have prepared long viewed on its long-term success in terms of foreign markets, and have consequently been exporting overseas for over 30 years for more than 30 countries. This vision has been complemented by aggressive marketing policies on both the domestic and international fronts and continuing development of its products and distribution network. S.B. Furniture utilized merely the highest MDF (Medium Density Fiber Board) and Particle Board available with E1 quality. (Low Formaldehyde environmental panel board) Surface material, melamine foils and all the fitting are specifically selected from manufacturers with global recognition for quality. Functionality and durability tests are conducted with each batch of raw material. Utilizing advanced technology, and computer-controlled continuous assembly lines for consistent finished products. Each step of its production process comes under the stringent supervision of a specialist team for product quality control and product quality assurance. Innovating product prototype to searching good material for production, testing product design, and evaluating product function, quality, and durability from our R&D department make S.B. Furniture products to be modern design long lasting function, as well as good quality. Number showroom of S. B. Furniture. In domestic 85% (230 showroom). Showrooms abroad (America, Europe, Middle East, Asia, Australia) 15% (40 showrooms).
(Source: http://businessend.redciel.com/marketing2/3601/ )

To be, and be recognized as, the low cost leader furniture store in Surat Thani, as well as provide variety choice to buy for customer

24 Brand of S.B Furniture

Ms. Tanyarak Chwaldit, director of marketing of S.B said for the impact of economic crisis in the country. And the global financial crisis that occurred year 2007 Not expected to affect sales much. The group will be affected before the. The export products. The main income of S. B. The. From the domestic market and exports 70% 30% majority of exports in South Asian countries. The relatively less affected and the rate of growth.
( Source: http://positioningmag.com/Magazine/Details.aspx?id=77465 )

The results in 2008 sales and 4,400 million baht and aims to grow another 10% increase from the aggressive marketing of brand S. B. and brand Koncept. The brand Koncept will focus on organizing marketing campaigns continued throughout the year. Announced an aggressive marketing policy of the Year 2009 S.B Brand. Furniture and furniture Koncept focusing on ways to market differentiated clearly also underscores the industry leader in furniture design. With the launch of Call Lake Limited 2009, including new versions and models Exio Collection Linate Collection by targeting growth of 10% or approximately 4,800 million baht
(Source: http://www.gotomanager.com/news/details.aspx?id=77263)

2.2.9.3 Index Living Mall Index Living Mall was initially established to operate a retailing business of Index Living Mall Co., Ltd., one of the subsidiaries of Index Interfurn Group, Thailand's biggest leader in the furniture industry. For 8 years, the group was bestowed Prime Minister's Awards, a significant mark to assure its standard, product quality and designs stressing on its international image, reputation and success. Index Living Mall was incorporated in 2003 by Mr. Pisith Patamasatayasonthi, President of Index Interfurn Group with the concept of positioning itself as Thailand's largest "special mall" gathering the widest selection of high quality, high style

To be, and be recognized as, the low cost leader furniture store in Surat Thani, as well as provide variety choice to buy for customer

25 furniture and home decor. Moreover, it is considered as the first ever special mall in Thailand with a commitment to offering a diversified line of super quality home furnishings and accessories carefully selected to meet the needs and expectations of a diverse population, as well as providing the best of service to meet the satisfaction of customers from all levels. Index Living Mall is the center of the home interior. From odds and ends such as the Vice glass. To large furniture. Diverse in terms of both goods and Local Brand Import Brand would have to think how to sit Brand Index Living Mall is generally different from the competition. Because competitors are talking about the full range of beauty, we sit to review the Decoration is all that is decorated in every home. In fact, they give different products than the basic functional diversity is a beautiful course, Index Living Mall, which is what these already. Index will use TV ads to create Awareness for consumers to know that the Index Living Mall is One Stop Shopping for furniture and home furnishings. This allows a targeted Perception valid and have the opportunity to shop in the Index, which will result in increased sales. Meanwhile, Index Living Mall's customer base will grow over the current. If proportionality customers into the Index Living Mall now known that the number of customer purchases to improve the existing house with customer to purchase a new house that has a 50/50 split perfectly The Index also has another brand furniture Winner, which is less than approximately 25-30% Brand Index is a catch-country markets. The market is also a gap Sales of the last year (2007) of the Bangkok International flowers approximately to 4,500 million baht, which formerly accounted for by foreign share 80-90% in 10-20%, Tech companies have made important markets in the country to represent sales from 55% in foreign countries 45%. The company is currently number one in the furniture market. Dominate sales in 2008 of 6,700 million baht from the total market value of 30,000 million baht, the furniture company targets growth in 2009 at 15%
( Source: http://www.indexlivingmall.com/en/about_history.php )

To be, and be recognized as, the low cost leader furniture store in Surat Thani, as well as provide variety choice to buy for customer

26 2.2.10 Summary of market Value Sale 2008 Total market Value - Sale of Index furniture - Sale of S.B furniture - Sale of Modern form 30,000 million 6,000 million 4,400 million 2,750 million 100% 20% 14.7% 10%

Estamation of marketshare year 2008

Index furniture , 20.0% S.B furniture , 14.7% Modern form , 10.0%

Other , 55.3%

* Estimation comes from roughly information from only 3 companies, total market

2.2.11 Products in general of furniture Products of furniture divide by 3 ways follows as 2.2.11.1 Furniture by Type 2.2.11.2 Furniture by Material 2.2.11.3 Furniture by Applications

To be, and be recognized as, the low cost leader furniture store in Surat Thani, as well as provide variety choice to buy for customer

27 2.2.11.1 Furniture by Type There are many different types of furniture and within each furniture product category there are many styles. Browse through a pre-verified list of manufacturers and suppliers dealing in various categories of furniture.

Cabinets

Chairs

Beds

Sofa

Wardrobe

Bench

Bookcase

Desk

Rack

Carts

Stool

Chests

Sideboards

Hutch

Shelves

Mirror Frames

Swing

Arbor

Gazebo

Furniture Set

Room Dividers

Table Accent

Entertainment Unit
(Source: http://www.furnituremanufacturers.net/category/)

2.2.11.2 Furniture by Material Produced with different techniques and decorated in numerous styles, furniture has been made of diverse materials. Here we provide you a wide range of furniture products in different materials, manufactured by pre-verified suppliers and exporters all across the globe.

Wood Furniture

Stone Furniture

Antique Furniture

Wrought Iron Furniture

Silver Furniture

Plastic Furniture

Glass Furniture

Steel Furniture

Leather Furniture

(Source: http://www.furnituremanufacturers.net/furniture-by-material/)

To be, and be recognized as, the low cost leader furniture store in Surat Thani, as well as provide variety choice to buy for customer

28 2.2.11.3 Furniture by Applications Available in different styles, materials and finishes, manufacturers and suppliers are providing with the largest selections of dining, bedroom, living room, office furniture. Click on the various categories given below for more information.

Garden Furniture

Bathroom Furniture

Office Furniture

Bedroom Furniture

School Furniture

Living Room Furniture

Dining Furniture

Kitchen Furniture

Baby Furniture

Entryway Furniture
(Source: http://www.furnituremanufacturers.net/furniture-by-application/)

2.2.12 Vision of our Organization To be, and be recognized as, the low cost leader furniture store in Surat Thani, as well as provide variety choice to buy for customer.

2.2.13 Mission of our organization Erawan furniture helps to create pleasant service and provide the easy price furniture to customer. W also serves in variety of products in both general, special and the used product. We are sensitive to the look and feel of good product and fine furniture. We always provide the best possible value to our customers who care about quality and budget. In which our employees we also create and nurture a polite service respect, and fairly to customer. We seek fair and responsible profit, enough to keep the company financially healthy for the long term. We intend to use cost leader marketing methods to reach low and medium income of population.

To be, and be recognized as, the low cost leader furniture store in Surat Thani, as well as provide variety choice to buy for customer

29 2.2.14 Strategy They are 3 level of strategy of organization which is 2.2.14.1 Corporate level 2.2.14.2 Business Level 2.2.14.3 Functional level

2.2.14.1 Corporate level According to the status of Erawan furniture that are the new one in the market, and the vision of company “to be the low cost leadership furniture store in Surat Thani” so Erawan furniture need to concentrate more about the market. Trust, Erawan furniture use Intensive strategy that effort to increase the market share We focus on market penetration strategy for seeking to increase market share by attempting via the marketing activity. Particularly in product low cost is variety of purchasing to customer, and communication mix, sale promotion.

2.2.14.2 Business Level

To be, and be recognized as, the low cost leader furniture store in Surat Thani, as well as provide variety choice to buy for customer

30 According to Erawan furniture aim to be the cost leadership in Surat Thani market so in the strategy of business level, Erawan use the cost leadership strategy. Because in the products of many competitor in Surat Thani aren’t more difference and the price is similar in the general product. So to new entries and take market share in market of Surat Thani, Erawan furniture have to is set price of product lower than competitor. Since, the most competitors in grade B and C store in Surat Thani ordering product from the suppler from Bangkok and perimeter so competitor will pay relatively high cost but if we order product from Lampoon we can pay relatively low cost. So, we can set low price than competitor. From strategy we use, “set low price” than competitor is the best way to entries in market in Surat Thani because order from Lampoon is unheeded by competitor. We should be use opportunity for take market share and customer royalty in Surat Thani which competitors also do not know. If successful, we will the main competitor about sale furniture in Surat Thani or may be the leader sale furniture in Surat Thani in the future.

2.2.14.3 Functional level The functional level strategy will give the detail of the strategy for each function of Erawan furniture that represent in the function of marketing, production and service, organization, management information system, and financial and accounting. The marketing functional The marketing functional is the core competency of Erawan furniture that represent in the price strategy which provides the low price of product and the variety way of payment to the customer that most customer prefer them according to the survey questionnaire. Erawan furniture allow customer to pay on cash, credit card, financial support (Ae-on, first choice), installment purchasing, putt of payment. More over the customer can bring the old furniture to be the discount for purchasing the new one at Erwan furniture (see more in chapter 3 marketing strategy). To increase the customer awareness and customer royalty, Erawan furniture also has the advertisement for announcing to customer via local radio, signboard, public relation, and leaflet. And we also give the souvenir and calendar to the customer in the event. To promote the sale Erawan furniture also gives the discount on the cash sale for customer and the commission for the sale person.
To be, and be recognized as, the low cost leader furniture store in Surat Thani, as well as provide variety choice to buy for customer

31 Product and Service functional Accounting to Erawan furniture is the retail business, so we need not to concern more about the production process of the product as well as the mainly strategy of Erawan furniture is the cost leadership. Therefore Erawan furniture needs to concern more about the supplier which offer the low cost as much as possible. Erawan furniture select and order some kind of products from Lampoon that lower cost than the same suppliers of competitor, and comparing and ordering the products that lower cost as much as possible from the suppliers of the same competitor. According to survey questionnaire the most of customer in Surat Thani prefer the hearty and welcoming service. Thus, Erawan furniture concern more about the hearty and welcoming when we serve the service to the customer. There are 2 mainly service process of Erawan furniture that offer to the customer which are the reception and selling, and The after sale service that will represent in the chapter 4 in the part of service process.

Organizations Functional Our strategy of organization functional use employee 10 persons (Chapter 4) coordinated operational everything in company which be system. We have general manager who have experience managing furniture store for control and take care everything and everyone in company, he/she must have good communication for assigning work to employees and negotiating with supplies and then we have accountant for supervise about everything which be number and work together with account receivable caretaker about payment in credit of customers. Salespersons must to learn price and information of all products in company for present to customers, accurately. We have driver which good profile about car driving and our mechanic have skill about application tools of fixing furniture which can increase price of second hand product (Chapter 4). The last we have house keeper for cleaning it produce an effect good appearance of company and we outsource security for to be on sentry in night time. This is system of organization functional in Erawan furniture.

Management Information System Functional The mainly information system of Erawan furniture is used in the office that represent by Hardware and Software. Hard ware, Erawan furniture use only one computer for recording the data and information of the customer, operating, and
To be, and be recognized as, the low cost leader furniture store in Surat Thani, as well as provide variety choice to buy for customer

32 administrative and the printer for issue the installment bill payment and copy the papers for customer. For the soft ware we use the basic soft ware program which is Microsoft office and the accounting soft ware that we use AccStar Integrated System Standard version that purchase from rachada.net.

Financing and accounting functional This project will loan 100% from the investor that will provide the interest rate 15% per year which are the maximum interest rate that can be apply for the Thai Civil
and Commercial

law in the section of 654. We will pay the interest rate to the investor

every month for 5 years. And at the end of year 5 will repay the entire principal to the investor. Erawan furniture has only loan money from the investor at the first time.

To be, and be recognized as, the low cost leader furniture store in Surat Thani, as well as provide variety choice to buy for customer

Chapter 3 Market Feasibility Study

To be, and be recognized as, the low cost leader furniture store in Surat Thani, as well as provide variety choice to buy for customer

34 This chapter explains about all market analysis, STP analysis, marketing mix strategy, sale forecast estimation, marketing expense. And then we show detail of competitor, customer, and competitive advantage in this chapter. We use Surat Thani market for analysis because we sale inside Surat Thani which focus on 3 districts are Muang, Kanjanadit, and Phunphin and these area are the main market to set the strategic and do the marketing activities. 3.1 General information of Surat Thani

The Provincial brand of Surat Thani

3.1.1 Location and Area Located on the east coast of the south and about 645 kilometers by road from Bangkok, Surat Thani occupies an area of approximately 13,726.05 square kilometer or 8,057,168 Rais. It is the sixth largest province in the country. The province also occupies the largest area on the coast of the Gulf of Thailand with the length of around 156 kilometers together with various islands i.e. Sa-mui Island with the area of 227.25 square kilometers, Pha-Ngan Island with the area of 194.2 square kilometers as well as Angtong National Marine park and its territories of 42 small islands. Samui is the biggest island in the province with the location of about 20 kilometers from the sea coast and 80 kilometers from the provincial town hall.

(Source: www.suratthani.go.th )

To be, and be recognized as, the low cost leader furniture store in Surat Thani, as well as provide variety choice to buy for customer

35 3.1.2 Border line To the north: Chumphon province and the Gulf of Thailand To the south: Nakornsrithammarat and Krabi province To the west: Phang-Nga and Ranong province To the east: the Gulf of Thailand and Nakornsrithammarat province

3.1.3 Geography 49% of the provincial area is mountainous with high mountain ranges along the north and south of the area. Such geographic characteristic leads to the existence of 14 basins including Tapi, Phumduang, Tatong, Takrajai, Chaiya, Tachang, etc. All rivers and canals of the province flow towards the Gulf of Thailand on the east side. The geographic characteristic of Surat Thani can additionally be concluded as the following. 1. Jagged mountains: the areas in the district of Kiriratnikom, Phrasaeng, Tachang, Chaiya, Tachana, Wiangsra, Chaiburi and the sub-district of Wipawadee. 2. A coastline plateau: the district of Muang and Phunphin. 3. A plateau in the east of the province: the district of Donsak, Kanjanadit, Wiangsra and Ban Nasarn. 4. An island area: Samui Island, Pha-ngan Island, Angtong National Marine Park and its territories of 42 small islands.

3.1.4 Population The population of the province is 983,486 with 487,455 males and 496,031 females, 369,432 houses. The highest number of the population is in the district of Muang followed by the district of Kanjanadit and Phunphin. (as of December 2008)
(Source: http://www.dopa.go.th/xstat/pop51_3.html )

Ruling 1) Area administration. The province is administratively divided into 18 districts, 1 subdivision district, 131 sub-districts and 1,064 villages. 2) Local administration. There are 3 forms of the administrative units i.e. 1 Provincial Administrative Council, 24 Municipalities (3 Muang Municipalities, 21 sub-district municipalities) and 113 sub-district administrative Councils.

To be, and be recognized as, the low cost leader furniture store in Surat Thani, as well as provide variety choice to buy for customer

36 3.1.5 Education There are 635 educational institutions, both private and government, ranging from kindergarten schools, elementary schools, high schools, senior high schools and universities. The university level includes National Institution Development Administration (NIDA), Prince of Songkla University Surat Thani Campus, Rajabhat Surat Thani University and Tapi College. Other human resource development institutions include the Institution of Labour Skill Development in the upper south, Vocational College and Chaiya Vocational College

3.1.6 Basic Infrastructures 3.1.6.1 Transportation By Car To get to Surat Thani from Bangkok or nearby city by driving on highway No. 41 (that was taken from Phetchaseam Road at Chumphorn province to get to Malaysia border which passing through Surat Thani) and proceeding on High way 401 at Phun Pin district to get to town directly.

By Train All southern express and rapid trains pass Surat Thani Railway station at Phun Pin district which far from town about 14 kilometers. The total distance from Bangkok is 650 kilometers.

By Boat There are many water transportations in Surat Thani offering such as boat providing for passenger and logistic product from Bangkok in Tapi River. Also, there are ferry providing from main land to Samui Island and Pha-Ngan Island at Don Sak district.

By Air There are two airports can be developed to be international airport in the future which are Surat Thani airport in Phunpin district and Kho Samui airport on Samui Island offering domestic and international flight.
(Source: www.suratthani.go.th )

To be, and be recognized as, the low cost leader furniture store in Surat Thani, as well as provide variety choice to buy for customer

37 3.2 PES analysis The PEST analysis is the instrument that common use for analyze the external environment of the business that include Political for analyze that there the supporting or restrict by the government or not, and how. Economic for analyze the purchasing of the potential customer. Social and Environment for analyze the general behavior of customer through the number of potential customer.

3.2.1 Political The furniture business in Thailand was not quite supported by government policy in the promoting of showroom, technological of production, the opening market for support the furniture goods and the supporting of personnel to design the furniture, so the furniture entrepreneur need to help them self The support policy of the government to the furniture business is quite not directly, that seem to be indirect as following According to The Thai government is aiming to expand exports to potentially lucrative markets such as Russia and the former Soviet satellites known as the Commonwealth of Independent States (CIS). Prime Minister Abhisit Vejjajiva and Commerce Minister Pornthiva Nakasai are scheduled to lead a trade mission to explore trade opportunities in CIS countries. The government has established eight regional hubs in an effort to improve trade and investment in overseas markets. It set up a CIS hub, headed by Winichai Chaemchaeng, a commercial adviser to the Commerce Ministry. Mr Winichai added that 311,919 tourists from CIS countries visited Thailand last year. There is also joint private-sector investment between Thailand and the CIS, especially in furniture, jeweler products and cosmetics. This represent the some the supporting furniture business indirectly via others policy, but much more to reflect the furniture business For Surat Thani the local government mainly support to the agriculture product and tourism in the Furniture does not more and also no the restriction
(Source: http://www.reic.or.th/news/news_detail.asp?nID=23008&p=1&s=15&t=12)

To be, and be recognized as, the low cost leader furniture store in Surat Thani, as well as provide variety choice to buy for customer

38 3.2.2 Economic To analyze the customer purchasing power are analyze the Gross Domestic Product (GDP) of the country , it will answer the fair information that relate to expenditure for people. However, our market is in the Surat Thani so The Gross Provincial Product (GPP) are important for analyze the purchasing power of the potential customer in Surat Thani and the spending of money

GROSS PROVINCIAL PRODUCT AT CURRENT MARKET PRICES IN SURATHANI (Billions of Baht) 2001 Agriculture Agriculture, Hunting and Forestry Fishing Non-Agriculture Mining and Quarrying Manufacturing Electricity, Gas and Water Supply Construction Wholesale and Retail Trade; Repair of Motor Vehicles, Motorcycles and Personal and Household Goods Hotels and Restaurants Transport, Storage and Communications Financial Intermediation Real Estate, Renting and Business Activities Public Administration and Defense; Compulsory Social Security Education Health and Social Work 13,964 11,908 2,056 39,907 895 8,658 1,402 1,857 2002 2003 2004 2005r 2006r 44,124 40,851 3,273 74,097 972 19,581 2,292 5,190 2007p 43,807 40,433 3,374 76,942 668 19,972 2,200 4,586 2008p1 50,133 46,853 3,280 82,505 667 21,941 2,598 5,578

18,511 25,790 31,093 35,259 16,782 23,410 28,679 32,088 1,729 967 1,446 2,172 2,380 1,018 1,541 2,313 2,414 1,036 1,737 2,692 3,171 897 2,045 3,506 45,148 47,913 57,085 64,712 11,300 13,009 16,837 17,890

7,027 6,131 3,025 1,199 2,252 2,592

7,029 6,634 3,262 1,420 2,467 3,019

7,732 6,077 3,386 1,580 2,614 3,191

9,138 7,128 4,049 1,942 2,743 3,711

9,868 9,087 5,295 2,176 2,970 3,809

10,926 10,305 6,635 3,151 3,123 4,079

11,311 11,235 7,119 3,402 3,409 4,337

12,235 11,981 6,997 3,763 3,263 4,525

2,886 1,564

3,079 1,832 510 11

3,193 1,687 563 11

3,490 1,889 683 11

4,194 2,235 730 11

4,574 2,504 753 11

5,200 2,757 735 11

5,425 2,810 712 11

Other Community, Social and 408 Personal Services Activities Private Households with 11 Employed Persons Gross Provincial Product (GPP) 53,871 GPP Per capita (Baht) Population (1,000 persons) 59,941 899

63,659 73,703 88,178 99,971 910 922 934 946

118,221 120,749 132,637 961 974 987

69,939 79,943 94,428 105,660 123,078 123,958 134,427

(Source: http://www.nesdb.go.th/Default.aspx?tabid=96)

To be, and be recognized as, the low cost leader furniture store in Surat Thani, as well as provide variety choice to buy for customer

39

Figure 1 represents the gross provincial product in Surat Thani for the year 2001-2008 Inflation rate According to the data of inflation rate from the office of the commercial affairs Surat Thanit that can be calculating the average backward 3 year it eequal to 3.3% per year
140,000 120,000 100,000 80,000 60,000 40,000 20,000 0 2001 2003 2005r 2007p Gross Provincial Product (GPP)

Figure 2, Gross Provincial Product (GPP) in millions

Figure 2, presented the gross provincial product in Surat Thani that increased every year from 53, 871 millions baht in 2001 to 132,637 millions baht in 2008.
140,000 120,000 100,000 80,000 60,000 40,000 20,000 0 2001 2003 2005r 2007p GPP Per capita (Baht) Personal and Household Goods

Figure 3, GPP per capital and P/H goods

Figure 3, represented the simple average expenditure per one person in Surat Thani also increased from 59,941 in 2001 to 134,427 in 2008. This also reflected the higher in purchasing power of people in Surat Thani during 8 year that never goes down. Especially, in the Personal and Household Goods
segment that implies the including of the spending money to Furniture goods that represent about 9.94% ( in average 8 years) of the total GNP per year of Surat Thani and is always in

To be, and be recognized as, the low cost leader furniture store in Surat Thani, as well as provide variety choice to buy for customer

40
the rang number 2 following the manufacturing in the non agriculture product also increased as well. From the following data we can estimated that the purchasing power and

demand for the furniture goods in Surat Thani will be increased and don’t go down, if there are not any negatives factors that cannot expected affect the macro economic.

The Growth rate
25.00% 20.00% 15.00% 10.00% 5.00% 0.00% 2002 2003 2004 2005r 2006r 2007p 2008p1

Gross Provincial Product (GPP) NA GPP Per capita (Baht) NA Personal and Household Goods NA

Figure 4, The Graph represented the positive relation between the growth rate of GPP and Personal and Household goods

Figure 4, In the growth rate of GPP( the write line ) and Personal and Household goods (the yellow line) it can be implied that if the growth rate GPP of Surat Thani increased the purchasing power of Furniture will be increased following. However, according to the world economic crisis in 2006-2007 that directly affected to the whole part of the real sector and purchasing power of people and also the economic of Surat Thani that bring the graph of GPP to dramatically drop in 2007, that also reflected the purchasing power of people, but this also represent the sight of economic will expend after the down turn. This advantage of economic also be positive for furniture business

The average income per month Analyzing the income of the potential customer will lead to understand the income’s source and amount of the potential customer in Surat Thani for supporting to the purchasing power. Form the survey of Surat Thani Statistical Office, the average income per mouth of household in Surat Thani per family was about 26,207. The mainly income
To be, and be recognized as, the low cost leader furniture store in Surat Thani, as well as provide variety choice to buy for customer

41 about 82.9% was from the working such as agricultures 28.9%, wage and salary 27%, profit from business owner 27%. For the non working such as non cash about 9.2%, from grant 5.3%, others cash income 1.2%, and from assets 1.4%

The Average income per month of household (2006-2007, every to adjust 2 year)

Figure 5, The average income of household that was recognized by status

(Source: http://surat.nso.go.th/surat/data/SRS50_4.htm)

The average income of household that was recognized by status as follow 1. The owners of business non agriculture bout 33,326 baht 2. The owner of agriculture about 30,987 baht 3. The wage and salary about 20,371 baht 4. The non economic work about 13,699

The average expense per month To know exactly the purchasing power of the potential customer that how much they will pay for the furniture goods which are our product we need to analyze there expense. Form the survey of Surat Thani Statistical Office, the average expenditure per month of household in Surat Thani per family was about 18,133. The mainly expense was paid for the consumer goods such as food, refreshment, and tobacco 30%, transportation and communication cost 27%, home and decoration furniture 16.1%, clothing material, shoes 2.6% and other consumer goods 10%( entertainment, doctors,

To be, and be recognized as, the low cost leader furniture store in Surat Thani, as well as provide variety choice to buy for customer

42 personality, education). As well as non consumer goods such as Tax, insurance, interest about 14% The average Expenditure per month of household (2006-2007, every to adjust 2 year)

Figure 6, The average expenditure per month of household in Surat Thani per family

(Source: http://surat.nso.go.th/surat/data/SRS50_4.htm)

The average expense of household that was recognized by status as follow 1. The owners of business non agriculture bout 20,936 baht 2. The owner of agriculture about 18,809 baht 3. The wage and salary about 17,011 baht 4. The non economic work about 12,295

According to above information, the purchasing power of our product which are furniture is represented in expense of home and furniture decoration was about 16.1 % of there expense it mean that we can estimate the simple total expense to furniture goods per one family a bout 2,779.3 bath per mount by average the expense of 4 status which is equal to 17,262.73 then multiply by 16.1%. There are about 369,432 families in Surat Thani so we can estimate total potential purchasing power that relates with Furniture goods about 1,026,762,358 baht per month or about 12,321,148,291 baht per year for the total area of Surat Thani. Now, In Surat Thani is the high about land buying.

To be, and be recognized as, the low cost leader furniture store in Surat Thani, as well as provide variety choice to buy for customer

43 3.2.3 Social and Environment Analysis The social and environment are the importance factor that leads to know the potential customer behavior

3.2.3.1 Social structure The social structure of Surat Thani is one big family where most people are Buddhist. The ratio of religious belief is 97.50% Buddhist 2.00% Muslim and 0.50% Christian. This not affects more about buying decision to furniture

3.2.3.2 Traditions, Festivals and Culture Having been a developed integrated society, the province possesses different historical locations and items as well as festivals. There are many well known places, items and festivals. Festivals and cultures include Chakphra Festival and long-tailed boat racing which held in the lunar month of October. Surat Thani also performs the Todphabha Festival, the ritual of merit making after the official end of the annual 3-month Buddhist Rains retreat (Phansa), different from other parts of the country. That is, the festival starts at 01.00 a.m. on the day that is the end of the full moon period in October and the decoration of the presentation plates or trays are of the religious stories. The items are to be given to the monks the next day. Other festivals and cultures include ancestor commemoration festival (Rub-Song Ta Yai) and harvest celebration (Tum Kwan Kao). From those festival, we can use take the advantage for doing the marketing activities by In the Chakphra Festival and long-tailed boat racing, we take the boot for give the sale promotion and buil the customer awareness for established the well-know and increase sales In the Todphabha Festival, we will be the host for จัดพุมผาปา In the Rub-Song Ta Yai, and Tum Kwan Kao, we will use this sight for give the sale promotion

To be, and be recognized as, the low cost leader furniture store in Surat Thani, as well as provide variety choice to buy for customer

44 3.2.3.3 The Number of population 1,000,000 987,000 974,000 980,000 961,000 960,000 946,000 934,000 940,000 922,000 No. population 920,000 910,000 899,000 900,000 880,000 860,000 840,000 2001 2002 2003 2004 2005 2006 2007 2008 Figure 7, Estimated number of population in Surat Thani Figure 7, represents the estimated number of population in Surat Thani that the Information of number comes from the graph that is increasing every year. This also represent the potential consumer that are increasing
1.80% 1.60% 1.40% 1.20% 1.00% 0.80% 0.60% 0.40% 0.20% 0.00%

1.59% 1.22% 1. 32% 1.30% 1.28% 1.35% 1.33% Growth rate

2002

2003

2004

2005

2006

2007

2008

Figure 8, The Growth rate of population
(Source: http://surat.nso.go.th/surat/Table/sttrpt52_8.xls)

Figure 8, represent the growth rate of population that are the positive number for every year mean that the number of population never go down the average 7 year growth rate is about 1.34%

To be, and be recognized as, the low cost leader furniture store in Surat Thani, as well as provide variety choice to buy for customer

45 3.2.3.4 Climate The provincial areas are influenced by the northeast monsoon toward the Gulf of Thailand and the southeast monsoon from the Indian Ocean. This leads to a long rainy season which starts in May onto January of the following year. The weather quite hot and very hot in April to June, there is quite heavy raining in September to November, moreover in the October.
(Source: http://www.nakhonsipolice.go.th/aomdata/khomoon.htm )

These quite affect to the customer buyer decision, because if there are very hot and the furniture store do not support to reduce the hot by decoration for example the air cannot convince to move, not have the fans the customer might be spent less time for stay with furniture store and less demand for buying. The also is importance to Erawan furniture to decorate the furniture store. The along rainy season also affect the demand for purchasing the furniture, because a lot of furniture are the knock-down that if they touch with water when transportation or warehousing they will have the damages. Thus, Erawan furniture needs to arrange with this problem

3.3 Market Focus According to the number of population , the The highest number of the population is in the district of Muang followed by the district of Kanjanadit and Phunphin that near the location of Erawan furniture, so we focus on these area of 3 district as the main market to set the strategic and do the marketing activities

(Source http://www.thailandguidebook.com/provinces/m_surat_thani.jpg)

To be, and be recognized as, the low cost leader furniture store in Surat Thani, as well as provide variety choice to buy for customer

46 3.3.1 Muang District The center of population system, transportation and economic of Surat Thani province and the northern part of south, that is ranked to be the number 7 of big city in Thailand. That has population about 30,841 people and 11,541 families. The mainly occupation are agriculture, trading and employee. We can estimate the total potential purchasing power by multiply the number of families with the average expense of home and furniture decoration per families which about 2779.3. The estimation is about 32,075,901.3 per month or 384,910,815.6 per year

3.3.2 Kanjanadit District The mainly occupation of people in Kanjanadit are agriculture (fishing), trading and employee, the total population is about 72,526 people and about 23,580 families. We can estimate the total potential purchasing power by multiply the number of families with the average expense of home and furniture decoration per families which about 2779.3. The estimation is about 65,535,894 per month or 786,430,728 per year

3.3.3 Phinphin District The mainly occupation of people in Kanjanadit are agriculture, and employee, the total population about 69,704 person and 25,109 families. We can estimate the total potential purchasing power by multiply the number of families with the average expense of home and furniture decoration per families which about 2779.3. The estimation is about 69,785,443 per month or 837,425,324 per year

Summary From focusing on 3 market areas which are Muang district, Kanjanadit dristic, and Phunphin district, there are the populations about 173,071 persons or about 17 % of total population in Surat Thani and 60,230 families or about 16.3% of total families in Surat Thani. The potential purchasing power of The market focusing is about 167,397,238 baht per mouth or about 2,008,766,859 per year or about 1.51% of GPP in year 2008 or 16.42% of Personal and Household Goods in year 2008.

“This represents the feasibility of the purchasing power of the market”

To be, and be recognized as, the low cost leader furniture store in Surat Thani, as well as provide variety choice to buy for customer

47 3.4 Competition Analysis 3.4.1 Competitor Analysis The competitor analysis is analyzing the other furniture stores in Surat Thani that serve the product and service similar to Erawan Furniture. According to the surveying by networking and interviewing the furniture entrepreneur who is Miss Mesanee Chairat, the owner of Nong Maw furniture that has experiences in this business more than 10 year and Mr. Suchart the sale man suppler to furniture store in Surat Thani. There are a lot of retail furniture store in Surat Thani because of the increasing rapidly of the population and Surat Thani is the biggest province in the southern of Thailand and has the GPP at the second that can be supported the growth rate for the demand for household product that including the furniture product to increase also, thus not surprise that there are a lot retail furniture store. The Furniture store in Surat Thani can be divided in to 3 groups according to the customer perceptions which are the big size, medium size, and small size. 3.4.1.1 The big size

The special product

The general product

The Special products are high differentiation but less available The General products are standardization and high available

This group is ranked in the grade A furniture store in Surat Thani market by the perception of the overall consumer in this market. The products usually are the bran name that served for the high class customer who wants to spend a lot of money for decorating home and design. The furniture store in this group mostly is the franchised furniture which is S.B. furniture that has brand Koncept furniture winner
To be, and be recognized as, the low cost leader furniture store in Surat Thani, as well as provide variety choice to buy for customer

48 furniture. This group does not the main directly competitors that fights with the Erawan furniture because of concerning the different customer with Erawan furniture. The force to the market of this group doest not affects more to Erawan furniture. Thus, we analysis in the General by using the 4 P analysis which are product, price, place, and promotion Product the products are quite be the brand name high quality especially in design, the more differentiation and standard. Price the price quite be medium to high and have varieties way to purchase such as credit card, finical support such as Ae-on, first choice, Place the decoration looks quite high class, and near the city limited Promotion the promotion launch in seasoning by packaging

To be, and be recognized as, the low cost leader furniture store in Surat Thani, as well as provide variety choice to buy for customer

49 3.4.1.2 The Medium size

The own suppler

The general product
The special product

The same suppler

The Special products are high differentiation but less available The General products are standardization and high available The same suppler are the suppler who supply for both Medium size and small size The own suppler are suppler who supply for the special product that not the same one to supply in big size and medium size

This group is ranked in the grade B furniture store is in Surat Thani market by the perception of the overall consumer in this market. Which has about 5 furniture stores which are Young Nam Furniture city, Big Sale Furniture, Mhanorha Furniture, Happy Home Furniture, Thana Furniture.

To be, and be recognized as, the low cost leader furniture store in Surat Thani, as well as provide variety choice to buy for customer

50 This group serves variety type of product in the middle price to higher price (quality usually concern by price) the size of the store quite large and has many type of purchasing to customer such as credit card, e-on, first choice. This group concern more with the customer who concerned more about home’s decoration in the quality and price, but less than competitor in the grade A. Competitor in this group is quite being the direct competitors to Erawan furniture because the concerning to the customer of this group quite be the same as Erawan furniture. The force to the market of this group affects more to Erawan furniture. The strong competitor in this group that Erawan furniture should be aware are Yong Nam Furniture, and Big Sie Furniture because they has more from briefly observation that we analysis these by using the 4P 1S analysis which are product,

price, place, and promotion.

To be, and be recognized as, the low cost leader furniture store in Surat Thani, as well as provide variety choice to buy for customer

51 Yong Nam Furniture City, This furniture store is the subsidiary of the young num furniture store at Chomporn province that manages by the son. Product the product of Young Nam furniture has verities and adding some brand name such as ToTo, Cuicue. It also has the same product that sold in general market. Thus, we analyzed and divided products of its in to two big catalogs according to the perception of customer, first the general product, and second the special product. The first thing are the product that has sold and available in the market that same as others furniture store. The second are the product that there are less available and more different from the other furniture store Price according to the big catalogs, the general product the price quite be the same, but little higher than to the overall market in Surattani, The special products quite higher price because of less available in the market. Yong Nam also sold has many ways for purchasing to customer such as credit card, cash, e-on, first choise Place the location of Young Nam Furniture city quite be a good location, its near the main road convince to access, but it is not in the center of Muang district that not convince for customer who live in the center. And for the customers who have not own vehicle or take motorcycle as the main vehicle are also hard to access. Promotion the promotion of Yong Nam Furniture are emphasize on the low price for some product to attract customer to come first, then offer the set of furniture, they also has the advertising on the local radio and bill board

Suppler we analyzed the suppler and also scheming divided to two catalogs according to the product, first the supply of general product this are the same as the general furniture store in Surat Thani. Second the supply of special product for the suppler of general product, the cost per unit of furniture from supply quite be the same as other furniture store in Surat Thani because they use supply together. But Young Nam Furniture can use the bargaining power to supply to reduce the cost. This kind of product Erawan furniture can use the competitive advantage by using the supply from Lamphoon that are lower price cost than.

To be, and be recognized as, the low cost leader furniture store in Surat Thani, as well as provide variety choice to buy for customer

52

3.4.1.3 The Small size

The own suppler

The general product
The special product

The same suppler

The Special products are high differentiation but less available The General products are standardization and high available The same suppler are the suppler who supply for both Medium size and small size The own suppler are suppler who supply for the special product that not the same one to supply in big size and medium size

This group is ranked in the grade C furniture store in Surat Thani market by the perception of the of overall consumer in this market about 11-15 which are BonKwoun Furniture, 99 furniture, Furniture living, Happy home furniture 2, Shinthong Furniture, Shonthong furniture, Roong rung Furniture, Surath Funiture Plaza, Full Sombat Furniture, Krungthong Furniture, Khoson Kheng rean, This group serves the low variety type of product in the low price the size of the store quite medium to small and has low type of purchasing to customer. Some of them about 30% have Credit card service to support. No one has e-on, first choice. About 50 % has installment price that finance by it self.

To be, and be recognized as, the low cost leader furniture store in Surat Thani, as well as provide variety choice to buy for customer

53 This group concern more with the customer who need to specify more about the price; low, instalment and reasonable with the quality of product. Their customers are not concern more about the luxury design, but concern about the benefit of products

Competitor in this group are also quite be the direct competitors to Erawan furniture because the concerning to the customer of this also including the customer’s group of Erawan furniture in term of the pricing. The force to the market of this group affects more to Erawan furniture. The strong competitor in this group that Erawan furniture should be aware are Bonkwon furniture, Home furniture, 99 furniture because they has more from briefly observation that we analysis these by using the 4P 1S analysis which are product, price, place, and promotion and the suppler

To be, and be recognized as, the low cost leader furniture store in Surat Thani, as well as provide variety choice to buy for customer

54 Bonkwon Furniture, This furniture store was established for about 10 years, so they have lot of customer loyalty. However, its but still be raked in the small group because there was the insight conflict. Product the product of Bonkwon furniture has verities but does not differentiate. It has only the same product that sold in general market. Thus, Bonkwon furniture products has only one catalogs according to the perception of customer which are the general product that has sold and available in the market that same as others furniture store, does not has the special product that there are less available and more different from the other furniture store Price because of Bonkwon furniture does not has the special product, so it need to use the low price and offer the variety ways for buying product to customer such as installment price, credit card. Place the location of Bonkwon Furniture quite be a good location, its in the center of Muang province that convince to access for people who live in the center here. The decoration of store quite not look terrific, it looks so normal but suitable for the low cost customer Promotion the promotion of Bonkown furniture rarely launce to the public about the public relation. It sometimes advertising in the local radio

Suppler According to Bonkwon furniture that has only one general product catalogs that come from the same suppler together with the other furniture store in Surat Thani. The bargains to suppler of Bonkwon furniture are not high or low. Erawan furniture can use the competitive advantage by using the supply from Lamphoon that are lower price cost than.

3.4.2 Customer analysis The customer analysis are the tools for searching the customer requirement, and demands, what things do the customers prefer and what things the customer less concern for adapting the products and services to meet the customer satisfaction. For the customer analysis, we collect the data from launching the questionnaire about 400 pieces from the theory of (ROBERT V. KREJCIE University of Minnesota, Dulut) buy using the networking at Nong maw furniture store and San Jaw market ( night market) which are the center of people there are many kind of people common at that place and the
To be, and be recognized as, the low cost leader furniture store in Surat Thani, as well as provide variety choice to buy for customer

55 The mainly customer make decision to buy the furniture by his or herself and following buy the family and friends, the advertising and sale person doest not effect more. Many customers decided to buy furniture for replacing the old one that was broken and for decoration home they do not concern more about the new member for family, Most of them convince to pay on cash and installment price, and also with credit card but little. The important thing that concern for making decision to buy the furniture that raked by product, price, place, and the promotion. The important information from research found that if there are the service about bring the furniture old one that damage for replacing the new one most of them interested about this, more over they also interested in the second hand furniture that still has the quality The factor that affect Product are the most important factor that customer concern for making decision for buying furniture store, the first thing that the customer more concern are the quality of product that durable and the warranty of the product. The customer also concern with the variety of product of each furniture store for choosing. The wellknown of the product, and the special design that not standardize with other furniture store for are in the middle mind of customer, The customer doest not concern more about the historical and past performance of the furniture store that they will purchased Price, the most of customer prefer to pay with the installment price that give the period about 10 times, customer also like to negotiate to the price with the seller when they buy on cash. They also most prefer to the variety way of purchasing such as pay buy using the installment price, credit card, cash, the financial support; e-on, first choice. The customer prefer to the low price but tolerable in quality more than the high price but high quality. Place, the unexpected thing that we got from the survey questionnaire that the most customer prefer the sincere welcoming to service from the employee of the furniture store that was ranked in the number one. The following are the service about free assembly, transportation, and after sell service. The location of the place that convince to access also in customer mind. The decoration for suitable in find out the furniture and the big size of the furniture store are not concern more by the customer. Promotions, mostly customer concern with the providing information by the employee about the products, following by the sale promotion with about reduce, turning, free.
To be, and be recognized as, the low cost leader furniture store in Surat Thani, as well as provide variety choice to buy for customer

56 3.4.3 Competitive Analysis The Five - forces model for the competitive of furniture retailer store business in Surat Thani.

The Rivalry among Existing competitor In the past about 17 years ago the number of furniture retail in Surat Thani doest not have a lot there are about 2-3 store, because higher investment cost, and the price of furniture quite high when compare with the cost of living, at that time the competition among existing competitors quite low. However when the times was past the level of income of people in Surat Thani increased the demand for expending the family also increased those affect to increased in demand of furniture, so the number of furniture retailer store also increased Nowadays the competition of existing competitor in furniture retailer store in Surat Thani quite high that has furniture retail store about 20-22 store, the lower price strategy are the main strategy that use for many competitors to fight with each other.

Threats of new entry The furniture retailer store has quite not easy to entry but not too hard, there are fewer barriers to entry. How ever to do this business, the firms need to have more the liquidity and big capital to invest and need to servile with the big competition.

Bargaining power of buyer The bargaining power of customer in this business is quite high, because there are a lot of furniture retailers in Surat Thani that sold the similar in the products and use the similar in price strategies. This problem will be solving by using the differentiation and varieties, and low cost in product to the customer

Bargaining power of supplier There are many suppliers from Bangkok and vanities that serve the product to the furniture store in Surat Thani from the small size to big size furniture store in Surat Thani the bargaining power of supplier quite not high and low is in the middle.

To be, and be recognized as, the low cost leader furniture store in Surat Thani, as well as provide variety choice to buy for customer

57 Threats of substitute product and service The threats of substitute product and service for this business quite low, because the Furniture quite is the essential product for each family that every family need to have them.

3.5 STP analysis STP is the marketing’s tools for accessing to the customer in common using, that including of Segment market, Target market, and Positioning. The overall

market of furniture in Surat Thani is quite wide and not effective, because it unconvinced to access to the whole market, the effective way to access the furniture market in Surat Thani are to divided the whole market in to segment and then target the one segment as the main market, and then position it self in the customer perception.

3.5.1 Market segment According to the competitor analysis the furniture store in Suratthani is divided in to 3 groups which grade A, B, C by the perception of the customer. All of them focus on the different customer, that grade A has the price of product quite high, grade B concern the price about in the middle to low, the grade C concern about the lowest price. From this Erawan furniture segment market by using the type of furniture store by customer perception in Surat Thani to be the base for segmenting market, that customer who prefer to purchase the furniture from which type of the store, Grade A, B, or C. Thus, the customer is divided according to the perception of them to go to the Furniture store. However, in the grade B and C are quite be similar to each other and , so, we combine them together to be the one segment because of the position of Erawan furniture place on between grade B, and C furniture store. Erawan furniture not only serves the new product to the customer but also serve the first hand product (used product) to customer. This should be the product development for the furniture store in Surat Thani. The segment market of Erawan furniture following by that Segments Market

To be, and be recognized as, the low cost leader furniture store in Surat Thani, as well as provide variety choice to buy for customer

58

Premium Market

Normal Market

Used Market

3.5.1.1 Premium Market, This segmentation are the special product such as the furniture for decorating home that quite luxury and normal furniture that there are not the special in design, and can be substituted by another product in the market but the quality quite higher than other general product that sold in the grade A furniture store such as S.B. furniture, winner furniture in the higher price. The customer for this segment are customer who has high income and prefer to spent high budget to decorate the home with the special product that less available in the market and customer who prefer to spent more budget to use the general product that has high quality and brand name.

3.5.1.2 Normal market, This segment are combine the customer who prefer to purchase furniture from the Grade B, and C furniture such as from Yong Nam furniture, Thana furniture, Nong maw furniture

3.5.1.2.1 Special product Such as the furniture for decorating home that different design and less available in the market that sold in the middle to low price and general product such as common furniture that there are not the special in design and more available in the market, this product also sold in both grade B grade C furniture store but different in the price that price are quite medium in the grade B furniture store

To be, and be recognized as, the low cost leader furniture store in Surat Thani, as well as provide variety choice to buy for customer

59 3.5.1.2.2 General product Such as the furniture for decorating home that different design and less available in the market that sold in the middle to low price and general product such as common furniture that there are not the special in design and more available in the market in the grade C furniture store at the low price.

3.5.1.3 Used Market ( second product) This segment are the second hand product that there are no group of competitor store which Grade A, B, C has only Erawan furniture store in this market.

3.5.2 Target market Erawan furniture has 2 target market which are the main target market and the secondary target market following by

3.5.2.1 The normal market It is the main target market for Erawan furniture because the product service and the strategy which emphasized on the low cost and variety of purchasing to the customer of Erawan furniture is suitable for this market

3.5.2.2 Used market It is the secondary target market for Erawan furniture this segment is not be concerned more by Erawan furniture, it is selected to be the secondary target market for Erawan furniture because Erawan furniture has the policy about the variety to purchase for customer that in clued the installment price by this we know from the filed trip survey that the missing payment might be occurred in some customer. The missing price leads Erawan furniture to confiscate the goods back from customer then fix some damage and resell to the new customer. Moreover, Erawan furniture also has the policy that allows the customer to get the discount for purchase the furniture by bring the old one to trade of. Therefore, used market is the market for supporting the product from those policies.

To be, and be recognized as, the low cost leader furniture store in Surat Thani, as well as provide variety choice to buy for customer

60 3.5.3 Positioning According to the grade A, B, C in Surat Thani that raked by the perception of customer The Erawan furniture should be ranked in the grade C + in customer mind, with the intention of to serve the variety of product that low cost and has variety of payment to the customer. The customer perception in Erawan Furniture’s positioning compare with other furniture store Grade A furniture store More No High No Low Large Grade B furniture store Middle No Medium No Low Big Erawan furniture Middle Yes low Yes High Middle Grade C furniture store low No low Yes (some) Middle Small

Variety of product Used product Overall price *Installment purchasing Variety of purchasing The size of store

* Installment purchasing in this table means customer can pay installment price period direct to company by there are not financial support companies such as e-on, first chose company to support the purchasing because some of customer cannot pay by this way. 3.6 Marketing Mix Strategy The Marketing Mix model (also known as the 4 P’s). There is Product, Price, Place (distribution), and Promotion. These four P's are the parameters that the marketing manager can control, subject to the internal and external constraints of the marketing environment. The goal is to make decisions that center the four P's on the customers in the target market in order to create perceived value and generate a positive response. 3.6.1 Product Strategy According to the customer requirement on that focus more about the quality of product that durable and the warranty of the product. Erawan furniture will serve the warranty of product to customer that can be change for the new one or free in fixing that depended on the period and type of product and condition if the product has damaged. The customer also concern with the variety of product of each furniture store. The products of Erawan Furniture has divided in to 2 mainly type of products following as the normal product and Used product.

To be, and be recognized as, the low cost leader furniture store in Surat Thani, as well as provide variety choice to buy for customer

61 3.6.1.1 The normal product It is containing by 2 product catalogue which are general product and special product.

The general products are the product that standardization and high available in the market the customer can find and purchase in all almost furniture store in Surat Thani the quality of the general quite be the same as overall market. For this kind of product it taking about 80 % of the total product of Erawan furniture.

There are 2 source of suppler of general product which are the first from the same suppler that came from Bangkok and perimeter such as Udomwattana, Top furnitex, Thrup Jinda furniture etc that take proportion about 50 % and the second from the lamphoon which are Sompol furniture take proportion about 50% ( for more detail please see chapter 4 in suppler ).

To be, and be recognized as, the low cost leader furniture store in Surat Thani, as well as provide variety choice to buy for customer

62 The special products are the product that high differentiation but less available in the market the customer can find out in some furniture store, the characteristic of this product quite be different from the general product in the design, has high value. For this kind of product it taking about 10 % of total product of Erawan furniture

3.6.1.2 The second hand products They are the product that used to use before by the other customers and bring them to resell again to another customer. The second hand product are the process of hedging the risk for customer who buy from the installment price that might be lost to pay ( see more detail in chapter 4 ) and the customer who use the old furniture to exchange for the new one. We estimated about this product about 10 % of total product.

To be, and be recognized as, the low cost leader furniture store in Surat Thani, as well as provide variety choice to buy for customer

63 The proportion of product
The percentage of product

10%

10% The general products The special products The second hand 80%

3.6.2 Price Strategy According to the vision of Erawan furniture that “to be the cost leadership and provide the varieties of purchasing” so, the pricing strategy is the importance strategy for the company.

The low cost strategy, Erawan furniture sale at the lower price than the competitor, but the quality of the product quite is the same as the competitor because in this strategy, Erawan furniture will use the general product that supply from Lamphoon for example. Product Price of Erawan furniture In cash Overall price of grade C furniture store In cash 2,400 Cost of product from Lamphoon (Somphon furniture) 900 Cost of product from the same suppler Name of the Same suppler

Wardrobe kid 3 1,900 1,900 Udomwattana doors Big show TV 5,500 6,500 3,400 5,300 RB furniture cabinet platinum Big show TV 3,500 3,900 2,200 3,200 Top furnitex cabinet 5 feet TV Cabinet 5 3,2 00 3,700 1,200 2,900 Udomwatthana feet * The cost of product from Lamphoon does not include the transportation cost that about 244 baht at maximum per unit (see more detail in chapter 4) From the filed trip survey, we got the information that the cost of goods sold of the Grade C furniture store take about 70% of the sale in cash the calculate from

To be, and be recognized as, the low cost leader furniture store in Surat Thani, as well as provide variety choice to buy for customer

64 the average cost of goods sold per mouth in one year divided by the average total sale in cash. As well as, from the same methods we also got that the cost of goods sold on credit sale is about 45%. It means that the average percentage of gross margin of grade C furniture store about 30% in cash sale and 55% in credit sale. Therefore Erawan furniture established the overall price strategy that represent by the gross margin of sale about

On cash sale* General product from the same suppler General product of suppler from Lamphoon Second hand product Special product On credit* General product from the same suppler General product of suppler from Lamphoon Special Product *See more detail in chapter 4 in part of product To provide the varieties way to buy for the customer, Erawan furniture also concern with this because most of customer prefer to the variety way of purchasing such as pay buy using the installment price, credit card, cash, the financial support; eon, first choice, so Erawan furniture distress about this issue by providing about 6 ways that divided in to 2 group 56% 50% 70% 33% 25% 30% 40%

On cash Cash, we will offer the maximum discount for 5 % to the customers who pay on cash for the products. Credit card The financial institution support (Ae-on, First chose) Taking the old furniture to be the discount for the new furniture

To be, and be recognized as, the low cost leader furniture store in Surat Thani, as well as provide variety choice to buy for customer

65 On credit Installment price or hire purchasing , the most of customer prefer to pay with the installment price that give the period about 10 times, so Erawan furniture give the period about 10 times to customer with in 5 month, about 2 time per mouth. For this price Erawan furniture plus about 30%-50% from cash sale Put off payment, for this payment is providing the chance to customer to postpone the payment that the maximum about 4 time with in 2 month

3.6.3 Place strategy The placing strategy including the service to customer, Erawan furniture provides sincere welcoming to service from the employee to customers this is the main point in place strategy. Erawan furniture’s employees are trained from manager about detail and price of product. Employee will introduce and tell detail of product which customer request. Everyone must smile and take care by heart. For the Zones in the store, Erawan furniture divided by 3 main, general goods zone to serve for customer General goods zone, this area take most area of the store. In this zone Erawan furniture set the model of each room inside house such as bedroom, living room, kitchen, etc these room will show in front of first zone for attract customer. We will set up at downstairs is products big size such as all cabinets, all tables, bed, etc and upstairs is products small to medium size such as mattress, sofa, all chair, etc. Customers can it at the back products clearly. Special goods, Erawan furniture place them at the second floor, this take the area not much more Second hand zone, Erawan furniture placed them at the back of store, this also take the area not much more After sale service Transportation, we have 1 pick up cars for delivery product to customer. We will emphasize for express delivery because it is portion of our image. We don’t have freight for sending to customer. Assembly and installment in some kind of product for example the big show cabinet that has the bigger size that cannot entrance in to the room, Erawan furniture serve to separate it for convince to entrance and assembly after.
To be, and be recognized as, the low cost leader furniture store in Surat Thani, as well as provide variety choice to buy for customer

66 3.6.4 Promotion Strategy According to the corporate strategy that using the intensive strategy that focuses on the market penetration, Erawan furniture also needs to concentrate more about the sale promotion. However, the first thing that Erawan furniture need to concern about to create the customer awareness by advertising

Adverting strategy Erawan furniture use the local radio as the broadcasting for announce to customer to increase customer awareness. Erawan furniture focuses on the country song when local radio on air. In every New Year, we will make calendar of Erawan Furniture dispense to customer. Signboard and Brochure Erawan furniture use the signboard and brochure to advertising in both product and the location of furniture store

Sale promotion Customer can turn old furniture to new furniture by bring old furniture is discount for new furniture. Give the discount about 10% in cash

3.7 Sale forecast From analysis the market by using PES analysis leads to know that there are more purchasing power of the furniture market in Surat Thani, The 3C analysis also leads to understand the customer competitor, and competition to establish the STP and 4 P for the Erawan furniture. Next step for Erawan furniture is to estimate the sale forecast. According to the potential market for home ad decoration goods of the focusing 3 market which are Muang district, Kanjanadit dristic, and Phunphin district in chapter 3 that is about 167,397,238 baht per mouth or about 2,008,766,859 per year. That estimate from multiply the average spending to home and decoration goods per family about 2779.3 baht per mouth with the number of family about 60,230 families.

To be, and be recognized as, the low cost leader furniture store in Surat Thani, as well as provide variety choice to buy for customer

67

From the filed trip survey by networking, We got the information that in year 2009 Nong maw furniture can generate the total sale about 4,150,000 baht per year, that come from sold in cash about 1,120, 800 in cash and about 3,029,200 on credit, in average represent about 100,000 baht per mount in cash and about 250,000 per mouth on credit that about 27 % in cash and about 73 % on credit. There is about 0.21 % in total of total potential of furniture market. Sale of Nong maw furniture
600,000 500,000 400,000 300,000 200,000 100,000 0 1 2 3 4 5 6 7 8 9 10 11 12 Sale on cash Sale on credit Total sale

This graph show that in January to February the total sale decreasing, this the normal situation that the sale in this 2 mouth can be any value in this ranges there is no more critical factor effected. From March to May the sale increase and peak in may because there are critical factors that affect the demand of furniture such as the movement the people from rural to the center of Surat Thani for working, for study and other. From June to October the sale is quite stable not rapidly change. This graph represent that the credit sale increase from February and peak in May because in March to may her are then decline from May to august, after increase
To be, and be recognized as, the low cost leader furniture store in Surat Thani, as well as provide variety choice to buy for customer

68 again from august to September, and down in the November. In the cash sale doest not change rapid. That can be summaries that from January to march the sale. Form the filed trip survey we also got the information that the Grade B furniture store such as Young Nam furniture, Big Sie furniture can generate the income per mouth about 1,800,000-2,000,000 per mouth or about 0.9-1% of the potential market per month. According to the main target market of Erawan furniture is the normal market that include the customer who prefer to purchase furniture from the grade C and B furniture store by this Erawan furniture should be placed at Grade C+ furniture store in Surat Thani and the main strategy that focus on low price and variety of purchasing to meet the customer. From the STP of Erawan furniture that target on two market which are Normal market which combine two similarly type of customer , and the second hand market that has only Erawan furniture in this market. The positioning of Erawan furniture that quite be obviously differentiate from the competitors, our marketing strategy that appreciate with our customers and the supporting of the core competency of us, and the important is the understanding clearly with the market and target customers. Thus, Erawan furniture confident that we have to generate the sale of potential market furniture and home decoration about 0.85 % by using the base from both grade C and B furniture store as well as, the growth rate of population in Surat Thani that continues to increase every year and the Personal and Household goods also increasing every year about 10 % in average 8 year, and in the chapter 2 many giant furniture store such as SB furniture, Index furniture also expected the growth rate about 10%-15%, so we expected that the growth rate of sale is 8 % per year calculated from the average the growth rate of Personal and Household goods in GPP 5 year from the year 2004-2008 3.7.1 Sale on sale forecast Because of the variety of the product of the Erawan furniture, and there are many ways to divided the furniture in to group but it difficult to estimated the revenue for each group of furniture , so Erawan furniture decided to divided the group of product according to the product strategy which are general product can generated sale about 80% of total sale in the first year , special product can generate sale about 20% of total sale in the first year, and the second hand product about 0% in the first

To be, and be recognized as, the low cost leader furniture store in Surat Thani, as well as provide variety choice to buy for customer

69 year because there is no the inventory for the second hand product, after the first year we expected that the general product will general about 80% of sale, special product will generate about 10% of sale and the second hand product about 10% according to the product strategy.

To be, and be recognized as, the low cost leader furniture store in Surat Thani, as well as provide variety choice to buy for customer

70

Table of sale on sale forecast
The sale by product year 1 0n cash General product The second hand Goods The special product Total sale on cash On credit General product The special product Total sale on credit Total sale on year 1 The sale by product year 2 0n cash General product The second hand Goods The special product Total sale on cash On credit General product The special product Total sale on credit Total sale in year 2 The sale by product year 3 0n cash General product The second hand Goods The special product percent of sale 90% 0% 10% January 300,980 0 33,442 334,422 899,425 99,936 999,361 1,333,783 January 288,941 36,118 36,118 361,176 863,448 215,862 1,079,310 1,440,486 January 313,019 39,127 39,127 February 213,147 0 23,683 236,830 790,659 87,851 878,510 1,115,340 February 204,621 25,578 25,578 255,776 759,032 189,758 948,790 1,204,567 February 221,673 27,709 27,709 March 418,394 0 46,488 464,883 828,038 92,004 920,042 1,384,925 March 401,659 50,207 50,207 502,073 794,916 198,729 993,645 1,495,719 March 435,130 54,391 54,391 April 258,595 0 28,733 287,328 1,051,957 116,884 1,168,841 1,456,169 April 248,251 31,031 31,031 310,314 1,009,879 252,470 1,262,348 1,572,662 April 268,939 33,617 33,617 May 302,644 0 33,627 336,272 1,522,579 169,175 1,691,754 2,028,026 May 290,539 36,317 36,317 363,173 1,461,675 365,419 1,827,094 2,190,268 May 314,750 39,344 39,344 June 271,937 0 30,215 302,153 1,047,329 116,370 1,163,699 1,465,851 June 261,060 32,632 32,632 326,325 1,005,436 251,359 1,256,795 1,583,120 June 282,815 35,352 35,352 July 417,254 0 46,362 463,616 801,338 89,038 890,376 1,353,992 July 400,564 50,070 50,070 500,705 769,285 192,321 961,606 1,462,311 July 433,944 54,243 54,243 August 454,292 0 50,477 504,769 770,509 85,612 856,122 1,360,891 August 436,121 54,515 54,515 545,151 739,689 184,922 924,611 1,469,762 August 472,464 59,058 59,058 September 357,338 0 39,704 397,042 930,030 103,337 1,033,366 1,430,408 September 343,044 42,881 42,881 428,805 892,828 223,207 1,116,035 1,544,841 September 371,631 46,454 46,454 October 253,758 0 28,195 281,953 1,080,436 120,048 1,200,485 1,482,438 October 243,608 30,451 30,451 304,510 1,037,219 259,305 1,296,524 1,601,033 October 263,908 32,989 32,989 November 321,121 0 35,680 356,801 758,619 84,291 842,910 1,199,712 November 308,276 38,535 38,535 385,345 728,275 182,069 910,343 1,295,688 November 333,966 41,746 41,746 December 425,975 0 47,331 473,306 890,710 98,968 989,678 1,462,984 December 408,936 51,117 51,117 511,171 855,082 213,770 1,068,852 1,580,023 December 443,014 55,377 55,377 Year 1 3,995,437 0 443,937 4,439,375 0 11,371,629 1,263,514 12,635,144 17,074,518 Year 2 3,835,620 479,452 479,452 4,794,525 0 10,916,764 2,729,191 13,645,955 18,440,480 Year 3 4,155,255 519,407 519,407

90% 10%

percent of sale 80% 10% 10%

80% 20%

percent of sale 80% 10% 10%

To be, and be recognized as, the low cost leader furniture store in Surat Thani, as well as provide variety choice to buy for customer

71

Total sale on cash On credit General product The special product Total sale on credit Total sale on year 3 The sale by product year 4 0n cash General product The second hand Goods The special product Total sale on cash On credit General product The special product Total sale on credit Total sale on year 4

391,274 80% 20% 935,402 233,850 1,169,252 1,560,527 January 337,098 42,137 42,137 421,372 1,007,356 251,839 1,259,195 1,680,567

277,091 822,285 205,571 1,027,856 1,304,947 February 238,725 29,841 29,841 298,406 885,538 221,384 1,106,922 1,405,328

543,913 861,159 215,290 1,076,449 1,620,362 March 468,602 58,575 58,575 585,752 927,402 231,851 1,159,253 1,745,005

336,174 1,094,035 273,509 1,367,544 1,703,718 April 289,626 36,203 36,203 362,033 1,178,192 294,548 1,472,740 1,834,773

393,438 1,583,482 395,870 1,979,352 2,372,790 May 338,962 42,370 42,370 423,702 1,705,288 426,322 2,131,610 2,555,312

353,519 1,089,222 272,306 1,361,528 1,715,046 June 304,570 38,071 38,071 380,712 1,173,008 293,252 1,466,261 1,846,973

542,430 833,392 208,348 1,041,740 1,584,170 July 467,325 58,416 58,416 584,156 897,499 224,375 1,121,874 1,706,030

590,580 801,330 200,332 1,001,662 1,592,242 August 508,807 63,601 63,601 636,009 862,971 215,743 1,078,713 1,714,723

464,539 967,231 241,808 1,209,038 1,673,578 September 400,218 50,027 50,027 500,273 1,041,633 260,408 1,302,041 1,802,314

329,886 1,123,654 280,913 1,404,567 1,734,453 October 284,209 35,526 35,526 355,261 1,210,089 302,522 1,512,611 1,867,872

417,457 788,964 197,241 986,205 1,403,663 November 359,656 44,957 44,957 449,569 849,654 212,413 1,062,067 1,511,637

553,768 926,339 231,585 1,157,923 1,711,691 December 477,093 59,637 59,637 596,366 997,595 249,399 1,246,994 1,843,360

5,194,068 11,826,494 2,956,624 14,783,118 19,977,186 Year 4 4,474,890 559,361 559,361 5,593,612 12,736,225 3,184,056 15,920,281 21,513,893

percent of sale 80% 10% 10%

80% 20%

The sale by product year 5 0n cash General product The second hand Goods The special product Total sale on cash On credit General product The special product Total sale on credit Total sale on year 5

percent of sale 80% 10% 10%

January 230,083 28,760 28,760 287,603 687,560 171,890 859,450 1,147,054

February 162,939 20,367 20,367 203,674 604,415 151,104 755,518 959,192

March 319,839 39,980 39,980 399,799 632,989 158,247 791,236 1,191,035

April 197,682 24,710 24,710 247,102 804,163 201,041 1,005,203 1,252,305

May 231,355 28,919 28,919 289,194 1,163,927 290,982 1,454,908 1,744,102

June 207,881 25,985 25,985 259,851 800,625 200,156 1,000,781 1,260,632

July 318,968 39,871 39,871 398,709 612,579 153,145 765,723 1,164,433

August 347,281 43,410 43,410 434,102 589,012 147,253 736,265 1,170,366

September 273,165 34,146 34,146 341,456 710,956 177,739 888,695 1,230,151

October 193,984 24,248 24,248 242,480 825,934 206,483 1,032,417 1,274,897

November 245,479 30,685 30,685 306,849 579,922 144,981 724,903 1,031,752

December 325,635 40,704 40,704 407,043 680,898 170,225 851,123 1,258,166

Year 5 3,054,290 381,786 381,786 3,817,862 8,692,979 2,173,245 10,866,223 14,684,086

80% 20%

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72 3.7.2 In term of unit sale According to the furniture is the product that difficult to predict accuracy that which kind of product will be purchased more by the customer in the term of unit sale. As well as, Erawan furniture has variety of product in the term of unit, so we expected the unit sale by using the average unit sale in term of general product, second hand product, and he special product that estimate by using the average cost in each catalog and plus the margin requirement strategy in the chapter 2 to be the price for the product in each catalog, then we use the total sale in the sale forecast divided by price of product then we got the unit sale. (See detail more about the price in chapter 4)

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73

Table of unit sale
Estimate unit sale Number of operating days The sale by product year 1 0n cash General product The second hand Goods The special product Total unit sale on cash On credit General product The special product Total unit sale on credit Total sale on year 1 Average per day The sale by product year 2 0n cash General product The second hand Goods The special product Total unit sale on cash On credit General product The special product Total unit sale on credit Total sale on year 2 Average per day January 28 January 136 0 2 138 268 4 272 410 15 January 130 43 2 176 257 8 266 442 16 February 28 February 96 0 1 97 236 3 239 337 12 February 92 31 1 125 226 7 234 358 13 March 31 March 189 0 3 191 247 4 250 442 14 March 181 60 3 244 237 8 245 489 16 April 26 April 117 0 2 118 314 5 318 436 17 April 112 37 2 151 301 10 311 462 18 May 31 May 136 0 2 138 454 7 461 599 19 May 131 44 2 177 436 14 450 627 20 June 30 June 123 0 2 124 312 4 317 441 15 June 118 39 2 159 300 10 310 468 16 July 31 July 188 0 3 191 239 3 242 433 14 July 181 60 3 244 229 7 237 481 16 August 31 August 205 0 3 208 230 3 233 441 14 August 197 66 3 265 221 7 228 493 16 September 30 September 161 0 2 163 277 4 281 445 15 September 155 52 2 209 266 9 275 484 16 October 31 October 114 0 2 116 322 5 327 443 14 October 110 37 2 148 309 10 319 468 15 November 30 November 145 0 2 147 226 3 229 376 13 November 139 46 2 188 217 7 224 412 14 December 28 December 192 0 3 195 266 4 269 464 17 December 184 62 3 249 255 8 263 512 18 Year 1 355 Total 1,801 0 26 1,826 3,391 49 3,440 5,266 15 Total 1,729 577 28 2,334 0 3,256 105 3,361 5,695 16

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The sale by product year 3 0n cash General product The second hand Goods The special product Total unit sale on cash On credit General product The special product Total unit sale on credit Total sale on year 3 Average per day The sale by product year 4 0n cash General product The second hand Goods The special product Total unit sale on cash On credit General product The special product Total unit sale on credit Total sale on year 4 Average per day The sale by product year 5 0n cash General product The second hand Goods

January 141 47 2 190 279 9 288 478 17 January 152 51 2 205 300 10 310 515 18 January 104 35

February 100 33 2 135 245 8 253 388 14 February 108 36 2 145 264 9 273 418 15 February 73 25

March 196 66 3 265 257 8 265 530 17 March 211 71 3 285 277 9 286 571 18 March 144 48

April 121 40 2 164 326 11 337 500 19 April 131 44 2 176 351 11 363 539 21 April 89 30

May 142 47 2 192 472 15 487 679 22 May 153 51 2 206 509 16 525 731 24 May 104 35

June 127 43 2 172 325 11 335 507 17 June 137 46 2 185 350 11 361 546 18 June 94 31

July 196 65 3 264 249 8 257 521 17 July 211 70 3 284 268 9 276 561 18 July 144 48

August 213 71 3 287 239 8 247 534 17 August 229 77 4 310 257 8 266 575 19 August 157 52

September 167 56 3 226 288 9 298 524 17 September 180 60 3 244 311 10 321 564 19 September 123 41

October 119 40 2 161 335 11 346 507 16 October 128 43 2 173 361 12 373 545 18 October 87 29

November 151 50 2 203 235 8 243 446 15 November 162 54 3 219 253 8 262 480 16 November 111 37

December 200 67 3 270 276 9 285 555 20 December 215 72 3 290 298 10 307 597 21 December 147 49

Total 1,873 626 30 2,528 0 3,527 114 3,641 6,169 17 Total 1,865 623 30 2,518 3,498 113 3,611 6,129 17 Total 1,377 460

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The special product Total unit sale on cash On credit General product The special product Total unit sale on credit Total sale on year 5 Average per day

2 140 205 7 212 352 13

1 99 180 6 186 285 10

2 195 189 6 195 389 13

1 120 240 8 248 368 14

2 141 347 11 358 499 16

2 126 239 8 246 373 12

2 194 183 6 189 383 12

3 211 176 6 181 393 13

2 166 212 7 219 385 13

1 118 246 8 254 372 12

2 149 173 6 179 328 11

2 198 203 7 210 408 15

22 1,859 2,592 84 2,676 4,535 13

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76 3.8 Marketing expense For the marketing expense, Erawan furniture divided the marketing expense in to 2 group which are selling expense and advertising expense

3.8.1 The selling expense is the expense that uses for selling activities that Erawan furniture use to force the short-term sale on cash for each month that there are discount sale and the sale commission.

The discount sale is the expense that pay from only cash sale, the customer who will get the discount sale need to paid vie “on cash” which are cash, credit card, Financial intuition support will get about 5% but for taking the old one to be the discount will get 5% on cash and the discount from the old one (See more in chapter 4). The sell commission is the commission paid for the sell person who needs to try to generate for the sale. Erawan furniture will use both sale on cash and credit to be the base for computing the sell commission which about 2 %.

3.8.2 The advertising expense is expense that pay for the reason that try to make the customer awareness, and keep the customer royalty.

Radio

From the observation, many people in Suratthani most favorite to listen about Country music. So, we will advertise in Country Cannel on radio wave such as FM91.5, FM106, and Etc. About expense advertise is 2,000 Baht per Cannel, we will advertise on 3 Cannel and total cost of advertise in radio is 6,000 per month. Reason of we chose advertise on radio wave because for attract customer come to store, make a realizable in our brand, and complete promotion in this season.

To be, and be recognized as, the low cost leader furniture store in Surat Thani, as well as provide variety choice to buy for customer

77 Calendar We will dispense to customer on special days or events. Within calendar has detail about name’s store and promotion in this season. About expense of calendar is 26 Bath per once, so we will order calendar for end of year days and new year days about 500 set per days and total cost of calendar is 26,000 Baht. Reason of we chose dispense calendar to customer because we will make loyalty and good relation with customer.

Example

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78 Leaflet We will dispense to customer on special days or events such as New Year day, Song-Kran day, Chuck-Pra day, and etc. Within our leaflet has about detail product new release, price, map of store, and etc. About expense of leaflet is 0.5 per once and we will make leaflet 1,000 Sheet per event which total cost of leaflet about 500 bath per event. Reason of we chose dispense leaflet to customer because notice to customer know about product new release and new promotion in this time.

Example

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79 Signboard We will set signboard in main location in central of Suratthani and will change every 6 months. Within our signboard has detail about name’s store, promotion, slogan, and address of store. Size of Signboard has 3 sizes those are 10m*5m (3 piece), 7m*3m (5 piece), and 5m*3m (10 piece). About expense of signboard, we will calculate by 99 baht per Square meters and costs of 3 sizes are 4,950 Baht, 2,079 Baht, and 1,485 Baht. Reason of we chose set signboard in main location in central of Suratthani because for increase brand image and attract customer come to store.

Example

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Souvenir We will dispense to customer on special event such as New Year day, SongKran day, Chuck-Pra day, and etc. Characteristic of souvenir is ceramic elephant and within elephant has a pen. About expense of souvenir is 40 baht per once and we will order 100 piece per event which total cost of souvenir is 4,000 per event. Reason of we chose dispense to customer on special event because we can make good relation with customer and increase positive brand image.

Example

Public Relation We will sponsor the local football team and support sport in schools. If somebody has natural disasters such as flooding, storm, and etc, we will help by send money or items for victims of natural disasters. About expense of public relation, we will have money for public relation about 2,000 baht per month.

Other We will have backup budget for other expense about advertise is 1,000 baht per month because if we thing or find the ways to advertise and we can do it now.

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81

Table of marketing expense
Year 1 Selling expense Discount sale Sale commission Other selling expense Total selling Expense Advertising expense Radio local Calendar Leaflet Signboard Souvenir Public relation Other Total advertising expense Total marketing expense Year 2 Selling expense Discount sale Sale commission Other selling expense Total selling Expense Advertising expense Radio local Calendar leaflet Signboard January 16,721 26,676 43,397 6,000 13,000 500 40,000 4,000 2,000 1,000 66,500 109,897 January 18,059 28,810 46,869 6,198 13,429 517 41,320 February 11,842 22,307 34,148 6,000 0 500 0 0 2,000 1,000 9,500 43,648 February 12,789 24,091 36,880 6,198 0 517 0 March 23,244 27,698 50,943 6,000 0 0 0 0 2,000 1,000 9,000 59,943 March 25,104 29,914 55,018 6,198 0 0 0 April 14,366 29,123 43,490 6,000 0 500 0 4,000 2,000 1,000 13,500 56,990 April 15,516 31,453 46,969 6,198 0 517 0 May 16,814 40,561 57,374 6,000 0 0 0 0 2,000 1,000 9,000 66,374 May 18,159 43,805 61,964 6,198 0 0 0 June 15,108 29,317 44,425 6,000 0 0 0 0 2,000 1,000 9,000 53,425 June 16,316 31,662 47,979 6,198 0 0 0 July 23,181 27,080 50,261 6,000 0 0 40,095 0 2,000 1,000 49,095 99,356 July 25,035 29,246 54,281 6,198 0 0 41,418 August 25,238 27,218 52,456 6,000 0 500 0 0 2,000 1,000 9,500 61,956 August 27,258 29,395 56,653 6,198 0 517 0 September 19,852 28,608 48,460 6,000 0 0 0 0 2,000 1,000 9,000 57,460 September 21,440 30,897 52,337 6,198 0 0 0 October 14,098 29,649 43,746 6,000 0 1,000 0 4,000 2,000 1,000 14,000 57,746 October 15,225 32,021 47,246 6,198 0 1,033 0 November 17,840 23,994 41,834 6,000 0 500 0 0 2,000 1,000 9,500 51,334 November 19,267 25,914 45,181 6,198 0 517 0 December 23,665 29,260 52,925 6,000 13,000 500 0 4,000 2,000 1,000 26,500 79,425 December 25,559 31,600 57,159 6,198 25,000 517 0 Total 221,969 341,490 0 563,459 72,000 26,000 4,000 80,095 16,000 24,000 12,000 234,095 797,554 Total 239,726 368,810 608,536 74,376 38,429 4,132 82,738

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Souvenir Public relation Other Total advertising expense Total marketing expense Year 3 Selling expense Discount sale Sale commission Other selling expense Total selling Expense Advertising expense Radio local Calendar Leaflet Signboard Souvenir Public relation Other Total advertising expense Total marketing expense Year 4 Selling expense Discount sale Sale commission Other selling expense Total selling Expense Advertising expense

4,132 2,066 1,033 68,695 115,563 January 19,564 31,211 50,774 6,402 13,871 534 42,680 4,268 2,134 1,067 70,956 121,730 January 21,069 33,611 54,680

0 2,066 1,033 9,814 46,694 February 13,855 26,099 39,954 6,402 0 534 0 0 2,134 1,067 10,137 50,090 February 14,920 28,107 43,027

0 2,066 1,033 9,297 64,315 March 27,196 32,407 59,603 6,402 0 0 0 0 2,134 1,067 9,603 69,206 March 29,288 34,900 64,188

4,132 2,066 1,033 13,946 60,914 April 16,809 34,074 50,883 6,402 0 534 0 4,268 2,134 1,067 14,405 65,288 April 18,102 36,695 54,797

0 2,066 1,033 9,297 71,261 May 19,672 47,456 67,128 6,402 0 0 0 0 2,134 1,067 9,603 76,731 May 21,185 51,106 72,291

0 2,066 1,033 9,297 57,276 June 17,676 34,301 51,977 6,402 0 0 0 0 2,134 1,067 9,603 61,580 June 19,036 36,939 55,975

0 2,066 1,033 50,715 104,997 July 27,122 31,683 58,805 6,402 0 0 42,781 0 2,134 1,067 52,384 111,189 July 29,208 34,121 63,328

0 2,066 1,033 9,814 66,466 August 29,529 31,845 61,374 6,402 0 534 0 0 2,134 1,067 10,137 71,510 August 31,800 34,294 66,095

0 2,066 1,033 9,297 61,634 September 23,227 33,472 56,699 6,402 0 0 0 0 2,134 1,067 9,603 66,302 September 25,014 36,046 61,060

4,132 2,066 1,033 14,462 61,708 October 16,494 34,689 51,183 6,402 0 1,067 0 4,268 2,134 1,067 14,938 66,121 October 17,763 37,357 55,121

0 2,066 1,033 9,814 54,995 November 20,873 28,073 48,946 6,402 0 534 0 0 2,134 1,067 10,137 59,083 November 22,478 30,233 52,711

4,132 2,066 1,033 38,946 96,104 December 27,688 34,234 61,922 6,402 13,871 534 0 4,268 2,134 1,067 28,276 90,198 December 29,818 36,867 66,685

16,528 24,792 12,396 253,391 861,927 Total 259,703 399,544 659,247 76,824 27,742 4,268 85,461 17,072 25,608 12,804 249,779 909,027 Total 279,681 430,278 709,958

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Radio local Calendar Leaflet Signboard Souvenir Public relation Other Total advertising expense Total marketing expense Year 5 Selling expense Discount sale Sale commission Other selling expense Total selling Expense Advertising expense Radio local Calendar Leaflet Signboard Souvenir Public relation Other Total advertising expense Total marketing expense

6,613 14,329 551 44,088 4,409 2,204 1,102 73,296 127,976 January 14,380 22,941 37,321 6,831 14,801 569 45,540 4,554 2,277 1,139 75,710 113,031

6,613 0 551 0 0 2,204 1,102 10,471 53,498 February 10,184 19,184 29,368 6,831 0 569 0 0 2,277 1,139 10,816 40,183

6,613 0 0 0 0 2,204 1,102 9,920 74,107 March 19,990 23,821 43,811 6,831 0 0 0 0 2,277 1,139 10,247 54,057

6,613 0 551 0 4,409 2,204 1,102 14,880 69,677 April 12,355 25,046 37,401 6,831 0 569 0 4,554 2,277 1,139 15,370 52,771

6,613 0 0 0 0 2,204 1,102 9,920 82,211 May 14,460 34,882 49,342 6,831 0 0 0 0 2,277 1,139 10,247 59,588

6,613 0 0 0 0 2,204 1,102 9,920 65,895 June 12,993 25,213 38,205 6,831 0 0 0 0 2,277 1,139 10,247 48,452

6,613 0 0 44,193 0 2,204 1,102 54,113 117,441 July 19,935 23,289 43,224 6,831 0 0 45,648 0 2,277 1,139 55,895 99,119

6,613 0 551 0 0 2,204 1,102 10,471 76,566 August 21,705 23,407 45,112 6,831 0 569 0 0 2,277 1,139 10,816 55,928

6,613 0 0 0 0 2,204 1,102 9,920 70,980 September 17,073 24,603 41,676 6,831 0 0 0 0 2,277 1,139 10,247 51,922

6,613 0 1,102 0 4,409 2,204 1,102 15,431 70,551 October 12,124 25,498 37,622 6,831 0 1,139 0 4,554 2,277 1,139 15,939 53,561

6,613 0 551 0 0 2,204 1,102 10,471 63,182 November 15,342 20,635 35,977 6,831 0 569 0 0 2,277 1,139 10,816 46,793

6,613 14,329 551 0 4,409 2,204 1,102 29,208 95,894 December 20,352 25,163 45,515 6,831 14,801 569 0 4,554 2,277 1,139 30,170 75,686

79,358 28,657 4,409 88,281 17,635 26,453 13,226 258,020 967,978 Total 190,893 293,682 484,575 81,972 29,601 4,554 91,188 18,216 27,324 13,662 266,517 751,092

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84 3.9 Conclusion Erawan furniture entry to the Surat Thani market because we know exactly and convince to access the data with this market the in the term of general environment and the competitor of the furniture retailer business. Erawan furniture focuses on 3 districts which are Maung, Phinphin, and Kanjanadit dristrict which there are central and highest population in Surat Thani. From analyzing the general information by using the PES analysis represent that there are many factors that support to be the feasible of the furniture market for the Erawan furniture that including the gross provincial product and personal and household goods increasing every year from 2001 to 2008 that never go down, the increasing in the number of population in Surat Thani from 2001-2008 that also never go down, and we can estimate the size of potential market by multiplying the average expense for the furniture and home decoration that we got from base of data from the Surat Thani Statistical Office per family. It is about 167,397,238 baht per mouth or about 2,008,766,859 per year or about 1.51% of GNP or 16.42% of Personal and Household Goods of Surat Thani in year 2008. By using the 3C analysis, Erawan furniture understand clearly about the competitor, customer, and competition in the Surat Thani market that Erawan furniture segment market in to 3 segments which are premium market, normal market, and the second hand market. And set the main target on the normal market which including the customer who prefer to purchase the furniture from grade B and grade C furniture store in Surat Thani, and set the secondary target on the used market which are the customer who need to purchase the second hand furniture. The positioning of the Erawan furniture is the grade C+ furniture store in the customer mind. The product of Erawan furniture is divided in to 2 mainly which are normal product and used product that normal product can be divided in to general and special product that Erawan furniture set the strategy that will be for 10% special product, 80% general product, and the 10 second hand product of the total sale for the price strategy Erawan furniture allow customer to pay on cash, credit card, financial support, bring the old furniture store to get the discount for the new one, installment purchasing, and put off payment. Erawan furniture providing the after sale service which in both free transportation and free fix the furniture. For the sale forecast from feasibility of the potential market, the target market of Erawan furniture, as well as strategy and core competency of Erawan furniture, we

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85

confident that Erawan furniture can generate the sale to 0.85% of the potential market or about 17,074,518 baht that at the first year and increase by 8% every year.

To be, and be recognized as, the low cost leader furniture store in Surat Thani, as well as provide variety choice to buy for customer

Chapter 4 Technical Feasibility Study

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87

This Chapter explains about the technical analysis that including product characteristic, Location and building, the product and service process thought the management analysis as well as the overall about cost.

4.1 Product Characteristics of Erawan Furniture There are a lot of products and variety in the Erawan furniture store, the following details are the example of product not all of them of Erawan furniture. Our product has a lot of styles and types. We set by level of products which there are special product, general product, and second hand product. There are 2 mainly product type of Erawan furniture which are Normal product, and Used products

4.1.1 Normal product Normal product which has 2 types following by this 4.1.1.1 Special product The special products are the product that less available on the market, customer usually found them at Grade A and B furniture store the cost and price of the is quite high Erawan furniture also sold this product to customer the example of the special product of Erawan furniture

Wardrobe

Circle bed

Bookshelf Ceramic door

Set of bedroom (SET 1)

Show cabinet iron legs

Set of food marble wood table 6 chairs

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Dressing table Japan

Bar beer counters 6 feet

Detail of Special product Furniture name Wardrobe Circle bed Bookshelf Ceramic door Set of bedroom (SET 1) Set of food marble wood table 6 chairs Show cabinet iron legs Dressing table Japan Bar beer counters 4.1.1.2 General product In general product divided by 2 groups are suppler same competitors and suppler from Lamphoon. 4.1.1.2.1 General product suppler same competitors Size 160x60x200 cm 6 feet 80x190 cm. 6 feet 1 set 4 feet Small 6 feet Cost (Baht) 5,900 19,000 2,900 22,000 25,000 4,900 2,900 4,500

Steel bed shaft

Steel bed lathing

Mattress foam

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89

Mattress spring

Mattress synthetic fabrics

Pillow

Bolster

Aluminum Pantry

Cloth Airier A

Cloth Airier KO Koan

Cloth Airier solo

Flooding table wood board

Flooding table steel plate

Japanese table

NC-172 G new counter

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90

NC-172 GS counter

NC-172 counter

NC-164 counter

NC-248 G Kitchen cabinet

NC-148 counters

NC-256 Kitchen cabinet

Set of food table 4 chairs

Set of food table 6 chair

Multi propose table

Shoe cabinet L805

Shoe cabinet RL115

Quilt

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91

Picnic chair

Round chair plastic

Detail of General product suppler same other company Furniture name Steel bed (Feet) Steel bed lathing Steel bed lathing Steel bed shaft Steel bed lathing Mattress (Feet) Mattress foam Mattress foam Mattress foam Mattress foam Mattress foam Mattress foam Mattress spring Mattress spring Mattress spring Mattress synthetic fabrics Mattress synthetic fabrics Mattress synthetic fabrics Mattress synthetic fabrics Mattress synthetic fabrics Mattress synthetic fabrics Mattress synthetic fabrics Mattress synthetic fabrics Mattress synthetic fabrics pillow bolster Pantry (Feet) Aluminum Pantry Aluminum pantry k 9064 Aluminum pantry k 1266 Size Color Cost (Baht)
1,600 1,480 2,325 1,050 770 910 1,100 1,300 1,320 1,560 1,260 1,800 2,160 1,190 1,130 1,540 1,700 1,900 2,200 2,040 2,280 2,640 80 90 1,538 1,722 2,399

6 5 6 3.5 3.5x6 3.5x8 5x6 5x8 6x6 6x8 3.5 5 6 3.5x4 3.5x6 3.5x8 5x4 5x6 5x8 6x4 6x6 6x8 3 3 4

Black, Pink Black, Pink Black Black, Pink Colorful Colorful Colorful Colorful Colorful Colorful White White White White White White White White White White White White White White, Colorful Tea, White Tea, White Tea, White

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92 Aluminum pantry ks 1073 Aluminum pantry ks 8072 Aluminum pantry ks 1274 Aluminum pantry ks 1575 Aluminum Pantry E1080 Aluminum Pantry E1281 Cloth Cloth Airier A Cloth Airier Ko Koan Cloth Airier solo Cloth Airier JR 214 Cloth Airier A-SPB Flooding table (Feet) flooding table wood board flooding table steel plate flooding table steel plate Japanese table flooding table wood board The Kitchen cabinet (Feet) NC-172 G new counter NC-172 GS counter NC-172 counter NC-164 counter NC-160 counter NC-156 counter NC-148 counter NC-264 Kitchen cabinet NC-256 Kitchen cabinet NC-248 G Kitchen cabinet NC-248 Kitchen cabinet Other product (Feet) Set of food table 4 chair Set of food table 6 chair Set of food table 8 chair shoe cabinet L805 shoe cabinet RL115 multi propose table multi propose table multi propose table Round chair plastic Quilt Quilt Picnic chair 1 M. 80 cm. 4 5 5 5 Big Big Big Big Big 3 3 4 Small 3 6 6 6 5.5 5.5 4.5 4 5.5 4.5 4 4 Small Medium Big Small Small 3 4 5 Big 5 6 Small Tea, White Tea, White Tea, White Tea, White Tea, White Tea, White Red, Blue Red, Blue Red, Blue Red, Blue Red, Blue Colorful Red, Blue Red, Blue Cartoon, Natural Colorful Teak Teak, Beech Teak, Beech Teak, Beech Teak, Cork Teak Teak, Beech Teak, Cork Teak, Beech Teak, Cork Teak Teak, Cork Teak, Cork Teak, Cork Beech Beech Beech, Teak Beech Teak Red, Blue Colorful Colorful Red, Blue
1,660 1,353 1,906 2,398 4,982 5,412 210 395 385 950 165 285 365 505 200 350 4,250 4,600 3,750 3,550 3,700 3,350 2,850 6,400 5,250 4,200 4,000 1,700 2,500 2,900 1,060 1,150 400 500 600 100 763 763 250

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93 4.1.1.2.2 General product suppler from Lamphoon.

Wardrobe3 doors

Wardrobe3 doors grass

Wardrobe 80 cm.

Wardrobe 2 doors kid

Wardrobe 3 doors kid

Wardrobe3 drawer

Wardrobe grass slide door

Big show cabinet

Big show TV cabinet platinum

TV cabinet grass

Little TV cabinet

TV cabinet top curve

Accounting cabinet

Accounting cabinet iron

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Computer cabinet 80 cm

Dressing table open door

Computer cabinet 3 feet

Computer cabinet 4 feet

Dressing top curve

Big dressing table

Bed head square

Bed head curve

Bookshelf 4 doors Bookshelf with 4 stall

Bookshelf with 3 stall Bookshelf with 2 stall

To be, and be recognized as, the low cost leader furniture store in Surat Thani, as well as provide variety choice to buy for customer

95 Detail of General product suppler from Lamphoon Furniture name Wardrobe (cm.) Wardrobe Wardrobe Wardrobe Wardrobe Wardrobe3 drawer Wardrobe3 doors Wardrobe3 doors grass Wardrobe2 doors grass Wardrobe 3 doors kid Wardrobe 2 doors kid Wardrobe grass slide door Wardrobe grass slide door Wardrobe light Big show (Feet) Big show cabinet Big show cabinet wing Big show cabinet Big show cabinet Big show cabinet golden Big show cabinet Big show TV cabinet platinum Big show cabinet platinum TV cabinet (Feet) Little TV cabinet TV cabinet grass TV cabinet wing TV cabinet wing TV cabinet little wing TV cabinet top curve TV cabinet iron TV cabinet differentiate TV cabinet top curve TV cabinet wing TV cabinet iron top head Working Table (Feet) Accounting cabinet Accounting cabinet 2 locker Accounting cabinet Computer cabinet Computer cabinet Computer cabinet Computer cabinet Computer cabinet Working cabinet Size Color Cost (Baht) 800 900 1,000 1,200 1,300 1,700 1,900 1,700 900 600 2,700 3,900 3,900 1,500 1,600 2,200 2,300 2,500 2,700 3,400 3,200 250 550 550 650 600 850 900 950 1,200 900 1,200 650 900 500 600 500 700 800 450 850

80 90 100 120 120 120 120 120 120 120 120 150 160 4 5 5 6 6 7 8 155 cm 3 3 3 4 4 4 4 4 5 5 5 4 4 3 4 3 1 m. 120 cm. 80 cm. 120 cm.

Teak, Beech, Cork Teak, Beech, Cork Teak, Beech, Cork Teak, Beech, Cork Teak, Beech, Cork Teak Teak, Cork Teak Teak, Cork Teak, Cork Beech Beech Teak, Cork Teak Teak, Cork Teak, Cork Teak, Cork Cork Tea Tea Beech Teak, Beech Teak, Beech Teak, Beech Teak Teak Cork Cork Teak, Beech Teak Teak Iron Iron Teak, Beech Teak, Beech Teak, Beech Teak Teak Teak Teak

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96 Little dressing table Dressing top curve Big dressing table Dressing table open door Bed (Feet) Bed head curve Bed head square Bed head square Bed head curve Bed head square Bed head curve Bed head square Bed head curve Bookshelf (cm.) Bookshelf with 2 stall Bookshelf with 3 stall Bookshelf with 4 stall Bookshelf Bookshelf Bookshelf Bookshelf 4 doors 4.1.1.3 Used product This example used product of Erawan Furniture. These fixed by our mechanical after that bring to sale again in low price. Small Medium Big Big 3.5 3.5 4 4 5 5 6 6 50 50 50 80x120 100x120 120x120 120x120 Pink, Blue Beech Beech Teak Teak, Cork Teak, Cork Beech Teak, Cork Cork Beech Teak Cork Teak, Beech Teak, Beech Teak, Beech Teak, Beech Teak, Beech Teak, Beech Teak, Beech 600 600 850 650 1,100 1,150 1,150 1,200 1,350 1,400 1,450 1,500 300 400 500 500 700 1,000 1,400

Working cabinet

Wardrobe

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97

4.2 Cost of goods To reduce the complexity of establish pricing strategy, Erawan furniture average the cost of furniture for each catalogue that represent by following table

This table show the cost of goods sold in average per unit for each product Transportation cost 244

On cash From lamphoon General product from same suppler ( select only low cost ) The second hand Goods The special product

Cost of Goods 1,242 1,664 581 10,367

Total cost 1,486 1,664 581 10,367

0 0 Transportation cost 244

On credit From lamphoon General product from same suppler( select only cost) The special product

Cost of Goods 1,242 1,664 10,367

Total cost 1,486 1,664 10,367

0

The cost of goods, the cost of product that sold on cash and credit are equal together that will be explain by following The Cost of goods from Lampoon in average is about 1,242 baht plus the transportation cost ( the calculation see more detail in logistic process) ,so the cost of goods in general product from Lampoon is about 1,486 baht The General product from same suppler of competitor from this Erawan furniture selecting only product that low cost as much as possible from the general product from the same suppler the average cost is about 1,664 baht per unit The second hand goods, the cost of second hand goods about 40% of general product (see more in path of suppler) The special product, The cot of goods sold in special product is about 10,367

4.3 Pricing product

According to the variety and a lot of products, so it quite complex to inform the price for every product, thus we represent the price of product in the term of percentage of the gross margin in average for each product cataloged.

To be, and be recognized as, the low cost leader furniture store in Surat Thani, as well as provide variety choice to buy for customer

98 As of in the price strategy in the chapter 3 the gross margin of the product represent by the following On cash sale General product from Lamphoon General product of suppler competitor Second hand product Special product On credit General product from Lamphoon General product of same competitor Special Product 60% 50% 70% from 33% same 25% 30% 40%

So, the price of product for each catalog should be
On cash From lamphoon General product from same suppler( select only low cost ) The secound hand Goods The spacial product On credit From lamphoon General product from same suppler( select only cost) The spacial product Cost of Goods 1,242 1,664 581 10,367 Cost of Goods 1,242 1,664 10,367 Transportation cost 244 0 0 Transportation cost 244 0 Total cost 1,486 1,664 581 10,367 Total cost 1,486 1,664 10,367 Margin strategy 33% 25% 30% 40% margin strategy 56% 50% 60% The average price 2,218 2,219 830 17,278 The average price 3,378 3,329 25,917

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99

4.4 The Location and Building

4.4.1 Land This land located near the parking and by pass road. We contract to Mr.Direak tel.083-523-9999 for rent and make a deal on both parties. At the first time this land offer for sell about 20,000,000 baht. However, we negotiate for renal and then we got the final price for rental is 25,000 per month, need to pay in advance for about 1 year every year, that need to prepaid about 300,000 per year “Pre paid for land 300, 0000 per year”

4.4.2 Landscape We use 5 workers to adjust the land area. And we need to hit the frame before build the store. If we see the floor levels of land are the same with street. We use employee to adjust the land for Smooth for build store. The land is not need to adjust more, so expense of adjust for this land area is quite not expensive more, it about 1,000 baht

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100

4.4.3 Building Erawan will hire the constructer that can be liable for us which is Munggorndaeng Company 43 moo 5 talo muang phichit 66000 Tel 0824100908 Mr. kong kreangkrai that evaluate the building like this table 1 2 3 4 5 6 7 8 9 10 11 12 Core building Quantity Concrete surface is only 1 floor 1,050 Concrete surface is only 2 floor and stairs 360 Pillar and cupola 1,610 Ceiling makes for Gypsum Smooth plaster 1,050 Masonry wall plaster 850 Door coil (5m) 7 Glass office and aluminum 1 Sewage system toilets and bathroom 1 Electrical work 100 Color work 3,400 Watt hour Meter and water meter 1 Concrete in front of the store 135 Total Option Building Quantity Concrete surface 300 Pillar 5m and cupola 300 Door coil (5m) 2 Color work 300 Electrical work 25 Concrete in parking car of store 325 Total Total building cost 4.4.4 Feathers and Dimension of Store Shop characteristics of a warehouse style simple but not too Low grade. If the grade level of each store we will be in stores during the relatively between normal until to luxury store levels. If Grade A is FB Furniture, Home pro shops and simple is a class C we will be in C +.Characteristics within a wide-area store and within have Office and toilets and office stay in right of the door for access to easy-to-buy or reserve products and back of the store is small warehouses for keep and constitute of product. In Erawan Furniture has divide by 3 area are Floor1, Floor2, and Behind Store Per once 450 900 25,000 60 750 360 m*m m*m m*m m*m m*m unit unit unit unit m*m unit m*m Per once 450 450 1,200 260 480 25,000 125,000 8,000 750 60 60,000 360 472,500 162,000 1,932,000 273,000 408,000 175,000 125,000 8,000 75,000 204,000 60,000 48,600 3,943,100

1 2 3 4 5 6

m*m m*m Until m*m m*m m*m

135,000 270,000 50,000 18,000 18,750 117,000 608,750 4,551,850

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101

The floor 1 is area for special product, set product, and product second hand. In this floor, we will to allocate and divide by the main 2 group. The first zone, we will set special product and set product in this same area. The first zone will set in front of store. The Second zone is product second hand and this zone stay in rear of floor1.

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102 The Floor 2 is area for general product such as table, chair, wardrobe, and etc.

The behind store is area for assembly product before sale, stock product in warehouse after get product from lampoon or other, and parking of store.

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103 4.4.5 Size of Store

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104 Duplicate

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105

4.4.6 Layout Within the store, we will divide by 2 rooms and 2 zones. There is office room, show room, warehouse zone, and assembly zone. We are allocate many zone for easy to service, easy to give information, and easy to buy to customer. Within many zones has more instruments to make a sell are namely:

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106 4.4.6.1 Office room Office room is important of the store because it control all of activity about finance account record, contract of sale, collect all document of product include of order in the stock. Our Office rooms have table, chair, Filing cabinets but we buy computer, Refrigerator, multifunction laser printer, air condition

Equipment

Product Computer

Unit 1

Price 10,600

Total 10,600

Refrigerator

1

5,590

5,590

Multifunction Laser Printer Air condition plug socket

1

6,200

6,200

1

24,900

24,900

3

120

360

switch plug

2

35

70

Lamp.

2

75

150

Telephone

1

399

399

Box

1

12

12

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107

Chair

4

700

2,800

pencil box

1

79

79

Clock

1

299

299

Clock out machine

1

5,500

5,500

Calculator

1

279

279

Picture

1

359

359

document file

10

98

980

Stapler

1

150

150

foot scraper

1

100

100

bin

1

50

50

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108

door

1

6,500

6,500

safe

1

14,980

14,980

kettle

1

1,190

1,190

Cup

5

39

195

Ceramic Glass

5

33

165

Spoon

10

65

650

The accounting soft ware program

1

7900

7900

FUJIKO cameras

1

38,000

38,000

Total cost of office fixed asset

128,457 baht

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109 4.2.4.2 Toilet In Toilet room in the store, within has Toilet bowl, Bidet, Toilet tissue box, Lavatory, Toilet hose, Mirror Price, Sink hydrant, Bath Screen, Bronze chromium sewer, White hose, Navel basin, Door knob, Miter Price, Doors.

Equipment

Product Toilet hose

Unit 1

Price 70

Total 70

Mirror Price

1

105

105

Sink hydrant

1

105

105

Bath Screen Bronze chromium Sewer

1

30

30

1

125

125

White hose

1

23

23

Navel basin

1

60

60

Door knob

1

92

92

Toilet bowl

1

1549

1549

Bidet Price

1

395

395

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110 Product Toile tissue box Unit 1 Price 85 Total 85

Lavatory

1

395

395

Miter

1

300

300

Total cost of toilet

3,334 Baht

4.4.6.2 Showroom Show room is very impotent because it is show product. A place is introducing product to customer. Our Show rooms have table, chair, Filing cabinets, bed but we buy fan, Lamp facto

Equipment

Product Fan (wall)

Unit 8

Price 2,500

Total 20,000

Lamp Factory

6

2,800

16,800

Sky Tube

2

5,900

11,800

Ice-hot cooler

1

5,300

5,300

plug socket

3

120

360

Paper Glass

1 box

680

680

Plug

12

80

960

Chair

1

1550

1550

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111

Dry Chemical (Fire Extinguisher)

1

650

650

switch plug

4

35

160

Lamp

4

75

300 58,540 Baht

Total cost of show room

4.4.6.3 Assembly zone We use Assembly zone for assemble all furniture in store and repair furniture second hand. Our Assembly room table, chair, but we buy Drill, Tool of a technician, fan (wall)

Equipment

Product

Unit

Price

Total

Drill Tool of a technician

3

1800

5400

1

10,770

10,770

Fan (wall)

2

2,500

5,000

Plug plug socket

2 2

80 120

160 240

Multipurpose rack

2

840

1680

Dry Chemical (Fire Extinguisher)

1

650

650

To be, and be recognized as, the low cost leader furniture store in Surat Thani, as well as provide variety choice to buy for customer

112 switch plug 1 35 35

Lamp

2

75

150 24,085 Baht

Total cost of assembly zone 4.4.6.4 Warehouse

Warehouse is a place for stock product we buy Vacuum air, fan (wall) Equipment Product Fan (wall) Unit 2 Price 2,500 Total 5,000

Vacuum air

4

930

3,720

plug socket

2

120

240

switch plug

2

35

80

Lamp

2

75

150

Total cost of warehouse zone 9,190 Baht

4.4.6.5 Office supply

Product pen

Unit 5

Price 15

Total 75

Pencil

1

45

45

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113

ruler

1

65

65

eraser

2

10

20

paper

5

90

450

Bill

10

50

500

Paper copy

5

86

430

Garbage bags

1 kg

32

32

Tissues

1 pack =24unit

185

185

Spray deodorize

1

95

95

Other Total cost of Office supply 2,500 baht

603

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114 4.4.6.6 Operating supper Product Unit Price Total

Screw nut

10 Kg

50

500

Nail

10 Kg

25

250

Other

1

1

160

Glue Rubber

2

45

90

Total cost 4.4.6.7 Total cost of layout Total cost of office equipment Total cost of Toilet Total cost show room Total cost of assembly room Total cost of warehouse Total cost of office supply Total cost of operating supply Total cost of layout 4.5 Pre opening cost 82,557 baht 3,334 baht 58,540 baht 24,085 baht 9,190 baht 2,500 baht 1,000 baht 177,606 baht

1,000 Baht

4.5.1Cost of request Electric-water Request the power from provincial electricity authority 1. We estimate electric power in the store that we use lot of power, so we should the power by two transformers. 2. We Request the electric power from provincial electricity authority. Cost of request the electric power from provincial electricity authority two transformers
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115 • • • •

power request of transformers 2 piece Kilowatt hour meter 2 piece Salary payment of Cables installed Fees of matter Request the power from PEA

20,000

Baths

15,000 Baths 1,000 Baths 2,000 850 Baths Baths per unit

Payment of electric equipment setting Total cost of request electric

38,850 Bath

Cost of Request the water from Metropolitan Waterworks Authority • • • Fees of water supply matter Request Setting water supply Payment Equipment and salary of water supply setting payment 5,000 1,000 1,500 600 8,100 46,950 Baths Baths Baths Baths per unit Baths Baths

Payment of water supply equipment setting Total cost of request water Total Cost of request Electric-Water

4.5.2 Prepare to be the Juristic person

4.5.2.1 Cost of Register Ask for about License Company limited. We need to have a Memorandum in first step. If we invest 2000 baths and fee of memorandum has equal 1 baths, but we invest 1,200,000 so, we pay free 600 baht. We use Memorandum to take note of Certificate. Fee of Certificate 5 baht per 200 baht, but we take a note Certificate1, 200,000 baths so, we pay fee of Certificate 6,000 bath and fee warrants registered 100 baths. We have 2 expenses. 1. Certified copies of documents 1 page per 50 baths but we use 25 page so, we pay 1250 bath for certified copies of documents. 2. Revenue stamp 200 bath per petition. We have 2 petitions so, we pay Revenue stamp about 400 bath. Cost of Memorandum Cost of Certificate Warrants registered Certificate copies of documents Revenue stamp Total cast prepare to be the Juristic person 600 Baths 6,000 Baths 100 Baths 1,250 Baths 400 Baths 8,350 Baths

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116 4.5.3 Facia Tax

From the Department of Local Government, we know the process of filing a petition about pay of facia tax which we can contact to Municipalities or Government facilities involved and must to do to finish on only March. In part of document, we must to have personal ID, census, VAT registration, Certificate of partnership leaves property need to install the label or receipt from a label store. In the part of facia tax, facia tax will pay tax follows the size and model of word. In the code of laws said that calculate by size of facia is 500 Square centimeter or low than 500 Square centimeter we will be calculate is 500 Square centimeter. And facia with has the Thai mix alphabet letters overseas or a picture. And / or other marks we will calculate in rate 20 baht per 500 square centimeters. Size of Facia of Earawan furniture is long 20 m and width 1.5m. Month Pay Equal Jan-Mar 100% 12,000 Year 1 Apr-Jun 75% 9,000 Jul-Sep 50% 6,000 Oct-Dec 25% 3,000

Year 2 Jan- Apr May-Aug All the period to pay 4,000 4,000

Sep-Dec 4,000

From table, we will see in year 1 paid more than year2. In the code of laws said that in year1 will pay brand tax in 4 times per year and once period has 3 month. Form of pay brand tax in first year are the first period pay 100% of price tax, second period pay 75%, third period pay 50%, and fourth period 25%. But in Second year and continually, form of brand tax in those years is all the period to pay equal and

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117

paid 3 times per year. In the part of pay tax, we can paid in Place of submitted document of facia tax or Place of officials have set or Sent by post. Cost of facia tax 12,000 Baht/3 months.

4.5.4 House and land tax House and land tax: Tax assessment recipient as annual Cost of the property 12.5 percent per year.

4.5.4.1 Tax payment Beneficiary assessment tax payment per year as annual fees. 12.5 percent of the annual fee. Tax payment = annual cost x 12.5%.

4.5.4.2 Calculation of tax valuation and annual tax rate Tax rate of house and land tax is 12.5% per year. We rent the land 25,000 per month, so equal 300,000 per year

Calculation of tax valuation and annual tax rate: 300,000 x 12.5% = 37,500

So, we must pay house and land tax is 37,500 baths per year

4.6 Service process to customer According to the survey questionnaire we found the interesting information that the customer concerns more about the hearty and welcoming service from the employee when they entrance to the furniture store, so this is the mainly point that Erawan furniture foster to the employees in every position to concern when they serve to the customer. There are 2 main service processes to the customer

4.6.1 The reception and selling process When the customers come to the store the employee will receipt in good mood for them and have developed the personality and polite service to the customer to provide good and reliable for In order to attract customers into our stores.
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118 For the selling process sale person will provide real information to customer and tell comprehensive information about products within the store to all interested customers to build trust in the sale and to high benefit for customers.

The sale on cash processing The accountant will issue the cash bill payment for the customer who wants to pay in cash in all of transaction Cash, the customer who want to pay on cash is allow the discount about 5% of the price on cash Credit card, the customer who want to pay on the credit card need to pay and 1.5% on service charge for the bank That Erawan furniture also give the discount about 5% on price. Financial intuition support, the customer who want to pay via the financial intuition ( Ae-on, First choise ). Erawan furniture also gives the discount about 5% on price after including VAT for the customer Taking the old furniture to be the discount for the new furniture, the customer who would like to purchase the furniture for the home decoration, but still has the old one can bring the old one to be the discount for purchasing the new one, the Erawan furniture will give the discount about maximum at 40% (581 baht in average) of the cost of product that customer will purchase by 1. The customer needs to ask for the sale person that would like to use this method for purchasing and than buy the new one at Erawan furniture by issue bill wit without the price 2. Transport the new furniture that has already purchased from Erawan furniture to the house of customer, then the mechanical will evaluate the value of price of the old one that customer need to exchange for the discount that no more that 40% of the cost of new one. 3. The price of the new one will write by the mechanical and collecting the money to the accountant as well as the old one is transported to the store.

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119 For the credit card and financial institution Erawan furniture serve for the customer after the first 6 and 9 month.

On credit sale processing There are 2 channel for the credit sale with are installment price and put off payment the Erawan furniture need to concern more with those process for this process it look like the financial service process to the customer. 1 Installment price, the customer who need to pay on the installment price need to sight the contact for purchasing agreement with Erwan furniture to protecting the missing of payment that Erawan furniture will give about 10 period of payment within 5 month that about 2 times per month that the customer who missing 4 time of payment or 2 month will allow Erwan furniture to go to pick the product back. The requirement for installment price of customer 1. The copy of ID card of customer 2. The copy of registration home’s address 3. Down payment 2 times of installment price at the first time for the new customer 4. Down payment 1 time of installment price for the old customer

2 Putt off payment, for this payment the customer also need to sigh contact like the installment purchasing that the contact quite flexible that installment purchasing that customer can design the payment by themselves that the payment

that the maximum about 4 time with in 2 month and the first need to pay about 30% of the price of product on credit.

The requirement for installment price of customer 1. The copy of ID card of customer 2. The copy of registration home’s address

4.6.2 The after sale service process Erawan furniture also has the after sale service to the customer which are following 1 Free transportation to the customer, Erwan furniture transport the furniture to the place that customer want not only in front of home but also in the position of
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120 room that customer want and free service assembly for the product that need to installment at place. For example if the customer want the wardrobe 5 feet up to the third floor but the size of product is very big that cannot move, so the mechanical will divided the wardrobe in to many parts them move the each of then to the 3 floor and re assembly by has not charged any fee. 2 The warrantee and free fixed service, Erawan furniture also has the warrantee for the product that if it was the damaged by both customer and own product we will go to fixed them for free in service (accepted the operating suppler).

4.6.3 The processing for asking financial institution support and credit card bank The critical requirement for asking the service from the fincnacial instutition (Ae-on and first choice) 1. Copy of Certificate of in cooperation Minimum 9 months registered 2. Certification Document not over 6 months and Minimum 9 months registered 3. Registration Capital 1 million above (In case of limited partnership, company limited, Public company limited) 4. Shop or store is convenient to merchandise 5. Type of goods or brand name has to find public favor in the market By those requirements Erwan furniture need wait bout 9 month after registered as juristic person.

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121 Example of the contact

4.6.4 The requirement for the credit card The critical requirement for asking the credit card service from the the bank which are Kasikon thai bank 1. Copy of Certificate of in cooperation Minimum 6 months registered 2. Certification Document not over 9 months and Minimum 6 months registered 3. Shop or store is convenient to merchandise 4. Type of goods or brand name has to find public favor in the market By those requirements Erawan furniture need wait bout 6 month after registered as juristic person.
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122 4.7. Logistic and suppler management

4.7.1 Logistic management Erawan furniture has 2 types of the logistic process which are inflow logistic and outflow logistic.

4.7.1.1 Inflow logistic It is the management transportation from suppliers to Erawan furniture that is divided in to 2 groups which are logistic from same suppler and the logistic from the suppler of Lampoon Logistic from the same suppler is the transportation from the suppler who supply the goods to overall furniture store in Surattani, This channel Erawan furniture need not to pay any freight for the service. It is the obligation of the suppler. Ordering via this logistic it take the lead time about 7-10 days for waiting the goods Logistic from the suppler of Lampoon is the transportation from the suppler from Lampoon that lower cost that the same suppler in Suratthani, This channel Erawan furniture need to take the own obligation about this transportation, so Erawan furniture need to outsource the Logistic company.

The Vehicle for transportation furniture goods is the big 6 wheel truck. That has the capacity about 7 tons.

(Source:http://www.kongservice2008.com)

That has the size of tray about, Long 6.5 metes, Wide 2.25 metes, and, High 3.0 metes. The rate of service has shown by following table

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123

Kong Sevice Truckdailyhome Ake Sevice Tippawantransport

Price 20,000 30,000 25,000 30,000

Labor 2,000 2,400 2,000 3,500

Equal 22,000 32,400 27,000 33,500

Source: (http://www.rodrubjang.com/detail.php?id=C01207439)

The table shows information about rate of logistic. We will contract and use service to Kong Service Ltd. because which compare all of company so, we will to see price of Kong Service Ltd. is cheaper than with other company. To transport the furniture, Erawan furniture transport by use the furniture that has not already yet assembled in the packaging that ready and easy for assembly by Erawan’ mechanical. By this Erawan furniture estimate the unit transportation and cost by using the Big show cabinet 7 feet that is the big size of packaging to be the base for calculation the minimum unit and maximum transportation cost per unit. The size of this package is wide 120 centimeters, thick 50 centimeters, long 200 centimeters, and the weight is about 65 Kilogram. From adjusting the tray of the truck 6 wheels, it can pick up the furniture packaging about 90 units and the cost per unit is about 244 baht per unit. It take the leads time about 12-14 days for production and 2 days for transportation, Therefore it takes time about 14-16 day for waiting

4.7.1.2 Out flow Logistic It is the transportation services to customer that serve the movement of furniture to customer from the store to the place that customer want. By using the company car

(Source: http://www.one2car.com/CarInfor/cardetails.aspx?caridx=E28090069&row=2 )

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124

Erawan furniture uses the used car to serve for the customer. Which cost about 260,000 baht and has the depreciation 52,000 baht per year

4.7.2 Suppler

According

to the price strategy that Erawan furniture used the low price

strategy to fight with the normal market in Surat Thani. Thus, Erawan furniture very concern more about the selecting and comparing the suppler that has the low cost as much as possible in the general goods.

4.7.2.1 The general product There are 2 sources of suppler for this products For this product catalogue, Erawan furniture compares the cost of product between supplier from Lampoon which is Somphoon furniture, and the same suppler in Surat Thani which one has the lower cost.

Suppler of the same competitor that has many companies that comes from Bangkok and perimeter. This is the example of the some of suppler of Erawan furniture

Name of salesman Miss Sawarot Mr. Suchart Mr. Suchart Miss Ponponna Mr. Pracha Mr. Suchart Miss Ponponna Arichayaphat

Contact 089-5196622 081-5834950 081-5834950 089-7762910 081-8162329 081-5834950 089-7762910 034-856445 081-8139055

The company Orange Furnitech Top Furnitech Udomwattana Trupjinda Furniture Joe pang furniture Panachock Sun rising Furnitech RB furniture NC furnich

The located Bangkok Samutphakarn Samutphakran Chomphon Bangkok Samutphakran Samutsakorn Samutsakorn Bangkok

The suppler from Lampoon, from the field trip survey at the lamphoon province at tam bon Ban mar. There are a lot of Furniture manufacturing but Erawan furniture use Somphon furniture because it is the bigger furniture manufacture that has high capacity of production and quite lowest cost.

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125 Erawan furniture selected only the products that quite be same quality and lowest cost from Somphon furniture when compare with suppler of the same competitor for serve at the store.
Somphon Furniture From Lamphoon 2,700 3,900 900 1,200 1,700 650 600 2,200 2,300 2,700 1,150 1,200 1,500 1,350 3,900 1,400 3,200 650 600

Wardrobe 120 CM grass slide door Wardrobe 150 CM grass slide door Wardrobe kid 3 doors TV cabinet 5 foots top curve Wardrobe 120 CM 3 doors Accounting cabinet 4 foots Computer cabinet 4 foots Big show cabinet 5 foot Big show cabinet 6 foot Big show cabinet 7 foot Bed 3.5 foots head square Bed 4 foots head curve Bed 6 foots head curve Bed 5 foots head square Wardrobe 160 CM light Bookshelf 4 doors Big show 155 cm cabinet platinum Dressing table open door Dressing top curve

Same suppler 4,800 6,800 1,900 2,900 2,900 1,500 1,500 3,100 3,200 None None None None None 6,700 3,200 5,300 1,460 1,390

Name of supplier Udomwattana Udomwattana Udomwattana Udomwattana Udomwattana Top furnitex Top furnitex Top furnitex Top furnitex None None None None None RB furniture RB furniture RB furniture Orange Furnitech Orange Furnitech

This table is the example of some products from Somphoon furniture that Erawan furniture is supplied.

4.7.2.2The special product Erawan furniture got the special product from Nophadol furniture

4.7.2.3 The Second hand product Erawan furniture got the second hand product from 2 sources 4.5.2.3.1. From customer who might miss to pay the installment purchasing within 2 months or 4 periods, Erawan furniture will go to pick the product back in the condition of the contact of the installment purchasing, then fix them for reworking and resell in the second hand product. 4.5.3.3.2. From the customer who bring the old one for new one. According to the filed trip and survey the questionnaire, we found that there are the customer who need the new furniture for decorating home but still has the old one and need not

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know how to handle with the old one. Thus, Erawan furniture also has the service about allow those customer to bring the old one for get the discount about no more than 40 % of the cost of the new one which about 581 baht in average for purchasing the new one To support this service for reducing the inventory, Erawan furniture need to fixed and resell them in the second hand product.

4.7.3 Inventory management

Erawan furniture need to keep a lot of ending inventory because we need to prepare the goods that available for the customer to purchase, so we need to maintain the high level of ending inventory, we will order the goods in advance for 1 month by estimate from the cost of goods sold for the next month, because we have the lead time about 7-15 days for all of goods. The warehouse zone is the zone for keep the inventory in the packaging like following picture. At the first time of operating Erawan furniture need to order the inventory 2,000,000 baht.

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4.8 The summary of cost Cost of investment Pre operating expense Request electric power Request water Register for juristic Adjust land Facial tax Property tax Other (installment and etc.) Total Prepaid rental land Investment cost Operating Investment fixed Car Equipment show room Equipment assembly zone Equipment Warehouse Total Administrative investment fixed Initial 260,000 58,540 24,085 9,190 351,815 Initial Initial 38,850 8,100 8,350 1,000 12,000 37,500 50,000 155,800 300,000

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128 Building Equip office Equip Toilet Total Total investment cost Depreciation Depreciation Operating Car Show room Equip assembly zone Equip Warehouse Total operating depreciation Administration Building Equip office Equip Toilet Computer Total administration depreciation 4.9 Management Analysis 4.9.1Human resource From the Ministry of Labour and Social Welfare, we know that minimum of wage rate in Surat Thani is 159 Bath per day. In Erawan Furniture there are 10 employees of our company managing the furniture store. and 1 outscoring. We have the general manager for Initial 260,000 58,540 20,485 9,190 348,215 Initial 4,551,850 71,957 3,334 10,600 4,637,741 Monthly Yearly Base year 4,551,850 128,457 3,334 4,683,641 5.035,456

4,333 52,000 5 976 11,708 5 341 4,097 5 153 1,838 5 5,804 69,643 Monthly Yearly Base year 18,966 227,593 20 1,199 14,391 5 56 667 5 294 3,533 3 20,515 246,184

General Manager Job position Job Type Job time Job qualification 1. Male / Female , age at least 26 years old 2. Master's or Bachelor's Degree 3. Thai nationality 4. Knowledge, Capability, Experience about managing furniture store at least 3 years : 1 : Full Time : 8.00am-6.00pm.

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Job description He/She can set up targeting of company, planning all of operating which follow target of company, assigning work to employee appropriately, good communication inside company, and can evaluation & improvement of all position in company. Besides, it is include managing and payment salary of employee, supervise order of stock, and contact suppler for order the product and negotiation about price.

Job recruitment We will be post notice about job description for apply a job on front of store and post in *Department of Employment in Surat Thani which internet and office of department of employment, we will post in both ways. We will interview them before start the job and check her/him job qualification. We will tell about salary, scope of work, test the skill of control and negotiation, and ask about experience from working
*Source: http://www.seso.go.th/t0105/index.php?pgid=index

Sellers Job position Job Type Job time Job qualification 1. Male / Female , age at least 20 years old 2. Thai nationality 3. Experience about sale at least 2 years : 2 : Full Time : 8.00am-6.00pm.

Job description Task of Seller and assistant is take care and give true information about product, advice about buy product, persuade, and explain to moderation of product with style of customer. These works start on 8.00am-6.00pm.

Requirement We will post a notice about apply for a job on area in front of store, area in central of Surat Thani, and post on internet. If somebody takes an interest, we will have interview about skill of talking and present by applicant show the technical for

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sale with committee. And applicant should be look good personality for make reliability with customer.

Accountant Job position Job Type Job time Job qualification 1. Male or female age at least 22 years old 2. Thai nationalities 3. Knowledge and Experience about accounting at least 2 year 4. Well know and well experience of routes 5. Responsibility of duty : 1 : Full Time : 8.00am-6.00pm.

Job description Task of accountant is management and respond all of activities about finance, account, record buy-sale, and order in-out of stock before send to manager for check against. These works start on 8.00am-6.00pm.

Requirement We will post a notice about apply for a job on area in front of store, area in central of Surat Thani, and post on internet. If somebody takes an interest, we will have interview about skill of account and ask about experience from working.

Mechanical Job position Job Type Job time Job qualification 1. Male age at least 20 years old 2. Permanent driving license 3. Thai nationality : 1 : Full Time : 8.00am-6.00pm.

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4. Well know and well experience of routes Responsibility of duty

Job description Task of mechanical is assembly product, send product to customer, and take product to warehouse. These works start on 8.00am-6.00pm.

Requirement We will post a notice about apply for a job on area in front of store, area in central of Surat Thani, and post on internet. If somebody takes an interest, applicant must to show technical about assembly and about personality should be look like healthy and strength. Driver Job position Job Type Job time Job qualification 1. Male age at least 24 years old 2. Permanent driving license 3. Thai nationality 4. Knowledge and Experience about delivery least 2 years 5. Well know and well experience of routes 6. Responsibility of duty : 1 : Full Time : 8.00am-6.00pm.

Job description Task of driver respond about delivery by transport the product of showroom. Move the product on the pickup car, communication with customer which place customer’s want. Move down the product from pickup car and set the point follow customer’s want. Good car care and well skill how to treat basic repair tired of pickup car. Well know the street. Perform the traffic too stick. Do not drink in job time.

Requirement We will be post notice about job description for apply a job on front of store and post in *Department of Employment in Surat Thani which internet and office
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of department of employment, we will post in both ways. We will interview them before start the job and check him job qualification. We will tell about salary, scope of work, test the skill of driving and well know the route, and ask about experience from working
*source: http://www.seso.go.th/index.php

House keeper Job position Job Type Job time Job qualification 1. Female age at least 25 years old 2. Thai nationality 3. Well skill in cleaning 4. Well know and well experience how to use equipment and chemicals for cleaning. 5. Responsibility of duty : 1 : Full Time : 8.00am-6.00pm.

Job description Task of house keeper respond about cleaning all of product in showroom and warehouse zone. Arranged and decorated locations to be organized. Maintain the cleaning front of store area. Always clean when dirt. Always clean the toilet. Care cleans all area of store. Police confer to customer.

Requirement We will be post notice about job description for apply a job on front of store and post in *Department of Employment in Surat Thani which internet and office of department of employment, we will post in both ways. We will interview them before start the job and check her job qualification. We will tell about salary, scope of work, and ask about experience from working
*source: http://www.seso.go.th/index.php

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Account receivable caretaker Job position Job Type Job time Job qualification 1. Male or femal age at least 25 years old 2. High vocational certificate. 3. Thai nationality 4. Responsibility of duty 5. Resolute of duty : 1 : Full Time : 8.00am-6.00pm.

Job description Task of account receivable caretaker respond about control and collect payment of customers who pay out a little at a time that reference from table date payment of customers. Account receivable caretaker will be call and talk about liability of customers. If customers not paid money to account receivable caretaker, we will be take possession the product.

Requirement We will be post notice about job description for apply a job on front of store and post in *Department of Employment in Surat Thani which internet and office of department of employment, we will post in both ways. We will interview them before start the job and check her job qualification. We will tell about salary, scope of work, and ask about experience from working
*source: http://www.seso.go.th/index.php

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4.9.2 Outsourcing Erawan furniture outsource the security guard from the We hire security from Sri-Tommasit Co. Ltd. for look after the store at night

4.9.2.1 Compensation Human resource General manager Sale person Accountant Driver Mechanical salary Account receivable caretaker House keeper Outsource guard Total position 1 2 1 1 3 1 1 1 11 Salary 10,000 5,500 8,000 7,500 7,000 6,500 5,000 7,000 Total 10,000 11,000 8,000 7,500 21,000 6,500 5,000 7,000 76,000

4.10 Conclusion There are 2 mainly product type of Erawan furniture which are Normal product, and Used products. Normal product is the product that sold at the first time to customer that which has 2 types which are special product and general product, and the used product that estimate the cost about 40% of the normal product. Erawan furniture is register as the juristic person according to the Thai law. It rent the land the need to pay in advance for 1 year. Erawan furniture need to build it owns building that there are 2 mainly zoned which are Core building and Option building. The core building is the main building for selling and administrative and the option building for the assembly and warehouse zone for assembly fixed and keeps the package furniture. The total investment cost for the Erawan furniture is 5,027,556 baht. Erawan furniture has 10 own employees which are seller 2 position who are try to generate the sale, driver 1 position who drive the car for delivery goods to customer, general manager 1 position who manage the furniture store, accountant 1 position who take responsibility about the accounting, mechanical 3 position who support the driver to service the customer, account receivable caretaker who try to collect money from the customer House keeper who take care and clean the furniture store.

To be, and be recognized as, the low cost leader furniture store in Surat Thani, as well as provide variety choice to buy for customer

Chapter 5 Financial Analysis

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This chapter explains about all financial statements. We calculate all of them are in monthly base and minimum 5 years. Profit/Loss statement (Income statement), Cash flow, and Balance sheet which theses are used calculations financial statements.

5.1 Total requirement and the source of fund First of all, Erawan furniture need to in from about the total requirement and the source of fun that represent by following table

Pre operating expense Operating Investment Administrative investment Prepaid rental land Expected expense at the beginning Inventory purchasing Maintain the liquidity Total funding requirement

155,800 351,815 4,683,641 300,000 122,008 2,000,000 2,000,000 9,613,264

This table represents the total funding requirement of this project that has the requirement about 9,613,264 baht, Thus Erawan furniture need to loan from the investor in amount of 10,000,000 baht to open and operate the project. According to the Thai civil commercial law in the section of 654 that the loan interest rate need not to have more the maximum rate of the law which is 15% per year. Thus, Erawan furniture will provide the maximum rate of the loan interest rate at 15% per year or 1,500,000 baht and will pay the interest rate every month for 60 year by need not to pay the principal as well as must pay the all of the principal which is 10,000,000 baht at the end of year 5. Because, we need to give the big amount of interest rate which is about 125,000 baht per month to the investor for 5 year. Moreover, Erawan furniture also have the back up plan for the investor that can guarantee that the investor will get the fully principal at the end of year 5 if we did not has the cash enough to pay all of principal to the investor. There are 2 alternative for the investor that can choose anyone. 1) We will pay 50% of the principal(5,000,000) at the end of year 5 to the investor, and let other have also computed the interest for the investor (750,000) plus bonus 30,000 baht per year to the invest to so we have cash enough to pay for this) . And repay 25% of principal (2,500,000) at the end of year 7 and let other have also

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137 computed the interest for the investor (375,000) also plus 50,000 baht in bonus and the last 25% of principal at the end of year 9 plus interest the bonus 70,000 baht. 2) We will loan the cash from the financial intuition such as the bank to repay the entire principal for the investor. By this way the investor will not get any bonus or interest after year 5.

5.2 Financial statement There are 3 man statements in the financial analysis path which are income statement, statement of cash flow, and the balance sheet

5.2.1 Income statement Income statement is the importance statement for the company that informs the information about the performance of the company. The number that is very importance for concerning is in the bottom line which is the net income Explanation for the income statement for the Erawan furniture Sale, the data of sale in the in come statement is imported from the sale in the sale forecast in the chapter 3 that there are 2 types of sale which are on cash and on credit sale. For the sale, Erawan furniture estimate to increase about 8 % in every year Cost of goods sold, because the sale forces of Erawan furniture is estimated from the percentage of potential market of Surat Thani and there are a lot of cost of product of Erawan furniture, so the to reduce the complexity of the cost of goods sold in the income statement Erawan furniture use the percentages of the gross margin of the price strategy that has represented in the chapter 4 to be the base for estimated the percentage for the cost of goods sold. All of them have already including in the cost of goods sold in the income statement. From interview the furniture store entrepreneur, the price of the goods from supplier increase quite not much more for each year it about 2%-3% per 2 years in average. Thus, Erawan furniture increase sale by 3% in year 3 and 4 and 4% in year 5 from year 1 Gross margin, the gross margin is the initial profit from sale that including only the deduction of the cost of goods sold. Because Erawan furniture try to find the furniture from the suppler that is lowest cost as much as possible, so it also represent higher in the gross margin.

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138 Operating expense, for the operating expense inform about the expense that use to operate the service to the customer that including fuel, operating suppliers, expected the bad dept, Electricity in the operating, and operating depreciation Pre operating expense, Erawan furniture percept this expense at the first year by deduction equally amount every month. Fuel is the expense for fuel to transportation service to the customer from this expense Erawan furniture estimated about 1.66% of the sale according to the filed trip survey we know that the fuel of Nong maw furniture is about 72,000 baht that is about 1.66% of the sale. And increase 3.3% every year according to the inflation rate in Surat Thani Operating supplier is the expense that use in that the assembly zone for

reserve to be the assembly and for fixed the product and the second hand product. Erawan furniture will purchase 4 times per year. Bed dept expense because Erawan furniture has the service about the credit sale, so we need to prepare for the bed dept from the filed trip survey we found that it is quite impossible that the sale on credit will be colleted fully 100%. There are about 5% that are the bad dept and lost. So Erwan furniture expected the bad dept about 5% of the expected cash received on credit sale. Electricity on operating is the mainly part of electricity on operating are use to assembly the product when them is placed to the store. Some kind of furniture such as wardrobe, TV cabinet, big show cabinet have the big size it hard to transportation so they need move by the package, and the goods that ordering from Lampoon also are in the packaged and then is assembly later by both the mechanical of suppler and Erawan furniture at the store, so Erawan furniture estimate the Electricity on operating about 0.3% of the inventory purchasing according to analysis the electricity cost from the field trip survey. And increase 3.3% every year according to the inflation rate in Surat Thani Operating depreciation is the non cash expense that need to deduction from the gross margin according to the principle accounting it is the assumption that the plant asset need to have the discount value by the time for operating depreciation. The data for operating depreciation is imported from the depreciation cost in chapter 4

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139 Operating income is the profit that has already deduced the operating expense. It reflects the profit that how much the company can generate the profit with after deduction the expense from operating activities. Marketing expense, is the expense that use for encourage the sale of the Erawan furniture the data is imported from the marketing expense in chapter 3. And increase 3.3% every year according to the inflation rate in Surat Thani Administrative expense, is the expense that use in the management that including salary of the employee, utility expense, insurance expense, office supply, rental land, property tax expense, Other administrative expense, and the administrative depreciation. Salary is the compensation that pay for the employee for Erawan furniture has the employee 10 person and outscoring 1 person that represent the detail in the chapter 4. Utility expense is the expense of facility such as electricity, telephone bill, water supply, that use in the administrative activities, it difficult to estimated all of the expense so Erawan furniture use the fixed rate that may be the maximum for this expense that about 8,000 baht per month that base on about 4 times of grade C furniture store from the filed trip survey. Insurance expense is the expense for transforming the risk of Erawna furniture to the insurance company that represented by following

The cost of risk management Fire insurance Car insurance Social security insurance for employee Total insurance expense

per year 21,207 7,200 41,400 69,807

per month 1,767 600 3,450 5,817

Office supply or stationary expense is the expense that diminution from the current asset in the balance sheet that expected that will enough to use within 4 months and purchasing again after 4 month so it expected to use equally for each month that use in office zone that essential for administration. Erawan furniture will purchase 3 times per year. Rental land, Erawan furniture need not to purchasing the land at the beginning because the cost is 25,000,000 baht is quite high and need to spent a lot of money at the beginning, so the negotiation result that need to pay 300,000 baht per year that

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about 25,000 baht per month it look better than pay 25,000,000 baht in one time. For this expense Erawan furniture deducting equally 25,000 baht every month Property tax expense, the data of the property tax expense is imported from the chapter 4. Facia tax expense, the data of the facia tax expense is imported from the chapter 4. Administrative depreciation is the non cash expense that need to deduction from the margin according to the principle accounting it is the assumption that the plant asset need to have the discount value by the time for operating depreciation. The data for Administrative depreciation is imported from the depreciation cost in chapter 4 Earning before interest and tax (EBIT), is the profit after deduction all of expense except financial activity and tax. This represent that how much the profit that company can generate before pay for tax and interest that reflect the earning performance of the company Interest expense, this is the compensation that Erawan furniture pay for the investor who invest to this project that represent about 15% of the money loan or about 1,500,000 baht per year. Erawan furniture will guarantee to pay the interest 125,000 baht every month for the investor. Interest income, is the profit after EBIT deduction with the interest payment. Income tax is the obligation of the private juristic person who has the profit from the operating need to pay tax to the government the rate is 30% of the interest income. Net income, is the important number in the bottom line that represent the overall profit that the company can generate from doing the business.

5.2.2 Cash flow statement The cash flow statement is the statement that show the movement of cash that cash inflow and cash outflow in all of activities of the business that including operating activity, selling and administrative activity, investment activity, and cash flow from financing activity. 5.2.2.1 Cash flow from operating activity is the transaction in cash of the company in the operating activity.

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Cash inflow, there are 2 mainly source of cash inflow from the operating activity Erawan furniture which are cash received on cash sale and cash received on credit the depreciation and operating suppler are non cash expense that including in the income statement, so we need to adjust them to know the real cash inflow from the operating activity that imported the data from the income statement. Cash outflow, the cash outflow from the operating activity of Erawan furniture has purchasing inventory on cash for every transaction, the cash that paid for operating expense, cash paid for the income tax that imported the data from income statement . Every transaction of Erawan furniture about purchasing the inventory uses the cash. And according to the revenue department of Thailand that need to pay the income tax about 2 times a year, so there are the cash flow in this activity at the middle and the end of the year. Net cash flow is the result of the cash inflow minus cash outflow, in the net cash flow the value of Erawan furniture is positive because there is cash inflow more than cash outflow. It represents the positive dimension in the operating expense

5.2.2.2 Cash flow from selling and administrative activity is the cash transaction of company for selling and administrative. Cash inflow, the cash inflow in this activity is to adjust the non cash transaction that has already including in the income statement which are depreciation, rental rand that pay the lump-sum at the beginning of year, and offices supplier. Cash outflow, the cash out flow from selling and administrative also imported from the income statement. Net cash flow, The net cash flow from selling and administrative of Erawan furniture is negative it means that the cash outflow is more than cash inflow in selling and administrative activity. It is the general situation.

5.2.2.3 Cash flow from investment activity, represent the cash that transaction in investment activity. Erawan furniture including investment transaction in both plant and current asset that will be represented in the balance sheet The transactions reflect that how much money that Erwan furniture spent for the investment activity for each year. Cash inflow, is the cash that received from selling the equipment. Erawan furniture hardly sells the equipment on the market
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Cash outflow, is cash paid for purchasing new equipment in both current and plant that including cash paid for purchasing administrative and operating plant asset, cash paid for rental land, office supplier, operating suppler. Net cash flow, the net cash flow from investment activity of Erawan furniture usually be the negative number because we seldom to sell the equipment but invest in current asset every year. 5.2.2.4 Cash flow from financing activity, represent the cash the occur in the find out the fund for Erawan furniture. Cash inflow, including the cash borrowing that occur only one time from the investor who invest to the Erawan furniture Cash outflow, represent the cash payment to the investor that including repayment the principle and interest payment. Erawan furniture has ability to pay the interest for the investor every month.

5.2.3 Balance sheet statement Balance sheet is the statement that represent the financial status of the company that strong or weakness that there are two side of balance sheet which are Asset, and Liability and Equity that always equal together. 5.2.3.1 Asset, there are 2 mainly type of asset which are current asset that can be use within 1 year, and Plant asset that has the depreciation Current asset Erawan furniture has cash, inventory, office suppler, operating suppler, prepaid land expense, and account receivable Fixed asset Erawan furniture has operating asset that use in the warehousing and assembly Zone that including car, Equipment show room, assembly, and warehouse zone. And administrative asset that including building, equipment office, and toilet zone less by the accumulative depreciation

5.2.3.2 Liability and equity Liability of Erawan including tax payable that Erawn furniture need to pay tax about 2 time per year which in June and December, so we need to have the tax payable. In the Long term note payable is not reduce because Erawan furniture would like the investor to get the maximum of interest rate that is 1,500,000 baht per year for 5 years and then will repay the entire principal at the end of year 5.

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143 Equity of Erawan furniture, there are only retain earning in the equity because Erawan furniture loan 100% in liability.

5.3 Financial ratio Ratio analysis Long-term solvency Long-term dept ratio Time interest earned Cash coverage Asset utilization Total asset turnover Fixed asset turnover Inventory turnover Day’s sale in inventory Receivable turnover Day’s sales in receivable Profitability Gross margin Profit margin Return on asset Return on fixed asset Return on dept EBIT margin 5.4 For the ratio analysis 5.4.1 Long-term solvency is intended to address the firm’s long-term ability to meet its obligation, or, more generally, its financial leverage. According to Erwan furniture need to loan 100% in liability to operate the business, so the long-term dept ratio is quite be high at the first year. However because of the increasing of the asset every year thought, we need not to loan any fund more it case the long-term dept ratio continuous to decline and reach the number 0 at the end of year 5 because Erawan furniture pay all of the principal to the investor. Time interest earn and the cash coverage represent the ability to pay the interest to the investor of Erawan furniture that has enough to pay 3-4 time for each year. Year 1 81.99% 3.09 3.31 1.40 3.63 6.08 58.42 5.02 70.72 47.28% 12.87% 18.01% 46.75% 21.97% 27.17% Year 2 68.07% 3.37 3.59 1.16 3.90 6.25 56.79 4.07 87.15 47.27% 13.52% 16.97% 56.96% 24.93% 27.45% Year 3 57.18% 3.66 3.88 1.14 4.93 6.59 53.84 3.47 102.27 46.55% 14.00% 19.63% 69.01% 27.98% 27.51% Year 4 48.37% 4.03 5.22 1.04 5.77 6.78 52.33 3.05 116.50 46.55% 14.81% 15.41% 85.39% 31.85% 28.12% Year 5 0.00% 4.41 5.51 1.63 6.82 6.84 51.92 2.74 129.58 46.30% 15.40% 25.10% 104.99% N/A 28.46%

5.4.2 Asset utilization The total asset turnover and fixed asset turn over of Erawan furniture is quite high because we generate more sale by use less in asset when compare , that represent

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144 the high efficacy rate of Erawan furniture. The inventory turnover of Erawan furniture is quite high it mean that we have more efficiently that we can mange the in the ending inventory because we ordering forward for the next month. Erawan furniture also has well managing the account receivable because we have the inventory care taker to look after the account receivable

5.4.3 Profitability ratio Because Erawan furniture has lower in cost of goods sold, so it quite higher in the gross margin and earning before interest and tax , so we can pay the higher in the interest rate for the investor. The profitable ratio of Erawan furniture is quite higher, that represents the good in generating the profit.

5.5 NPV analysis is use to estimate and analyze the value of money at the present time Net present value 1,782,848 for 60 month at the discount rate 3.3% per year that comes from the average inflation rate 3 year at Surat Thani. By did not including the repayment for the principal of the initial investment at the end of year 5 .This project also represents the positive NPV that very interesting to invest. However, if we including the repayment for the end of year 5 the NPV will be negative to 6,698,009

5.6 Internal rate return is the rate that measure the internal return for this project Internal rate return of Erawan furniture is equal to 17% per year or 1.39% per month that overcome the inflation rate. This rate not including the computation of the principal 5.7 Conclusion Erawan furniture will have the fund by loan from the investor and will pay the interest rate 15% per year for the investor. The overall of 3 financial statement which are income statement, cash flow statement, and the balance sheet show the number that quite good that represent higher in net income, the good liquidity that represented in the cash flow statement, and the strong financial in the balance sheet . And in the ratio analysis also give the percentage that excellent the NPV which positive (not including the repayment the initial investment for the investor, the IRR of Erawan
To be, and be recognized as, the low cost leader furniture store in Surat Thani, as well as provide variety choice to buy for customer

145 furniture represent the satisfaction number that higher than the interest rate the we offer to the investor. That can be concluding that there is feasibility in the financial of Erawan furniture.

To be, and be recognized as, the low cost leader furniture store in Surat Thani, as well as provide variety choice to buy for customer

146

Table of Income statement Year 1
Year 1 Sale Sale on cash Sale on credit Total sale Cost of goods sold On cash On credit Total cost Gross margin On cash On credit Total Gross margin Operating Expense Fuel Operating suppliers Expected the bad dept Electricity in operating Operating depreciation Pre operating expense Total operating Expense Operating income Marketing expense Selling expense Discount sale Sale commission Total selling Expense Advertising expense January 334,422 999,361 1,333,783 237,440 462,704 700,144 96,982 536,657 633,639 22,141 1,000 9,994 6,000 5,864 12,983 44,998 588,641 February 236,830 878,510 1,115,340 168,149 406,750 574,899 68,681 471,760 540,440 18,515 0 18,779 2,268 5,864 12,983 45,425 495,015 March 464,883 920,042 1,384,925 330,067 425,979 756,046 134,816 494,063 628,879 22,990 0 27,979 2,236 5,864 12,983 59,068 569,811 April 287,328 1,168,841 1,456,169 204,003 541,173 745,176 83,325 627,668 710,993 24,172 1,000 39,668 3,066 5,864 12,983 73,770 637,223 May 336,272 1,691,754 2,028,026 238,753 783,282 1,022,035 97,519 908,472 1,005,991 33,665 0 56,585 2,260 5,864 12,983 98,374 907,617 June 302,153 1,163,699 1,465,851 214,528 538,793 753,321 87,624 624,906 712,531 24,333 0 58,228 2,224 5,864 12,983 90,649 621,881 July 463,616 890,376 1,353,992 329,167 412,244 741,411 134,449 478,132 612,580 22,476 1,000 58,347 2,264 5,864 12,983 89,951 522,629 August 504,769 856,122 1,360,891 358,386 396,384 754,771 146,383 459,737 606,120 22,591 0 57,708 2,281 5,864 12,983 88,443 517,677 September 397,042 1,033,366 1,430,408 281,900 478,449 760,348 115,142 554,918 670,060 23,745 0 56,353 2,268 5,864 12,983 88,230 581,830 October 281,953 1,200,485 1,482,438 200,187 555,824 756,011 81,767 644,660 726,427 24,608 1,000 51,440 1,931 5,864 12,983 84,843 641,584 November 356,801 842,910 1,199,712 253,329 390,268 643,596 103,472 452,643 556,115 19,915 0 48,233 2,383 5,864 12,983 76,394 479,721 December 473,306 989,678 1,462,984 336,047 458,221 794,268 137,259 531,457 668,716 24,286 0 49,226 2,269 5,864 12,983 81,644 587,072 Total 4,439,375 12,635,144 17,074,518 3,151,956 5,850,071 9,002,028 1,287,419 6,785,072 8,072,491 283,437 4,000 532,539 31,450 70,363 155,800 921,790 7,150,701

16,721 26,676 43,397

11,842 22,307 34,148

23,244 27,698 50,943

14,366 29,123 43,490

16,814 40,561 57,374

15,108 29,317 44,425

23,181 27,080 50,261

25,238 27,218 52,456

19,852 28,608 48,460

14,098 29,649 43,746

17,840 23,994 41,834

23,665 29,260 52,925

221,969 341,490 563,459

To be, and be recognized as, the low cost leader furniture store in Surat Thani, as well as provide variety choice to buy for customer

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Radio local Calendar Brochure Signboard Souvenir Public relation Other Total advertising expense Total marketing expense Administration Expense Salary Utilities expense Insurance expense Office supply Rental land Property tax expense Facia tax Administrative depreciation Total administrative expense Selling and administrative expense Earning before interest and Tax Interest expense Interest income Income Tax Net income

6,000 13,000 500 40,000 4,000 2,000 1,000 66,500 109,897 76,000 8,000 6,167 2,500 25,000 3,125 12,000 21,149 153,941 263,838 324,804 125,000 199,804 59,941 139,863

6,000 0 500 0 0 2,000 1,000 9,500 43,648 76,000 8,000 6,167 0 25,000 3,125 0 21,149 139,441 183,089 311,926 125,000 186,926 56,078 130,848

6,000 0 0 0 0 2,000 1,000 9,000 59,943 76,000 8,000 6,167 0 25,000 3,125 0 21,149 139,441 199,384 370,427 125,000 245,427 73,628 171,799

6,000 0 500 0 4,000 2,000 1,000 13,500 56,990 76,000 8,000 6,167 0 25,000 3,125 9,000 21,149 148,441 205,431 431,792 125,000 306,792 92,038 214,755

6,000 0 0 0 0 2,000 1,000 9,000 66,374 76,000 8,000 6,167 2,500 25,000 3,125 0 21,149 141,941 208,315 699,302 125,000 574,302 172,291 402,011

6,000 0 0 0 0 2,000 1,000 9,000 53,425 76,000 8,000 6,167 0 25,000 3,125 0 21,149 139,441 192,866 429,016 125,000 304,016 91,205 212,811

6,000 0 0 40,095 0 2,000 1,000 49,095 99,356 76,000 8,000 6,167 0 25,000 3,125 6,000 21,149 145,441 244,797 277,833 125,000 152,833 45,850 106,983

6,000 0 500 0 0 2,000 1,000 9,500 61,956 76,000 8,000 6,167 0 25,000 3,125 0 21,149 139,441 201,397 316,280 125,000 191,280 57,384 133,896

6,000 0 0 0 0 2,000 1,000 9,000 57,460 76,000 8,000 6,167 2,500 25,000 3,125 0 21,149 141,941 199,401 382,429 125,000 257,429 77,229 180,200

6,000 0 1,000 0 4,000 2,000 1,000 14,000 57,746 76,000 8,000 6,167 0 25,000 3,125 3,000 21,149 142,441 200,187 441,396 125,000 316,396 94,919 221,477

6,000 0 500 0 0 2,000 1,000 9,500 51,334 76,000 8,000 6,167 0 25,000 3,125 0 21,149 139,441 190,775 288,946 125,000 163,946 49,184 114,762

6,000 13,000 500 0 4,000 2,000 1,000 26,500 79,425 76,000 8,000 6,167 0 25,000 3,125 0 21,149 139,441 218,866 368,206 125,000 243,206 72,962 170,244

72,000 26,000 4,000 80,095 16,000 24,000 12,000 234,095 797,554 912,000 96,000 74,007 7,500 300,000 37,500 30,000 253,784 1,710,791 2,508,345 4,642,356 1,500,000 3,142,356 942,707 2,199,649

To be, and be recognized as, the low cost leader furniture store in Surat Thani, as well as provide variety choice to buy for customer

148

Year 2
Year 2 Sale Sale on cash Sale on credit Total sale Cost of goods sold On cash On credit Total cost Gross margin On cash On credit Total Gross margin Operating Expense Fuel Assembly suppliers Expected the bed dept Electricity on operation Operating depreciation Total operating Expense Operating income Marketing expense Selling expense Discount sale Sale commission Total selling Expense Advertising expense Radio local Calendar January 361,176 1,079,310 1,440,486 252,101 504,340 756,441 109,075 574,970 684,045 24,632 1,033 51,457 1,922 5,864 84,908 599,137 February 255,776 948,790 1,204,567 178,532 443,351 621,883 77,244 505,440 582,684 20,598 0 50,612 2,518 5,864 79,591 503,093 March 502,073 993,645 1,495,719 350,447 464,311 814,758 151,626 529,335 680,961 25,577 0 48,543 2,492 5,864 82,476 598,485 April 310,314 1,262,348 1,572,662 216,599 589,870 806,469 93,715 672,478 766,193 26,893 1,033 52,738 3,421 5,864 89,948 676,245 May 363,173 1,827,094 2,190,268 253,495 853,765 1,107,260 109,678 973,330 1,083,008 37,454 0 61,112 2,519 5,864 106,948 976,060 June 326,325 1,256,795 1,583,120 227,775 587,275 815,050 98,550 669,520 768,070 27,071 0 62,887 2,468 5,864 98,290 669,780 July 500,705 961,606 1,462,311 349,492 449,339 798,831 151,213 512,267 663,480 25,006 1,033 63,015 2,511 5,864 97,428 566,052 August 545,151 924,611 1,469,762 380,515 432,052 812,568 164,636 492,559 657,195 25,133 0 62,325 2,536 5,864 95,857 561,337 September 428,805 1,116,035 1,544,841 299,306 521,501 820,807 129,499 594,534 724,034 26,417 0 60,861 2,529 5,864 95,671 628,363 October 304,510 1,296,524 1,601,033 212,548 605,840 818,387 91,962 690,684 782,646 27,378 1,033 55,556 2,146 5,864 91,976 690,670 November 385,345 910,343 1,295,688 268,971 425,385 694,356 116,374 484,958 601,332 22,156 0 52,091 2,646 5,864 82,757 518,575 December 511,171 1,068,852 1,580,023 356,797 499,453 856,250 154,374 569,399 723,772 27,018 0 53,164 2,566 5,864 88,612 635,161 Total 4,794,525 13,645,955 18,440,480 3,346,578 6,376,482 9,723,060 1,447,946 7,269,473 8,717,420 315,332 4,132 674,360 30,273 70,363 1,094,461 7,622,959

18,059 28,810 46,869 6,198 13,429

12,789 24,091 36,880 6,198 0

25,104 29,914 55,018 6,198 0

15,516 31,453 46,969 6,198 0

18,159 43,805 61,964 6,198 0

16,316 31,662 47,979 6,198 0

25,035 29,246 54,281 6,198 0

27,258 29,395 56,653 6,198 0

21,440 30,897 52,337 6,198 0

15,225 32,021 47,246 6,198 0

19,267 25,914 45,181 6,198 0

25,559 31,600 57,159 6,198 25,000

239,726 368,810 608,536 74,376 38,429

To be, and be recognized as, the low cost leader furniture store in Surat Thani, as well as provide variety choice to buy for customer

149

Brochure Signboard Souvenir Public relation Other Total advertising expense Total marketing expense Administration Expense Salary Utilities expense Insurance expense Office supply Rental land Property tax expense Facia tax Administrative depreciation Total administrative expense Selling and administrative expense Earning before interest and Tax Interest expense Interest income Income Tax Net income

517 41,320 4,132 2,066 1,033 68,695 115,563 76,000 8,264 6,167 2,583 25,000 3,125 4,000 21,149 146,287 261,850 337,287 125,000 212,287 63,686 148,601

517 0 0 2,066 1,033 9,814 46,694 76,000 8,264 6,167 0 25,000 3,125 0 21,149 139,705 186,399 316,695 125,000 191,695 57,508 134,186

0 0 0 2,066 1,033 9,297 64,315 76,000 8,264 6,167 0 25,000 3,125 0 21,149 139,705 204,020 394,465 125,000 269,465 80,840 188,626

517 0 4,132 2,066 1,033 13,946 60,914 76,000 8,264 6,167 0 25,000 3,125 0 21,149 139,705 200,619 475,625 125,000 350,625 105,188 245,438

0 0 0 2,066 1,033 9,297 71,261 76,000 8,264 6,167 2,583 25,000 3,125 4,000 21,149 146,287 217,548 758,512 125,000 633,512 190,054 443,458

0 0 0 2,066 1,033 9,297 57,276 76,000 8,264 6,167 0 25,000 3,125 0 21,149 139,705 196,981 472,799 125,000 347,799 104,340 243,459

0 41,418 0 2,066 1,033 50,715 104,997 76,000 8,264 6,167 0 25,000 3,125 0 21,149 139,705 244,702 321,350 125,000 196,350 58,905 137,445

517 0 0 2,066 1,033 9,814 66,466 76,000 8,264 6,167 0 25,000 3,125 0 21,149 139,705 206,171 355,166 125,000 230,166 69,050 161,116

0 0 0 2,066 1,033 9,297 61,634 76,000 8,264 6,167 2,583 25,000 3,125 4,000 21,149 146,287 207,922 420,442 125,000 295,442 88,632 206,809

1,033 0 4,132 2,066 1,033 14,462 61,708 76,000 8,264 6,167 0 25,000 3,125 0 21,149 139,705 201,413 489,257 125,000 364,257 109,277 254,980

517 0 0 2,066 1,033 9,814 54,995 76,000 8,264 6,167 0 25,000 3,125 0 21,149 139,705 194,699 323,876 125,000 198,876 59,663 139,213

517 0 4,132 2,066 1,033 38,946 96,104 76,000 8,264 6,167 0 25,000 3,125 0 21,149 139,705 235,809 399,351 125,000 274,351 82,305 192,046

4,132 82,738 16,528 24,792 12,396 253,391 861,927 912,000 99,168 74,007 7,748 300,000 37,500 12,000 253,784 1,696,207 2,558,133 5,064,826 1,500,000 3,564,826 1,069,448 2,495,378

To be, and be recognized as, the low cost leader furniture store in Surat Thani, as well as provide variety choice to buy for customer

150

Year 3
Year 3 Sale Sale on cash Sale on credit Total sale Cost of goods sold On cash On credit Total cost Gross margin On cash On credit Total Gross margin Operating Expense Fuel Assembly suppliers Expected bad dept Electricity on operating Operating depreciation Total operating Expense Operating income Marketing expense Selling expense Discount sale Sale commission Total selling Expense Advertising expense Radio local Calendar January 391,274 1,169,252 1,560,527 281,303 549,174 830,477 109,972 620,078 730,049 27,465 1,067 55,610 2,176 5,864 92,181 637,868 February 277,091 1,027,856 1,304,947 199,212 482,764 681,975 77,879 545,093 622,972 22,967 0 54,728 2,860 5,864 86,419 536,553 March 543,913 1,076,449 1,620,362 391,041 505,587 896,627 152,872 570,863 723,735 28,518 0 52,528 2,820 5,864 89,729 634,005 April 336,174 1,367,544 1,703,718 241,689 642,308 883,997 94,485 725,236 819,721 29,985 1,067 57,100 3,868 5,864 97,883 721,837 May 393,438 1,979,352 2,372,790 282,858 929,662 1,212,520 110,580 1,049,690 1,160,270 41,761 0 66,205 2,851 5,864 116,680 1,043,590 June 353,519 1,361,528 1,715,046 254,159 639,482 893,641 99,360 722,045 821,405 30,185 0 68,127 2,805 5,864 106,981 714,425 July 542,430 1,041,740 1,584,170 389,975 489,284 879,259 152,455 552,456 704,911 27,881 1,067 68,266 2,855 5,864 105,933 598,978 August 590,580 1,001,662 1,592,242 424,592 470,461 895,052 165,988 531,202 697,190 28,023 0 67,518 2,877 5,864 104,282 592,908 September 464,539 1,209,038 1,673,578 333,976 567,861 901,837 130,563 641,177 771,741 29,455 0 65,933 2,861 5,864 104,113 667,628 October 329,886 1,404,567 1,734,453 237,168 659,697 896,865 92,718 744,870 837,588 30,526 1,067 60,185 2,435 5,864 100,077 737,510 November 417,457 986,205 1,403,663 300,127 463,201 763,328 117,331 523,004 640,335 24,704 0 56,432 3,005 5,864 90,005 550,330 December 553,768 1,157,923 1,711,691 398,126 543,853 941,979 155,642 614,070 769,712 30,126 0 57,594 2,853 5,864 96,436 673,276 Total 5,194,068 14,783,118 19,977,186 3,734,224 6,943,335 10,677,558 1,459,845 7,839,783 9,299,628 351,598 4,268 730,226 34,265 70,363 1,190,721 8,108,907

19,564 31,211 50,774 0 6,402 13,871

13,855 26,099 39,954 0 6,402 0

27,196 32,407 59,603 0 6,402 0

16,809 34,074 50,883 0 6,402 0

19,672 47,456 67,128 0 6,402 0

17,676 34,301 51,977 0 6,402 0

27,122 31,683 58,805 0 6,402 0

29,529 31,845 61,374 0 6,402 0

23,227 33,472 56,699 0 6,402 0

16,494 34,689 51,183 0 6,402 0

20,873 28,073 48,946 0 6,402 0

27,688 34,234 61,922 0 6,402 13,871

259,703 399,544 659,247 0 76,824 27,742

To be, and be recognized as, the low cost leader furniture store in Surat Thani, as well as provide variety choice to buy for customer

151

Brochure Signboard Souvenir Public relation Other Total advertising expense Total marketing expense Administration Expense Salary Utilities expense Insurance expense Office supply Rental land Property tax expense Facia tax Administrative depreciation Total administrative expense Selling and administrative expense Earning before interest and Tax Interest expense Interest income Income Tax Net income

534 42,680 4,268 2,134 1,067 70,956 121,730 76,000 8,536 6,167 2,668 25,000 3,125 4,000 21,149 146,644 268,374 369,494 125,000 244,494 73,348 171,146

534 0 0 2,134 1,067 10,137 50,090 76,000 8,536 6,167 0 25,000 3,125 0 21,149 139,977 190,067 346,486 125,000 221,486 66,446 155,040

0 0 0 2,134 1,067 9,603 69,206 76,000 8,536 6,167 0 25,000 3,125 0 21,149 139,977 209,183 424,822 125,000 299,822 89,947 209,876

534 0 4,268 2,134 1,067 14,405 65,288 76,000 8,536 6,167 0 25,000 3,125 0 21,149 139,977 205,264 516,573 125,000 391,573 117,472 274,101

0 0 0 2,134 1,067 9,603 76,731 76,000 8,536 6,167 2,668 25,000 3,125 4,000 21,149 146,644 223,375 820,215 125,000 695,215 208,564 486,650

0 0 0 2,134 1,067 9,603 61,580 76,000 8,536 6,167 0 25,000 3,125 0 21,149 139,977 201,557 512,868 125,000 387,868 116,360 271,508

0 42,781 0 2,134 1,067 52,384 111,189 76,000 8,536 6,167 0 25,000 3,125 0 21,149 139,977 251,166 347,811 125,000 222,811 66,843 155,968

534 0 0 2,134 1,067 10,137 71,510 76,000 8,536 6,167 0 25,000 3,125 0 21,149 139,977 211,487 381,421 125,000 256,421 76,926 179,494

0 0 0 2,134 1,067 9,603 66,302 76,000 8,536 6,167 2,668 25,000 3,125 4,000 21,149 146,644 212,946 454,682 125,000 329,682 98,905 230,777

1,067 0 4,268 2,134 1,067 14,938 66,121 76,000 8,536 6,167 0 25,000 3,125 0 21,149 139,977 206,098 531,412 125,000 406,412 121,924 284,488

534 0 0 2,134 1,067 10,137 59,083 76,000 8,536 6,167 0 25,000 3,125 0 21,149 139,977 199,060 351,270 125,000 226,270 67,881 158,389

534 0 4,268 2,134 1,067 28,276 90,198 76,000 8,536 6,167 0 25,000 3,125 0 21,149 139,977 230,175 443,101 125,000 318,101 95,430 222,671

4,268 85,461 17,072 25,608 12,804 249,779 909,027 912,000 102,432 74,007 8,003 300,000 37,500 12,000 253,784 1,699,726 2,608,752 5,500,155 1,500,000 4,000,155 1,200,046 2,800,108

To be, and be recognized as, the low cost leader furniture store in Surat Thani, as well as provide variety choice to buy for customer

152

Year 4
Year 4 Sale Sale on cash Sale on credit Total sale Cost of goods sold On cash On credit Total cost Gross margin On cash On credit Total Gross margin Operating Expense Fuel Assembly suppliers Expect bed dept Electricity on operating Operating depreciation Total operating Expense Operating income Marketing expense Selling expense Discount sale Sale commission Other selling expense Total selling Expense Advertising expense Radio local January 421,372 1,259,195 1,680,567 302,941 591,419 894,360 118,431 667,776 786,207 30,418 1,102 60,169 2,416 5,864 99,970 686,237 February 298,406 1,106,922 1,405,328 214,536 519,899 734,435 83,870 587,023 670,893 25,436 0 59,148 3,177 5,864 93,625 577,268 March 585,752 1,159,253 1,745,005 421,121 544,478 965,598 164,631 614,775 779,406 31,585 0 56,695 3,132 5,864 97,275 682,131 April 362,033 1,472,740 1,834,773 260,280 691,716 951,996 101,753 781,023 882,776 33,209 1,102 61,560 4,296 5,864 106,032 776,745 May 423,702 2,131,610 2,555,312 304,616 1,001,175 1,305,791 119,086 1,130,435 1,249,521 46,251 0 71,297 3,166 5,864 126,578 1,122,943 June 380,712 1,466,261 1,846,973 273,709 688,673 962,383 107,003 777,587 884,590 33,430 0 73,368 3,115 5,864 115,777 768,813 July 584,156 1,121,874 1,706,030 419,973 526,922 946,895 164,183 594,952 759,135 30,879 1,102 73,517 3,171 5,864 114,534 644,601 August 636,009 1,078,713 1,714,723 457,253 506,650 963,903 178,757 572,063 750,820 31,036 0 72,712 3,195 5,864 112,807 638,013 September 500,273 1,302,041 1,802,314 359,666 611,543 971,209 140,607 690,499 831,105 32,622 0 71,005 3,178 5,864 112,668 718,437 October 355,261 1,512,611 1,867,872 255,412 710,443 965,855 99,850 802,168 902,018 33,808 1,102 64,815 2,705 5,864 108,294 793,724 November 449,569 1,062,067 1,511,637 323,213 498,832 822,045 126,356 563,235 689,591 27,361 0 60,773 3,338 5,864 97,335 592,257 December 596,366 1,246,994 1,843,360 428,751 585,688 1,014,439 167,615 661,306 828,921 33,365 0 62,024 3,191 5,864 104,444 724,477 Total 5,593,612 15,920,281 21,513,893 4,021,472 7,477,438 11,498,909 1,572,141 8,442,843 10,014,984 389,401 4,409 787,084 0 70,363 1,289,338 8,725,646

21,069 33,611 0 54,680 0 6,613

14,920 28,107 0 43,027 0 6,613

29,288 34,900 0 64,188 0 6,613

18,102 36,695 0 54,797 0 6,613

21,185 51,106 0 72,291 0 6,613

19,036 36,939 0 55,975 0 6,613

29,208 34,121 0 63,328 0 6,613

31,800 34,294 0 66,095 0 6,613

25,014 36,046 0 61,060 0 6,613

17,763 37,357 0 55,121 0 6,613

22,478 30,233 0 52,711 0 6,613

29,818 36,867 0 66,685 0 6,613

279,681 430,278 0 709,958 0 79,358

To be, and be recognized as, the low cost leader furniture store in Surat Thani, as well as provide variety choice to buy for customer

153
Calendar Brochure Signboard Souvenir Public relation Other Total advertising expense Total marketing expense Administration Expense Salary Utilities expense Insurance expense Office supply Rental land Property tax expense Facia tax Administrative depreciation Total adminstrative expense Selling and administrative expense Earning before interest and Tax Interest expense Interest income Income Tax Net operating income 14,329 551 44,088 4,409 2,204 1,102 73,296 127,976 76,000 8,818 6,167 2,756 25,000 3,125 4,000 21,149 147,014 274,990 411,247 125,000 286,247 85,874 200,373 0 551 0 0 2,204 1,102 10,471 53,498 76,000 8,818 6,167 0 25,000 3,125 0 21,149 140,259 193,756 383,512 125,000 258,512 77,553 180,958 0 0 0 0 2,204 1,102 9,920 74,107 76,000 8,818 6,167 0 25,000 3,125 0 21,149 140,259 214,366 467,765 125,000 342,765 102,830 239,936 0 551 0 4,409 2,204 1,102 14,880 69,677 76,000 8,818 6,167 0 25,000 3,125 0 21,149 140,259 209,935 566,809 125,000 441,809 132,543 309,267 0 0 0 0 2,204 1,102 9,920 82,211 76,000 8,818 6,167 2,756 25,000 3,125 4,000 21,149 147,014 229,225 893,718 125,000 768,718 230,615 538,102 0 0 0 0 2,204 1,102 9,920 65,895 76,000 8,818 6,167 0 25,000 3,125 0 21,149 140,259 206,153 562,660 125,000 437,660 131,298 306,362 0 0 44,193 0 2,204 1,102 54,113 117,441 76,000 8,818 6,167 0 25,000 3,125 0 21,149 140,259 257,699 386,902 125,000 261,902 78,571 183,331 0 551 0 0 2,204 1,102 10,471 76,566 76,000 8,818 6,167 0 25,000 3,125 0 21,149 140,259 216,824 421,188 125,000 296,188 88,857 207,332 0 0 0 0 2,204 1,102 9,920 70,980 76,000 8,818 6,167 2,756 25,000 3,125 4,000 21,149 147,014 217,994 500,443 125,000 375,443 112,633 262,810 0 1,102 0 4,409 2,204 1,102 15,431 70,551 76,000 8,818 6,167 0 25,000 3,125 0 21,149 140,259 210,810 582,914 125,000 457,914 137,374 320,540 0 551 0 0 2,204 1,102 10,471 63,182 76,000 8,818 6,167 0 25,000 3,125 0 21,149 140,259 203,441 388,816 125,000 263,816 79,145 184,671 14,329 551 0 4,409 2,204 1,102 29,208 95,894 76,000 8,818 6,167 0 25,000 3,125 0 21,149 140,259 236,152 488,324 125,000 363,324 108,997 254,327 28,657 4,409 88,281 17,635 26,453 13,226 258,020 967,978 912,000 105,811 74,007 8,267 300,000 37,500 12,000 253,784 1,703,369 2,671,347 6,054,299 1,500,000 4,554,299 1,366,290 3,188,010

To be, and be recognized as, the low cost leader furniture store in Surat Thani, as well as provide variety choice to buy for customer

154 Year 5
Year 5 Sale Sale on cash Sale on credit Total sale Cost of goods sold On cash On credit Total cost Gross margin On cash On credit Total Gross margin Operating Expense Fuel Assembly suppliers Expected bad dept Electricity on operating Operating depreciation Total operating Expense Operating income Marketing expense Selling expense Discount sale Sale commission Total selling Expense Advertising expense Radio local Calendar January 454,814 1,359,131 1,813,945 325,429 644,554 969,983 129,386 714,577 843,962 33,739 1,139 64,828 2,702 5,864 108,272 735,690 February 322,089 1,194,773 1,516,862 230,461 566,609 797,070 91,628 628,164 719,792 28,214 0 63,756 3,545 5,864 101,378 618,414 March 632,240 1,251,257 1,883,497 452,381 593,396 1,045,777 179,860 657,861 837,721 35,033 0 61,142 3,503 5,864 105,542 732,178 April 390,766 1,589,624 1,980,390 279,601 753,863 1,033,464 111,165 835,761 946,926 36,835 1,139 66,418 4,808 5,864 115,063 831,862 May 457,329 2,300,785 2,758,115 327,228 1,091,124 1,418,353 130,101 1,209,661 1,339,762 51,301 0 76,956 3,541 5,864 137,661 1,202,101 June 410,928 1,582,630 1,993,558 294,027 750,547 1,044,574 116,901 832,084 948,984 37,080 0 79,191 3,476 5,864 125,611 823,374 July 630,517 1,210,911 1,841,429 451,148 574,263 1,025,410 179,370 636,649 816,018 34,251 1,139 79,352 3,537 5,864 124,142 691,877 August 686,486 1,164,325 1,850,812 491,195 552,170 1,043,364 195,292 612,156 807,447 34,425 0 78,483 3,569 5,864 122,341 685,107 September 539,977 1,405,378 1,945,355 386,364 666,486 1,052,851 153,613 738,892 892,504 36,184 0 76,640 3,555 5,864 122,242 770,262 October 383,457 1,632,659 2,016,116 274,371 774,272 1,048,643 109,086 858,387 967,473 37,500 1,139 69,959 3,020 5,864 117,481 849,992 November 485,250 1,146,358 1,631,608 347,206 543,649 890,855 138,044 602,709 740,753 30,348 0 65,596 3,725 5,864 105,533 635,220 December 643,696 1,345,962 1,989,658 460,578 638,309 1,098,887 183,119 707,653 890,772 37,008 0 66,947 3,725 5,864 113,543 777,228 Total 6,037,550 17,183,795 23,221,345 0 4,319,988 8,149,243 12,469,231 0 1,717,562 9,034,552 10,752,114 0 431,917 4,554 849,268 42,708 70,363 1,398,810 9,353,305 0 301,877 464,427 766,304 0 81,972 29,601

22,741 36,279 59,020 0 6,831 14,801

16,104 30,337 46,442 0 6,831 0

31,612 37,670 69,282 0 6,831 0

19,538 39,608 59,146 0 6,831 0

22,866 55,162 78,029 0 6,831 0

20,546 39,871 60,418 0 6,831 0

31,526 36,829 68,354 0 6,831 0

34,324 37,016 71,341 0 6,831 0

26,999 38,907 65,906 0 6,831 0

19,173 40,322 59,495 0 6,831 0

24,262 32,632 56,895 0 6,831 0

32,185 39,793 71,978 0 6,831 14,801

To be, and be recognized as, the low cost leader furniture store in Surat Thani, as well as provide variety choice to buy for customer

155
Brochure Signboard Souvenir Public relation Other Total advertising expense Total marketing expense Administration Expense Salary Utilities expense Insurance expense Office supply Rental land Property tax expense Facia tax Administrative depreciation Total administrative expense Selling and administrative expense Earning before interest and Tax Interest expense Interest income Income Tax Net operating income 569 45,540 4,554 2,277 1,139 75,710 134,730 76,000 9,108 6,167 2,846 25,000 3,125 4,000 21,149 147,395 282,125 453,565 125,000 328,565 98,570 229,996 569 0 0 2,277 1,139 10,816 57,257 76,000 9,108 6,167 0 25,000 3,125 0 21,149 140,549 197,806 420,607 125,000 295,607 88,682 206,925 0 0 0 2,277 1,139 10,247 79,528 76,000 9,108 6,167 0 25,000 3,125 0 21,149 140,549 220,077 512,101 125,000 387,101 116,130 270,971 569 0 4,554 2,277 1,139 15,370 74,516 76,000 9,108 6,167 0 25,000 3,125 0 21,149 140,549 215,065 616,798 125,000 491,798 147,539 344,258 0 0 0 2,277 1,139 10,247 88,275 76,000 9,108 6,167 2,846 25,000 3,125 4,000 21,149 147,395 235,670 966,430 125,000 841,430 252,429 589,001 0 0 0 2,277 1,139 10,247 70,664 76,000 9,108 6,167 0 25,000 3,125 0 21,149 140,549 211,213 612,161 125,000 487,161 146,148 341,013 0 45,648 0 2,277 1,139 55,895 124,249 76,000 9,108 6,167 0 25,000 3,125 0 21,149 140,549 264,798 427,079 125,000 302,079 90,624 211,455 569 0 0 2,277 1,139 10,816 82,156 76,000 9,108 6,167 0 25,000 3,125 0 21,149 140,549 222,705 462,402 125,000 337,402 101,220 236,181 0 0 0 2,277 1,139 10,247 76,152 76,000 9,108 6,167 2,846 25,000 3,125 4,000 21,149 147,395 223,548 546,714 125,000 421,714 126,514 295,200 1,139 0 4,554 2,277 1,139 15,939 75,434 76,000 9,108 6,167 0 25,000 3,125 0 21,149 140,549 215,983 634,009 125,000 509,009 152,703 356,306 569 0 0 2,277 1,139 10,816 67,710 76,000 9,108 6,167 0 25,000 3,125 0 21,149 140,549 208,259 426,961 125,000 301,961 90,588 211,372 569 0 4,554 2,277 1,139 30,170 102,148 76,000 9,108 6,167 0 25,000 3,125 0 21,149 140,549 242,697 534,531 125,000 409,531 122,859 286,672 4,554 91,188 18,216 27,324 13,662 266,517 1,032,822 912,000 109,296 74,007 8,539 300,000 37,500 12,000 253,784 1,707,126 2,739,947 6,613,357 1,500,000 5,113,357 1,534,007 3,579,350

To be, and be recognized as, the low cost leader furniture store in Surat Thani, as well as provide variety choice to buy for customer

156 Table of cash flow statement Year 1
Year 1 January Cash flow from operating activity Cash inflow Cash received on cash sale 334,422 Cash received on credit sale 189,879 Adjust depreciation 5,864 Cash inflow from operating activity 530,165 Cash out flow Purchasing inventory 2,000,000 Cash paid for operating expense 44,998 Cash paid for income tax Cash out flow from operating activity 2,044,998 Net cash flow form Operating activity -1,514,833 Cash flow from selling and administrative activity Cash inflow Adjust depreciation 21,149 Adjust rental land 25,000 Cash inflow from S and A activity 46,149 Cash outflow Marketing expense 109,897 Administrative expense 153,941 Cash outflow from S and A activity 263,838 Net cash flow form S and A activity -217,689 Cash flow Cash received from sold equipment Cash inflow from investment activity Cash outflow 351,815 Cash paid investment on operating (fixed) February March April May June July August September October November December CF year 1

236,830 356,795 5,864 599,489 756,046 45,425 801,471 -201,982

464,883 531,603 5,864 1,002,350 745,176 59,068 804,244 198,105

287,328 753,683 5,864 1,046,875 1,022,035 73,770 1,095,805 -48,930

336,272 1,075,116 5,864 1,417,252 753,321 98,374 851,695 565,557

302,153 1,106,341 5,864 1,414,357 741,411 90,649 545,180 1,377,241 37,116

463,616 1,108,595 5,864 1,578,075 754,771 89,951 844,722 733,353

504,769 1,096,450 5,864 1,607,083 760,348 88,443 848,792 758,292

397,042 1,070,710 5,864 1,473,616 756,011 88,230 844,241 629,375

281,953 977,369 5,864 1,265,186 643,596 84,843 728,440 536,746

356,801 916,419 5,864 1,279,084 794,268 76,394 870,662 408,422

473,306 935,287 5,864 1,414,456 756,441 81,644 397,527 1,235,612 178,844

4,439,375 10,118,248 70,363 14,627,986 10,483,425 921,790 942,707 12,347,922 2,280,065

21,149 25,000 46,149 43,648 139,441 183,089 -136,941

21,149 25,000 46,149 59,943 139,441 199,384 -153,235

21,149 25,000 46,149 56,990 148,441 205,431 -159,282

21,149 25,000 46,149 66,374 141,941 208,315 -162,166

21,149 25,000 46,149 53,425 139,441 192,866 -146,717

21,149 25,000 46,149 99,356 145,441 244,797 -198,648

21,149 25,000 46,149 61,956 139,441 201,397 -155,249

21,149 25,000 46,149 57,460 141,941 199,401 -153,253

21,149 25,000 46,149 57,746 142,441 200,187 -154,039

21,149 25,000 46,149 51,334 139,441 190,775 -144,627

21,149 25,000 46,149 79,425 139,441 218,866 -172,717

253,784 300,000 553,784 797,554 1,710,791 2,508,345 -1,954,561

351,815

To be, and be recognized as, the low cost leader furniture store in Surat Thani, as well as provide variety choice to buy for customer

157
Cash paid investment on administrative (fixed) Cash paid for prepaid rental land (current) Cash outflow from investment activity Net cash flow form investment activity Cash flow form financing activity cash inflow Borrowing cash Cash inflow from financing activity cash outflow Repayment the principle Interest payment Cash outflow from financing activity Net cash flow from investment activity Net cash increase or decrease Beginning cash Ending cash 4,683,641 300,000 5,335,456 -5,335,456 4,683,641 300,000 5,335,456 -5,335,456

0 0

0 0

0 0

0 0

0 0

0 0

0 0

0 0

0 0

0 0

0 0

10,000,000 10,000,000

0

0

0

0

0

0

0

0

0

0

0

10,000,000 10,000,000

125,000 125,000 9,875,000 2,807,022 0 2,807,022

125,000 125,000 -125,000 -463,923 2,807,022 2,343,099

125,000 125,000 -125,000 -80,129 2,343,099 2,262,969

125,000 125,000 -125,000 -333,212 2,262,969 1,929,758

125,000 125,000 -125,000 278,390 1,929,758 2,208,148

125,000 125,000 -125,000 -234,601 2,208,148 1,973,547

125,000 125,000 -125,000 409,705 1,973,547 2,383,252

125,000 125,000 -125,000 478,043 2,383,252 2,861,295

125,000 125,000 -125,000 351,122 2,861,295 3,212,418

125,000 125,000 -125,000 257,708 3,212,418 3,470,125

125,000 125,000 -125,000 138,795 3,470,125 3,608,920

125,000 125,000 -125,000 -118,873 3,608,920 3,490,047

1,500,000 1,500,000 8,500,000 3,490,047 0 3,490,047

To be, and be recognized as, the low cost leader furniture store in Surat Thani, as well as provide variety choice to buy for customer

158

Year 2
Year 2 January Cash flow from operating activity Cash inflow Cash received on cash sale 361,176 Cash received on credit sale 977,692 Adjust depreciation 5,864 Cash inflow from operating activity 1,344,732 Cash out flow Purchasing inventory 621,883 Cash paid for operating expense 84,908 Cash paid for income tax 706,791 Cash out flow from operating activity Net cash flow form Operating activity 637,941 Cash flow from selling and administrative activity Cash inflow Adjust depreciation 21,149 Adjust rental land 25,000 Cash inflow from S and A activity 46,149 Cash outflow Marketing expense 115,563 Administrative expense 146,287 Cash outflow from S and A activity 261,850 Net cash flow form S and A activity -215,702 Cash flow Cash received from sold equipment 0 0 Cash inflow from investment activity Cash outflow Cash paid investment on operating (fixed) 0 0 Cash paid investment on administrative (fixed) February March April May June July August September October November December CF year 2

255,776 961,623 5,864 1,223,263 814,758 79,591 894,349 328,914

502,073 922,323 5,864 1,430,260 806,469 82,476 888,945 541,315

310,314 1,002,017 5,864 1,318,194 1,107,260 89,948 1,197,208 120,987

363,173 1,161,126 5,864 1,530,163 815,050 106,948 921,997 608,165

326,325 1,194,848 5,864 1,527,036 798,831 98,290 601,615 1,498,736 28,300

500,705 1,197,283 5,864 1,703,851 812,568 97,428 909,996 793,856

545,151 1,184,166 5,864 1,735,181 820,807 95,857 916,665 818,516

428,805 1,156,367 5,864 1,591,036 818,387 95,671 914,058 676,978

304,510 1,055,559 5,864 1,365,932 694,356 91,976 786,332 579,600

385,345 989,733 5,864 1,380,942 856,250 82,757 939,007 441,934

511,171 1,010,110 5,864 1,527,144 830,477 88,612 467,833 1,386,922 140,222

21,149 25,000 46,149 46,694 139,705 186,399 -140,250 0 0 0 0

21,149 25,000 46,149 64,315 139,705 204,020 -157,871 0 0 0 0

21,149 25,000 46,149 60,914 139,705 200,619 -154,471 0 0 0 0

21,149 25,000 46,149 71,261 146,287 217,548 -171,400 0 0 0 0

21,149 25,000 46,149 57,276 139,705 196,981 -150,832 0 0 0 0

21,149 25,000 46,149 104,997 139,705 244,702 -198,553 0 0 0 0

21,149 25,000 46,149 66,466 139,705 206,171 -160,023 0 0 0 0

21,149 25,000 46,149 61,634 146,287 207,922 -161,773 0 0 0 0

21,149 25,000 46,149 61,708 139,705 201,413 -155,264 0 0 0 0

21,149 25,000 46,149 54,995 139,705 194,699 -148,551 0 0 0 0

21,149 25,000 46,149 96,104 139,705 235,809 -189,661 0 0 0 0

4,794,525 12,812,846 70,363 17,677,734 0 9,797,096 1,094,461 1,069,448 11,961,005 5,716,729 0 0 253,784 300,000 553,784 0 861,927 1,696,207 2,558,133 -2,004,349 0 0 0 0 0 0

To be, and be recognized as, the low cost leader furniture store in Surat Thani, as well as provide variety choice to buy for customer

159

Cash paid for prepaid rental land (current) Cash outflow from investment activity Net cash flow form investment activity Cash flow form financing activity cash inflow Borrowing cash Cash inflow from financing activity cash outflow Repayment the principle Interest payment Cash outflow from financing activity Net cash flow from investment activity Net cash increase or decrease Beginning cash Ending cash

300,000 300,000 -300,000

0 0 0

0 0 0

0 0 0

0 0 0

0 0 0

0 0 0

0 0 0

0 0 0

0 0 0

0 0 0

0 0 0

0 0

0 0

0 0

0 0

0 0

0 0

0 0

0 0

0 0

0 0

0 0

0 0

125,000 125,000 -125,000 -2,760 3,490,047 3,487,287

125,000 125,000 -125,000 63,664 3,487,287 3,550,951

125,000 125,000 -125,000 258,444 3,550,951 3,809,395

125,000 125,000 -125,000 -158,484 3,809,395 3,650,911

125,000 125,000 -125,000 311,766 3,650,911 3,962,677

125,000 125,000 -125,000 -247,532 3,962,677 3,715,145

125,000 125,000 -125,000 470,303 3,715,145 4,185,448

125,000 125,000 -125,000 533,494 4,185,448 4,718,942

125,000 125,000 -125,000 390,205 4,718,942 5,109,147

125,000 125,000 -125,000 299,336 5,109,147 5,408,483

125,000 125,000 -125,000 168,384 5,408,483 5,576,866

125,000 125,000 -125,000 -174,439 5,576,866 5,402,427

300,000 300,000 -300,000 0 0 0 0 0 0 1,500,000 1,500,000 -1,500,000 1,912,380 3,490,047 5,402,427

To be, and be recognized as, the low cost leader furniture store in Surat Thani, as well as provide variety choice to buy for customer

160 Year 3
Year 3 January Cash flow from operating activity Cash inflow Cash received on cash sale 391,274 Cash received on credit sale 1,056,591 Adjust depreciation 5,864 Cash inflow from operating activity 1,453,729 Cash out flow Purchasing inventory 681,975 Cash paid for operating expense 92,181 Cash paid for income tax 774,157 Cash out flow from operating activity Net cash flow form Operating activity 679,572 Cash flow from selling and administrative activity Cash inflow Adjust depreciation 21,149 Adjust rental land 25,000 Cash inflow from S and A activity 46,149 Cash outflow Marketing expense 121,730 Administrative expense 146,644 268,374 Cash outflow from S and A activity Net cash flow form S and A activity -222,225 Cash flow Cash received from sold equipment 0 Cash inflow from investment activity Cash outflow Cash paid investment on operating (fixed) 0 0 Cash paid investment on administrative (fixed) February March April May June July August September October November December CF year 3

277,091 1,039,837 5,864 1,322,792 896,627 86,419 983,046 339,746

543,913 998,023 5,864 1,547,799 883,997 89,729 973,726 574,073

336,174 1,084,891 5,864 1,426,928 1,212,520 97,883 1,310,404 116,525

393,438 1,257,886 5,864 1,657,188 893,641 116,680 1,010,321 646,867

353,519 1,294,419 5,864 1,653,801 879,259 106,981 672,137 1,658,377 -4,576

542,430 1,297,056 5,864 1,845,350 895,052 105,933 1,000,986 844,365

590,580 1,282,847 5,864 1,879,291 901,837 104,282 1,006,119 873,171

464,539 1,252,731 5,864 1,723,134 896,865 104,113 1,000,978 722,156

329,886 1,143,522 5,864 1,479,271 763,328 100,077 863,405 615,866

417,457 1,072,210 5,864 1,495,531 941,979 90,005 1,031,985 463,547

553,768 1,094,285 5,864 1,653,917 894,360 96,436 527,909 1,518,706 135,211

21,149 25,000 46,149 50,090 139,977 190,067 -143,918

21,149 25,000 46,149 69,206 139,977 209,183 -163,034

21,149 25,000 46,149 65,288 139,977 205,264 -159,116

21,149 25,000 46,149 76,731 146,644 223,375 -177,226

21,149 25,000 46,149 61,580 139,977 201,557 -155,408

21,149 25,000 46,149 111,189 139,977 251,166 -205,018

21,149 25,000 46,149 71,510 139,977 211,487 -165,339

21,149 25,000 46,149 66,302 146,644 212,946 -166,797

21,149 25,000 46,149 66,121 139,977 206,098 -159,950

21,149 25,000 46,149 59,083 139,977 199,060 -152,911

21,149 25,000 46,149 90,198 139,977 230,175 -184,026

5,194,068 13,874,300 70,363 19,138,731 0 10,741,441 1,190,721 1,200,046 13,132,209 6,006,522 0 0 253,784 300,000 553,784 0 909,027 1,699,726 2,608,752 -2,054,968 0 0 0 0 0 0

To be, and be recognized as, the low cost leader furniture store in Surat Thani, as well as provide variety choice to buy for customer

161
Cash paid for prepaid rental land (current) Cash outflow from investment activity Net cash flow form investment activity Cash flow form financing activity cash inflow Borrowing cash Cash inflow from financing activity cash outflow Repayment the principle Interest payment Cash outflow from financing activity Net cash flow from investment activity Net cash increase or decrease Beginning cash Ending cash 300,000 300,000 -300,000 300,000 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 300,000 -300,000 0 0 0 0 0 0 1,500,000 -1,500,000 -1,500,000 2,151,554 5,402,427 7,553,982

0

0 125,000 -125,000 -125,000 32,347 5,402,427 5,434,774

125,000 -125,000 -125,000 70,827 5,434,774 5,505,602

125,000 -125,000 -125,000 286,039 5,505,602 5,791,641

125,000 -125,000 -125,000 -167,591 5,791,641 5,624,050

125,000 -125,000 -125,000 344,640 5,624,050 5,968,690

125,000 -125,000 -125,000 -284,985 5,968,690 5,683,705

125,000 -125,000 -125,000 514,347 5,683,705 6,198,052

125,000 -125,000 -125,000 582,833 6,198,052 6,780,885

125,000 -125,000 -125,000 430,359 6,780,885 7,211,244

125,000 -125,000 -125,000 330,916 7,211,244 7,542,160

125,000 -125,000 -125,000 185,636 7,542,160 7,727,796

125,000 -125,000 -125,000 -173,815 7,727,796 7,553,982

To be, and be recognized as, the low cost leader furniture store in Surat Thani, as well as provide variety choice to buy for customer

162 Year 4
Year 4 January Cash flow from operating activity Cash inflow Cash received on cash sale 421,372 Cash received on credit sale 1,143,217 Adjust depreciation 5,864 1,570,452 Cash inflow from operating activity Cash out flow Purchasing inventory 734,435 Cash paid for operating expense 99,970 Cash paid for income tax 834,405 Cash out flow from operating activity Net cash flow form Operating activity 736,048 Cash flow from selling and administrative activity Cash inflow Adjust depreciation 21,149 Adjust rental land 25,000 46,149 Cash inflow from S and A activity Cash outflow Marketing expense 127,976 Administrative expense 147,014 274,990 Cash outflow from S and A activity Net cash flow form S and A activity -228,842 Cash flow Cash received from sold equipment 0 Cash inflow from investment activity Cash outflow Cash paid investment on operating (fixed) 0 10,600 Cash paid investment on administrative (fixed) February March April May June July August September October November December CF year 4

298,406 1,123,814 5,864 1,428,084 965,598 93,625 1,059,223 368,860

585,752 1,077,205 5,864 1,668,820 951,996 97,275 1,049,272 619,549

362,033 1,169,646 5,864 1,537,543 1,305,791 106,032 1,411,823 125,720

423,702 1,354,647 5,864 1,784,212 962,383 126,578 1,088,961 695,252

380,712 1,393,989 5,864 1,780,565 946,895 115,777 760,713 1,823,385 -42,820

584,156 1,396,830 5,864 1,986,849 963,903 114,534 1,078,436 908,413

636,009 1,381,527 5,864 2,023,400 971,209 112,807 1,084,016 939,384

500,273 1,349,095 5,864 1,855,231 965,855 112,668 1,078,523 776,709

355,261 1,231,485 5,864 1,592,610 822,045 108,294 930,339 662,271

449,569 1,154,688 5,864 1,610,121 1,014,439 97,335 1,111,774 498,347

596,366 1,178,461 5,864 1,780,690 969,983 104,444 605,576 1,680,003 100,687

21,149 25,000 46,149 53,498 140,259 193,756 -147,608

21,149 25,000 46,149 74,107 140,259 214,366 -168,217

21,149 25,000 46,149 69,677 140,259 209,935 -163,787

21,149 25,000 46,149 82,211 147,014 229,225 -183,077

21,149 25,000 46,149 65,895 140,259 206,153 -160,005

21,149 25,000 46,149 117,441 140,259 257,699 -211,551

21,149 25,000 46,149 76,566 140,259 216,824 -170,676

21,149 25,000 46,149 70,980 147,014 217,994 -171,845

21,149 25,000 46,149 70,551 140,259 210,810 -164,661

21,149 25,000 46,149 63,182 140,259 203,441 -157,292

21,149 25,000 46,149 95,894 140,259 236,152 -190,004

5,593,612 14,954,604 70,363 20,618,580 0 11574532.2 1,289,338 1,366,290 14,230,160 6,388,420 0 0 253,784 300,000 553,784 0 967,978 1,703,369 2,671,347 -2,117,563 0 0 0 0 0 10,600

To be, and be recognized as, the low cost leader furniture store in Surat Thani, as well as provide variety choice to buy for customer

163
Cash paid for prepaid rental land (current) Cash outflow from investment activity Net cash flow form investment activity Cash flow form financing activity cash inflow Borrowing cash Cash inflow from financing activity cash outflow Repayment the principle Interest payment Cash outflow from financing activity Net cash flow from investment activity Net cash increase or decrease Beginning cash Ending cash 300,000 300,000 -300,000 300,000 300,000 -300,000 0 0 0 0 0 0 1,500,000 1,500,000 -1,500,000 2,470,857 7,553,982 10,024,839

0 0

0 0

0 0

0 0

0 0

0 0

0 0

0 0

0 0

0 0

0 0

0

0 125,000 125,000 -125,000 82,206 7,553,982 7,636,188

125,000 125,000 -125,000 96,253 7,636,188 7,732,440

125,000 125,000 -125,000 326,331 7,732,440 8,058,772

125,000 125,000 -125,000 -163,066 8,058,772 7,895,705

125,000 125,000 -125,000 387,175 7,895,705 8,282,881

125,000 125,000 -125,000 -327,825 8,282,881 7,955,056

125,000 125,000 -125,000 571,863 7,955,056 8,526,919

125,000 125,000 -125,000 643,708 8,526,919 9,170,627

125,000 125,000 -125,000 479,863 9,170,627 9,650,490

125,000 125,000 -125,000 372,610 9,650,490 10,023,100

125,000 125,000 -125,000 216,055 10,023,100 10,239,155

125,000 125,000 -125,000 -214,317 10,239,155 10,024,839

To be, and be recognized as, the low cost leader furniture store in Surat Thani, as well as provide variety choice to buy for customer

164 Year 5
Year 5
Cash flow from operating activity Cash inflow Cash received on cash sale Cash received on credit sale Adjust depreciation Cash inflow from operating activity Cash out flow Purchasing inventory Cash paid for operating expense Cash paid for income tax Cash out flow from operating activity Net cash flow form Operating activity C&S Cash inflow Adjust depreciation Adjust rental land Cash inflow from S and A activity Cash outflow Marketing expense Administrative expense Cash outflow from S and A activity Net cash flow form S and A activity Cash flow Cash received from sold equipment Cash inflow from investment activity Cash outflow Cash paid investment on operating (fixed) Cash paid investment on administrative (fixed)

January

February

March

April

May

June

July

August

September

October

November

December

CF year 5

454,814 1,231,740 5,864 1,692,419 797,070 108,272 905,342 787,076

322,089 1,211,359 5,864 1,539,312 1,045,777 101,378 1,147,155 392,157

632,240 1,161,702 5,864 1,799,806 1,033,464 105,542 1,139,006 660,800

390,766 1,261,938 5,864 1,658,568 1,418,353 115,063 1,533,416 125,151

457,329 1,462,158 5,864 1,925,351 1,044,574 137,661 1,182,235 743,116

410,928 1,504,623 5,864 1,921,414 1,025,410 125,611 849,499 2,000,520 -79,105

630,517 1,507,690 5,864 2,144,070 1,043,364 124,142 1,167,506 976,564

686,486 1,491,173 5,864 2,183,522 1,052,851 122,341 1,175,192 1,008,331

539,977 1,456,166 5,864 2,002,007 1,048,643 122,242 1,170,886 831,121

383,457 1,329,222 5,864 1,718,542 890,855 117,481 1,008,336 710,207

485,250 1,246,330 5,864 1,737,443 1,098,887 105,533 1,204,420 533,024

643,696 1,271,990 5,864 1,921,550 1,098,887 113,543 684,509 1,896,938 24,611

21,149 25,000 46,149 134,730 147,395 282,125 -235,976

21,149 25,000 46,149 57,257 140,549 197,806 -151,658

21,149 25,000 46,149 79,528 140,549 220,077 -173,929

21,149 25,000 46,149 74,516 140,549 215,065 -168,916

21,149 25,000 46,149 88,275 147,395 235,670 -189,522

21,149 25,000 46,149 70,664 140,549 211,213 -165,064

21,149 25,000 46,149 124,249 140,549 264,798 -218,649

21,149 25,000 46,149 82,156 140,549 222,705 -176,557

21,149 25,000 46,149 76,152 147,395 223,548 -177,399

21,149 25,000 46,149 75,434 140,549 215,983 -169,834

21,149 25,000 46,149 67,710 140,549 208,259 -162,111

21,149 25,000 46,149 102,148 140,549 242,697 -196,548

0 0 0

0 0 0

0 0 0

0 0 0

0 0 0

0 0 0

0 0 0

0 0 0

0 0 0

0 0 0

0 0 0

0 0 0

6,037,550 16,136,092 70,363 22,244,004 0 12,598,134 1,398,810 1,534,007 15,530,951 6,713,053 0 0 253,784 300,000 553,784 0 1,032,822 1,707,126 2,739,947 -2,186,163 0 0 0 0 0 0

To be, and be recognized as, the low cost leader furniture store in Surat Thani, as well as provide variety choice to buy for customer

165

Cash paid for prepaid rental land (current) Cash outflow from investment activity Net cash flow form investment activity Cash flow form financing activity cash inflow Borrowing cash Cash inflow from financing activity cash outflow Repayment the principle Interest payment Cash outflow from financing activity Net cash flow from investment activity Net cash increase or decrease Beginning cash Ending cash

300,000 300,000 -300,000

0 0 0

0 0 0

0 0 0

0 0 0

0 0 0

0 0 0

0 0 0

0 0 0

0 0 0

0 0 0

0 0 0

300,000 300,000 -300,000 0 0 0 0 0 10,000,000 1,500,000 11,500,000 -11,500,000 -7,273,110 10,024,839 2,751,729

0 10,000,000 125,000 10,125,000 -10,125,000 -10,296,937 13,048,666 2,751,729

125,000 125,000 -125,000 126,100 10,024,839 10,150,939

125,000 125,000 -125,000 115,499 10,150,939 10,266,438

125,000 125,000 -125,000 361,871 10,266,438 10,628,309

125,000 125,000 -125,000 -168,765 10,628,309 10,459,545

125,000 125,000 -125,000 428,595 10,459,545 10,888,139

125,000 125,000 -125,000 -369,170 10,888,139 10,518,970

125,000 125,000 -125,000 632,915 10,518,970 11,151,885

125,000 125,000 -125,000 706,774 11,151,885 11,858,659

125,000 125,000 -125,000 528,722 11,858,659 12,387,381

125,000 125,000 -125,000 415,372 12,387,381 12,802,753

125,000 125,000 -125,000 245,913 12,802,753 13,048,666

To be, and be recognized as, the low cost leader furniture store in Surat Thani, as well as provide variety choice to buy for customer

166 Table of Balance sheet statement Year 1
Balance sheet 1 Asset Current asset Cash Inventory Prepaid land expense Account receivable Total current asset Fixed Asset Operating fixed asset ( Accumulative depreciation) Administrative asset ( Accumulative depreciation) Total fixed asset Total asset Liability and Equity Liability Income tax payable Long term note payable Total laibility Equity Retain earning Total owner equity Total laibility and Equity January February March April May June July August September October November December

2,807,022 1,299,856 275,000 809,482 5,191,360 351,815 -5,864 4,683,641 -21,149 5,008,444 10,199,804

2,343,099 1,481,003 250,000 1,331,197 5,405,298 351,815 -11,727 4,683,641 -42,297 4,981,431 10,386,730

2,262,969 1,470,133 225,000 1,719,635 5,677,737 351,815 -17,591 4,683,641 -63,446 4,954,419 10,632,157

1,929,758 1,746,992 200,000 2,134,793 6,011,542 351,815 -23,454 4,683,641 -84,595 4,927,407 10,938,949

2,208,148 1,478,278 175,000 2,751,431 6,612,856 351,815 -29,318 4,683,641 -105,743 4,900,395 11,513,251

1,973,547 1,466,368 150,000 2,808,789 6,398,704 351,815 -35,182 4,683,641 -126,892 4,873,382 11,272,087

2,383,252 1,479,727 125,000 2,590,570 6,578,549 351,815 -41,045 4,683,641 -148,041 4,846,370 11,424,919

2,861,295 1,485,305 100,000 2,350,241 6,796,841 351,815 -46,909 4,683,641 -169,189 4,819,358 11,616,199

3,212,418 1,480,968 75,000 2,312,897 7,081,282 351,815 -52,772 4,683,641 -190,338 4,792,346 11,873,628

3,470,125 1,368,553 50,000 2,536,013 7,424,691 351,815 -58,636 4,683,641 -211,487 4,765,333 12,190,024

3,608,920 1,519,225 25,000 2,462,504 7,615,649 351,815 -64,499 4,683,641 -232,635 4,738,321 12,353,970

3,490,047 1,481,398 0 2,516,895 7,488,340 351,815 -70,363 4,683,641 -253,784 4,711,309 12,199,649

59,941 10,000,000 10,059,941 139,863 139,863 10,199,804

116,019 10,000,000 10,116,019 270,711 270,711 10,386,730

189,647 10,000,000 10,189,647 442,510 442,510 10,632,157

281,685 10,000,000 10,281,685 657,264 657,264 10,938,949

453,975 10,000,000 10,453,975 1,059,276 1,059,276 11,513,251

0 10,000,000 10,000,000 1,272,087 1,272,087 11,272,087

45,850 10,000,000 10,045,850 1,379,069 1,379,069 11,424,919

103,234 10,000,000 10,103,234 1,512,965 1,512,965 11,616,199

180,462 10,000,000 10,180,462 1,693,166 1,693,166 11,873,628

275,381 10,000,000 10,275,381 1,914,643 1,914,643 12,190,024

324,565 10,000,000 10,324,565 2,029,405 2,029,405 12,353,970

0 10,000,000 10,000,000 2,199,649 2,199,649 12,199,649

To be, and be recognized as, the low cost leader furniture store in Surat Thani, as well as provide variety choice to buy for customer

167 Year 2
Balance sheet 2 Asset Current asset Cash Inventory Prepaid land expense Account receivable Total current asset Fixed Asset Operating fixed asset ( Accumulative depreciation) Administrative asset ( Accumulative depreciation) Total fixed asset Total asset Liability and Equity Liability Tax payable Long term note payable Total liability Equity Retain earning Owner equity Total owner equity Total liability and Equity January February March April May June July August September October November December

3,487,287 1,346,839 275,000 2,618,513 7,727,639 351,815 -76,227 4,683,641 -274,933 4,684,297 12,411,936

3,550,951 1,539,714 250,000 2,605,680 7,946,346 351,815 -82,090 4,683,641 -296,081 4,657,284 12,603,630

3,809,395 1,531,426 225,000 2,677,002 8,242,823 351,815 -87,954 4,683,641 -317,230 4,630,272 12,873,096

3,650,911 1,832,216 200,000 2,937,334 8,620,461 351,815 -93,817 4,683,641 -338,379 4,603,260 13,223,721

3,962,677 1,540,006 175,000 3,603,302 9,280,985 351,815 -99,681 4,683,641 -359,527 4,576,248 13,857,233

3,715,145 1,523,788 150,000 3,665,249 9,054,182 351,815 -105,545 4,683,641 -380,676 4,549,235 13,603,417

4,185,448 1,537,524 125,000 3,429,572 9,277,544 351,815 -111,408 4,683,641 -401,825 4,522,223 13,799,768

4,718,942 1,545,764 100,000 3,170,017 9,534,723 351,815 -117,272 4,683,641 -422,973 4,495,211 14,029,934

5,109,147 1,543,344 75,000 3,129,686 9,857,176 351,815 -123,135 4,683,641 -444,122 4,468,199 14,325,375

5,408,483 1,419,313 50,000 3,370,651 10,248,446 351,815 -128,999 4,683,641 -465,271 4,441,186 14,689,633

5,576,866 1,581,207 25,000 3,291,261 10,474,334 351,815 -134,862 4,683,641 -486,419 4,414,174 14,888,509

5,402,427 1,555,434 0 3,350,004 10,307,865 351,815 -140,726 4,683,641 -507,568 4,387,162 14,695,027

63,686 10,000,000 10,063,686 2,348,250 0 2,348,250 12,411,936

121,194 10,000,000 10,121,194 2,482,436 0 2,482,436 12,603,630

202,034 10,000,000 10,202,034 2,671,062 0 2,671,062 12,873,096

307,222 10,000,000 10,307,222 2,916,499 0 2,916,499 13,223,721

497,275 10,000,000 10,497,275 3,359,958 0 3,359,958 13,857,233

0 10,000,000 10,000,000 3,603,417 0 3,603,417 13,603,417

58,905 10,000,000 10,058,905 3,740,863 0 3,740,863 13,799,768

127,955 10,000,000 10,127,955 3,901,979 0 3,901,979 14,029,934

216,587 10,000,000 10,216,587 4,108,788 0 4,108,788 14,325,375

325,865 10,000,000 10,325,865 4,363,768 0 4,363,768 14,689,633

385,527 10,000,000 10,385,527 4,502,981 0 4,502,981 14,888,509

0 10,000,000 10,000,000 4,695,027 0 4,695,027 14,695,027

To be, and be recognized as, the low cost leader furniture store in Surat Thani, as well as provide variety choice to buy for customer

168 Year 3

Balance sheet 3 Asset Current asset Cash Inventory Prepaid land expense Account receivable Total current asset Fixed Asset Operating fixed asset ( Accumulative depreciation) Administrative asset ( Accumulative depreciation) Total fixed asset Total asset Liability and Equity Liability Tax payable Long term note payable Total liability Equity Retain earning Owner equity Total owner equity Total liability and Equity

January

February

March

April

May

June

July

August

September

October

November

December

5,434,774 1,406,932 275,000 3,462,665 10,579,371 351,815 -146,590 4,683,641 -528,717 4,360,150 14,939,521

5,505,602 1,621,584 250,000 3,450,684 10,827,869 351,815 -152,453 4,683,641 -549,865 4,333,137 15,161,007

5,791,641 1,608,953 225,000 3,529,110 11,154,704 351,815 -158,317 4,683,641 -571,014 4,306,125 15,460,829

5,624,050 1,937,477 200,000 3,811,763 11,573,289 351,815 -164,180 4,683,641 -592,163 4,279,113 15,852,402

5,968,690 1,618,598 175,000 4,533,229 12,295,516 351,815 -170,044 4,683,641 -613,311 4,252,101 16,547,617

5,683,705 1,604,216 150,000 4,600,338 12,038,259 351,815 -175,908 4,683,641 -634,460 4,225,088 16,263,347

6,198,052 1,620,009 125,000 4,345,021 12,288,083 351,815 -181,771 4,683,641 -655,609 4,198,076 16,486,159

6,780,885 1,626,794 100,000 4,063,837 12,571,516 351,815 -187,635 4,683,641 -676,757 4,171,064 16,742,579

7,211,244 1,621,822 75,000 4,020,144 12,928,210 351,815 -193,498 4,683,641 -697,906 4,144,052 17,072,261

7,542,160 1,488,284 50,000 4,281,190 13,361,634 351,815 -199,362 4,683,641 -719,055 4,117,039 17,478,673

7,727,796 1,666,936 25,000 4,195,184 13,614,917 351,815 -205,225 4,683,641 -740,203 4,090,027 17,704,944

7,553,982 1,619,317 0 4,258,822 13,432,121 351,815 -211,089 4,683,641 -761,352 4,063,015 17,495,136

73,348 10,000,000 10,073,348 4,866,173 4,866,173 14,939,521

139,794 10,000,000 10,139,794 5,021,213 5,021,213 15,161,007

229,741 10,000,000 10,229,741 5,231,089 5,231,089 15,460,829

347,213 10,000,000 10,347,213 5,505,190 5,505,190 15,852,402

555,777 10,000,000 10,555,777 5,991,840 5,991,840 16,547,617

0 10,000,000 10,000,000 6,263,347 6,263,347 16,263,347

66,843 10,000,000 10,066,843 6,419,315 6,419,315 16,486,159

143,770 10,000,000 10,143,770 6,598,810 6,598,810 16,742,579

242,674 10,000,000 10,242,674 6,829,587 6,829,587 17,072,261

364,598 10,000,000 10,364,598 7,114,076 7,114,076 17,478,673

432,479 10,000,000 10,432,479 7,272,465 7,272,465 17,704,944

0 10,000,000 10,000,000 7,495,136 7,495,136 17,495,136

To be, and be recognized as, the low cost leader furniture store in Surat Thani, as well as provide variety choice to buy for customer

169 Year 4
Balance sheet 4 Asset Current asset Cash Inventory Prepaid land expense Account receivable Total current asset Fixed Asset Operating fixed asset ( Accumulative depreciation) Administrative asset ( Accumulative depreciation) Total fixed asset Total asset Liability and Equity Liability Tax payable Long term note payable Total liability Equity Retain earning Owner equity Total owner equity Total liability and Equity January February March April May June July August September October November December

7,636,188 1,459,392 275,000 4,374,801 13,745,380 351,815 -216,953 4,683,641 -782,501 4,036,003 17,781,383

7,732,440 1,690,555 250,000 4,357,908 14,030,904 351,815 -222,816 4,683,641 -803,649 4,008,990 18,039,894

8,058,772 1,676,953 225,000 4,439,957 14,400,681 351,815 -228,680 4,683,641 -824,798 3,981,978 18,382,660

7,895,705 2,030,748 200,000 4,743,050 14,869,503 351,815 -234,543 4,683,641 -845,947 3,954,966 18,824,469

8,282,881 1,687,339 175,000 5,520,013 15,665,233 351,815 -240,407 4,683,641 -867,095 3,927,954 19,593,187

7,955,056 1,671,851 150,000 5,592,285 15,369,192 351,815 -246,271 4,683,641 -888,244 3,900,941 19,270,133

8,526,919 1,688,859 125,000 5,317,328 15,658,106 351,815 -252,134 4,683,641 -909,393 3,873,929 19,532,035

9,170,627 1,696,166 100,000 5,014,514 15,981,307 351,815 -257,998 4,683,641 -930,541 3,846,917 19,828,224

9,650,490 1,690,811 75,000 4,967,461 16,383,763 351,815 -263,861 4,683,641 -951,690 3,819,905 20,203,667

10,023,100 1,547,002 50,000 5,248,587 16,868,689 351,815 -269,725 4,683,641 -972,839 3,792,892 20,661,581

10,239,155 1,739,396 25,000 5,155,966 17,159,517 351,815 -275,588 4,683,641 -993,987 3,765,880 20,925,397

10,024,839 1,694,940 0 5,224,499 16,944,277 351,815 -281,452 4,683,641 -1,015,136 3,738,868 20,683,145

85,874 10,000,000 10,085,874 7,695,509 7,695,509 17,781,383

163,428 10,000,000 10,163,428 7,876,467 7,876,467 18,039,894

266,257 10,000,000 10,266,257 8,116,402 8,116,402 18,382,660

398,800 10,000,000 10,398,800 8,425,669 8,425,669 18,824,469

629,415 10,000,000 10,629,415 8,963,771 8,963,771 19,593,187

0 10,000,000 10,000,000 9,270,133 9,270,133 19,270,133

78,571 10,000,000 10,078,571 9,453,465 9,453,465 19,532,035

167,427 10,000,000 10,167,427 9,660,797 9,660,797 19,828,224

280,060 10,000,000 10,280,060 9,923,607 9,923,607 20,203,667

417,434 10,000,000 10,417,434 10,244,147 10,244,147 20,661,581

496,579 10,000,000 10,496,579 10,428,818 10,428,818 20,925,397

0 10,000,000 10,000,000 10,683,145 10,683,145 20,683,145

To be, and be recognized as, the low cost leader furniture store in Surat Thani, as well as provide variety choice to buy for customer

170 Year 5
Balance sheet 5 Asset Current asset Cash Inventory Prepaid land expense Account receivable Total current asset Fixed Asset Operating fixed asset ( Accumulative depreciation) Administrative asset ( Accumulative depreciation) Total fixed asset Total asset Liability and Equity Liability Tax payable Long term note payable Other Total laibility Equity Retain earning Owner equity Total owner equity Total laibility and Equity January February March April May June July August September October November December

10,150,939 1,522,027 275,000 5,351,889 17,299,855 351,815 -287,316 4,683,641 -1,036,285 3,711,856 21,011,710

10,266,438 1,770,733 250,000 5,335,303 17,622,474 351,815 -293,179 4,683,641 -1,057,433 3,684,843 21,307,318

10,628,309 1,758,421 225,000 5,424,858 18,036,587 351,815 -299,043 4,683,641 -1,078,582 3,657,831 21,694,419

10,459,545 2,143,309 200,000 5,752,543 18,555,397 351,815 -304,906 4,683,641 -1,099,731 3,630,819 22,186,216

10,888,139 1,769,530 175,000 6,591,170 19,423,840 351,815 -310,770 4,683,641 -1,120,879 3,603,807 23,027,646

10,518,970 1,750,367 150,000 6,669,178 19,088,514 351,815 -316,634 4,683,641 -1,142,028 3,576,794 22,665,309

11,151,885 1,768,321 125,000 6,372,399 19,417,605 351,815 -322,497 4,683,641 -1,163,177 3,549,782 22,967,387

11,858,659 1,777,808 100,000 6,045,552 19,782,019 351,815 -328,361 4,683,641 -1,184,325 3,522,770 23,304,789

12,387,381 1,773,600 75,000 5,994,765 20,230,745 351,815 -334,224 4,683,641 -1,205,474 3,495,758 23,726,503

12,802,753 1,615,811 50,000 6,298,202 20,766,766 351,815 -340,088 4,683,641 -1,226,623 3,468,745 24,235,512

13,048,666 1,823,843 25,000 6,198,230 21,095,739 351,815 -345,951 4,683,641 -1,247,771 3,441,733 24,537,472

2,751,729 1,823,843 0 6,272,202 10,847,774 351,815 -351,815 4,683,641 -1,268,920 3,414,721 14,262,495

98,570 10,000,000 10,098,570 10,913,141 10,913,141 21,011,710

187,252 10,000,000 10,187,252 11,120,066 11,120,066 21,307,318

303,382 10,000,000 10,303,382 11,391,037 11,391,037 21,694,419

450,921 10,000,000 10,450,921 11,735,295 11,735,295 22,186,216

703,350 10,000,000 10,703,350 12,324,296 12,324,296 23,027,646

0 10,000,000 10,000,000 12,665,309 12,665,309 22,665,309

90,624 10,000,000 10,090,624 12,876,764 12,876,764 22,967,387

191,844 10,000,000 10,191,844 13,112,945 13,112,945 23,304,789

318,358 10,000,000 10,318,358 13,408,145 13,408,145 23,726,503

471,061 10,000,000 10,471,061 13,764,451 13,764,451 24,235,512

561,649 10,000,000 10,561,649 13,975,823 13,975,823 24,537,472

0 0 0 14,262,495 14,262,495 14,262,495

To be, and be recognized as, the low cost leader furniture store in Surat Thani, as well as provide variety choice to buy for customer

Chapter 6 Risk Management

172 This chapter explains about risk of company. In the real life, it is a lot of and varieties risk which occur different depend on industries, generally involve grouping and assessing risk under the following heading; Strategic, Operational, Compliance (including health and safety), Environmental, and Financial. We will show chart of Measuring the impact and likelihood of risk for measuring level of risk.

6.1 Business risk The most business has problem about risk. So, many owner of business find to the best way for reduce risk and in Erawan Furniture too. It is clear that risk management is now a core business process and should be planned accordingly and on a continuing basis so as to reduce and protect risk and volatility and improve returns.

6.2 Erawan Furniture risk Our company divided by 8 risks which identify 5 groups as follow:

6.2.1 Strategic It arises from being in a particular industry and geographical area. Erawan furniture has a particular industry, it is second hand product which the most furniture store don’t have its. This Erawan furniture risk is: Risk of purchasing stolen things, the customer might stole the furniture from anywhere and sold to us to be the discount.

6.2.2 Operational It arises from the various operational and administrative procedures that the business uses to implement its strategy. Erawan furniture has a second hand product which is strategic so, we must fix second hand product before sale again by mechanicals of company. We have transportation to customers when they order big product. This Erawan furniture risk is: Risk of accident by work Risk of accident by logistic

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173 6.2.3 Compliance (including health and safety) It derives from the necessity to ensure compliance with laws, regulations and other less formal social expectations which, if infringed, can damage a company. Health and safety risks are sometimes straightforward and can be considered as a subset of compliance or operational risk, but in many industries (e.g. transport) health and safety are key areas which require major resources and concentration so, this Erawan furniture risk is: Risk of health and safety of employee Risk of robber

6.2.4 Environmental It can be relatively routines and covered under compliance but in many businesses (and in an increasingly large number) they are a major area requiring separate consideration. The most risk environmental south of Thailand is season so, so, this Erawan furniture risk is: Risk of fire Risk of flood-waters

6.3 Measuring the impact and likelihood of risk The risks must then be evaluated in terms of their likelihood of occurrence and their severity if they do occur. There are a number of ways of doing this, including ‘risk mapping’, which plots the likelihood of the risk occurring on one axis and the severity or impact of the risk on the other. Impact can be measured in many ways ultimately there will be a financial effect but as this is often extremely difficult to calculate with any certainty, businesses often use a series of levels (measuring the overall effect on the business or selected business unit in a larger organization). Whatever method is chosen it must be clear and easily understood by everyone in the organization. Once each risk is plotted, the chart can be divided into categories of risk, usually high (top right corner), medium and low (bottom left corner). The concentration should then be on reducing the higher risk items lying in the top right corner of the chart.

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174

The chart show level of likelihood and impact by likelihood have 14 level measuring 1 to 14 or low to high possible and impact have 8 level measuring 1 to 8 or low to high, too.

A B C D E F G

Risk of purchasing stolen things Risk of robber Risk of health and safety of employee Risk of accident by work Risk of flood-waters Risk of fire Risk of accident by logistic

6.3.1 Explanation about the graph A Risk of purchasing stolen things From chart risk of purchasing stolen things range of Low Risk, show that likelihood level 1 and impact level 1 which means that low possible and low impact.

B Risk of robber From chart risk of robber range of Low Risk, show that likelihood level 2 and impact level 2 which means that low possible and medium impact.

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C Risk of health and safety of employee From chart risk of health and safety of employee range of Medium Risk, show that likelihood level 5 and impact level 4 which means that medium possible and medium impact.

D Risk of accident by work From chart risk of accident by work range of Medium, show that likelihood level 5 and impact level 4 which means that medium possible and medium impact.

E Risk of flood-waters From chart risk of flood-waters range of low Risk, show that likelihood level 0.5 and impact level 7 which means that low possible and high impact.

F Risk of fire From chart risk of fire rent of low Risk, show that likelihood level 2 and impact level 7 which means that low possible and high impact.

G Risk of accident by logistic From chart risk of accident by logistic range of Medium Risk, show that likelihood level 9 and impact level 2 which means that low possible and high impact.

6.4 Appropriate action for risks We uses generally the four main ways of dealing with risks are grouped as follows: Accept Transfer (usually via insurance) Reduce/manage Eliminate

6.4.1 Risk of purchasing stolen things Risk of purchasing stolen things will occur with customer bring old product for discount new product. We can eliminate this risk by when customers buy new product, we will deliver to home and appraise for discount from old product, immediately.
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176

6.4.2 Risk of robbery Risk of robber, we can reduce it by hire security for inspect around the company in night time and set up FUJIKO cameras inside our company. However our company doesn’t worry about robber because location of company is near police booth.

6.4.2.1 Security We hire security from Sri-Tommasit Co. Ltd. Address Tel Security Gender Time work Salary : : : : : : 22/67 Ratautid, Tarad, Muang, Surat Thani 84000 077-285287 1 person Male Monday - Sunday (6 pm. - 6 am.) 7,000 Baht

6.4.2.2 FUJIKO cameras We use FUJIKO CCTV cameras and we use be packaging as follow:

Name of Package Component

: :

FK-608.NET - FUJIKO CCTV cameras 8 pieces - Speed recording 50 Fleming - Epson's hardware can support 2 pieces - Freedom to adjust the camera to the camera Fleming - High definition recording on a MJPEG system - Display Popup system when unusual events occur - Free hard disk 500 GB - Monitor and remote control 38,000 Baht Upstairs (used Infrared series)

Price

:

Cameras in package : and place set up

FK-515B 3 pieces

Downstairs (used Box camera series)

FK-523 4 pieces

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177 Office (used Dome series)

FK-331D 1 pieces

Contact as

:

Telephone - 0-2704-9093 (11.00-20.00 am.) - 081-639-8162, 080-594-0639 (8.00 am-5.30pm.) E-mail - gunkamoy@hotmail.com, gunkamoy@yahoo.com

Source : http://www.gunkamoy.com/index.php?lay=show&ac=article&Id=323250&Ntype=1

6.4.3 Risk of health and safety of employee and Risk of accident by work Every company will protect about health and safety and accident by work to employee for welfare of them. Erawan furniture does this by transfer to Social security insurance for employee everyone.

6.4.3.1 Social security insurance We make Social security insurance for employee for safety in work.
Employers with employees from 1 or more people must apply for registration within 30 days. Employees to begin work age not less than 15 years and not more than 60 years. Subsidy payments of employers and employees must to pay every month to the Social Security Fund.

Employers and employees will pay 5% of employee salaries in every month. Social security insurance will guarantee to Death, Disability cases, Maternity cases, Illness, Experiencing harm, Unemployment, and Child welfare cases.

Detail Administrative expense

Salary of month 64,000

Rate social security insurance 10 % 64,000*5%

Expense of social security insurance 3,200

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178 Option of Social security insurance

Accident or illness can not work. Is able to receive medical treatment in hospital to ensure the rights set forth in the card treatment without charge if any, but is unable to receive emergency treatment in hospital as an insurance card to ensure their right to access treatment at any hospital that is nearest. And should inform relatives or related hospitals by the card to guarantee the right to be informed immediately for medical insurance, they can withdraw the charges was as clinical. Actually paid as necessary within the first 72 hours

Disabled 1. Receive medical treatment as they actually paid less than 2,000 baht per month. 2. Receive compensation for lack of a monthly income of 50 per cent wage subsidy to deliver life. 3. Costs are in the process of rebuilding physical disability physical Psychological and professional. Notice Social Security office actually paid not exceeding 40,000 baht.

Die 1. Receive 40,000 baht 2. If people pay their insurance contributions, then from up to 3 years but less than 10 years, or the heirs have the right to receive aid equal to the average wage of the deceased. One-half months 3. If people pay their insurance contributions from 10 years ago or more heirs have the right to receive aid equal to the average wage of the dead 5 months

Childbirth 1. Insurance receives maternity 12,000 baht. 2. Receive subvention vacation for 50 percent of maternity pay to deliver an average subsidy for a period of 90 days.

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179

3. The insurance man with his wife is not entitled to use their insurance will be 2 times the value Maternity Package 12,000 Baht each, but no right to receive subvention vacation to childbirth. 4. Their insurance is both husband and wife. Who can exercise their insurance has 2 different times, which suggest that the exercise of their insurance before wife due to be paid. Welfare to work to stop childbearing than with childbirth costs 12,000 baht, however the right to withdraw up to childbirth combined must not exceed 4 times.

Aid for child Who receive their insurance benefits are received child welfare Package 350 Baht per child per month for 1 child who likes the old law that no more than 6 years old can now withdraw no more than 2 per person.

Senile 1. old-age pension 2. old-age perpetuity

Jobless 1. People from unemployment insurance to register as unemployed and filed a request replacement benefits at the Employment Bureau of State within 30 days from the first unemployment. 2. Be provided to new work as appropriate. 3. Will receive training as skilled workers needed to get a new job.
Source: http://mx.kkpho.go.th/uc/index.php?option=com_content&task=view&id=230&Itemid=2

6.4.4 Risk of flood-waters In South of Thailand is near sea, it may be flood-waters from storm. Our company is located Surat Thani province which near sea. We can eliminate this risk by establish company on elevation land if our company flooded-waters, it means that flood-waters everywhere in Surat Thani too.

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180 6.4.5 Risk of fire Generality of much furniture are woods or knockdown. So, fire problem is the most take damage to much in store. Therefore, we will find the ways for protect or reduce damage which happens. The best way to reduce risk of fire is insurance about fire. We will to do insurance with Muang Thai Insurance Company as follow:

6.4.5.1 Location insured property The business of small shop or office will consider only Class 1 buildings (all concrete walls) and buildings, Class 2nd floor (half a block half wall wood) Located in the Bangkok and all of Muang Districts in the country only

6.4.5.2 Asset insurance Edifice or building (excluding foundation and land prices) and renovation of the building Furniture and furnishings installed appliances and electrical equipment, and various appliances. Stock is if the insured need to protect buildings with capital insurance refund Property value. That is new (New Replacement Value Cost) insured must be quote the buildings under construction in the current value. As well as adjust the sum insured on buildings price that changes in construction each year. If the insurance capital is lower than actual value when the happen the damage. Insured must be average insured damages.

6.4.5.3 Threats of protect. 1. Fire. 2. Lightning. 3. Gas explosion of cooking that used to live in the household

6.4.5.4 Buildings It can calculate the cost of insurance. Total area is square meters multiplied by construction value per square meter, following formula to calculate Size of store = width (m) x Long (m) number of units x number of booths 30 x 35 x 1 x 1= 1,050 square meter.
To be, and be recognized as, the low cost leader furniture store in Surat Thani, as well as provide variety choice to buy for customer

181 6.4.5.5 Cost estimate There are types of store divide by 2 types Class 1 buildings (all concrete walls) = 8,000 baht / square meters

Class 2 buildings (half wall wood building) = 6,000 baht / square meters Therefore, Erawan Furniture selects class 1 because building of Erawan furniture used concrete everything for durability and we will calculate of sum insurance premium by Sum insured= Size of store (m) x type of store (฿) 1, 050 x 8,000 = 8,400,000 Baht

6.4.5.6 Insurance premium

Table the insurance premiums of the fire insurance.
Small shops Class 2 building Class 1 building Sum insured Insurance Sum insured Insurance premium premium Offices Class 1 building Class 2 building Sum insured Insurance Sum insured Insurance premium premium

8,000,000 9,000,000

20,197.32 22,721.45

8,000,000 9,000,000

47,268.32 53,176.86

8,000,000 9,000,000

10,313.73 11,603.08

8,000,000 9,000,000

24,494.44 27,555.71

Source: www.muangthaiinsurance.com/products_ business.htm *Full of table look at in the appendix A

From the table of insurance premiums of the fire insurance, you can see that our company is small shops and select class 1 building insurance type. From calculate sum insured of Erawan furniture equal 8,400,000 baht so, when we compare zone between 8,000,000 with 9,000,000 of insurance in table which can calculate as follow:

Insurance premium of Erawan furniture =

Sum insured of Erawan furniture x Insurance premium of table

Sum insured of table

=

8,400,000 x 20,197.32 8,000,000

= 21,207.186

baht pre year

So, we will pay 21,207.186 baht per year for Fire insurance

To be, and be recognized as, the low cost leader furniture store in Surat Thani, as well as provide variety choice to buy for customer

182 6.4.6 Risk of accident by logistic Erawan furniture does this by transfer to logistic insurance for driver employees which deliver goods to customers. We will do Damage to the car to take insurance for them.

6.4.6.1 Damage to the car to take insurance Accident of car has increase more than past example when employee of store drive for send product to customer may be have accident. So, Erawan furniture has to make car insurance level 3 with Allianz CP Company for protect and reduce risk about accident to be happening. About detail follow by:

Damage to the car to take insurance

Age of car not more than 7 years Plan 1 Plan 2 200,000 2,000 Plan 3 300,000

Damage caused by such vehicles on land The first damage (If the insured party is negligent) Liability to outsider Damage to life, body, and healthy/Person Damage to life, body, and healthy/Time Damage to Asset Protected by the attachment end Accident of the driver or passenger /Person Medical treatment of the driver or passenger / Person insurance of the driver Price premium insurance
Source: www.insurethai.com/insure3plus.html

100,000

500,000 10,000,000 1,000,000

100,000 * 7 100,000 * 7 300,000 6,200 7,200 8,200

From the table, we will stay in plan 2 because if we see to appropriate about product and employee. So, we will to pay price premium insurance is 7,200 per year.

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183 6.4.7 Summary cost of risk management Risk Risk of purchasing stolen things Risk of robber - Security - FUJIKO cameras Risk of health and safety of employee and Risk of accident by work Risk of flood-waters Risk of fire Risk of accident by logistic Total * Pay only first month. 6.4.8 Financial risk For the financial risk, Erawan furniture show the risk acceptable in the from of the scenario that explain about the volume of sale cost, and expense that might change. 6.4.8.1 Expense and cost analysis Erawan furniture needs not to concern more because the expense can be controlled by the Erawan furniture that will adjust to be increase or decrease Marketing expense has 2 type of cost which is fixed and variable. The variable cost are the sale commission and cash discount that we be increased or decreased depend on the sale for each month that Erawan furniture can control the rate of sale commission or discount. Fixed expense such as radio local, calendar etc also control by the Erawan furniture that Erawan furniture need not aware more about those expense. Thus, Erawan furniture need not to concern more about the marketing expense when it increase or decrease because Erawan furniture can control all of them. Operating expense, also has both fixed and variable cost. The variable cost of the cost of the operating expense including fuel that depends on sale, and electricity that depend on the inventory purchasing, and the bad dept If the price of fuel increased it will affect the fuel expense in the income statement but the fluctuation of the oil price dose not effect more with the net income of Erawan furniture. In the real situation the fee of electricity quite not fluctuation so the expense for the electivity in the operating expense dost not affect Erawan furniture more. Cost per month 8,000 *38,000 3,200 Cost per year 96,000 38,400 21,207.186 7,200

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184 For the bad dept is the account receivable that cannot collected the cash from the customer, it also be the risk for Erawan furniture The fixed expense including the depreciation and office supply that the depreciation is the fixed expense that cannot be change, so it is not concerned to be the risk for the expense. But the office supply can be control by Erawan furniture Administrative expense, the mainly part of the administrative expense are the fixed expense that including salary, insurance expense, rental land, property tax expense, facia tax, and administrative depreciation that can not be change in the scenario analysis. There are only utility expense and office supply that change in the scenario analysis. For the scenario analysis we expected that the expense will increase by 100% for each year

6.4.8.2 Base sale fore estimation Sale in Year 1 Sale in Year 2 Sale in Year 3 Sale in Year 4 Sale in Year 5 100% 108% 117% 126% 136%

6.4.8.3 Base for the cost of goods sold estimation The cost of goods sold year 1 year 2 year 3 year 4 year 5 100% 100% 103% 103% 104%

Scenario 1 Sale decrease but cost, and expense is the same that can be acceptable by there are not negative in the net income for each month for each month and also have the principal enough for pay to the investor.

1 Year 1 decrease by 14% to be 84% in the estimation 2 Year 2 decrease by 15% to be 93% in the estimation 3 Year 3 decrease by 15% to be 102% in the estimation 4 Year 4 decrease by 15% to be 111% in the estimation 5 Year 5 decrease by 15% to be 121 % in the estimation
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185 For the scenario 1 represent the maximum of sale that can be decreasing by dose not affect the investor and the overall of business that Erawan furniture need not to do anything that net income in all of year still be positive that still has the liquidity enough to operate the business and pay compensation to the investor for every month In this scenarios represent the percentage of decreasing in sale that higher However, Erawan furniture can be accept by did not adjust any thing. Because we have higher in the gross margin However, if they occur in the real situation, Erawan furniture need to find out adjust the organization and strategy particularly in the cost to solve this problem by try to increase the sale or reduce the cost.

Table of statement in scenario 1
Income statement Sale Cost of goods sold Gross margin Operating Expense Selling and administrative expense Earning before interest and tax Interest expense Income Tax Net income Cash flow statement Net cash flow form Operating activity Net cash flow from selling and administrative Cash paid for interest Cash repayment from the principal Net cash flow Total net cash flow Balance sheet Asset Current asset Cash Inventory Account receivable Total current asset Total fixed asset Total asset Liability and Equity Total liability Retain earning Total liability and Equity Year1 14,684,086 7,741,744 6,942,342 803,992 2,429,461 3,708,889 1,500,000 662,667 1,546,222 Year1 1,826,674 -1,875,677 -1,500,000 0 3,115,541 3,115,541 Year 1 Year2 15,879,302 8,372,635 7,506,667 952,716 2,473,615 4,080,336 1,500,000 774,101 1,806,235 Year2 5,058,093 -1,919,831 -1,500,000 0 1,338,263 4,453,804 Year 2 Year3 17,416,009 9,308,641 8,107,368 1,046,514 2,524,233 4,536,621 1,500,000 910,986 2,125,635 Year3 5,342,293 -1,970,449 -1,500,000 0 1,571,844 6,025,648 Year 3 Year4 18,952,715 10,129,991 8,822,724 1,143,578 2,586,828 5,092,318 1,500,000 1,077,695 2,514,623 Year4 5,766,324 -2,033,044 -1,500,000 0 1,933,281 7,958,928 Year 4 Year5 19,908,137 10,555,855 9,352,282 1,235,829 2,602,786 5,513,667 1,500,000 1,204,100 2,809,567 Year5 5,931,924 -2,049,002 -1,500,000 -10,000,000 -7,917,079 41,850 Year 5

3,115,541 1,554,842 2,164,530 6,834,913 4,711,309 11,546,222 10,000,000 1,546,222 11,546,222

4,453,804 1,627,468 2,884,024 8,965,296 4,387,162 13,352,458 10,000,000 3,352,458 13,352,458

6,025,648 1,691,351 3,698,078 11,415,077 4,063,015 15,478,092 10,000,000 5,478,092 15,478,092

7,958,928 1,725,927 4,568,991 14,253,847 3,738,868 17,992,715 10,000,000 7,992,715 17,992,715

41,850 1,823,780 5,521,931 7,387,561 3,414,721 10,802,281 10,000,000 10,802,281 10,802,281

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Scenario 2 Cost of goods sold increase but sale and expense still be the same. The risk for increasing in cost of goods sold is very low from the filed trip survey, so we assume that the cost will increase about 7% of estimation for each year. That is scenario quite less possibility to occur in the real situation. How ever if it occur the investor also have the total principle repayment at the end of year 5.

6.4.8.4 Base for the cost of goods sold estimation
The cost of goods sold year 1 year 2 year 3 year 4 year 5 100% 100% 103% 103% 104%

1 Year 1 increase by 7% to be 117% in the estimation 2 Year 2 increase by 7% to be 117% in the estimation 3 Year 3 increase by 7% to be 110% in the estimation 4 Year 4 increase by 7% to be 110% in the estimation 5 Year 5 increase by 7% to be 111% in the estimation

This scenario effect to reduce net income in less a month of the Erawan furniture, so Erawan furniture can accept if the cost reduces by 15% of estimation for each year. Table of statement in scenario 2
Income statement Sale Cost of goods sold Gross margin Operating Expense Selling and administrative expense Earning before interest and tax Interest expense Income Tax Net income Cash flow statement Net cash flow form Operating activity Net cash flow from selling and administrative Cash paid for interest Cash repayment from the principal Net cash flow Total net cash flow Year1 17,074,518 9,433,596 7,640,922 923,050 2,508,345 4,209,527 1,500,000 812,858 1,896,669 Year1 1,988,687 -1,954,561 -1,500,000 0 3,198,670 3,198,670 Year2 18,440,480 10,392,899 8,047,580 1,096,544 2,558,133 4,392,903 1,500,000 867,871 2,025,032 Year2 5,242,042 -2,004,349 -1,500,000 0 1,437,693 4,636,362 Year3 19,977,186 11,403,218 8,573,969 1,193,050 2,608,752 4,772,167 1,500,000 981,650 2,290,517 Year3 5,492,589 -2,054,968 -1,500,000 0 1,637,621 6,273,983 Year4 21,513,893 12,280,388 9,233,505 1,291,924 2,671,347 5,270,234 1,500,000 1,131,070 2,639,164 Year4 5,835,068 -2,117,563 -1,500,000 0 1,917,506 8,191,489 Year5 23,221,345 13,308,506 9,912,839 1,401,684 2,739,947 5,771,208 1,500,000 1,281,362 2,989,845 Year5 6,114,872 -2,186,163 -1,500,000 -10,000,000 -7,871,291 320,198

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Balance sheet Asset Current asset Cash Inventory Account receivable Total current asset Total fixed asset Total asset Liability and Equity Total liability Retain earning Total liability and Equity

Year 1

Year 2

Year 3

Year 4

Year 5

3,198,670 1,469,795 2,516,895 7,185,360 4,711,309 11,896,669 10,000,000 1,896,669 11,896,669

4,636,362 1,548,173 3,350,004 9,534,539 4,387,162 13,921,701 10,000,000 3,921,701 13,921,701

6,273,983 1,616,397 4,258,822 12,149,203 4,063,015 16,212,218 10,000,000 6,212,218 16,212,218

8,191,489 1,696,526 5,224,499 15,112,514 3,738,868 18,851,382 10,000,000 8,851,382 18,851,382

320,198 1,834,106 6,272,202 8,426,507 3,414,721 11,841,227 10,000,000 11,841,227 11,841,227

Scenario 3 represent that if the bed dept higher than estimation about 10 % for every year to be like this

Income statement Sale Cost of goods sold Gross margin Operating Expense Selling and administrative expense Earning before interest and tax Interest expense Income Tax Net income Cash flow statement Net cash flow form Operating activity Net cash flow from selling and administrative Cash paid for interest Cash repayment from the principal Net cash flow Total net cash flow Balance sheet Asset Current asset Cash Inventory Account receivable Total current asset Total fixed asset Total asset Liability and Equity Total liability Retain earning Total liability and Equity

Year1 17,074,518 9,002,028 8,072,491 1,454,329 2,508,345 4,109,817 1,500,000 782,945 1,826,872 Year1 1,374,748 -1,954,561 -1,500,000 0 2,584,730 2,584,730 Year 1

Year2 18,440,480 9,723,060 8,717,420 1,768,821 2,558,133 4,390,465 1,500,000 867,140 2,023,326 Year2 4,570,317 -2,004,349 -1,500,000 0 765,967 3,350,698 Year 2

Year3 19,977,186 10,677,558 9,299,628 1,920,947 2,608,752 4,769,929 1,500,000 980,979 2,288,950 Year3 4,765,138 -2,054,968 -1,500,000 0 910,170 4,260,867 Year 3

Year4 21,513,893 11,498,909 10,014,984 2,076,422 2,671,347 5,267,215 1,500,000 1,130,164 2,637,050 Year4 5,050,376 -2,117,563 -1,500,000 0 1,132,813 5,393,681 Year 4

Year5 23,221,345 12,469,231 10,752,114 2,248,078 2,739,947 5,764,089 1,500,000 1,279,227 2,984,863 Year5 5,269,298 -2,186,163 -1,500,000 -10,000,000 -8,716,865 -3,323,185 Year 5

2,584,730 1,481,398 3,049,435 7,115,563 4,711,309 11,826,872 10,000,000 1,826,872 11,826,872

3,350,698 1,555,434 4,556,904 9,463,035 4,387,162 13,850,197 10,000,000 3,850,197 13,850,197

4,260,867 1,619,317 6,195,948 12,076,132 4,063,015 16,139,147 10,000,000 6,139,147 16,139,147

5,393,681 1,694,940 7,948,709 15,037,330 3,738,868 18,776,198 10,000,000 8,776,198 18,776,198

-3,323,185 1,823,843 9,845,681 8,346,339 3,414,721 11,761,060 10,000,000 11,761,060 11,761,060

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This scenario represent that the default rate higher than estimation from 5% to 10 % every year in the term of operating business is can be acceptable but for the investor the repayment of the principal is not cover all of them. However Erawan furniture also have the back up plan for the investor that represent in the chapter 5, and Erawan furniture also have the Account receivable care taker to be the special employee that look after the account receivable of the company.

Scenario 4

The important expense higher than estimation about 10 % for

each year which are fuel expense, operating expense, administrative expense, the marketing expense and the default rate. The sale and cost still be the same.

Income statement Sale Cost of goods sold Gross margin Operating Expense Selling and administrative expense Earning before interest and tax Interest expense Income Tax Net income Cash flow statement Net cash flow form Operating activity Net cash flow from selling and administrative Cash paid for interest Cash repayment from the principal Net cash flow Total net cash flow Balance sheet Asset Current asset Cash Inventory Account receivable Total current asset Total fixed asset Total asset Liability and Equity Total liability Retain earning Total liability and Equity

Year1 17,074,518 9,002,028 8,072,491 1,003,787 2,598,451 4,470,253 1,500,000 891,076 2,079,177 Year1 2,196,444 -2,044,667 -1,500,000 0 3,316,321 3,316,321 Year 1

Year2 18,440,480 9,723,060 8,717,420 1,193,843 2,592,516 4,931,060 1,500,000 1,029,318 2,401,742 Year2 5,590,040 -2,038,732 -1,500,000 0 1,751,308 5,067,630 Year 2

Year3 19,977,186 10,677,558 9,299,628 1,299,330 2,645,654 5,354,644 1,500,000 1,156,393 2,698,251 Year3 5,868,544 -2,091,870 -1,500,000 0 1,976,674 7,044,304 Year 3

Year4 21,513,893 11,498,909 10,014,984 1,407,427 2,709,466 5,898,091 1,500,000 1,319,427 3,078,664 Year4 6,238,484 -2,155,682 -1,500,000 0 2,282,803 9,327,106 Year 4

Year5 23,221,345 12,469,231 10,752,114 1,527,384 2,779,322 6,445,409 1,500,000 1,483,623 3,461,786 Year5 6,549,937 -2,225,538 -1,500,000 -10,000,000 -7,475,601 1,851,506 Year 5

3,316,321 1,481,398 2,570,149 7,367,868 4,711,309 12,079,177 10,000,000 2,079,177 12,079,177

5,067,630 1,555,434 3,470,694 10,093,757 4,387,162 14,480,919 10,000,000 4,480,919 14,480,919

7,044,304 1,619,317 4,452,535 13,116,155 4,063,015 17,179,170 10,000,000 7,179,170 17,179,170

9,327,106 1,694,940 5,496,920 16,518,966 3,738,868 20,257,834 10,000,000 10,257,834 20,257,834

1,851,506 1,823,843 6,629,550 10,304,899 3,414,721 13,719,620 10,000,000 13,719,620 13,719,620

To be, and be recognized as, the low cost leader furniture store in Surat Thani, as well as provide variety choice to buy for customer

189

This scenario of the risk of financing also can be acceptable from the Erawan furniture. Because we can repay all of principal to the investor at the end of year 5, and it not affect the overall of the project.

6.5 Conclusion The overall level of the risk for Erawan furniture in the term of both business and financial risk. The level of risk in the term of operating business is quite low but Erawan furniture also have the risk management for those risk, and in the financial risk Erawan furniture also prepare for this risk.

To be, and be recognized as, the low cost leader furniture store in Surat Thani, as well as provide variety choice to buy for customer

Chapter 7 Summary

To be, and be recognized as, the low cost leader furniture store in Surat Thani, as well as provide variety choice to buy for customer

191

The Erawan furniture project is the furniture store project that operates in the Surat thani. Our project business is furniture store. Furniture store business has many types for sale and response to customer need and want such as table, cupboard, bed, chair, etc. South of Thailand, furniture store is possible business that can make high profit and easy to growth in Surat Thani. In the market feasibility study we found that there many information that support the market to be feasible for example the growth rate of gross provincial profit, personal and household good, and the growth rate of population in the Surat Thani. Erawan furniture has the core competency about the low cost of furniture, because we will selective more about the suppler who will give us the low price as much as possible especially, from Lamphoon province. Erawan furniture also provides the variety way of purchasing for the customer. There are two mainly type of product of Erawan furniture which are special product, general product, and second hand product. We set the main target on the normal market and the used market. For the sale forecast from feasibility of the potential market, the target market of Erawan furniture, as well as strategy and core competency of Erawan furniture, we confident that Erawan furniture can generate the sale to 0.85% of the potential market or about 17,074,518 baht that at the first year and increase by 8% every year. Erawan furniture is register as the juristic person according to the Thai law. It rent the land the need to pay in advance for 1 year. Erawan furniture need to build it owns building that there are 2 mainly zoned which are Core building and Option building. The core building is the main building for selling and administrative and the option building for the assembly and warehouse zone for assembly fixed and keeps the package furniture. The total investment cost for the Erawan furniture is 5,035,456 baht. We find out the source of funding from the investor that we will offer the interest rate about 15% per year and will pay all of the interest rate at the end of year 5 that we guarantee the all of principal of the investor by we have the backup plan for the investor In the financial analysis that represent in 3 financial statement, Erawan furniture have strong in the financial status that also represent in the ratio analysis For the risk the mainly of risk for Erawan furniture in both business risk and financial risk is quite be and can be acceptable. However, we also prepare about the handle of risk by using the risk management.

To be, and be recognized as, the low cost leader furniture store in Surat Thani, as well as provide variety choice to buy for customer

192

Reference

Allianz CP Company, Damage to the car to take insurance (Online): www.insurethai.com/insure3plus.html

CSI specs, Evaluation of Thailand Furniture,(Online): (http://web.ku.edu/~itech/program/start_prog.html * Other source: under table, graph, or detail

To be, and be recognized as, the low cost leader furniture store in Surat Thani, as well as provide variety choice to buy for customer

Appendix

To be, and be recognized as, the low cost leader furniture store in Surat Thani, as well as provide variety choice to buy for customer

194

Member group 1. Mr. Kla Tel: 0869111746 Kreankrai ID 4931203009

E-mail: kla_036@hotmail.com

2. Mr.Kanit

Winyousawalak

ID 4931203017

Tel: 0865419990 E-mail: ook_devil@hotmail.com

3. Mr.Peerapol

Choomeeboon

ID 4931203075

Tel: 0848416953 E-mail: Pattel-mo@hotmail.com

4. Mr.Akaracheewin

Bualuang

ID 4931203129

Tel: 0878411105 E-mail: mbass_power@hotmail.com

5. MissSupaporn

Boonruang

ID 4931203168

Tel: 0858123360 E-mail: Bowling_b_@hotmail.com

To be, and be recognized as, the low cost leader furniture store in Surat Thani, as well as provide variety choice to buy for customer

195 The statement of grade C furniture store

To be, and be recognized as, the low cost leader furniture store in Surat Thani, as well as provide variety choice to buy for customer

196 The catalogue for the goods of the suppler

To be, and be recognized as, the low cost leader furniture store in Surat Thani, as well as provide variety choice to buy for customer

197 The invoice and bill of furniture

To be, and be recognized as, the low cost leader furniture store in Surat Thani, as well as provide variety choice to buy for customer

198 The from of questionnaire

To be, and be recognized as, the low cost leader furniture store in Surat Thani, as well as provide variety choice to buy for customer

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