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Due to the very low consumption as compared to developed countries and even in India, a large gap is to be filled by introducing new and cost effective products. Customers with low purchasing power don’t have any option other than plastic furniture. Middle and lower classes in Pakistan is major buyer and these classes are 65% of total population. Also there are very few players in this business.
The business of Molded Furniture has marked its place in the country through growth during the last ten years. This growth has opened up new opportunities. The prime reason for this is awareness about the product. Along with that, companies are offering conditional warranty of plastic chairs minimizing risk of customer. Molded Furniture is basically produces in developed countries to be used as Lawn Furniture and outdoor restaurants. As trends are from developed countries, it was introduced in Pakistan around 1984-1985 by a Karachi based firm. Then a factory was installed in Gujranwala and then with the passage of time now there are some main 7 units producing plastic chairs, tables, baby products, etc day and nights.
Due to low purchasing power people in Pakistan found this product cheap, associated with warranty covering the risk of consumers. Customer bank is increasing day by day with the penetration of companies, by introducing new and economical models, variety of colors, exports to Afghanistan, etc.
International Trade: In 2007 the trade value of plastic furniture in 2007 is $149,613 exports and $219,410 imports. In 2008 it was increased and trade value of plastic furniture was $555,519 exports and $253,114 imports. It is clear that in 2007 the imports are more than exports but in 2008 exports are twice to imports. (Exhibit 1)
The Government of Pakistan has offering Rs.3.5 per kg rebate on exports. However Government has offered D.T.R.E. (duties and taxes remission exemption) for the
Materials to be imported for export purpose only. Plastic furniture includes, All Model Chairs, All Model Tables, Baby Swings, Shoe Racks, Stool. (Exhibit 2) The main raw material of molded furniture is plastic.
Pre feasibility report of moulde furniture (SMEDA)
Plastic: A plastic is a type of synthetic or man-made polymer; similar in many ways to natural resins found in trees and other plants. Webster's Dictionary defines polymers as: “any of various complex organic compounds produced by polymerization, capable of being molded, extruded, cast into various shapes and films, or drawn into filaments and then used as textile fibers”.
Plastics are used because they are: • Attractive • Hard • Soft & Rubbery • Easy to Clean • Flexible • Good insulators of heat or electricity • Light weight • Hygienic • Easy to Shape & Color • Economical Apart from some of the properties of plastics mentioned above, one important feature of plastic is that it is a non-rusting material, which makes it a very usable commodity especially in coastal areas where there is a lot of humidity. As stated earlier, the use of plastics is increasing all the time as they replace materials
(Exhibit 3) Consumption & Imports Pakistan used to import 80-90 percent raw material for plastic making from different countries. Market Players There were some 6.000 tonnes. The prices of raw material of plastic industry depend on international scenario. the per capita plastic consumption worked out to be around 24 kg per annum. The special grade raw material was imported from Germany and USA. Globally.such as metal. The total consumption of plastic raw material in India was two million tones annually. where per capita consumption was 120 kg per annum.3 kg in India and 7 kg in China. wood. paper. . The plastic industry fall in cottage industry and there were some manufacturers. India was also a major producer of plastic’s raw material. The prices are directly related to crude oil prices as the raw material is made from Naphtha. The consumption of plastic was less in Pakistan as the local industries were not developing as rapidly as they were growing in the other parts of the world. which was 20 percent of total raw material consumption. The total consumption of raw material used in the plastic industry in the country was around 450.000 plastic products manufacturers in the country and 600. while this was 3.1 kilograms. The highest per capita consumption of plastic was in United States and Germany. The country imported 70 percent raw material from UAE and Far Eastern countries. who were medium-sized industries. which is a by-product of crude oil. The raw material of plastic industry is a byproduct of crude oil. During Iraq war. More over the overall demand and local supply gap that prevails in the market remains largely unmet which also provides opportunities for entering in to this business Market Overview The per capita consumption of plastic in Pakistan was 3. ceramics and glass in a wide variety of uses.000 people were directly and indirectly engaged with this business. the prices shot up by 70 percent.
canolas. (Exhibit no. About 400 units were engaged in recycling of plastic scrap in Punjab. Industrial plastic waste.. The sources for collection of scrap were house hold waste of broken unusable plastic items. 3) Receive chairs and parts of table as output. 1) Initially mixing of color with plastic Resin. Molding machines melt and inject plastic in moulds and required plastic furniture is made.Moreover. Australia. the recent penetration of cheap Chinese products into Pakistan had made the competitive situation in the local plastic industry very intense. Korea. 4) Assembling and packing. Diagnostic study of plastic (SMEDA Pakistan) Introduction of Plastic Furniture Plastic furniture is made with poly propylene (Plastic Dana) that is currently not manufacturing in Pakistan. Local manufacturers had to import raw material which is a substantive cost of their total produce while Chinese products offering a large variety at affordable rates had made survival difficult for the local industry. hospital waste such as disposables syringes. container. Saudi Arabia. 2) Input the material into the injection molding the machine. 4) . It also made with recyclable material because plastic is 100% recyclable material. plastic cans. china. It is imported from Turkey. Manufacturing Process: The following steps are included in the manufacturing process. Plastic is shaped in furniture through molding machines. etc. Hong Kong. Plastic scrap recycling had developed into an industry in Pakistan. Thailand. etc.
and has been working to produce high quality moulded furniture. It has the clear goal which states. keeping the honesty as its priority. (Sonica official website) Citizen: .” a complete well coordinated moulded furniture. But continuously and gradually this small unit started manufacturing of Plastic Furniture on a large scale in 2009. “The statement clearly shows that the company keeps it employees motivated towards providing high quality products. Sonica Plastic Industries satisfying hundred of million customer all over Pakistan and abroad too.Company’s History/Introduction Boss: The company was invented in 1991. policies of competitive prices.Sonica Plastic Industries has its own automatic machinery. plastic steel furniture. The brand name of Pakson Industries in Pakistan is BOSS. The company strictly abides by the sovereignty. plastic steel furniture & households etc”.” Pakson International Plastic Industry (BOSS) services. this is all achieved by sharing committed management and experienced employees. (BOSS official website) Sonica: Sonica Plastic industries started its business in 1978 by manufacturing spare parts of Plastic washing machices on a small scale under the supervision of Muhammad Munawar. Sonica Plastic Industries is now become a prominentname in Plastic Furniture industry in Pakistan. Over the years BOSS has earned great respect in markets all over the country. strict quality control and regular delivery are the cause of its success. households.
has tremendously developed to become well reputed for its advanced technology. Environmental Analysis In Pakistan CITIZEN firstly introduce plastic furniture. Than TOYO enter in to this industry. Now TOYO is in stage of recession in plastic furniture. TOYO enter in to this industry. fine product quality and excellent after sale service.Citizen established in 1987. (Citizen official website) TOYO: After citizen the first mover. Haji Bashir Ullah (Late) was the founder of the company. A good development made in this industry in near past because of need and demand of people for plastic furniture and recent trend of plastic furniture in Pakistan. Two partners Mr. Today citizen is recognized as one of the biggest plastic and steel plastic furniture manufacturers in Pakistan. they start with steel plastic in 1987. Iftikhar introduce TOYO plastic industries than in 1991 one partner made separate firm with the name of BOSS. with more than 100 sale networks all over the Pakistan. produces high class furniture both in plastic and steel materials. Through continuous improvement & innovation. Iftikhar introduce TOYO plastic industries than in 1991 one partner made separate firm with the name of BOSS. Precision machining and strict quality control at all stages of production to meet exacting requirements of this modern world in the hallmark of citizen. Azam and Mr. Azam and Mr. BOSS firstly highlights the plastic furniture industry in Pakistan. Steel plastic mean plastic chair with steel foot. Two partners Mr. He started production on a small scale. Dilawar Hasan Shah(General manager sonica) .
. 3. & OTHER FACTORS 1. 7. 8. 4. 4. Plastic furniture manufacturing sector in Pakistan rising due to shifting of the people towards plastic furniture. 2. so to meet standards of the buyers.PEST Analysis POLITICAL. Companies are paying heavy import duty on raw materials due to which per unit cost is increasing. & LEGAL FACTORS 1. There is no or very short relief on the import of polypropylene. Firms in Gujranwala are running by family ownership because of lack of trust on the others. 3. 2. Buyers are quality conscious. 6. manufacturers must maintain high quality in moderate rates which is a big task. 5. Government is not providing any subsidy to the plastic furniture industry. All plastic furniture companies are importing their raw material from different countries due to which they are increasing prices of their products. GOVERNMENTAL. Government is charging heavy duty on raw materials. The duties on the import of polypropylene need to be further reduced. Establishment of EIS (Export Investment Support) for the purpose of research and development centers. Exporters and importers of Pakistan are facing problems to get visa from the foreign embassies due to security issues. High prices of petroleum are also affecting the prices of finished goods. CULTURAL. SOCIAL.
4. increased the cost of production. Lack of skilled labor is another problem faced by the firms existing in plastic furniture industry in Gujranwala. Pioneer in Plastic chairs. Mr. Abdul Rehman(General manager BOSS) SWOT Analysis of BOSS Strength: Good Brand Image. 4. Introduction of VAT (Value Added Tax) and new governmental policies are also affecting. gas etc. 3. The machinery is mostly imported which can be technologically inferior as compare to international market. . 5. Cover almost 60% of the total sale of plastic chairs in Pakistan. Fluctuation in foreign exchange rates also affects the prices of raw material.TECHNOLOGICAL FACTORS 1. 2. telephone. is not focusing on research and development ECONOMIC FACTORS 1. Government departments. The rise in the services charges and interest rates on loans of the Banks is also a drawback to the growth of plastic furniture industry. Labor in plastic furniture industry is not mostly familiar with the usage of machinery. The rising in the utilities cost such as electricity. High rates on the export re-finance also drawback for the plastic furniture industry. 3. 2.
Citizen and other local firms) Threats from Chinese market due to low price products of same range. Manufacture huge range of plastic products as never other company manufacture. SWOT Analysis of Sonica Strengths: Good Relationship with customers . A wide range of plastic chairs (main product) and other products. (Toyo. Quality Products based on the best available raw materials. Lack of fully functional and authorized HR department Opportunities: Large domestic markets (lack of customers for Chinese products). Employees are under stress by the management. Strong financial position due to strong background of the CEO. Company has good market image so they can add new product lines Increasing trend of plastic furniture Threats: Low price competitors are the main threats for the company. Qualified and skilled labor in the region. Non participative management. Adoption of new technology Weaknesses: Weak corporate culture (lack of communication among the departments).
New technology introduce A wide range of plastic furniture Skilled labor Provide cheaper products to its customers Increasing Preference of Plastic furniture Good communication among the departments Personal relationing with distributors Weaknesses: Lack of Research & Development efforts. Lack of vision / Planning Not getting benefits from support institutions Opportunities: Increasing Preference of Plastic furniture 65% middle income group of whole population Competitive rates Threats: increasing prices of raw material Porter’s five forces model Competitor Analysis In Pakistan main players of this industry are. 1st Boss 2nd Sonica 3rd Citizen .
Now BOSS is the market leader of plastic furniture industry in Pakistan. The BOSS’s market share is about 30% in the industry in this way BOSS is the market leader of the industry. PHATA. In the view of international basis. reliability. (Exhibit 5). Than SONICA has 10-15 share and other share is acquired by the other firms. PARADISE etc also working in the industry in Pakistan. they hire old boss’s employees who have a great relationing in market and distributor dealers. The main strategy used by BOSS is high advertisement and BOSS in the first company who highlights the plastic furniture industry in true sense. The BOSS and SONICA are the main two big size companies. Mr. They use high advertisement in print media. they have new and famous mold machines and totally new plants but the other local firms use old and second hand plants. they are in the industry for about 17-18 years and are highly penetrated in the market. VENUS. the main advantage is that they are old player and they create a good will in the market and consumer minds. SONICA consider BOSS as his competitor and they are growing in the industry. Boss increasing there size day by day from 2009 to 2010 they expand their outlets from 15 to 24. The BOSS plays in the industry for about 17-18 years and they are highly penetrated in the market. India is a big name in plastic furniture industry and then China and other countries. 1st time they sell there products to the dealers on the basis of boss’s employees to the dealers. UNIQUE. The main competitors are BOSS. SONICA and CITIZEN. TIGER. The main reason of there success is that. availability and affordable prices. sign boards. TV ads. Dilawar hasan Shah(General manager sonica) Reason of Success of Sonica: Sonica group of industries started plasted furniture buseness in 2009 and in a very short time they made 10 to 15 percent share in the market. The old employees of boss have great experience of market .The other firms are TOYO. There is a high competition in the industry and competition affect the prices and consumer mind because consumers always in search of good quality.
The main buyers of plastic furniture are middle income and above middle income people who want economical prices and also there is a great demand of plastic furniture. Mr. raw material also import from other countries. gardens etc. electricity provide specific temperature to the electric heater in molding machines. Karachi. Korea. Multan. Another limitation is that there is no manufacturing of POLY PROPLEEEN (which is the main raw material) in Pakistan and it import from other countries such as Turkey. there is less space houses. low purchasing power and inflation people want economical products and plastic furniture is economical and its use is everywhere such as in houses. skilled labor is also easily available. Murry and south Punjab region. the molding machines run on gas and gas does not provide accurate temperature in result low efficiency production. public places. Saudi Arabia. There are many small local suppliers available to this industry and they provide material at reasonable prices. colleges. so the demand for plastic furniture is increasing. The cities in which high sale of plastic furniture are Rawalpindi. Umair Javed (Area sales manager. When we talk about consumer benefit to this industry. The general manager of sonica group of industries. . classes. sonica) Advantages and Limitations of Industry The material used in plastic furniture is totally recyclable and easily available. and government does not provide any subsidy in import of raw material. there is no problem of suppliers. The limitation of the industry is electricity shortage and no government support. dilawar Hasan Shah was also the general manager of boss and give their services in boss for 10 year. There are mold machines which run best on electricity. Also suppliers available those are provide recyclable plastic material that is used in production. Sonica hire all experienced and well reputed employees from boss and it is the success of sonica. this is the main advantage for this industry and many local suppliers are available. in the shortage of electricity. Mr.in this way they speedy penetrate in market. he has a great experience of plastic furniture.
high import taxes and no support of government. The alternatives available are generators and power plants but they consumed so much fuel in result the manufacturing cost is high and alternative of imports are use of local raw material and use of recyclable material. The days of huge electricity load shedding the industry become totally close and no working will b made. The research describe that 60% consumers prefer plastic furniture because it is easy to move and light weight. (Exhibit 11) . 9) Consumers feel that it is a profitable industry when we ask them would you invest in plastic furniture business. High prices of petroleum also increase plastic prices because plastic is a petroleum product. Interview with Sonica general manager Consumer Analysis Consumer analysis describe about the consumer point of view about the industry and about market players. (Exhibit 8. more than 50% people agree. Consumers buy plastic furniture because of economical prices. (Exhibit 10) Brand loyality is very important for a firm loyal consumers are na switch to other brand when prices are increase. (Exhibit 7) Plastic furniture capture the market of other furnitures such as wood and iron furniture. (Exhibit 6) When we ask to the consumers that which company’s plastic furniture you want to buy than more than 40% consumer prefer to BOSS it describe the positioning of firms. require less space it mean plastic chairs are pack with each other and it also easy to move because of light weight and better quality.Problems of Industry: The main problems are electricity crises.
885 Quantity (kgs) 127.719 25.838 85. 1 Exports of Pakistan 2007 Countries World Afghanistan United Arab Emirates Seychellies Canada 150.916 1.Exhibit no.000 50.000 0 Exports of Pakistan 2008 Trade value $ 555.000 World Afghanistan United Arab Emirates Seychellies Canada Trade value $ 149.164 14.613 143.931 Countries World Afghanistan UAE Mauritius .992 168 136 Quantity (kgs) 35.350 65.493 109.316 5.418 40 32 100.406 33.519 372.
UK Switzerland 600.682 1.000 500.385 847 319 300.000 200.000 100.000 0 Exhibit no.000 500.000 100. 2 World Afghanistan UAE Mauritius UK Switzerland 600.000 200.000 400.000 300.000 0 Exhibit no.000 3.000 400. 3 World Afghanistan UAE Mauritius UK Switzerland .
Exhibit no. 4 .
Of outlets 15 15 14 14 14 15 15 15 15 16 19 19 19 18 19 20 20 19 19 19 20 20 22 23 24 sale staff incentive 15000 15000 10000 10000 8000 8000 8000 8000 8000 10000 15000 15000 18000 18000 18000 16000 16000 10000 8000 10000 10000 18000 20000 20000 25000 advertising 705000 650000 625000 325000 300000 320000 400000 400000 425000 650000 700000 900000 800000 750000 700000 550000 400000 300000 325000 280000 325000 680000 750000 800000 1000000 .Exhibit no 5 Date sales December 2008 5647000 January 2009 5805000 February 2009 5420000 Mar-09 5525000 Apr-09 4800000 May-09 4850000 Jun-09 4600000 Jul-09 4650000 Aug-09 4450000 Sep-09 4800000 Oct-09 5200000 Nov-09 5500000 Dec-09 5920000 January 2010 6200000 Feb-10 6000000 Mar-10 5800000 Apr-10 5500000 May-10 5200000 Jun-10 4900000 Jul-10 5100000 Aug-10 4950000 Sep-10 5500000 Oct-10 6000000 Nov-10 6600000 Dec-10 7000000 No.
6 Exhibit no. 7 .Exhibit no.
Exhibit no. 8 Exhibit no. 9 .
switch to other brand Yes No 16% 2% 4% 4% 4% May be 10% 4% 2% 10% 6% Total 48% 6% 6% 24% 16% Company's Furniture Prefer to buy Boss Sonica Venus citizen Toyo 22% 0% 0% 10% 6% . 11 count Increase price. 10 Exhibit no.Exhibit no.
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