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Business Plan: RAINBOW SALT LAMPS
Rainbow salt Lamps started off with an idea of providing different kinds of salt lamps in innovative designs for endowing a fresh healthy air by generating negative ions. On the other hand it will serve to decorate the place and enhances the beauty of the environment in which it is placed. Man has always been very much concerned about his health, with lot of endeavors, medical science has advanced a lot in providing a good health and care to mankind. Scientists are still conducting researches regarding this subject and out of these researches came out the discovery of “Rock salt”. The salt is extensively used to make different items out of which salt lamps are at boom. These salt lamps are produced in Pakistan and the demand and importance of these salt lamps is increasing day by day. By ensuring good quality, variety, cost and availability, we can capture a good and massive market. At the beginning of 21st century, we can hardly imagine living without electric devices; they have made it easier for us to work in the offices, homes and many other places. However, we do not realize that they are also a source of very harmful positive ions called ELECTRIC SMOG. Electric smog deteriorates the condition of air, which
hazardously affects our physical and emotional state. Sources of harmful positive ions are: computer monitors, TV sets, Electric heaters, Dryers, Vacuum cleaners, Microwave ovens, Tobacco smoke. Being the exporter in Texas, USA, and the product will mainly focus the health conscious people and the ones who appreciate beauty and uniqueness. People have the awareness about the scientific research and its benefits so it will be easy for us to create a good customer relationship. Rainbow salt lamp is expected to occupy 10% of the market share in the initial level while adopting penetration strategy focused on this target area. It also anticipates a moderate growth rate yearly that can lead to increase of market share by adopting Product Development strategy. We opt to use different tools of advertising to attract our customers i.e. teaching strategy, test marketing, website which not only facilitate the users to have an opportunity of online shopping but also enhance their knowledge of salt products and its benefits. Our main objective is customer satisfaction so through online facility we will also answer different queries and regarding the manufacturing of product and will surly strive to resolve them. Though there is less competition in this market as the market is in its initial growth stage in America but still there are some exporters from China and Pakistan who are our tough competitors as they have been in this market longer before us. So due to all these factors there is a complete check and balance process in the quality assurance and considering the customer’s perception about high quality product, such system is being developed which checks whether each unit has met the standards being laid for a best quality product. Rainbow salt Lamps requires setting up a strong well knitted distribution channel. The whole project will require a capital investment of Rs.12 million. This investment will be utilized in purchasing machinery, hiring a building, labor cost, marketing cost, transportation cost and coping up with other fixed and variable costs. It is just the beginning; in the long run Rainbow Salt lamps has a vision to expand its market by exporting the product in different areas of not only USA but also Canada, Europe and Australia. We believe in building a strong customer and employee relation ship so with the passage of time Rainbow Salt Lamps will come up with certain benefits to entertain its employees and also share a ratio of its profit to different NGOs engaged in different health programs in Pakistan. Other than this set up plan, Rainbow salt lamps will avail all the possible opportunities come in its way and aims to exceed customers’ expectations.
We can exit from the business by winding it up at breakeven. All the raw material could easily sold in the local market due to its high consumption of salt in different ways.
PREFACE Promotion of handicrafts from Pakistan is always encouraged for exports, but it also covers a big risk as entering a new and unfamiliar market with different demographics, values and traditions is not an easy task. We with a belief “greater is the risk, greater is the return” took an initiative and the rest of the journey with lots of hardships became exciting and at the same time a source of practical knowledge. We will never forget the long hours of working, other commitments like exams and assignments, searching the local markets, running after Sir. Shehzad Ansar for his guidance during the project. The most difficult parts in the project were working on finance department, marketing, brochure, and annexure. The project entailed establishing a business plan and covering all its aspects i.e. management, marketing, finance. When we started the project we did not know much about the salt products and its benefits. But peering through data, giving a whole business plan, from idea generation to day of operations, now we are in a position to launch a new venture in the market for real. The details of all departments are given ahead.
We would like to take this time to acknowledge all those who have been instrumental in making our contribution to this project possible. First of all, we would like to thank ALLAH ALMIGHTY, for giving us the skills, talents, and opportunity to work on such a challenging and exciting project. This project is truly better because of the effort that our teacher, Prof. Shehzad Ansar has put into it. We are thankful for his guidance and support. We would also like to thank Mr.Tanvir Arshad, Junaid Zaheer, Himayat Rasool, Beenish Arseen, Hasan Shariq for sending us the information regarding the international market. Last but not the least we also like to thank to web site creators, researchers and authors of journals that helped us in providing all the valuable information which was essential for our project.
The “Rainbow salt Lamp”, is an organization which is related to an ancient handicraft
of Pakistan which is connected with the extraction of high quality crystalline raw salt from the mines situated several miles beneath the surface of the earth. The pure and high quality crystalline is available at Khewra mine. Khewra salt mine is located in the mountains called "Kohistan Salt". It is about 260km long, 16km wide and 900m high. Since centuries, salt is being extracted from this mine. Historical references show that salt is being obtained since 327 B.C. This salt is used for preserving food and leather, preparation of various chemicals, manufacturing of glass, soap and 1400 other products. Khewra salt mine is the largest salt mine of the world- It has the capacity to enclose billions of people. The best quality salt extracted from this is called "Transparent salt", also famous as "Shefih Mehal". The company is situated at Multan road, Lahore and is engaged in exporting its product to Texas, USA. The organization will be a sole proprietership. The product line of the company consists of designer rock salt lamps. The company aims to be committed in providing a product which gives its customers healthy, beautiful and soothing environment by meeting and fulfilling the quality standards and providing desired level of customer satisfaction. Rainbow salt lamps are not only aesthetically pleasing but have a significant practical value as well.
To become the best manufacturers and exporters of salt made creations in international market
We aim to provide high quality natural and innovatively designed salt lamps- rendering a healthy future with an experience of a unique décor and ultimately achieving customer satisfaction
Breath easier, feel better, live healthier
PRODUCT DESCRIPTION: The product is a block of salt in different designs and colors, hollowed from inside to fit
inside a bulb, emitting lights of different colors depending upon the colors of salt slabs. The especially shaped block after being fitted on a wooden stand finally produces a salt lamp. FEATURES: The available colors will be bright red, orange and yellow. The white color of the lamp will be complimented by fitting bulbs of different colors. The product will be available in different shapes such as in different geometrical shapes like squares, triangles, spheres and cylinders and our special offer will be to give lamps in the shape of Cross. The salt lamps will weigh from 2kg to 8kg depending on their being medium and large size. The size of the lamps will range from 6 inches to 12 inches. Scientific Research
At the beginning of 21st century, we can hardly imagine living without many electric
devices; they have made it easier for us to work in the office and at home. However, we do not realize that they are also a source of very harmful positive ions the so called ELECTRIC SMOG. Electric smog deteriorates the condition of air, which hazardously affects our physical and emotional state. Sources of harmful positive ions are: • • • • • • • computer monitors TV sets Electric heaters Dryers Vacuum cleaners Microwave ovens Tobacco smoke
Scientific tests have revealed that the ratio of negative to positive ions should be between 1.02 to 0.98. In closed rooms where a few people work at the same time the amount of negative ions may fall to as low as 200/cm3 . The positive effect of negative ions can be experienced on a visit to a salt mine, by the sea or walking right after the storm. Now, we know how important it is to make sure that harmful effect of electric smog is reduced to a minimum in the rooms where we work.
The cheapest and simplest method of fighting against electric smog is to air rooms regularly, particularly those where few people stay together and have many electric machines or where cigarettes are smoked. You can also use air ionizers but these are quite expensive and it's not even a natural way to purify the air. So we offer Rainbow salt crystal lamps which are natural air ionizers that effectively boost the number of negative ions in the air. The effect of air ionization by salt originates from physical and chemical properties of salt, discovered many years ago. In salt lamps the ionization effect is enhanced by heating the Rainbow salt crystals with a bulb installed inside the lamp, As a result the Rainbow salt crystal lamp improves the quality of our environment and thus our well-being. In addition, Rainbow crystal salt help cure many diseases. Because of their color, they are also used in color therapy i.e. chromo-therapy. Their soothing light helps neurotics and people suffering from insomnia. So Rainbow crystal salt lamp is a product worth-having at every home. Even though they are not a "medical device", Salt Crystal Lamps, by emitting negative ions, significantly reduce a myriad of indoor air pollutants. Negative ions have known benefits, and may provide relief from sinus, migraine headaches allergies and hay fever, reduce the severity of asthma attacks, enhance the immune system, increase alertness, increase work productivity and concentration, increase lung capacity and reduce susceptibility to colds and flu. PRODUCT SIGNIFICANCE: • • • • • Reduces electromagnetic radiations when placed near computers or other radiation emission items. Has a negatively ionization effects and hence, is helpful in the treatments of illnesses such as rheumatism, allergies, respiratory diseases, sleeplessness, migraine, high blood pressure, other physical disorders. Creates a soothing, calming and refreshing atmosphere enhancing meditative experience. Aids in the healing process by providing a cleaner, negatively ionized environment. Preserves the natural air quality.
PLACES TO USE: • • • • • • • • • At the office. By your computer. During massage and meditation. In smoky places. In your study. In children's bed room. Anywhere you want the air quality to be improved or preserved. Anywhere you want to create a coy and relaxing environment. Anywhere you want to enjoy the beauty of salt crystal lamps
This product will be suitable for the market for an everlasting period of time due to its unique nature and benefits. This product will remain at the growth and maturity stage as we will be offering innovative designs keeping in view the changing market trends and to meet and exceed customer expectations.
We will be obtaining trade marks and design patents.
The key personnel involved for the success of our business is the owner, the designers and the artisans but most importantly the marketer and distributors in USA will be the key people upon whom, the success of our business relies on. All these personnel together with their hard work and competence will play a key role in making our business a success story. KEY RESPONSIBILITES OF HUMAN RESOURCE: • • • • President (CEO) Quality Manager Production Manager Admin. & Finance Manager
President (CEO) President is the owner of the organization who is investing his capital in the venture. • Job Description To make the overall strategies and key decisions of the organization. Quality Manager One of the major competitive strategies of the Rainbow Salt Lamps is to induce quality in each of its operation and final product. Quality Manager is handling the quality of the operations of the organization in total. • Job Description To ensure, control and maintain the quality of the manufacturing processes. Production Manager Production Manager is one of the key posts in the organization. Several other personnel are working under Production Manager like: • Store Supervisor
o o o o o •
Cutter Operator Lathe Machine Operator Grinder Operators Drill Machine Operator Small Hand drill operator
Job Description To handle the production processes of the organization and ensure innovative designs and layouts.
Administration and Finance Manager Admin and finance manager is going to handle following two officers: • Accounts Officer • Purchase Officer • Job Description To handle all the issues related to administration and finance.
Strengths: 1. There is an easy access to raw material as the most of salt mines are in Pakistan which are Khewra salt mine, Warcha salt mine, Kalabagh salt mine, Jatta/ Bahadurkheil salt mine etc. 2. Cheaper labor available in Pakistan. 3. Raw material is available at low cost giving us a cost advantage. 4. Wide variety of designs specially designed by sculptural expert. 5. Skilled labor. Weaknesses: 1. The production process is highly manual and requires high quality of standardization and control. 2. The most essential issue is to manage the human resources as much care is needed to operate the machines as well as the handiwork. 3. Lack of awareness of the local people about its benefits. 4. Project requires heavy investment as initial losses are must due to high promotional charges required to capture the international market. Opportunities: 1. Many people in USA and Canada are aware of the benefits of Salt lamps. So it could be a good market for our product and they are more inclined towards their health and decoration.
2. Other then lamps marble flouring pieces can also be added to extend the product line. 3. Our product can capture the market of gift items as well as of curing products. 4. Increased market size as most of the western countries perceive the benefits and uses. 5. With the passage of time product line can be increased by understanding the market demand and the trends. 6. Standards of life are improving day by day and people are getting more aware of the salt products which are beneficial for the health concerns. Threats: 1. New entrants from the Asian countries because of its high profit margin. 2. Salt lamps designs changes rapidly due to fashion trends. 3. Need to add innovative product line to have a stay in the market for longer period of time.
The people of USA are quite conscious about their health and well being but they are not able to get the desired satisfaction level through different dietary food, exercises and an access to clean and healthy air in their homes and work places. As there are several companies already selling the salt lamps in this market but much work is needed to be done for the awareness of the health and décor aspects of the salt lamps and salt products. Thus highlights the benefits provided by the salt lamps in elegant colors and eye-catching designs will encourage us to reach diverse markets in the USA and will render us an edge in the market.
The handicraft industry of Pakistan has always maintained good status with respect to local market as well as in the exports to other countries. Handicrafts, particularly the salt lamp production is at boom and will grow on a massive scale with special reference to exports. People not only in the domestic market but in the international market are increasingly concerned about their health and they are making leaps and bounds to ensure their well being. Secondly there is a lot of inclination towards the decoration of houses, workplaces, restaurants etc. So the trends in the industry promise a bright future to excel in the market. And Rainbow Salt Lamps is sure to capitalize and benefit from this incredible opportunity.
MAJOR CUSTOMER PROFILE:
In terms of our market segmentation, the customers who possess the following characteristics will be the people who would be most interested to benefit from our product. • • • • • • • People who are a little or extensively health conscious People who want the air to be clean and healthy to breath in People who are suffering from various diseases like asthma, allergies, breathing problems People who are prone to their mental well being People who are inclined towards interior decoration for their homes, workplaces, labs, hotels and restaurants. People who appreciate unique decorative items People who are under-active and want to be alert and more productive in their workplace
The marketing strategy used by our enterprise will be focusing on the international market as it offers greater growth opportunities as compared to catering the domestic market. The marketing strategy is made keep in view the market of USA. The strategies are as follows • • • • Participating in tradeshows to exhibit the product and create awareness Giving ads on the internet Giving product information through magazines Providing free samples
PRODUCT STRATEGY: The strategy for salt lamps is to provide high quality lamps in unique designs and vivid colors to our customers. Through our product we aim to focus on improving the well being of the people, at the same time giving them an experience of enjoying beauty and serenity around them. Attributes of salt lamps: As we will be competing with the companies who are in this business for a long time so we have to provide an additional feature in our product in order to gain a competitive edge. The order winning and order qualifying attributes of our product are: • • Low cost—our center of attention is the provision of the salt lamps at the lowest possible cost to our customers High quality – along with low cost, we aim to provide high quality salt lamps to satisfy our customers
Fast delivery—through our extensive distribution system, we seek to ensure fast delivery of salt lamps to our customers to exceed customers’ expectations Variety – we emphasize to offer variations in our product designs as per customers requirements and expectations
Through these attributes, we aim to create quality and satisfaction for all our customers and become the best company in creating value for the customers PRICING STRATEGY: The price of the salt lamps is suitable for the all type of customers. As we are producing at low cost so we will provide lamps at quite affordable prices. Providing less price does not indicate that we are compromising on quality. In fact we ensure high quality in combination with less prices. A bit increase in the prices is going to be offered as per design complication. Initially we will focus on market penetration strategy to gain access to large market and reap good profits. PLACEMENT STRATEGY: Our production facility will be located at Multan Road, Lahore. Whereas the warehouse in USA will initially be set up in Texas. The location is convenient in terms of reaching the market as it is a center of business activity. We will be starting the distribution from our warehouse in Houston, Texas to the different retail stores and pharmacies within this area through an agent who is familiar with the local market. Currently we will distribute the salt lamps through an agent in US. We are going to have a warehouse that is going to receive the exported salt lamps and the agent who is in charge of the warehouse will be responsible to deal out the lamps with the retail stores, health care centers and pharmacies. PROMOTION: The salt lamps will be promoted initially through different promotional tools. We will be starting by giving salt lamp samples in the market. For the advertisement, we will be focusing on the electronic media. Our company and our product will be advertised on the search engines like google, yahoo. The reason is that our target market which includes youngsters, professionals are into the habit of surfing the internet for all their deals. So this is the best media to capture the maximum market. We will be endorsing the product through different tools like • • • • • Free sample campaign Point-of-sale displays in retail outlets Holding demonstrations and exhibitions Offering specially designed small size salt lamp as a gift to first 500 buyers who purchase the product Promote the product through health care and interior decoration magazines
For retailers • • We will provide them quantity discounts Allowances
We will use push strategy. Our sales agent will meet the retail store manager and the pharmacist to show them the samples at first, in order to check the response of the market. He/she is going to explain to them the significance of the salt lamps with respect to their medical and decoration aspects.
• • We will go for two main strategies Market penetration—we will increase our sales with the existing product by making improvements in our advertising and entering into contracts with retail stores. Market development—enter into new demographic and geographical markets with the same product.
1. Obtained raw material from mine
2. Transported to production facility
3. Separated on the basis of shape
6. Carving lamps to shape
5. Drilling holes into the slabs
4. Cutting into smaller slabs
7. Segregation based on size and weight
8.Polishin g and staining
9. Packaging of the finished product
10. Shipment and transportation
DETAIL OF PROCESS:
The process of making salt lamp is given as below. 1. OBTAIN RAW MATERIAL: The process begins by obtaining the salt blocks from the mines. At the site salt blocks are selected carefully on the basis of their color and quality. 2. TRANSPORT TO PRODUCTION FACILITY: The selected salt blocks are transported to the production facility where they are graded on the basis of their shape. The naturally shaped pieces are sorted out from the rest that are to be shaped. 3. CUTTING: The blocks that are required to be shaped as per design specifications are broken down into smaller chunks through hand chiseling. These chucks are graded again on the basis of color and luminescent quality and delivered to artisans. 4. DRILLING: Holes are drilled into the core of the uncut slabs. This is done initially to avoid difficulty in the final stages. During the process, quality control is ensured in checking the core integrity and rejecting the cracked one. 5. CARVING: The lamps are then carved according to the desired shape through chipping tools. Quality is maintained in ensuring that the base is flat and that the lamp stands proper. 6. SEGREGATION: The shaped lamps are then separated on the basis of size and weight specifications. 7. POLISHING: The finished lamps are washed, dried, and steel brushed to bring out shine and sparkle.
8. INSTALLATION OF FITTINGS: Cut, be leveled, stained hardwood bases are prepared to support the lamps. These bases are attached with stained resistant fasteners, carefully aligning the holes. Necessary light adjustments are then added. 9. PACKAGING: The lamps are carefully packed in plastic bags for fragile items and packaged in cardboard cartons. 10. SHIPMENT: The boxed lamps are finally sent for transoceanic shipment
Cost of Good Sold (CGS):
Cost of Good Sold Rock salt with transportation Wooden Base Leads & Holder Bulbs carton small box other material for packing CGS per lamp Rs. 10 30 25 15 37 10 13 140
NPV: NPV for the following project is NPV= Rs. 9,910,056.98 when we discount the cash flows at discount rate of 9%. IRR: IRR for this project is calculated to be 36%. Payback Period: Payback Period for this project is equals to 2.4years.
CORPORATE SOCIAL RESPONSIBILITY:
As recently as a decade ago, many companies viewed business ethics only in terms of administrative compliance with legal standards and adherence to internal rules and regulations. Today the situation is different. Attention to business ethics is on the rise across the world and many companies realize that in order to succeed, they must earn the respect and confidence of their customers. Businesses need to balance economic, legal, and social responsibilities in order to achieve long-run success. Generally, there is often a relationship between good social and good financial performance. So for that purpose, corporate social responsibility is an obligation to consider the interest of customers, employees, stakeholders, communities and ecological consideration. • For that Rainbow salt lamps donated 5% of its annual income to the AIM (Identify, Merge and Action) NGO, situated in Faislabad engaged in dairy consultancy, literacy promotion, health awareness and Agriculture. Their aim is Community development through Self-identified programs for their Self-reliance and to promote civil society. 3% of the profit will be allocated to provide medical kits and medicines to the villages located around the Lahore city and also provide them free samples of salt lamp.
Following are the future plans of Rainbow Salt Lamps: • • • We will increase our product line by adding more designs and color variations We will set up our own sales center in Texas We will explore new markets beyond USA
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