Project on leather industry

Submitted To: Madam Shumila Jabeen

Submitted By: Arslan Javed Muhammad Furqan Asghar Furqan Akbar CIIT/FA09-MBA-020/LHR CIIT/FA09-MBA-083/LHR CIIT/FA09-MBA-038/LHR

Section: Submitted Date:

B 12-05-2011

1

Table of contents Executive Summary Objective of business Mission of business Key to success Products and Services Description of products and Services Comparative and comparison Technological Dimension Market Analysis Target market Market need Market trend Market Growth Industry analysis Strategies and implementation Web Plan Management Summary Organization Structure Management Team Personal plan Financial Plan Projected profit and loss Break even analysis 2 .

The negative perception of the country in the world community has adversely affected business and we are getting 20 per cent less price for the same product manufactured in other countries. which is the part of business. Price is the only attraction to the buyers who have created fences against Pakistani goods. but importantly for last 9 years there is marginal contribution in exports. so the scope of leather products could never die although it might face difficulties. Despite low exports. Importantly electricity shortfall. and leather products are need more than a want of us. Leather industries contribution towards exports is always essential part of the exports share. Turkeys strong position gained in last decay. So it shows that there are lots of problems in the industry but still is attractive one as history could repeat itself. This may have some certain reasons important are the intense competition. and we believe we can get something positive out of it. China. As you know that the World leather industry is huge and never ever going to be closed down although could face ups and downs as the history of leather products is as old as human being are. raw materials prices and very importantly War against Terrorism put negative effects on leather industry. Pakistan is always considered as important player of this ground since after its independence. 3 . the price of hides and skins are showing an upward trend due to scarcity created by the war on terror in the areas which were previously rich in livestock. new players like Bangladesh.Executive Summary We are interested to launch a leather company name RDB leather industry.

To perform continuous business improvement in order to meet and exceed customer expectation. and correct documentation in case of deviations. To solve reliable export services to the needs of the business community. Safety:-By providing a world class. Decisions can impact the success of the company as much as the performance of the export. safe and hazard free work environment to its employees. undamaged goods.By always delivering goods on time with excellent planning and by cutting down the production lead time. Quality :-By maintaining high standards of quality in the work culture and products that is in manufacture /exports and the services that its provides.Objectives of business The objective of the business is to set the standard for excellence in global export through total commitment to quality in people and customer service. Cost:-By always remaining competitive by world standards and maintaining production levels Delivery:. Moral:-By always keeping its moral standards high and conducting its business with dignity according to the established rules and regulations. Development:-By developing cost effective and innovative products without compromising on quality. 4 . with superior financial results. Reliable services means on-time delivery. To create sustainable business growth in order to enhance the prosperity of employee and benefit shareholders.

Another important aspect is the availability of skilled labor force as higher degree of precision and accuracy is required in footwear manufacturing. There is a need for strong linkage with the progressive footwear exporters. by maintaining our uncompromising integrity. clearing and export company in the Pakistan. This requires aggressive marketing efforts. in the support and development of our People. through total commitment to customer service. 2) Products and Services: a) Description of Product and Services Product We are dealing in leather garments including y y y y y Leather jacket Ladies handbags Leather shoes Leather belts Leather skirts 5 . KEY SUCCESS FACTORS The commercial viability of this venture depends upon the regular and continuous flow of export orders. To be the recognized industry leader.Vision Of Organization Mission Of Organization To become a leading transportation. The key for the successful running of the project in making this project profitable is the manufacturing of good quality OF Leather and manufacturing shoes. Communications and Systems in sustained growth and profitability.

Italy and UK. We shall also target the South African market where quality is not issue because they are price conscious. France. It is good for strategy making to identify the strengths and weakness of competitors and try to differentiate itself from them. Our main focus to export our garments (goods) in western world. It means that we are dealing two kind of customers as price and quality conscious. USA. Germany. Yousaf tanneries Ltd Latif tanneries Ltd. Local demand is very small as compare to international market but the leather shoes demand is high. We are also giving shipping facility or service for the delivery of goods on behalf of customers. Service Company will give online sale services for its customers to access the global market.y y Leather wallet Leather gloves Mostly company will focus on global market including Canada. b) Comparative and Comparison It is very important to analyze the competition environment of the industry in order to compete successfully. Customers can order through company website for customize their products. Indian garments products are our rivals because they have high market share in leather garments. 6 . In Sahiwal there are many small and larger producers are competing our products as y y y Qamar tanneries Ltd. Indian designers are innovator in garments. Direct competitors It includes the following local and international competitors.

We have international competition as y y y y China Bangladesh India Turkey Indirect competitors The rexion sheet makers are also main competitors in the national market and international market. 3) Market Analysis a) Target Market Export market is the primary market. stitching. processing. As far as the domestic market is concerned. major customers include leading chain stores in Europe and America. The output and quality of leather has steadily increased. cutting and packing. Now we have explained it in different processes to know its importance. 7 . retail selling to the big players in the market with an expansive network of retail shoe stores is an extremely lucrative opportunity. given the size and production capacity of the unit. Orders can be procured directly by contacting buyers during international trade fairs or indirectly through middlemen. In the export market. leather dying. and the Leather Technologist can claim to be a member of an ancient profession. and transport. Technology is an essential part of every business similar case with leather products in every step technology is used for different purpose like wear housing. c) Technological Dimension Leather was one of the first manufactured materials.

Leather products are treated as fashion symbol and to protect the bodies against cold. Now in these days every business is facing decline due to the global crisis but in future it is predicted that the winter season period is increasing as compare to the summer.  The major export partners are: European community(accounts for 65% of the total exports) North and Latin American countries as well as Central Asian states(contributing 35% of total exports)  Pakistan has 1% share of the world leather market. local consumption of leather footwear is estimated around a 16 million pairs per annum. Total production of footwear was 11 billion pairs and the total international trade of footwear was $47 billion. d) Market Growth Footwear market is the biggest market amongst all the leather sub-sectors. Germany. Canada. of which $25 billion trade was of leather footwear. b) Market need Bringing the consumer and shopper at the heart of all decision making is the vision of the Generating Demand team at Roland Leather Manufacturer. institutional sales to the Armed and Police force with little modification are also viable options. Growth of 3% has been projected for this local market 8 . According to an estimate. So we have forecast that the future need/trend is bright due to the above two reasons. We will continue our efforts to better understand our consumers and shoppers with the intent to not only make deep local consumer understanding the base of all Marketing and Communication Strategy but to also make it the foundation of all innovation and renovation efforts c) Market Trend Leather product is a fashion symbol for teenager and youth generation in the western world like UAS. France and Italy. which is the highest amongst all the leather sub-sectors.Moreover.

the climate is generally arid. Total annual installed capacity of these units is estimated to be 15 Million leather garments (of all kinds) per annum. characterized by hot summers and cool winters. The demand can still be created by focusing more on the products which are not affected by the climate. Pakistan lies in the temperate zone.4) Industry Analysis There are about 350 leather garment manufacturing units in the organized sector in the country. The demand of Leather is highly dependent on natural factors such as climate. There are also wide variations between extremes of temperature at various locations. Gloves 4% Global Demand for Leather Automoti ve 7% Products Leather Goods 9% Clothing 11% Footwear 56% Upholster y 13% 9 .

The government of Pakistan gives 50% government subsidy in various international fairs and exhibitions held at different destinations in the world. Pakistan Pavilions was organized by Pakistan Tanners Association in collaboration with the EPB.  The entities that are involved in this venture are    SMEDA Ministry of industries Production & special initiatives The aim of this strategic step.Other Leather Products 1% Footwear 8% Product Profile Garments 42% Gloves 16% Leather 33% 5) Strategies and Implementation Lately. is to reposition the leather industry on the domestic. the leather industry has engaged in various fairs domestically and internationally in order to increase awareness of leather products among the masses. regional and the international front 10 .

SMEDA has initiated the project of IIN( industry information Network) 6) Web Plan We are also giving online shopping so it is necessary for us to focus on the information technology as well as its importance. so it is necessary for company to focus on internet marketing and its application 7) Management Summary a) Organization structure The hirercay of the industry is given as follows: 11 .  Update the website  Promotion through e-marketing and different website  Invoicing of bills  Make query We will focus on information technology plan as first preference because our customers can access throughout the world via internet. It will perform the following functions.  The leather vision and strategy also includes the goal of setting up leather parks in Sialkot.

y y Description of company¶s operation Flow of order for goods 12 .b) Managemnet Team President Manger Finance Manger Marketing Manger oder processing Managemnet Team c) Personal Plan Basically operation plan is mixture of following three activities as under.

y Technology utilization Description of company¶s operation In our case we are performing overall our activities with respect of following functions y y y y HRM department Finance department Operation department Marketing department Human Resource We have categorized the functions of human resource into selected field as requirements  Recruitment & selection  Compensation  Training  Performance appraisal Finance department Finance department will perform all those functions according to the need of the business including  Budgeting  Payrolls  Financing  Preparing statements  To issue the credit to other departments after documents  To put check and balance on capital 13 .

The connection with customers is also a major function of our operation plan. Here we make a proper direct to our suppliers as well as our customers. so marketing department will perform the following functions. The overall activities regarding product manufacturing to supply toward customer is associated with this function. Pricing and promot 14 . Marketing department  It is very critical department of our business because production/manufacturing is not a big task but it is very important how to reach the customers. name & number of suppliers which are concerned in our project and process of manufacturing as a whole.Operation department Our operation activities are based on supply chain management system for our product.

8)Financial Plan a) Projected profit and loss Income Statement RBD LEATHER MANUFACTURING Income Statement For the year ended on Year 1 details Revenues Cost of Goods Sold Gross Profit Less Operating Expenses Marketing Expenses Building rental expense Telephone expense Miscellaneous expense Depriciation expense(office equipment) Fixed Electicity Repairs & Maintenance Office supplies expense Net Profit Retained Earnings Profit Turn Forward to B/S Rs.200 4000 1000 500 1.400 106.400 8442000 1.200 75000 5000 2000 500 18.582.200 72. 10. Rs.475 b)Break even Analysis 15 .688.130.725 1.509.

009.475 2.V) X = 200000/ (2430.675 Operation Cash Balance Profit Add Depreciation Total 16 .027.Variable Costs) = 200000/ (2430-2025) = 200000/ 405 = 494 units Total Costs = Total Revenue TC = TR RBD LEATHER Cash Flow Statement For the year ended on Year 1 Rs 500.Break-even analysis We have done this analysis on monthly basis it means that initial fixed cost and variable cost is considered in this analysis as TFC + TVC = P × X TFC + (V × X) = P × X X = TFC / (P .200 2.475 18.509.2025) X = 494 units Breakeven Point = Fixed Costs/ (Unit Selling Price .000 1.