Market Research and Industry Analysis.

Market Research:The firm has conducted the customer survey having a word with project and
technical manager in below industries and associated personnel:

1. Dabur Nepal Pvt. Ltd at Rampur Tokni, Bara

2. Asian paints Nepal (P) Ltd , Lalitpur having its factory at Hetuada
3. Berger paints Nepal (P) Ltd., Tinkune, Kathmadu having its factory at Hetuada
4. Chaudhary Group Pvt. Ltd. – food division at Sanepa, Kathmandu having its
production hub at Nawalparashi
5. Arihanta Packaging Industry Pvt. Ltd, Biratnagar
6. Himalayan Distillery Ltd., Parwanipur, Bara
7. Clearing and forwarding agents located in Birgunj
8. Smart Food & Snacks Pvt. Ltd , Tadi, Chitwan
During the visit – i had a detail discussion with their technical personnel along with
procurement heads. They have shown interest on roofing and willing to take up with their
board for future expansion.it is found that this kind of roofing is extensively used by
manufacturing, service, schools, government offices, clearing and forwarding agents; & even
on the farming.
Target Market/Market Size: While taking the market intelligence, we have noticed that these
manufacturing industries are facing problem during their peak season & while prebuilding the
stocks to cater their peak demand. The demand is cyclic for Dabur having highest demand in
March due to their fiscal year closing in the books of reporting to their parent company in
India. Same case is there for Berger and Asian paints. After fiscal year closing; Dabur has the
high demand of specially fruit juices in following months till the festival until
September/October. In order to cater this – Dabur has hired a warehouse having a space of
60K sq ft 5 km away from their factory. As such, this could be one of the choice for them to
invest since they are paying NPR 6.5 million per year for renting few warehouses. Similarly the
two major industries for paints in Nepal are also having the same kind of problem for catering
the demand for March sale as well as seasonal sale before the festival specially Dashain and
Tihar.
Second target market is Chaudhary group’s Ganga Devi Chaudhary Udyog Gram – who has an
expansion project for the warehouses since 13 different companies are running in the same
compound.
Third target market shall be industries in Hetuada such as Nepal lever, and others. We do see
the potential for the clearing and forwarding warehouses at Birgunj area.
This shall not be a hot cake for sure and shall have a very niche market and the aspiration of
the company is to have only one project a year having at least 30,000 square feet.
Market Trend: As of now, there is no market trend roofing here in Nepal. However, We
do foresee the existence of market as rightly said in our marketing class – market need to be
created. Roofing do have the potential here in Nepal and it can be diversified for the other
roofing need such as porch, garden, louvers, party venue, cement, hydropower, and so on.

Market Growth:Although the firm is business to business model firm, the market growth of
the firm is directly associated with the growth in industry. Since the industrial growth is
sluggish despite the favorable laws for the foreign direct investment; the growth for this
business shall be flat as well.
Nepal ranks the 45th for the ease of doing business in the world; industry contributes only 20%
of GDP by sector and has an economy of GDP of USD 70 billion approximately. None of these
statistics are in favor of market growth. As such after doing few projects in various industries;
this company needs to diversify taking small projects such as porch, louvers, shades, & possibly
extending service to resident building so that it can achieve minimum of one project a year.

Macro Environment Influences (PESTLE Analysis):

The macro environment analysis includes political, economic, social, technological, legal and
ecological factor analysis that helps to screen the external forces that affects the business.
Political Environment:Roofing firm is highly dependent on industrial growth of the country
which is directly interrelated to the country’s political system. If the political environment is
stable then the business will grow as expected – more industry means more opportunity for
this kind of business. Unfortunately, we have not got the privilege of having favorable political
system and the industry has not flourished.
Political environment is the basis for doing the business in any country. This shall have many
impact on the overall of business. The strikes, labor union heavily influenced by the political
parties, demand of donation by the various unions are some of the factors not favorable for
the business.
Economic Environment:Economic force is the general indicator of attractiveness of market.
Economic environment is not very lucrative for any kind of business here in Nepal.
However, there has been some economic growth in the urban sector as well as rural sector.
This can be attributed to the internal as well as external migration caused due to the political
turmoil. The nation’s economy is now hugely dependent on the remittance generated by the
many displaced from the country or the ones who chose to go abroad for better opportunities.
Despite these facts, the country is devastated by the recent earthquake and shall require
massive construction. The economic environment is exacerbated. Hence, this BDP is focused
on low volume and less ambitious project with low initial investment.
Nepal’s manufacturing sector has not performed as the engine of growth. In fact, its share in
GDP gradually declined from 9.0 per cent in 2000/01 to 6.2 per cent in 2012/13. Other sectors
- transport, storage and communications and financial intermediation - increased their shares
in the economy over the years. Still others showed minor changes. Agriculture maintained its
dominant position with 34.3 per cent in 2012/13.
Social Environment:The population of Nepal has been increasing at a steady rate. The annual
growth rate as per Nepal Census 2011 data is 1.4% with the decadal growth of 14.99%. The
population as of 2001 was 23.1 Million and of 2011 is 26.6 million. The increase in the
population will call for increase in demand of manufacturing goods and services. Hence, the
economic activities is bound to be increased by the increase in population. That is the only
hope in this business.
 Government instability with corruption in every sectors & inefficient government bureaucracy
are not the very positive social factors. Inadequate supply of infrastructure is another problem.
Despite these facts I do see a niche market for this kind of roofing in Nepal.
Technological Environment:Even though the country is not technologically advanced, Nepal
has the option and has been able to import and introduce the best of the technology. In this
business; roofing sheet shall come from the state of art industry in India. For the installation –
we shall be calling the fabricator with the tools in a trailer; who has lots of past experience in
this sector. Hence, unavailability of technology here in Nepal is not an issue at all.
Environmental/Ecological Environment:There will be no direct impact on
environment/ecological environment by the operation of this business. In fact, this kind of
roofing is absolutely environment friendly since the material shall come from India and shall
not pollute at all. The installation shall not require truss and that shall prevent the usage of
resources such as energy and others.
Legal Environment:To operate this firm, we need to register firm in company registrar office.
The import of roofing sheets and fabricator are allowed and shall not be a problem. The
material and installation are being very friendly that there shall be no legal problem.
Michael Porters Five Forces Model :
A. Threat of new entrant :
Just like any business; the market is free for any new entrants to enter the industry. The threat of
new entrant is unavoidable; however it is low considering the skilled manpower required in this
sector which is comparatively tough to find in Nepalese market in future & the fabricator are
not available as of now. The numbers may increase considering the potential in this sector. The
fabricator and roofing company in India could be the possible threat if they choose to come here
and take a risk working in Nepal. In order to counter the threat from the new entrants our effort
will be to provide the reasonable TCO – on the basis of cost model; meaning COGS + 15% to
18%. This 15 to 18% shall include the operation cost as well as cost of fund. Which could be
the barrier to the new entrants. Another problem is the volume on this sector, which is not
appealing to the new entrants.

B. Bargaining Power of Customers:

 The bargaining power of customer is persisted to be very low because there are no one in Nepal
who is willing to provide this product as of now. The firm in India may not be willing to come
in Nepal and work for these small projects of 30 k square foot. Talking to the industries in India
– the firm in India are willing to work for a project which is not less than 100 k square feet. As
such, no industry is able to use this for their need.

C. Bargaining Power of Supplier:

Supplier has not thought about expanding their business in Nepal due to the scale of
opportunity. Since the business that are aiming to do has very low scale and niche market; and
there are alternative suppliers and fabricators willing to work with this company – as such,
bargaining power of supplier is very low.

D. Threat of Substitutes:
Since this firm is first in its kind in Nepal there are no local substitutes within Nepalese market
however firms in India/Nepal provides the close substitutes. Not only that, the substitute are
already there such as CGI sheet having truss, PVC sheets, & traditional roofing.

E. Rivalry Amongst Competitors:

Being a pioneer in this market there will be no local direct competitors in initial years. From
neighboring country India, we expect less rivalry in the industry. However, there is no barrier to
entry in this business, new players may enter into the industry and try to get the share of pie,
and each firm will try all the means to stay competitive. The indirect competitors are the ones
who are building the traditional roofing.