Business Plan of Leather Products

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147188971 Business Plan of Leather Products
Operations management (University of Central Punjab)
Studocu is not sponsored or endorsed by any college or university

Downloaded by Mansoor Ali (maafzal28@gmail.com)
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Business Plan For Leather Products
Assignment Of Entrepreneurship
SUBMITTED TO:
Sir Sajjad Mohsin
SUBMITTED BY:
Zohra Tanveer
Mi10MBA017

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BUSINESS PLAN FOR LEATHER

PRODUCTS
Executive Summary
History of leather
Introduction
Company information
 Business Ownership
 Mission
Marketing mix
Operations management
 Equipment
 Product Design
 Location
 Supply Chain Management
 Distribution Chain
Financial Projections
 Profit & Loss Account
 Balance Sheet

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BUSINESS PLAN OF LEATHER

PRODUCTS
History Of Leather:
The second largest industry in regard to exports is the Leather Industry.
Contributing more than $800 million in 2009 to the foreign exchange in Pakistan.
This industry has the potential of delivering more and providing a large number of
jobs by diversifying product range and improving quality.
The leather industry in Pakistan is as old as the history of the country. During the
colonial era just a few number of tanneries were working in large cities such as
Karachi, Lahore, and New Delhi etc.
In the 1950s the number of well-equipped tanneries increased in Karachi, Lahore

and other major industrial cities.
Leather industry’s core products in Pakistan are;
 leather garments
 gloves
 tanned leather
 footwear
In the 50s and 60s most of the tanned leather was exported in raw form but soon
after the local tanning industry making semi-finished leather made rapid progress
in making finished products due to availability of raw material, labor and growing
demand in the foreign market.

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Pakistan Leather Industry has the production capacity of more than 100 million
square meters and against the production capacity it is producing only 60 million
square meters.
More than 450 units of leather garment manufacturers in Pakistan are producing
approximately 5 million pieces against the production capacity of exceeding 7.5
million pieces.
The industry has been facing some challenges which have been slowing down the
production process.
 Energy crisis
 Environmental challenges
 Lack of proper training
Introduction Of Business:
The business which I want to start is of leather products namely leather jackets &
gloves. Use of leather goods is increasing day by day. Now-a-days fancy leather
goods are being used by the people of even remotest area of our country, because
lifestyle has been changing very fast. Fancy leather products are durable and
beautiful to look at in comparison to other similar products.
Market Potential:
With the development in tanning technology, good quality leathers are coming to
market. Leather products have very high demand in domestic and foreign market.
The demand for leather products like hand bags, wallets, purses & belts etc. is
increasing gradually. It brings maximum unit value realization as compared to
other leather products. The main foreign markets for leather products are Europe,
Canada, Japan and USA. There is good scope for expansion of the industry.
Target Market:
 Labors
 Young boys & girls

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 Children
 Working class
NAME OF BUSINESS:
The name of my business is “JILANI LEATHER FIELDS” which is indulged in the

business of manufacturing leather jackets & gloves.
Mission:
“To become the premier manufacturing organization in the leather industry,

gaining market competitiveness and diversifying into value added leather with
clean, well maintained and friendly environment”.
Objectives:
 Our aim is to maximize business without compromising on quality.

 We are committed to meet the changing demands of an evolving
organization.
 We aspire to improve quality norms and enhance our product range.
Raw Materials:
 Leather
 Silk Cloth for lining
 Adhesives
 Solution, spirit, buckles, buttons etc.
 Satin
 Andlis
Business ownership
The name of business owner is Mr.Tanveer Aslam Jilani.

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There are three type of structures from which business can be started, which are as
follow;
 Sole proprietorship
 Partnership
 Joint stock company
But for starting Jilani Leather Fields I will prefer sole proprietorship because sole
proprietorship is one of the least expensive business structures to begin. There are
some other factors for choosing this structure which are;
a) Limited capital requirements
b) Full control
c) Full training
d) Better knowledge of the market
e) Simple accounting records
Total Capital Requirement:
The total capital requirement including fixed capital and working capital is
estimated at Rs: 10 lac.
Product Information:
Two types of leather products are offered;
1. Leather jackets
2. Leather gloves
SIZE PRICE
 Working gloves 9.5 -10 inches Rs:75 each pair
 Wielding gloves 14-16 inches Rs:180 each pair
These are available in 3 different sizes in jackets;

Small
Medium
Large
Prices of jackets ranging from Rs: 3000-12000

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MARKET ANALYSIS
The Market Analysis section of a business plan shows the entrepreneur’s

knowledge and expertise about the particular business being started (or currently
running.)
This segment should have a full description of the business’s history, growth, and
trends. It must include a complete description of the needs, size, and unique
characteristics of the potential customers, clients, or patients.
It should also assess whether those needs are currently being met. If not, it must
explain how your business will meet them, including a projected estimated market
share to be acquired. In addition, this portion should reflect the geographic location
of your target market, pricing and gross margin levels, and possible trends and/or
changes that may impact all the above.
Market Trends
Market trends are the upward or downward movement of a market, during a period
of time. The market size is more difficult to estimate if one is starting with
something completely new. In this case, you will have to derive the figures from
the number of potential customers, or customer segments.
Market potential of leather products is considerably high in Pakistan as well as in
foreign also.
Target Market
 Local market
 Labor

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 Working class
 Youth
 Children
 Foreign market
Competitive Analysis
Competitor analysis in marketing and strategic management is an assessment of the

strengths and weaknesses of current and potential competitors. This analysis
provides both an offensive and defensive strategic context to identify opportunities
and threats.
The market for leather products is highly competitive. Competitors are very strong
in this business. To give them tough competition I will adopt following strategies.
 Cost-cut strategy
 Price skimming strategy
 Penetration strategy
 Positioning strategy
 Segmentation strategy
MARKETING MIX:
The marketing mix and the 4 Ps of marketing are often used as synonyms for each
other. In fact, they are not necessarily the same thing.
"Marketing mix" is a general phrase used to describe the different kinds of choices
organizations have to make in the whole process of bringing a product or service to
market. The 4 Ps is one way – probably the best-known way – of defining the
marketing mix, and was first expressed in 1960 by E J McCarthy.
The 4Ps are:

 Product (or Service)
 Place
 Price
 Promotion

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Products Or Services
Product or service must meet customer requirements whatever these might be. For
example, an important aspect is function - products should do what they say they
can do and what they are expected to do. My company is offering leather jackets &
gloves.
Two types of leather products are offered;
1. Leather jackets
2. Leather gloves
Place
Roughly one fifth of the cost of a product is spent getting it to consumers. Of

course, the actual figure varies widely from product to product but generally
distribution is a very important element in the marketing mix. Different
organizations use different approaches to reaching their customers.
I will distribute my products to different local retailer’s local brands who then sell
these products in foreign markets.
Promotion
It is the process of communicating with customers? For marketing purposes,

communication of products and services contributes to the persuasion process to
encourage consumers to avail themselves of whatever is on offer. The key
processes involved in promotion, include:

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 branding - creating a distinctive image and character to an organization/and
or its products and services
 advertising - to inform and persuade the public
 packaging - presenting the product in a desirable and appropriate way
 public relations activities and other forms of publicity
 sponsorship
 Special promotions - e.g. buy one get one free.
 Direct selling
Objectives Of Promotion
However, there are three basic objectives of promotion. These are as follows:
o To present information to consumers as well as others.

o To increase demand.
o To differentiate a product.
Following marketing technique is used for my business.
Direct Selling
For the promotion of my businesses I will use direct selling. Direct selling is a type
of sales channel where products are marketed directly to customers, wholesalers
and retailers eliminating the need for middlemen. I will conduct Direct selling in
one-on-one, in a group or party format, or online.
Developing A Promotional Strategy

The promotional strategy for Jilani Leather Fields is based on following factors;
 Segmentation
Dividing the marketing into distinct groups?

There are 3 segment of market if we consider customers .i.e.
 Children
 Young

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 Old
But when we consider then as professionals there are two classes:
 Working class
 Labor class
 I will use following market research methods to identify target customer for
Jilani Leather Field;
 Sales analysis and buying patterns

 Questionnaires
 Focus groups
 Face-to-face interviews
 I will use above mentioned methods to know the;
 Potential customers
 Consumption habits of customers
 Disposable income
 Buying habits
 Expectations & expirations
 Priorities
 Targeting
Deciding which of these groups to communicate with, and how to talk to

them?
Jilani Leather Field is targeting young people and children’s for jackets and
gloves for labor class.
 Positioning
For giving my competitors tough competition I will go for following positioning

strategies;

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 Branding and messaging
 Corporate identity
Price
Price needs to be relevant to the product/service and the market. A manufacturer
should seek to provide to its customers with products at affordable prices. A firm's
pricing decision is often aimed at attracting a particular market segment. The prices
for my products are following;
SIZE PRICE
 Working gloves 9.5 -10 inches Rs:75 each pair
 Wielding gloves 14-16 inches Rs:180 each pair
These are available in 3 different sizes in jackets;

Small
Medium
Large
Prices of jackets ranging from Rs: 3000-12000
Pricing Strategies
Pricing strategy is an important part of the marketing mix. The price of a product
should reflect its image and the need to give a consumer what they want. I will use
following pricing strategies for selling my products.
 Cost-Plus Pricing.
 Hour-Based Pricing
 Penetration Pricing
 Skimming
PRICING FACTORS:
Pricing factors are;

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 manufacturing cost,
 market place,
 competition,
 market condition
 Quality of product.
OPERATIONS MANAGEMENT:
Operations management is an area of management concerned with overseeing,
designing, and controlling the process of production and redesigning business
operations in the production of goods or services. It involves the responsibility of
ensuring that business operations are efficient in terms of using as few resources
as needed, and effective in terms of meeting customer requirements. It is
concerned with managing the process that converts inputs (in the forms of
materials, labor, and energy) into outputs (in the form of goods and/or services).
Manufacturing Process:
The proposed items are manufactured by units in different methods. The main
operations are pattern making, economical layout of patterns, clicking of
components, and skiving decoration by embossing machine or hand, folding,
coloring, assembling, stitching, fitting and finishing.
Personnel hiring:
I will hire people who can sew leather jackets & gloves. For hiring purposes, I will
give add in newspaper and by printing banners? I will hire 25 people for my
business with special sewing skill vested in them.
Equipment/ machinery:
1. Flatbed Ind. Sewing 2 x Rs 7500/- Rs 15,000

machine
Complete with motor

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2.Cylinder bed sewing 1 x Rs 35,000/- Rs
machine 35,000/-
Complete with motor
3.Upper Leather skiving 1 x Rs 25,000/- Rs
machine 25,000/-
Complete with motor
4.Misc. tools & L.S Rs 15,000/-
equipment’s
Distribution Channels:
Jilani Leather Field will distribute its products to local retailers and local brands.
After penetrating into the leather market we will also start selling direct to
customers by eliminating the use of intermediary.
Supply Chain Management
Supply chain is the sequence of organizations facilities, functions and activities

that are involved in producing and delivering a product and service. It also refers to
movement of materials and information within a facility and outgoing shipment of
goods and materials in supply chain.
 Need for supply chain management

 Improve operations
 Increasing levels of outsourcing
 Increasing transportation cost
 Competitive pressures
 Manage inventories
 Benefits of supply chain

 Lower inventories
 Higher productivity

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 Greater agility
 Shorter lead times
 Higher profits
The main supply chain members of Jilani leather field are HMB & PRIME
INDUSTRIES, from whom it purchases leather as a raw material.
Product Design:
Product design is one of the crucial stages in Operations Management. The design
of a product or a service is one of the most important steps. This will definitely
affect the earnings from the product.
The basic limiting characteristics of the production system design are set during
the product design phase. In designing the product, or the item to be processed in
non manufacturing systems, the product designer specifies materials, tolerances,
basic configurations, methods of joining parts and the like, and through these
specifications sets the minimum possible production cost.
 First of all process begins with purchasing rough or unfinished leather.

 This leather is put into a boiler of wood containing high quantity of
concentrated chemicals to convert it into soft material for 3-4 hours.
 Then the leather is dried and pressed, after that cutting is performed of
different designs.
Raw Materials:
 Leather
 Silk Cloth for lining
 Adhesives
 Solution, spirit, buckles, buttons etc.
 Satin
 Andlis

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Proposed Capacity
My business capacity is greatly dependent on the market size and the number of
potential client or no: of orders one can attract/get. Leather products will be
designed and stitched by the tailors. On average, my business having variety of
design made by our tailors and we also prepare orders according to customers
demand and requirements. The expected number of orders we receive will be 2-3
orders. Each order consisted of;
 Gloves 350
 Jackets 150
Location Of Production Facilities
The production activity should be located where a firm can be most productive
and yield the highest revenues per unit of investment.
 A Highly Productive Business Unit:

 Is one that is near to the market, so that the demand for units of output is
high relative to costs of making that input?
 Is one that is close to a skilled labor force? The easier it is for the firm to
attract labor with appropriate skills the more likely it is to produce high
value outputs and low costs per unit of output.
 One that locates close to high value raw materials. The further materials
have to travel the lower the productivity of the plant will be.
For Jilani Leather Fields the location which i will prefer is Defence Road Sialkot.
I am choosing this location because of many factors;
 Electricity rates in that area are cheaper

 Industrial area

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FINANCIAL PLAN:
Financial planning is the task of determining how a business will afford to achieve
its strategic goals and objectives. Usually, a company creates a Financial Plan
immediately after the vision and objectives have been set. It describes about the
activities, resources, equipment and materials that are needed to achieve these
objectives, as well as the timeframes involved.
Basically, the financial plan section of the business plan consists of three financial
statements, the income statement, the cash flow projection and the balance sheet
and a brief explanation/analysis of these three statements
The expenses which I incurred before opening of the shop are:-
1. Initial investment
 Machines &equipment’s= 90,000

 Furniture= 20,000
 Storage cabinets & stools= 20,000
 Cartons= 20,000
 Stationary materials= 1,000
Salary of the employees:-

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1. Full-time workers= 8,000 per month
2. Part-time workers=4,000 per mon
Profit And Loss Analysis
I have assumes the profits and losses which will be incurred by me in the running
course of business. I have estimated the profits and losses for these years.
Profit & loss account:
Rs:
Sales 5,90,000
C.G.S 3,70,000
Gross margin 2,20,000
Expenses
Depreciation 4,000
Start-up-cost 50,000
Workmen’s compensation 5,500
Packing material 5,000
Telephone 2,000
Utilities 15,000
Salaries 50,000
Repairs 1,000
operating expenses 2,550
Profit before interest 84,950
Tax expenses 2,000
Interest expenses 1,500
Net profit 81,450
Balance sheet
CAPITAL & LIABILITIES ASSETS Rs:

Borrowings 63,550 Furniture 20,000

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Long term liability 2,50,000 Land & building 4,00,000
Total liability 3,00,000 Machines 90,000
Capital 9,00,000 Cash 2,00,000
Net profit 81,450 Inventory 5 ,00,000
Preliminary expenses 60,000
Accumulated dep: 25,000
Total Liabilities & Capital 12,95,000 Total Assets 12,95,000
SWOT ANALYSIS
Strength
 High quality leather is used as raw material
 Fashionable and wearable Exclusive and unique print designs
 Specialized product range
 Efficient use of colors and lining material
 Quick response to Changing consumer needs and demand
 Having large variety of quality products in all sizes
 Offers products at affordable prices
Weaknesses
 Lower profit margins to compete with already existing leather businesses.

 Limited capital for marketing.
 Start-up establishment which will take time to implement systems and
policies.

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Opportunities
 Raise brand profile/ customer awareness through advertising and

connections to retailers & local brands
 Increase product range
 Explore and expand designs
 Use innovative stitching methods
 Incorporate sustainable elements into designs
 Location advantage.
Threats
 Time required penetrating market of established clothes boutique

 Competition from other leaders in market
 Market saturation
 Economic recession

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lOMoARcPSD|20539602

147188971 Business Plan of Leather Products

Operations management (University of Central Punjab)

Studocu is not sponsored or endorsed by any college or university

Business Plan For Leather Products

Downloaded by Mansoor Ali (maafzal28@gmail.com)

Business Plan For Leather Products

BUSINESS PLAN FOR LEATHER

Downloaded by Mansoor Ali (maafzal28@gmail.com)

Business Plan For Leather Products