YARDSTICK INTERNATIONAL COLLEGE

COLLEGE OF POSTGRADUATE STUDIES DEPARTMENT of BUSINESS

ADMINSTRATION

COURSE:- PROJECT ANALYSISI AND MANAGEMENT

TITLE:- FINISHED LEATHER PROJECT

ASSIGNMENT 1

SUBMITED BY: - HANA GIRMA

IDNO .MO/3116/14A

SUBMITTED To; DR .ZEGEYE HABTEMARIAM

SUBMISSION DATE; JAN 31, 2023

EXECUTIVE SUMMARY

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This finished leather project is the establishment of a plant for the production of finished leather with
a capacity of 50,000 pieces of hides, 50,000 pieces of sheep skin and 50,000 pieces of goal skin per
annum. The major raw material for finished leather is crust leather, which is locally available. The
present demand for the proposed products is estimated at 138,152 pieces for hides and 149,262
pieces for sheep and goat skin per annum. The demand is expected to reach at248,101 pieces for
hides and268,054 pieces for sheep and goat skin by the year 2025 The total investment requirement
is estimated at Birr 19.75 million, out of which Birr 9.45 million is required for plant and machinery.
The plant will create employment opportunities for 57 persons. The project is financially viable with
an internal rate of return (IRR) of 17.28 % and a net present value (NPV) of Birr 9.05 million,
discounted at 8.5%.Finished leather production creates backward linkage with tanneries that produce
crust leather and a forward linkage with leather products manufacturers. The establishment of such
factory will have a foreign earning effect to the country by exporting its product to the world market.

QUESTION 1 ANSWER

Evaluate the strength and weakness of each feasibility analysis aspects of the proposal by looking at
its market and demand analysis, technical analysis, financial analysis, organizational and managerial
analysis environmental analysis, economic analysis, social and cultural analysis, etc. evaluate
whether these project appraisal aspects are adequately addressed in the proposal or not. Evaluate also
whether these aspects are in line with the requirements, principles and techniques found in a good
project proposal
1.1. Evaluation of the strength and weakness of feasibility analysis aspects of the proposal by
looking project market and demand analysis.
1.1.1. Evaluation of market and demand analysis
Market demand evaluation is done to provide a detailed understanding of the economic viability of a
business idea (i.e. product or service offering). In a generic market demand evaluation, we usually
start by undertaking a to further define the business model and provide a solid starting point for the
market. Thereafter, the it define the target market, undertake a demographic and socio-economic
profile of the target market, evaluate current market and industry trends, and do a competitor
analysis. Once the market is well understood, these key findings are used to develop a demand
model which will quantify current and projected demand for your business idea, such as the potential
number of customers or units that could be absorbed by the market.

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 1.1.1.1. evaluation of the Strength market and demand analysis, Project

The present demand for the proposed products is estimated at 138,152 pieces for hides and149,262
pieces for sheep and goat skin per annum.
The demand is expected to reach at 248,101 pieces for hides and 268,054 pieces for sheep and goat
skin by the year 2025.
The market study reveals that there is high demand for finished leather both in local and
international market.
As stated earlier, there is a very wide market for semi-processed hides & and skins
This project envisages the establishment of a plant that processes leather up to finished level by
utilizing crust leather as a raw material
On the other hand, it is believed that the collection system of hides and skins will be improved.
Moreover, contra band/illegal trade will be minimized due to the various measures which are
being implemented by the government.
Considering these positive trends, an annual average growth rate of 5% is applied for the future
demand, taking the present demand/supply as a base
Finish During the period of analyses, production of hides and skins have registered an average
annual growth rate of 34% and 15%, respectively. More over during the same period, export of
hides and skins has registered an average annual growth rate of 7.1%. End leather has a wide
market both in the domestic e.g. In 2014 the demand Hides is 145,060 Sheep & Goat Skins
156,725 and at increasing amount in after same in 2025 year Sheep & Goat Skins 248,101 ,
268,054 amount this show the market demand is very at increasing evaluation
1.1.1.2. evaluation of the Weakness market and demand analysis of Project
The only limiting factor is availability of the raw material (leather processed up to crust level).
Therefore, for the selection of plant capacity it is recommended to consider the above
estimated amount of hides and skins that can be collected in the City and processed up to crust
level
The limiting factor, thus, would be the amount of crust leather to be supplied.
To evaluate the limitation contra band illegal trade will be minimized due to the various
measures
The capacity of the finishing department of these factories is very low which could not fully

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satisfy local demand for the product this is evidenced by the fact that the shoe industry suffers
from shortage of finished leather.
Finished leather has a wide market both in the domestic as well as in the international market
while the major market for semi-processed leather is export only.
The process up to finished leather for the domestic market is mainly carried out by the few
Government -owned tanneries.

1.2. evaluation of the strength and weakness of feasibility analysis aspects of the proposal
by looking project technical analysis
1.2.1. Technical analysis
A technical evaluation assesses the details of how you intend to deliver a product or service to
customers. Think materials, labor, transportation, where your business will be located, and the
technology that will be necessary to bring all this together. It's the logistical or tactical plan of how
your business will produce, store, deliver, and track its products or services. A technical evaluation
is an excellent tool for both troubleshooting and long-term planning. It can serve as a flowchart of
how your products and services evolve and move through your business to physically reach your
market. Technical evaluation is a trading discipline employed to evaluate investments and identify
trading opportunities by analyzing statistical trends gathered from trading activity, such as price
movement and volume.
1.2.2. Evaluation of the Strength of technical analysis of the project
 The market study reveals that there is high demand for finished leather both in local and
international market.
 The factors for determining capacity are availability of raw material and minimum economies
of scale for the finished leather plant
 The proposed capacity for the envisaged plant by considering the Demand factors is to process
50,000 hides, 50,000 sheep skins and 50,000 goats’ skins from the crust leather stage to
finished leather.
 The plant will start its operation at 70% of its full capacity in the first year with a 15% build-up
of capacity every year reaching full capacity in the third year and then after; taking the skill
development, availability of the required raw material and market penetration problems into
consideration.

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 The main raw materials for production of finished leather are crust leather which is available
locally.
 Procurement of crust leather shall be carried out by establishing strong business ties with
tanneries that produce this product Local tanneries such as Ethiopian Tannery, ELICO
(Ethiopian leather industry corporation), and Walia Tannery are potential local sources of crust
leather and hides.

1.2.3. evaluation of the Weakness of technical analysis of the project

 The amount of raw materials and their respective cost is depicted
 The total cost of raw materials is estimated at Birr 14192.35 thousands, out of which Birr
11962.87 thousands is required in foreign currency.
 The utilities required by the finished leather manufacturing plant are fuel oil, water and
electricity. 50,000 liters of fuel oil, 60,000 kWh of electricity and 5,000 m3 of water is estimated to
be utilized annually by the project.
 The machinery and equipment for the production of finished leather can be obtained from the
following American Company.
 The total cost of machinery and equipment is estimated at Birr 9.455 million, out of which Birr
7.625 million is required in foreign currency.

1.3. evaluation of the strength and weakness of feasibility analysis aspects of the proposal by
looking project financial analysis
Financial evaluation is the process of evaluating businesses, projects, budgets, and other finance-
related transactions to determine their performance and suitability. Typically, financial evaluation is
used to analyze whether an entity is stable, solvent, liquid, or profitable enough to warrant a
monetary investment financial evaluation is used to evaluate economic trends, set financial policy,
build long-term plans for business activity, and identify projects or companies for investment. This is
done through the synthesis of financial numbers and data. A financial evaluation will thoroughly
examine a company's financial statements—the income statement, balance sheet, and cash flow
statement. Financial analysis can be conducted in both corporate finance and investment finance
settings. One of the most common ways to analyze financial data is to calculate ratios from the data

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in the financial statements to compare against those of other companies or against the company's
own historical performance.

3.1. evaluation of the Strength of financial analysis of the project

Based on the projected profit and loss statement, the project will generate a profit throughout
its operation life
Annual net profit after tax will grow from Birr 1.26 million to Birr 3.15 million during the life
of the project
Moreover, at the end of the project life the accumulated cash flow amounts to Birr 19.30
million.
Tax holidays 5 years this is strong side of the project
Raw material local 30 days get locally raw material within 30 days
Work in progress within 2 days this show the strong side of the project
Cash in hand collected with in short period of time 5 days

1.3.3. evaluation of the Weakness of financial analysis of the project

 The total cost of machinery and equipment is estimated at Birr 9.455 million, out of which Birr
7.625 million is required in foreign currency.
 The high cost of total investment requirement is estimated at Birr 19.75 million, out of which
Birr 9.45 million is required for plant and machinery.
 The utilities required by the finished leather manufacturing plant are fuel oil, water and
electricity. 50,000 liters of fuel oil, 60,000 kWh of electricity and 5,000 m3 of water is
estimated to be utilized annually by the project. This show high cost consumption it lead loss
of the project performance
 Source of finance 30 % equity 70 % loan it is hard time fo the repayment loan for long
period of time because this is the weak side of the company
 Raw material import 90 days this is another evaluation of the project whether because the
project take long period of time to import raw materials from abroad
 Lack of import substitution of raw materials are shown is domestically raw material is rare to find
Foreign currency reserve highly used for purchase of 90 day importing raw material
1.4. evaluation the strength and weakness of feasibility analysis aspects of the proposal

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by looking project organizational and managerial analysis
1.4.3. organizational analysis and managerial analysis
The process of appraising the growth, personnel, operations, and work environment of an entity
Organizational analysis is the process of appraising the growth, personnel, operations, and work
environment of an entity. Undertaking an organizational analysis is beneficial, as it enables
management to identify areas of weakness and then find approaches for eliminating the problems.
Organizational analysis: a process that enables organizations to generate data on its. Environment
and
helps in the formulation of a strategy which would propel the organizational to. Its desired future
state
It also helps to determine the desired organizational resources needed to. Achieve organizational
goals.
Project management focuses on the creation of the “product, service, or result” of the project in order
to meet its objectives. Business analysis aims at understanding the needs of the business stakeholders
and at defining the characteristics of the solution to meeting those needs. Project analysis is the
process of determining the aspects of a project in project management. This analysis helps in
identifying whether the project is executing as expected and uses the specified budget. By
conducting
a project analysis, the current or future problems that occur during the project can be identified.
1.4.4. evaluation the Strength of organizational and managerial analysis of the project
 The plant will create employment opportunities for 57 persons.
 A total of 57 employees are required for the smooth operation of the plant
 Improved man power planning
 Variety of professional e.g. chemist Production personnel, chemists and technical personnel
 The major raw material for finished leather is crust leather, which is locally available.
 Finished leather production creates backward linkage with tanneries that produce crust leather
 a forward linkage with leather products manufacturers
 The establishment of such factory will have a foreign earning effect to the country by exporting
its product to the world market.
The project is financially viable with an internal rate of return (IRR) of 17.28 % and a net
present value (NPV) of Birr 9.05 million, discounted at 8.5%.
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 1.4.5. Evaluation of the Weakness of organizational and managerial analysis of
the project
 High cost training is the annual cost of manpower including fringe benefits is estimated at
Birr 654,000.
 Cost training the cost of training is estimated at Birr 50,000.
 Crust leather requires mechanical and chemical treatments to obtain proper thickness,
moisture, lubrication and aesthetic appeal.in production process it may be the employee can
be contact that make such disease related with chemical in work place
 major market for semi-processed leather is export only it is ignoring domestic demand
rather than focusing whether foreign market
1.5. evaluation of the strength and weakness of feasibility analysis aspects of the
proposal by looking project environmental analysis
An Environmental Analysis (EA) identifies problems, conflicts, or resource constraints that may
affectthe natural environment or the viability of a project. It also examines how a proposed action
mightaffect people, their communities, and their livelihoods Business leaders can control aspects of
the internal environment that can positively or negatively affect a company's operating and financial
results. However, the greatest challenges to business success may be a consequence of the external
environment over which company leaders have little, if any, control. To address these challenges,
business leaders often conduct an environmental analysis and develop policies and processes that
adapt company operations and products to this environment. An environmental analysis looks at the
industry and the political, economic, technical, cultural and other environments in which the
business operates. The aim is to identify challenges facing the business, and opportunities it could
exploit. Successful businesses adapt their internal environment – including human and financial
resources, policies, technologies and operations – to the external environment. The company
performs an environmental analysis to identify the potential influence of particular aspects of the
general and operating environments on business operations. This analysis identifies the opportunities
and threats in a business environment in terms of a company's strengths and weaknesses.
1.5.1 Evaluation of the Strength of environmental analysis of the project
Finished leather is used for footwear (upper and sole), luggage, handbags, leather goods and
apparel, gloves, industrial belting, leather upholstery, etc.
 An environmental analysis look The plant will create employment opportunities for 57 persons

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 An environmental analysis looks at the industry economic for the project and employees
 An environmental analysis looks at the industry technical issue the reaction of people with new
technology
 An environmental analysis looks at the industry cultural because ensuring hard work
organization behavior
1.5.2. Evaluation of the Weakness of environmental analysis of the project
 environmental air and water pollution is the weak side because Crust leather requires
mechanical and chemical treatments to obtain proper thickness, moisture, lubrication and
aesthetic appeal
 The challenges facing the business, is lack of raw materials
 The challenges facing the business, is lack of foreign currency
 The challenges facing the business, is lack of experience of employee
 Lack of opportunities it could exploit.
 Lack of Successful businesses adapts internal environment –
 Lack of trained human resource
 Lack of trained financial resources,
 Lack of policies,
 Lack technologies and operations –
 To the external environment. The company does not perform an environmental analysis to
identify the potential influence of particular aspects of the general and operating environments
on business operations.
1.6. evaluation of the strength and weakness of feasibility analysis aspects of the
proposal by looking project economic analysis Economic analysis essentially entails the evaluation
of costs and benefits. It starts by ranking projects based on economic viability to aid better allocation
of resources. It aims at analyzing the welfare impact of a project. Economic analysis essentially
entails the evaluation of costs and benefits. It starts by ranking projects based on economic viability
to aid better allocation of resources. It aims at analyzing the welfare impact of a project. Cost is a
major factor for consideration in both financial
and economic analysis. From a financial perspective, cost to the investing party is paramount. Costs
which impose “additional burden” are those considered in economic analysis. Some identifiable cost

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elements include
1.6.1. evaluation of the Strength of economic analysis of the project
 The project can create employment for 57 persons
 In addition to supply of the domestic needs, the project will generate Birr 5.74 million in terms
of tax revenue.
 The establishment of such factory will have a foreign earning effect to the country by exporting
its product to the world market.
 Based on the projected profit and loss statement, the project will generate a profit throughout
its operation life
 The amount of raw materials and their respective cost is depicted
 Annual net profit after tax will grow from Birr 1.26 million to Birr
 3.15 million during the life of the project
 Moreover, at the end of the project life the accumulated cash flow amounts to Birr 19.30
million
 Break-even point of the project including cost of finance when it starts to operate at full
capacity (year 3) is estimated by using income statement projection.
 Based on the projected cash flow it is estimated that the project’s initial investment will be
fully recovered within 5 years.
 Accordingly, the IRR of this project is computed to be 17.28 % indicating the viability of the
project.
 Accordingly, the net present value of the project at 8.5% discount rate is found to be Birr
9.05 million which is acceptable
1.6.2. Evaluation of the Weakness of economic analysis of the project
 No substitution of import it shows highly importing cost disadvantage The total cost of raw
materials is estimated at Birr 14192.35 thousands, out of which Birr 11962.87 thousands is
required in foreign currency
 High cost for foreign currency Out of which Birr 11962.87 thousands is required in foreign
currency.
 High cost utilities The total cost of utilities is estimated at Birr 336,666
 High cost investment there is no cost minimization procedure The total investment cost of the

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project including working capital is estimated at Birr 19.75 million, of which 38 per cent will
be required in foreign currency
 no cost minimization procedure The annual production cost at full operation capacity is
estimated at Birr 17.71 million

1.7. evaluation of the strength and weakness of feasibility analysis aspects of the proposal by
looking project social

analysis Social analysis involves examining the socio-cultural, institutional, historical and political
context of Bank-financed operations. Social analysis is a process that aims to identify the social
dimensions of projects, as well as analyze the different stakeholder perspectives and priorities.
Social analysis not only allows the Bank to understand the opportunities and constraints, and the
likely social impacts associated with a project, but also provides spaces to incorporate stakeholders'
views establish participatory processes and inform the design of strategies for inclusion, cohesion
and accountability. Understanding the social implications of projects and policies is critical in
ensuring that the proposed project or policy contributes to equitable and sustainable development.
The analysis can provide insight into social diversity and gender, institutions, rules and behavior,
stakeholder dynamics, participation concerns and social risks.

1.7.1. Evaluation of the Strength of Social analysis of the project

Highly organized structure of organization socially working behavior
the leather project enables Source of finance 70 % loan Social that aims to identify the social
dimensions of projects, as well as analyze the different stakeholder perspectives and priorities
the leather project Social relationship not only allows the Bank to understand the opportunities
and constraints, and the likely social impacts associated with a project, but also provides spaces
to incorporate stakeholders' views establish participatory processes and inform the design of
strategies for inclusion, cohesion and accountability
Understanding the social implications of projects and policies is critical in ensuring that the
proposed project or policy contributes to equitable and sustainable development
The analysis can provide insight into social diversity and gender, institutions, rules and
behavior, stakeholder dynamics, participation concerns and social risks.
1.7.2. Evaluation of the Weakness of financial analysis of the project
environmental air and water pollution is the weak side because Crust leather requires

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mechanical and chemical treatments to obtain proper thickness, moisture, lubrication
and aesthetic appeal
 Social risks. Include the chemical air and water pollution
 environmental pollution

 no well-designed policies is critical policies is critical in ensuring that the proposed

project or policy contributes to equitable and sustainable development

1.8. evaluation of the strength and weakness of feasibility analysis aspects of the
proposal by looking project organizational culture analysis
Basically, an organization's culture is its personality. It's comprised of assumptions, beliefs, values,
norms, and tangible signs (artifacts) or organization members and their behaviors. Culture is a very
powerful force and is multidimensional. The same person placed in different organizations (or parts
of the same organization) would act differently, because a strong embedded culture creates social
ideals that guide individual behavior. These ideals are manifested in a number of ways. Culture is a
means by which messages about what the organization stands for is conveyed to employees and
other stakeholders. When individuals become committed to the organization's beliefs, those beliefs
become internalized and individual members hold them as their personal beliefs. Whether we as
individuals are aware or not, the internalization process occurs and, if congruent, can be a means of
personal satisfaction. In other words, our organization's personality becomes our personality and
vice-versa.
1.8.1. Evaluation of the Strength of culture analysis of the project
 Culture is a very powerful force and is multidimensional
 The same person placed in different organizations (or parts of the same organization) would act
differently
 When individuals become committed to the organization's beliefs, those beliefs become
internalized and individual members hold them as their personal beliefs.
 a strong embedded culture creates social ideals that guide individual behavior
 A strong culture can generate commitment to the organization's values.
 When individuals become committed to the organization's beliefs,
 which organizations can strengthen their performance, adapt to change and changing
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environments while increasing their chances of survival and maintaining their competitive
performance
1.8.2. Evaluation of the Weakness of culture analysis of the project
 ideals are manifested in a number of ways
 lack kaizenazation in social concern
 weak understanding of leather benefits around society
 weak side is lack of hard working organization culture skin
QUESTION 2 ANSWERS
2. Evaluate whether the project proposal objective is SMART
2.1 specific ; the goals should be very precise with no room for misinterpretation
2.2 Measurable:-the goals should be quantifiable and progress should be easy to track
2.3 Achievable:-the goal should be attainable not outlandish or unrealistic
2.4 Relevant:- the goal should contribute to your broader overarching goals
2.5 Time bound.:-the goal should have a defined start and end date
QUESTION 3 ANSWERS
3. evaluation of whether a proposal also incorporate various sub-plan like budget plan, time
plane, communication plan, risk identification and mitigation plan, etc.
3.1. budget plan
 The total investment cost of the project including working capital is estimated at Birr 19.75
million, of which 38 per cent will be required in foreign currency.
 The annual production cost at full operation capacity is estimated at Birr 17.71 million
 The major component of the production cost raw material cost which account for 80.13%.
 The other important production costs are depreciation and financial cost accounting for 7.72%
and 3.89 % of the total production cost respectively.
 The remaining 8.26 % is the share of utilities, direct labor, labor overhead and administration
cost.
3.2. time plane
 The plant will start its operation at 70% of its full capacity in the first year with a 15% build-up
of capacity every year reaching full capacity in the third year and then after; taking the skill
development, availability of the required raw material and market penetration problems into
consideration.

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The plant will operate for 300 days in a year, working under three-shift system of 8 hours each
day
3.3. communication plan
There is many communication channel for instance in work hierarchy plan
There are communication in each feasibility analysis plan
There is communication in plan from top management to lower management plan
There is financial information that need for communication plan
3.4. risk identification and mitigation plan
There is no identified risk in this feasibility study
QUESTION 4 ANSWERS
4. Evaluate the way the proposal be written, see the procedures, sequences of topics, clarity,
simplicity, flow, availability of required contents, etc.
Here by step by step the way of feasibility study in this proposal is written
4.1. Description of the project is finished leather project
4.2. The outlined the potential solution resulting from the project
4.3. Listed the criteria for evaluating these solution e.g. financial teckinical
environmental, organizational managerial, market demand and etc.
4.4. State which solution is most feasible for the project demand and market
4.5. Make a conclusion statement there no conclusion statement but the way of
writing whether if any one need could put any conclusion in main points .
4.1. Describe the project
The first part of a feasibility study includes a description of the project you want to complete. You
should highlight its purpose and main components that influence its success.For example, "This
project aims to use department education and best HR practices to ensure the
successful integration of new employees with the upcoming merger."
4.2. Outline the potential solutions resulting from the project
Secondly, talk with your team to create some possible solutions that could result from the project.
This can help you later on in the process when you try to determine which solution provides the most
benefits.
For example: “Enhanced company productivity” “Positive workplace culture" "Satisfaction of new
and existing employees alike" "Improved HR strategies and overall department"

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 4.3. List the criteria for evaluating these solutions
Thirdly, write out a list of rules for you and your team to accurately assess these solutions. Consider
criteria such as the potential for revenue, increased productivity, better communication across
departments, expansion of a product line or customer satisfaction.For example: “Number of new
employees joining the branch during the merger" "Current state of the HR department and practices
used" "Current workplace culture and employee optimism" "Projected revenue gained as a result of
the merger"
4.4 State which solution is most feasible for the project
Fourthly, after deliberating with your team, make a statement about the solution to which you want
to guide your project. Make sure you include an explanation for why you want to achieve this
solution above the other options you discussed. For example, "Based on the potential solutions
offered by this merger project, we have decided that the most feasible solution for both the project
and the future of our company is improved HR strategies and overall department. This is because the
basis of our success now and in the future relies on the talented on boarding efforts of our HR team."
4.5 Make a conclusion statement
Lastly, the concluding statement helps you summarize your main points. You should start by
reiterating the statement made in your project description that defines it and your reasoning for
starting the project. Then, restate which solution you primarily want to achieve through the project's
completion and explain why you want this solution to hold more significance than the other
solutions .For example, "The goal of this project is to give our HR department the resources they
need to coordinate a successful merger. We have chosen improved HR strategies and overall
department as the most feasible solution because our HR department serves as a fundamental
structure to other solutions ,such as increased productivity, positive workplace culture and job
satisfaction among our employees."
5. Conclusion
Strengths
Mobilized basic raw material from areas and then impart higher and better value to products made
from them than if there materials are processed and utilized in the leather market
Created opening for new class of entrepreneurs, executives, marketing experts, machine
operators, women employees, cutting across the social and cast barrier,
Wastage in the processing could be Controlled and where possible recycled. Assured export

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opportunities for its products.
Capability to work on With modern technology, machines and technical manpower and
marketing.
Weakness:
 The sector comprising the activities of playing, leather project footwear and leather goods
Manufactures suffered heavily on account of various economic and social factors, like the
growing diversion of the old and unproductive animals for slaughter purpose reducing the
raw material supply for leather in this project etc.
 This sector creates- problems of pollution, labor unrest, has less labor intensive processing,
and involves huge air and water pollution quite often to depend on imported machinery and
chemicals- and sometimes also technology. The system suffers from the lack of individual
attention at the raw materials se1ection stage.
6. Recommendation
Taking in to consideration the above facts and evaluation, certain suggestions would be made, so
as to minimize the intensity of the problems and exploit the opportunities, which would ultimately
help! to boost, the exports of leather and leather products, earning valuable foreign exchange »
i) In order to make available leather for producing finished leather products only exports of leather
components and finished leather products should be allowed for export.
ii) There should be direct negotiations between the finished leather project and the Government
and its organizations for their purchase of leather articles. Similarly, state Government and State
Level Public.

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