Preface

This project is one part of Project Feasibility Study and Evaluation (1203302). The objective of this project is for exporting Thai leather product to foreign country. Our company produces products from snakes, crocodiles, and cow leather, which is raw material product of Thailand. We hope that this project will give useful knowledge to people who interest about exporting leather products to use in daily life and success in business. Thanks for Aj.ChaiyawatThongintr that give us suggestion to do big project until finish.

Norrachad Leather group

Table of Content
Pages Preface Executive Summary Chapter 1: Introduction Background and Significance of the Project Project Objectives Benefits of Project Activities/Time Frame I 1 2

Chapter 2: Industry Profile Nature of Industry Situation of Industry Product/Service Vision Mission Strategy Corporate Level Business Level Functional Level

Chapter 3: Market Feasibility Study Market Analysis General Environment Analysis Leather Industry gung-ho over global demand Social Factor Economic Factor

23

Competition Analysis (3C Analysis) Competitor Analysis Customer Analysis Competitive Analysis

II

STP Analysis Marketing Mix Strategy Sales Forecast/Profit Estimation Marketing Expenses Conclusion Chapter 4: Technical Feasibility Study Production and Operation Analysis Product Characteristics ( in detail) Production/Service Process Location Facility Layout Machine/Tools/ Equipments Logistics Management Facility Management Machine/Tools/ Equipments 55

Cost of Investment Pre-Operating Cost

Investment Cost Land Buildings Equipments Tools Etc Depreciation

Operating Cost Raw material Cost Direct Labor Cost Manufacturing Overhead

Management Analysis Organization Chart III

Administration Cost Telephone Electricity Water

Conclusion

Chapter 5: Financial Analysis o Profit/ Loss Statement o Cash Flow o Balance Sheet o Profitability Ratios

97

Chapter 6: Risk Management o Risk Management o External Factors o Internal Factors o Risk analysis of 4ps Chapter7: Summary Reference

113

129 VIII

IV

Content of Figure
Figure 2.1: Cows leather products Figure 2.2: Crocodiles leather products Figure 2.3: Snacks leather products Figure 3.1: GNI Figure 3.2: Trend of Export Figure 3.3: Sale Forecast Figure 4.1: Men Wallet Figure 4.2: Women Wallet Figure 4.3: Women Handbag Figure 4.4: Location Figure 4.5: Facility Layout Figure 4.6: Acer PC Figure 4.7: Printer Figure 4.8: Air Conditioning Figure 4.9: Hot & cold water dispenser Figure 4.10: Industrial Luminaries Figure 4.11: Extinguisher Figure 4.12: Telephone Figure 4.13: Set of Stationary Figure 4.14: Leather Laser Cutting Machine Figure 4.15: Heavy Duty Loch Stitch Figure 4.16: Tools Figure 4.17: Cabinets Figure 4.18: Bookcases Figure 4.19: Home Office Set Figure 4.20: Working Chair Figure 4.21: Working Table Figure 4.22: Meeting Table Figure 4.23: Sofa Figure 4.24: Shelves Figure 4.25: New Nissan Narava Single Cab Figure 4.26: Isuzu F-Series V

Content of Table
Table 1.1: Activities/ Time Frame Table 2.1: Manufacturing Production Index Table 2.2: Structure of Export Table 2.3: Structure of Import Table 3.1: Exported Leather Products in 2006 Table 3.2: Exported Leather Products in 2007 Table 3.3: Exported Leather Products in 2008 Table 3.4: Exported Leather Products in 2009 Table 3.5: Exported Leather Products in 2010 Table 3.6: Price of Products Table 3.7: Sale Forecast of Year 1 Table 3.8: Sale Forecast of Year 2 Table 3.9: Sale Forecast of Year 3 Table 3.10: Sale Forecast of Year 4 Table 3.11: Sale Forecast of Year 5 Table 4.1: Pre- Operating Cost Table 4.2: Vehicles (cost) Table 4.3: Machines ( cost) Table 4.4: Inventory (cost) Table 4.5: Computer (cost) Table 4.6: Office Equipment (cost) Table 4.7: Furniture (cost) Table 4.8: Cost of Investment Table 4.9: Depreciation Table 4.10: Depreciation of Year 1 Table 4.11: Depreciation of Year 2 Table 4.12: Depreciation of Year 3 Table 4.13: Depreciation of Year 4 Table 4.14: Depreciation of Year 5 Table 4.15 Water rate at Chonburi (January 2555) Table 4.16: Administration Cost Year - 1 Table 4.17: Administration Cost Year - 2

VI

Table 4.18: Administration Cost Year - 3 Table 4.19: Administration Cost Year - 4 Table 4.20: Administration Cost Year - 5

VII

Executive Summary Our company produces the leathers products because we want to study about the market of leatherandthe Thais leather products which export to Singapore and Malaysia. Our companys name is Norrachad Leather Company and we decide to put this name because we want to show the strong and good quality products when the customers use our products as Norrachad means the strongest and big animals in Thai. Our products are handbags, wallets which are made from the leathers of cow, snack, and crocodile. And, we will export our products to Malaysia and Singapore because there will be the ASEAN Community open in 2015 and there will be traffic free area. As our factory will be at Chonburi, it is easy for us to transport and export our products and it is near with the supplier which will give us raw leathers from Samut Prakarn. And, it is easy for us to recruit the employees. We divided our segment into three segments which are customers buy our products for being fashionable, being usable and souvenir. Our target is sexual fashionable people because our products appropriate for both man and women in any age. We provide a customer with a unique leather handbag and we also design handbag up to customers requirements. The positioning of our product will be high cost and high quantity. And, we can design the products according to the customers need and customers can tell us what design they want. For our sale forecast, we will estimate our sale by using information of GNI (Gross National Income) per person of Malaysia and Singapore and trend of export from the last four years (2007-2010) of Thailand. The profit of Year 3 will not increase too much but in Year 4 it increases more because we add on the marketing expense more for the call center service where customers can call and ask for information of our products. For the risk management, we will consider on both external and internal factors to decrease the risk in advance. So, It will help to organize the allocation of resources and capital by helping to regularize the way that priorities are set. This will help with decision-making and planning, as well.

Chapter 1 Introduction

Chapter 1 Introduction
1.1 Background and Significance of the Project Thailand is the perfect place to source animal skins or leathers such as stingray, ostrich, alligator, crocodile, cow, and snake. These leathers can create the exotic products such as handbag, wallet, bag, belt, shoulder bag, passport wallet, coin purse, checkbook wallet, briefcases, portfolio, backpack, shoes, boots, and jacket. The main area for tanning operation is SamutPrakarn, a flat and marshy province on the Southeast border of Bangkok. So we can produce the genuine leather product with the price lower than other well know brand name bags from aboard but the quality of product is as well as them. The name of our company is Norrachad. The meaning of Norrachad is a big animal like buffalo, elephant, house and cow. Brand Norrachad represents a quality, an endure, the luxury, and the royal product. Norrachad factory is located in Chonburi because Chonburi connect to the Gulf of Thailand. Chonburi has the LaemChabang port; its the main port to transport goods between countries. Its convenience for shipping our products because we export our product to Singapore and Malaysia through the ship. The area around the LaemChabang port has been developed to be economic area. It has the development of housing, utilities and transportation. Around Chonburi have many Industrial Estates, so its not hard to find the labor. Even though the labor cost in Chonburi in 2012 has trend to increase from 196 Baht to 274 Baht, but it cheaper than other provine in Central of Thailand and its still in the price that we can pay. North of Chonburi near SamutPrakarn that is the main source to buy the tanned leather, the main material of our products. Moreover, government also plans to develop Conburi as a center of industry and economy of Thailand in the future. It is very convenience to transport our products to the customer. We can transport by bus, ship, and airplane too. The target market of Norrachad is sexual fashionable people. We can satisfy them with the quality, chic, endure, luxury, and marvelous leather handbag.

1.2 Project Objective(s) To study about Thai leather To study brand of leather To study about the exporting of Thai leather To study marketing of Thai leather and Foreign leather To understand management of leather for each division To study behavior of the customer

1.3 Benefits of Project Understand the process of producing leather Leather company can increase income Understand the exporting system of leather Understand transportation of leather Understand marketing and sale product Understand to design product and to maintain product Understand the problem and solve the problem Understand to create brand and to pay taxes Understand the advertisement and promotion of the leather Company leather can be possible to do in the future and gain more profit in long-term

1.4 Activities/Time Frame

Table1.1 Activities/Time Frame

Chapter 2 Industry Profile

Chapter 2 Industry Profile

2.1 Nature of Industry Thailands leather industry is becoming a major international player, and the kingdom is becoming a key destination for global brands to base their production because of its tradition of fine craftsmanship and the availability of quality raw materials. Thai manufacturers also are developing and marketing high-quality products under their own labels, which are gaining recognition. The tanning industry, which relies on both domestic and imported raw materials, is well-established and produces quality tanned leather used to create an impressive array of finished leather products, including luggage, shoes and boots, gloves, toys, pet accessories, handbags, apparel, belts, and purses. Many of those products are exported. Cow and buffalo hide comprise about 90 percent of the raw hides used in Thailand. Pigskin also is often used to make leather items. In addition, Thailand is well-known for its supply of exotic skins, with companies such as Leather manufacturing items that include shoulder bags, wallets, belts, purses, briefcases, boots, and shoes from the skins of snakes, crocodiles, ostriches, stingrays, and fish. Thailand is the perfect place to source animal skins, leathers and leather goods such as: Leather PDA Cases, Leather Wallets, Leather Furniture, Crocodile Leather Footwear, Leather Bridal Sandals, Leather Motorcycle Accessories, Leather Pilot's Bag, Leather Football Boots, Leather Golf Shoes, Leather Baby Shoes, Leather Cowboy Boots and Crocodile Leather Briefcases. Thailand is an agricultural society. This will come as a surprise to the majority of visitors and business men who arrive and depart Bangkok oblivious to the agricultural heritage which still thrives beyond the city boundaries. It comes as no surprise to me to find a large rice paddy field at the end of a small street of a housing estate in the suburbs of northern Bangkok. I was however surprised to be faced with a charging buffalo heading against the stream of traffic down a major Bangkok thoroughfare. What did take me aback was the little guy with the straw hat running behind in a vain attempt to corral his beast. Agricultural products and the by-products of this sector provide a major part of the gross national product of Thailand. Although the buffalo may not be the beast of burden for the modern Thai agriculturist the skin of this fine animal is the main stay of the Thai tanning and Thailand leather industry. Along with cowhide and pigskin are more raw materials that are exotic. Snakeskin, crocodile skin and even fish skin is used to provide the base leather material for 5

some fine leather products. The main area for tanning operations is Samut Prakan, a flat and marshy province on the Southeast border of Bangkok. http://www.thaitradeusa.com/home/?page_id=3481 http://www.bangkokcompanies.com/categories/thai_companies_p282.htm

2.2 Situation of Industry 2.2.1 Sectoral Industrial Master Plan (Leather and Footwear Industry) The objective of this project is to establish a Master Plan and industrial policy for the development of Thai leather, leather goods and footwear industry for the next ten years. It covers the study of the industry structure and linkage, production status, marketing and trades, key factors influencing the development of the industry, effects of global economy and trade liberalization. The Master Plan itself includes vision, strategies, plans, projects, roles of the government and private sector essential for the development of the three subsectors to compete in the domestic and global market.

1) Industry Structure The footwear, leather goods and tannery industries in Thailand consist of approximately 4,900 factories employing around 500,000 workers. More than 90 % of them are small-sized factories. Out of 148 tanneries in Thailand, 138 are located in the tannery industrial clusters at the Km.30th and 34th on Sukhumvit road in Samut Prakarn province. There are about 11,000 workers employed in the two clusters producing 93 million square feet of finished leather in 2001, representing 50% of total capacity. There are more than 2,000 footwear factories in Thailand employing around 200,000 workers. Approximately 85 % of those factories are small and medium-sized enterprises. More than 1,000 factories are located in Bangkok, 500 in neighboring provinces and the rest scattered in other parts of the country. The total annual production capacity is approximately 500 million pairs of footwear. Last year, the capacity utilization was around 70 %. The leather goods industry is made up by approximately 2,750 factories, of which 60 % are located in Bangkok, 25% in surrounding provinces, and the rest in other provinces. The total employment of the industry is more than 300,000 workers. Raw hides and skins is major material used in the tannery industry. Of all the hides and skins, 90 % is from bovine. Due to the shortage and low-quality of domestic supply, 80% of the bovine hides required by the industry are imported. The value of the imported hides had 6

been increasing every year from an annual average of 4,700 million Baht in 1993 to 8,500 million Baht in 2001. Presently, the government does not levy any duty on imported raw hides and wet blue. Chemicals, which are the second most important raw material for the tannery industry and almost always imported from other countries, are taxed at the ad valorem rate of 1 to 20 %. Raw materials used in the footwear industry consist of leather and others such as, textiles, PVC, PU, EVA, foam, rubber and accessories. About 60% of the leather and 70% of other materials used in the industry is imported. For the leather goods industry producing many kinds of bags, luggage, briefcase, and other small leather goods items, more than 60% of all the material used is not genuine leather. In the manufacturing of luggage, about 70% of materials are main materials comprising of leather, artificial leather, textiles and others. 15% is metal, and the rest are accessories. For the production of genuine leather bags, 80% of the materials are genuine leather, 10% is lining materials and other materials make up the rest. Leather processing, a bio-chemical-intensive process, is complex and consists of many steps, requiring a great deal of experience and know-how in tanning chemistry. To make high quality leather, advanced machinery and technology is essential. Moreover there are many standards concerning, for example, production process, products and environment, with which the industry should comply to be able to compete in the world market. Most of Thai tanneries are, however, not equipped with advanced technology and machines. They are generally outdated and aging causing problems ranging from low product quality and high reject rate to low production efficiency. Therefore, it is very essential that the machines, technology and production process are upgraded or replaced. The manufacturing of footwear involves less machinery and technology but depends more on skilled labor than the tannery processing does. Nevertheless, advanced machines and technology has become increasingly important for the production of high quality footwear with high precision and efficiency, but from the result of the survey in this study, it has been found that more than half of the machines used in Thai footwear industry have been installed and used extensively for more than ten years. In terms of the cost structure of the three sub-sectors, the proportion of the expenses of the tannery industry is as follows: raw hides and skins 69%, chemicals 15%, labor and salary 13.5%, and other expenses 2.5%; the footwear industry: raw material 61%, labor 25%, and others 14%; the leather goods industry: raw material 59%, labor 24% and others 17%.Most of the tanneries are family-run enterprises hiring very few mid-level managers, scientists, engineers and designers from outside the family. Most of the experience and 7

know-how has been internally transferred from older generations to younger generations of the same family, limiting progressive development in all areas including marketing. For the footwear industry, there are shortages of personnel in the following areas: skilled labor, designers, technicians and engineers for control and maintenance of machinery, and for production planning, and marketing. The need for personnel in the leather goods industry includes skilled labor, designers, and marketing professionals. The linkage within the sub-sector is mostly done through each specific trade and/or manufacturing association which is at the moment not very strong. Benefits that members gain from each association are mostly limited in the area of information distribution and information exchange. Other benefits that the associations should provide for the members, such as increasing bargaining power and business alliances, are minimal and vague. Regarding the linkage between the upstream industry, namely the tannery, and the downstream industries, including the footwear and leather goods industries, it is very limited and mainly confined in social activities. Each group appears to have some reservations and lack of trust in others. The lack of continuous communication between the upstream and downstream industries is also evident, considering the values of export and import of finished leather. While the tannery industry exports approximately 11.3 billion Baht, the footwear and leather goods industries together import around 11.5 billion Baht annually.

2) Markets of Thai Footwear and Leather Goods Until 2000, the export value of footwear and leather goods products had been ranked in the top ten of all the products exported from Thailand. For the last two years, however, the export growth of other domestic products has been higher than that of the footwear and leather goods which in turn had been growing steadily until 1997. For the last five years, the industry has experienced an average annual decline of 4.8%, from US$ 2,057 million in 1997 to US$ 1,692 million in 2001. The export value in 2001 included US$ 840 million of footwear and accessories, US$ 440 million of leather goods, and US$ 410 million of leather, representing an annual growth of - 7.5%, 3% and - 5.6% from 1997, respectively.In 2001, major export markets for Thai footwear and accessories were the USA (36%), the European Union (38%, including the UK 12%, Belgium 9%, Denmark 5% and the Netherlands 4%), Japan (4%) and ASEAN (3%). For the leather goods, the export markets were the USA (67%), the European Union (13% where Germany, Switzerland, the UK and France took 4%, 3%, 3% and 2% from the total export, respectively), Japan (6%) and ASEAN (2%). Approximately 26% of Thai leather 8

went to Hong Kong, 17% to the USA, 18% to the European Union (in which Sweden took 8% from the total export), ASEAN (15%) and Japan (4%). The export value along the border of Thailand and neighboring countries in 2001 was recorded at around US$ 40 million, but unofficial figures including underground trade ranged from US$ 100 to US$ 200 million.Accounting for the export, border trades, and domestic market, estimated to be around US$ 900 million, the total value of Thailands footwear, leather goods and leather in 2001 was in the neighborhood of US$ 2.7 billion.

3) Key Development Factors Following are broad factors or attributes that are very important to the development of any industries including Thai footwear and leather goods industry: Factors of production or factor conditions; Domestic market or demand conditions; Related and supporting industries; Firm strategy, structure, and rivalry Role of government

3.1) Factors of Production Factors of production comprise basic and advanced factors. Basic factors are

naturally inherited or their creation does not require much effort or investment. These include, for example, natural resources, climate, location and unskilled labor. Advanced factors are much more important than basic factors. To create them requires relatively more effort, commitment and private and public investment. Advanced factors consists of skilled labor, designers, engineers, scientists, researchers, marketing personnel, raw material, knowledge, information, capital, infrastructure, research and testing laboratory, specialized educational institutes, and others.

3.2) Domestic Market Conditions There are three general elements of domestic market or demand conditions that are significant to the development: the segmentation or composition of domestic market; the size and pattern of growth of domestic market; and influence of domestic demand conditions on international market. The market size in Thailand may not be large at the moment; therefore, we should consider Indochina market as well. Considering the composition of the regional market, it is not clear that its segmentation can create any competitive advantage at the 9

moment unless the tastes of consumers can be raised in the future. Regarding the size of the market, the region has a total population of more than 200 million people. Although the purchasing power of this population is still low but there is a potential that it will be increased, especially for the upmarket consumers, when the region is more developed. The third element of the domestic market condition can clearly create a competitive advantage for Thai products since Thai footwear and leather goods products are popular in other countries in the region. The popularity is rapidly spread due to quick communication of todays media such as television, radio and others.

3.3) Related and Supporting Industries Related and supporting industries of the footwear, leather goods and tannery industry include chemical, petrochemical, plastic, textile, rubber, polymer, molding, accessory and machinery industries. Thailand lacks most of these industries, and the ones that are present are still weak, forcing footwear, leather goods, and tannery industries to rely heavily on imported raw material. The government should implement some short-term measures to make the required raw material competitively available. Such measures include lowering duty tax and the creation of an alliance of producers to increase their bargaining power. For the long term, the government needs to create a conducive environment to increase the number of manufacturers who produces high quality products in those related and supporting industries. Because several of these industries are capital intensive and requires know-how and experience, the government should encourage foreign investment in Thailand by technology owners.

3.4) Firm Strategy, Structure and Rivalry Each firms strategy and the way in which it operates are very important to the overall national competitiveness. The firms strategy and operation, in turn, depends on several factors within its own organization including the commitment, goals of the firm and its employees and image of the industry when compared with other industries in the country. For the footwear, leather goods and tannery industries, the consensus is that the support from the government is not enough and the lack of appropriate government support is one of the reasons why it is difficult for the sector to draw qualified persons into the sector.Rivalry among local firms in high-end domestic market is not very intense because Thai upmarket products are not popular among Thai consumers. In this segment, strong competition comes from brandnames from foreign countries. For low-end market, local firms are fiercely 10

competing one another on price in a very unhealthy way. In the long run, the government should campaign for local entrepreneurs to raise their product design and quality, and at the same time to increase business efficiency to cut unnecessary expenses.

3.5) Role of Government Policy, measures, rules and regulations of the government can affect the development of the industry both positively and negatively. Although the government has been supportive of the footwear, leather goods and tannery industries through several programs and projects, the support lacks continuity and commitment. In addition, there are many government

agencies involved in the development programs or implementing policy and measures, but the communication and cooperation among those agencies is insufficient. It has caused many, especially small- and medium-sized entrepreneurs to be so confused that they do not want to participate in any government programs. They also consider several programs which would benefit them and the industry to be too complicated to apply for since there are so many rules and regulations to follow. Moreover, changes in rules and regulations sometimes are done without prior consultation with the private sector. The government should focus on creating a strong foundation for the development of factors of production, a favorable environment for the private sector to conduct business, and at the same time building up its own competitiveness in trade negotiations in the global arena.

4) Strategy for Industrial Development This study has established a ten-year vision of Thailand : Asian Footwear and Leather Goods Center or Thailands Leather Goods : Italy of the East which is a vision that has been agreed upon by both the private and public sectors, and is in continuity of the objective of a project, called Bangkok Fashion City aimed at making Thailand the Southeast Asian Center for Fashion Business, including footwear and leather goods, in the next three years. In terms of export value, the goal is to increase it from approximately US$ 1.7 billion to US$ 2 billion over the next three years and to US$ 3 billion in the following seven years or ten years after the implementation of the program. To realize the above visions and objectives, the study has identified six key strategic areas: 1) proactive marketing; 2) products research and development; 3) brand and country image creation; 4) production and management sector development; 5) cluster or linkage creation; and 6) rule and regulation development. The implementation of these six strategies

11

requires key programs and projects needed for the development of each key area in the value chain. This study has proposed such six-teen programs and fifty-seven projects. The above six strategies required for the development of footwear, leather goods and tannery industries are in congruence with three previously established national industrial development strategies to increase the competitiveness of Thai industry. The three national strategies are as follows: 1) improvement of labor quality; 2) development of technology; and 3) increasing the value and reducing the cost in the value chain. http://www.oie.go.th/policy7_en.asp 2.2.2 Summary of Industrial Economic Condition 2010 and trend 2011 Footwear and Leather Products Industry The MPI of the tanning and dressing of leather grew 20.6% y-o-y and the MPI of luggage, handbags and similar products, saddlery and harnesses increased 19.3% y-o-y. The export values of footwear and parts, travel accessories, and bleached leather goods went up 1.2%, 21.0%, and 21.6% y-o-y, respectively. Production and exports saw y-o-y growth because of the low production figure in 2009 and the improving economy of trading nations. Production and export value in the footwear industry should increase in 2011 while the leather industry should be stable. Positive factors for growth next year include more investments, the economic stimulus packages, higher purchasing volume, increasing capacity utilization, and the improving local and world economies. Possible negative influences on Thailands industries could be the currency exchange rates, policy interest rates, oil prices, local political circumstances, and Europes economy.

http://www.oie.go.th/industrystatus1_en.asp

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Summary of Industrial Economic Condision 2009 and trend 2010 Footwear and Leather Industry

1. Overall Conditions The footwear and leather industry is labor-intensive and export-dependent. Therefore, the economic uncertainties of Thailand's trading partners may well have a negative impact on entrepreneurs in this industry. The global financial crisiscaused production to slow in 2009. The footwear and leather industry was further affected by the economic woes of Thailand's major trading partners: the US, Japan and the European Union.

2. Production In 2009, there were 1,014 footwear and leather factories registered with the Department of Industrial Works (as of January 21, 2009), cumulatively employing 108,136 workers. There were 189 tanning and dyeing factories with 8,158 workers, 468 footwear factories with 73,805 workers, and 357 leather factories with 26,173 workers. In 2009 , the manufacturing production indices of the different footwear and leather sectors changed as follows: - Tanning and dressing of tanned leather compared to previous year: the production index rose 3.1%, the shipment index rose 12.9%, and the finished goods inventory index fell 3.2%. - Production of travel bags, purses, and similar products compared to previous year: the production index fell 31.4%, the shipment index fell 42.1%, and the finished goods inventory index fell 49.8%. - Production of footwear compared to previous year: the production index fell 15.9%, the shipment index fell 14.9%, and the finished goods inventory index rose 14.1%.
1

2009 figures are estimates 13

2.2.3. Marketing 1) Exports In 2009, overall exports of footwear and leather products decreased by an estimated 20.0% from the previous year. A product breakdown is as follows: footwear and footwear parts (17.5%), travel bags and accessories (22.0%), and leather, tanned and composite leather products (23.3%). Exports of footwear and footwear parts in 2009 decreased by approximately 17.5% from 2008, as follows: athletic shoes (30.7%), leather shoes (10.0%), other shoes (4.2%), and shoe parts (20.1%). One export category that likely increased is sandals (5.9%). Declining export markets (January to October 2009) included the United States, Denmark and the United Arab Emirates, with decreases of 42.15%, 16.29% and 27.11%, respectively. Exports of travel bags and accessories in 2009 decreased by approximately 22.0% from 2008, as follows: travel bags, handbags (24.2%), coin purses (13.1%), wallets (6.9%), and other travel items (27.2%). Declining export markets (January to October 2009) included the United States, Japan and France, with decreases of 22.41%, 4.73% and 13.51%, respectively. Exports of leather and tanned and composition leather products in 2009 decrease by an estimated 23.3% from 2008. Almost all export categories experienced a decline, as follows: tanned cow and buffalo leather (18.4%), leather gloves (12.0%), clothing and belts (27.4%), and leather and other leather products (34.2%). Meanwhile, exports of pet toys increased by approximately 35.4%. Declining export markets (January to October 2009) included Hong Kong, Vietnam and China, with decreases of 32.79%, 35.16% and 30.26%, respectively.

2) Imports Imports of raw hides and tanned leather in 2009 dropped by approximately 38.5% from 2008. Major import sources were the United States, the Netherlands and Australia. In 2009, shoe imports decreased by an estimated 8.7% from 2008, as follows: rubber or plastic shoes (26.2%) and other shoes (12.1%). Major import sources were China, Indonesia and Vietnam. Bag imports in 2009 decrease by approximately 10.6% from 2008, as follows: travel bags (19.6%), handbags and other bags (6.8%). Major import sources were China, France and Italy.

14

2.2.4. Summary and Trends As compared to a year earlier, the production index in 2009 declined in two product categories: luggage, handbags, and similar items, saddles and harnesses (31.4%) and footwear (15.9%). Local production dropped due to the global economic recession and reduced domestic consumption. Compared to 2008, export values in 2009 declined as follows: shoes and shoe parts (17.5%) and travel bags and accessories (22.0%). This was due to the economic crisis affecting Thailand's primary trade partners, the United States and the European Union. Imports of shoes increased at the reduced rate of an estimated 8.7%. The primary source of cheap imports is China. Imports of premium-grade, trendy, fashion bags from Italy and France decreased by approximately 10.6%. Imports of raw hides for the production of exported tanned leather goods decreased by an estimated 38.5% due to reduced domestic demand and slow consumer spending, based on concerns over the stagnant economic situation. In 2010, overall production and export values of footwear and leather products are expected to increase for all products due to 1) the currently low base of production and exports, 2) major trading partners headed for economic recovery, increasing consumer confidence and spending, and 3) global recognition of Thai design excellence and quality standards. In addition, the two-year extension of anti-dumping measures imposed by the European Union and the United States (AD) on shoe products from China and Vietnam, their plans to suspend certain privileges of the Generalized System of Preferences (GSP) for shoe products from Vietnam by increasing the import tariff, and the enactment of a free trade agreement with Japan under the Japan-Thailand Economic Partnership Agreement (JTEPA) all serve to expand Thailand's opportunity to compete in the Japanese market. In 2010, overall production and exports of the footwear and leather industry is expected to increase as compared to 2009.

15

Table 2.1: Manufacturing Production Index

Item

2006

2007

2008

2009*

% change

ISIC:1911 Tanning and Dressing Tanned Leather Products Product delivery Finished product inventory 87.14 49.72 187.26 74.68 42.22 156.49 81.57 45.26 152.97 84.13 39.41 148.14 3.13 -12.91 -3.16

ISIC:1912 Manufacture of Luggage, Handbags and Similar Items, Saddles and Harnesses Products Product delivery Finished product inventory 52.18 49.70 268.79 57.85 71.32 297.33 11.96 18.09 62.05 8.21 10.47 31.12 -31.38 -42.14 -49.84

ISIC: 1920 Manufacture of Footwear Products Product delivery Finished product inventory * 2009 figures are estimates Source: Industrial Information Center, Office of Industrial Economics, Ministry of Industry Base year 2000, and the index is not seasonally adjusted 111.87 110.30 63.30 105.81 105.57 87.59 98.71 99.82 87.52 83.01 84.98 99.82 -15.91 -14.86 14.06

16

Table 2.2: Structure of Exports Unit: million US$ Product Footwear and Parts 1. Athletic shoes 2. Sandals 3. Leather shoes 4. Other shoes 5. Parts of shoes Travel Bags and Accessories 1. Luggage and travel bags 2. Handbags 3. Wallets and coin purses 4. Other travel items Leather and Tanned and 2006 926.1 544.3 78.4 226.5 62.7 14.3 201.8 74.4 39.0 21.3 67.0 451.0 2007 972.6 495.7 87.3 291.0 79.5 19.0 229.4 72.8 47.6 18.9 90.1 536.9 2008 970.8 447.9 113.1 321.9 69.2 18.8 230.1 56.0 53.0 14.2 106.9 571.0 2009* 800.9 310.2 119.8 289.7 66.3 15.0 179.5 42.4 46.0 13.2 77.8 437.9 % change -17.5 -30.7 5.9 -10.0 -4.2 -20.1 -22.0 -24.2 -13.1 -6.9 -27.2 -23.3

Composition Leather Products 1. Tanned cow and buffalo leather 2. Pet toys 3. Leather gloves 4. Clothing and belts 5. Leather and other leather products Total * 2009 figures are estimates

155.9 30.5 53.6 4.2 206.7 1,578. 9

188.2 15.5 48.0 4.5 280.7 1,739. 0

206.4 24.8 54.4 4.9 280.6 1,771. 9

168.4 33.5 47.8 3.5 184.6 1,418. 3

-18.4 35.4 -12.0 -27.4 -34.2

-20.0

Source: Information and Communication Technology Center, in cooperation with the Customs Department

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Table 2.3: Structure of Imports

Value: million US$ Product Raw Hides and Tanned 2006 478.9 111.6 19.2 18.3 17.5 56.7 79.7 22.9 56.7 2007 571.4 155.9 17.6 23.6 28.0 86.8 106.4 31.8 74.6 2008 559.1 194.2 14.3 31.9 32.5 115.5 131.5 39.1 92.3 2009* 343.8 177.3 16.8 35.1 24.0 101.4 117.5 31.5 86.0 % change

Leather Shoes 1. Athletic shoes 2. Leather shoes 3. Rubber and plastic shoes 4. Other shoes Bags and Purses 1. Luggage and travel bags 2. Handbags and other bags * 2009 figures are estimates

-38.50 -8.67 17.51 9.94 -26.17 -12.14 -10.62 -19.56 -6.83

Source: Information and Communication Technology Center, in cooperation with the Customs Department http://www.oie.go.th/industrystatus1_en.asp

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2.3 Product/Service (in General)

Example of our products Figure 2.1 Cowsleather products

Figure 2.2 Crocodiles leather products

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Figure2.3 Snakes leather products

2.4 Vision Our leather company plans to export wallet and handbag which are made by the leather of snakes, crocodiles and cows to Singapore and Malaysia. And we are trying to get high profit within 2 or 3 years, and to become a popular brand company.

2.5 Mission Our company will export wallet and handbag to the Singapore and Malaysia. So we will start by understanding what the local people at those country wants for wallet and handbag that made by leather. Then we will find our target market. And export the fashionable of wallet and handbag that customers want. From small size to big size of marketing to those country which will make more profit to us.

2.6 Strategy 2.6.1 Corporate Level Strategy Growth strategy We will use this strategy for our company in order to develop our company efficiently. At first, we will produce the leather products which are popular in the market and then we will increase our productivity in size and expansion.

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Globalization strategy We wont have our own shop in Thailand but we will sell our product through hotel only. But, our company aim to export our products to Malaysia, Singapore, so we will use globalization strategy for selling our products with the same way over these three countries. In the future, there will have ASEAN community in 2015 which means all ASEAN Country can easily access to each other. As the countries that we will export include in ASEAN, Malaysia and Singapore, we can get many benefit from it in the long term.

2.6.2 Business Level Strategy We will have differentiation strategy in our company because our products are not new to the market and we have to be different form our competitors. As our company will locate in Choburee, it is easy for us to take raw leather from SamutPrakan which is the main city that produces the raw leather in Thailand. And we produce our products from three different animals so the customers can get the type of leather at the same place. We also will design our products mostly in Thai style for making differences. However, the customers can order the design according to their need with the leather that they want.

2.6.3 Functional Level Strategy Marketing Strategy We have to survey our customers need for our products from each country so, we can meet their demand. As our target group is the people from high society, wealthy people, we should make the advertising from different media such as internet, magazine, TV. As we export our products to Malaysia, and Singapore the best way to advertise our products is using the agency from each country and contacting the shop which is selling the imported leather products in those countries

Research and Development Strategy Our company has many competitors in the market so we should have research and development strategy to compete with them. We will make research to find out the customer need by interviewing, data collecting, surveying and observing. After we finished the research, we have to develop according to research.

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Operation Strategy At first, we will choose the supplier from SamutPrakan because it is the place where we can get the good quality leather. And then, for our input, we will select the labor according to the recruiting and selecting process to get the right labor with the right job. We will have the training for the labor in using the producing equipment with both on-site and out- site training. When we deliver our products to the customers, we will see the feedback from them. So, we can set up with new process according to the feedback and we can create the loyalty customer from that.

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Chapter 3 Market Feasibility Study

Chapter 3 Market Feasibility Study

3.1 Market Analysis 3.1.1 General Environmental Analysis The environment analysis is for firming an effective company, which will be competitive in the market place. This is done to provide the firm with a description of the elements in society that directly affect the industry and the direction managers must take to implement appropriate strategies to survive. This study is commonly referred to as the general environmental analysis. We will mainly talk about economic, sociocultural and technological. These three sections describe the external environmental factors our firm must understand to effectively compete in a specific market. 1) Leather industry gung-ho over global demand The countrys tanneries and leather and leather goods makers are putting on warpaint to battle for more orders in the international markets. The latest data published on the website of Export Promotion Bureau (EPB) shows that the countrys leather export earnings rose 29.94 per cent to US $149.46 million, in the last seven months of the fiscal 2010-11, as against $115.02 million in the corresponding period of the previous year. The EPBs data revealed that leather goods exports, during the period between July 2010 and January 2011, were to the tune of $149.46 million, which is 8.46 per cent lower than the target of $163.28 million. An analysis of the EPB data showed that the countrys leather product export earnings were forging ahead due to growing international demand for Bangladeshi leather products, mainly for quality and cheaper prices. But in terms of export earnings leather products lag far behind finished leather. According to the statistical data of EPB, the country earned $31.40 million through exports of leather products during the July 2010-January 2011 period; the earning was 62.11 per more than the targeted figure of $19.37 million. During the last seven months of the current fiscal, exporters of leather products registered 23

145.70 per cent earnings growth over that in the corresponding period of the previous year. Md. Saiful Islam, president of Leather Goods and Footwear Manufacturers and Exporters Association of Bangladesh (LFMEAB), told The Independent that the countrys tanners and leather product producers are witnessing demand for their finished leather and leather goods in the international market. Islam said the leather industry is cashing in on the Chaina+1 strategy, which tells foreign importers to pick Bangladeshi products as they have quality and cheaper prices. Our local leather products are better than Chinas in terms of quality and prices; these factors help win the confidence of foreign buyers, he added. Md. Sahin Ahmed, chairman of Bangladesh Tanners Association, told The Independent that the countrys export earnings from finished leather went through ups and downs during the past few years, but now they are expected to increase. Export earnings from leather products are still so much skimpy compared to those from finished leather due to lack of modern technology and skilled workforce, he said. Many investors would invest in the leather industry of Bangladesh if bank loans with low interest rate, uninterrupted supply of gas and electricity and good institutions to train workers were ensured, said an official of Bangladesh Finished Leather and Leather goods and Footwear Exporters Association (BFLLFEA). Despite having a leather technology college, we do not get sufficient numbers of skilled workers for the sector due to the shortage of teachers, the official said. http://news.priyo.com/business/2011/02/20/leather-industry-gung-ho-over-20341.html

2) Sociocultural Factors Today the handbag has an almost iconic status in the world of fashion. A practical accessory that no woman can do without, over the last fifty years it has also taken on the role of status symbol, a badge of style reflecting a woman's self-image and the image she wants to project to the world. It hasn't always been so. A quick look at the history of the handbag reveals its very lowly roots. Depictions of handbags 2000 years ago show simple pouches fashioned from crude leather, usually carried by men. The first evidence of a handbag with any role as a fashion accessory came in medieval times, when wealthy women would embellish the simple bag they wore on their belts to carry their necessities, with lavish embroidery and even jewels, to reflect their status.

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Little was seen of any sort of fashion bag for the next few centuries. Women wore voluminous layers of clothing and though fashions changed there was always plenty of room between skirts and petticoats to conceal ample pockets, which would have room for all the things you needed to keep handy and had the advantage of being attached securely to you. Women's pockets of the seventeenth and eighteenth centuries were usually separate from their dresses, made up of large fabric pockets suspended from a belt that tied underneath your skirts. A slit in your skirts and petticoats allowed easy access to your pockets, so that whenever you needed your scissors or smelling salts they were right to hand. The contents of a woman's pockets then were quite similar in use to the contents of her handbag today. The V&A Museum in London documents an assortment of practical sewing tools, handkerchief, notebook, money and beauty aids, scent bottle, keys and even an apple or orange as the contents of one lady's pockets. Just like the contents of today's handbag, a woman's pockets were a private, almost mysterious domain, swathed in secrecy under her skirts. It was at the turn of the nineteenth century that the reticule, the forerunner of the modern handbag came into fashion. The wide skirts and hoops of the eighteenth century had given way to slim-line, even skimpy, high-waisted, figure-hugging dresses of filmy muslin. No fashionable lady wanted to ruin the outline of her shapely figure by suspending pockets full of bulky items underneath her petticoats. So the first fashion bag was born. The reticule was a small decorative bag, with a similar function to today's evening bags. It held a few essentials, maybe a scent-bottle, or a needle and thread to sew up a torn ruffle, some smelling salts to revive a fainting beauty. It was a given thing that you would be accompanied by a gentleman or a servant to carry anything that was too big for your delicate bag. A lady would have several reticules to go with different outfits and fashion magazines advised on the latest styles and ways they should be carried. Pockets continued to be worn through the nineteenth century though, especially once wider skirts returned to fashion and for a period chatelaines were worn, decorative purses that hung from the belt and could be elaborate or simply functional. The term 'handbag' first came in to use at the beginning of the twentieth century and was used for leather bags then carried by men. It was the 1920's that saw the first emergence of the modern handbag carried by women. This was another period with a fashion for light, skimpier dresses that weren't suited to pockets. It was also a period of growing independence for women, when women could go out on their own and travel without a man or a servant to carry things for them. The handbag was at once a fashion accessory chosen to match an outfit

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and a practical symbol of their new independence, women could now go forth into the world carrying all they needed themselves, self-reliant and fearless. Handbags rose in importance as fashion accessories, until in the 1950's designers were giving names to the fore-runners of today's It bags, some of which are still sought after classics today, such as the Hermes Kelly bag, named after Grace Kelly whose favourite bag it was, and the Chanel 2.55 quilted shoulder bag, first produced in February 1955. Handbag fashion went through a short slump in the early 1960's when the hip new youth culture rejected handbags as too formal for the new swinging style. Ever versatile, designers soon came up with funky new designs, using modern materials and bright colors and the handbag's new casual interpretation evolved with the times, regaining its special place close to the heart of every woman, young and old. Today, at the beginning of the twenty-first century, there is a handbag for every role a woman could wish to play, every image she ever dreamed of projecting. Our handbags can be our portable offices, complete with laptop, phone and papers; they can carry the beauty secrets that transform us from jet-setting professional to glamorous seductress; they are the trustworthy guardians of our identities, our pills and potions, even emergency rations. They can equip us for a weekend of activity with friends or bulge with the essentials of a young family. Or like the regency beauty with her reticule, we can float out for an evening's entertainment carrying the lightest and prettiest of evening bags, unburdened and carefree, with our minds on nothing but the pleasure of dancing the night away. http://www.gleni.it/bag-in-history.html

3) Economy Factors Malaysia GDP Malaysia Gross Domestic Product is worth 238 billion dollars or 0.38% of the world economy, according to the World Bank. Historically, from 1960 until 2010, Malaysia's average Gross Domestic Product was 55.64 billion dollars reaching an historical high of 237.80 billion dollars in December of 2010 and a record low of 2.42 billion dollars in December of 1961. Malaysia is a rapidly developing economy in Asia. Malaysia, a middleincome country, has transformed itself since the 1970s from a producer of raw materials into an emerging multi-sector economy. The Government of Malaysia is continuing efforts to boost domestic demand to wean the economy off of its dependence on exports. Nevertheless,

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exports - particularly of electronics - remain a significant driver of the economy. This page includes: Malaysia Gross Domestic Product (GDP) chart, historical data, forecasts and news.

http://www.tradingeconomics.com/malaysia/gdp

Malaysia GDP Growth Rate The Gross Domestic Product (GDP) in Malaysia expanded 3.7 percent in the third quarter of 2011 over the previous quarter. Historically, from 2000 until 2011, Malaysia's average quarterly GDP Growth was 1.17 percent reaching an historical high of 5.90 percent in September of 2009 and a record low of -7.60 percent in March of 2009. Malaysia is a rapidly developing economy in Asia. Malaysia, a middle-income country, has transformed itself since the 1970s from a producer of raw materials into an emerging multi-sector economy. The Government of Malaysia is continuing efforts to boost domestic demand to wean the economy off of its dependence on exports. Nevertheless, exports - particularly of electronics - remain a significant driver of the economy. This page includes: Malaysia GDP Growth Rate chart, historical data, forecasts and news. Data is also available for Malaysia GDP Annual Growth Rate, which measures growth over a full economic year.

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http://www.tradingeconomics.com/malaysia/gdp-growth

Malaysia GDP Annual Growth Rate The Gross Domestic Product (GDP) in Malaysia expanded 5.8 percent in the third quarter of 2011 over the same quarter, previous year. Unlike the commonly used quarterly GDP growth rate the annual GDP growth rate takes into account a full year of economic activity, thus avoiding the need to make any type of seasonal adjustment. Historically, from 2000 until 2011, Malaysia's average annual GDP Growth was 4.50 percent reaching an historical high of 10.10 percent in March of 2010 and a record low of -6.20 percent in March of 2009. This page includes: Malaysia GDP Annual Growth Rate chart, historical data, forecasts and news. Data is also available for Malaysia GDP Quarterly Growth Rate, which measures growth over the previous quarter.

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http://www.tradingeconomics.com/malaysia/gdp-growth-annual

Malaysia Imports Malaysia imports were worth 47.4 Billion MYR in November of 2011. Malaysia imports commodities: electronics, machinery, petroleum products, plastics, vehicles, iron and steel products and chemicals. Its main import partners are: Japan, China, European Union, Singapore and United States. This page includes: Malaysia Imports chart, historical data and news.

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http://www.tradingeconomics.com/malaysia/imports

An import is any good or service brought into one country from another country in a legitimate fashion, typically for use in trade. Import goods or services are provided to domestic consumers by foreign producers. An import in the receiving country is an export to the sending country. Imports, along with exports, form the basis of international trade. Import of goods normally requires involvement of the Customs authorities in both the country of import and the country of export and are often subject to import quotas, tariffs and trade agreements. when the "imports" are the set of goods and services imported, "Imports" also means the economic value of all goods and services that are imported. The macroeconomic variable I usually stands for the value of these imports over a given period of time, usually one year.

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http://www.tradingeconomics.com/singapore/gdp

Singapore GDP Singapore Gross Domestic Product is worth 223 billion dollars or 0.36% of the world economy, according to the World Bank. Historically, from 1960 until 2010, Singapore's average Gross Domestic Product was 48.16 billion dollars reaching an historical high of 222.70 billion dollars in December of 2010 and a record low of 0.65 billion dollars in December of 1960. Singapore along with Hong Kong, South Korea and Taiwan is one of the Four Asian Tigers. Singapore has a highly developed and successful free-market economy. It enjoys a per capita GDP higher than that of most developed countries. The economy depends heavily on exports, particularly in consumer electronics, information technology products, pharmaceuticals, and on a growing service sector. This page includes: Singapore Gross Domestic Product (GDP) chart, historical data, forecasts and news.

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http://www.tradingeconomics.com/singapore/gdp-growth

Singapore GDP Growth Rate The Gross Domestic Product (GDP) in Singapore expanded 1.9 percent in the third quarter of 2011 over the previous quarter. Historically, from 2007 until 2011, Singapore's average quarterly GDP Growth was 6.36 percent reaching an historical high of 39.90 percent in March of 2010 and a record low of -16.70 percent in September of 2010. Singapore along with Hong Kong, South Korea and Taiwan is one of the Four Asian Tigers. Singapore has a highly developed and successful free-market economy. It enjoys a per capita GDP higher than that of most developed countries. The economy depends heavily on exports, particularly in consumer electronics, information technology products, pharmaceuticals, and on a growing service sector. This page includes: Singapore GDP Growth Rate chart, historical data, forecasts and news. Data is also available for Singapore GDP Annual Growth Rate, which measures growth over a full economic year.

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http://www.tradingeconomics.com/singapore/gdp-growth-annual

Singapore GDP Annual Growth Rate The Gross Domestic Product (GDP) in Singapore expanded 6.1 percent in the third quarter of 2011 over the same quarter, previous year. Unlike the commonly used quarterly GDP growth rate the annual GDP growth rate takes into account a full year of economic activity, thus avoiding the need to make any type of seasonal adjustment. Historically, from 2007 until 2011, Singapore's average annual GDP Growth was 5.51 percent reaching an historical high of 19.40 percent in June of 2010 and a record low of -8.40 percent in March of 2009. This page includes: Singapore GDP Annual Growth Rate chart, historical data, forecasts and news. Data is also available for Singapore GDP Quarterly Growth Rate, which measures growth over the previous quarter.

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http://www.tradingeconomics.com/singapore/imports

Singapore Imports Singapore imports were worth 37012 Million SGD in December of 2011. Singapore relays on purchasing raw goods and refining them for re-export. Singapore's principal imports are machinery and equipment, mineral fuels, chemicals and foodstuffs. Main import partners are Malaysia, United States, European Union, China and Japan. This page includes: Singapore Imports chart, historical data and news. An import is any good or service brought into one country from another country in a legitimate fashion, typically for use in trade. Import goods or services are provided to domestic consumers by foreign producers. An import in the receiving country is an export to the sending country. Imports, along with exports, form the basis of international trade. Import of goods normally requires involvement of the Customs authorities in both the country of import and the country of export and are often subject to import quotas, tariffs and trade agreements. when the "imports" are the set of goods and services imported, "Imports" also means the economic value of all goods and services that are imported. The macroeconomic variable I usually stands for the value of these imports over a given period of time, usually one year.

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3.1.2 Competition Analysis (3C Analysis) This analysis helps us to know about the competitors, so we can make different and better from them. And we can analyze the customers to meet their needs.

1) Competitor Analysis Our company produces the leather products and we aim to export to Malaysia, Singapore and Portugal. The main competitors of our company are:

Direct competitor These are our main direct competitors. 1. Marwell Company: is the competitor that competes with us at same market (Singapore). Marwell Company was established in 1980. When throughout 25 years, Marwell has been developing to create more variable of products such as luggage, belt, wallet, key chain, pajama, leather care lotion, etc. In order to support the growth rate of domestic market, all clients currently are able to find Marwell brand in leading department stores in Bangkok and provincial area. 2. Thai Oriental Leather Company Limited (TOL): which is Thailands leading manufacturers and exporters of genuine exotic leather products made of Alligator/Crocodile, Stingray, Snake, Python, Ostrich skins specializing in handbags, bags, purses, wallets, belts, briefcases, luggages, boots, shoes or other exotic leathers products. With knowledge and experience in manufacturing of genuine exotic leather products over 10 years, their products are trusted and exported to many countries, such as USA, Australia, Russia and other countries in Europe and Asia. Thai Oriental Leather Company Limited is our direct competitor because this company also exported products to Europe and Asia.

Indirect Competitor This is our main indirect competitor. ACT Leather (Thailand) Company: is Thailands leading manufacturer and exporter or leather upholstered furniture and cut/sew covers. Their dedicated employees which now numbers over 1000, work within a clean, safe, modern and well equipped environment. ACT exports its extensive range of products to the United Kingdom, USA, Canada, Australia, Japan and Italy.Their policy is to use the best leathers, which are imported from Italy, South America, Australia and China. We also provide a selection of foams from imported fire 35

retardant foams to the standard grades. Together with our strong R&D team well equipped with advance IT systems we are able to provide responsive service and cutting edge designs to our customers. This allows ACT to make the most suitable and competitive product offer to our customers. 2) Customer Analysis Our products are selling to Singapore and Malaysia so our target markets are Singapore people and Malaysia citizens. Cultures have been meeting and mixing in Malaysia since the very beginning of its history. Malaysia's cultural mosaic is marked by many different cultures, Chief among these is the ancient Malay culture, and the Chinese, and the Indians. The multicultural country is different to dealt with. For the Chinese and Indian, they normally like the famous brand and focus on the quality of goods, they know the best goods worth the greater prize. Another country is Singapore,The place name "Singapore" is derived from Singa-pura("City of the Lion"), The main cultural traditions are Malay, Indian, Chinese, and to some extent Western (British). The different communities do not regard themselves as sharing a culture; instead, they consider themselves parts of a whole. The economic standard is better so people will focus more on the brand and the style of goods. So to the different we have to set different goods and advertisement method to fulfill the needs of customers. Our products are made with the fashion style and good quality .especially it is using the unique leather from other competitors. So ,even we are the new brand to join the market ,we still very competitive to others.

3) Competitive Analysis Through marked improvements over the past 20 years, Thailand's leather industry is establishing itself as a major player on the world stage. Despite fierce competition from highend manufacturers based in Europe and low-cost manufacturers in China, Indonesia and Vietnam, leather exports have been increasing steadily and appear poised for future success in the global market. Thailand's leather industry draws support from the extensive leather-tanning sector present in the country. While imported leather is used extensively for highest quality exports, over 130 tanneries supply a large portion of the processed leather used in the production of a variety of products including luggage, shoes and boots, gloves, toys, pet accessories, handbags, apparel, belts and purses. Tanneries in Thailand boast an annual production 36

capacity of approximately 15,000 tons of leather, largely produced from cowhide and buffalo. Importing hides for processing is common, with over 50% coming from China and premium quality hides shipped from America for processing. The majority of these tanneries are located in the Samut Prakarn province, 20 kilometers southeast of Bangkok. The leather industry in Thailand receives extensive support and assistance from both government organizations and trade association in the country. The Department of Export Promotion (DEP) organizes a yearly industry trade show in Bangkok, which attracts interested buyers from around the world. In addition, the DEP champions the export of leather exports abroad and assists exporters to participate in important overseas tradeshows. Also supporting the interests of the leather industry are the Thai Leather Goods Association, the Thai Footwear Association, the Tanning Industry Association, the Leather-based Industry Club, the Federation of Thai Industries and the Footwear Industry Club. The export of leather goods from Thailand can be broken down into three main categories. Leather footwear shipments make up 50% of the total export of leather goods, consisting primarily of name-brand sports shoes produced for leading international companies sourcing production in Thailand. General leather goods consisting of handbags, folders, wallets, and premium leather gifts contribute 27% of total leather exports, while tanned leather used in the production of furniture, office equipment and in automotive interiors make up the remaining portion of the category. Analysts believe that Thailand's export of leather goods will continue to increase in the near future. At present, most importers of leather elect to order goods through trading companies based in Hong Kong, Taiwan, Singapore and South Korea. In turn, these trading companies frequently order products from countries that have lower production and labor costs, including Thailand, China, Indonesia and Vietnam among others. Due to significantly higher labor costs, the Thai leather industry is no longer able to compete on price alone, and is being pressured to adjust its production and marketing strategies to ensure export competitiveness over the long-term. More emphasis is being placed on the development of production technology and product designs to match industry leaders in the global market place.

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Thailand's leather industry has gone through three distinct stages of development. Initial efforts by leather product manufacturers resulted in lower quality products for the domestic market and limited exports, which were mostly competitive on price. The second phase resulted from the continued efforts to increase the quality of products and found Thailand becoming a key destination for international brands to base their production. The final stage of development finds Thai manufacturers developing and marketing high quality products internationally under their own brand name. While individual companies within Thailand's leather industry operate at varying stages of development, the DEP and the Thai Leather Goods Association have been promoting Thailand as a competitive place for foreign companies to base their production and helping Thai exporters to develop their own brand names. Over the past four years, Thailand's leather exporters and designers have been collaborating with Linea Pelle, a renowned Italian design house, focusing on upcoming fashion trends as well as materials and accessories needed to transform products into finished collections. Through these efforts, a select group of Thai leather goods producers is beginning to make progress on the international scene and are competing directly with Europe's leading manufacturers. Despite strong competition from regional countries, Thailand's leather industry should remain on course for further gains in the future. Liberalized trade within the Association of Southeast Asian Nations (ASEAN) region slated for 2003 along with gains in product design, fashion trend awareness and upgrades in technology will likely allow further increases in the volume of Thai leather products shipped to destinations around the world. i http://www.thailand.com/exports/html/industry_ioleather.htm

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3.2 STP Analysis 3.2.1 Market Segmentation

Fashionable. Usedable Souvenir

1) Customers buy our products for being fashionable. Our products are designed with very good and fashionable designer. We dont copy or just make amount of bags to sell in a very low prize. We will follow the step of fashion and being creative to growing the influence of our brand.

2) Customers buy our products for being usable. We emphasize both on fashion and the good quality of our products. We use 100 percent true leather from our unique leather supplier. And the real products with reasonable prize are going to be very usable for customers.

3) Customers buy our products for souvenir. We would like to export our products to Malaysia and Singapore. We set only booth in 5 star hotel in Thailand. So whenever the guests come to travel to Thailand Singapore or Malaysia. Our leather products are going to be the good choice of souvenir. Because in some other countries, some leather products like crocodile leather and snack leather are banned.

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3.2.2 Target market

Fashionable. Usedable Souvenir

The target market of our product is sexual fashionable people because our products appropriate for both man and women in any age. We provide a customer with a unique leather handbag and we also design handbag up to customers requirements. People in different age have different need, so we provide team design that helps the customer create a leather handbag to conform to their need. Our designs always update to respond the need of customer in any ages. The prices of product are up to the kind of leather and design. The customer can choose the leather handbag that they are affordable. Ours products are high quality, chic, and luxury, so sexual fashionable people are suitable for our products.

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3.2.3 Positioning High Quality Service

Our product

Expensive Cheap

Poor Quality Service

The positioning of our products will be high cost and high quality.Our products are mainly sold for export, the raw leather we choose is absolutly the true good quality leather supplied by the only supplier in Thailand. We use fashion design and elaborate process to make our products. So the cost will be high compared with competitor. No doubt the quality of our products are great. Well not save a coin to make sure the high quality of our products. So our products will be located in high cost and high quality.

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3.3 Marketing Mix Strategy 3.3.1Product strategy 1) Product Leather products of our company are mainly focused on the quality and design to match the target in each of the countries that we are export. The products of this company, we will need to be sure, all kinds of goods made from natural ingredients. Including all stages of production, the quality will be always monitored. In order to maintain the reputation of Thai leather products and is a reliable company. The company also received orders from foreign companies that have contracts with us; we will manufacture the product and use our logo in order to guarantee the quality of the products we sent out and build the reputation of our company.

2) Branded products Because we are a company that made leather products, which have been copied a lot of damage, our company has a trademark registered in the country to trade with countries that we export.

3.3.2Pricing strategy The price of the product is based on a percentage of product price range is inversely proportional to the total number of products for many products, it will cost to produce a lower price would be, If you have a reservation at low production rates will be higher. The price of the company, it will be because we can reduce the cost of promotion and reduction in personnel costs, enabling us to sell products that are competing.

3.3.3Place strategy 1) The way for consumers to access directly The company has representative offices in Malaysia and Singapore, which is are tail distributor to sell our products and customers can order from the dealer and they will the orders sent to the parent company in order to produce.

2) The implementation of the consumer over the internet We've created this website to present the product and the price of the product in our web site with reservations and compute the price of the product, including discounts for 42

customers who buy a lot of product to customers via the Internet that will enable us to penetrate markets that are broader. 3) The implementation of the consumer over the telephone We will not release the customer service center for customers to request information or to order, they can call for information from the public and the consumers through a Media Center that will give use call at a time.

4) The operation consumer through the show Our company has had to show the product2 times a year, we will show in a large visitors as many customers from the show, it is exporting. The customer has to buy a lot.

3.3.4 Promotion strategy To enhance our marketing, we will bring our products to be held up to the storage of good s in the public interest through ICT. ICT system can help information about the products or information about new products and leather industry. The company's storage systems will enable our customers to purchase products from our statistics that we have the statistics to a vote. We can also be used to calculate the various statistics. The level of statistical difference, but it will make the difference.

Example 100 points for a premium product 150 points for a10% discount 200 Points for a15% discount Members will also benefit the industry and markets in the Journal, members of the company and when the efforts of the company held. We will invite members to come without any charge.

3.4 Sales Forecast/Profit Estimation We will estimate our sale by using information of GNI (Gross National Income) per person of Malaysia and Singapore and trend of export from the last four years (2007-2010) of Thailand.

3.4.1 GNI (Gross National Income) 43

Figure 3.1 (http://www.google.co.th/publicdata/explore?ds=d5bncppjof8f9_&met_y=sp_pop_totl&idim =country:MYS&dl=th&hl=th&q=%E0%B8%9B%E0%B8%A3%E0%B8%B0%E0%B8%8A %E0%B8%B2%E0%B8%81%E0%B8%A3+%E0%B8%A1%E0%B8%B2%E0%B9%80%E 0%B8%A5%E0%B9%80%E0%B8%8B%E0%B8%B5%E0%B8%A2#ctype=l&strail=false &bcs=d&nselm=h&met_y=ny_gnp_pcap_pp_cd&scale_y=lin&ind_y=false&rdim=country& idim=country:MYS:SGP&ifdim=country&tstart=1138467600000&tend=1264698000000&hl =th&dl=th)

From the above graph, the red line or the above line represents the GNI of Singapore. We can see that the income is keeping increasing or decreasing between $ 50,000 or 1,556,000 baht and $ 60,000 or 1,867,200 baht from 2006 to 2007. The blue line or the below line represents the GNI of Malaysia. The income is keeping increasing between $ 10,000 or 311,200 baht to $ 20,000 or 622,400 baht from 2006 to 2010. So, we estimate to export our products to Singapore mote than Malaysia according to the information of GNI of each country. Note: We use the exchange currency on 27th Jan 2012 for calculating from dollar to bath which is 1dollar = 31.12 baht. The exchange rate may change day by day. (http://baht.thaivisa.com/)

3.4.2 Trend of Export

44

Figure 3.2 (http://www.ops3.moc.go.th/menucomen/export_topn_re/report.asp)

Table 3.1 Value: million baht of Exported Leather products in 2006 Country Jan Feb 2.18 1.82 4 Mar 6.59 2.06 8.65 Apr 2.46 1.26 3.72 May 10.44 2.99 13.43 Jun 3.58 1.32 4.9 Jul 1.59 1.15 2.74 Aug 2.95 1.04 3.99 Sep 6.23 1.07 7.3 Oct 2.36 1.73 4.09 Nov 4.94 0.71 5.65 Dec 2.92 1.29 4.21

Singapore 4.3 Malaysia Total 0.82 5.12

Table 3.2 45

Value: million baht of Exported Leather products in 2007 Country Singapore Malaysia Total Jan 6.52 1.23 7.75 Feb 2.53 0.82 3.35 Mar 5.51 2.91 8.42 Apr 2.4 1.85 4.25 May 5.44 0.22 5.66 Jun 2.07 0.7 2.77 Jul 4.26 0.92 5.18 Aug 2.98 0.55 3.53 Sep 7.4 1.06 8.46 Oct 7.42 2.93 10.35 Nov 8.84 2.53 11.37 Dec 9.76 0.44 10.2

Table 3.3 Value: million baht of Exported Leather products in 2008 Country Singapore Malaysia Total Jan 3.23 1.4 4.63 Feb 1.88 1.87 3.75 Mar 8.32 2.41 10.73 Apr 1.47 0.78 2.25 May 6.15 1.85 8 Jun 3.71 1.91 5.62 Jul 6.26 1.92 8.18 Aug 3.07 1.88 4.95 Sep 6.57 0.6 7.17 Oct 8.35 1 9.35 Nov 7.1 1.66 8.76 Dec 10.13 1.67 11.8

Table 3.4 Value: million baht of Exported Leather products in 2009 Country Singapore Malaysia Total Jan 2.84 1.73 4.57 Feb 1.86 1.63 3.49 Mar 12.57 1.43 14 Apr 9.51 0.49 10 May 5.45 0.37 5.82 Jun 3.92 1.91 5.83 Jul 4.68 3.4 8.08 Aug 4.55 2.14 6.69 Sep 18.11 1.04 19.15 Oct 5.89 0.28 6.17 Nov 6.47 1.71 8.18 Dec 8.65 0.78 9.43

Table 3.5

Value: million baht of Exported Leather products in 20010 Country Singapore Malaysia Total Jan 5 2.3 7.3 Feb 1.49 0.59 2.08 Mar 5.16 1.02 6.18 Apr 4.32 0.44 4.76 May 12.8 2.05 14.85 Jun 12.12 1.14 13.26 Jul 9.18 2.4 11.58 Aug 7.11 1.24 8.35 Sep 5.84 0.98 6.82 Oct 6.11 1.23 7.34 Nov 5.61 0.78 6.39 Dec 9.76 0.66 10.42

46

The table shows that the growth rate and value of exported leather handbags is increasing from 2007 to 2009 in Singapore and the growth rate and value in 2010 is increasing a little which is going to be stable. The growth rate and value of exported leather handbags in Malaysia is decreasing in 2007, but in 2008 it is growing 17.08% and the growth rate is decreasing in 2009 and 2010. So, according to the growth rate and value of exporting leather handbags, we may export more to Singapore.

Table 3.6 Products Handbag snack Handbag cow Handbag Crocodile Wallet snack Wallet cow Wallet Crocodile Price (Baht) 4,000 4,000 14,000 3,000 1,200 5,000

Way of calculating the quantity of exported products to Malaysia and Singapore per month and year We calculate by summing the value of exported leather products of two countries and divided by the average price of all products. To find the quantity of each product to be exported, as we have 6 types of products, we take the total amount of products divided by the total type of products which is 6. For example: To find the quantity of products for the 1st month of Year 1 4.3 million + 0.82 million = 5.12 million Average price of all products = 56,200/6 = 9,366 Total exported quantity for month = 5.12 million / 9,366 = 546 Exported quantity of each product = 546 / 6 = 91

47

Table 3.7: Sale Forecast of Year 1

Products Handbag snack Handbag cow Handbag crocodile Wallet snack Wallet cow Wallet crocodile Total

Jan 364,000 364,000 1,274,000 273,000 169,200 455,000 2,899,200

Feb 284,000 284,000 994,000 213,000 85,200 355,000 2,215,200

Mar 612,000 612,000 2,142,000 459,000 183,600 765,000 4,773,600

Apr 264,000 264,000 924,000 198,000 79,200 330,000 2,059,200

May 876,000 876,000 3,066,000 657,000 262,800 1,095,000 6,832,800

Jun 348,000 348,000 1,218,000 261,000 104,400 435,000 2,714,400

Jul 192,000 192,000 672,000 144,000 57,600 240,000 1,497,600

Aug Sep Oct Nov Dec Total 284,000 516,000 288,000 400,000 296,000 4,724,000 284,000 516,000 288,000 400,000 296,000 4,724,000 994,000 1,806,000 1,008,000 1,400,000 1,036,000 16,534,000 213,000 387,000 216,000 300,000 222,000 3,543,000 85,200 154,800 86,400 120,000 88,800 1,477,200 355,000 645,000 360,000 500,000 370,000 5,905,000 2,215,200 4,024,800 2,246,400 3,120,000 2,308,800 36,907,200

Table 3.8: Sale Forecast of Year 2

Products Handbag snack handbag cow Handbag crocodile Wallet snack Wallet cow Wallet crocodile Total
Table

Jan
548,000 548,000 1,918,000 411,000 164,400 685,000 4,274,400
3.9:

Feb
236,000 724,000 826,000 177,000 70,800 290,000 2,323,800

Mar
596,000 596,000 2,086,000 447,000 178,800 745,000 4,648,800
Sale

Apr
300,000 300,000 1,050,000 225,000 90,000 375,000 2,340,000

May
400,000 400,000 1,400,000 300,000 120,000 500,000 3,120,000

Jun
196,000 196,000 686,000 147,000 58,800 245,000 1,528,800

Jul
368,000 368,000 1,288,000 276,000 110,400 460,000 2,870,400
of

Aug

Sep

Oct

Nov

Dec

Total

248,000 600,000 736,000 808,000 724,000 5,760,000 248,000 600,000 736,000 808,000 724,000 6,248,000 868,000 2,100,000 2,576,000 2,828,000 2,534,000 20,160,000 186,000 450,000 552,000 606,000 543,000 4,320,000 74,400 180,000 220,000 242,400 217,200 1,727,200 310,000 750,000 920,000 1,010,000 905,000 7,195,000 1,934,400 4,680,000 5,740,000 6,302,400 5,647,200 45,410,200
Year 3

Forecast

Products Handbag snack handbag cow Handbag crocodile Wallet snack Wallet cow Wallet crocodile Total

Jan Feb 328,000 264,000 328,000 264,000 1,148,000 924,000 246,000 198,000 98,400 79,200 410,000 330,000 2,558,400 2,059,200

Mar 760,000 760,000 2,660,000 570,000 228,000 950,000 5,928,000

Apr 160,000 160,000 560,000 120,000 24,000 200,000 1,224,000

May 568,000 568,000 1,988,000 426,000 170,400 710,000 4,430,400

Jun 400,000 400,000 1,400,000 300,000 120,000 500,000 3,120,000

Jul 580,000 580,000 2,030,000 435,000 174,000 725,000 4,524,000

Aug Sep Oct Nov Dec Total 352,000 508,000 664,000 620,000 836,000 6,040,000 352,000 508,000 664,000 620,000 836,000 6,040,000 1,232,000 1,778,000 2,324,000 2,170,000 2,926,000 21,140,000 264,000 381,000 498,000 465,000 627,000 4,530,000 105,600 152,400 199,200 186,000 250,800 1,788,000 440,000 635,000 830,000 775,000 1,045,000 7,550,000 2,745,600 3,962,400 5,179,200 4,836,000 6,520,800 47,088,000

48

Table 3.10: Sale Forecast of Year 4

Products Handbag snack handbag cow Handbag crocodile Wallet snack Wallet cow Wallet crocodile Total
Table

Jan

Feb

Mar

Apr

May

Jun

Jul

Aug

Sep

Oct

Nov

Dec

Total

516,000 148,000 516,000 148,000 1,806,000 518,000 387,000 111,000 154,800 44,400 645,000 185,000 4,024,800 1,154,400
3.11:

436,000 436,000 1,526,000 327,000 130,800 545,000 3,400,800

Sale

336,000 336,000 1,176,000 252,000 100,800 420,000 2,620,800

1,056,000 1,056,000 3,696,000 792,000 295,200 1,320,000 8,215,200

940,000 940,000 3,290,000 705,000 282,000 1,175,000 7,332,000

824,000 824,000 2,884,000 618,000 247,000 1,030,000 6,427,000

of

592,000 484,000 520,000 452,000 740,000 7,044,000 592,000 484,000 520,000 452,000 740,000 7,044,000 2,072,000 1,694,000 1,820,000 1,582,000 2,590,000 24,654,000 444,000 363,000 390,000 339,000 555,000 5,283,000 177,600 145,200 156,000 135,600 222,000 2,091,400 740,000 605,000 650,000 565,000 925,000 8,805,000 4,617,600 3,775,200 4,056,000 3,525,600 5,772,000 54,921,000
Year 5

Forecast

Products Jan Feb Mar Apr May Jun Jul Aug Handbag snack 324,000 248,000 996,000 708,000 412,000 416,000 572,000 476,000 handbag cow 324,000 248,000 996,000 708,000 412,000 416,000 572,000 476,000 Handbag crocodile 1,134,000 868,000 3,486,000 2,478,000 1,442,000 1,456,000 2,002,000 1,666,000 Wallet snack 243,000 186,000 747,000 531,000 309,000 312,000 429,000 357,000 Wallet cow 97,200 74,400 298,800 212,400 123,600 124,800 161,700 1,428,000 Wallet crocodile 405,000 310,000 1,245,000 885,000 515,000 520,000 715,000 595,000 Total 2,527,200 1,934,400 7,768,800 5,522,400 3,213,600 3,244,800 4,451,700 4,998,000
Figure 3.3 70,000,000 60,000,000 50,000,000 40,000,000 30,000,000 20,000,000 10,000,000 0 Year 1 Year 2 Year 3 Year 4

Sep Oct Nov Dec 1,360,000 436,000 580,000 668,000 1,360,000 436,000 580,000 668,000 4,760,000 1,526,000 2,030,000 2,338,000 1,020,000 327,000 435,000 501,000 408,000 130,800 174,000 200,400 1,700,000 545,000 725,000 835,000 10,608,000 3,400,800 4,524,000 5,210,400

Total 7,196,000 7,196,000 25,186,000 5,397,000 3,434,100 8,995,000 57,404,100

Year 5

49

3.5 Marketing Expenses (Sales Incentive) 1. Marketing Research Expense: We select marketing research because we must know lifestyle of customer, need of customer, and cost is cheaper. Type of marketing research is questionnaires, which know the customers opinions about kinds of handbag, types of product that they prefer to order etc. We make questionnaires 1 year/time because fashion change every year. 2. Agency for each country: We will send two countries, agency will distribute our product and make the product to be well known and make customer to be royalty.

Nethill (Malaysia) About Us NETHILL is a Registered Trading Company and Distributor in Leather Goods to International Dealers as well as our Local Dealers/Retailers/Clients. NETHILL has the Coolest, Quality, Styles & Rugged Leather Products - Leather Bag, Leather Briefcases, Leather Laptop Bag, Leather Travel Bag, Leather Duffle, Leather Shoulder Bag, Leather Messenger Bag, Leather Sling Bag, Leather Pouch, Leather Handphone Pouch, Leather Tote, Leather Satchel, Leather Wallet, Leather Purses, Leather Belt, Leather Credit Card Holder, Leather Passport Holder, Handmade Leather Products Leather Bag, Leather Briefcases, Leather Journal and other Leather Products. We accepts small order quantity as well as we can handle large order quantity from clients. At NETHILL, we do our best to bring you the latest fashions and designs featured in High Quality At Affordable Price! We have an extend line of finest products containing contemporary designers labels from around the world and our own exclusive NETHILL Collections.

Desmond NETHILL (JM-0486175-V) Contact No: + 6012 771 8889 Tel/Fax: +603 7728 1889

50

Company Profile Basic Information Company Name: Business Type: Nethill

Trading Company, Distributor/Wholesaler Genuine Leather Briefcase,ShoulderBag,MessengerBag,SlingBag,Leather

Product/Serv Laptop Bag,LeatherBriefcase,Leather Duffle Bag,Leather Travel ice (We Sell): Bag,Wallet,LeatherBag,Belt,Credit Card Holder,ChequeHolder,Satchel,Purses,LeatherProduct,Trading,Manufacturer,W holesale,Case Product/Serv ice (We Buy): Address: Brands: Number of Employees: Ownership & Capital Year Established: Legal Representative/Business Desmond Ng Owner: Trade & Market North America South America Main Markets: Eastern Europe Southeast Asia Africa Oceania 51 2007 JalanTeratai PJU 6, LederMann, Letag 5 - 10 People Supplier,Manufacturer,Trading,Wholesale,Distributor,GenuineLeather Briefcase,MessengerBag,SlingBag,Satchel,Wallet

Mid East Eastern Asia Western Europe Total Annual Sales Volume: Export Percentage: Factory Information Contract Manufacturing: Buyer Label Offered http://www.alibaba.com/member/onbiz.html US$1 Million - US$2.5 Million 81% - 90%

Twinkle Corporation About Us Twinkle Corporation is headquartered in Singapore with many associate offices worldwide. Our core business is mainly Import and Export Trading. Company Profile Basic Information

Company Name: Business Type: Product/Service (We Sell): Address: Number of Employees: Ownership & Capital Year Established: Legal

Twinkle Corporation Trading Company Trading, Fashion, Accessories LorongChuan 5 - 10 People

2005

Representative/Business Jacqueline Wong Owner: Trade & Market 52

North America South America Western Europe Eastern Europe Main Markets: Eastern Asia Southeast Asia Mid East Africa Oceania Total Annual Sales Volume: Below US$1 Million

http://www.alibaba.com/member/twinklecorp/aboutus.html

3. Magazine: We select advertisement in magazine because majority women like to read the magazine. In magazine, we emphasize the information about quality of handbag, type of handbag, after service. We select two magazines in two countries. The cost of magazine is 15,000 baths per month. 4. Website: we make own website for intermediate between customers and company. Major content of web page is Company Profile, product , Services Available, Registration Form, Survey Form, Question Form, Customer Response. In website emphasize picture and information, simplicity, easy to see, comfortable to use. The cost of website is 2,000 baths per month. 5. Customer service call centers: customer service call centers is after sales service, promote product and service of company to customers, advise product and service to customers. We make customer service call center after more and more customers, many lifestyle of customer. The cost of customer service call center is 14,000 bath per month.

53

3.6 Conclusion The countrys tanneries and leather and leather goods makers are putting on war paint to battle for more orders in the international markets. Today the handbag has an almost iconic status in the world of fashion. Little was seen of any sort of fashion bag for the next few centuries. The economic situation in Malaysia and Singapore are quite well and they import lots of products every year. These are advantages for us to export our products. The direct competitors are Marwell Company in Singapore, Thai Oriental Leather Company Limited in Thailand. Indirect competitor is ACT Leather (Thailand) Company. The culture of Singapore and Malaysia are suitable for us to export our leather products, Thailand's leather industry is establishing itself as a major player on the world stage, we use great quality leather with fashion design and elaborate process to make us very competitive. We pitch our products in high cost and high quality level, for our target market are both man and woman who would like to pursue fashion and good quality leather products. We use pricing strategy, place strategy such like retailing in Singapore and Malaysia, online sell, telecommunication sell to spread our brand name. According with the forecast of our revenue, in the next five years , our products will get into the markets smoothly and steadily.

54

Chapter 4 Technical Feasibility Study

Chapter 4 Technical Feasibility Study

4.1Production and Operations Analysis 4.1.1Product Characteristics

Figure4.1Men Wallet

Style Color

: fashion : brown, black, or etc.

Main Material : genuine leather Specification : 10.1cm x 9.0cm (folded); 19.4cm x 9.0cm (unfolded) Production time: within 10 days (per stock 150Pieces) Description : we have basically cow, crocodile, and snake leather wallet, color

available by customers wants. Our products are very attractive design by latest market. Can long-term use. Have many designs to choose.

55

Figure4.2 Women Wallet

Style Color

: fashion : available all

Main Material : genuine leather Specification : 22cm 10cm

Production time: 10 to 15 days (per stock 150 Pieces) Description : we have basically cow, crocodile, snake leather make purse, color

available by customers wants. Can long-term use. Have many designs to choose.

Figure4.3 Women Handbag

Style Color

: fashion : all colors

Main Material : genuine leather Specification : 44cm 33cm

Production time: 10 to 30 days (per stock 300 Pieces) Description: we have basically cow, crocodile, snake leather make handbag, color available by customers wants. Have many designs to choose.

56

4.1.2 Production/ Services Process

The process of making women handbag

Step 1 In first step, use thick paper cut and designs the style that we like to make the handbag.

Step 2 Put the paper upon the leather that we need, cut down like paper shape.

57

Step 3 Stitching the pieces together

Step 4 Sew the string with the handbag, and put the decoration

http://board.exteen.com/showcase/read/14609 58

The Process of making wallet

Begin by sketching a design and size for wallet. Remember to account for simple things like the size of bills and credit cards. This seems basic, but it is disastrous when overlooked. Also note that if wallet is too large, will have a hard time fitting it into back pocket. Decide whether or not want a change pocket or prefer card pockets on both sides within the wallet.

Step One Mark out your preferred dimensions for wallet on a cut of leather. Make cuts with a sharp knife and glide along the rulers edge to keep the cut straight. If will be adding an overlapping tab with a snap button, add no less than two inches to the end of the wallet length to account for it. This wallet is cut to 10-inches long, including the extended snap tab and 7-inches wide before being folded over.

In the photo above, can see that make one large cut twice the width of what the wallet will be in order to fold it over itself for the main (cash) pocket.Can do this or cut it into two pieces to be stitched together later. Either way works fine. 59

Step Two Shape snap tabs at one end of the wallet. When the wallet is folded, they will become one.

Step Three Cut out the embossed cowhide to make card and change pockets.

In this case made three card pockets, each measuring 3-inches by 2-inches and one change pocket at 3-inches by 3-inches. 60

Lay the card pockets on top of each other evenly spaced out and use tape to secure them, and then tape them to the body of the wallet that will be on the inside.

Step Four Use the rotary punch (with the thick piece of leather placed underneath the leather that is receiving the holes), to punch holes in the card pockets and in the body of the wallet. Using the thick hide below wallet will both extend the life of tool and also make it easier to punch holes.

Step Five Stitch one side of the card pocket to the body of the wallet using the waxed string. Begin stitching on the inside of the wallet to hide the knot.

61

Step Six

Remove the tape and finish stitching the card pockets. Double-back on stitching for added strength and to be able to tie the end string with the original starting knot. Use a lighter to slightly burn the knot so that the wax melts together. Step Seven

Repeat steps four through six for a change pocket on the opposing side, or for more card slots.

62

Step Eight

Determine the location for snaps. Fold and close the wallet and then flip the snap tab over the closed wallet. Mark the snap placement with the Glovers needle.

Use the rotary tool to punch a hole for both sides of the snap button (the male portion of the snap will be inserted into the snap tab, while the female portion is placed in the rear body of the wallet where the tab makes contact when closed).

63

Step Nine

Insert the outer male end of the snap into the snap tab from the outside. Place the correlating end on the opposite side of the tab. Use the concave side of bout press (to accommodate the round head of the snap) and, place the dot setter to where the two correlating pieces connect, and then mallet hammer the two pieces together. Repeat this step for the female portion of the snap on the rear body of the wallet

Step Ten

Fold leather so that it forms what will eventually be a completed wallet. Use rotary tool to punch holes in the body of the wallet (both side together!) alongside card pockets and near the edge.

64

Step Eleven

Using Glovers needle and sinew, and making sure that have enough sinew to stitch the entire perimeter of wallet twice, which is about three times more than would think, stitch the side of the wallet that just punched holes for. Once that portion is stitched up, punch holes around the remaining perimeter of wallet.

Step Twelve

65

Double back on stitching so that ends up with a cross-stitch pattern. When have completed the stitching, tie the end to the initial knot and cut the tags. Now take a nice long whiff of that new, fresh leather smell, and dont forget to break it in by throwing it in some mud. Leather likes that sort of treatment. http://artofmanliness.com/2011/02/24/weekend-diy-project-how-to-make-a-leather-wallet/

66

4.1.3 Location The location of Norrachad leather locate in the middle part of Thailand at Ban Bueng, Chon Buri 20220, located 500 meters west from Ban Bueng Agricultural officer. The total area is 4 acres 89 square yard.

Figure: 4.4 Location

67

4.1.4 Facility Layout

5 Figure 4.5 Facility Layout

68

4.1.5 Machine/ Tools/ Equipments Equipment

Figure 4.6 Acer PC 23-inch 16:9HD monito AspireX1700 2.4GHz dual core Pentium CPU Vista Home Premium (64-bit) 4GB of RAM, 512MB 640 GB hard drive, DVD burner, card reader nine USB port 14,990

Figure 4.7 Printer

Canon laser multifunction printer Print- Scan- Copy- Fax 2400 x 600dpi quality (9600x600dpi) USB2.0 Hi-Speed,10 BASE-T/100BASETX,2x USB memory slot Warranty 3 year 28,250

69

Figure 4.8 Air conditioner

VS-A2 , VATELY R22,R407C,R410A 14,050

Figure 4.9 Hot and cold water dispenser Built-In Energy Saver Child Resistant Guard on Hot Faucet Dry Storage Compartment 4,590

70

Figure 4.10 Industrial Luminaries

Suitable for 19 mm conduit suspension 2nos.6.5mm dia Holes for direct mounting 36 watts 300

Figure 4.11 Extinguisher

UL rated 5-B:C 780

Figure 4.12 Telephone Panasonic KX-TG3600BX 2.4 GHz withFHSS system Speaker Phone Rechargeable AAA NI-MH 990

71

Figure 4.13 Set of stationary 1,500

Machine

Figure 4.14 Leather Laser Cutting MachineSerial / Model No.: sk1215 Trademark / Brand: Packing: Payment Terms: Minimum Order: Suke plywood/wooden box T/T(Bank Transfer), Western Union 1 Set/Sets

Production Capacity: 60 Set/Sets per Month Shipping: Unit Price: 15 days after payment 2,100

72

Figure 4.15 Heavy Duty Lock Stitch Machines

Model:

LS 1600 LB

Max. Stitch Length: 12.7 mm(2 Spi) Pressure Foot Lift : Needle Bar Stroke : 6.4 mm 50.8 mm

Pressure Foot Clearance : 15 mm (by knee lifter) 12.7 mm (by Hand) Hook Size : Horizonal Extra Large 10"

Space at right of Needle: Needle: Material: Price :

DD x 1# 25 Extra Heavy, Bulky 38,00

73

Figure 4.16 Tool

1. Metal ruler 2. Knife/Razor blade 3. Glovers needle 4. Dot setter and Bout press (for fixing snaps) 5. Rotary punch 6. Thick and dense piece of leather (to use in conjunction with the rotary punch) 7. Waxed string and sinew 8. Mallet 9. Cutting board 10. Leather

Figure 4.17 Cabinets

VECTRA VECTRA 2 door low cabinet 80 cm WT White Size Price Code Material 80 x 40 x 83.5 CM 3,190 110011518 ALUMINIUM TEXTURE FRAME MELAMINE WHITE

74

VECTRA VECTRA 2 door low cabinet 120 cm WT White Size Price Code Material 119.4 x 40 x 83.5 CM 4,150 110011468 ALUMINIUM TEXTURE

FRAME MELAMINE WHITE

Figure 4.18 Bookcases

VECTRA VECTRA high cabinet 80 cm WT White Size Price Code Material 80 x 40 x 159.4 CM 3,290 110011670 ALUMINIUM TEXTURE FRAME MELAMINE WHITE

75

Figure 4.19 Home Office Set

TETRIS home office 2.0 x 2.4 m. TETRIS home office 2.0 x 2.4 m. Espresso Price 29,190

VECTRA Vectra home office set 2.6x2.2 m. White Price 17,360

Figure 4.20 Working Chair Working chair coverPVC Size54(W) x 48(D) x 90(H) cm Price 890

Figure 4.21 Working Table Size 180 x 90 x 75 cm DSM 180 3 Drawers size 43 x 60 x 65 cm 653 DSM Price 7500

76

Figure 4.22 Meeting Table

Boat-Shaped Conference Tables from 6'-18' in 24 Colors! Item# No. Y3681 Price 16,470

Figure 4.23 Sofa

FASCINATE/L FASCINATE/L (R) 503GDBN/8503BK/503GDBN Gold Brown Price Code Material 32,900 110017936 Sofa covered fabric

Coffee Table

NOTTE NOTTE coffee table hi-gloss WT/WN White-Walnut Size Price Code Material 80 x 100 x 30 CM 8,490 110016472 Top Higloss Particle Board , Base V-neer

77

Figure 4.24 Shelves

Price 8,000 Price 8,900

Vehicles Figure 4.25 New Nissan Navara Single Cab

Increased Value and Multi-Purpose Use (Chassis Cab) The Navara Single Cab offers the highest level of value with the large number uses offered by the rigid steel structure that can be further modified for special duties. Robust and Capable (XE).

More durable and efficient 510,500 Baht

Figure 4.26 Isuzu F-Series 78

Isuzu F-Series brings the benefits of advanced engineering to every aspect of vehicle design. From superb safety and convenience to unsurpassed power and durability, these topperforming trucks have the features businesses need to meet the challenge of tough jobs and cost-effective operations.

The versatile model lineup, ranging from 9 tons 21 tons GVM, means the F-Series is ready to handle any application. Ready and reliable. 1,280,000 Baht

4.1.6 Logistics management The main functions of a qualified logistician include inventory management, purchasing, transportation, warehousing, consultation and the organizing and planning of these activities. For our products, our main supplier is Samut Prakan company, they provide us the raw leather to our factory site in Chonburi Thailand by road transportation. These two factories near each other, so the cost of transportation would be our advantage.

Customer Service We will export our products to Malaysia and Singapore. The selling will also be undertaken in Thailand but just for the booth inside the 5 star hotel. We would like to provide our very kind and concerned service to our customer to boost our brand and customer loyalty. The feedback process will be also done by our staff to satisfy the needs of them and looking for the potential of more creative products.

Return goods 79

If there was any return goods because the mistake we have make or the bad quality of our products. The most sincere apologies will be sent immediately and we will provide the compensation to make it up. The investigation will also be carry on by our personnel.

Location planning Our company and factory will be located in Chonburi, Thailand. Because of Three reasons: 1. Chionburi is located in the center of Thailand. So it is convenient to deliver our goods. 2. Chonburi is near the sea. It is easier to take a ship as a method of transportation. 3. Chonburi near Samut Prakan company which is our unique raw leather material supplier. This saved lots of transportation fee for us.

Transport & Traffic We will use road transportation, water transportation and air transportation as well as the way to export our products. 1. Road transportation will be used mainly inside the country. Like in Thailand, we will use trunk to transport our products to every province.

2. Water transportation is going to be the main way as the exporting method. It costs more time 80

than other air transport but save lots of money.

3. Air transportation is going to be a suppletive way to transport. When we facing any urgent cases, the air transport can also be used.

Warehousing & Inventory Control 81

We will keep our raw leather dry when it is storing or being used. Warehousing must be built for our special purpose is to keep leather products for a long time. Including different air condition system, temperature system, and so on. Different kinds of goods or facilities will be separated strictly in case of property loss or emergency.

4.1.7 Facility Management Due to the particularity of our products, our facility management will be conducted strictly and carefully. 1. Air condition system: Due to the moisture weather in Thailand .we must to make sure the air condition system is going well all the time. 2. Electric system: We have electric system and also the standby electric system in case of emergency. 3. Safety facility: including the fire extinguisher system, emergency escape system and poison gas handling system as well. This system will be controlled with very professionalism to make sure everything is going very well.

4.2 Cost of Investment 4.2.1 Pre-operating cost 1) Landscape - Area 1 rai equal 400 square yards equal 1600 square meters - Improve area height 1meter/rai equal 1600 cubic meter - Truckload 1 equal to 10 cubic meters - Improve area height 1meter/rai equal to 160 truckload - Improve area 500 truckload filled up special price

Standard cost - fill + improve height 1meter/rai price is 300000-400000 bath - fill late rite + improve height 1meter/rai price is 400000-600000 bath - Construction work in landfills. Measure the level100 square meter area height of 1 meter is equal to400cubic meters (Q), cost about 90,000 to 100,000 Baht - Construction work in landfills. Measure the level 50 square meter area height of 1 meter is equal to 200 cubic meters (q) for about 70,000 Baht. http://www.landcover.tk/

82

Our land has 4 rai fill + improve height 1meter/rai price is 300000-400000 bath. Therefore 4 rai the cost is 1,200,000 baths.

2) Registration Registration of company Service Company limited registration service 9,500 bath Note Registrationincluded all Fee,freerubberstamp+Tax ID card+ VATandaccount ing service free one mont h Limited partnership registration 4,500 bath Registrationincluded all Fee,freerubberstamp+Tax ID card+ VATandaccount ing service free one mont h commercial registrat ion company/partnership liquidat ion registrat ion Change address Change director Change authorized director Change object ive Change name 1,500 bath Capital increase Change VAT Tax ID card registration VAT Registration Social securit y registrat ion Account ing service 2,500 bath 500 bat h 1,000 bath 1,500 bath 1,500 bath Totaltaxwithholding, VAT andTransferdocumentstothe company. http://www.troy-accounting.com/ Start rate not included Fee 2,000 bath Start rate not included Fee 1,500 bath Theregistrationincluded Fee.

10,000 bath Start Ratepublishedpapersandfees.

83

3) Registered trademarks - 10,000 baht per registered service mark (from start to finish, including the cost of everything For less than 1 s) if more than one charge 800 baht per transaction. - The check marks in 2000 THB - The renewal fee 5000 Baht - The transfer fee of 5000 Baht - Fee for an appeal against the refusal consulting agreements or other charges as applicable http://thaitradebrand.com/

Table 4.1 Pre-Operating cost Pre-Operation Landscape Registration of Company Registration Trademark Total Amount 1,200,000 9,500 10,000 1,219,500

4.3 Investment Cost 4.3.1 Land - The total area is 4 acres 89 square yard which is 2,200,000 baht. 4.3.2 Building Cost Construction Prefab. Area 200-500 square meters for 4,500 Baht per square meter. Area 500 1,000 square meters for 4,000 Baht per square meter. Area1,000 5,000 square meters for 3,500 Baht per square meter. Area 5,000 square meters, more than 3,000 Baht per square meter. Cost of construction. Above do not include ground. The construction cost based on weight. The start 500 bath per sq m (not pin) Ground pin for the weight of1 ton /square meter increase 1,000 Baht per square meter. Ground pin for the weight of2 ton /sq meter increase 2,000 Baht per square meter. Ground pin for the weight of3 ton /sq meter increase 3,000 Baht per square meter. http://www.meesuk.net/index.php?page=shop.browse&category_id=18&vmcchk=1&option=co m_virtuemart&Itemid=1

84

4.3.3 Factory

Size: 40 meters long, 50 meters wide. Factory 40 *50 = 2000 square meters. Area1000 5000 square meters for 3500 baht per square meter. Therefore, price of construction is 2000 * 3500 = 7000000. Ground pin for the weight of 2 ton /sq mincrease2000 baht per square meter. Therefore, price of ground pin is 2000 * 2000 = 4000000.

Total11 million contract to build the plant. Table 4.2 Vehicles Vechicles Nissan Navara Single Cab Isuzu F-Series Total Quantity 2 2 4 Price 510,500 1,280,000 1,790,500 Total 1,021,000 2,560,000 3,581,000

Table 4.3 Machines Machines Heavy duty lockstitch machine Leather skiving machine Total Quantity 10 4 14 Price 38,000 21,000 59,000 Total 380,000 84,000 464,000

85

Tables 4.4 Inventory Inventory Spare Parts ( per set) Raw Leathers (lot) Total Quantity 1 1 2 Price 150,000 400,000 550,000 Total 150,000 400,000 550,000

Tables 4.5 Computers Computers Acer PC Quantity 10 Price 14,990 Total 149,900

Tables 4.6 Office Equipments Office Equipment Computer Printer and fax Air conditioner Water cooler Industrial Luminaries Extinguisher Set of Stationary Telephone Total Quantity 10 2 5 6 30 10 1 10 74 Price 14,990 28,250 14,050 4,590 300 780 1,500 990 65,450 Total 149,900 56,500 70,250 27,540 9,000 7,800 1,500 9,900 332,390

86

Tables 4.7 Furniture Furniture Cabinets-80cm WT Cabinets- 120cm WT Bookcases- 80cm WT Home Office Set 2.0*2.4m Home Office Set 2.6*2.2m Working Chairs Working Tables Sofa Coffee Table Boat-Shaped Conference Tables Set Shelves A Shelves B Total Quantity 2 2 2 1 1 10 10 1 1 1 2 3 36 Price 3,190 4,150 3,290 29,190 17,360 890 7,500 32,000 8,490 16,470 8,000 8,900 139,430 Total 6,380 8,300 6,580 29,190 17,360 8,900 75,000 32,000 8,490 16,470 16,000 17,800 242,470

Table 4.8 Cost of Investment Investment Land Building Vechicles Machines Inventory Computers Office Equipments Furniture Total Amount 2,200,000 11,000,000 3,581,000 464,000 250,000 149,900 332,390 242,470 18,219,760

87

4.3.4 Depreciation Table 4.9 Depreciation Investment Building Vehicles Machines Computers Office Equipments Furniture Total Amount 11,000,000 3,581,000 464,000 149,900 332,390 242,470 15,769,760 Depreciation 20 Years 5 Years 5 Years 3 Years 5 Years 5 Years Annual Dep. 550,000 716,200 92,800 49,966 66,478 48,494 1,523,938 Monthly Dep. 45,833 59,683 7,733 4,164 5,539 4,041 129,993

Table 4.10: Depreciation for Year - 1

Investment Amount Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Building 11,000,000 45,833 45,833 45,833 45,833 45,833 45,833 45,833 45,833 45,833 45,833 45,833 45,833 Vechicles 3,581,000 59,683 59,683 59,683 59,683 59,683 59,683 59,683 59,683 59,683 59,683 59,683 59,683 Machines 464,000 7,733 7,733 7,733 7,733 7,733 7,733 7,733 7,733 7,733 7,733 7,733 7,733 Computers 149,900 4,164 4,164 4,164 4,164 4,164 4,164 4,164 4,164 4,164 4,164 4,164 4,164 Office Equipments 332,390 5,539 5,539 5,539 5,539 5,539 5,539 5,539 5,539 5,539 5,539 5,539 5,539 Furnitures 242,470 4,041 4,041 4,041 4,041 4,041 4,041 4,041 4,041 4,041 4,041 4,041 4,041 Total 126,993 126,993 126,993 126,993 126,993 126,993 126,993 126,993 126,993 126,993 126,993 126,993

Table 4.11: Depreciation for Year 2

Investment Amount Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Building 10,450,000 45,833 45,833 45,833 45,833 45,833 45,833 45,833 45,833 45,833 45,833 45,833 45,833 Vechicles 2,864,800 59,683 59,683 59,683 59,683 59,683 59,683 59,683 59,683 59,683 59,683 59,683 59,683 Machines 371,200 7,733 7,733 7,733 7,733 7,733 7,733 7,733 7,733 7,733 7,733 7,733 7,733 Computers 99,934 4,164 4,164 4,164 4,164 4,164 4,164 4,164 4,164 4,164 4,164 4,164 4,164 Office Equipments 265,912 5,539 5,539 5,539 5,539 5,539 5,539 5,539 5,539 5,539 5,539 5,539 5,539 Furnitures 193,976 4,041 4,041 4,041 4,041 4,041 4,041 4,041 4,041 4,041 4,041 4,041 4,041 Total 14,245,822 126,993 126,993 126,993 126,993 126,993 126,993 126,993 126,993 126,993 126,993 126,993 126,993

88

Table 4.12: Depreciation for Year 3

Investment Amount Building 9,900,000 Vechicles 2,148,600 Machines 278,400 Computers 49,967 Office Equipments 199,434 Furnitures 145,482 Total 12,721,883

Jan 45,833 59,683 7,733 4,164 5,539 4,041 126,993

Feb 45,833 59,683 7,733 4,164 5,539 4,041 126,993

Mar 45,833 59,683 7,733 4,164 5,539 4,041 126,993

Apr 45,833 59,683 7,733 4,164 5,539 4,041 126,993

May 45,833 59,683 7,733 4,164 5,539 4,041 126,993

Jun 45,833 59,683 7,733 4,164 5,539 4,041 126,993

Jul 45,833 59,683 7,733 4,164 5,539 4,041 126,993

Aug 45,833 59,683 7,733 4,164 5,539 4,041 126,993

Sep 45,833 59,683 7,733 4,164 5,539 4,041 126,993

Oct 45,833 59,683 7,733 4,164 5,539 4,041 126,993

Nov 45,833 59,683 7,733 4,164 5,539 4,041 126,993

Dec 45,833 59,683 7,733 4,164 5,539 4,041 126,993

Table 4.13: Depreciation for Year 4

Investment Amount Building 9,350,000 Vechicles 1,432,400 Machines 185,600 Office Equipments 132,956 Furnitures 96,988 Total 11,197,944

Jan 45,833 59,683 7,733 5,539 4,041 122,829

Feb 45,833 59,683 7,733 5,539 4,041 122,829

Mar 45,833 59,683 7,733 5,539 4,041 122,829

Apr 45,833 59,683 7,733 5,539 4,041 122,829

May 45,833 59,683 7,733 5,539 4,041 122,829

Jun 45,833 59,683 7,733 5,539 4,041 122,829

Jul 45,833 59,683 7,733 5,539 4,041 122,829

Aug 45,833 59,683 7,733 5,539 4,041 122,829

Sep 45,833 59,683 7,733 5,539 4,041 122,829

Oct 45,833 59,683 7,733 5,539 4,041 122,829

Nov 45,833 59,683 7,733 5,539 4,041 122,829

Dec 45,833 59,683 7,733 5,539 4,041 122,829

Table 4.14: Depreciation for Year 5

Investment Building Vechicles Machines Office Equipments Furnitures Total

Amount 8,800,000 716,200 92,800 66,478 48,494 9,723,972

Jan 45,833 59,683 7,733 5,539 4,041 122,829

Feb 45,833 59,683 7,733 5,539 4,041 122,829

Mar 45,833 59,683 7,733 5,539 4,041 122,829

Apr 45,833 59,683 7,733 5,539 4,041 122,829

May 45,833 59,683 7,733 5,539 4,041 122,829

Jun 45,833 59,683 7,733 5,539 4,041 122,829

Jul 45,833 59,683 7,733 5,539 4,041 122,829

Aug 45,833 59,683 7,733 5,539 4,041 122,829

Sep 45,833 59,683 7,733 5,539 4,041 122,829

Oct 45,833 59,683 7,733 5,539 4,041 122,829

Nov 45,833 59,683 7,733 5,539 4,041 122,829

Dec 45,833 59,683 7,733 5,539 4,041 122,829

89

4.4 Operating Cost 4.4.1 Raw material Snake leather (lot) Cow leather (lot) Crocodile leather (lot) Spares of bag (lot) Total 100,000 100,000 200,000 150,000 550,000

4.4.2 Direct Labor Cost Painter Glue people Stitched in/ stitched out Check style Package Total 10,000 7,000 15,000 8,000 7,000 47,000 5 5 10 5 5 30 50,000 35,000 150,000 40,000 35,000 310,000

4.4.3 Manufacturing Overhead Salaries of maintenance personnel Salaries of manufacturing managers Salaries of the materials management staff Salaries of the quality control staff Wages of building janitorial staff Total 7,000*2 bath 15,000 bath 7,000*2bath 8,000 bath 6,000*2bath 63,000 bath

90

4.5 Management analysis 4.5.1 Organization Chart

In office

In factory

4.5.2 Administration cost Description Telephone cost Internet fee ( 9 Mb BB) Electricity Manager Financial manager Salary Human Resource Sale and marketing manager Salary * 2 Water charge 2,000Baht 1,000 Baht 3050Baht 15,000 Baht 10,000 Baht 10,000 Baht 20,000 Baht 1,867 Baht Per month cost

91

1) Telephone Cost From the information of TOT company, International telephone service 008 to Malaysia, Country Country code Time GMT ( Greenwich Mean Time) Malaysia 60 1 4 5 TOT Rates (Baht/ minute) AIS DTAC, TT &T, TOT 3G. 7

International telephone service 008 to Singapore, Country Country code Time GMT ( Greenwich Mean Time) Singapore 65 1 TOT Rates (Baht/ minute) AIS DTAC, TT &T, TOT 3G. 4 7 7

http://www.totiig.net/business1/008_th.php

2) Electricity Cost From the information of Provincial electricity Authority Electronics industry is engage by government officers, any other government agency, local government, embassy, international organization and other that involve with government. Use electricity average 15 minute, between 30KW but not more than1, 000KW and not more than 250,000 units per month. Normal capacity: Need of electric power (Baht/kilowatt) At voltage of 69 kilowatt or more Voltage from 22 to 33 kilowatt At voltage below 22 kilowatt 221.50 2.8095 312.24 196.26 2.7815 312.24 175.70 2.7441 Cost (Baht/unit) Service charge (Baht/month) 312.24

92

Time of use rate: TOU Need of electric power (Baht/kilowatt) Peak At voltage of 69 kilowatt Voltage from 22 to 33 kilowatt At voltage below 22 kilowatt 210.00 3.9189 2.3027 312.24 132.93 3.7731 2.2695 312.24 74.14 Peak 3.6917 Off Peak 2.2507 312.24 Cost (Baht/Unit) Service charge (Baht/ month)

http://www.pea.co.th/rates/Rate2011.pdf

93

3) Water Cost Table 4.15 Water rate at Chonburi (January 2555) The use of water(m/m onth) Num ber units. Pri ce Minimum water Minimum rate of 50 Baht/month (4m) Minimum rate of 150 Baht/month(10m) A Total Price A Total Pric e Minimum rate of 300 Baht/month (18m) 1.Housing 2.Bovernment and small business 3.Enterprise/industrial companies/big business A Total

0 -10

10

11.82

118.20

118.20

14.12

141.20

141.20

15.21

152.10

152.10

11-20

10

13.53

135.30

253.50

16.92

169.20

310.40

18.26

182.60

334.70

21-30

10

15.92

159.2.

412.70

18.12

181.20

491.60

21.45

214..5 0

549.20

31-50

20

17.96

359.20

771.90

19.12

382.40

874.00

24.45

489.00

1,038.20

51-80

30

18.99

569.70

1,341.6 0

19.64

589.20

1,463.2

26.55

796.50

1,834.70

81-100

20

19.43

388.60

1,730.2 0

19.91

398.20

1,861.40

26.80

536.00

2,370.70

101-300

200

20.64

4,128.0

5,959.40

27.05

5,410. 0

7,780.70

301-1,000

700

20.74

14,518.0 0

20,507.4 0 41,347.4 0

27.30

19,110 .00

26,890.7 0 54,030.7 0

1,001-2,000

1,000

20.84

20,840.0 0

27.14

27,140 .00

2,001-3,000

1,000

20.96

20,960.0 0

62,307.4 0

26.99

26,990 .00

81,020.7 0

>3,000

21.07

26.83

94

Table 4.16 Administration Cost Year- 1

Description Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Total Telephone cost 7,200 7,200 10,800 7,200 14,400 7,200 3,600 7,200 10,800 7,200 7,200 7,200 97,200 Water Charge 2,061 1,861 2,200 1,861 5,989 2,061 1,030 1,861 2,200 1,861 2,200 1,861 27,046 Internet Fee ( 9 Mb BB) 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 12,000 Electricity 4,078 4,078 4,762 4,078 5,447 4,078 2,034 4,078 4,762 4,078 4,078 4,078 49,629 Manager 15,000 15,000 15,000 15,000 15,000 15,000 15,000 15,000 15,000 15,000 15,000 15,000 180,000 Financial Manager Salary 10,000 10,000 10,000 10,000 10,000 10,000 10,000 10,000 10,000 10,000 10,000 10,000 120,000 Human Resource 10,000 10,000 10,000 10,000 10,000 10,000 10,000 10,000 10,000 10,000 10,000 10,000 120,000 Sale and Marketing Manager Salary * 2 20,000 20,000 20,000 20,000 20,000 20,000 20,000 20,000 20,000 20,000 20,000 20,000 240,000 Total 69,339 69,139 73,762 69,139 81,836 69,339 62,664 69,139 73,762 69,139 69,478 69,139 845,875

Table 4.17 Administration Cost Year- 2

Description Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Total Telephone cost 10,800 7,200 10,800 7,200 7,200 3,600 7,200 3,600 10,800 10,800 14,400 10,800 104,400 Water Charge 2,200 1,861 2,200 1,861 2,061 1,030 1,861 1,030 2,200 3,900 5,989 3,900 30,093 Internet Fee ( 9 Mb BB) 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 12,000 Electricity 4,762 4,078 4,762 4,078 4,078 2,034 4,078 2,034 4,762 4,762 5,447 4,762 49,637 Manager 15,000 15,000 15,000 15,000 15,000 15,000 15,000 15,000 15,000 15,000 15,000 15,000 180,000 Financial Manager Salary 10,000 10,000 10,000 10,000 10,000 10,000 10,000 10,000 10,000 10,000 10,000 10,000 120,000 Human Resource 10,000 10,000 10,000 10,000 10,000 10,000 10,000 10,000 10,000 10,000 10,000 10,000 120,000 Sale and Marketing Manager Salary * 2 20,000 20,000 20,000 20,000 20,000 20,000 20,000 20,000 20,000 20,000 20,000 20,000 240,000 Total 73,762 69,139 73,762 69,139 69,339 62,664 69,139 62,664 73,762 75,462 81,836 75,462 856,130
Table 4.18 Administration Cost Year- 3

Description Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Total Telephone cost 7,200 7,200 10,800 3,600 10,800 7,200 10,800 7,200 7,200 10,800 10,800 14,400 108,000 Water Charge 1,861 1,861 5,000 1,030 2,200 1,861 2,200 1,861 2,000 2,200 2,200 5,989 30,263 Internet Fee ( 9 Mb BB) 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 12,000 Electricity 4,078 4,078 4,762 2,034 4,762 4,078 4,762 4,078 4,078 4,762 4,762 5,447 51,681 Manager 15,000 15,000 15,000 15,000 15,000 15,000 15,000 15,000 15,000 15,000 15,000 15,000 180,000 Financial Manager Salary 10,000 10,000 10,000 10,000 10,000 10,000 10,000 10,000 10,000 10,000 10,000 10,000 120,000 Human Resource 10,000 10,000 10,000 10,000 10,000 10,000 10,000 10,000 10,000 10,000 10,000 10,000 120,000 Sale and Marketing Manager Salary * 2 20,000 20,000 20,000 20,000 20,000 20,000 20,000 20,000 20,000 20,000 20,000 20,000 240,000 Total 69,139 69,139 76,562 62,664 73,762 69,139 73,762 69,139 69,278 73,762 73,762 81,836 861,944

95

Table 4.19Administration Cost Year- 4

Description Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Total Telephone cost 7,200 3,600 7,200 7,200 18,000 14,400 14,400 10,800 7,200 7,200 7,200 14,400 118,800 Water Charge 2,200 1,030 2,061 1,861 7,000 6,000 5,500 2,200 2,000 2,061 2,000 5,989 39,902 Internet Fee ( 9 Mb BB) 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 12,000 Electricity 4,078 2,034 4,078 4,078 6,131 6,131 5,447 4,762 4,078 4,078 4,078 4,762 53,735 Manager 15,000 15,000 15,000 15,000 15,000 15,000 15,000 15,000 15,000 15,000 15,000 15,000 180,000 Financial Manager Salary 10,000 10,000 10,000 10,000 10,000 10,000 10,000 10,000 10,000 10,000 10,000 10,000 120,000 Human Resource 10,000 10,000 10,000 10,000 10,000 10,000 10,000 10,000 10,000 10,000 10,000 10,000 120,000 Sale and Marketing Manager Salary * 2 20,000 20,000 20,000 20,000 20,000 20,000 20,000 20,000 20,000 20,000 20,000 20,000 240,000 Total 69,478 62,664 69,339 69,139 87,131 82,531 81,347 73,762 69,278 69,339 69,278 81,151 884,437

Table 4.20 Administration Cost Year- 5

Description Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Total Telephone cost 7,200 5,000 14,400 10,800 7,200 7,200 10,800 10,800 21,600 7,200 10,800 10,800 123,800 Water Charge 1,861 1,500 5,989 5,989 2,000 2,000 2,200 2,200 8,000 2,000 2,200 5,989 41,928 Internet Fee ( 9 Mb BB) 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 12,000 Electricity 4,078 3,000 5,447 4,762 4,078 4,078 4,762 4,762 6,816 4,078 4,762 4,762 55,385 Manager 15,000 15,000 15,000 15,000 15,000 15,000 15,000 15,000 15,000 15,000 15,000 15,000 180,000 Financial Manager Salary 10,000 10,000 10,000 10,000 10,000 10,000 10,000 10,000 10,000 10,000 10,000 10,000 120,000 Human Resource 10,000 10,000 10,000 10,000 10,000 10,000 10,000 10,000 10,000 10,000 10,000 10,000 120,000 Sale and Marketing Manager Salary * 2 20,000 20,000 20,000 20,000 20,000 20,000 20,000 20,000 20,000 20,000 20,000 20,000 240,000 Total 69,139 65,500 81,836 77,551 69,278 69,278 73,762 73,762 92,416 69,278 73,762 77,551 893,113

4.6 Conclusion We have three main products and they are man wallet, women wallet and women bag. After the Production and Operations Analysis, it is feasible for our company to manufacture these kinds of products. The location of our company is in the middle of Thailand near the only raw leather supplier in Thailand, it is considered to be the advantage for us. Any facilities to be chosen are according with the actual demand. The transportation and logistics management are according to the actual situation and the budget. The best services to satisfy our customers are our final goal. The export transportation will be considered mainly by shipping, road transportation will be considered as domestic transport tool.

96

Chapter 5 Financial Analysis

Chapter 5 Financial Analysis

5.1 Income Statement
Norrachad Leather Company Income Statement Monthly Based For Year- 1 May Jun Jul

Description Revenue Sale Net Sale Cost of Good Sold Gross Profit / Loss Expense Salaries Stationary Internet Electricity Telephone Water Marketing expense Total Expense EBITD Depreciation EBIT Interest Expense(12%) EBI Tax (30%) Net Income Retained earnings beginning of the months Retained Earnings

Jan

Feb

Mar

Apr

Aug 2,215,200 2,215,200 923,000 1,292,200

Sep 4,024,800 4,024,800 923,000 3,101,800

Oct 2,246,400 2,246,400 923,000 1,323,400

Nov

Dec

Total 36,907,200 36,907,200 11,076,000 25,831,200 660,000 18,000 12,000 49,669 97,200 27,046 204,000 1,067,915 24,763,385 1,523,916 23,353,763 3,099,744 20,254,019 6,076,206 14,177,814

2,899,200 2,215,200 4,773,600 2,899,200 2,215,200 4,773,600 923,000 923,000 923,000 1,976,200 1,292,200 3,850,600 55,000 55,000 55,000 1,500 1,500 1,500 1,000 1,000 1,000 4,078 4,078 4,782 7,200 7,200 10,800 2,061 1,861 2,200 17,000 17,000 17,000 87,839 87,639 92,282 1,888,361 1,204,561 3,758,318 126,993 126,993 126,993 1,761,368 1,077,568 3,631,325 237,144 155,064 462,072 1,524,224 922,504 3,169,253 457,267 276,751 950,776 1,066,957 645,753 2,218,477 1,066,957 1,712,710 1,066,957 1,712,710 3,931,187

2,059,200 6,832,800 2,714,400 1,497,600 2,059,200 6,832,800 2,714,400 1,497,600 923,000 923,000 923,000 923,000 1,136,200 5,909,800 1,791,400 574,600 55,000 1,500 1,000 4,078 7,200 1,861 17,000 87,639 1,048,561 126,993 921,568 136,344 785,224 235,567 549,657 3,931,187 4,480,844 55,000 1,500 1,000 5,447 14,400 5,989 17,000 100,336 5,809,464 126,993 5,682,471 709,176 4,973,295 1,491,989 3,481,307 4,480,844 7,962,151 55,000 55,000 1,500 1,500 1,000 1,000 4,078 2,034 7,200 3,600 2,061 1,030 17,000 17,000 87,839 81,164 1,703,561 493,436 126,993 126,993 1,576,568 366,443 214,968 68,952 1,361,600 297,491 408,480 89,247 953,120 208,244 7,962,151 8,915,271 8,915,271 9,123,515

3,120,000 2,308,800 3,120,000 2,308,800 923,000 923,000 2,197,000 1,385,800 55,000 1,500 1,000 4,078 7,200 1,861 17,000 87,639 1,298,161 126,993 1,285,462 166,296 1,119,166 335,750 783,416 13,394,398 14,177,814

55,000 55,000 55,000 55,000 1,500 1,500 1,500 1,500 1,000 1,000 1,000 1,000 4,078 4,782 4,078 4,078 7,200 10,800 7,200 7,200 1,861 2,200 1,861 2,200 17,000 17,000 17,000 17,000 87,639 92,282 87,639 87,978 1,204,561 3,009,618 1,235,761 2,109,022 126,993 126,993 126,993 126,993 1,077,568 2,882,625 1,108,768 1,982,029 155,064 372,216 158,808 263,640 922,504 2,510,409 949,960 1,718,389 276,751 753,123 284,988 515,517 645,753 1,757,286 664,972 1,202,872 9,123,515 9,769,268 11,526,554 12,191,526 9,769,268 11,526,554 12,191,526 13,394,398

97

Description Jan Feb Mar Apr Aug Sep Oct Nov Dec Total Revenue Sale 4,274,400 2,323,800 4,648,800 2,340,000 3,120,000 1,528,800 2,870,400 1,934,400 4,680,000 5,740,000 6,302,400 5,647,200 45,410,200 Net Sale 4,274,400 2,323,800 4,648,800 2,340,000 3,120,000 1,528,800 2,870,400 1,934,400 4,680,000 5,740,000 6,302,400 5,647,200 45,410,200 Cost of Good Sold 973,000 973,000 973,000 973,000 973,000 973,000 973,000 973,000 973,000 973,000 973,000 973,000 11,676,000 Gross Profit / Loss 3,301,400 1,350,800 3,675,800 1,367,000 2,147,000 555,800 1,897,400 961,400 3,707,000 4,767,000 5,329,400 4,674,200 33,734,200 Expense Salaries 55,000 55,000 55,000 55,000 55,000 55,000 55,000 55,000 55,000 55,000 55,000 55,000 660,000 Stationary 1,500 1,500 1,500 1,500 1,500 1,500 1,500 1,500 1,500 1,500 1,500 1,500 18,000 Internet 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 12,000 Electricity 4,762 4,078 4,762 4,078 4,078 2,034 4,078 2,034 4,762 4,762 5,447 4,762 49,637 Telephone 10,800 7,200 10,800 7,200 7,200 3,600 7,200 3,600 10,800 10,800 14,400 10,800 104,400 Water 2,200 1,861 2,200 1,861 2,061 1,030 1,861 1,030 2,200 3,900 5,989 3,900 30,093 Marketing Expense 17,000 17,000 17,000 17,000 17,000 17,000 17,000 17,000 17,000 17,000 17,000 17,000 204,000 Total Expense 92,262 87,639 92,262 87,639 87,839 81,164 87,639 81,164 92,262 93,962 100,336 93,962 1,078,130 EBITD 3,209,138 1,263,161 3,583,538 1,279,361 2,059,161 474,636 1,809,761 880,236 3,614,738 4,673,038 5,229,064 4,580,238 32656070 Depreciation 126,993 126,993 126,993 126,993 126,993 126,993 126,993 126,993 126,993 126,993 126,993 126,993 1,523,916 EBIT 3,082,145 1,136,168 3,456,545 1,152,368 1,932,168 347,643 1,682,768 753,243 3,487,745 4,546,045 5,102,071 4,453,245 31,132,154 Interest Expense (12%) 396168 162096 441096 164040 257640 66696 227688 288420 444840 572040 639528 560904 4221156 EBI 2,685,977 974,072 3,015,449 988,328 1,674,528 280,947 1,455,080 464,823 3,042,905 3,974,005 4,462,543 3,892,341 26,910,998 Tax (30%) 805793.1 292221.6 904634.7 296498.4 502358.4 84284.1 436524 139446.9 912871.5 1192201.5 1338762.9 1167702.3 8073299.4 Net Income 1,880,184 681,850 2,110,814 691,830 1,172,170 196,663 1,018,556 325,376 2,130,034 2,781,804 3,123,780 2,724,639 18,837,699 Retained earnings beginning of the months 14,177,814 16,057,998 16,739,848 18,850,662 19,542,492 20,714,662 20,911,325 21,929,881 22,255,257 24,385,291 27,167,095 30,290,875 Retained Earnings 16,057,998 16,739,848 18,850,662 19,542,492 20,714,662 20,911,325 21,929,881 22,255,257 24,385,291 27,167,095 30,290,875 33,015,514

Norrachad Leather Company Income Statement Monthly Based For Year- 2 May Jun Jul

98

Description Jan Feb Mar Apr Revenue Sale 2,558,400 2,059,200 5,928,000 1,224,000 Net Sale 2,558,400 2,059,200 5,928,000 1,224,000 Cost of Good Sold 1,023,000 1,023,000 1,023,000 1,023,000 Gross Profit / Loss 1,535,400 1,036,200 4,905,000 201,000 Expense Salaries 55,000 55,000 55,000 55,000 Stationary 1,500 1,500 1,500 1,500 Internet 1,000 1,000 1,000 1,000 Electricity 4,078 4,078 4,762 2,034 Telephone 7,200 7,200 10,800 3,600 Water 1,861 1,861 5,000 1,030 Marketing Expense 31,000 31,000 31,000 31,000 Total Expense 101,639 101,639 109,062 95,164 EBITD 1,433,761 934,561 4,795,938 105,836 Depreciation 126,993 126,993 126,993 126,993 EBIT 1,306,768 807,568 4,668,945 -21,157 Interest Expense 184248 124344 588600 24120 EBI 1,122,520 683,224 4,080,345 -45,277 Tax (30%) 336756 204967.2 1224103.5 13,583 Net Income 785,764 478,257 2,856,242 -58,860 Retained earnings beginning of the mont 33,015,514 33,801,278 34,279,535 37,135,777 Retained Earnings 33,801,278 34,279,535 37,135,777 37,076,917

Norrachad Leather Company Income Statement Monthly Based For Year- 3 May Jun Jul 4,430,400 4,430,400 1,023,000 3,407,400 55,000 1,500 1,000 4,762 10,800 2,200 31,000 106,262 3,301,138 126,993 3,174,145 408888 2,765,257 829577.1 1,935,680 37,076,917 39,012,597 3,120,000 3,120,000 1,023,000 2,097,000 55,000 1,500 1,000 4,078 7,200 1,861 31,000 101,639 1,995,361 126,993 1,868,368 251640 1,616,728 485018.4 1,131,710 39,012,597 40,144,307 4,524,000 4,524,000 1,023,000 3,501,000 55,000 1,500 1,000 4,762 10,800 2,200 31,000 106,262 3,394,738 126,993 3,267,745 420120 2,847,625 854287.5 1,993,338 40,144,307 42,137,645

Aug 2,745,600 2,745,600 1,023,000 1,722,600 55,000 1,500 1,000 4,078 7,200 1,861 31,000 101,639 1,620,961 126,993 1,493,968 206712 1,287,256 386176.8 901,079 42,137,645 43,038,724

Sep 3,962,400 3,962,400 1,023,000 2,939,400 55,000 1,500 1,000 4,078 7,200 2,000 31,000 101,778 2,837,622 126,993 2,710,629 352728 2,357,901 707370.3 1,650,531 43,038,724 44,689,255

Oct 5,179,200 5,179,200 1,023,000 4,156,200 55,000 1,500 1,000 4,762 10,800 2,200 31,000 106,262 4,049,938 126,993 3,922,945 498744 3,424,201 1027260.3 2,396,941 44,689,255 47,086,196

Nov 4,836,000 4,836,000 1,023,000 3,813,000 55,000 1,500 1,000 4,762 10,800 2,200 31,000 106,262 3,706,738 126,993 3,579,745 457560 3,122,185 936655.5 2,185,530 47,086,196 49,271,726

Dec 6,520,800 6,520,800 1,023,000 5,497,800 55,000 1,500 1,000 5,447 14,400 5,989 31,000 114,336 5,383,464 126,993 5,256,471 659736 4,596,735 1379020.5 3,217,715 49,271,726 52,489,441

Total 47,088,000 47,088,000 12,276,000 34,812,000 660,000 18,000 12,000 51,681 108,000 30,263 372,000 1,251,944 33,560,056 1,523,916 32,036,140 4177440 27,858,700 8384776.1 19,473,924

99

Description Jan Feb Mar Revenue Sale 4,024,800 1,154,400 3,400,800 Net Sale 4,024,800 1,154,400 3,400,800 Cost of Good Sold 1,073,000 1,073,000 1,073,000 Gross Profit / Loss 2,951,800 81,400 2,327,800 Expense Salaries 55,000 55,000 55,000 Stationary 1,500 1,500 1,500 Internet 1,000 1,000 1,000 Electricity 4,078 2,034 4,078 Telephone 7,200 3,600 7,200 Water 2,200 1,030 2,061 Marketing Expense 31,000 31,000 31,000 Total Expense 101,978 95,164 101,839 EBITD 2,849,822 -13,764 2,225,961 Depreciation 122,829 122,829 122,829 EBIT 2,726,993 -136,593 2,103,132 Interest Expense(12%) 354,216 9768 279336 EBI 2,372,777 -146,361 1,823,796 Tax (30%) 711833.1 43,908 547138.8 Net Income 1,660,944 -190,269 1,276,657 Retained earnings beginning of the months 52,489,441 54,150,385 53,960,116 Retained Earnings 54,150,385 53,960,116 55,236,773

Norrachad Leather Company Income Statement Monthly Based For Year- 4 Apr May Jun Jul 2,620,800 2,620,800 1,073,000 1,547,800 55,000 1,500 1,000 4,078 7,200 1,861 31,000 101,639 1,446,161 122,829 1,323,332 185736 1,137,596 341278.8 796,317 55,236,773 56,033,090 8,215,200 8,215,200 1,073,000 7,142,200 55,000 1,500 1,000 6,131 18,000 7,000 31,000 119,631 7,022,569 122,829 6,899,740 857064 6,042,676 1812802.8 4,229,873 56,033,090 60,262,963 7,332,000 7,332,000 1,073,000 6,259,000 55,000 1,500 1,000 6,131 14,400 6,000 31,000 115,031 6,143,969 122,829 6,021,140 751080 5,270,060 1581018 3,689,042 60,262,963 63,952,005 6,427,000 6,427,000 1,073,000 5,354,000 55,000 1,500 1,000 5,447 14,400 5,500 31,000 113,847 5,240,153 122,829 5,117,324 642480 4,474,844 1342453.2 3,132,391 63,952,005 67,084,396

Aug 4,617,600 4,617,600 1,073,000 3,544,600 55,000 1,500 1,000 4,762 10,800 2,200 31,000 106,262 3,438,338 122,829 3,315,509 425352 2,890,157 867047.1 2,023,110 67,084,396 69,107,506

Sep 3,775,200 3,775,200 1,073,000 2,702,200 55,000 1,500 1,000 4,078 7,200 2,000 31,000 101,778 2,600,422 122,829 2,477,593 324264 2,153,329 645998.7 1,507,330 69,107,506 70,614,836

Oct 4,056,000 4,056,000 1,073,000 2,983,000 55,000 1,500 1,000 4,078 7,200 2,061 31,000 101,839 2,881,161 122,829 2,758,332 357960 2,400,372 720111.6 1,680,260 70,614,836 72,295,096

Nov 3,525,600 3,525,600 1,073,000 2,452,600 55,000 1,500 1,000 4,078 7,200 2,000 31,000 101,778 2,350,822 122,829 2,227,993 294312 1,933,681 580104.3 1,353,577 72,295,096 73,648,673

Dec 5,772,000 5,772,000 1,073,000 4,699,000 55,000 1,500 1,000 4,762 14,400 5,989 31,000 113,651 4,585,349 122,829 4,462,520 563880 3,898,640 1169592 2,729,048 73,648,673 76,377,721

Total 54,921,400 54,921,400 12,876,000 42,045,400 660,000 18,000 12,000 53,735 118,800 39,902 372,000 1,274,437 40,770,963 1,473,948 39,297,015 5045448 34,251,567 10363286.4 23,888,281

100

Description Jan Feb Mar Apr Revenue Sale 2,527,200 1,934,400 7,768,800 5,522,400 Net Sale 2,527,200 1,934,400 7,768,800 5,522,400 Cost of Good Sold 1,123,000 1,123,000 1,123,000 1,123,000 Gross Profit / Loss 1,404,200 811,400 6,645,800 4,399,400 Expense Salaries 55,000 55,000 55,000 55,000 Stationary 1,500 1,500 1,500 1,500 Internet 1,000 1,000 1,000 1,000 Electricity 4,078 3,000 5,447 4,762 Telephone 7,200 5,000 14,400 10,800 Water 1,861 1,500 5,989 5,989 Marketing Expense 31,000 31,000 31,000 31,000 Total Expense 101,639 98,000 114,336 110,051 EBITD 1,302,561 713,400 6,531,464 4,289,349 Depreciation 122,829 122,829 122,829 122,829 EBIT 1,179,732 590,571 6,408,635 4,166,520 Interest Expense 168504 97368 797496 527928 EBI 1,011,228 493,203 5,611,139 3,638,592 Tax (30%) 303368.4 147960.9 1683341.7 1091577.6 Net Income 707,860 345,242 3,927,797 2,547,014 Retained earnings beginning of the mont 76,377,721 77,085,581 77,430,823 81,358,620 Retained Earnings 77,085,581 77,430,823 81,358,620 83,905,634

Norrachad Leather Company Income Statement Monthly Based For Year- 5 May Jun Jul 3,213,600 3,213,600 1,123,000 2,090,600 55,000 1,500 1,000 4,078 7,200 2,000 31,000 101,778 1,988,822 122,829 1,865,993 250872 1,615,121 484536.3 1,130,585 83,905,634 85,036,219 3,244,800 3,244,800 1,123,000 2,121,800 55,000 1,500 1,000 4,078 7,200 2,000 31,000 101,778 2,020,022 122,829 1,897,193 254616 1,642,577 492773.1 1,149,804 85,036,219 86,186,023 4,451,700 4,451,700 1,123,000 3,328,700 55,000 1,500 1,000 4,762 10,800 2,200 31,000 106,262 3,222,438 122,829 3,099,609 399444 2,700,165 810049.5 1,890,116 86,186,023 88,076,139

Aug 4,998,000 4,998,000 1,123,000 3,875,000 55,000 1,500 1,000 4,762 10,800 2,200 31,000 106,262 3,768,738 122,829 3,645,909 465000 3,180,909 954272.7 2,226,636 88,076,139 90,302,775

Sep 10,608,000 10,608,000 1,123,000 9,485,000 55,000 1,500 1,000 6,816 21,600 8,000 31,000 124,916 9,360,084 122,829 9,237,255 1138200 8,099,055 2429716.5 5,669,339 90,302,775 95,972,114

Oct 3,400,800 3,400,800 1,123,000 2,277,800 55,000 1,500 1,000 4,078 7,200 2,000 31,000 101,778 2,176,022 122,829 2,053,193 273336 1,779,857 533957.1 1,245,900 95,972,114 97,218,014

Nov 4,524,000 4,524,000 1,123,000 3,401,000

Dec 5,210,400 5,210,400 1,123,000 4,087,400

Total 57,404,100 57,404,100 13,476,000 43,928,100

55,000 55,000 660,000 1,500 1,500 18,000 1,000 1,000 12,000 4,762 4,762 55,385 10,800 10,800 123,800 2,200 5,989 41,928 31,000 31,000 372,000 106,262 110,051 1,283,113 3,294,738 3,977,349 42,644,987 122,829 122,829 1,473,948 3,171,909 3,854,520 41,171,039 408120 490488 5271372 2,763,789 3,364,032 35,899,667 829136.7 1009209.6 10769900.1 1,934,652 2,354,822 25,129,767 97,218,014 99,152,666 99,152,666 101,507,488
101

5.2 Statement of Cash Flow

Description Cash flows from operating activities Net income Depreciation Decrease (Increase) in Inventory Increase (decrease) in Accrued Expenses Net cash from operating activities Cash flows from investing activities Decrease (Increase) in Fixed Asset Net cash used in investing activities Cash flows from financing activities Increase (decrease) in Borrowing Increase (decrease) in long term dept paid Net cash used in financing activities Net increase (decrease) in cash and cashequivalents Cash and cash equivalents at beginningof year Cash and cash equivalents at end of year

Jan

Feb

Mar

Norrachad Leather Company Statement of Cash Fiow Monthly Based for Year-1 Apr May Jun

Jul

Aug

Sep

Oct

Nov

Dec

Total

1,066,957 645,753 2,218,477 549,657 3,481,307 953,120 208,244 645,753 1,757,286 664,972 1,202,872 783,416 14,177,814 126,993 126,993 126,993 126,993 126,993 126,993 126,993 126,993 126,993 126,993 126,993 126,993 1,523,916 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 1,193,950 772,746 2,345,470 676,650 3,608,300 1,080,113 335,237 772,746 1,884,279 791,965 1,329,865 910,409 15,701,730 -17,969,760 -17,969,760 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 -17,969,760 0 -17,969,760 25,000,000 -10000000 15,000,000 12,731,970

25,000,000 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 -5,000,000 0 0 0 0 0 -5,000,000 25,000,000 0 0 0 0 -5,000,000 0 0 0 0 0 -5,000,000 8,224,190 772,746 2,345,470 676,650 3,608,300 -3,919,887 335,237 772,746 1,884,279 791,965 1,329,865 -4,089,591 0 8,224,190 8,996,936 11,342,406 12,019,056 15,627,356 11,707,469 12,042,706 12,815,452 14,699,731 15,491,696 16,821,561 8,224,190 8,996,936 11,342,406 12,019,056 15,627,356 11,707,469 12,042,706 12,815,452 14,699,731 15,491,696 16,821,561 12,731,970

102

Description Jan Feb Mar Jul Aug Sep Oct Nov Dec Total Cash flows from operating activities Net income 1,880,184 681,850 2,110,814 691,830 1,172,170 196,663 1,018,556 325,376 2,130,034 2,781,804 3,123,780 2,724,639 18,837,700 Depreciation 126,993 126,993 126,993 126,993 126,993 126,993 126,993 126,993 126,993 126,993 126,993 126,993 1,523,916 Decrease (Increase) in Inventory 0 0 0 0 0 0 0 0 0 0 0 0 0 Increase (decrease) in Accrued Expenses 0 0 0 0 0 0 0 0 0 0 0 0 0 Net cash from operating activities 2,007,177 808,843 2,237,807 818,823 1,299,163 323,656 1,145,549 452,369 2,257,027 2,908,797 3,250,773 2,851,632 20,361,616 Cash flows from investing activities Decrease (Increase) in Fixed Asset 0 0 0 0 0 0 0 0 0 0 0 0 0 Net cash used in investing activities 0 0 0 0 0 0 0 0 0 0 0 0 0 Cash flows from financing activities Increase (decrease) in Borrowing 0 0 0 0 0 0 0 0 0 0 0 0 0 Increase (decrease) in pricipal paid 0 0 0 0 0 -5,000,000 0 0 0 0 0 -5,000,000 -10000000 Net cash used in financing activities 0 0 0 0 0 -5,000,000 0 0 0 0 0 -5,000,000 -10000000 Net increase (decrease) in cash and cashequivalents 2,007,177 808,843 2,237,807 818,823 1,299,163 -4,676,344 1,145,549 452,369 2,257,027 2,908,797 3,250,773 -2,148,368 10,361,616 Cash and cash equivalents at beginningof year 12,731,970 14,739,147 15,547,990 17,785,797 18,604,620 19,903,783 15,227,439 16,372,988 16,825,357 19,082,384 21,991,181 25,241,954 Cash and cash equivalents at end of year 14,739,147 15,547,990 17,785,797 18,604,620 19,903,783 15,227,439 16,372,988 16,825,357 19,082,384 21,991,181 25,241,954 23,093,586

Norrachad Leather Company Statement of Cash Fiow Monthly Based for Year-2 Apr May Jun

103

Description Jan Feb Mar Jul Aug Sep Oct Nov Dec Total Cash flows from operating activities Net income 785,764 478,257 2,856,242 -58,860 1,935,680 1,131,710 1,993,338 901,079 1,650,531 2,396,941 2,185,530 3,217,715 19,473,927 Depreciation 126,993 126,993 126,993 126,993 126,993 126,993 126,993 126,993 126,993 126,993 126,993 126,993 1,523,916 Decrease (Increase) in Inventory 0 0 0 0 0 0 0 0 0 0 0 0 0 Increase (decrease) in Accrued Expenses 0 0 0 0 0 0 0 0 0 0 0 0 0 Net cash from operating activities 912,757 605,250 2,983,235 68,133 2,062,673 1,258,703 2,120,331 1,028,072 1,777,524 2,523,934 2,312,523 3,344,708 20,997,843 Cash flows from investing activities Decrease (Increase) in Fixed Asset 0 0 0 0 0 0 0 0 0 0 0 0 0 Net cash used in investing activities 0 0 0 0 0 0 0 0 0 0 0 0 0 Cash flows from financing activities Increase (decrease) in Borrowing 0 0 0 0 0 0 0 0 0 0 0 0 0 Increase (decrease) in Long Term Debt paid -5,000,000 0 0 Net cash used in financing activities 0 0 0 0 0 -5,000,000 0 0 0 0 0 0 0 Net increase (decrease) in cash and cashequivalents 912,757 605,250 2,983,235 68,133 2,062,673 -3,741,297 2,120,331 1,028,072 1,777,524 2,523,934 2,312,523 3,344,708 20,997,843 Cash and cash equivalents at beginningof year 23,093,586 24,006,343 24,611,593 27,594,828 27,662,961 29,725,634 25,984,337 28,104,668 29,132,740 30,910,264 33,434,198 35,746,721 Cash and cash equivalents at end of year 24,006,343 24,611,593 27,594,828 27,662,961 29,725,634 25,984,337 28,104,668 29,132,740 30,910,264 33,434,198 35,746,721 39,091,429
104

Norrachad Leather Company Statement of Cash Fiow Monthly Based for Year-3 Apr May Jun

Description Jan Feb Mar Jul Aug Sep Oct Nov Dec Total Cash flows from operating activities Net income 1,660,944 -190,269 1,276,657 796,317 4,229,873 3,689,042 3,132,391 2,023,110 1,507,330 1,680,260 1,353,577 2,729,048 23,888,280 Depreciation 126,993 126,993 126,993 126,993 126,993 126,993 126,993 126,993 126,993 126,993 126,993 126,993 1,523,916 Decrease (Increase) in Inventory 0 0 0 0 0 0 0 0 0 0 0 0 0 Increase (decrease) in Accrued Expenses 0 0 0 0 0 0 0 0 0 0 0 0 0 Net cash from operating activities 1,787,937 -63,276 1,403,650 923,310 4,356,866 3,816,035 3,259,384 2,150,103 1,634,323 1,807,253 1,480,570 2,856,041 25,412,196 Cash flows from investing activities Decrease (Increase) in Fixed Asset 0 0 0 0 0 0 0 0 0 0 0 0 0 Net cash used in investing activities 0 0 0 0 0 0 0 0 0 0 0 0 0 Cash flows from financing activities Increase (decrease) in Borrowing 0 0 0 0 0 0 0 0 0 0 0 0 0 Increase (decrease) in pricipal paid 0 0 0 0 0 0 0 0 0 0 0 0 0 Net cash used in financing activities 0 0 0 0 0 0 0 0 0 0 0 0 0 Net increase (decrease) in cash and cashequivalents 1,787,937 -63,276 1,403,650 923,310 4,356,866 3,816,035 3,259,384 2,150,103 1,634,323 1,807,253 1,480,570 2,856,041 25,412,196 Cash and cash equivalents at beginningof year 39,091,429 40,879,366 40,816,090 42,219,740 43,143,050 47,499,916 51,315,951 54,575,335 56,725,438 58,359,761 60,167,014 61,647,584 Cash and cash equivalents at end of year 40,879,366 40,816,090 42,219,740 43,143,050 47,499,916 51,315,951 54,575,335 56,725,438 58,359,761 60,167,014 61,647,584 64,503,625

Norrachad Leather Company Statement of Cash Fiow Monthly Based for Year-4 Apr May Jun

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Description Jan Feb Mar Jul Aug Sep Oct Nov Dec Total Cash flows from operating activities Net income 707,860 345,242 3,927,797 2,547,014 1,130,585 1,149,804 1,890,116 2,226,636 5,669,339 1,245,900 1,934,652 2,354,822 25,129,767 Depreciation 126,993 126,993 126,993 126,993 126,993 126,993 126,993 126,993 126,993 126,993 126,993 126,993 1,523,916 Decrease (Increase) in Inventory 0 0 0 0 0 0 0 0 0 0 0 0 0 Increase (decrease) in Accrued Expenses 0 0 0 0 0 0 0 0 0 0 0 0 0 Net cash from operating activities 834,853 472,235 4,054,790 2,674,007 1,257,578 1,276,797 2,017,109 2,353,629 5,796,332 1,372,893 2,061,645 2,481,815 26,653,683 Cash flows from investing activities Decrease (Increase) in Fixed Asset 0 0 0 0 0 0 0 0 0 0 0 0 0 Net cash used in investing activities 0 0 0 0 0 0 0 0 0 0 0 0 0 Cash flows from financing activities Increase (decrease) in Borrowing 0 0 0 0 0 0 0 0 0 0 0 0 0 Increase (decrease) in pricipal paid 0 0 0 0 0 0 0 0 0 0 0 0 0 Net cash used in financing activities 0 0 0 0 0 0 0 0 0 0 0 0 0 Net increase (decrease) in cash and cashequivalents 834,853 472,235 4,054,790 2,674,007 1,257,578 1,276,797 2,017,109 2,353,629 5,796,332 1,372,893 2,061,645 2,481,815 26,653,683 Cash and cash equivalents at beginningof year 64,503,625 65,338,478 65,810,713 69,865,503 72,539,510 73,797,088 75,073,885 77,090,994 79,444,623 85,240,955 86,613,848 88,675,493 Cash and cash equivalents at end of year 65,338,478 65,810,713 69,865,503 72,539,510 73,797,088 75,073,885 77,090,994 79,444,623 85,240,955 86,613,848 88,675,493 91,157,308
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Norrachad Leather Company Statement of Cash Fiow Monthly Based for Year-5 Apr May Jun

5.3 Balance Sheet

Description Jan Feb Mar Apr Asset Current asset Cash 8,224,190 8,996,936 11,342,406 12,019,056 Total current asset 8,224,190 8,996,936 11,342,406 12,019,056 Non Current Asset Land 2,200,000 2,200,000 2,200,000 2,200,000 Fixed asset 15,769,760 15,642,767 15,515,774 15,388,781 Depreciation 126,993 126,993 126,993 126,993 Total Fixed asset 15,642,767 15,515,774 15,388,781 15,261,788 Total Non Current Asset 17,842,767 17,715,774 17,588,781 17,461,788 Total Assets 26,066,957 26,712,710 28,931,187 29,480,844 Liability and Equity Long Term Debt Total Liability Equity Retained Earning Total Equity Total Liability and Equity

Norrachad Leather Comppany Balance Sheet Monthly Based For Year- 1 May Jun Jul

Aug

Sep

Oct

Nov

Dec

Total

15,627,356 11,707,469 12,042,706 12,815,452 14,699,731 15,491,696 16,821,561 12,731,970 152,520,529 15,627,356 11,707,469 12,042,706 12,815,452 14,699,731 15,491,696 16,821,561 12,731,970 152,520,529 2,200,000 15,261,788 126,993 15,134,795 17,334,795 32,962,151 2,200,000 15,134,795 126,993 15,007,802 17,207,802 28,915,271 2,200,000 15,007,802 126,993 14,880,809 17,080,809 29,123,515 2,200,000 14,880,809 126,993 14,753,816 16,953,816 29,769,268 2,200,000 14,753,816 126,993 14,626,823 16,826,823 31,526,554 2,200,000 14,626,823 126,993 14,499,830 16,699,830 32,191,526 2,200,000 14,499,830 126,993 14,372,837 16,572,837 33,394,398 2,200,000 14,372,837 126,993 14,245,844 16,445,844 29,177,814 26,400,000 180,855,582 1,523,916 179,331,666 205,731,666 358,252,195

25,000,000 25,000,000 1,066,957 1,066,957 26,066,957

25,000,000 25,000,000 1,712,710 1,712,710 26,712,710

25,000,000 25,000,000 25,000,000 25,000,000 3,931,187 4,480,844 3,931,187 4,480,844 28,931,187 29,480,844

25,000,000 20,000,000 20,000,000 20,000,000 20,000,000 20,000,000 20,000,000 15,000,000 260,000,000 25,000,000 20,000,000 20,000,000 20,000,000 20,000,000 20,000,000 20,000,000 15,000,000 260,000,000 7,962,151 8,915,271 9,123,515 9,769,268 11,526,554 12,191,526 13,394,398 14,177,814 98,252,195 7,962,151 8,915,271 9,123,515 9,769,268 11,526,554 12,191,526 13,394,398 14,177,814 98,252,195 32,962,151 28,915,271 29,123,515 29,769,268 31,526,554 32,191,526 33,394,398 29,177,814 358,252,195

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Description Asset Current asset Cash Total current asset Non Current Asset Land Fixed asset Depreciation Total Fixed asset Total Non Current Asset Total Assets Liability and Equity Long Term Debt Total Liability Equity Retained Earning Total Equity Total Liability and Equity

Jan

Feb

Mar

Apr

Norrachad Leather Comppany Balance Sheet Monthly Based For Year- 2 May Jun Jul

Aug

Sep

Oct

Nov

Dec

Total

14,739,147 15,547,990 17,785,797 18,604,620 19,903,783 15,227,439 16,372,988 16,825,357 19,082,384 21,991,181 25,241,954 23,093,586 224,416,226 14,739,147 15,547,990 17,785,797 18,604,620 19,903,783 15,227,439 16,372,988 16,825,357 19,082,384 21,991,181 25,241,954 23,093,586 224,416,226 2,200,000 2,200,000 2,200,000 2,200,000 2,200,000 2,200,000 2,200,000 2,200,000 2,200,000 2,200,000 2,200,000 2,200,000 14,245,844 14,118,851 13,991,858 13,864,865 13,737,872 13,610,879 13,483,886 13,356,893 13,229,900 13,102,907 12,975,914 12,848,921 126,993 126,993 126,993 126,993 126,993 126,993 126,993 126,993 126,993 126,993 126,993 126,993 14,118,851 13,991,858 13,864,865 13,737,872 13,610,879 13,483,886 13,356,893 13,229,900 13,102,907 12,975,914 12,848,921 12,721,928 16,318,851 16,191,858 16,064,865 15,937,872 15,810,879 15,683,886 15,556,893 15,429,900 15,302,907 15,175,914 15,048,921 14,921,928 31,057,998 31,739,848 33,850,662 34,542,492 35,714,662 30,911,325 31,929,881 32,255,257 34,385,291 37,167,095 40,290,875 38,015,514 26,400,000 162,568,590 1,523,916 161,044,674 187,444,674 411,860,900

15,000,000 15,000,000 15,000,000 15,000,000 15,000,000 10,000,000 10,000,000 10,000,000 10,000,000 10,000,000 10,000,000 5,000,000 140,000,000 15,000,000 15,000,000 15,000,000 15,000,000 15,000,000 10,000,000 10,000,000 10,000,000 10,000,000 10,000,000 10,000,000 5,000,000 140,000,000 16,057,998 16,739,848 18,849,662 19,541,492 20,713,662 20,910,325 21,928,881 22,254,257 24,384,291 27,166,095 30,289,875 33,014,514 271,850,900 16,057,998 16,739,848 18,850,662 19,542,492 20,714,662 20,911,325 21,929,881 22,255,257 24,385,291 27,167,095 30,290,875 33,015,514 271,860,900 108 31,057,998 31,739,848 33,850,662 34,542,492 35,714,662 30,911,325 31,929,881 32,255,257 34,385,291 37,167,095 40,290,875 38,015,514 411,860,900

Description Asset Current asset Cash Total current asset Non Current Asset Land Fixed asset Depreciation Total Fixed asset Total Non Current Asset Total Assets Liability and Equity Long Term Debt Total Liability Equity Retained Earning Total Equity Total Liability and Equity

Jan

Feb

Mar

Apr

Norrachad Leather Comppany Balance Sheet Monthly Based For Year- 3 May Jun Jul

Aug

Sep

Oct

Nov

Dec

Total

24,006,343 24,611,593 27,594,828 27,662,961 29,725,634 25,984,337 28,104,668 29,132,740 30,910,264 33,434,198 35,746,721 39,091,429 356,005,716 24,006,343 24,611,593 27,594,828 27,662,961 29,725,634 25,984,337 28,104,668 29,132,740 30,910,264 33,434,198 35,746,721 39,091,429 356,005,716 2,200,000 2,200,000 2,200,000 2,200,000 2,200,000 2,200,000 2,200,000 2,200,000 2,200,000 2,200,000 2,200,000 2,200,000 12,721,928 12,594,935 12,467,942 12,340,949 12,213,956 12,086,963 11,959,970 11,832,977 11,705,984 11,578,991 11,451,998 11,325,005 126,993 126,993 126,993 126,993 126,993 126,993 126,993 126,993 126,993 126,993 126,993 126,993 12,594,935 12,467,942 12,340,949 12,213,956 12,086,963 11,959,970 11,832,977 11,705,984 11,578,991 11,451,998 11,325,005 11,198,012 14,794,935 14,667,942 14,540,949 14,413,956 14,286,963 14,159,970 14,032,977 13,905,984 13,778,991 13,651,998 13,525,005 13,398,012 38,801,278 39,279,535 42,135,777 42,076,917 44,012,597 40,144,307 42,137,645 43,038,724 44,689,255 47,086,196 49,271,726 52,489,441 26,400,000 11,198,012 1,523,916 9,674,096 169,157,682 525,163,398

5,000,000 5,000,000 5,000,000 5,000,000 5,000,000 5,000,000 5,000,000 5,000,000 5,000,000 5,000,000

0 0

0 0

0 0

0 0

0 0

0 0

0 25,000,000 0 25,000,000

33,801,278 34,279,535 37,135,777 37,076,917 39,012,597 40,144,307 42,137,645 43,038,724 44,689,255 47,086,196 49,271,726 52,489,441 500,163,398 33,801,278 34,279,535 37,135,777 37,076,917 39,012,597 40,144,307 42,137,645 43,038,724 44,689,255 47,086,196 49,271,726 52,489,441 500,163,398 38,801,278 39,279,535 42,135,777 42,076,917 44,012,597 40,144,307 42,137,645 43,038,724 44,689,255 47,086,196 49,271,726 52,489,441 109 525,163,398

Description Asset Current asset Cash Total current asset Non Current Asset Land Fixed asset Depreciation Total Fixed asset Total Non Current Asset Total Assets

Jan

Feb

Mar

Apr

Norrachad Leather Comppany Balance Sheet Monthly Based For Year- 4 May Jun Jul

Aug

Sep

Oct

Nov

Dec

Total

40,879,366 40,816,090 42,219,740 43,143,050 47,499,916 51,315,951 54,575,335 56,725,438 58,359,761 60,167,014 61,647,584 64,503,625 621,852,870 40,879,366 40,816,090 42,219,740 43,143,050 47,499,916 51,315,951 54,575,335 56,725,438 58,359,761 60,167,014 61,647,584 64,503,625 621,852,870 2,200,000 2,200,000 2,200,000 2,200,000 2,200,000 2,200,000 2,200,000 2,200,000 2,200,000 2,200,000 2,200,000 2,200,000 11,198,012 11,071,019 10,944,026 10,817,033 10,690,040 10,563,047 10,436,054 10,309,061 10,182,068 10,055,075 9,928,082 9,801,089 126,993 126,993 126,993 126,993 126,993 126,993 126,993 126,993 126,993 126,993 126,993 126,993 11,071,019 10,944,026 10,817,033 10,690,040 10,563,047 10,436,054 10,309,061 10,182,068 10,055,075 9,928,082 9,801,089 9,674,096 13,271,019 13,144,026 13,017,033 12,890,040 12,763,047 12,636,054 12,509,061 12,382,068 12,255,075 12,128,082 12,001,089 11,874,096 54,150,385 53,960,116 55,236,773 56,033,090 60,262,963 63,952,005 67,084,396 69,107,506 70,614,836 72,295,096 73,648,673 76,377,721 26,400,000 125,994,606 1,523,916 124,470,690 150,870,690 772,723,560

Liability and Equity Long Term Debt 0 0 0 0 0 0 0 0 0 0 0 0 0 Total Liability 0 0 0 0 0 0 0 0 0 0 0 0 0 Equity Retained Earning 54,150,385 53,960,116 55,236,773 56,033,090 60,262,963 63,952,005 67,084,396 69,107,506 70,614,836 72,295,096 73,648,673 76,377,721 772,723,560 Total Equity 54,150,385 53,960,116 55,236,773 56,033,090 60,262,963 63,952,005 67,084,396 69,107,506 70,614,836 72,295,096 73,648,673 76,377,721 772,723,560 Total Liability and Equity 54,150,385 53,960,116 55,236,773 56,033,090 60,262,963 63,952,005 67,084,396 69,107,506 70,614,836 72,295,096 73,648,673 76,377,721 772,723,560
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Description Asset Current asset Cash Total current asset Non Current Asset Land Fixed asset Depreciation Total Fixed asset Total Non Current Asset Total Assets

Jan

Feb

Mar

Apr

Norrachad Leather Comppany Balance sheet Monthly Based For Year- 5 May Jun Jul Aug

Sep

Oct

Nov

Dec

Total

65,338,478 65,810,713 69,865,503 72,539,510 73,797,088 75,073,885 77,090,994 79,444,623 85,240,955 86,613,848 88,675,493 91,157,308 65,338,478 65,810,713 69,865,503 72,539,510 73,797,088 75,073,885 77,090,994 79,444,623 85,240,955 86,613,848 88,675,493 91,157,308

930,648,398 930,648,398

2,200,000 2,200,000 2,200,000 2,200,000 2,200,000 2,200,000 2,200,000 2,200,000 2,200,000 2,200,000 2,200,000 2,200,000 26,400,000 9,674,096 9,547,103 9,420,110 9,293,117 9,166,124 9,039,131 8,912,138 8,785,145 8,658,152 8,531,159 8,404,166 8,277,173 107,707,614 126,993 126,993 126,993 126,993 126,993 126,993 126,993 126,993 126,993 126,993 126,993 126,993 1,523,916 9,547,103 9,420,110 9,293,117 9,166,124 9,039,131 8,912,138 8,785,145 8,658,152 8,531,159 8,404,166 8,277,173 8,150,180 106,183,698 11,747,103 11,620,110 11,493,117 11,366,124 11,239,131 11,112,138 10,985,145 10,858,152 10,731,159 10,604,166 10,477,173 10,350,180 132,583,698 77,085,581 77,430,823 81,358,620 83,905,634 85,036,219 86,186,023 88,076,139 90,302,775 95,972,114 97,218,014 99,152,666 101,507,488 1,063,232,096

Liability and Equity Long Term Debt 0 0 0 0 0 0 0 0 0 0 0 0 0 Total Liability 0 0 0 0 0 0 0 0 0 0 0 0 0 Equity Retained Earning 77,085,581 77,430,823 81,358,620 83,905,634 85,036,219 86,186,023 88,076,139 90,302,775 95,972,114 97,218,014 99,152,666 101,507,488 1,063,232,096 Total Equity 77,085,581 77,430,823 81,358,620 83,905,634 85,036,219 86,186,023 88,076,139 90,302,775 95,972,114 97,218,014 99,152,666 101,507,488 1,063,232,096 Total Liability and Equity 77,085,581 77,430,823 81,358,620 83,905,634 85,036,219 86,186,023 88,076,139 90,302,775 95,972,114 97,218,014 99,152,666 101,507,488 1,063,232,096
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5.4 Profitability Ratios 5.4.1 Profit Margin = Net Income / Sales Profit Margin of Year 1 = 14,177,814 / 36,907,200 = 38.4 % Profit Margin of Year 2 = 18,837,699 / 45,410,200 = 41.4% Profit Margin of Year 3 = 19,473,924 / 47,088,000 = 41.5% Profit Margin of Year 4 = 23,888,281 / 42,045,400 = 56.8% Profit Margin of Year 5 = 25,129,767 / 43,928,100 = 57.2% The profit of our company will increase year by year. The profit of Year 3 will not increase too much but in Year 4 it increases more because we add on the marketing expense more for the call center service where customers can call and ask for information of our products.

5.4.2 Return on Assets = Net Income / Total Assets ROA of Year - 1 = 14,177,814 / 33,394,398 = 42.4% ROA of Year - 2 = 18,837,699 /411,860,900 = 4.5 % ROA of Year 3 = 19,473,924 /525,163,398 = 3.7% ROA of Year 4 = 23,888,281 /772,723,560 = 3.1% ROA of Year 5 = 25,129,767 /1,063,232,096 = 2.4%

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Chapter 6 Risk Management

Chapter 6 Risk Management

6.1 Risk Management The goal of business risk management is to detail what kinds of risks exist in your specific business and figure out how to prevent them entirely or minimize their impact on the business as a whole. To do this, most risk managers take a five step approach. First, identify the risks involved in all aspects of the business. Second, review the probability of the negative events occurring. Third, come up with a plan, a way to decrease the risk. Fourth, put the plan into action. Last, monitor the situation to see if the plan is effective or if it needs to be altered.

6.1.1 Kinds of Risk When many people think of risk management, they think of events that need to be insured against, things like fires, floods, and accidents in the workplace. These kinds of events are important in business risk management, but they are not the only kinds of risks that need to be considered when managing risk. Risk management includes risks that are a part of the industry the business is in and the way in which it does business. Because of this, business risk management is a way of codifying the way decisions are made and guiding those decisions are made in the future.

6.1.2 Financial Risks Most businesses take risks with their financial assets on a regular basis. Choosing the wrong supplier or distributor can backfire when the supplies needed to make a product arrive on time or the distributor goes out of business, stranding the products with no way to move them. Relationships with clients also can be risky, especially if a company comes to rely on one too much. A business risk management process or plan should cover these kinds of risks and how decisions should be made. In other words, it should say how much risk is too much in a financial relationship.

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6.1.3 Employee Risks While these may include physical risks, business risk management should also take into account how to prevent theft, fraud, and other crimes by employees. Another risk to a business caused by employees is simple human error, where even a tiny mistake in entering data or in the manufacturing process can have huge and sometimes devastating consequences. Risk management should include a quality control process for data input and production to minimize the impact of employee errors.

6.1.4 Benefits of Business Risk Management Having a risk management plan in place not only can help in the event of an emergency, it can also help guide the way the company does business. It will help to organize the allocation of resources and capital by helping to regularize the way that priorities are set. This will help with decision-making and planning, as well. Since risk management requires the anticipation of potential problems, it can help the business prevent a disaster or at least prevent a disaster that happens from having too severe an impact on finances and other assets. http://www.businessriskmanagement.org/

6.2 External risks External risks refer to risks external to the business itself. These risks are largely outside your control once you have bought the business, and can include all or some of the following: Risk 1. Technology Description Some businesses are very sensitive to location (hotels or general retail, for example). You can obviously check what you think of the location before you buy, but there can always be environmental changes after you have bought the business that you could not have anticipated, and which fundamentally affect the business. Your hotel, which was nicely 114 Solution Provide them to training, consulting and support in the complex field by human resource manager of our company so we did not pay for it.

situated on a busy road, is now in a back street due to the new bypass. The handy public car park next to your convenience store has been sold to big supermarket. It could be even simpler - the council decides to put double yellow lines in front of your parade of shops. 2. Competition Apart from the increasing trend towards out-of-town major outlets, maybe someone will just decide to open up in competition just down the road. A business could react to an increase in competition (e.g. a launch of rival product) in the following ways:

Cut prices (but can reduce profits) Improve quality (but increases costs) Spend more on promotion (e.g. do more advertising, increase brand loyalty; but costs money) Cut costs (e.g. use cheaper materials, make some workers redundant) 3. Fashion Some things just simply fade. Trade change, so company must be able to react quickly e.g. offering more modern design. 4. Customer loyalty Sometimes customer loyalty is lost when a business changes hands. Always pay attention to the loyalty customer or provide special gift for them in order

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to make them feel that theyre very important to our company. 5. Political The changes in government policy might affect the business e.g. a decision to subsidise building new houses in an area could be good for a local brick works. Positive or negative politics happens. The philosopher Plato said, "One of the penalties for refusing to participate in politics is that you end up being governed by your inferiors." And this hold true today in the workplace: If you don't participate in the political game, you risk not having a say in what happens and allowing people with less experience, skill or knowledge to influence the decisions being made around you. 6. Legal The way in which legislation in society affects the business We should adjust ourselves to the legal because we cannot

e.g.changes in employment laws on avoid it. working hours. 7. Economic The economy affects a business in terms of taxation, government spending, general demand, interest rates, exchange rates and European and global economic factors. We have to provide the plan for the economic crisis e.g. prepare budget, layoffs, or create the new organization structure to proper for the changing of economic. 8. Employee Outside interest Making the bond between top manager and the employee. Make them feel like they are the important part of the growing of company.

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9. Social

The changes to the structure of society e.g. working women, single parent families, how consumers, households and communities behave and their beliefs. For instance, changes in attitude towards health, or a greater number of pensioners in a population.

We should adjust ourselves to social because we cannot avoid it.

10. Ethical

What is regarded as morally right or wrong for a business to do? For instance should it trade with countries which have a poor record on human right.

Provide them to training, the code of ethic, consulting, and support by human resource manager of our company so we did not pay for it.

http://site4business.com/index.php/entrepreneurresources/buy-business-articles/9-buy-businessrisk http://www.infocheese.com/externalfactors.html

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6.3 Internal Factors Internal Risks are those risks, which arise from the events taking place within the business enterprise. The various internal factors giving rise to such risks are: Risk 1. Human Description They may result from strikes and lock-outs by trade unions; negligence and dishonesty of an employee; accidents or deaths in the Solution Provide them to training, consulting and support in the complex field by human resource manager of our company, so

industry; incompetence of the we did not pay for it. manager or other important people in the organization. 2. Physical They include the failure of machinery and equipment used in business; fire or theft in the industry; damages in transit of goods, etc. 3. Stock factor. The risk of investing in stocks is far greater at times of extremely high valuations. Most carefully about how to use the machine or equipment make employees safety by make them see the demo of the way to use. Have the intuition to stock the right items, the hot sellers, or might you end up with shelves of unwanted items. 4. Trade publications factors. They are generally a good source of information, not only for commentary on the major concerns currently affecting that business sector, but will also contain advertisements for specialists in stocktaking, financing and so on. Invest less intrade publications because customer may read a few issues.

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6.4 Risk analysis for 4 Ps Product All of our products is quality product, so it is a risk of infringing the copyright, because the cost of the product at a cheaper cost. If the infringing products in the market are increase, it will affect our brand and the impact on prices and consumer confidence.

Price Because our prices are inversely proportional to the number of customer orders. If the version number will be a lot cheaper, but if I were to order the product will be less expensive, so the risk that the products are purchased less expensive. It will not get the attention of customers, which may cause the product is not expensive to do.

Place We have several ways to reach customers directly for their clients. Telephone and the Internet .that the risk is relatively minor to reach customers directly, but to reach customers via the Internet and telephone are at risk in terms of communication, the client may not receive adequate information. Customer do not touch the actual product of these risks will affect the purchasing decisions of customers.

Promotion Customers be as free who as purchase promotions products we through will our have store to will send

the journal to register and collect points for prizes and for the promotion. This risk is the cost of producing the journal and the reward to be sent to members, because some members of the order of just one, but we need to be delivered to all members of the Journal.

119

Sale Decrease 5% Description Revenue Sale Net Sale Cost of Good Sold Gross Profit / Loss Expense Salaries Stationary Internet Electricity Telephone Water Marketing expense Total Expense EBITD Depreciation EBIT Interest Expense(12%) EBI Tax (30%) Net Income 660,000 18,000 12,000 49,669 97,200 27,046 204,000 1,067,915 660,000 18,000 12,000 49,637 104,400 30,093 204,000 1,078,130 660,000 18,000 12,000 51,681 108,000 30,263 372,000 1,251,944 660,000 18,000 12,000 53,735 118,800 39,902 372,000 1,274,437 38,024,893 1,473,948 36,550,945 4715919.6 31,835,025 660,000 18,000 12,000 55,385 123,800 41,928 372,000 1,283,113 39,774,782 1,473,948 38,300,834 4926947.4 33,373,887 35,061,840 43,139,690 44,733,600 35,061,840 43,139,690 44,733,600 11,076,000 11,676,000 12,276,000 23,985,840 31,463,690 32,457,600 52,175,330 52,175,330 12,876,000 39,299,330 54,533,895 54,533,895 13,476,000 41,057,895 Year - 1 Year - 2 Year - 3 Year - 4 Year - 5

22,917,925 30,385,560 31,205,656 1,523,916 1,523,916 1,523,916

21,394,009 28,861,644 29,681,740 2,878,301 3775642.8 3894912

18,515,708 25,086,001 25,786,828 5554712.5 7525800.4

7736048.4 9550507.62 10012165.98 22,284,518 48,571,977 70,856,495 23,361,721 70,856,495 94,218,216

12,960,996 17,560,201 18,050,780 12,960,996 30,521,197

Retained earnings beginning of the months Retained Earnings

12,960,996 30,521,197 48,571,977

120

Sale decrease 10%

Description Revenue Sale Net Sale Cost of Good Sold Gross Profit / Loss Expense Salaries Stationary Internet Electricity Telephone Water Marketing expense Total Expense EBITD Depreciation EBIT Interest Expense(12%) EBI Tax (30%) Net Income

Year - 1

Year - 2

Year - 3

Year - 4

Year - 5

33,216,480 33,216,480 11,076,000 22,140,480

40,869,180 40,869,180 11,676,000 29,193,180

42,379,200 42,379,200 12,276,000 30,103,200

49,429,260 49,429,260 12,876,000 36,553,260

51,663,690 51,663,690 13,476,000 38,187,690

660,000 18,000 12,000 49,669 97,200 27,046

660,000 18,000 12,000 49,637 104,400 30,093

660,000 18,000 12,000 51,681 108,000 30,263

660,000 18,000 12,000 53,735 118,800 39,902

660,000 18,000 12,000 55,385 123,800 41,928

204,000 1,067,915 21,072,565 1,523,916 19,548,649

204,000 1,078,130 28,115,050 1,523,916 26,591,134

372,000 1,251,944 28,851,256 1,523,916 27,327,340

372,000 1,274,437 35,278,823 1,473,948 33,804,875

372,000 1,283,113 36,904,577 1,473,948 35,430,629

2,656,858 16,891,791 5067537.42 11,824,254

3503181.6 23,087,952 6926385.72 16,161,567

3279280.8 24,048,059 7214417.76 16,833,641

4386391.2 29,418,484 8825545.14 20,592,939

4582522.8 30,848,106 9254431.86 21,593,674

121

Sale decrease 15% Description Revenue Sale Net Sale Cost of Good Sold Gross Profit / Loss Expense Salaries Stationary Internet Electricity Telephone Water Marketing expense Total Expense EBITD Depreciation EBIT Interest Expense(12%) EBI Tax (30%) Net Income 2,435,414 15,267,875 4580362.38 10,687,512 3230720.4 21,089,904 6326971.08 14,762,933 2996752.8 21,976,187 6592856.16 15,383,331 4056862.8 4238098.2 204,000 1,067,915 19,227,205 1,523,916 17,703,289 204,000 1,078,130 25,844,540 1,523,916 24,320,624 372,000 1,251,944 26,496,856 1,523,916 24,972,940 372,000 1,274,437 372,000 1,283,113 660,000 18,000 12,000 49,669 97,200 27,046 660,000 18,000 12,000 49,637 104,400 30,093 660,000 18,000 12,000 51,681 108,000 30,263 660,000 18,000 12,000 53,735 118,800 39,902 660,000 18,000 12,000 55,385 123,800 41,928 31,371,120 31,371,120 11,076,000 20,295,120 38,598,670 38,598,670 11,676,000 26,922,670 40,024,800 40,024,800 12,276,000 27,748,800 46,683,190 48,793,485 46,683,190 48,793,485 12,876,000 13,476,000 33,807,190 35,317,485 Year - 1 Year - 2 Year - 3 Year - 4 Year - 5

32,532,753 34,034,372 1,473,948 1,473,948

31,058,805 32,560,424

27,001,942 28,322,326 8100582.66 8496697.7

18,901,360 19,825,628

122

Interest increase (5%) Description Revenue Sale Net Sale Cost of Good Sold Gross Profit / Loss Expense Salaries Stationary Internet Electricity Telephone Water Marketing expense Total Expense EBITD Depreciation EBIT Interest Expense(17%) EBI Tax (30%) Net Income 4391304 18,848,065 5654419.5 13,193,646 5734814 25,397,340 7619202 17,778,138 5918040 26,168,068 7850420.4 18,317,648 7147718 32,149,297 9644789.1 22,504,508 7467777 33,703,262 10,110,979 23,592,283 660,000 18,000 12,000 49,669 97,200 27,046 204,000 1,067,915 24,763,285 1,523,916 23,239,369 660,000 18,000 12,000 49,637 104,400 30,093 204,000 1,078,130 32,656,070 1,523,916 31,132,154 660,000 18,000 12,000 51,681 108,000 30,263 372,000 1,251,944 33,560,056 1,473,948 32,086,108 660,000 18,000 12,000 53,735 118,800 39,902 372,000 1,274,437 40,770,963 1,473,948 39,297,015 660,000 18,000 12,000 55,385 123,800 41,926 372,000 1,283,113 42,644,987 1,473,948 41,171,039 36,907,200 36,907,200 11,076,200 25,831,200 45,410,200 45,410,200 11,676,000 33,734,200 47,088,000 47,088,000 12,276,000 34,812,000 54,921,400 54,921,400 12,876,000 42,045,400 57,404,100 57,404,100 13,476,000 43,928,100 Year-1 Year-2 Year-3 Year-4 Year-5

123

Interest increase (10%) Description Revenue Sale Net Sale Cost of Good Sold Gross Profit / Loss Expense Salaries Stationary Internet Electricity Telephone Water Marketing expense Total Expense EBITD Depreciation EBIT Interest Expense(22%) EBI Tax (30%) Net Income 660,000 18,000 12,000 49,669 97,200 27,046 204,000 1,067,915 24,763,285 1,523,916 23,239,369 5682864 17,556,505 5266951.5 12,289,554 660,000 18,000 12,000 49,637 104,400 30,093 204,000 1,078,130 32,656,070 1,523,916 31,132,154 7421524 23,710,630 7113189 16,597,441 660,000 18,000 12,000 51,681 108,000 30,263 372,000 1,251,944 33,560,056 1,473,948 32,086,108 7658640 24,427,468 7328240.4 17,099,228 660,000 18,000 12,000 53,735 118,800 39,902 372,000 1,274,437 660,000 18,000 12,000 55,385 123,800 41,926 372,000 1,283,113 36,907,200 36,907,200 11,076,200 25,831,200 45,410,200 45,410,200 11,676,000 33,734,200 47,088,000 47,088,000 12,276,000 34,812,000 54,921,400 57,404,100 54,921,400 57,404,100 12,876,000 13,476,000 42,045,400 43,928,100 Year-1 Year-2 Year-3 Year-4 Year-5

40,770,963 42,644,987 1,473,948 1,473,948

39,297,015 41,171,039 9249988 9664182

30,047,027 31,506,857 9014108.1 9452057.1

21,032,919 22,054,800

124

Interest increase (15%) Description Revenue Sale Net Sale Cost of Good Sold Gross Profit / Loss Expense Salaries Stationary Internet Electricity Telephone Water Marketing expense Total Expense EBITD Depreciation EBIT Interest Expense (27%) EBI Tax (30%) Net Income 660,000 18,000 12,000 49,669 97,200 27,046 204,000 1,067,915 660,000 18,000 12,000 49,637 104,400 30,093 204,000 1,078,130 660,000 18,000 12,000 51,681 108,000 30,263 372,000 1,251,944 660,000 18,000 12,000 53,735 118,800 39,902 372,000 1,274,437 660,000 18,000 12,000 55,385 123,800 41,926 372,000 1,283,113 36,907,200 45,410,200 47,088,000 54,921,400 57,404,100 36,907,200 45,410,200 47,088,000 54,921,400 57,404,100 11,076,200 11,676,000 12,276,000 12,876,000 13,476,000 25,831,200 33,734,200 34,812,000 42,045,400 43,928,100 Year-1 Year-2 Year-3 Year-4 Year-5

24,763,285 32,656,070 33,560,056 40,770,963 42,644,987 1,523,916 1,523,916 1,473,948 1,473,948 1,473,948

23,239,369 31,132,154 32,086,108 39,297,015 41,171,039 6974424 9108234 9399240 11352258 11860587

16,264,945 22,023,920 22,686,868 27,944,757 29,310,452 4879483.5 6607176 6806060.4 8383427.1 8793135.6

11,385,462 15,416,744 15,880,808 19,561,330 20,517,316

125

Cost/Expense increase by 5% Description Revenue Sale Net Sale Cost of Good Sold Gross Profit / Loss Expense Total Expense EBITD Depreciation EBIT Interest Expense(12%) EBI Tax (30%) Net Income 3,099,744 20,086,229 6025868.78 14,060,360 4048104 27,030,144 8109043.05 18,921,100 4177440 27,796,103 5045448 34,187,845 5271372 35,835,511 10750653.41 25,084,858 1,121,311 24,709,889 1,523,916 23,185,973 1,132,037 32,602,164 1,523,916 31,078,248 1,314,541 33,497,459 1,523,916 31,973,543 1,338,159 40,707,241 1,473,948 39,233,293 1,347,269 42,580,831 1,473,948 41,106,883 36,907,200 36,907,200 11,076,000 25,831,200 45,410,200 45,410,200 11,676,000 33,734,200 47,088,000 47,088,000 12,276,000 34,812,000 54,921,400 54,921,400 12,876,000 42,045,400 57,404,100 57,404,100 13,476,000 43,928,100 Year - 1 Year - 2 Year - 3 Year - 4 Year - 5

8,338,831 10256353.55 19,457,272 23,931,492

126

Cost/Expense increase by 10%

Description Revenue Sale Net Sale Cost of Good Sold Gross Profit / Loss Expense Total Expense EBITD Depreciation EBIT Interest Expense(12%) EBI Tax (30%) Net Income

Year - 1

Year - 2

Year - 3

Year - 4

Year 5

36,907,200 36,907,200 11,076,000 25,831,200

45,410,200 45,410,200 11,676,000 33,734,200

47,088,000 47,088,000 12,276,000 34,812,000

54,921,400 57,404,100 54,921,400 57,404,100 12,876,000 13,476,000 42,045,400 43,928,100

1,174,707 24,656,494 1,523,916 23,132,578

1,185,943 32,548,257 1,523,916 31,024,341

1,377,138 33,434,862 1,523,916 31,910,946

1,401,881

1,411,424

40,643,519 42,516,676 1,473,948 1,473,948

39,169,571 41,042,728

3,099,744 20,032,834 6009850.05 14,022,983

4048104 26,976,237 8092871.1 18,883,366

4177440 27,733,506 8,320,052 19,413,454

5045448

5271372

34,124,123 35,771,356 10237237 10731407

23,886,886 25,039,949

127

Cost/Expense increase by 15% Description Revenue Sale Net Sale Cost of Good Sold Gross Profit / Loss Expense Total Expense EBITD Depreciation EBIT Interest Expense(12%) EBI Tax (30%) Net Income 3,099,744 4048104 4177440 27,670,908 5045448 5271372 1,228,102 1,239,850 1,439,736 33,372,264 1,523,916 31,848,348 1,465,603 1,475,580 36,907,200 45,410,200 36,907,200 45,410,200 11,076,000 11,676,000 25,831,200 33,734,200 47,088,000 47,088,000 12,276,000 34,812,000 54,921,400 57,404,100 54,921,400 57,404,100 12,876,000 13,476,000 42,045,400 43,928,100 Year - 1 Year - 2 Year - 3 Year - 4 Year - 5

24,603,098 32,494,351 1,523,916 1,523,916

40,579,797 42,452,520 1,473,948 1,473,948

23,079,182 30,970,435

39,105,849 40,978,572

19,979,438 26,922,331 5993831.3 8076699.2

34,060,401 35,707,200 10712160

8,301,273 10218120.44 19,369,636

13,985,606 18,845,631

23,842,281 24,995,040

128

Chapter 7 Summary

Chapter 7 Summary

Nowadays, have many products from animal skin, such as stingray, ostrich, alligator, crocodile, and cow and etc., which make bag, belt, shoes, boots and others. The main area of leather skin in Thailand is Samut Prakarn. Our company name is Norrachad Leather Company. We produce wallet and handbag which are made by the leather of snakes, crocodiles and cows. Our company located at Chonburi province. And we export our products to Singapore and Malaysia. Our company was built for to make high profit within 2 or 3 years, and also for become a popular brand company. We will start by understanding what the local people at Singapore and Malaysia wants for the leather products, then we will know who will be our target market. We will use many strategies for our company because leather products are not new to the market. And we also have to use the different strategies with our competitors. We will use the strategies that will develop our company efficiently. We will produce the products that popular in the market and we will increase our productivity. Our product will sell through hotel only in Thailand. In the future, there will have ASEAN community in 2015 which means all ASEAN country can easily access to each other. As the countries that we will export include in ASEAN, Malaysia and Singapore, we can get many benefit from it in the long term. We can meet our customers need and their demand from survey. To export our products to Malaysia and Singapore, the best way to advertise our products is using the agency from each country and contacting the shop which is selling the imported leather products in those countries. At first, we will choose the supplier from Samut Prakan because it is the place where we can get the good quality leather. And then, for our input, we will select the labor according to the recruiting and selecting process to get the right labor with the right job. We will have the training for the labor in using the producing equipment with both on-site and out- site training. When we deliver our products to the customers, we will see the feedback from them. So, we can set up with new process according to the feedback and we can create the loyalty customer from that. The countrys tanneries and leather and leather goods makers are putting on war paint to battle for more orders in the international markets. Today the handbag has an almost iconic status in the world of fashion. Little was seen of any sort of fashion bag for the next few centuries. The economic situation in Malaysia and Singapore are quite well and they import lots of products every year. These are advantages for us to export our products. The direct competitors are 129

Marwell Company in Singapore, Thai Oriental Leather Company Limited in Thailand. Indirect competitor is ACT Leather (Thailand) Company. The culture of Singapore and Malaysia are suitable for us to export our leather products, Thailand's leather industry is establishing itself as a major player on the world stage, we use great quality leather with fashion design and elaborate process to make us very competitive. We pitch our products in high cost and high quality level, for our target market are both man and woman who would like to pursue fashion and good quality leather products. We use pricing strategy, place strategy such like retailing in Singapore and Malaysia, online sell, telecommunication sell to spread our brand name. According with the forecast of our revenue, in the next five years, our products will get into the markets smoothly and steadily. We have three main products and they are man wallet, women wallet and women bag. After the Production and Operations Analysis, it is feasible for our company to manufacture these kinds of products. The location of our company is in the middle of Thailand near the only raw leather supplier in Thailand, it is considered to be the advantage for us. Any facilities to be chosen are according with the actual demand. The transportation and logistics management are according to the actual situation and the budget. The best services to satisfy our customers are our final goal. The export transportation will be considered mainly by shipping, road transportation will be considered as domestic transport tool. The profit of our company will increase year by year. The profit of Year 3 will not increase too much but in Year 4 it increases more because we add on the marketing expense more for the call center service where customers can call and ask for information of our products. Finally, we have to consider on the risk for our company in external and internal factors. In external factors, we have to focus on technology, competition, fashion, customer loyalty, politic, social, employee, economic, legal and ethic. From these factors, we will know how to decrease the risk in advance to get the competitive advantages and success. On the other hand, we will consider our internal factors on human, technology, physical, stock factor and trade publications factors. So, it will help to organize the allocation of resources and capital by helping to regularize the way that priorities are set. This will help with decision-making and planning, as well.

130

Reference 1. http://www.chonburi.go.th/%E0%B8%AA%E0%B8%A7%E0%B8%AA%E0%B8%94%E0 %B9%80%E0%B8%A1%E0%B8%AD%E0%B8%87%E0%B8%8A%E0%B8%A5/%E0%B 8%97%E0%B8%95%E0%B8%87%E0%B9%81%E0%B8%A5%E0%B8%B0%E0%B8%A D%E0%B8%B2%E0%B8%93%E0%B8%B2%E0%B9%80%E0%B8%82%E0%B8%95/tabi d/62/language/th-TH/Default.aspx 2. http://humanrevod.wordpress.com/2011/09/16/minimum-wage-table-2012/ 3. http://www.thaitradeusa.com/home/?page_id=3481 4. http://www.bangkokcompanies.com/categories/thai_companies_p282.htm 5. http://www.oie.go.th/policy7_en.asp 6. http://www.oie.go.th/industrystatus1_en.asp 7. Industrial Information Center, Office of Industrial Economics, Ministry of Industry 8. Base year 2000, and the index is not seasonally adjusted 9. Information and Communication Technology Center, in cooperation with the Customs Department 10. Information and Communication Technology Center, in cooperation with the Customs Department 11. http://www.oie.go.th/industrystatus1_en.asp 12. http://news.priyo.com/business/2011/02/20/leather-industry-gung-ho-over-20341.html 13. http://www.gleni.it/bag-in-history.html 14. http://www.tradingeconomics.com/malaysia/gdp 15. http://www.tradingeconomics.com/malaysia/imports 16. http://www.tradingeconomics.com/singapore/gdp 17. http://www.tradingeconomics.com/singapore/gdp-growth 18. http://www.tradingeconomics.com/singapore/gdp-growth-annual 19. http://www.tradingeconomics.com/singapore/imports 20. http://www.google.co.th/publicdata/explore?ds=d5bncppjof8f9_&met_y=sp_pop_totl&idim= country:MYS&dl=th&hl=th&q=%E0%B8%9B%E0%B8%A3%E0%B8%B0%E0%B8%8A %E0%B8%B2%E0%B8%81%E0%B8%A3+%E0%B8%A1%E0%B8%B2%E0%B9%80%E 0%B8%A5%E0%B9%80%E0%B8%8B%E0%B8%B5%E0%B8%A2#ctype=l&strail=false &bcs=d&nselm=h&met_y=ny_gnp_pcap_pp_cd&scale_y=lin&ind_y=false&rdim=country& idim=country:MYS:SGP&ifdim=country&tstart=1138467600000&tend=1264698000000&hl =th&dl=th 21. http://baht.thaivisa.com/ VIII

22. http://www.alibaba.com/member/onbiz.html 23. http://www.alibaba.com/member/twinklecorp/aboutus.html 24. http://www.troy-accounting.com/ 25. http://www.totiig.net/business1/008_th.php 26. http://www.pea.co.th/rates/Rate2011.pdf 27. http://site4business.com/index.php/entrepreneurresources/buy-business-articles/9-buybusiness-risk 28. http://www.infocheese.com/externalfactors.html

IX

Group 1 Section 2 Group Member

1.

Miss Nathsiri Moeitom

5231207050

aun_aun_naral@hotmail.com 087-357-7095 iam_yee19@hotmail.com 087-542-1057 zarawut5455@hotmail.com 083-663-0533 oddadd_@hotmail.com 080-670-6848 nonnie_arnon@hotmail.com 083-679-9656 pinknego29@hotmail.com 086-918-4696 winnie_99@hotmail.com 088-430-7625 spy0116@hotmail.com 080-979-9052

2.

Miss Varanda Chaichomphoo

5231207089

3.

Mr. Sarawut Sribunruang

5231207099

4.

Miss Orada

Comerungsee

5231207129

5.

Mr. Arnon

Mahamat

5231207135

6.

Miss Nan Wel Hlaine

5231207136

7.

Miss Wint Wah Bo

5231207138

8.

Mr. Peiyuan Song

5231207503

Number of international student: 3 people