Report on a Business Plan in a Village

Production of Handmade Apparels

Prepared For: Iftekharul Amin Course Instructor, Marketing Management

Assostant Professor

Prepared By: Md. Ashiqur Rahman Roll-ZR-55

Batch-20, Section A Institute of Business Administration, University of Dhaka April 15th, 2014

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Table of Contents:

Contents Page Number1. Introduction 32. The Village 3

2.1 Location 3 2.2 Education 3 2.3 Occupation 4

3. The Business 5 3.1 The Idea 5 3.2 Why handmade Clothing? 5 3.3 Product 6 3.4 Target Market 6 3.5 SWOT 6

4. Mechanism 7 4.1 Production Channel 7 4.2 Distribution Channel 8 4.3 Wage Distribution 9

5. Financials 9 5.1 Production Cost 9 5.2 Distribution Cost 10 5.3 Middle-man wage Cost 10 5.4 Business Set-up Cost 10 5.5 Price 10 5.6 Marginal Profit 11

6. Welfare 117. Conclusion 11

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1. Introduction:Bangladesh is a country is a country where most of the people practically lives in rural areas. Those who live in cities or towns almost always have a connection with at least one village because of their ancestors. As business students, everywhere we go we should look for opportunities to thrive in a business and these villages aren’t any exceptions. And trade and commerce in a rural area can be blessing for the people of any area if conducted properly.

2. The Village:

2.1 Location: The village for the execution of this plan is in the district Kushtia. It’s the Bagulat Union of Kumarkhali Upazilla. This place is almost 15 kilometres south of the Kushtia main town and about 35 kms north of Jhenidah District town. Means of transportation are mainly van or mechanised van. Buses and auto-rickshaws are also available. There is a 30 feet road crossing across the village which makes any kind of business more convenient.

2.2 Education: Compared to many other areas of Bangladesh the state of education is much better in this area, which is justifiably reflected in the 80% literacy rate in the area. Here is a brief overview of the education sector of the area.

1. Number of primary schools: 142. Number of high school: There are total 8 high schools in the area. Four of them are specialized for Boys and two for Girls. Among these High Schools Bagulat Govt. Primary High School was established in 1880. 3. Collegiate High school: 14. University College: There is one University College in the area named Alauddin Ahmed University College. It was established in 1996. People can study upto Masters’ level in this institution.5. Kamil Madrasa: There is one Kamil Madrasa in the region named Bashgram Kamil Madrasa. It was establishe in 1940 as a Fazil Madrasa. In 2006 it was converted to a Kamil Madrasa. People can get Kamil degree here which is equivalent to Masters’ degree in general line of education. 6. Scholarships: There are several foundations which give scholarship in terms of good educational performance to encourage better education.

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2.3 Occupation:

Agriculture:Agriculture is the main work field in this area like almost all the villages of Bangladesh. The main agricultural products are Rice, Onion, Wheat, Garlic and Jute. The main fruits generated in this area are Mango, Jackfruit and Banana. There is a major discrepancy here compared to the other places of the district. That is this area produces a lot Sugarcane comparatively which was not like this before 2003. In this year WABDA facilitated this area with canals and deep tube-well as a potentially large paddy growing area. So now-a-days the sugar cane farmers can grow IRRI three times a year with better irrigation system with better return.

The process is also well-developed. They use mechanized system for the cultivation and processing of rice and other crops which previously was mainly done in non-mechanized way. According to the local farmers they use best available fertilizers and pesticides. Because of the development in the area the total rice production has gone up by almost 350%

Now, most of the farmers cultivate lands of other people. In simple words, people with a lot of cultivable land area are up the ladder in the society and they don’t engage in agricultural process. They usually use two methods to give the farmers the land to cultivate.

a) Lease: The owner get a certain amount of money from the farmer for a certain period of time of cultivation.

b) “Bhaga”: This is a local term. If the owner follows this system, the farmer has to give a certain percentage of the crop to the owner. Usually the ratio is one-third without the production cost. If the owner bears the production cost it might increase accordingly.

The distribution channel for the farmers is pretty simple too. After processing the crop they sell them to an accumulator called “Arotdar” The arotdar carries out further transactions of the crops. The transportation cost of the delivery of the crops is taken care of by the Arotdar.

“Kamla” or “Jon”: These are the people who help out the well-off families in various works. In return they get food and shelter. People from other parts of the country also come to this area to work as Kamla or Jon. These are generally from Manikgonj, Faridpur and Dinajpur according to local people.

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Small enterprises: Other than these many of the residents run small enterprises like Nursery, Dairy Farm etc.

3. The Business:

3.1 The Idea: The idea is to start a small business on handmade clothing in the village and only the production process will involve the village area. On small scale products will be available in the local market but largely it will be marketed in the cities and towns.

3.2 Why Handmade Clothing: (a) Workforce: As mentioned above this area is well-developed in Education, Healthcare, Agriculture etc. major sectors. But, why still this not as good as any small town or suburb. It’s the economic condition, lack of trade and commerce. And a major set-back in this area is the low involvement of the women in the sector. Almost every male member of the village has a job and almost no female has a real job. Yes, they look after the household, assists in agriculture but nothing as a separate economic entity unless they are victim of misfortune like early death of father or husband. So, the first reason this business will be successful in the area is the abundance of work-force and thus leading low production cost. Already the women in this area sew clothing but not on a regular basis, may be for specific individuals when asked. So, the training cost will also be low as there are already people capable of doing their jobs and the others won’t need external trainers.

(b) Low Production Cost: As there is abundance of work-force and available raw materials, the production cost will be minimum. The wages will be comparatively low because number of alternatives is high.

(c) High Demand: Inside Bangladesh there is a huge and increasing demand of handmade clothing as people regard it more sophisticated. Apart from the general demand several festivities of Bangladesh like Pohela Boishakh, Pohela Falgun. Independence Day, International Mother Language day increase its demand to the roof.

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(d) High Profit Margin: The profit margin is incredibly higher as the production cost is low and there is a high demand, thus higher marginal price.

3.3 Products: Practically all handmade apparel, pillow cushion, Nokshi Katha etc. Apparels include both male and female products. The specialty of the products includes minimum level of Customization meaning external inputs can be changed according to the need of the customers. For males mainly fotua and Panjabi and for females Salwar(2 or 3 pieces), Saree, Dupatta etc.

3.4 Target Market: The target market of the business will be female of 5-45 years age group. Although male products will be marketed but passive marketing approach will be taken meaning influencing the female section to influence males to buy the products. In case of marketing, both male and female buyers will be targeted. The income group will be middle class, upper-middle class and Higher Class.

3.5 SWOT analysis: Here’s a SWOT analysis of the business:

Helpfulto achieving the target

StrengthHigh Demand

High Profit MarginAbundance of Work Force

Low Production Cost

OpportunityIncreasing DemandOccasional Boom

Untamed Workforce

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4. Mechanism:

4.1 Production Channel: At the primary level, one conditional production manager will be appointed at each specific village area, preferably one of the experienced workers who will be in charge of supplying raw materials to the workers and after hand works the products will stored under that production manager. Then this production manager is responsible for tailoring the clothing through outsourced tailors. Under each primary production manager maximum 5 workers will work. The quality control will be also done by this manager.

The Primary Production Manager will store the manufactured products to another Secondary Production Manager who will outsource packaging and do quality control management. Under each secondary Production manager will manage maximum 5 primary production managers. Secondary Production Managers are also responsible for enter the products into the distribution channel.

Each worker is provided with average 15 works per month and the products are specialized meaning someone specialized in working on Panjabi will always be provided with that product. The number of products will change according to the amount of work. Like, sewing one nokshi katha is equivalent to 3 panjabis. And the works will be distributed accordingly. The number of works will be specified centrally and the Primary Production manager will just follow instructions.

4.2 Distribution Channel:

Primary Priduction Manager

Supply Raw Materials

WorkersSewing

Primary Production ManagerCollection

Outsourced Tailor

Primary Procution Manager

Secondary Production Manager

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Secondary Production manager will package and deliver it to an accumulator who will receive products from maximum 3 secondary Production Managers in a specific area. The accumulator themselves can be distributors or they can deliver the products to the showrooms which will be rented at different areas.

Primarily, the showrooms will only be set up in Kushtia and Dhaka. More specifically two showrooms in Kushtia, one in N.S Road and another in Laboni Tower. Another five showrooms will be set up in Dhaka. The areas will be Mirpur Muktijoddha Market, Dhanmondi Plaza A.R, Shyamoli Plaza, Mirpur Benaroshi Polli and Gulshan B.C.C Market. The locations are selected based on the target market and the feasibility depends on the availability of shops to rent. Like the most profitable place would be New Market Gausia but as it is unlikely to manage showroom there, places with low intensities are targeted initially. With the expansion of the business, new showrooms can be set up.Other than that products will be provided to renowned shops under different brand on contractual basis.

4.3 Wage distribution:

Secondary Production Manager Accumulator Distributor

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Three pathways will be used for wage distribution. Bank Accounts, Bcash and Cash Receipts. Based on availability of branches, wages can be sent to the workers.

5. Financials:5.1 Production Cost: The production cost is varied in different types of products as there are more than one variety. Here’s a list of approximate production cost.

Production Cost of Varied Products

Products Wage Raw Materials Total

Fotua 120 130 2503-piece Kamiz 350 375 725Panjabi 150 180 330Cushion(5-piece set) 225 225 550Nokshi KathaBed Sheet

700350

600600

1300950

5.2 Distribution Cost: Due to the varied distribution and packaging channel it is hard to estimate the exact cost per product. But, on average per 100 pieces the cost is Tk. 10

Business Central

Production Managers

Cash Bcash Bank Accounts

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5.3 Price: Here’s a table showing market prices of different products:

ITEM Price

Fotua 700

3-piece 1200

Panjabi 1000

Cushion 700

Nokshi Katha 3500

Bed Sheet 2000

5.4 Business Set-up cost: For the starting of the business we estimate that we will have a monthly cost of Tk. 350,000 for the rent of seven showrooms. Other than that for network purposes we estimate another Tk. 50,000.

5.5 Middle man wage cost: Once again it’s tough to assume per unit cost for the varied products in this sector. Here’s a table showing per unit wage of the middle men.

ITEMFotua 103-piece 10Panjabi 10Cushion 10Nokshi Katha 20Bed Sheet 20

5.6 Marginal Profit: Here’s a calculation of the estimated marginal profit of the products.

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Items Procuction Cost Distribution Cost Middle-man wage cost Price Total Cost M.PFotua 250 0.1 10 700 260.1 439.93-piece 725 0.1 10 1200 735.1 464.9Panjabi 330 0.1 10 1000 340.1 659.9Cushion 250 0.1 10 700 260.1 439.9Nokshi Katha 1300 0.1 20 3500 1320.1 2179.9Bed Sheet 950 0.1 20 2000 970.1 1029.9

6. Welfare:

This is a business which will not only bring economic profit but also help the local people who are suffering from unemployment, especially women. As mentioned earlier the people of this area are lagging behind in terms of development and economic liberty because half of the population is not directly engaged in economic progress. So, through this business we can alleviate that problem from the village and do a wholistic welfare to the people.

7. Conclusion:

As a business student we are supposed to look for opportunities to thrive anywhere in any business. On the other hand as a conscious citizen of Bangladesh we should look after the people of the places where who came from. So, this is a perfect combo for us to do our share to the economy as well as take care of the people of our ancestor’s land

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