1

2011

Batwa House Inc.

Table of Contents

Executive summary.....................................................................................................................................2

Company Overview.....................................................................................................................................2

Mission statement........................................................................................................................................2

Current Status..............................................................................................................................................2

Market and products....................................................................................................................................2

Objectives....................................................................................................................................................2

Product and service description...................................................................................................................2

Market analysis and comparison..................................................................................................................2

Industry Analysis.........................................................................................................................................2

Customer analysis........................................................................................................................................2

Competitor Analysis....................................................................................................................................2

Marketing strategy.......................................................................................................................................2

Product and service strategy....................................................................................................................2

Pricing.....................................................................................................................................................2

Distribution..............................................................................................................................................2

Promotion................................................................................................................................................2

Advertising..............................................................................................................................................2

Sales Assumptions.......................................................................................................................................2

Operations...................................................................................................................................................2

Scope of operations.................................................................................................................................2

Ongoing operations (Production Flow Chart)..........................................................................................2

Development expenses............................................................................................................................2

Development strategy..............................................................................................................................2

Management................................................................................................................................................2

Batwa House Inc.

Company organization.............................................................................................................................2

Organizational Structure..........................................................................................................................2

Organizational Chart...............................................................................................................................2

Administrative expenses..........................................................................................................................2

Summary of finances...................................................................................................................................2

Investment requirements..........................................................................................................................2

Total Projected Cost................................................................................................................................2

Capital requirement.................................................................................................................................2

Financial Assumptions............................................................................................................................2

Financial forecasts...................................................................................................................................2

Project Returns........................................................................................................................................2

Financial risks..........................................................................................................................................2

Exit strategy.............................................................................................................................................2

Batwa House Inc.

Executive summary

This feasibility plan is deliberated for “Batwa House Inc.” which will be launched in Lahore.

Batwa House Inc. is a business that is engaged in the customized design, manufacturing and

marketing of leather wallets. Giving meaning and shape to leather wallets with embroidery of

colorful glasses, beads and threads is what we specialize. Our product range consists of different

size of personalized wallets for both males and females. In order to promote our product, we plan

to hire embroiders and designers from Southern Punjab (Bahawalpur, Multan) on commission

basis to use our products in their designs. Their specific expertise will help us create a

memorable and effective product that will be enjoyed by our customers. The prices of our

products will be based on two factors: size and complexity. Our target market is age group of

adults and above. We have tried to touch upon every pertinent aspect in as much thoroughness as

possible.

Company Overview

The Company is going to establish in summer of 2011. Batwa House Inc.is new in business. It is

a partnership between Sibghat Ali khan, Sara Asif, Saleha Noor, M. Shehryar Shahid and Ayesha

Naseer. The company will get registered by this year’s summer and will get its product line

patent in the end of year 2011. The urge to grow will make Batwa House Inc.the hot sellers in

the coming years. With the passage of time company will change its trends of designs to meet the

demand of customers.

Batwa House Inc.

Mission statement

To be best leather wallets designer in Pakistan, not in sheer size but in ways that are more

meaningful i.e. quality people, quality products, quality business plans, returns and innovation.

Batwa House Inc. want to understand customer’s needs and care about meeting them by doing

more than just selling leather wallets. We want to teach personalized regimen, using hand

embroidery on leather products according to specification given by our customers and providing

them unique, versatile and trendy leather products. We want to implement careful quality

assurance in our products and research about customers demands so that we can offer a hundred

percent satisfaction guarantee. We want to create an organization environment which stimulates

creativity, communication, and performance which results in personal satisfaction and high

productivity. This success oriented attitude based on discipline and determination will lead

everyone to new heights and greater achievements.

Current Status

As we are about to launch, therefore a lot of work is under development. Employees have been

recruited and production work has completed. Marketing and promotion needs maximum

attention at the moment. We are hoping that the exhibition will create much hype amongst

customers, and then sales at the outlet will benefit after the name of our company has been well-

established.

Batwa House Inc.

Market and products

Our market consists of adults, of both genders. We aim to target the market of teenagers as well

as adults. Our products consist of:

Wallets

Handbags

Souvenirs

Key chains

Mobile phone covers

Office items

Briefcase

Tablemats and coasters

Miscellaneous

But our main product is wallets, for which we wish to be known for.

Objectives

Providing quality goods and after-sales services

Satisfy customer wants in an efficient and effective way

Attain reasonable profits and maintain sustainable growth

Provide a friendly work environment for employees

Batwa House Inc.

Product and service description

Our leather wallets with embroidery of colorful glasses, beads and threads are what we specialize

in. Our product range consists of different size of personalized wallets for both males and

females. In order to promote our product, we plan to hire embroiders and designers from

Southern Punjab (Bahawalpur, Multan) on commission basis to use our products in their designs.

The designs will reflect Pakistani culture and traditional patterns. We also will provide after sales

service if customers are dissatisfied with the products. For example repair of a damaged piece or

repair of any item.

Market analysis and comparison

We have several local competitors such as:

HUB

Traditions

Jaffer Jee’s

Leather point

As these competitors have well established name in the market therefore they are a major threat,

but we have an edge over them in terms of design; our product will be completely according to

the specification of customers. We will have skilled employees for our business. Initially, we

have single outlet so it can be difficult for us to target our market easily. Though we have skilled

workers but still as we are new in the business and we have no experience. The major

opportunity that company looks forward is to expand its business by opening more outlets in the

Lahore and also in other major cities of the country. As the lifestyle of the people is changing

towards more customized products so it will be opportunity for us to fulfill the demand of

Batwa House Inc.

market. We aim to increasing the awareness among consumers about our product will be helpful

for the growth of our business. Intimation of our product in the market can decline our sales. And

an unexpected rise in the prices of raw material especially leather is a major threat to our

business.

Industry Analysis

As mentioned earlier there is a huge competition in the leather industry. Various foreign brands

have already captured bigger part of population and the competition between the local leather

products is also intensive. Our leather wallet products need to be taken under high consideration

and must not be ignored if we want to establish our particular market. We must highly focus on

the quality and designs to ensure good quality material, color combinations, variety and ease of

using. The basic threat from imported brands and our local markets are their low cost, variety,

and image. They sell new concepts in form of fashion. In order to avoid such uncertain rivalries

in the market, we must strongly focus on our core strengths. This way we will be able to

understand the nature of demand and what need to be served in more specified terms. This sort of

strategy will help us to improve our quality and designs with different product range, competitive

pricing, high flexibility and speed of delivery keeping in mind the total quality management

procedures to ensure quality products.

Customer analysis

Our ideal customer is men and women of age group 20 and above. As these individuals are

employed, they will be more interested in purchasing leather products that fall into our price

range. Moreover, we make products that are used on regular bases like household items, office

items and wallets and handbags. There is sufficient demand by the customers hence, making the

business profitable and promising in future.

Competitor Analysis

The leather industry is quite competitive as Pakistan has various local as well as foreign brands.

Some of these brands offer products at a lower price than we do, giving them a competitive edge.

Batwa House Inc.

Companies like HUB are selling at higher prices but our products infuse Pakistani culture and

tradition, something competitors do not offer.

In addition foreign branded wallets are also sold here and are preferred by customers that are

brand conscious. However, our main focus is on quality and our distinct point is our designing

which sets us apart from competition. We also offer our customers an opportunity to have

embroidery done according to specific preferences. These are attributes that competitors in the

industry do not possess.

Marketing strategy

Product and service strategy

Pure customer oriented: Batwa House Inc. is offering wide range of designs purely according to

the demand of the customer.

1. The customers at Batwa House Inc. can select the embroidery designs of their choice

from our design book or they might themselves give us the designs if they specially

want to imprint something on the wallets like their names or anything else.

2. The customers can select the leather wallet of their own choice (camel, elephant, and

ostrich) on which embroidery is to be done.

3. Designer consultancy: We have made a booklet in which the most demanded designs

of embroidery and leather wallets are placed for the convenience of the customers in

selection of designs.

4. Premium quality: Since quality is of utmost importance in any business, we check the

quality of our product on each and every step. From purchasing of the inventory to the

finishing of the product, quality check is implemented as an important measure. Even

the finished product is wasted if it lacks quality on any step of its production. If the

product finds any defect within the first month of sale we are responsible to replace or

fix the defect without any extra charges.

5. Unique, stylish and trendy leather wallets: We have a competitive advantage of such a

differentiated and unique product which has not been introduced before. Though

people have substitute products like other leather wallets but the kind of customization

Batwa House Inc.

and embroidery we are offering makes us only in the market. Gems, mirrors, and

colorful threads make our wallets stylish and trendy.

Pricing

Pricing products and services is a challenging process for all new entrepreneurial business. Often

entrepreneurs will underestimate the value of their time and expertise and find it difficult to believe

that customers will actually pay the price they need to charge to make a profit. The bottom line of

any business is profit. If a business is going to be successful and maximize profits, accurate pricing

is critical. Prices must be high enough to cover costs and earn a reasonable return; yet attractive

enough so customers will purchase the product or service. The primary purpose in operating a

business is to make a profit. We should establish our prices from an accurate accounting of direct

costs, labor, overhead expenses, and profit margin. In addition, we have to consider all the

psychological factors that may have an impact on the business as establishing a pricing strategy.

To be successful and profitable we have to continuously monitor our pricing strategy.

Our pricing decisions should be based on an orderly analysis rather than on an educated guess.

By taking a systematic, step-by-step approach, we can make pricing a simple task.

Costs

Profit

Retail pricing

Breakeven analysis

Other pricing strategy considerations

As every product or service has its price we often hear about the importance of price in

business world. Price of product or service leads to the profit of the business, behind the scene is

always the primary purpose of each profit oriented company. Understanding the market and what

customers will or will not pay directly impacts our pricing strategy.

Out of the four basic strategies i.e. Premium Price Strategy, Economy Price Strategy, Penetration

Pricing Strategy and Skimming Strategy we selected both Skimming and Premium Price

Strategies. The uniqueness we are giving in our product, as we are delivering the customer with

what he wants and giving a whole lot of the choices for customer and what we add value to the

customer can be benchmarked easily so we selected the skimming strategy. As we define quality

Batwa House Inc.

what actually customer demand nothing more is pure than this quality so we are focusing on the

Premium price. Price of our product will vary from size and complexity of the product depends on

leather and raw material used on it. To solve this problem we set different ranges of prices for

different category of designs. Minimum price of our customized leather wallet is Rs.1200.

Distribution

To start a new business the first and basic requirement is a place from where you are making or

selling your product and for this we need a shop where we make our product and as well we

display and sale.

For this we tried to search in markets first as per our partners we have a shop in a areas like

Gulberg, Defense, Model Town because our product is mostly bought by the customer who has

the affordability and mostly middle and upper class will buy this type of product so first we go to

Defence Y block market here we found shops starting from the rent of Rs.45000 and up to

Rs.150000 and some are even more than that. Then we go to Liberty market for finding the rent

rates. The rates of Liberty market and Defense Y block market rates are almost same. Then we

visited Main and Mini market of Gulberg here we found the rates starting from Rs.25000 and up

to Rs.70000. Based on the nature of our product we have selected to open our outlet in mini

market because it is linked to the famous M. M. Aalam road which is the most frequently visited

place of both middle and upper class society. The location we have selected is a convenient

location.

Promotion

For the promotion of our product we will use different means, like outdoor advertising, print

media, and electronic media. We will use percentage of sales method for promotion of our

product and dedicate 10 percent of our sale revenue to spend on advertising and promotional

purposes.

Batwa House Inc.

Advertising

To promote our wallets we will use a billboard, which will be in vicinity of our store. This will

help us in attracting customers quickly. Those people who are roaming around in the shopping

area will be attracted by the billboard and visit our shop to view our products. Due to limited

budget we are using only one billboard, with expansion in business we can use more billboards

also, but billboards will not be the preferred media and only few billboards at selected locations

will be used.

Our product is a customized product and to effectively persuade our customer to buy the product

we need an advertising media, that uses both sight and sound .So advertisement on television

will be the preferred mode of advertising. To advertise at mass scale we will use the cable

television advertising, due to our financial constraints, we will place our ads on world call cable.

We will broadcast our ads on their private channels, and also place our ads on their scrolls.

Traditionally, the local newspaper has been the medium that most advertisers rely on to get their

message across to customers. We believe our product will be of high interest to educated class,

and we can reach them through advertising over newspapers. Advertisement on newspaper will

be a good way of creating awareness about the product, although quality of ads in newspaper is

not good, but at this initial stage we believe informing our customers about our product is the

biggest priority. As our target market is middle and upper class so will give our product ads in

the DAWN, THE NEWS and JUNG newspapers.

These forms of advertising will be used in order to create awareness about our products; later on

we believe word of mouth will become a major source of promotion for our products. To

encourage this we will allow cash discounts and other benefits to those who refer others to our

store.

Sales Assumptions

Batwa House Inc.

O

pe

rat

io

ns

As a procurator, the person has to be a bargain hunter and had a little know how about the

market. So we decided to do the various tasks on which we have to collect the data and finalize

the decision for buying raw material.

Go to different markets.

Check out the different rates of the product.

Check out the quality of a product.

Scope of operations

As we are offering customized wallets to our customers, for this we are getting our raw material

i.e. leather sheets from Chamra market Lahore and colorful gems, glasses, threads, and most

importantly leather wallets from Shah Almi market Lahore. Our customers will select the designs

and place orders. We will be printing that rough design on cloth and than imprint it on leather

sheets. Afterwards our employees will do the embroidery on these leather sheets and stick that

sheet with the wallet very artistically. Then the finishing touch will be given so that the quality is

checked and finally pack the product.

Particulars

No. of wallets sold per month 150 units

Per unit sale price Rs.1200

Monthly Sales (150 x Rs.1200) Rs.180,000

Monthly profit (150xRs.200) Rs.30,000

Total Sales (Year 1) (1800xRs.1200) Rs.21,60,000

Design printing on Leather Sheet

Embroidery on leather sheet using colorful

beads, glasses & threads

Customized Design

Rough design on cloth

Stitching on Wallet & Finishing

Packing

Final Product

Batwa House Inc.

Ongoing operations (Production Flow Chart)

Development expenses

Our two major variable costs will consist of raw materials and labor. As we increase output, we

will also need to hire a dedicated staff for the designing of leather wallets and open up new

outlets for our products. As our product’s market repute builds, we will also add a dedicated

Batwa House Inc.

wing to market research which will be giving us timely information about the customers taste

and demand. Every rupee earned above the break even requirement will go into the company’s

reserves for the above stated expansion projects.

Development strategy

Every business wants to grow with the passage of time. In prospect of Batwa House Inc., its

growth strategy is to focus on opening more outlets in other areas of Lahore, and other cities in

order to increase the size of our target market and uncovering more opportunities by finding out

more uses of our products, like we will add a dedicated wing to market research which will be

updating us with market demand and priorities. To achieve this, we need to aggressively position

and promote our product coming up with new designs and ideas.

Management

Company organization

Batwa House Inc. is a fresh business and yet willing to expand, but currently it comprises of

limited staff which is working efficiently to fulfill the needs of the market. This is a partnership

based business consisting of five partners; Ayesha Naseer, Sibghat Ali Khan, Sara Asif, Saleha

Noor and M. Shehryar Shahid. Each partner is investing equal share of capital i.e. Rs.200,000.

All the functions and operations of management have been divided among each partner who then

takes the responsibility of that work and is accountable to other partners for his work. These

functions and operations include marketing, accounts, finance, procurement and production that

are divided into different departments. Like:

Sibghat is managing marketing. He is responsible for identifying and satisfying the needs

of the customers, marketing plans, marketing research, how to get, maintain and increase

the customers.

Sara is managing production. He is responsible for designing and manufacturing of the

products. With the help of employees, he will make the quality products according to the

requirement of the customers.

Shehryar is managing procurement. He is responsible for all the purchases of the raw

materials that also include the selection of the suppliers.

Batwa House Inc.

Saleha is managing accounts & finance. He is responsible for recording the sales and along

with this he will also play a role of human resource manager & he is also responsible for

all the financial work e.g. making budgets, controlling the cash flow, income statements

and balance sheet.

Ayesha is the creative manager; who is responsible for making new designs for the

products. She chooses the innovative embroidery patterns and colors, and explains to the

workers how the final product is supposed to look like.

In such business type creative ideas, designs are the backbone bone of the business. Therefore,

brainstorming sessions and forced relationship methods are used to make sure that we are

providing promised values to our customers. These exercises allow us to design new concepts

and give them physical shape with the help of skilled employees. To assist the work load, House

of Batwa has hired three employees on monthly pay bases, one employee for packing the

products, one sales girl will sit on the counter and one employee for miscellaneous tasks. The

employees who will be doing embroidery and shape our products will be hired on daily wages

according to the demand of our products.

Organizational Structure

Batwa House Inc. has a de-centralized decision making structure. The company has a wide

structure where each partner is manager of different department. Strategic and tactical decisions

are made after holding a meeting consisting of all the partners.

Organizational Chart

Batwa House Inc. has a very simple organizational chart. It constitutes of the owners, each one is

the manager of the specific department.

Marketing Manager(Sibghat Ali Khan)

Production Manager (Sara Asif)Procurement Manager (M. Shehryar Shahid)

Embroiders on daily wages & 1 Employee for Packaging

1 Sales Girl &1 Employee Perform Misc. Tasks

Creative Manager(Ayesha Naseer)

Batwa House Inc.

Batwa House Inc.

Administrative expenses

Administrative salaries will consist of profit/loss sharing equally amongst the 5 partners.

Bonuses and commissions will be available according to further injection of capital and

investment by any partner.

Summary of finances

Investment requirements

Total Projected Cost

Description Cost (Rs.)

Purchases (simple wallets)150 units 22,500

Furniture & Fixture (Interior Decoration) 45,000

Security Deposits for Premises 60,000

Salaries 4,000

Finance & Account Manager (Saleha

Noor)

Batwa House Inc.

Promotional Expenses 300,000

Total Capital Cost 436,500

Raw material (Leather & Embroidery) 43,500

Prepaid Rent (Display Shop and Stitching Unit) 25,000

Project Cost 500,000

Capital requirement

Financing Ratios% Amount (Rs.)

Equity 100% 500,000

Debt 0% 0

Financial Assumptions

Initial (Year 1) Average cost per wallet (Rs.)

Cost of each wallet(simple) 150

Material (lather) 70

Accessories 50

Embroidery Cost 100

Direct Labor Cost 100

Administration & Rent expenses & Transportation Expense 500

Fixed electricity 30

Unit cost per wallet (Rs.) 1,000

Profit (20%of cost) 200

Batwa House Inc.

Selling price 1,200

Financial forecasts

Pr

oj

ec

t

Returns

Internal Rate of Return (IRR) 35.33 %

Payback Period (PBP) 3.08 Years

Net Present Value (NPV) Rs. 270,744

Financial risks

We can face the following financial risks

External:

Particulars

No. of wallets sold per month 150 units

Per unit sale price Rs.1200

Monthly Sales (150 x Rs.1200) Rs.180,000

Monthly profit (150xRs.200) Rs.30,000

Total Sales (Year 1) (1800xRs.1200) Rs.21,60,000

Batwa House Inc.

Economic instability and inflation: costs of raw material and production might fluctuate

and as a result pricing strategy will be affected

Competitive pricing: as our business will be newly established compared to competitors,

initially fixed costs cannot be covered by pricing. It will take some time to settle down

and make profits

Internal

Default/fraud: trust and loyalty is an essential business ethic. But cannot be promised,

uncertainty exists in any business, and such a risk is always present

Management conflicts: with the existence of several partners, there is always chance of

difference of opinion and conflicts arising due to this.

Bargaining power of suppliers: suppliers are an essential component and control supply.

They might misuse their power over the supply of raw material and endanger the smooth

flow of supply chain. This may result in loss or buffering. Both unfavorable outcomes for

any business

Exit strategy

We will initially be willing to bear loss or at least break even for a year. If we are still

unsuccessful, then we plan to sell the existing products at a reduced price and equally divide and

liquidate assets within the 5 partners.