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11.0 Executive Summary

21.1 Objectives

21.2 Mission

21.3 Keys to Success

2Chart: Highlights

32.0 CompaChittagong Summary

32.1 CompaChittagong Ownership

32.2 CompaChittagong History

4Table: Past Performance

5Chart: Past Performance

52.3 CompaChittagong Locations and Facilities

53.0 Products

63.1 Competitive Comparison

73.2 Sourcing

74.0 Market Analysis Summary

74.1 Market Segmentation

8Chart: Market Analysis (Pie)

8Table: Market Analysis

94.2 Target Market Segment Strategy

94.2.1 Market Needs

94.3 Industry Analysis

104.3.1 Industry Participants

104.3.2 Distribution Patterns

104.3.3 Competition and Buying Patterns

104.3.4 Main Competitors

115.0 Strategy and Implementation Summary

115.1 Competitive Edge

115.2 Marketing Strategy

115.2.1 Pricing Strategy

115.2.2 Promotion Strategy

125.2.3 Distribution Strategy

125.3 Sales Strategy

125.3.1 Sales Forecast

13Chart: Sales by Year

13Table: Sales Forecast

14Chart: Sales Monthly

145.4 Strategic Alliances

146.0 Management Summary

156.1 Management Team Gaps

156.2 Personnel Plan

15Table: Personnel

157.0 Financial Plan

167.1 Important Assumptions

16Table: General Assumptions

167.2 Key Financial Indicators

16Chart: Benchmarks

177.3 Break-even Analysis

17Chart: Break-even Analysis

17Table: Break-even Analysis

187.4 Projected Profit and Loss

18Table: Profit and Loss

19Chart: Profit Monthly

19Chart: Profit Yearly

20Chart: Gross Margin Monthly

20Chart: Gross Margin Yearly

217.5 Projected Cash Flow

21Chart: Cash

22Table: Cash Flow

237.6 Projected Balance Sheet

23Table: Balance Sheet

237.7 Business Ratios

24Table: Ratios

1Table: Sales Forecast

2Table: Personnel

3Table: General Assumptions

4Table: Profit and Loss

5Table: Cash Flow

6Table: Balance Sheet

Executive SummaryFabfurnitures is an importer of Bangladeshi furniture serving Chittagong. The business was originally incorporated in CHITTAGONGrecently and has undergone various changes in business strategy. The refined model is to import a wide range of Bangladeshi furniture and sell primarily to designers and unfinished furniture retail stores. The ConceptRecognizing that the market for good furniture is quite competitive using the larger furniture retailers,Fabfurnitures will minimize the competition by targeting specific niches, generally focusing on out-of-the-way locations that are not served by the larger furniture superstores. By leveraging location and expertise in Bangladesh, Fabfurnitures will be able to have control of the entire importation process. In Bangladesh, Luca will serve as not only as a principal of Fabfurnitures, but also as the agent.

Fabfurnitures has three keys to success. The first is establishing a high quality, high value relationship with its vendors and customers. The second key is to ensure reliable and timely delivery of their products. The last key to success is reliable administration of the organization.

Fabfurnitures is set up as a home-based business with additional warehouse space. This will be the most cost effective arrangement yet provide the requisite amount of service and support.

The Market

Fabfurnitures will target three market segments. The first, that currently comprises 80% of their business, is specialty retailers. This segment is growing at 2% and there are 16 potential customers. This is a more competitive niche and through targeted marketing, Fabfurnitures will begin to reduce their dependence on this segment. The second segment is designers, that also have a 2% annual growth, with 44 potential customers. The last targeted niche is unfinished furniture retailers growing at 2% with a potential market of 50 participants.

The market is based less on brand equity of the manufacturer and more on the actual product and the service provider. It is very important to the customer to touch and feel the product. The salesperson is also instrumental in the transaction. These realities are beneficial to Fabfurnitures as they can pick and choose from a variety of manufacturers instead of being able to sell products from only known companies.

The Sales Strategy

Key to the sales strategy is direct sales calls on all market segments targeted in this plan with the exception of interior designers. Fabfurnitures, through its well-focused business strategy will achieve profitability by month two. Conservative forecasts indicate that sales will bealmost doublefrom year one to year three. Net profits will be commensurate.1.1 Objectives

The objectives of Fabfurnitures are:

1. To put in place adequate, and reliable, administrative machinery, allowing the owner to spend her time selling and maintaining major accounts.

2. To concentrate Fabfurnitures's efforts on several selected market sectors that have been researched and found promising.

3. To improve the reliability and timeliness of shipments from Bangladesh.

1.2 Mission

Fabfurnitures's mission is to supply certain market niches for Dinnig tables and other furniture items which are, for a variety of reasons, not well served by the large domestic manufacturers. The owner of Fabfurnitures utilizes her interior design background, her experience in the furniture retail market, as well as her contacts inBangladesh to tailor her products to the needs of these market niches.

1.3 Keys to Success

The keys to success in Fabfurnitures' business are:

1. Offering items of a high quality-value relationship which are not available everywhere. This is essential for maintaining the niche market sectors mentioned in the mission statement.

2. Reliable and timely deliveries. Fabfurnitures must make good on its delivery promises. Because of the nature of doing business in Bangladesh, this requires long-range planning in scheduling orders, taking into accountBangladeshi holidays and business practices.

3. A reliable administration that is ready to serve customers, prepare accurate billing, follow-up on orders and other documentation, and maintain a close watch on expenses and collection of accounts receivable.1.3.1 KEY SUCCESS FACTORS Quality of raw material

The furniture industry in Pakistan is dependent on the quality of the raw material available. The high quality wood is scarce in Pakistan and customer complaints arise due to the use of cheap and low quality wood by the manufacturers. It has to be ensured that furniture displayed in the showroom and manufactured on orders must be of high quality raw material. Attractive Design and Quality Finishing

The life style of the people is improving and they are getting more quality conscious. Contemporary and chic designs are better liked by people these days. Special attention should be given to present latest designs according to the current market demands and requirements. Tastefully designed and knockdown furniture items, made of superior quality wood and light weighted are more suitable for sale purposes.

New designs and styles with durability can build brand equity for the business. As there is high competition in market, creation of up-to-date designs and styles, and introducing new trends is vital. As this proposed showroom business is expected to target middle to upper middle class, the furniture should be able to fulfil their special requirements. It is therefore more important that furniture should be aiming to cater the traditions with modern functional demands, coupled with quality of the material and aesthetic sense. It is of utmost importance that furniture should be durable and of the latest style and fashion at an economical cost so as to attract the relevant class of the society. Sales promotion

Another critical success factor of this proposed pre-feasibility is the Marketing and Promotion of the Furniture. Sales promotion activity is necessary for market penetration. This involves dedication and hard work from the marketing personnel and advertisement through print media along with the use of other marketing techniques. Other Success Factors

1. Advance orders for sale can ensure the success of the business.

2. Assurance to customers that furniture is made of seasoned (dry) wood. Properly seasoned (dry) wood guarantees high quality as it minimizes deformation of wood due to dampness.

3. New designs and styles can build brand equity for business. As there is high competition in market, to make the project commercially viable, creation of new designs and styles and setting new trends is vital4. The location of the showroom is an important factor for success. The showroom should be located in heavily populated or developed cities and its location within the city should be decided keeping the target market in mind.

5. Responsiveness to customers' demands and requirements is very important to stay in market and retain market share.

6. Better customer service and after sale service to promote business goodwill.

7. Competitive prices should be offered

1.3.2 Steps for starting a furniture businessStarting a furniture rental business can be a very lucrative venture. However, before you initiate the process, you will have to conduct a business feasibility study, competition analysis, and market research. This will tell you how viable the prospects of your furniture rental business are. Ensure that you have a foolproof business plan in place, which will not only act as a guide to set goals but will also be required for availing loans. Have policies in place regarding payment terms, rates, etc., to avoid any conflicts later. Check with the local, state, and federal authorities to know about the necessary permits, licenses, and taxation required by you to start this business. To keep your business floating, you cannot let your prices fall below a certain level. Hence, capitalize on your key selling points like quality, variety, delivery, flexibility in payment, etc. Here are a few more points that will tell you how to start a furniture rental business.

Select a Niche

It is essential that you establish an identity for your business. There are many types of furniture rental businesses; hence, you will have to select a niche which you intend to sell. It can be anything from baby furniture, corporate furniture, luxury furniture, to basic home furniture. Home furniture could also be divided further into living room, kitchen, or bedroom furniture. This will not only help set up an identity for yourself but it will also give you a focused target market. You can then plan your operations, marketing, and promotions around that particular target market.

Locate a Retail Store

While you can operate this business from your home, getting a proper office space is recommended. Try to lease a retail space in a commercial area. Getting an office near the shops of home supplies, offices of real estate agent, etc., can help you get better visibility and customers. If you have rental furniture which can be used by students, ensure that you have an outlet near their college/university dorms or hostels. If you are planning to lease out office furniture, try to have a store where offices are taken on rent.

Legal Contract

You will have to take help of your attorney to make a rental contract that will lay down the terms of leasing out the furniture. It will include the leasing date, total period, return date, before due date return policy, repair policy, compensation for damage policy, payment terms, late payment, etc. Both the parties will have to agree to the terms and sign on it. This is an important step because a legal contract is a proof of the arrangement that has taken place between you and the renter.

Sourcing a Finance

You will require a considerable amount of money for buying various types of furniture, storing it in a warehouse, and for hiring a company to look after the transport. If you do not have the necessary savings, you can go for an SBA loan or a bank loan. You can also check if any business incubators are available in your area. They will help save a lot of cost and provide support. Also, you can avail a credit union loan if you are a member of one. This will enable you to get finance at lower interest rates.

Get a Ware house

You will have to get a warehouse space to store your furniture, till the time someone hires it. Ensure that the warehouse is spacious enough to accommodate all the furniture, and you don't end up stacking it one above the other. Doing this can often damage the furniture and increase your cost of maintenance and repair. Also, ensure that there are no rodents in the warehouse which can eat away the foam. As a cautionary measure, get a pest control done for your space. Also, look for molds on walls which can get transferred to your furniture and spoil it. Apart from this, it is essential that you put up your furniture in a place which has the necessary security arrangements for your goods. If you think this is expensive, you can also utilize a garage space, but security of the furniture will become a major issue. Also, don't forget to check the warehouse insurance requirement.

Hire or Buy Moving Trucks

You will have to send the furniture to the customer's doorstep and even set it up for him. For this, you will require to hire moving trucks and helping hands. In the initial days, it is advisable that you hire this service. However, it will prove to be very expensive in the long run. Once your business picks up, buy your own moving truck and add one more when it expands further. You can also hire people who will help to move the furniture around.

Online Showroom

In order to attract the attention of customers, try to have an interactive website which will showcase the various furniture options that will be available with you. As it will not be possible to take all the customers to the warehouse to display the furniture, this can really work well for your business. You can also display the photos of a variety of furniture, quantities available, similar options for their selection, colors, charges for hire as per duration, etc. Have a rent calculator which will estimate the amount a customer will have to pay for a certain piece of furniture. If you want, you can accept online booking and payment as well. This will help you get many clients.

Sourcing the furniture

It is advisable that you get good quality furniture for your business. For this, you can open an wholesale account with a wholesaler to save cost as retail outlets will charge you higher. You can also go for cheap furniture available on online websites. However, if you are planning to get secondhand furniture, ensure that it looks good and is in a proper condition. You can also polish it at home so that it looks new. However, don't spend on something that looks used, tattered, and has stains on it. People will never pay you a good amount if you offer furniture that is below par in quality.

Check the Furniture

Once the furniture comes back in your possession after you had let it out for a period of time, conduct a thorough check. If you find that the renter's cat has clawed on the leather sofa or if the chairs have beverage stains on them, do charge the renter for all this damage. Also, check all the wood and metallic works of the furniture as people tend to stick the broken legs of chairs together with adhesives. Scan your furniture thoroughly to spot any kind of problems. If you find anything is amiss, spoiled, or damaged, promptly add it to the renter's bill.

Packing It

Once the furniture arrives back, you will have to clean it, sanitize it, and wrap it properly for storage. If there are any sofa covers that need laundry, do not hesitate to spend on them. A customer will be impressed if the furniture smells good and has a 'just out of the store' look. So, do not forget to package it accordingly. If you find that any kind of repairs are required for the furniture, undertake them before leasing it out again. Ensure that the furniture is squeaky clean before you rent it out again.

Business expansion

There are many furniture rental businesses that adopt a rent-to-own model for raking up the profit and are successful at it. After you generate enough revenue, plan this transition properly and venture in it to book more profit. This also allows the renter to use the furniture and buy it when he can afford it. However, ensure that people who opt for this scheme do buy the furniture after renting it for a substantial period. There are many people who pick up used furniture from the side streets. However, they are more cautious about getting things like futons, couches, mattresses, etc., from random places. Hence, ensure that you also add these to your business for increasing profit.

Cost Calculations

Let us suppose you have spent $5,000 buying a sofa and you are charging $500 per year for leasing it out. It will mean that your initial investment will take 10 long years for recovery, so forget the profit attached with it. Hence, in this case, increase the charges such that you will book a good amount of profit as well as recover your investment amount quicker. Also, if you are giving doorstep delivery, do not forget to add the logistics charges as well. Unlike a cash loan, you cannot run a credit check on a customer. So, you are taking a higher amount of risk. Hence, proactively try to get a certain higher amount as deposit as it will secure your furniture. Also, in case of any damage to the furniture by the customer, you can reduce these charges from the deposit.

Promoting Your Business

For promoting the business, register with various online directories. You can also advertise in newspapers, directories, magazines, etc. Try to become a BBB member and get a good grade. Also, utilize your moving trucks for branding. Apart from that, you can also take your business the social media way and promote it.

1.3.3 Technical feasibilityIntroduction to Furniture-making

To those who have eyes for venturing into this enjoyable activity of furniture-making, let me share with you my vast experience in this field. I have been making furniture for 44 years already, having started way back in 1967. I had managed a furniture company in the Sultanate of Oman in 1985. I am still connected at present with a big furniture firm here in Manila, Philippines as a General Manager. I know everything about this trade, from designing up to servicing at the clients home. I started with this trade as an apprentice, then machine operator, then carpenter, then manager.

To get started in furniture-making, you should have a very keen interest in it. It is not easy to make an elegant furniture piece. It requires a good carpentry skill. Do not rely on the machines because they are only there to assist you. Machines are only good supporters, but without your excellent skill in carpentry works, you cannot produce a very fine furniture piece.

Of course, not all furniture items do require splendid craftsmanship. What I am trying to say are those items which an ordinary mortal cannot perfectly make. These items include wooden chairs such as Queen Anne, French Provincial, Scandinavian, and other high-end designs. Simple furniture items like fully upholstered sofa, bookshelves, coffee tables, are the best items to start with as they do not call for a very high expertise. At any rate, you need the following machines to get started:The Portable Machines and their importance

Portable Circular Saw:I cannot imagine how a furniture item could be created without this machine. Can you split a wood stock of, say, 18 long by a hand saw? Yes, why not? But how many hours are you going to do it? If at all, is your cut perfect? It can be perfected, why not? You use hand plane to do that, but then, again, how much strength and time will the work calls for?

This machine is not very expensive. The last purchase I made was when I supervised an interior finishing works of a multi-national corporate office in a business district here in Manila. I got it for Php4,500 only, Black & Decker brand. I dont know its price in other countries. I can only speak for my country.

This machine is very basic in general woodworking. The much expensive version of this type is the Table Saw, but you cannot easily transfer it from one place to another, unlike the portable saw. Of course, there is a big difference between the two insofar as the overall uses are concerned, but principally, they are of the same importance.

This machine comes in a variety of models and specifications. You can choose the one that fits your budget. But, remember this when you buy this machine. Never go for an ordinary cutting blade. YouMUSTuse acarbide-tippedblade because it yields a smooth cut and you dont have to sharpen it every time. Sharpening of this kind of blade is doneONLYby a sharpening machine also.The Portable Drill:

This machine is important not only in woodworks, but also in metal works and glazing works. If you have this kind of machine, you can make comfortably any woodwork or metal work projects. The stationary version of this type of machine has a thousand and one uses, aside from its main purpose of drilling or boring holes. Drill bits come in plenty of sizes that you can choose from. Anyway, when you buy this machine, various types of bits are included in the package. Without this machine you cannot make perfect holes for screwing purposes, for example. You can also use this machine for making mortises. Although you cannot make a perfectly-shaped mortise with this machine, your work can be complemented by a chisel for the corners. This machine is as versatile also as the portable saw. This is not also an expensive machine. It is cheaper than the portable saw by as high as 50%. Never make a furniture piece if you dont have this machine.The Portable Router:

This is the most expensive machine among the portable machines in furniture-making. Although it is not as versatile as the portable saw, furniture-making requires this machine for exquisite results. One of its many uses are molding works. If you want to make a perfect dado or perfect rabbet, you should have this kind of machine. The result is very, very clean and smooth, what with its 20,000 rpm. This is expensive than the circular saw by as high as 400%, but you will be happy by its performance. If your budget is a little bit generous, I advise you to equip yourself with this machine. Again, remember this: always use carbide-tipped bits and blades.

12 tools to start building up good furniture

Hand tools are expensive and the prospect of buying everything you need to start building fine furniture can be overwhelming. The good news is that you dont need every tool youve been told you need, and you dont have to pay as much as you might think. By following this list, and a few guiding principles, you can have all the essential tools on a reasonable budget, and in the end, youll be a better woodworker.

When I decided to build fine furniture, I owned a framing hammer, a tape measure and some miscellaneous tools from the two summers I spent building homes. Having just graduated from university, finances were tight. I knew I had to nickel-and-dime my way to an adequate tool kit, and now that Ive done it, Im happy I did. It ensured that I bought only what I needed and spending more time with fewer tools helped me develop my hand-tool skills. I bought used tools when I could, forcing me to spend a great deal of time restoring, tuning, lapping, and sharpening. The more time I spent with each tool, the more comfortable I become using it, and the better my results were at the bench. I made sure that I only purchased a lower quality tool if, through a little extra effort or some minor adjustments, it could achieve the same results as a higher quality tool. In a few short months I had amassed the hand tools I needed. While my kit has expanded, I still turn to these tools for the majority of my work.

Bevel-up, Low-Angle Jack Plane

As its name suggests, this plane is extremely versatile, so there is no need to rush out and buy a bunch of planes. With a couple of extra blades, it becomes even more versatile. Put in a high-angle blade to flatten and smooth boards with unruly grain. Put in a low-angle blade and pair it with a shooting board to take perfect end-grain shavings.

Block Plane

I suggest buying a less expensive plane and swapping the stock blade for a thicker replacement. The thicker blade will reduce chatter and the higher quality steel will maintain a better edge. A less expensive plane will require more time to flatten the sole, but youll have a high performance tool for half the price. Ive been using a fully adjustable low-angle Stanley block plane with a Hock replacement blade for the last year. The planes adjustment mechanism requires a little more TLC than a Veritas or Lie-Nielsen, but it can cut just as well.

Small Hammer

A small 7 oz or 8 oz Japanese plane hammer isnt perfect for every job, but its pretty good at common tasks like chopping dovetails, adjusting planes or driving small finishing nails. Once youve developed your skills and an understanding of the type of work you like to do, you may be inclined to buy some more specialized hammers. My only other hammer is a turned applewood mallet given to me by a friend.

Bevel-Edge Chisels

A full set of bevel-edge chisels is good to have and, if you chop mortises by hand, mortising chisels are definitely the best tool for the job. Practically speaking, most of your mortise and tenons will be cut with machines. When fitting joinery by hand, most tasks can be done with a 1/4", 1/2", or 1" chisel, and you can design your fully hand-cut joinery to use the tools you have. There is no need to make a 5/16" tenon where a 1/4" will do. Acquiring chisels is a great opportunity to buy used. Not only will you save some money, but the quality of steel will be far better than that of your average home improvement brand. You may also get lucky like I did one cold Sunday morning at an estate auction when I purchased a set of old Swedish Berg chisels for Rs.350.

Water Stones

Before you set metal to wood you need to be able to sharpen your tools. There is a great debate about what type of sharpening stones are best, but if you arent apt at sharpening, getting caught up in that argument will only hinder your progress. A combination 800x/4000x water stone is an effective and affordable option to get your tools up and running.

3" Engineers Square

This is my tool of choice for laying out joinery. A small square is more manageable when marking a small line on a small part. If the square is much bigger than the part you are marking, it can become challenging to hold it in place to mark a clean, accurate line. You want to be confident in the accuracy of your tools, so buy the best you can afford and avoid buying used, as there is a good chance a used square has been dropped.

Pocket Square

The pocket square is large enough for the measurements we need most frequently, like checking material thickness and small enough to fit in your pocket so youre never without it in the shop. Its also great for setting up machines because you can check for square and depth of cut without changing tools. While it may seem expensive for such a simple piece of metal, its cheaper than a small combination square and it is made to the tolerances of an engineers square. This tool will save you lots of time, energy and frustration.

12" Combination Square

In reality, this square can do the job of the engineer square, the pocket square and more. Its flat cast iron head means it can act as a substitute for an engineer square, and the 12" rule means you can measure and mark work beyond the size of a pocket square. Flip the tool around to accurately find a 45 angle for mitre work, or use the straight edge of the rule to check the flatness of a board. Again, dont try and save by buying an inexpensive or used square as it will cost you in the long run.

Wheel Marking Gauge

A standard wheel marking gauge will make clean, accurate reference marks. Its also great for transferring measurements (like the depth of a mortise). They are not expensive and theres no need to shell out the extra cash for one with all the bells and whistles.

6" Sliding Bevel Gauge

If you want to do any work with angles (and you do), then you need a sliding bevel gauge. They help you layout dovetails and let you transfer angles to and from drawings, machines, and parts. A cheap bevel gauge is harder to set accurately and will inevitably loosen up when you need it most, so this is another tool worth spending a little extra on.

Card Scraper

Inexpensive and invaluable, this tool is a necessity when working with curved parts, tricky grain, and veneer. Its important to learn how to put a consistent burr on the scraper, and this can often deter beginners from using it, but once you can, youll save hours of sanding and open up a world of new design possibilities. New, used, or homemade, they arent going to blow your budget.

Mill-Bastard FileFiles are extremely useful, helping to shape parts, sharpen scrapers, and round over tenons. You will inevitably collect a variety of files, but the oh-so-average mill-bastard is a good place to start. The mill refers to its shape and single-cut parallel rows of teeth, while the bastard means the cut is between rough and smooth.

Product Manufacturing ProcessWood is cut into different sizes of blocks and slabs. If the wood purchased is not seasoned than these blocks/slices are seasoned through different processes, namely:

Condensation

Boiler System

Vacuum System

Seasoning through putting the wood slices under normal environmental temperature

for considerable duration.

Before start of manufacturing of any furniture product a desired design is selected. Selection

of elegant design is important to ensure attractive finished product.

The seasoned wood blocks are cut into desired shape and slices according to the requirement of design. The slices of wood are molded into the desired shape according to the design. Carving means different elegant pattern carved in the wood. Quality of carving depends on the skills of the labor. Once the different pieces are carved & molded than these parts/pieces are assembled or fixed together to give the shape to the final product.

Assembled product is grind to make the surface smooth. Once the surface is smooth, finishing material is applied to make the surface ready for paint or polish. After the base is prepared final finishing is applied depending on requirement in term of paint/polish. Upholstery of fabric is carried out according requirement of design.

Distribution / Marketing Channels Though the demand for wooden furniture in domestic market is persistent throughout the year, but it significantly increases during the period of October to March because of the wedding season. The demand for the furniture almost doubles during this period. Hence, the primetime to enter into market is start of August.

Billboards, Radio, F.M Channels, and Newspapers are the conventional mediums, which have been powerfully used for the promotion of products

1.4 SWOT Analysis:

Wood is the main raw material used in furniture making and the entire finished product depends on quality of wood. The information and technical know how about the quality of wood and use of seasoned (dry) wood plays a vital role in the manufacturing of good quality furniture, which will ultimately reflect on the reputation of the furniture show room. Strong competition exists in the international and domestic market. Manufacturing and sale of high quality trendy designs and good marketing is essential to get a permanent place in the market. Real wood furniture is the most popular furniture in existence; it's been around for hundreds of years.

Before making the decision, whether to invest in setting up the Furniture Show Room or not, one should carefully analyze the associated risk factors. A SWOT analysis can help in analyzing these factors, which can play an important role in making the decision.

1.4.1 Strengths 1. Availability of high quality furniture to customers

2. Variety of traditional and modern designs of locally manufactured furniture will be available in the showroom.

3. A number of suppliers available in the local market, for instance the Chiniot and Gujrat furniture market.

4. Profit margins can be as high as 100%

5. Central location of the showroom in a big city, easily accessible to the target market.

6. The showroom is proposed to be open 11 hours a day.

7. A product mix that includes furniture for both household and official use.

1.4.2 Weaknesses

1. A number of competitors in the market.

2. Easy market entry

3. Seasonal sector (especially household furniture in the wedding season November to March).

4. Heavy investment in the working capital.

5. Very strict quality check required.

6. Dependency on the supplier for timely delivery of orders.

1.4.3 Opportunities

1. High quality furniture being produced locally at competitive rates and in large quantities.

2. The life style of the people is improving and they are getting more quality conscious, thus preference for the high quality products is increasing.

3. With an overall increase in income levels people are willing to spend more on house renovation and decoration.

4. Continuous increase in construction and renovation of houses and offices create new opportunities.

5. Market share can be acquired from un-organized sector through high quality product and promotional activity.

1.4.4 Threats 1. Lack of tree plantation resulted in lack of raw material (wood.)

2. The prices of all raw materials such as chipboard, timber, foam, polish chemical materials, colour paints and hard ware have increased

3. Heavy imports of furniture particularly from China

4. Local furniture manufacturers face high costs and poor output due to obsolete machinery, inadequate tools and manual labour.

5. Furniture trends and designs change rapidly.

6. Several established competitors enjoy a good market share.

1.5 HISTORICAL DEVELOPMENT OF BANGLADESH-INDIA TRADE RELATIONSBangladesh and India signed the Treaty of Friendship, Cooperation and Peace on March19,1972 in Dhaka for 25 years. Owing to this treaty, both countries signed the first one-year trade agreement on March 28, 1972. In the agreement, fish, raw jute, newsprint and naphtha were identified as the principle exports of Bangladesh to India. Indias major export items to Bangladesh, on the other hand, were cement, coal, machinery and unmanufactured tobacco. The trade between the nations was limited to government level (Madaan, 1996). This agreement also provided border trade between Bangladesh and Neighboring Indian states; and within 16 kilometers of both countries border, free trade was allowed for certain commodities.

The expected level of trade was not achieved under the first trade agreement. Also free border trade between Bangladesh and India led to some illegal trade and hence was abolished in October 1972 by mutual consent of the both governments. However, to attain the desired level of trade, the first trade agreement was further extended up to September 27, 1973 (Madaan, 1996).

The first trade agreement of 1972 was replaced by another trade agreement for three years. This agreement was signed on 5 July 1973 and became effective from 28 September 1973. Raw jute, fish, newsprint, etc were identified as major exportable items of Bangladesh to India. On the other hand, major exports of India to Bangladesh were unmanufactured tobacco, cement, coal, raw cotton, cotton yarn, cotton textiles and books. This agreement provided for a system of Balanced Trade and Payment Arrangement (BTPA) and most favored nations treatment to each other (Madaan,1996; Hassan, 2002).

The desired level of trade between the two nations was not achieved by the agreement of

1973, and trade imbalance increased in the very first year. Rupee trade was found to be a barrier in the bilateral trade, and thus abolished rupee trade from 1 January 1975 by a Protocol signed on 17 December 1974. It was decided that trade would be conducted in free convertible currency.

India and Bangladesh signed another trade Protocol on 12 January 1976 for higher volume of trade and long-term arrangements for trade of coal and newsprint. BTPA between Bangladesh and India was extended for another three years till 27 September 1979 on 5 October 1976.

On 4 October 1980, the third trade agreement was signed between these two nations initially for three years. By mutual consent, this agreement was extendable for another 3 years.

On 8 November 1983, Bangladesh and India renewed a Protocol on trade of 1980 for further three years. In May 1986, the trade agreement of 1983 was extended for another three years till 3 October 1989. Subsequently this agreement was renewed a number of times. Based on available information, this agreement was valid up to 3 October 2001.

1.5.1 TREND, STRUCTURE AND CURRENT PICTURE OF BANGLADESH-INDIA TRADE

One of the important features of Bangladesh- India bilateral trade to be mentioned is that a large volume of informal or unrecorded trade, both in commodities and services, occurs every year, and it is growing despite unilateral or regional or multilateral trade liberalization in these two countries (Pohit and Taneja, 2003; Eusufzai, 2000). The official data on trade in services between these nations are, in fact, not available at all. Under this situation of data paucity with regard to illegal trade and trade in services, our current analysis will depend on mostly on the official trade data in commodities.

In this section, data on trend, structure and current state of Bangladesh-India trade are presented. Attention is paid on overall trade relationship; special reference is to be made to examine the importance of Bangladesh - India trade in the context of SAARC as well as individual country. Bangladeshs historical trade deficit with India and the commodity composition of Bangladesh-India trade over time are also examined.

Bangladesh-India Trade in SAARC Perspective

The combined share of Bangladesh and India in the SAARC trade demonstrates their importance and high influence in the regional trade. Table 1 shows that the trade share of both countries was 56.23 percent of the intra-SAARC trade in 1990. This share increased to 69.71 percent in 1995 and 64.5 percent in 2002. Indias share is, more or less, double of Bangladeshs share in intra- SAARC trade with limited exceptions for some years. However, Indias export share is much higher than import share in the regional trade. On the other hand, Bangladeshs position is opposite; its imports share is much higher than export share in the SAARC region

1.5.2 The Importance of India in Bangladeshs TradeIndia plays an important role in Bangladeshs trade since the independence, and recently, especially in 1990s, Bangladeshs trade with India increased tremendously. The Table 4 compares the growth rates of Bangladeshs trade with India, SAARC countries and world for selected years from 1980. It is observed from the table that the average annual growth rates of Bangladeshs trade with India, during 1980 to 1995, were much higher than those with the SAARC and the world. For example, during 1980- 85, while average annual growth rates of Bangladeshs trade with the World and SAARC countries, were 2.46 per cent and 0.11 per cent respectively, this figure was 9.72 per cent with India. During 1985-90 the growth rates with the world, SAARC countries and India were 7.94, 18.68 and 20.63 per cent respectively. The growth rate of trade with India increased very significantly during 1990-95. While the growth rates with the world and SAARC countries were 16.70 and 57.85 percent respectively, the growth rate with India was 87.29 per cent. Though the growth rates with SAARC countries and India were slightly negative during 1995-2000, those figures turns into convincingly positive in 2001. The overall growth performance was negative in 2002 following the September 11 incident in 2001 in the USA. However, Bangladeshs trade got momentum in 2003 with all noted destinations.

In the context of Bangladeshs global trade though Indias share is not convincingly high, it may be mentioned that the influence of India on Bangladeshs trade has been increasing over the years. From the Table 5, it is observed that Indias share in Bangladeshs global trade has increased to 10.7 percent in 1995 from 3.6 percent in 1990. Though this share has slightly decreased in recent years, it is still almost 10 percent.The important feature is that though Indias share in Bangladeshs global import has been increasing over the years, Indias contribution in Bangladeshs global exports has been shrinking. For example, Indias share in Bangladeshs global import increased to 15.5 percent in 2003 from 4.7 percent in 1990. On the other hand, with regard to exports, this share decreased to 0.7 percent from 1.3 percent during the same period.As per as Bangladeshs trade with the SAARC countries is concerned, India certainly holds an important position, and over the years its dominance has been increasing. India provided with the 94.1 percent of Bangladeshs imports from the SAARC countries in 2003. Indias contribution to Bangladeshs exports to SAARC countries increased to 53.5 percent in 2003 from 36.6 percent in 1990. Indias share in Bangladeshs total trade with the SAARC countries increased from 60.6 percent to 91.7 percent during the same period of time.The importance of India as the source of Bangladeshs imports can be well understood by the Table 6. Based on official trade data only, India was the fourth largest importing source for Bangladesh in 1990 just after Japan, Singapore and the USA. If unofficial trade were taken into account, Indias position would be higher. The table also reveals that India topped the list for Bangladeshs imports in 1995, and since then India continued to maintain the largest importing source for Bangladesh.

1.5.3 The Importance of Bangladesh in Indias TradeThe importance of Bangladesh to Indias trade can also be examined. Bangladeshs contribution to Indias global trade was 0.74% in 1990. In 1995, this share rose to 1.59 percent. After that, though this figure decreased marginally, it was still 1.13 percent in 2003.

This is the official record of trade; if unofficial trade were also considered, this ratio would be double or even more.With regard to exports, Bangladeshs contribution to Indias global exports is significant. In

1990, Indias exports to Bangladesh was 297 million i.e. 1.67 percent of Indias global exports. Within 5 years of time, i.e. in 1995, this ratio increased to 3.14 percent. In 2002 and 2003, Bangladeshs share in Indias global exports was 2.11 and 2.42 percent respectively.As per as import of India is concerned, India imported from Bangladesh only 0.06 percent of its global imports in 1990. This ratio was more or less the same over the years except in 1995 and 2001 when it rose to 0.23 percent and 0.13 percent respectively.In the context of Indias trade with the SAARC countries, Bangladeshs contribution is significant. Bangladesh constituted 40.91 percent of Indias total trade with the SAARC countries in 2003. In 1990 and 1995, this ratio was 53.42 and 59.64 percent respectively.Bangladeshs share of Indias exports to SAARC countries was 49.64 per cent in 2003. In

2002, it was 52.57 percent. In 1990 and 1995, this ratio was even higher, 60.98 and 62.17 percent respectively. However, Bangladeshs share of Indias imports from SAARC countries was not convincing; it was only 8.42 percent in 2003.

The importance of Bangladesh for Indias export market can further be realized from the Table 8. It is observed that Indias largest export market in the SAARC region is Bangladesh at all the time.

The Balance of Trade of Bangladesh with IndiaThe bilateral trade situation between Bangladesh and India for 31 years, 1973-2003. These figures clearly indicate the unfavorable trade balance of Bangladesh with India. In 1990s, especially in the 2nd half of the decade, trade deficit of Bangladesh increased very sharply. In 2003, the trade deficit reached to US$ 1, 435.9 million, which is about 4 times higher, compared to 1993, and more than 46 times higher compared to 1983. The value of exports compared to that of imports is always quite low, and in 2002 and 2003, it was 3.4 and 3.6 percent respectively. This is really a disappointing picture for Bangladeshs bilateral trade financing as, according to economic theory, countrys exports are to be used to pay for its imports. Though the export-import relationship should be looked at the world trade level rather than bilateral level, yet this trade imbalance still has some economic and political implications for Bangladesh.Trade Structure of Bangladesh with India

Bangladeshs exports to India are highly concentrated to a few items. Table 10 demonstrates that the countrys major countable export items were only six in FY 1994-FY1996. In fact, in FY 1996 only 3 items- chemical fertilizer, raw jute and frozen fish- constituted about 90 percent of Bangladeshs exports to India. However, fertilizer and newsprint are sometimes export items and sometimes import items depending on domestic production (Eusufzai, 2000).

On the other hand, Indias exports to Bangladesh are more diversified, and export-base is significantly wide. It is observed from Table 11 that Bangladesh classified a total number of 5985 items for imports in the First Import Schedule at 8-digit H.S. Code level. Out of 5985 items, in FY 1996, Bangladeshs imports from the world were 4601 items of which 2129 items were from India alone. In terms of number of commodities imported from India, Indias contribution to Bangladeshs global imports was 47.8, 45.8 and 46.3 percent respectively in FY94, FY 95 and FY 96.

The data on the imports composition of Bangladesh from India for selected years during FY 1980 to FY 1996. It is evident from the table that Bangladeshs major imports items from India are vegetable products, textile and textile articles, machinery and transport equipments, chemical and allied products, mineral products, and base metals. Examining the data of FY 1996 we see that vegetable products constituted 36.64 percent of total imports of which cereals alone accounted for 33.24 percent. The second largest import category was the textile and textile articles, which constituted 27.43 percent of total imports. This categorys rank was the first in FY 1991, FY 1994 and FY 1995. More than 50 percent of total imports from India were under this category in FY 1991.

Observing data for last three years it is revealed that textile and textile related articles plus the machinery and transport related equipment constituted for roughly 49 percent of total imports from India. Thus Bangladeshs total official imports consist of significant portion intermediate inputs.

1.5.4 PROBLEMS CAUSING INDO-BANGLADESH TRADE IMBALANCE

Although the trade deficit with a particular country is not bad if the over all trade balance is satisfactory, yet from the distribution aspect of trade policies (the distribution of benefits and costs among groups of producers and groups of consumers) the growing trade deficit with India is a great concern for Bangladesh. Bangladeshs fear is that if this deficit continues, Bangladesh will be dependent only on a few products for its exports, and imports from India displace domestic production to such an extent as to de-industrialize Bangladesh. As a result, it is argued, a severe polarization in Bangladesh and high levels of unemployment will occur. Therefore, increasing trade deficit with India is a problem, and attempts are made here to find out the causes of this problem.

Bilateral Exchange Rate

Bilateral exchange rates between Bangladesh and India during 1986 to 1999 have been presented in Table 13 in order to explore the dynamics underlying this expansion of trade imbalance between these two countries. Available data exhibit that the nominal and real values of the Bangladeshs Taka vis--vis the Indian Rupee have been appreciating, with negligible exceptions, over the years. This appreciation of Taka, due to competitive depreciation undertaken by the Indian monetary authorities, may have a significant positive effect on the increased trade deficit of Bangladesh with India.It is evident from the table that the nominal exchange rate, Taka per Rupee, had been continuously declining right from 1986 to 1996. In 1997, though it increased slightly, it started to decline again from 1998. This declining trend of the exchange rate implies that Taka had been appreciating. In nominal term, the exchange rate decreased to 1.140 in 1999 from 2.411 in 1986 indicating a 52.71 percent appreciation of Bangladeshs Taka against Indian Rupee during 13 years of time. The downward trend of real exchange rate was also observed from the Table 13. In real term, Taka appreciated 31.72 percent against Indian Rupee in 1999 compared to 1986.

Productivity Issues and Structural Factors

The productivity differences can also best explain trade patterns between countries. India has productive advantages both in agriculture and industry compared to Bangladesh because of scale economies (Eusufzai, 2000). Structurally Indian economy is much larger, more diversified and technologically advanced. Also geographically India is very closed to Bangladesh, and Bangladeshs importers are very familiar with Indian products and production capacities. All these factors have made Indian products very competitive, both in terms of price and quality, in Bangladeshs market (Hassan 2002). As a result, Indias exports to Bangladesh are more diversified and consists of high value added manufactured goods. On the other hand, Indias imports from Bangladesh are limited to a few items, as Bangladesh does not have a large supply base to offer a wide variety of products to India. The obvious result is an increase of trade imbalance between the two nations.

Tariff and Non-Tariff Barriers

It is generally agreed that Bangladesh has initiated the program of tariff liberalization earlier than India- in the mid 1980s, and the speed of liberalization in Bangladesh is faster than that in India. Bangladesh has continued this higher speed of liberalization till recent years (Rahman,1998; Eusufzai, 2000; Dasgupta, 2000). This is evident from the Table 14 and Table 14A, which show a comparison of nominal rates of protection (import weighted average and simple average) for both countries.The table shows that Bangladesh sharply reduced its tariff rates in all categories of imports in 1997-98 compared to 1990-913. Both un-weighted and import-weighted tariff rates have always been higher in India than in Bangladesh. Also significant quantitative restrictions on consumer goods imports in India were in place during this period.

Recently Indian commodities, compared to the worlds commodities, faces lower average tariff restrictions in Bangladesh. Table 15 compares the dynamics of decline in the average import weighted tariff imposed by Bangladesh on its imports from the world and India. It is observed that Indian imports faced a higher rate of tariff (31.16%) compared to the world average (24.14%) in FY 1992. However, import weighted tariffs on imports from India were lower (12.05%) than that from the world (17.33%) by FY 1996. This reverse scenario came because of almost 60 per cent decline of import weighted tariff rate between FY1994 and FY1995 on imports from India compared to 14.70 per cent decline on imports from the world (Eusufzai, 2000).There are many non-tariff barriers (NTBs) in India that Bangladeshi exporters are to face to enter into Indian markets. In Table 16, five types of such NTBs are mentioned that are imposed on imports of India. Rahman (1998) notes that there are thousands of items under these NTBs, and there is lack of transparency and clarity with regard to application of these NTBs because customs authorities in India mainly apply these according to their own discretion. Though significant fiscal reforms took place in the 1990s in India, trade policy pursued by the Indian government is still considered as highly complex and restrictive.Among other NTBs, the rules of origin (ROO) issue and infrastructural bottlenecks deserve to be mentioned here for huge trade deficit of Bangladesh with India. According to SAPTA agreement, local content in the exported goods has to be at least 50% of f.o.b. value of the product in order to receive preferential treatment / tariff concession (Rahman 1998). As the manufacturing base of Bangladesh is not strong enough as India, this ROO criterion limits the export expansion of Bangladesh to India. This is particularly true for exports of some cosmetic goods and toiletries, where Bangladesh has achieved notable expertise, and India has a huge market for this kind of products.Inadequate infrastructure in Bangladesh also imposes sever limitations on trade expansion with India. There is severe lack of facilities of infrastructure in all land-routes, except Benapole. Severe limitations also exist in storage facilities. As a result, enhancing exports from Bangladesh to India is being constrained. 1.5.5 Productive Capacity and Economic EfficiencyThe production capacity and economic efficiency of Bangladesh must increase in order to meet the countrys growing demand for importable goods and maximize the export earnings. In the major economic sectors, efficient import-substituting activities must increase along with continuous improvement of economic efficiency and competitiveness within an open economic environment. Huge exportable surplus are to be generated and exports must be diversified taking Indian demand requirements into account. Bangladesh must earn relative efficiency in the production of exportable goods and services to reduce her trade deficit.To gain from bilateral trade, there is no alternative but to increase the productivity in all sectors as a long run measure. For this purpose, Bangladeshs agriculture sector urgently needs a technological spurt. More research and development, transfer of technologies, market based effective price system and appropriate incentive mechanisms are very important to enhance the countrys agricultural productivity. To increase the productivity in the industrial sector, development of the countrys technical base and technological capacity building are crucial. To develop the technological capacity building, huge investment, creative intervention of the government, appropriate incentive mechanism to foster technical education must take place in the country. As regard the productivity increase in the service sector, quality of education must be increased; quality medical service within reasonable cost must be ensured. Huge private investment in health and education with creative government interventions would be very helpful for this purpose.

Furniture Industry ofBangladesh Outlines of Furniture IndustryTraditionally furniture industry in Bangladesh developed as cottage based industry. It is in 90s when the furniture industry in Bangladesh has transited from cottage based industry to mechanized mass production oriented industries. Following that the furniture businesses began to grow accommodating modern machineries, innovative designs and use of diverse materials. Furniture industry of Bangladesh is shifting its focuses from dependency on teak for raw materials to processed wood .

The main varieties of products are wood, processed wood & Medium Density Fibre board (MDF), laminated board, particleboard, rattan/bamboo and wrought iron furniture. For a more personal domain as ones home, the preferred raw materials still remains solid wood, but combination of solid wood with other materials like cane, rattan, laminated boards, plywood and MDF are becoming very popular. But for offices furniture designs are usually focused on the more contemporary style and the preferred use of materials include plastic, MDF, laminated boards and wrought irons . Around 70% production of furniture sector of Bangladesh is home furniture and 30% is office furniture .

One of the key strengths of the local furniture industry is diversity in product portfolio . According to CSIL (Centre for Industrial Studies), Bangladesh has a strong potential in linking home dcor craft items with the furniture industry. The export of furniture products from Bangladesh started from 1995. It is estimated that, by 2015 Bangladesh has export potential of crafts furniture accessories worth of USD 10 million along with furniture worth USD 40 million. The potential can be materialized through exploiting low labour cost which is a vital factor in becoming competitive in the world market. In wood furniture manufacturing, labour accounts for up to 40% of the total costs. In Bangladesh labour costs account for 20% of the production. Here, the hourly wage rate in furniture is between $ 0.06- 0.40, less than in China ($0.50- 0.75) which is the largest furniture exporting country .

At present two relevant associations i.e., Bangladesh Furniture Export Association and Bangladesh Furniture Industries Owners Association (BFIOA) are actively working on materializing the potential of this sector. Bangladesh Furniture Export Association has 19 members.

Profiles of Furniture Industry

Government of Bangladesh has declared the furniture industry as a Thrust Sector . The sectors contribution to GDP (gross domestic product) is 0.29 percent on average, while the industry is comprised of around 41,560 enterprises and employs nearly two lakh skilled and semi-skilled people .

According the officials of Bangladesh Furniture Industries Owners Association (BFIOA)There are 28,000 furniture factories in Bangladesh (including all SMEs) among them 1,952 companies are registered member of furniture owners association. However, according to the baseline survey of furniture industry in Bangladesh by Dr. Ali Nesar Khan (2011), there are a total of 9,913 wooden and 2,628 non wooden furniture manufacturers in Bangladesh employing around 1,19,810 workers. Also there are around 74,926 carpentry households employing another 1,54,285 workers. Adding to this, there are 1,20,000 craftsmen producing soft furniture and 200,000 suppliers supplying raw and semi-processed materials. Out of this huge employment, almost 1,00,000 workers are women . Among the employees working in furniture sectors, 20% are working in large industries and 80% are working in SMEs . There are a number of furniture clusters in Dhaka which are located at Badda, Sutrapur, Mirpur area of Dhaka. A number of large companies have their factory in Savar and Gazipur area. Number of large companies is few compare to the total number of furniture industry in Bangladesh. There are 15 large Furniture companies are doing their business in the country which includes Otobi, Navana, Hatil, Akhtar, Partex, Brothers etc .

Trends in Furniture (Supply chain feasibility)

In all furniture styles some significant trends are:

Individual items of furniture can be used for different functions: flexible seating for sitting, reclining or sleeping; modular wall systems and living room systems. Furniture for older people with a focus on comfort (e.g. higher seats).

Part of the trend of making more use of the home space is to extend the home into the garden or onto a patio or veranda.

Many households are full of furniture, so rather than overloading their homes, consumers are looking for something with a simple elegance to achieve less is more.

Combined with this simple functionality, consumers want aesthetically pleasing designs. For example, LED illumination to enhance simple cabinet, invisible loudspeakers in internal doors, new coverings on handles that feel good to touch, flat screen TVs which almost disappear into surroundings when not being used.

Small visible legs, made of metal or wood, are an important feature at the moment for living room chairs, couches, armchairs and cupboards and small tables.Trends in materials, colours and shapes

Home furniture and furnishings are becoming more colourful. The colours used in upholstery furniture fabrics, and cupboard and cabinet fronts are loud and bold. The design and form in upholstered furniture remains voluminous. As far as materials are concerned, there is a decrease in the use of cherry in new lines. However, cherry, along with oak and walnut, are key materials for products at the high end market. The vogue is still very much for the dark, exotic look with oak and other wood species presented in a number of guises, striped effect to emulate zebrano, heavily lacquered and most popular of all, stained dark, almost black. Modern technology is enhancing pieces with improved finishes and high-tech options.

Woods: Interior parts and primary and secondary frames of most items are made from lower quality wood like birch, ply and laminates, while for exposed surfaces fine timbers are used. Lighter hard woods such as oak, beech, maple, alder, birch, cherry and hickory have proved more popular than pine.

Rattan: Fine wickerwork, bamboo, hemp, abaca and sea grass continue to be important materials, which are increasingly used in natural interiors.

Metals: The metallic, hi-tech or industrial look is popular in furniture, being an eye catching element. Metals in simple forms are often combined with wood or glass. Stainless steel, chrome, wrought iron, aluminium and copper have become popular in the past few years.

Glass: Smoked glass and other opaque finishes, rather than clear (cold) glass is popular. Natural and acrylic glass is increasingly used in combination with other materials in tables, cabinets etc.

New materials: Experiments are done with new materials: polycarbonates in matt finish, high gloss, transparent and in many colours. Also, recycled polyester is increasingly being used in modern items.

Fabrics: These are softer in texture and appearance, with single light natural colours used as a basis. Small motifs, textured look; geometric or large colourful designs are also in fashion. Floral designs, micro-fibres are still common and (soft) hi-tech fibres are gaining importance.

Finishes: There is a trend towards high gloss finish in many colours for tables and chests. There is also much use of polished, laminates, satin-finish, acid-etched, painted glass with neutral or bright colours; opaque lacquers; painted and enamelled steel; anodized, polished and mat aluminium.

Chart: Highlights

2.0 Company Chittagong Summary

Fabfurnitures is a bare-bones importer of furniture from Bangladesh, with minimal overhead, and a limited number of niche markets in India. After an attempt in the early 90's to compete with the "Big Boys," with a showroom in High Point, North Carolina, Fabfurnitures has settled on a more localized out-reach to market segments that for one reason or another are not well-served by either the large domestic manufacturers, or the large Chittagong import houses. Fabfurnitures capitalizes on the owner's background in interior design for serving segments which are more closely connected to designer clientele than main stream furniture retailers.

2.1 Chittagong Ownership

Fabfurnitures was incorporated in the state of Chittagong. The company Chittagong's ownership is shared equally between Kate Jackson of Wenham, Chittagong and Luca de Febonio of, Bangladesh. Kate had 20 years of experience in the design field and knowledge of the U.S. market. Senor de Febonio had 25 years experience in the manufacturing of furniture in Bangladesh and shipping to the U.S. market. Ms. Jackson, as president, secretary and treasurer, is responsible for the daily management, sales, and development of the compaChittagong. Sr. de Febonio is responsible for the manufacturing, quality control, and shipping of the goods from Bangladesh until they reach the U.S.

2.2 Chittagong History

Originally Fabfurnitures established a showroom in High Point, N.C. which is the furniture buying capital of the U.S. These showrooms are opened only two times a year, for two weeks only. At these times, buyers attend the market to purchase. Due to the economics of the country at the time, Fabfurnitures was not successful in this venture.

As the country rebound, the furniture business did not return to its old way of doing business. It was becoming a global market with more competition. It became obvious that Fabfurnitures could not continue with its present plan and had to find a niche of its own in which to promote its products. The decisions were made to pull back its emphasis on the national market andfocus more on a smaller geographic region, as well as to concentrate on only certain segments of that regional market (see Market Strategy).

A third conclusion reached, as a result of the High Point experience, was the need to warehouse. Customers were becoming less and less willing to wait for product. Last year Fabfurnitures began warehousing, this became the turning point of the Chittagong: since then sales have steadily increased.

Chart: Performance Expectation

2.3 Company Chittagong Locations and Facilities

Fabfurnitures works out of the home of its owner. Warehouse space is shared with its primary finishers in Ahmedabad where a small showroom is provided by the finishers, Flair Finishers.

3.0 Products

Fabfurnitures' product line is rather extensive, amounting to over 200 items including, Dinnig tables, stools, dressers, book shelves, mirrors, screens, side tables, dining tables, lounges, etc. Because of the large quantity of items and styles, it is not feasible to stock all these items, however, of these items can be purchased from Fabfurnitures by special order. Because of the long lead time between ordering and arrival of the goods, Fabfurnitures has found that it must concentrate on a limited number of items which suit the targeted market sectors, and to try to keep a stock in these items ready for immediate delivery.Dining Tables:

Sofa Set:

Beds:

3.1 Competitive Comparison

Probably the most notable competitor seen in retail outlets of the type targeted by Fabfurnitures is from Chapman International. The Chapman catalog is excellent and in color. All items in the catalog are available immediately, unfinished, from stock in Delaware. Below is a price comparison:

Data for competitors..which will be suited for our business..

Chapman ItemRawFinishedPremium FinishFabfurnitures ItemRawFinished

Renaissance "A"$197$235$270156A$202$264

Renaissance "S"$165$195$220155S$177$234

Splat Side$132$150$175152S$150$206

Celestial "S"$127$145$170150S$191$247

Celestial "A"$162$190$225151A$219$281

The finished prices listed above for Chapman include their standard finish which is applied in Bangladesh. For a finish which Chapman calls "Premium" (giving a distressed or antique look) an additional 12500 rs are charged. This additional charge should be considered when comparing the level of Fabfurnitures finish work.

Taking this into consideration, Fabfurnitures's prices for the items mentioned above are higher than Chapman's. It should be mentioned that only the Renaissance approaches a close comparison. The other two compared models of Chapman, although roughly similar when viewed from a distance, are far less substantial when examined up close. The Chapman Dinnig tables weigh much less and have very little carving work when compared to Fabfurnitures's Dinnig tables.

Competitiveness from point of view of price is an important factor and looms larger once the retailer's margin has been tacked on. The price difference in respect to Chapman should not be a problem for Fabfurnitures, given the higher quality of Fabfurnitures's Dinnig tables. However, pricing is only one aspect of competition. Chapman has an excellent color catalog and all items contained in it are readily available from stock kept in Delaware. Some market sectors might be expected to lean in Chapman direction if Fabfurnitures has problems delivering in a timely manner. "Timely deliveries" has been underscored in the "Objectives" section of this plan.

A price comparison was also performed for unfinished Dinnig tables targeted for the designer market. The two major Chittagong furniture import houses (Columbia and Atlantic) were chosen for comparison purposes. The item compared here is in all three cases the identical Dinnig table, most probably produced in the same factory in Bangladesh:

Competitor 1's Item#382S and 382A ......... Rs. 12750 and Rs. 16980 respectively (raw)

Competitor 2's Item#7616S & A .................Rs. 16500 and Rs. 17700 respectively (raw)

Fabfurnitures' equivalent........................................Rs. 13020 and Rs. 15400 (raw)

Comparing prices on a finished basis is a bit more difficult because of the wide range of finish options, but Fabfurnitures's finished, upholstered price of 25020 Rs and 29400 Rs for the side and arm Dinnig table respectively compares with Competitor 1 prices of 26880 Rs and 28920 Rs and Competitor 2's prices of 29400 rs-36300 rs (depending on type of finish) for the side and 24000-30000 for the arm Dinnig table.

3.2 Sourcing

Fabfurnitures' products are imported from Bangladesh through an agent who receives a 7% commission. This agent, Luca de Febonio is a 50% owner of Fabfurnitures, and their relationship is long-standing. The agent is responsible for arranging production schedules with the various local factories and handles all matters that arise until the point when goods are ready for shipment. Payment is made by Fabfurnitures directly to the producing factories at the prevailing exchange rate for Bangladeshi Lira.

4.0 Market Analysis Summary

Fabfurnitureshas learned by experience that it needs to target several market niches to be successful. Fabfurnitures has identified three promising areas: Specialty Retail, Designers, and Unfinished Furniture Retailers. The first group accounts for nearly 80% of present sales. Reliance on this group will decrease somewhat as a result of increased efforts in marketing the other two customer groups.

4.1 Market Segmentation

According to Indian government statistics there are over 17,000 outlets selling furniture nation-wide. Briefly stated, these outlets fall into the following categories:

1. High-end. High-end furniture outlets carry furniture produced by the top manufacturers home-based.These companies have a network of dealers throughout the country who are chosen based on the high image of the outlet. Some outlets represent the manufacturer exclusively. It is not unusual to find a dining Dinnig table in these outlets priced to sell at 72000 rs.

2. Middle Range. A step down from the first category are furniture outlets, such as Veralum's Furniture, that sell furniture which is targeted to up-market buyers, but not the top rung. A dining Dinnig table from one of these outlets might cost between 36000-48000 rs.

3. Mass Merchandisers such as ** or ** must carry lines with broad appeal, and high volume. This furniture is still sourced from large factories mostly in the West part of gujarat, but quality is lower and so are the prices. A dining Dinnig table from one of these outlets would sell in the 18000 rs range.

4. Low-end. Dinnig tables sold from these outlets would have virtually no hand work. The Dinnig tables are likely to need re-gluing a few years later, and much of the furniture requires some assembly on the part of the purchaser. A Dinnig table from these outlets would sell for under $200.

5. Unfinished Furniture Outlets. These are varied: These are manufacturers who only sell their own products, others take on items from other manufacturers to round out the line, and others only sell unfinished furniture but offer the option to have the finishing done by them. Quality can vary. Some are very low end, others like to have a better price variety.

6. Specialty Retailers. These include certain specialty retailers who combine antiques and reproductions to obtain an unusual offering which cannot be price-shopped. These retail outlets are small and must have healthy mark-ups to survive. They would avoid items that could be readily found at larger retailers who work on thinner margins. This market sector represents Fabfurnitures's biggest volume.

7. Designer Market. Designers have difficulty making money on furniture. Taking clients to pick out Dinnig tables from retailers at the design center or elsewhere does not result in big commissions for the designer. What some designers do is to buy unfinished Dinnig tables (often via the major Chittagong import houses) and then have a refinisher and an upholsterer complete the work. In this manner the designer can insure a larger profit for himself and the customer gets a quality Dinnig table which cannot be price-shopped easily.

The last three mentioned market sectors - Unfinished Furniture Outlets, Specialty Retailers, and Designers - are the ones most attractive to Fabfurnitures's products.Chart: Market Analysis (Pie)

Table: Market Analysis

Market Analysis

20132014201520162017

Potential CustomersGrowthCAGR

Unfinished Furniture Retailers2% 16 16 16 16 16 0.00%

Specialty Retailers2% 44 45 46 47 48 2.20%

Interior Designers2% 50 51 52 53 54 1.94%

Other1% 10 10 10 10 10 0.00%

Total1.63% 120 122 124 126 128 1.63%

4.2 Target Market Segment Strategy

By specifically focusing its marketing efforts on the underserved segments of Designer and Unfinished Furniture markets, Fabfurnitures will diversify its customer base. This will help to reduce its current sole reliance on the Specialty Retail segment. Established connections with the Bangladeshi manufacturers of high quality furniture will help to source rarely available products, which are in strong demand by the sought customer segments.

4.2.1 Market Needs

Customer needs across the three segments described in Target Market Segment Strategy are similar in the sense that each customer segment seeks high quality furniture supply sources that will help add value to the retail consumers. Unfinished furniture outlets require furniture that may be either finished by the 'do-it-yourselfers' or by the store's on-site finishers. In both cases, the furniture will help sell such retailers other high-margin products and services. Designer stores require quality unfinished furniture that can easily be finished by the outsourced finishers or upholsterers. Like with maChittagong other products, designer stores can then add hefty premiums to leverage their brand identity through perceived product uniqueness. Finally, the Specialty Retailers that are currently the core customer segment for Fabfurnitures, have shown the need for antique-looking furniture that appeals for their clientele. This need can be met by applying special finishes to the Fabfurnitures's products.

4.3 Industry Analysis

As mentioned in the Market Segmentation section, the market areas most attractive to Fabfurnitures are:

1. Unfinished Furniture Outlets

The outlets listed below are all located within an hour or so drive from Fabfurnitures's offices. Fabfurnitures's Dinnig tables are normally imported from Bangladesh in unfinished form. This is because it is too cumbersome to maintain a stock of all the possible finishes that might be desired. Also, shipping is complicated if the Dinnig tables are shipped finished, as packaging to protect the finish would be needed and that reduces the quantity that can be placed into the container. Since the landed products are unfinished, marketing certain select sellers of unfinished furniture makes sense:

2. Specialty Retailers

These retailers usually do not have very large showrooms. They usually combine an assortment of antiques bought at auctions or estate sales which include cupboards, corner cabinets, farm house tables, hope chests, etc., as well as some reproductions.

4.3.1 Industry Participants

The major players in the furniture business are the large manufacturers headquartered in High Point, North Carolina and elsewhere, primarily in the South. There are also local manufacturers that are much smaller and usually specialize in a particular wood or a particular style. The more important outlets for Fabfurnitures's products do not usually carry the domestic products coming out of the Bangladesh. This is because these outlets need to have larger margins to survive and thus need to avoid products that are found everywhere. For these specialty outlets, smaller importers are often preferred who can offer a more unique line. Chapman, for example, is a maker of furniture in Bangladesh. Relax's Heritage is another supplier that targets this same specialty retail segment. Fabfurnitures's products are solid pieces, heavier than most, with more hand carving work.

4.3.2 Distribution Patterns

For the vast majority of furniture outlets, furniture is not supplied off the showroom floor, but instead must be ordered. The customer will be shown a chart of standard finishes, make his choice, as well as his choice of fabric, make a down-payment and then wait at least eight weeks to receive the ordered furniture. Large institutional buyers such as hotels would negotiate directly with the furniture manufacturer. The larger manufacturers have regional representatives who will call on major outlets and large direct buyers.

Fabfurnitures' distribution plan is to sell directly to the design trade , who pay list price, as well as offer two tiers of discounts when selling to small and large retailers. Arranging the sale of full container loads directly to big buyers is also considered.

4.3.3 Competition and Buying Patterns

The key to the buying decision on the part of the consumer is the salesman and the Dinnig table being in front of the buyer. As has been pointed out in the Competitive Analysis section there are other Dinnig tables with similar appearance as those supplied by Fabfurnitures which are less expensive. It is essential that the salesman point out the salient features and selling points favoring Fabfurnitures's Dinnig tables (weight--i.e. stability, strength, etc.). The re-gluing of a Dinnig table several years down the road can be a very costly exercise. Unless a salesman mentions the likelihood of this happening in the case of a lighter Dinnig table, the consumer is not apt to consider it. Most importantly, Fabfurnitures's Dinnig tables must be available in the retail outlet. Whatever Dinnig tables the outlet carries are going to be sold. MaChittagong of the specialty outlets targeted in the Market Strategy section carry Dinnig tables from only one supplier.

4.3.4 Main Competitors

The most frequently seen competitor selling to Fabfurnitures' prime targeted outlets is Chapman. As was pointed out elsewhere in the business plan, Chapman products are produced in Bangladesh, which has a better reputation for delivery reliability. The Dinnig tables (unlike Fabfurnitures's Dinnig tables) come from one factory. These products are imported by a firm in Delaware which enjoys a full-color catalog of excellent quality published by Chapman. More importantly the importer carries every catalog item in stock. The Chapman Dinnig tables are, however, inferior in quality to those of Fabfurnitures's suppliers in terms of weight, strength of construction, as well as the degree of hand-carving detail.

5.0 Strategy and Implementation Summary

Fabfurnitures will pursue a differentiation strategy by offering a specific line of solid, hand-carved furniture to the selected customer segments in the limited geographic areas. Such sales of both finished and unfinished high-quality and high-margin furniture that appeals to the Specialty Retail, Designer, and Unfinished Furniture customer segments will be mostly achieved through the direct sales channel handled by Kate Jackson.

5.1 Competitive Edge

To further entrench in its niche market, Fabfurnitures will utilize its established connections with the Bangladeshi manufacturers of high-quality furniture, which provide an opportunity to offer unique products in the selected U.S. markets. Further, It will utilize unique industry experience and superb selling skills of it co-owner, Kate Jackson, to achieve the desired sales penetration.

5.2 Marketing Strategy

The following sections illuminate the pricing, promotion and distribution strategies for Fabfurnitures.

5.2.1 Pricing Strategy

The present pricing structure for Fabfurnitures's products is to charge list price to the designer segment of the market. The designer segment of the market is typically making purchases which are time-sensitive and in small quantities.

We will allow a 12% discount to both of the Retail segment (Specialty Retailers and Unfinished Furniture Retailers). For a full container, or very large orders, Fabfurnitures offers a 36% discount off of the list price.

5.2.2 Promotion Strategy

Brand identity is not a key issue with consumers. Direct mail is planned in the form of post card-sized mailings. A copy of one is included in the appendix. These have proved useful in identifying interested interior designers, as these individuals cannot economically be called upon in person.

Since getting Fabfurnitures' Dinnig tables into an outlet is the toughest hurdle, some promotional strategy should be devised to help along the retailer's initial decision to try carrying Fabfurnitures's products. For the first 60 days, the retailer might be given an arm Dinnig table free for every five side Dinnig tables purchased. Once the outlet carries Fabfurnitures's Dinnig tables, and the sales persons have been properly instructed concerning the Dinnig tables' sales features, re-ordering seems to proceed along smoothly unassisted.

For the unfinished furniture outlets, attaching a tag with a photo of a suggested finish might be very useful to encourage sales in this segment. Step-by-step instructions to achieve this finished look in the photo by "do-it-yourselfers" could be made available. Naming a local refinisher who will do the work at an agreed reasonable price might be another option for the "do-it-yourselfer" who couldn't get around to it.

5.2.3 Distribution Strategy

At the present time, Fabfurnitures plans only one level between itself and the consumer. In most cases this will be the retailer. Some thought has been given to selling directly to the consumer via classified ads in mail-order publications, but this proposal requires further study.

5.3 Sales Strategy

Key to the sales strategy is direct sales calls on all market segments targeted in this plan with the exception of interior designers. These sales calls need to be made by the owner, Experience has proven that the more time she devotes to sales, the more sales result. A full-time team member needs to be found and added as soon as possible. Without this person, too much of Kate's time is deflected away from her major task of selling.

Forty-four specialty retailers have been identified, as well as 16 unfinished furniture retailers. With proper geographical planning and appointment scheduling handled by a competent team member, three or four sales calls could be achieved in a day.

5.3.1 Sales Forecast

For purposes of projections, the most popular Dinnig table (#155) was used with a landed cost of 4680 rs. Sales prices used are recent sales prices for this Dinnig table (9420 rs to retailers, 10680 rs to the design trade, and 6840 rs wholesale). Although various Dinnig tables and other pieces of furniture will be imported, it is assumed that the profit spread realized with Dinnig table #155 will be maintained. The weighted average sales price is 10000. Sales are all assumed to be on an unfinished basis. Although much of sales are expected to be on a finished basis, we have assumed that the added sales price for finishing will merely be paid out to Fabfurnitures's refinishers who perform the work. A similar comment applies in respect to upholstery.

Sales projections reflect reasonable success from Fabfurnitures's marketing efforts explained earlier. It is assumed that these efforts will result in unit sales of Dinnig tables of 900, 1200, and 1500 in years 2013, 2014, and 2015 respectively. Monthly unit sales in 2014 will gradually grow from 65 monthly (April-July) to 90 units by January 2015. It is further assumed that sales will continue to reflect historical experience in respect to discounts. Eighty percent of sales will go to retailers, with 10 percent each to wholesalers and the design trade.

Chart: Sales by Year

Sales Forecast

201320142015

Sales

Retailer Sales$113,040 $150,720 $188,400

Designer Sales$16,020 $21,360 $26,700

Wholesale$10,260 $13,680 $17,100

Other$0 $0 $0

Total Sales$139,320 $185,760 $232,200

Direct Cost of SalesFY 1999FY 2000FY 2001

Retailer Sales$45,216 $60,288 $75,360

Designer Sales$6,408 $8,544 $10,680

Wholesale$4,104 $5,472 $6,840

Other$0 $0 $0

Subtotal Direct Cost of Sales$55,728 $74,304 $92,880

6.0 Management Summary

The management of Fabfurnitures is made up of the owner and one other member who still needs to be added. This plan calls for the owner to concentrateefforts firstly on sales. The maChittagong administrative functions of Fabfurnitures would become the primary focus of the other team member.

6.1 Management Team Gaps

As mentioned earlier in this plan, a team member needs to be found and trained soon. This person's functions listed below should allow Kate to concentrate on new sales, maintenance of existing accounts, and devising company Chittagong strategy and policies.

New team member duties:

1. Entering and and maintaining day-to-day financial entries into the computerized accounts set up by Fabfurnitures's accountant. Balancing checkbook and reconciling bank statements.

2. Invoicing, billing, and expediting over the phone past-due accounts.

3. Organizing all paperwork related to orders place for shipments from Bangladesh.

4. Preparing the landed coast for each imported item following the format provided.

5. Answering phones from customers and dealing with inquiries. Close contact with dealers and suppliers by pager/cell phone so that customers can feel that they will be always reachable.

6.2 Personnel Plan

Fabfurnitures' sales targets can only be reached if the owner's time is freed up to spend virtually 100% of her time selling to new customers and managing the accounts she has already sold to. This means that a capable individual must be added as soon as possible to handle the administration.

Table: PersonnelPersonnel Plan

201320142015

Admin. Assist.$19,992 $24,000 $24,000

Owner$24,000 $30,000 $35,000

Other$0 $0 $0

Total People22 2

Total Payroll$43,992 $54,000 $59,000

7.0 Financial PlanIt is assumed that the owner's private resources will be sufficient to finance aChittagong monthly cash-flow shortage. However, it would be advisable to establish a bank relationship as soon as possible. Sales could very well increase at a much sharper rate than assumed in these conservative projections. Sharper sales will result in a greater need for funds in support of inventory and receivables. 7.1 Important Assumptions

Payroll burden is calculated at 12.65% made up of 7.65% social security, 2% unemployment, and 3% worker's compensation. Payables are assumed to reach levels equal to one month's operating expenses. Accounts receivable are assumed to be 45 days, although sales terms are net 30 and some sales require some payment in advance.

Inventory turnover reflects the fact that containers carryin