managerial accounting report- "cost and value chain analysis of vesta apparels”
TRANSCRIPT
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Cost and Value Chain Analysis of Vesta
Apparels
Prepared For:
Mr. Rakibul Hasan
Course: ACT-333Section: 01
Date: 17-12-2012
Prepared By:
Rifatul Ahsan Yasdany 102 0273 030
Nafees Imtiaz 102 0009 030
Syed Saadman Chowdhury 102 0918 030
Jonait Faruque 091 0859 030
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Cost and Value Chain Analysis
of Vesta Apparels
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Table of Contents
Executive Summary ........................................................................................................................1
Introduction .....................................................................................................................................2
Costing Strategy of Vesta Apparels ................................................................................................3
Full Cost of the Primary Product ...................................................................................................4
Value Chain Activities ....................................................................................................................6
Cost of Value Chain activity .........................................................................................................13
Calculation of BEP,BER and Margin of safety ..........................................................................14
Recommendation for better costing method ................................................................................18
Strategies to attract customers ......................................................................................................20
References .....................................................................................................................................24
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Letter of TransmittalDecember 17th , 2012
Mr. Rakibul Hasan
ACT-333
Faculty Member, School of Business
North South University
Bashundhara, Dhaka.
Subject: Submission of the Term paper
Sir,
It is an immense gratification for us to put forward this report on Cost and Value chain analysis
of Vesta Apparels to you, which you requested us to put in order as a confirmation of the
appliance of acquaintance you taught us in ACT-333 course.
On the process of preparing this report, we erudite to take steps as a cluster with each of us
working all the time on this project. It has helped us to expand a lot of knowledge about how
costing method is followed in reality and also helped us to evaluate the knowledge we learned in
the class room with its` real life application. This has farther enforced our confidence that the
things we learned will be truly required in realistic existence, rather than text or definitions to be
memorized and then over and done.
If for whichever cause, you are unable to deduce anything, please do not pause to contact us for
clarification at this mail:[email protected]. We hope you will forgive any of our mistakes,
lacking or inconveniences.
Sincerely yours,
Rifatul Ahsan Yasdany
Syed Saadman Chowdhury
Nafees Imtiaz
Jonait Faruque
mailto:[email protected]:[email protected]:[email protected]:[email protected] -
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Executive Summary
The objective of this report was to find out about the costing method and value chain of
Vesta Apparels Ltd and analyze its key indicators to determine the riskiness of the company.
Through the project, we learnt that Vesta Apparels uses Job order costing method to determine
the cost of the product. We calculated the full cost for the primary product of Vesta Apparels,
which was found to be $22.26 including the profit margin. We also tried to find the per unit cost
of each value chain activities, based on assumptions and estimations. We found out the BEP in
units to be 115,285 units, and margin of safety to be 59,175 units. Using the calculation of
Degree of Operating Leverage value, we identified the company as a risky one. We evaluated the
present costing system, taking its disadvantages into consideration. An alternative cost
computation method, Activity Based Costing was suggested to the company to reduce its costs.
In the end, we suggested several ways which would enable Vesta Apparels to attract more
customers and become more profitable in the process.
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Introduction:
Vesta Apparels Ltd. Is a 100% export oriented Ready Made Garments manufacturing company.
In the year 2006, this manufacturing company was established. It has already successfully
established its name among the major apparel manufacturers in the country.
Its customers include companies like Matalan, McNeal, CUBUS, LPP, Dress Man, Uniform
Express Ltd, NDC, Texpoint SA, SINOSKY, and SRG Import etc from countries like UK,
Germany, France, Bolivia and more.
It is found that outsourcing is not just a trend but a reality. Vesta Apparels primary objective is
to capitalize on this opportunity and playing commendable role through using the
experience,skill and reputation as leading RMG manufacturer in Bangladesh for the overseas
counterpart. Their present focus is to work only for a handful and selective business partners who
has understanding of the aspects of manufacturing and quality control, beliefs in longer term
relationship, trust, the ability to negotiate with some drawbacks or difficulties that occur in
occasions.
The company strictly follows the AQL Inspection level Mark. The Organizations Quality
Assurance department is very sincere and strict in maintaining good quality standard during the
production and before the final release of the garments.
Vesta Apparels has developed a high level of professionalism. They develop the product from
ground up from fabric construction to sewing methods, from receiving an order to costing,
preparing layout, production to shipment. Since inception Vesta Apparels believes in building
and strengthening in-house resources and none of its employees or workers are hired or recruited
from abroad. Since birth the number of workers has doubled from 400 to more than 850 workers
with the growth of its business. Currently Vesta Apparels accommodates a good set of expertisefor prompt dealing and smooth operation complying with the nature of its product and activity.
They have the following departments: Production planning and merchandising, Pattern and
sample making, marker and cutting, sewing, quality assurance, finishing and merchandising. The
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daily capacity is 1200 shirts/Day-line. The company has a monthly production capacity of
250000 pcs and yearly turnover of $10.5 million.
Costing Strategy:
Vesta Apparels works based on the orders it gets. Each job or order varies in terms of varying
amount of quantity or different type of products like shirts, jeans etc. Each job requires varying
amount of resources. That is why Vesta Aparel uses the Job Costing Method to determine the
cost for a particular job. Even when multiple identical units of distinct products are produced,
they still use the Job Costing Method.
The Garment industry is divided in the following stages: Textile (spinning, weaving, knitting),
Dyeing (Colouring the fabric), Garment (Finished Goods Production- Cutting-Sewing,
Finishing).Costing May start at any stage or can be cumulative in nature. e.g a garment industry
(Finishing) would purchase raw materials until stage 2 and then cut it, sew it and finish it with
shipment.
Sometimes Previous stages are selected by factories so there is generally no pricing formula.
It solely depends on an order and the buyers choice. However a complete price can be charged.
In other instances, the whole job can be sub contracted or outsourced to other garmentscompany, especially when the volume of order exceeds the capacity of Vesta Apparels.
However, the main strategy remains Job Costing.
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Full Cost of the Primary Product:
JOB: MENS LONG SLEEVE SHIRTS-REF: NL1553-2.
JOB COST SHEET
Raw Materials
Fabrics $4.715
Buttons 0.062
Labels 0.049
Polythene 0.012
Hard Paper for collars 0.024
Printing & Embroidery 0.30
Total Raw Materials Cost $5.162
Labour costs
Direct Labour 0.80
Management and supervisors 0.35
Total Labour Cost $1.15
Finishing Dept. Expenditures
Trimming 0.625
Iron, wash and QC 1.20
Other Finishing expenses 4.00
Total Finishing Dept. Cost $5.825
10% Wastage loss $0.6975
Manufacturing Overheads
Accumulated MOH 4.2
Total Manufacturing Overheads 4.2
Commercial Expenses
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Bill of Lading, L/C & others 0.088
Total Commercial Expenses 0.088
TOTAL MANUFACTIRUNG COST
(FULL COST PER SHIRT) $17.1225
PRICE QUOTATION
TOTAL MANUFACTIRUNG COST 17.1225
Mark up (30%) 5.13675
Quoted Price per shirt $22.25925
FACTS
In most if not all garments manufacturing plants, only Direct Material costs are taken tobe variable, while all other costs are taken to be fixed costs.
In Bangladesh, the Minimum Wage of labour in the RMG industry is 3000 BDT, whichis equivalent to 37 USD.
ASSUMPTIONS
All costs are per unit of shirt. Accumulated MOH includes various overheads, individual data for which is unavailable. Direct labour costs are assumed based on the minimum wage rate. This per unit cost
primarily depends on the number of orders, while total labour cost is fixed.
Management and supervision cost is also a fixed cost, per unit figure is an assumptionand depends on the number of order.
Other finishing expenses include various activities required for finishing the product, datafor which is unavailable.
Commercial expenses include Bill of lading processing costs, banking charges, costs foropening Letter of Credit.
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VALUE CHAIN ACTIVITIES
Value chain is chain of activities by which a company brings in materials, creates a good or
service, markets it, and provides service after a sale is made. Each step creates more value for the
consumer. The value chain extends the definition to include marketing & sales and service. If we
look into the value chain of the RMG sector we will see lot of insight (see Figure 2). It is
important to note that value chain activities are not isolated from one another. Linkages exist not
only between the primary activities but also between the primary and support activities. When
these linked activities are preformed one after another maintaining a chain and managed these
from a supplier to a customer then it is supply chain management (SCM). Both chains overlay
the same network of companies. Both are made up of companies that interact to provide goods
and services. When we talk about supply chains, however, we usually talk about a downstreamflow of goods and supplies from the source to the customer. Value flows the other way. The
customer is the source of value, and value flows from the customer, in the form of demand, to
the supplier. That flow of demand, sometimes referred to as a demand chain is manifested in
the flows of orders. and cash that parallel the flow of value, and flow in the opposite direction to
the flow of supply. Thus, the primary difference between a supply chain and a value chain is a
fundamental shift in focus from the supply base to the customer. Supply chains focus upstream
on integrating supplier and producer processes, improving efficiency and reducing waste, while
value chains focus downstream, on creating value in the eyes of the customer.
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(Nuruzzaman, Ahasanul Haque and Rafq Azad, 2008)
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Downward Supply Chain flow chart for a knit garments factory
Supply Chain Analysis of the Industry
Lead Time
Lead time has been one of the deciding factors of efficiency in RMG business. Apparel sector is
no longer bi-seasonal and buyers have been pacing order 4-6 times a year to keep with the
changes in the fashion world. Therefore, quick delivery is considered as a strong competitive
advantage. Unfortunately Bangladesh has been performing poorly in this aspect. It takes almost
90-100 days before the buyer receives the goods. This is less than competitive compared to other
countries like China, India, Vietnam, Cambodia who can deliver the service much quicker.
Days Taken after preceding step
Components Optimal Time Non-optimal Time
Producer Receives LC 0 0
Yarn Fabric Dyeing
WashingPrintingEmbroidery
Accessories Production
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Raw material Supplier Receives LC 4 6
Supplier Produces and ships goods 15 30
Raw materials sails and reaches Ctg. port 21 30
Port Clearance and inland transportation 5 9
Garments Produced and shipped 20 30
Finished goods sails and reaches buyer 25 30
Total lead time 25 30
Total Lead Time 90 135
Table: Typical Lead time Components. (Source BGMEA)
Downward Supply Chain in Vesta Apparels
Downward supply chain management is one of the most important parts of an RMG factory. If a
factory is dependent on outside suppliers for the steps in it there occur various problems and the
production process hence the delivery of the product always face the a high level of uncertainty.
Detail description of Vesta Apparels downward supply chain scenario is given below.
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Cotton
Vesta Apparel imports cotton from USA (Fair Trade certified cotton, organic cotton, CIS
countries like Uzbekistan, Kazakhstan etc. In recent past Vesta Apparel imported from India and
Pakistan too.
Considerations for cotton import for Vesta Apparel are: Buyer requirement, compliance (e.g.
child labor issue), suitable source of the desired cotton, quality, homogeneity, price, certification
or protocols (which can be used as a selling point for the output) etc.
Even though cotton imported from CIS countries has a resentment of using child labor and
forced labor of children and adults alike and nowadays buyers are trying to avoid it, the quality
of CIS cotton is very good. It is handpicked with less contamination and lower price.
Yarn and Thread
Vesta Apparels produces only pure cotton yarn for knit fabric production. Other type of yarn
needed in knit fabric production whether it is mixed or pure type is bought from outside sources.
75% of these yarn types are collected from local factories and remaining 25% is imported from
foreign producers especially from China. More than 90% of the knitting units cotton yarn
demand is fulfilled by the spinning unit and remaining cotton yarn is bought from local
producers.
Yarn sourced from outside are for example:
Polyester Elasten CVC PC Mellange Lycra Viscose Modal
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Knitting
The current machine capacity is also used for outside factorys fabric production as Vesta
Apparelss knit fabric is also produced in outside factories. It is because the characteristics of the
machines are varied and the internal machines cannot produce all types of knit fabrics for Vesta
Apparels garments. All types of woven fabric needed for garments are bought from outside
which is very low in quantity.
Fabric needs prior booking with a lead time of 30-90 days depending on type of fabric and
availability of the machines. Sometimes availability of yarn also influences the lead time.
Dyeing
The dyeing unit of Vesta Apparels can only dye the knit fabric. Currently the performance of the
dyeing unit of Vesta Apparels is quite satisfactory as it meets all the demands of the garments
unit on time in most cases.
But there is one concern for the garments in terms of dyeing. Vesta Apparels does not have any
yarn dyeing facility which in turn makes the knitting unit wait for the arrival of the dyed yarn
after they send the yarn outside for dyeing in another factory. It increases the lead time and
hampers in regular operational routine of the unit. As a result, the garments unit faces difficulty
with the production and subsequently the delivery of the garments. To alleviate this problem
Vesta Apparels should establish a yarn dyeing unit.
Washing
Washing is needed before and after the garments is made. Some fabrics are washed before it
reaches the garments for various operational conveniences and some garments need wash after it
is made. 50-60% garments produced in Vesta Apparels garments unit need washing. This
capacity is dependent on Dryer, Fabric, Type of wash, quantity in a lot etc. In time of necessity
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the washing unit also does overtime. The lead time of washing unit is 6 hours for washing and
1.5 hours for drying process.
Printing
The types of printing available here are:
Embroidery
The embroidery unit has color capacity up to 12 colors of thread and the capacity in quantity
produced always depends on design. The capacity of embroidery is lower than necessary and the
remaining are done outside. Vesta Apparels generally does not face severe problem with the
receipt of embroidery part from the outside factories since there are some designated embroidery
factories that specializes on embroidery and Vesta Apparels is one of the main buyers for them.
Accessories
Accessories management is the prime headache for Vesta Apparels as its accessories unit cannot
deliver the needed items on time. The main problem with quality is the communication with theMaterial Management (MM) department and relevant support of the accessories unit.
Pigment
Embossed
High density rubber
Burn out
Discharge print
Crack print
Foil
Glitter
Photo print
Viyellatex Printing unit
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The normal lead time of the unit is:
Sample lead time: 1 week Button sample production
time: 3 days
Button Bulk production
lead time: 10-15 days
Hanger: 15 days Poly Bags: 8 days Label: 10 days
Care Label: 7 days Tweed: 8 days Elastic: 8 days
Costs of Value Chain Activities
Transportation $ 3,703
Information and communication 1600
Testing and Inspection 870Material handling & storage 1278
Information System 860
Warehouse 1800
Sundry value chain expenses 1221
Total cost 11.332
**All costs illustrated above are for one month, since average time required to process an
order is 30 days.
**Costs are assumed as actual figures were not disclosed by the company.
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Calculation of BEP, BER and Margin of Safety
BREAK DOWN OF COSTS
Total Variable Cost per unit of shirt:
Fabrics $4.715
Buttons 0.062
Labels 0.049
Polythene 0.012
Hard Paper for collars 0.024
Printing & Embroidery 0.30
Total Raw Materials Cost /VC per unit $5.162
Total Fixed Cost per unit of shirt:
Labour costs $1.15
Finishing Dept. Expenditures 5.825
Manufacturing Overheads 4.2
Commercial expenses 0.088
Total Fixed Cost per unit $11.263
The manufacturing plants total capacity per month is 250,000 units.
Assuming 70% of total capacity is used for a particular production order for export, we get
175,000 units produced in a month for one particular job order.
Therefore,
Budgeted sales units= 175,000 shirts
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Total Fixed Cost= $11.263*175,000 shirts= $1,971,025
Selling price per shirt = $22.25925
CALCULATIONS & PERFORMANCE MEASURES
(a) Contribution Margin per unit = Sales price per unit- VC per unit
= $22.25925- $5.162
= $17.097
Total contribution margin = $17.097* 175,000units =$3,009,475
(b) Breakeven point = Fixed cost / CM per unit
= $1,971,025 / $17.097
=115,285 shirts
(c) Breakeven Revenue = 115,285*$22.25925
= $2566, 158
(d) Margin of Safety = Budgeted sales units-Breakeven sales units
= 175,000- 115,285
=59,175 shirts
COMMENTS ON THE RISKINESS OF THE COMPANY
In order to measure the riskiness of the company, an effective tool is Degree of Operating
Leverage.
Operating Income = Total revenue-Total Costs
= (175,000*$22.25925)(175,000* 17.1225)
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= $ 898,931
Degree of Operating Leverage= Contribution Margin / Operating Income
= $3,009,475 / $ 898,931
= 3.35
Operating Leverage describes the effects that fixed costs have on changes in operating income
as changes occur in units sold and contribution margin. This company has a very high proportion
of fixed cost in the cost structure, since all costs except direct materials are considered to be
fixed, and hence have a high operating leverage.
From the above result ofDOL of 3.35, we can infer that when budgeted sales of 175,000 is
achieved, a percentage change in sales and contribution margin will result in 3.35 times that
percentage change in operating income.
A company with high fixed costs is comparatively riskier compared to those with lower
proportion of fixed costs as the Contribution Margin is lower. This company has a high fixed
cost structure, with fixed costs amounting up to $1,971,025, hence it tends to be riskier than an
average company in the apparels industry.
Margin of Safety percentage = Margin of safety in Dollars / Budgeted sales indollars
= ($22.25925 * 59,175) / (175,000*$22.25925)
=0.338 or 34%
The Margin of Safety Percentage of 34% indicates that the gap between budgeted sales and
breakeven sales is quite large, hence from this perspective we may conclude that the
company is in a comparatively risk free position.
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THE FIGURES AT A GLANCE
CONTRIBUTION MARGIN PER UNIT $17.097
TOTAL CONTRIBUTION MARGIN $3,009,475
BREAKEVEN POINT 115,285 shirts
BREAKEVEN REVENUE $2,566, 158
MARGIN OF SAFETY 59,175 shirts
MARGIN OF SAFETY PERCENTAGE 34%
DEGREE OF OPERATING LEVERAGE 3.35
OPERATING INCOME $ 898,931
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Recommendation of a better costing Method
As we have already stated that Vesta Apparels uses the Job order costing system to determine the
cost of production. Although there are some advantages to this system, but there are some major
disadvantages as well.
One is that it focuses attention primarily on products rather than on departments or activities.
This is not an issue if there are supplemental systems in place that record information about these
other cost categories, but it leaves management with inadequate information if this is not the
case.
Another difficulty is that overhead is generally allocated based on rates that are changed only
about once a year. Considerable fluctuation in overhead costs over the course of a year can result
both in over and under allocation of overhead costs to jobs during that period.
Since overheads are allocated on estimation this method may not yield 100 percent accurate
result and may lead to errors while quoting the price for a product or service.
The most important problem with job order costing is that it requires a major amount of data
entry and data accuracy in order to yield effective results. Data related to materials, labor, and
overhead, indirect labor, scrap, spoilage, and supplies must be entered into system capable of
accurately assigning these costs to the correct jobs every time. In reality such systems are
extensive with mistakes due to the sheer volume of data transactions, keying errors,
misidentification of jobs, and the like. Problems can be resolved with a sufficient amount of error
tracing by the accounting staff, but there may be so many that there are not enough staff
members to keep up with them. Though these issues can to some degree be resolved through the
use of computerized data entry system outweighs the benefits to be gained from it.
A final issue is that a large proportion of the costs assigned to a job, frequently more 50%, comefrom allocated overhead. When there is no fully proven method for accurately allocating
overhead, such as through an activity based costing system the results of the allocation yield
meaningless information. This has been a particular problems for the companies that persist in
allocating overhead costs based on the direct labor used by each job, Since a small amount of
labor is generally being used to allocate a much larger amount of overhead, resulting in large
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shifts in overhead allocations based on small amount of labor is generally being used to allocate
a much larger amount of overhead, resulting in large shifts in overhead allocations based on
small changes in labor costs. Some companies avoid this problem by ignoring overhead for job
order costing purposes or by reducing overhead cost pools to include only overhead directly
traceable at the job level. In this way, many costs are not allocated to jobs at all, but those that
are allocated are fully justifiable.
Due to these drawbacks, we recommended a different costing system for Vesta Apparels to
follow. We recommended Activity Based Costing for Vesta Apparels so that it could reduce the
cost of production through accurate allocation of overheads.
Activity based costing (ABC) assigns manufacturing overhead costs to products in a more
logical manner than the traditional approach of simply allocating costs on the basis of machine
hours. Activity based costing first assigns costs to the activities that are the real cause of the
overhead. It then assigns the cost of those activities only to the products that are actually
demanding the activities.
Activity based costing system have the following main benefits:
More accurate costing of products for customers, as a result the cost of product may wellgo down.
Overhead are allocated accurately. Easier to understand for everyone. Utilizes unit cost rather than just total cost. Integrates well with Six Sigma and other continuous improvement programs. This is
important, since Vesta Apparels claims to be very conscious about the quality of the
product.
Identifies waste and non-value added activities. Supports performance management and scorecards Enables costing of processes, supply chains, and value streams It facilitates benchmarking; therefore the management can compare results to improve
performance.
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Strategies to attract customers
1)Join local business organizations. Many, such as home-based business groups, are
inexpensive to join. And the marketing benefits are huge. Once they get to know you and what
you do, the other business people in your group will mention your business to others and may
even give you referrals. Local business organizations are also great opportunities to create and
participate in some cooperative marketing strategies. So it will be a good strategy for Vesta
Apparels to be in close touch with BGMEA and BKMEA to be always informed what is
happening in the entire industry. An important thing is Be Found Locally.
2) Create or become front and center in a charitable event. Now days, foreign buyers
sometimes take a deep look at a companys social audit. You can get huge amounts of press for
events like thiswhich can translate into new customers. Many charities have established events
that you can become a very visible part of by becoming a sponsor.
3) Create your own Blog- Use a build audience of people who would be interested in your
products and/or services. Creating a blog is easier than creating a website - and savvier too. write
regularly about topics related to your business and what your business is doing. You'll start
connecting with other bloggers, business people and potential customers.
4) Join and use Twitter. Vesta apparels should use a variety of social media. Example: Twitter,
LinkedIn, Zorphia, Alibaba. As for marketing strategies, be sure you don't use Twitter
exclusively to promote your product but to find and converse with like-minded people who may
be interested in what you're doing.
5) Internet. New Look plans to establish a presence on the Internet by developing a website.
Plans are underway to develop a professional and effective site that will be interactive and from
which sales will be generated worldwide. In the future, this is expected to be one of the
company's primary marketing channels.
6) Participate in different trade shows and set trade show appointments: In the garments sector,
trade shows in different countries still remain as the most effective tool of marketing.
http://sbinfocanada.about.com/cs/successprogram/a/week7.htmhttp://sbinfocanada.about.com/cs/successprogram/a/week7.htmhttp://sbinfocanada.about.com/cs/successprogram/a/week7.htmhttp://sbinfocanada.about.com/cs/successprogram/a/week7.htm -
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Industry trade shows are often THE place to demonstrate products and network. Participating in
trade shows can be expensive. One way to enhance your chances of success at a trade show is to
use your website to encourage visitors to your booth, and to set sales appointments.
Vesta Textiles should use their websites to list the trade shows that they will be attending. Thegoal here is to help your sales team set appointments at the booth.
Assuming you have a page on your website for Trade Shows, and that you can create a
separate registration page for each show, here are some tactics to consider:
You would have a short paragraph at the top of the page, highlighting how Vesta apparels
participates in a series of trade shows for the machine tools industry throughout the year.
STRATEGY & IMPLEMENTATION
5.1 PHILOSOPHY
Manufacturing's business philosophy is to make the needs of our customers our main priority. It
is our mission to provide our customers with fast turnaround, exceptional quality, unparalleled
customer service and competitive pricing. With the introduction of our patented Virtual Design
Center program and the unveiling of our modern design and manufacturing facility, we will
position Vesta Apparels as a superbly innovative company and a future industry leader.
We will implement the most comprehensive design software and set the highest standards of
operational systems and quality control.
5.2 INTERNET STRATEGY
Our plan is to position Vesta Apparels as a technology-driven innovative company within the
textile-manufacturing sector of the manufacturing industry. To do this, we are putting forth a
great amount of time and resources into developing a premiere Web site. We are working with a
design firm and have secured a domain name - www.vestastyle.com. We have already initiated
the process of integrating our Virtual Design Center into the site.
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In addition to describing our manufacturing processes and design capabilities.. Our site will also
include a simple online form to complete for custom quotes as well as a generic form to submit
questions and comments. Our vision is to create a Web site that will become an integral part of
our marketing, sales and daily operations.
5.3 MARKETING STRATEGY
Vesta Apparels recognizes the critical importance of marketing. We will require a properly
designed and executed marketing plan to ensure market penetration and business success. Until
we hire an in-house sales and marketing team, we will work with a marketing and public
relations firm. Once a sales and marketing staffs are in place, we will reassess the need for an
outside firm.
In addition to conveying to our potential customers the fast turnaround, exceptional quality,
unparalleled customer service and competitive pricing offered by Vesta Apparels, we will also
position our company as future-minded and a leader in the integration of innovative technology
into the textile manufacturing process.
Our marketing plan will include an initial publicity campaign that introduces our company and
patented Virtual Design Center. Further, we will launch a comprehensive advertising campaign
in trade publications and related Web sites. The publicity campaign will be closely followed by a
direct-mail campaign to targeted customers.
The other main component of our marketing plan will be to attend trade shows which will
require booth construction and maintenance, marketing materials such as brochures, and
promotional items such as pens with our logo.
To increase local awareness of our company and to foster a positive public perception, we will
participate in and sponsor local charity events such as Walk for the Cure and youth sports teams.
We will also reach out to local high schools and colleges to offer internships and promote careers
in manufacturing.
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5.4 SALES STRATEGY
Vesta Apparels will build a sales team focused on securing new business in the short and long
term. The sales team will be motivated by commissions and performance-based bonuses.
Under the direction of executive management, we will employ an outside sales staff as well as an
inside sales staff. The outside sales staff will focus primarily on trade show attendance,
comprehensive follow up, relationship building, closing deals, and securing referrals.
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References:
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1. http://www.letslearnfinance.com/advantages-and-disadvantages-of-job-costing.html2. http://accounting4management.com/job_order_costing_advantages_disadvanta
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3. http://www.accountingcoach.com/online-accounting-course/35Xpg01.html4. http://accounting4management.com/limitations_of_activity_based_costing.htm#UAXByj
tGxc8U12EE.99
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