INTRODUCTION

The name of the started firm is AHMED KNITWEARS that will be located in the Sialkot city.  This city is famous for manufacturing different kinds of Sports Goods, Leather Garments, Surgical instruments and Sports Wears. The total population of Sialkot District is approximately 39 million. Sialkot is located in North-East Punjab with nearby districts of Gujrat and Gujranwala.

The principle of equity financing will be used to finance the projects of the firm. To check the aggregate market share and rate of growth the organization is representing all textile garments manufacturing units of Pakistan. By representing these manufacturing units of the country Gross Domestic Product (GDP), Foreign Direct Investment (FDI) and Foreign Reserves Enhancement can be checked thoroughly. It is very important for a country to keep the Balance of Trade (BoT) favorable so the introduction of the Hand Knitted Garments Unit in Pakistan can be very helpful to bring foreign exchange in the country as well as to provide employment opportunities to the ever growing unemployed labor of the country. This project will also generate revenue for Government of Pakistan in form of Taxes, levies and Duties etc. This firm will also increase the job opportunities for the women.

 

Introduction to knitting

 

The concept of knitting or converting yarn into garments or fabric was started long back or about 3000 years ago by using two sticks or needles. Knitting is one of the oldest technique of forming fabric or garments from the yarn. Knitting is done by inter-looping one or one set of yarns. A long and continuous length of yarn is converted into intermeshed loops by hand. The inventor of this technique is unknown. The hand knitting process is slow but it is still in practice in the present time. Rev. William Lee, an English clergyman, is the person who invented Frame for knitting in 1564 B.C. after efforts of 3 years. The invention of frame reduced the consumption of time in knitting process. Previously, woolen and cotton knitted fabrics were used mainly for the purpose of making winter and inner garments but now a days hand knitting is used for many purposes like,

1. Making seamless garments
2. Making Softer Garments
3. Easy to Wear
4. Elasticity of Fabric

PURPOSE OF REPORT

The objective of this report is to assess economic and market feasibility of the business idea that has been discussed in the report. This report analyses external environment, competition in the industry and analysis of the target market to determine if the analysis supports the business idea. It is also important to perform a financial assessment of the business idea to make sure that business will operate above breakeven level and will be generating sufficient level of returns on investment. This report will provide detailed analysis and information to assess that business idea is worthy of being implemented.

 

PROJECT PROFILE

Venture Brief detail

The proposed venture defines an opportunity to invest in the Hand Knitted Garments Manufacturing Unit. The major products of this unit are consists Jerseys, Sweaters, Caps, Gloves, Mufflers, Socks, Underwear’s and Baby Frocks. However, the line of production can be extended to produce all types of Hand Knitted Garments.

 

Prospect Support

Pakistan’s export of Hand Knitted or Crochet Clothing, accessories in the year 2017 was $ 2.5 billion (http://www.worldstopexports.com) which is the 11.5% of the total exports made in the year. Despite the world saw Economy Recession which caused overall decline in the worldwide exports. Despite this, According to the Pakistan Bureau of Statistics (PBS) the overall export of the country increased by approximately 0.75% as compared to year 2016 in spite of the fact that the political, law and order and economic conditions were not helping the exports that much. However, these issues will be addressed and the markets will come back and provide Favourable conditions and opportunities to the investors in coming years. This makes the business a smart export opening. Pakistan is a country that has an integral advantage due to its native accessibility of excellence in cotton yarn, wool yarn and different types of raw material required for such kind of products manufacturing. Pakistan has very skilled labour with respect to production of Hand Knitted Garments.

Furthermore, the easy availability of Raw Material from yarn industries is there in Pakistan. Pakistan has a big name in world’s top producers of quality hand knitted garments in Global Market. Pakistan has abundance of skilled labor available for knitting garments. Another plus for this venture is that female skilled labor is also available at cheaper rates. As a result, production of class, worthy and quality products is certainly possible.

 

Realistic monetary Size

This feasibility report is constituted on a skillful production unit that produces large quality of knitted garments in day time and it can achieve the targeted quantity by using night shifts. There are 21 machines can be arranged and this quantity can be increased as per the requirement of future orders.

Venture Cost

The total cost to produce 75,000 hand knitted garments is Rs. 34.55 million per year. This cost consists of fixed cost, variable cost and working capital cost. At first, the target of the unit is 75,000 pcs for the 1^st year but it can be increased during business keeping in mind the demand of the market and after introducing the products.

Venture Special Features

1. The factory workers will be provided with first aid and necessary medical facilities free of cost at factory.
2. Child labor will not be allowed in the factory whatsoever.
3. Factory workers will be provided with pure and fresh and cold water.
4. It will be made sure that the employees of the firm get neat, clean and airy room, washrooms, toilets and halls in the factory.
5. All the rules and regulations of Government in general and rules and regulations of Labor laws will be strictly followed by the company.
6. Every employee is insured and register for the purpose of pension fund.
7. Each and every employee of the firm will be given medical and health insurance as well as gets himself/herself register for the pension fund.

Product and Process Description

The following flow chart shows the process of producing final product using raw material that will be used in the production process.

 

Yarn/ Thread Collection

Winding of        Yarns

Yarn Distribution

Knitting Start of Panels

 

Labelling

Attaching Pockets

Linking of Panels

Making Button Holes

Pressing / ironing

 

Quality Control

Mending

Threading

 

             

1.    Yarn/ Thread Collection

          At first, cotton yarn, woolen thread or any other thread or woolen is collected and used as raw material. The yarn or thread is collected or purchased from the local market as well as from the international market (Imported). In Pakistan, yarn and knitting thread is easily available from cities like Faisalabad, Karachi and Lahore. While if imported woolen thread is required then a firm can avail it from Australia, New Zealand and China etc.

 

                      Cotton Yarn                                    Woolen Yarn

 

 

   

2.    Winding of Yarn

Winding of Yarn is a process of a transferring yarn or thread from one package to another to package to facilitate the completion of next level of production smoothly and conveniently. This process also improves the quality of yarn or thread. This process can be completed manually, mechanically or electrically. There are three types of Winding of yarn.

• Parallel Winding
• Near Parallel Winding
• Cross Winding

Winding of Yarn

 

3.    Distribution of Yarn

When the process of Winding of yarn is completed the next step is Distribution of Yarn.

In this process the yarn or thread cones are sent to the distribution department. The distribution department then this department sends this cones to the different chains of production/manufacturing of knitting. It should be noted here that the distribution should be done very carefully according to the colours schemes, layers and gauge of thread, to prevent any type of mishap or blunder in production or manufacturing at the first step.

 

4.    Knitting Start of Panels

Knitting is done by inter-looping one or one set of yarns. A long and continuous length of yarn is converted into intermeshed loops by hand. The inventor of this technique is unknown. The hand knitting process is slow that’s why now a days most of the knitting is done on machines. But there is still a lot of demand of hand knitted garments. In this process, the different labors from different chains of production makes small panels of a sweater or any garments. These small panels are later joined with each other to form a full sweater or any such kind of knitted garment.

 

5.    Linking of Panels

In this step the, the panels collected from the preceding department are linked together to form a complete shape of a sweater or any garment whose production is in process. In this process the labors collect panels and start linking them either by hand or by machines according to the demanded product. Once all the small panels are joined together it forms a complete shape of desired product.

The picture given below tells how the panels are joined.

 

 

6.    Making Button Holes

In this process, when the small panels are linked and final shape is made the next step is to make button holes to attach the desired and pre-designed button shapes. In this step the zippers are also attached as per the requirement of demanded or designed pattern. These button holes are made according to the approved designs and requirements of the buyers and customers.

 

7.    Attaching Pockets

 

In this process the pockets are attached to the main body of the sweater or any knitted garments are being made. The pockets are may be of cotton or any other cloth like or pockets are can be also made of the same woolen or cotton yarn. Pockets play an important role in the look of the garment. That’s why the design and structure of the pockets is made very carefully and these pockets are attached with proper care and attention. The pockets may be attached by sewing or either by knitting. This is completely dependent on the instructions of the customer or on the pre-planned or pre-decided design of the articles or the sweater whose production is in the process.

 

8.    Labeling

In this step different types of labels are attached or stitched in the inner side of the garment or sweater. These different labels may contain information about the material, washing instructions, company or place of made and size etc.

 

9.    Mending

Once the sweater or any garment which is being made is completed, it is checked if there is any hole have been left in the body of the garment. Usually there are some holes which are left in the garment because these garments are made manually. Then these garments are mended with the help of needles to fill up the holes.

 

10. Threading/Trimming

In this process the excessive and loose threads are plucked or trimmed from inside and outer side of the garment to give it a nice and final look. After this process the sweater or the garment is become ready to wear. There is a special team for this purpose.

11. Quality Control

Quality control or final check is a procedure or set of procedures in which Quality Control (QC) department checks and makes sure that the sweater or the garments being made are exactly same according to the instructions given by the client/customer or pre-determined design by the firm itself . So in this process the Quality Controlling techniques are applied to complete the whole process of production and make the product ready to use or dispatched to the customer.

 

12. Pressing/Ironing

After all the pre discussed procedures are done, then it comes to the final process which is to press or iron the sweater or the garment to make it ready to pack and dispatch. The pressing may be done by two ways. One is a traditional one i.e. Hand iron press and the other is the steam press.

 

13. Finished/Final Product

When all the above said procedures are completed then it forms a final shape to be packed and dispatched to the customers. The final or finished product may look like the below given image.

 

 

The Value Proposition

Target market of knit wears includes all type of people with different ages at Pakistan. Clothing is the necessary need of everyone. Firm will serve to all those people who want customized and quality wears at reasonable prices. This business will provide employment opportunities to all those people who have skills but they don’t have opportunity to utilize their skills. This business will play an important role in the well-being of people.

Knit wears will provide products according to the choice of customers. This business provides exclusive products to every customer according to their unique choice. This business will provide trainings to their employees to make them more skilled. So they can develop more exclusive and efficient products.

          Secondary Research Analysis

In this part external environment has been studied at wide level. It studies the market trends, demands of people, policies of government and social behavior. This part shows that weather external factors are in the favor of this business or not.

PESTLE Analysis

It is tool which a business can use to analyze its external environment. It helps to define those factors which can impact their business. It also helps to know exact weakness and threats of that business. At the time of SWOT analysis it proves helpful to interpret results about external forces. (Google)

Political factors

Pakistan is facing political instability from the time of Pakistan’s birth. Government is not able to maintain political stability since 1947. Government is facing uncertainties in the structure of government and in the result well-being of public effects. But at the same time clothing industry is getting high attention from the government, because this industrial sector of Pakistan is growing fastest. Government has taken a very useful measure for this industry in which they are providing loans to the new business. They have establishes a program with the name of Balancing, Modernization and Replacement (BMR), it provides loan on low rates. In addition, there are many incentives which have been provided by Chamber of Commerce. They have established city of textile at Karachi and Cities of Garments at Karachi, Lahore & Faisalabad. 5% import duty has been reduced on textile machinery and parts. Business of garment export is also getting 6% R & D support. 5% import duty has been reduced on ginning presses. 1% turns over tax and 15% to 2% sales tax has been reduced on retailers of specified textile fabrics and or fashion wear. All these facts are showing that political factors have positive affect on this business. (Analysis of the textile industry in Pakistan, 2016)

Economic Factors

There is very important role of economic factors in the growth and development of any business. It is the most essential element which can affect all factors of an organization. Economy of Pakistan is in an anxious condition.  The reason of this condition is long-term instabilities of structural. A long-lasting lack of spending for infrastructure, large income inequality and natural high inflation has been resulted by new Zardari government in Pakistan. Economic depression has been seen in the last two decade. It has also affected the purchasing power of the customers. Great speed of FDI, poverty level and exports has been declined. Unemployment rate is very high. That is why this business is very affected for society. This will provide employment opportunities and it will also increase rate of export. Government is supporting industrial sector to develop their economy. This business will play an important role in the growth of economy. So there is no negative effect of economic factors on this business. 15.7% export of garment products has been declined in Pakistan due to the shortage of production. This business will help to increase the export rate. (Analysis of the textile industry in Pakistan, 2016) (Pestel analysis of Textile industry of Pakistan)

Socio-Cultural Factors

Culture and society of any specific area is most important fact that cannot be ignored while starting a business. Business nature and social system must be matched. It’s very important to know the socio-cultural environment of target market to study any comparison between choices of the target customers and business nature. All Socio-Cultural Factors has been described as follow:

Growth of population: Population of the Pakistan is growing very fast. There is a high amount of labor in Pakistan. Unemployment rate is very high. They have skilled but they don’t have opportunity to utilize their skills. This business will provide employment opportunities in the society. As world is becoming modern so choices of the people are changing day by day. Demand of new trendy wears is so high. There is difference of classes in our society. Every class has their own priority. They are fashion oriented and follow fashion trends. They have enough awareness about quality of wears so they invest their amount on high quality apparels. That is why people prefer to buy imported products. But at the same time due to the high inflation, people of lower class do bargain on prices. This business also provides solution to these people. Knit wear business is providing high quality products on reasonable price.

Religion and Culture: Religion of any country has great impact on the choices of the customers. Pakistan has Islamic culture but they have merged their norms with western culture. Pakistan has its own sort of traditions. These traditions are part of their life but somehow they are also blending western norm in their culture. This helps to adopt marketing strategies for the business according to the Islamic traditions of the country

Age circulation: there is highest number of youth in Pakistan. They are more attracted toward fashion wears and new trend wears. This business is the cause to satisfy their needs. It is a great opportunity for business to maximize their profit.

Everyone has their own choices according to their taste which often changes according to the trends. People prefer apparels according to their choices. This business provides customized wears according to the choices of people. This business also provides solution to the people. (Pestel analysis of Textile industry of Pakistan)

Technological Factors

Everything is becoming modern so there are enough developments in the technology. Competition has been increased by the quick revolution and development of the technology. There is old fashioned and outdated machinery which is used in this industry. Government is not providing loans to the garment industry. But knit wear company is focusing on both factors e.g. technology and work force. Work force is their first priority of knit wear business.

Furthermore power failure is also a very big issue which Pakistan is facing. Due to the shortage of electricity garment industry is not able to run their machines. As knit wear is focusing on hand made wears so it has less focus on technology. R&D of other countries is very advanced but Pakistan is not as advanced in its R&D. There is no any proper research in garment industry even other countries are creating very innovative apparels. It is a positive point for knit wear business because this business is focusing to enhance the creativity of the workers so business can develop something unique by utilizing unique skills of its workers. (Analysis of the textile industry in Pakistan, 2016)

Legal factors

Pakistan is a democratic country they have developed enough strict laws. They have also developed business related laws which are against the garment industry. Government has implemented 15% duty on the import of cotton. Government has also established two ginning institutes to improve the quality of ginning cotton. Ministry of commerce has implemented a rule that if any garment company will import any sort of machinery then they have to pay import duty on that machine. Furthermore government has also implemented taxes on the income, wealth, sales and import taxes. All these rules have great impact on this business. But at the very start business going to serve within the country so there is not a great impact of these laws on knit wear business. (Analysis of the textile industry in Pakistan, 2016)

Environmental Factors

It is also a great impact of environmental factors on any business. There are many policies promoted by the government against those businesses who are not disposing off their waste properly. As these factors are effecting environment in a negative way. Chemical of the garment industry can pollute the water which can spread diseases in environment. Furthermore noise of the machines is also a biggest cause to disturb pollution. Due to the shortage of the electricity generators can pollute the air. It also becomes cause of different diseases. There are lots of factors in this business which can effect environment in a very negative way. But knit wear business doesn’t have so much focus on the machines. They are using just few machines which have good quality so they don’t create noise pollution. This business will dispose of their chemical in a proper way so there would be no any creation of environmental problem. In short there would not any extraordinary negative effect of this business on the environment (Analysis of the textile industry in Pakistan, 2016) (Analysis of the textile industry in Pakistan, 2016)

The Economy within the Market

Sialkot and other cities of the Pakistan are our target market. Fashion trends towards traditional apparels are increasing so garment industry is playing great role to fulfill their needs. People love to wear traditional but trendy wear. Target audience of this business includes people of Pakistan especially people of northern areas and people at international level especially Russia, Spain, and European countries. These products are also the need of climate and it also considers as the fashion apparel. Everything is growing very fast so people are getting aware about the trends of the market and apparel choices. In short business is providing everything according to the demand of the customers.

It is proved by the analysis that knit wear business has high capacity to run their business in Sialkot

Demand Analysis

Trends in the apparels industry are changing day by day. It becomes outdated to repeat the previous style. People want to adopt something new. Choices about the apparels depend upon the images of fashion and in the present world people follow to the celebrities. These products are also the need of climate and it also considers as the fashion apparel. Everything is growing very fast so people are getting aware about the trends of the market and apparel choices. People are so much quality conscious and they are not ready to compromise on the quality of the product and especially apparels. Every business is introducing something unique according to the requirements of the customer so gap of the need could be fulfilled. Every business introduces something according to the needs. Wants and desires of the customer. It is shown by the market analysis that according to the rough estimate about textile industry in Pakistan around 80% of the customers are from the lower and lower to middle class. They have low bargaining power so they cannot afford brands but still they want something unique with high quality.

There is flood of competitors of textile apparels in Pakistan. Some companies are branded and some are no branded companies. Profit distribution is low within this industry. It is all because of the brands because brands affect the profit of the businesses. It is showed by the study that non-branded companies are affected within the market. People buy apparels from those companies who sell high quality products with good fabric and designs on reasonable prices. It motivates the customer to increase these products.

Target Market

AHMED KNITWEARS is targeting the people of Sialkot and other cities of Pakistan with all age groups, from the middle to high upper class. Population of the Pakistan is growing day by day. So demand for the apparels is increasing. People love to wear their traditional dresses. They are offering two sorts of products. In first sort they are representing already made products with their own unique designs and art work. But 2^nd products are those which firm establishes according to the customer’s choice. It includes fabric, color, size and design according to the customer’s need. Firms also target to the institutes, organizations, Schools, universities and NGO’s to make custom products on big scale. There are two big group of target market. First group prefers already design products, they like existing design products of the company. Second group is that group which like to design their products according to their own imaginations, for example they prefers to choose that color, design and fabric which suits them mostly.

Market Segmentation Process

Market segmentation is a process in which customers are distributed on the basis of their comparable features.

Geographic Segmentation

In this segment customers are distinguished from each other on the basis of geography. There are different cities of Pakistan which would be served by this firm. Furthermore business will also serve at international level like Russia, Spain and European countries. There are different people with different cultures in different areas. Business will study the culture of each area at national level and the culture of every country at international level. After that each area and country would be served according to their culture and needs. In this way business will produce customized products according to their requirements and traditions.

Demographic Segmentation

            In the geographical Segmentation customers are divided on the basis of different ages, income and education. Target audience of this business includes people of Pakistan especially people of northern areas and people at international level especially Russia, Spain, and European countries. Knit wear is offering wears to every age of people. There are some people who want: kids’ cloth, some wants apparels for youngsters, some wants for middle age people and other wants for old age people. But more potential customers for this business are youngsters. They love to wear traditional and trendy apparels. Firm will invest equal intention to people of all ages.

Behavioral Segmentation

Every person has different behavioral patterns towards their purchasing habits. We distribute them in different groups. There are some people who wants to buy stitched apparels, some want to buy unstitched, some want baby cloths, some wants apparels relate to the accessories, few wants eastern dresses and others prefer western apparels. Eastern and western both are our potential customers. Business will serve to every group according to their need. Business is providing creative and customized solution to every customer.

Psychographic Segmentation

There are different groups of people who have different psychology with each other. Their psychological reaction toward garment industry is changed because of difference in classes. There are some people who don’t compromise on quality and they are not price conscious. Some people are enough price-conscious and often ignore the quality of the product and few people wants quality products but they also do bargain on prices. Firm is providing them solution of their problems because this business is providing high quality products on reasonable prices.

There are also some other groups which are included in this segment. Some people buy something on the basis of color and some prefers designs. At the same time there are some people who buy already designed apparels and other prefers customized products. All customers are potential customers for firm because this business is providing solution to all people.

Category demand

It is proved by segmentation that there is enough demand of these products. Business can serve all groups of customers according to their choices and requirements. There is element of flexibility in this business. Because of this reason business has competitive edge over others. Target audience of this business includes people of Pakistan especially people of northern areas and people at international level especially Russia, Spain, and European countries. Knit wear is offering wears to every age of people. Some wants eastern dresses and others prefer western apparels. Eastern and western both are our potential customers. Some buy already designed apparels and other prefers customized products. Some people are price conscious and others are quality conscious. All are our potential customers. There is great demand of these products.

Competitor Analysis

Purpose of the competitor analysis is to analyze the strengths and weaknesses of the competitors so company can analyze the opportunities and gaps which he can fulfill by providing services. At the same time it helps to cover the weaknesses of the business by competing with the strengths of the competitors. It also provides the awareness about the threats so business can fight with the threats of the competitors. There are some direct and some indirect competition of the business which is as follow: (Reasons Why Brands Should Perform Competitor Analysis, 2013)

Direct competition

Competition is increasing in the apparels industry. There are number of brands which are working in their field. There are some companies like USMAN knit wears, International Knitwear Limited, SHAHEEN Knit wears, Classic Knit wears Apparels Art (PVT) LTD. and ZESHAAN Knit Wears are good players. They have better resources R&D labs, machines, and others. But at the same time AHMED knit wear is starting this business from Sialkot. There is no any big production unit of knit wears at Sialkot but Sialkot has very good workforce and skilled labor. It is plus point to start business from Sialkot.

Furthermore other companies have high quality machines and technology but they are not focusing on marketing techniques they don’t have proper resources to improve their marketing strategies. So AHMED knit wear will focus to improve their marketing strategies by utilizing their workforce. They have cheap labor so they can save labor cost for investing on marketing resources. It is also a positive point of AHMED knit wears that they are providing number of categories in apparels. They are providing all sort of knit wears of all ages and designs. Because of all these points company could be able to make a good place and to get success among this competition. (Competitor Analysis of Hela Clothing, 2016)

Indirect competitors

It is very important to highlight the direct competitor of business but it is also very essential need to get awareness about the indirect competitors of business. Firm has to focus on its marketing strategies to compete with direct competitors. But at the same time if business makes a comparison with its indirect competitors then Reliance Textiles, Ocean Lanka and Banswara Syntex Limited are the indirect competitors of the company. There is vast competition in this line.

Reliance Textiles are the main suppliers of fabric. They supply their fabric to all top brands of US and European countries. It is also a possibility that they can enter into the supply of garments. It can provide one point solution to the needs of those brands. Banswara Syntax was only supplying the best quality yarn. But now they are expanding their product line at small scale which could create an indirect competition for AHMED knit wears. These companies are motivated to expand their products because of their profitable relationship.

So AHMED Knit wear will also focus to improve the profitable relations with their partners. Customer satisfaction, employee satisfaction and supplier satisfaction are the most essential factors to notice. Otherwise revenue, customer satisfaction and profitability could be suffered. Furthermore, AHMED Knit wears is maintaining good relationships with big player companies.

SWOT Analysis

SWOT Analysis is the beneficial structure which a business develops to examine the strengths and weaknesses, and the opportunities and threats of that business. It is helpful for a business so they can minimize their threats by focusing on the strengths and they can get advantage of their opportunities. (SWOT Analysis)

Strengths

Unique Selling Proposition (USP) for the business is that firm is providing customized deigns of apparels. It is a competitive edge of the business that firm can make totally custom designs and products. It helps the company to acquire more customers. Business has very minor cost of outsourcing so firm can produce products on very low cost further more labor cost is also very low it also minimizes the cost of firm. In the result firm is able to sell their products on low prices. Business provides high quality products on low prices so customer attracts toward these products. Furthermore, success of any business depends upon the workforce of any business, and AHMED Knit Wears has also this edge. Business has easy availability of high skilled labor on cheap cost. It is also a plus point for the business that they don’t have any big competitor within the city.

Weaknesses

Business has low availability of initial capital. Firm is new in market so business needs high marketing cost. There is need of a special introduction in the market so it requires high cost. Due to the low amount of initial capital it is tough to expand the business. Business need to take loan so it will be also a risk for the business. There are lots of other well-known brands in market they have loyalty of their customers. So it is little tough to penetrate the market. Sialkot doesn’t have availability of good raw material so business needs to buy from other cities which can increase the cost of suppliers.

Opportunities

There are number of opportunities for the firm in market. There are opportunities to enhance the product lines like there is high demand of other handmade accessories of different fabrics. Furthermore business also has opportunity it can enhance its market to serve. It can serve in new market. If firm is producing wears for people of cold areas then they can also manufacture some products and accessories to serve other areas which have warm or moderate climate. Firm can also make possible its online presences so customers can also buy these products online. Business has opportunity that they can utilize their market research to bring something new according to the imaginations of the customers. Firm has conducted a survey to know the preferences of the youth to be up-to-date. So it can develop everything according to the trends. All these opportunities can enhance the efficiency and profitability of the firm. (Analysis of the textile industry in Pakistan, 2016)

Threats

Great competition from the existing brands is the greatest threat for the firms. There are number of brands that are already existing and enjoying brand loyalty of their customers. It is little tough to make a place in the market. Technological changes also can affect the performance of the business so it is also a threat foe the firm. Furthermore high rate of recession also affects the buying power of the customers which is also a threat. As Pakistan don’t have so much stability in economic and political factors.  Change in the governmental policies also a threat for a business and political stability also can affect the business negatively. World is getting modern day by day so market trends change with the passage of time. It also affects the performance of the business. (Analysis of the textile industry in Pakistan, 2016)

                                          Marketing Strategy

Customized products are a different concept from others. Driven force for the marketing strategy will be product differentiation. Firm will provide different products from others according to the unique personality of the customer. There are very few people who are providing this facility every business is focusing to develop their own sort of design.

It is natural fact that everyone wants to look different and unique in their own way. Firm is providing them this facility that they can be involved in the designing of the apparels. Well trained workforce will help them to take orders according to their taste, color, fabric, latest trends and their choices. Furthermore customer will be provided high quality and custom products on the reasonable prices. These strategies will help to maintain high quantity of customers.

Positioning

Providing customized products on reasonable prices will help the firm to be a leader in the market. Positioning of the product depends upon the marketing strategy. Marketing strategy will focus to plan the feature of customization and low prices. There is no any company who is providing these features. AHMED knit wears has this edge over others. But the same time quality of the product and attractiveness also effects the positioning of the product.

Marketing mix

Product

As the initial step firm will produce some products for the review. After that firm will be produced consists Jerseys, Sweaters, Caps, Gloves, Mufflers, Socks, Underwear’s and Baby Frocks. These products will be produced in different colors, designs and fabrics. At the time of expansion these products also can be produced according to the different climates of different areas. High quality would be produced. Quality is the first priority for the firm. Products would be according to the choices, requirement and demands of the customers. Trendy products would be produced. These products would be individualized at great level.

Price

Firm will adopt penetration pricing strategy. Prices will be low at the start. Firm will provide high quality and customized products on reasonable prices. This pricing strategy will help to acquire maximum customers at vey initial step.

Place

Location of the firm plays an important role in the productivity of the firm. Location selected by the AHMED knit wear is factory area, shahabpura road Sialkot. Sialkot is the city of Pakistan which is famous for its sports goods, leather, surgical and other industrial goods. Sialkot has availability of skilled labor that is available at cheap cost. Factory area at shahabpura has been selected for the production because in this area there are enough factories and labor is also easily available. There is no any specific distributional place because company mostly works at contractual bases. But company will expand its distribution channels in northern areas at national level and in future at the international level.

Promotion

AHMED Knit Wear will use high medians for advertising purposes.  All integrated marketing       mix would be used for making communication with customers. Business will use all social Medias. Furthermore business will create awareness about their products through newspapers, print media, journals and business newspaper. Furthermore AHMES Knit Wears could arrange exhibitions at national and especially at international levels. Marketing team of AHMED Knit wears could go in different areas for exhibition purposes. It helps to advertise the products more effectively.

Porter’s Five Forces

It is a framework which shows competition of a business. It is used to describe the intensive of competition.

Threat of New Entrants

Cost of the production is increasing due to depression of value of rupee, recession, inflation and global events. Profits capacity of this industry has been decline due to the strictness of the government in the regulations of the prices. It require large amount of investment to enter in this industry. If someone has high amount of investment then he could be successful otherwise people with low investment are not able to survive. So it is little tough to for a new entrants to enter in this market.

Bargaining power of Buyers

There is great demand of these products in the market. People are aware about their needs. They are also aware about the needs of the prices. People are quality conscious but at the same time they are price conscious. Firm is providing high quality products on reasonable prices. If customers would be satisfied then it will increase firm’s power over buyer.

Bargaining power of Suppliers

Cost of inputs is increasing due to the increase of taxation, excise duty, recession, inflation and global event. It increases the prices of the raw material. It affects the cost of the business. There is negative affect of firm’s power over suppliers. (Pestel analysis of Textile industry of Pakistan)

Rivalry among Competitors

There is an enough competition in this industry. Due to the increment in the cost of manufacturing, power and petroleum, there is great battle of competition in the market. There is a healthy competition in demanding conflicts. (Pestel analysis of Textile industry of Pakistan)

Threat of Substitutes

There are is no any special substitute of these products but there is number of variety of these products in different designs. People are getting aware about the products features due to the knowledge and technology. But knit wears are somehow unique so there are very minor substitutes of these products. That is why firm’s power is high on substitutes. (Pestel analysis of Textile industry of Pakistan)

Primary research

Data has been collected by primary research. There were no any reliable resources so we have made personal visits. It was simple random sampling. First hand data was gathered from public places, students and businessmen. All people were selected randomly. All participants were asked some questions about the demand and need of the products, prices, labor availability, and rental places. This research will approve weather this business has any demand or not. It assured the implementation of marketing mix. This research will be helpful to make any final decision. Following questions were asked from different people.

• Should Knit wear products offer at the national and international level?
• How much need of Knit wear products among buyers?
• By using which way these products could be promoted and advertised?
• Is Sialkot is accurate place for manufacturing?
• Which products are more common among customers?
• Is there availability of labor
• Have labor skills in this field?
• Which similar products can be added by company? Suggest some?
• Does customer prefer low prices over high quality or high quality over low prices?
• Do customers prefer pre-designed products or custom products?

Results of primary research

It has been suggested by the primary research that there is high demand of these products at national and international level. Customers prefer traditional and trendy handmade knit wears. There is enough demand of these products in the north and cold areas. People like customized handmade apparels. People are more quality conscious but at the same time due to the economic instability they also focus son the prices. This company is providing high quality products at reasonable prices. So these products had great demand among customers. Youth is also very attracted toward these products.

Furthermore there is great availability of labor in Sialkot. They are skilled but they don’t have any platform to utilize their skills. This location is very beneficial for the business. There is easy availability of building on low rent which is beneficial for this firm. Labor is also easily available on this location on very cheap costs.

In short it is proved by the primary research that it is useful to start this business at the location of Sialkot and with the same products. This research has provided some suggestions that firm should polish the skills of the labor by training them so more good results could be produced. They also suggest that company should provide these products in great variety. Overall it proves in the favor of this business.

Financial plan

Department of the finance has a great impact on the success and failure of any business. It is a key to affect the efficiency of the business. It is helpful for an organization to achieve its goals.

It helps to generate the cash flow of business, maintain the profitability and controls the cost. It helps to make the key decision related to the investment and assist to generate profit. It analyzes and communicates that information to make any decision related to the business.

Work of the finance department could be distributed in three following activities:

• Generates the profit by using resources of lowest cost.
• Invest the resources in the right places
• Investment of the resources at the profitable places

Financial department do reporting of finance. It is done for the purpose of auditing and for internal and external people.

Investment Techniques

 

It is required to select any technique of investment. It helps to know that how much fund can fulfill the needs of finance in new venture. Following ways can assist to generate finance.

The investment technique requires that how required finance for new venture will generated.

• Owner
• Finance from family or friends
• Finance from Banks

Source of Capital

 

Following table shows the source of capital:

Particulars	Rate
Debt	0 %
Equity	100 %

 

 Owner’s Withdrawal

Business has supposed that money will be drawn by the owner after reaching at the point of desired profitability. It would be dependable on the accessibility and sustainability of resource to grow the business in future.

Project Investment

	DESCRIPTION			AMOUNT
				(Rs.)
	Capital Cost
	Renovation			1,500,000
	Machinery & Equipment		1,312,500
	Furniture & Fixtures		970,000
	Office Equipment		135,000
	Marketing Cost		252,341
	Pre-operating Costs		665,000
	Total Capital Cost		4,834,841
	Working Capital
	Equipment Spare Part Inventory		43,546
	Raw Material Inventory		174,182
	Upfront Building Rent		1,260,000
	Cash		50,000
	Total Working Capital		1,780,069
	TOTAL PROJECT COST		6,362,569

Revenue & Cost Projections

 

Cost of the sales is 50%. It includes cost of overheads, material and labor. Admin expenses are expected to 10% of the sale. It is supposed that sales will be increased by 07% in every year however the cost of raw material could be supposed to increase by 05%. Revenue is supposed to increase by 02% because of the increase in the population rate and prices of the products.

Prices are based on the cost of the raw material, production cost, other expense s and sales duty.

 

Moreover sale of the products are divided in the two procedures, by using these procedures firm can generate revenue.

 

 

REVENUE STREAM	% OF TOTAL SALES
Custom products	70%
Predesign products	30%

 

The smallest order size could be supposed as RS. 800/ per order. But if a customer purchases customized products then prices will be increased due to the additional cost.

 Rent Cost

          The rent of buildings will be assumed as the Rs. 50,000/- per month. It is also supposed that firm will pay Rs. 300,000 in advance. Rent of 6 months would be paid in advance and rent of next 6 month would be deposited. Rent has been assumed to pay on the basis of months. It would be increased after a year by 10% per annum within projected period

The rent would be payable on a monthly basis and is expected to increase at the rate of 10% per annum for the projected period.

 Utility Requirements

 

UTILITY	MONTHLY CHARGES (RS.)
Electricity (Direct & Indirect)	77,443
Water	4,355
Gas	21,773
Telephone	1,520
Total	105,091

 

Utility expenses include 150000. As it is a knit wear firm high amount of electricity is required for machines in the production process. There is also need of Gas for generators so they can cover the problem of load shedding. Utility expenses are assumed to increase by 10% after every year.

Depreciation on Building & Equipment

 

Depreciation is supposed to charge on Equipment, furniture and machinery. It would be charged at the rate of 10% per annum by using diminishing balance method

Account Receivables

Transactions of the sales depend upon the volume of sale. If sales are in bulks then customer can made transaction by bank but if customer will purchase solo product or low quantity products then cash would be received at the time of transaction

Taxation

          If firm is running by a sole proprietorship then tax rate is same as the tax rate of salary person. That is why same tax rate has been assumed for this firm. Tax rate would be considered as 16%.

 

Income statement

 

Projected Income Statement
For the years Ended 2018,2019 & 2020
Particulars	Year	Year	Year
	1	2	3
Sales	12,000,000	14,400,000	17,280,000
Total cost of Sales	6,000,000	7,200,000	8,640,000
Gross Profit	6,000,000	7,200,000	8,640,000
Less: Operating Expenses:
Administration Expense	80,000	88,000	8,800
Building Rental Expense	50,000	55,000	60,500
Salary Expense	3,288,000	3,616,800	3,978,480
Marketing Expense	25,000	25,000	25,000
Utility Expense	150,000	150,000	150,000
Miscellaneous	35,000	35,000	35,000
Depreciation Expense	50,000	50,000	50,000
Net Profit Before Tax	2,322,000	3,180,200	4,332,220
Less: Tax Payable (16%)	371,520.00	508,832.00	693,155.20
Net Profit After Tax	1,950,480.00	2,671,368.00	3,639,064.80
Retained Earnings (20%)	390,096.00	534,273.60	727,812.96

KEY ASSUMPTIONS

 

Item	Assumption(s)
Revenue Increase	02 % per year
Sales Increase	07 % per year
Increase in Cost of Raw Materials	05 % per year
Increase in Staff Salaries	10 % per year
Increase in Utilities (Electricity / Water / Gas)	10 % per year
Increase in Rent	10 % per year
Increase in Office Expenses	10 % per year
Debt / Equity Ratio	0 : 100
Depreciation
Building and fixtures	10 % per annum (Diminishing Balance)
Machines	10 % per annum (Diminishing Balance)
Furniture	10 % per annum (Diminishing Balance)
Equipment Annual Maintenance Cost	01% of Production quantity sold
Raw Material Inventory	15 Days
Tax Rate	Income Tax on Salaried Individuals

 

References

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3..34541…10.0..0.559.5554.3-11j2j1……0….1j2..gws-wiz…..6..35i39j0i131j0j

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