Mr. X
Head of the SME division,
Brac Bank Limited
Dhaka, Bangladesh
Dear Mr. X:
In order to seek finance for my business, I am writing to you. For my new business which involves producing and selling banana-fiber related products, I need you to join hands with me with some cash from your bank. I have the confidence to state that my newly-established company has the potential to maintain your interest.
BestFiber Bangladesh, a company intending to become born- global right from the start, is designed to take advantage of the market opportunities present throughout the world with high quality and diversified product portfolio produced from fiber extracted from banana stem. This business being relatively new has the potential to become a high- growth yielding one as there is no such domineering firms with similar businesses as is found in other industries. I strongly believe that, of course I have the necessary backing tools here, Bestfiber with its professional approach to branding and marketing and high- quality machines for production can leverage the opportunities present for this industry. Though starting with small- scale manufacturing, the company has the plan to grow big and enter into associated businesses with strength gained from the earlier operation.
We currently require8,500,000taka that will be used to finance the purchasing of infrastructure like land at Bonpara,Natore, office space at Dhaka, machineries import, worker recruitment and training and other key areas.
So all that we need is the required sum to materialize our plan for Bestfiber. If you have any further queries regarding the business plan or any other aspects of the business, please do not hesitate to contact me. I am looking forward to your response.
Thank you.
Sincerely,
Mr. Abdullah Sakif Nur
BastFiber Bangladesh.
Description of the company- Bestfiber Bangladesh.
A new born-global firm in the nascent industry of banana Fiber, Bestfiber Bangladesh. wants to distinguish itself in providing high- quality Fiber at an affordable cost for its international buyers. It will be located at the heart of Bangladesh, Dhaka having corporate Headquarter there. Because of the availability of raw materials and ease of transport, we want our factory to be established at Bandarban area. Though at Bandarban, we will have other locations throughout the country to collect stems from.
Mission of Bestfiber Bangladesh:
The goal of the company is simple- to extract high- quality Fiber and manufacture yarn to cater to the needs of the international market at an affordable price. Being a born- global company right from the start, we would also like to capitalize on the the prospect present in our domestic market. But it will take some time for us to well- up in the domestic market, since the demand of this Fiber is yet to be stimulated here and the domestic RMG business people are not well aware of banana Fiber. Until then we develop our competitive foothold by gathering valuable experience from the international market that will be of use in the domestic market.
Our key Business:
As has already been said, our main business will be to sell high quality banana Fiber and yarn to the international customers and the prices we would be offering will surely be very competitive vis- a- vis our competitors from the Philippines and India.
Business Incorporation:
* Trade License (Issued by Dhaka City Corporation) * Registration under the Partnership Act of 1932 * Export Registration Form
Management and Ownership:
Bestfiber Bangladesh. will be a firm jointly formed by partnership of six students from the Department of International Business, University of Dhaka.
Bestfiber Bangladesh. will consist of three core functional departartments- Finance and Costing, Marketing and Business Development and Operations and Supply Chain Management.
With immense weight on every segment, Operations and SCM department will be the leading department overseeing such critical segments like the operational procedures and maintenance of supply chain efficiency.
Our Business Model in a Nutshell:
* Collecting stems:
To extract high quality Fibers, we will first source the main raw material, banana stem from domestic and international sources. * Processing:
Then we will process the stems in order to extract Fibers out of it. * Manufacturing fiber and yarn:
In the next step, we will manufacture yarn from the extracted Fibers. * Packaging the products for shipment:
Finally, we will wrap the products for selling.
Banana Fiber Industry Analysis and Current Trends
Banana is a tropical crop. The banana pseudo stem is a major source of banana fiber, a natural fiber with high strength, which can be easily blended with cotton or other synthetic fibers to produce blended fabric and textiles. Given the myriad uses and utility, the demand for banana fiber worldwide has been growing substantially. Though the industry is still in its nascent level, it has got a great potential to be seen as a sustainable alternative to other natural and synthetic fibers. The credibility of its great potential is evidenced by a research which was sponsored by the Indian Ministry of Agriculture. The researchers were asked to recommend ‘Top 5 natural fibers’ for concentration under the Focus Fiber, Focus State (FFFS) policy of the Indian government. And the point to be optimistic is that, the research group put Banana Fiber first on the list of Top 5 potential fibers. The research group proposed the Indian government that Tamilnadu state be given concentration for banana fiber().
Banana Fiber- A Synopsis:
Natural fibers present important advantages such as low density, appropriate stiffness and mechanical properties and high disposability and renewability. Moreover, they are recyclable and biodegradable.
Banana fiber is obtained from the pseudo-stem of banana plant (Musa sepientum) and it is a bast fiber with relatively good mechanical properties. The ‘‘pseudo-stem’’ is a clustered, cylindrical aggregation of leaf stalk bases. Banana fiber at present is a waste product of banana cultivation and either not properly utilized or partially done so. The extraction of fiber from the pseudostem is not a common practice and much of the stem is not used for production of fibers. This is reflected from the relatively expensive price of banana fibers (Table I) when compared to other natural fibers:
Optimum temperature range for banana cultivation is 15ºC – 35ºC with relative humidity of 75-85%. The preferable climate for banana crop is tropical humid lowlands, although it can also grow at higher sea levels (up to an elevation of 2,000 meters above). Banana is cultivated in climatic conditions ranging from humid tropical to dry mild. The climate of Bangladesh and the Asia Pacific mostly fit to this requirement.
Banana fibers have a major proportion (60-65%) of cellulose and single-fiber length is 80-200 mm. Other elements are cellulose, hemicellulose, and lignin. Its elongation is 3% and its mechanical and physical properties are similar to flax. Some physical and chemical properties of banana fibers are given below:
* Its appearance is similar to bamboo and ramie fiber; however banana fiber has better fineness and spin ability. It has shiny appearance depending upon the extraction & spinning process. * It is very strong fiber with smaller elongation. It is light weight. * Its average fineness is 2,400 Nm. * It can easily absorb moisture as well as release moisture. * It can be spun by different methods like ring spinning, open-end spinning, bast fiber spinning, and semi-worsted spinning
Banana fiber has got some advantages in the industry that can be said to be the rationale for choosing it. Here they are: * Convertibility into textiles: Banana fibers have got a variety of uses in the textile industry. * Easy availability: The cultivation of banana is widespread in Bangladesh and the Asia and the Pacific. So there will be an abundant supply of stem. * High growth potential: banana fiber and its by- products are being imported to Japan in huge quantity and is on the rise. In an article we found that Japan has a monthly demand of 27 metric tons which its current suppliers are unable to meet ( ). * Neutrality to other crops: This crop is already being largely grown, and thus do not pose a threat to acreage under the other crops and will use existing biomass.
Bangladesh has substantial production of banana. However the use of banana fiber in the textile industry and for other purposes is not that much known in this country. Abaca fiber which belongs to the same family as banana fiber is being used successfully in Philippines since decades and hence is also known as ―Manila Hemp‖. Philippines is the world‘s largest producer of abaca fiber, while the crop is also cultivated in Ecuador and other Southeast Asian countries. Along with India, the other major banana producing countries in the world are China, Brazil, Ecuador and Indonesia. Philippines and Japan are the major banana fiber producing countries for large scale manufacturing of textile items made from banana fiber.
To analyze the industry properly, we need to know the status of banana production in major countries and in Bangladesh. The production of pseudostem, the raw material for banana fiber, is directly connected to it. It follows:
International scenario – Banana Fiber
As such no data is available on global banana fiber production. However, data related to banana production and trade can be taken. India is the largest producer of banana with 32.8% share in total global production of banana in 2008. The other major banana producing countries are China, Brazil, Ecuador and Indonesia.
Exhibit 6.3.16: Overall global production trend in banana (in million tonnes)
Source: FAO statistics
Ecuador was the largest exporter of banana in 2007. The other major exporting countries in 2007 were Costa Rica, Colombia, Guatemala and Belgium. On the other end, Germany was the biggest importer of banana in 2007. The other major importing countries in 2007 were Belgium, Japan, Italy, France, Canada and China.
Philippines and Japan are the major banana fiber producing countries for large scale manufacturing of textile items made from banana fiber. Philippines is also exporting huge quantity of readymade garments manufactured from banana fiber to Japan, Singapore, Taiwan and all far East Asian countries. In India, banana fiber is primarily used in cottage industry present in Southern India.
Distribution of the world banana production by continent
Source: UNCTAD Secretariat from FAO statistics
Here it is very evident that the contribution of production from Asia is rising which will ease our access to the raw materials from our neighboring countries.
An overview of this Industry:
Banana Fiber in Use:
Banana fiber is used for manufacturing doormats, carpets, yarn, rope, geotextiles, luggage carriers and interior decorative items. In recent past, banana fiber has also been recognized for manufacturing high quality apparel garments and home furnishings due to increasing environmental awareness and growing importance of eco-friendly fabrics. Banana fiber is being used for making traditional dresses like kimono, and kamishimo in Japan since the Edo period (1600-1868). Banana fiber is also used to make fine cushion covers, neckties, bags, table cloths, curtains and other things. Rugs made from banana silk yarn fibers are also very popular worldwide.
Below is the list of the products, not an exhaustive one although, that can be made from banana fiber:
Banana fiber yarn and fabrics | Paper(tissue paper,art paper, security/currency paper etc.) | Carpet and Net | bandages | packing materials | Tenting materials | Bags | Rope of various usages |
Being in a nascent industry like this, our company aims to take advantages of the significant opportunities present in the industry. Below is a brief discussion of the opportunities present:
* Banana fiber is considered to be a good alternative to other natural and synthetic fibers like sisal, hemp, ramie etc.
* It is stronger than any other natural fiber except the pineapple fiber and its longevity is substantial enough. In addition, it can easily absorb and release moisture and is not very weighty. Moreover, it is biodegradable. So it has got every potential to replace the existing ones.
* Numerous products can be made with this fiber. The list includes high quality yarn, fabric, pen stands, table decorative, land shades etc. Banana fiber is also used in manufacturing industries of handicrafts, home decorative, door mats, table mats, tenting, net and bags of various kinds.
* Paper made out of banana fiber is having very good export potential for 25 countries including European countries. 100% chemical free tissue paper, filter paper, paper bags, craft papers, greeting cards, wedding cards, carry bags, nursery pouches, art papers, decorative papers, tissue papers, bond papers can be manufactured using banana fiber. These 100% chemical free paper made out of banana fiber can even have longevity as long as 700 years.
* Another staggering point is that the worldwide demand for banana fiber and its products are going undersupplied because of the lack of efficient producers and marketer.
* The supply of raw materials which is actually considered to be “left-out” is obtainable for almost free and will contribute to a very low production cost.
The competitive Environment:
Currently, the competition in this industry is not very intense because of the domination of only a number of countries like Philippines, Malaysia, Indonesia and Japan. Though the use of banana fiber is culturally linked to Japan, they usually source most of their fiber from outside given the unavailability of stem in Japan. Nonetheless there are a number of Japanese and Korean companies producing high quality fiber for selling merely in the native markets rather than the huge international market therein. Hence, these manufacturers need not considered to be such big players as that from the Philippines and India.
Competing countries | Core Advantages | Japan, Korea | High-quality, Active Patents, Sophisticated Technology | India, Philippines | Cheap raw materials, labor and technology |
Table: Competing Nations and Their Advantages
It is to be noted that most of the competing firms in these countries are not well- established yet are just in the developing phase. In addition, lack of awareness of banana fiber and related products and poor brand communication among potential customers by the existing firms are keeping the degree of competition at a low stage which, of course, is going to increase in the days to come.
Market Potential:
Banana fiber can be easily blended with cotton fiber or other synthetic fibers to produce blended fabric & textiles. Currently, it is mainly used by cottage industry in Southern India. Banana Fiber also finds use in high quality security/ currency paper, packing cloth for agriculture produce, ships towing ropes, wet drilling cables and others. Banana fiber has the potential to partially replace the consumption of cotton and jute fiber in India. It can be exported to far-east Asian and South Asian countries like Singapore, Taiwan, Japan, Thailand, Sri Lanka and Malaysia.
Barriers to Entry:
As far as the barriers to entry to this business are concerned, it is projected to be medium level. There do exist some barriers that can work as stumbling factors for the new entrants to this business. Below are these barriers:
* Limited domestic supply of banana trunk and stem which is too meager to supply fiber to the world market. * Maintaining high quality in production is not very easy and buyers do not compromise with quality. * To develop an efficient supply chain is not so easy. * Reaching out to the international buyers requires substantial effort and an efficient marketing and distribution planning capacity * Trained workers to produce high quality fiber and yarn are not available. * Hard- to- get access to the relevant market data. * Absence of a ready-to-eat domestic market which requires substantial effort to go international right from the start of the business.
Long- term Opportunities for us:
This growing industry has some excellent potential in the long-run. Banana is mainly cultivated in more than 107 countries all over the world. Being completely biodegradable and naturally occurring, the banana fiber products are expected to be in great demand in the international markets as they pose no toxic effects to man and the environment. A number of value added textile products can be made which in turn would enhance the profitability of banana farming. Banana fibers can be made available at cheap rate for preparation of fancy articles as well as textiles. So all this reflects a great prospect for this industry in the coming days.
Though we are currently concentrating on only extracting the fibers and producing yarn out of it, we do have a plan to concentrate on new product lines that can be developed using banana fiber in future. This would depend on how firmly the industry meets our growth expectation and also on future market condition.
Target Market
Market Description
The definition of target market must come across these following criteria in order to be a useful planning tool: * Definable * Meaningful * Sizable * Reachable
Philippines and Japan are the countries using banana fiber on large scale for commercial production of variety of textile items.
Philippines is also exporting huge quantity of readymade garments made from this fiber to Japan, Singapore, Taiwan and all far East Asian countries.
We have selected the European countries for our fiber:
Country | Targeted Industry | Our Product | Austria | RMG, Tent, Handicrafts | Clothing Yarns, Tenting Yarns, Dyed Fibers | Japan | RMG, handmade Paper, Handicrafts | Clothing Yarn, Paper Fiber, Dyed Fibers | China | RMG, automobiles, tent | Clothing Yarn, Tenting Yarns | Belgium | Apparel manufacturing industry, Paper mill industry, Automobile | Dyed Fibers | Bulgaria | Textile and clothing | Clothing Yarn, Dyed Fibers | United Kingdom | Paper and Paper product, textile and clothing | Clothing Yarn, Dyed Fibers | Sweden | Packaging industry, Pulp and paper and furniture | Dyed Fibers | Spain | Fishing, textile and apparel | Clothing Yarn, Dyed Fibers | Thailand | Clothing | Clothing Yarn | Philippines | Clothing | Clothing Yarn | Portugal | Fishing, textile | Clothing Yarn | Italy | Fashion industry, textile | Clothing Yarn, Dyed Fibers | Germany | Car industry | Dyed Fiber | France | Pharmaceutical and cosmetic industry | | Finland | Paper industry, textile industry | Clothing Yarn, Dyed Fibers | Estonia | Textile | Clothing Yarn | Denmark | Textile | Clothing Yarn |
These countries have the potentialities for our project to be successful. The opportunities that we can find in these areas are: * Geographically we are in the better position for producing banana and for finding the main raw material, which are totally unused and considered as wastage after gaining banana, for extracting the banana fiber. * We have an adequate number of labor forces that requires less salary and wages for extracting banana fiber that acts as an opportunity for us. * These countries already have the established market for banana fiber. * The demand of the fiber that is used in carpet-weaving and various hand made products is present in these countries at large scale.
MARKET SIZE AND TRENDS:
Banana Fiber can be the substitute of the some other fibers, such as- * Rayon Fibers * Textile Fibers * Polyester Fibers * Nylon Fibers
Here are some Pie-Charts for these several types of fibers –
Figure: World Consumption of Rayon Fiber
Figure: World Consumption of Textile Fiber
Figure: World Consumption of Polyester fiber
Figure: World Consumption of Nylon Fiber
There are some other kind of fibers that are used to manufacture Carpet and Tent, such as- * Nylon * Cotton Canvas * RIP-stop nylon * Polyester * Polyethylene * UV_tex 5.
We can use are banana fiber as the substitute of these various fiber and can catch the whole world consumption.
Trends:There are many natural fibers that are liked for their comfort ability and looks. With the increasing environmental awareness, these natural fibers have gained unimaginable importance. Now, many raw materials that were not traditionally used for making fabrics, at least not commonly, are there to make fabrics from. One such raw material comes from banana plant- the banana fiber. Although banana fiber have been used for making textile in some parts of the world such as Japan and Nepal since very early ages yet their application in many industries has gained momentum only in the recent past.
A native plant of Southeast Asia, banana is now grown extensively in all tropical countries for fruit, fiber or foliage. Generally, banana fiber extraction is done by hand stripping and decortication. While hand stripping, a narrow strip of banana leaf sheath is placed under a serrated knife with pressure. Fiber is then extracted by pulling the leaf sheath by hand. Decortication is a mechanized process in which, cut stalks are first crushed by roller and fibers are scraped by means of revolving wheels with knives.
The fiber extracted from banana plant is brownish, somewhat flat and darker in shade. It appears like bamboo and ramie fiber, but is fine and spins better than them. It is considerably strong and also has shiny appearance. It can absorb moisture very well and is bio- degradable, thus eco- friendly.
In Japan, the traditional dresses like kimono and kamishimo are made from banana fiber and are liked especially as summer wear. The Banana silk fiber yarns are used to make traditional rugs by Nepalese women. Banana fiber is also used to make fine cushion covers, ties, bags, table cloths, curtains and many other items all over the world. Due to the growing popularity of items made from banana fibers, many manufacturers are engaged in research to come up with cost effective and fast methods of making banana fiber. One such innovation has been made in India where a Banana Fiber Separator Machine has been developed. This machine uses the agriculture waste of banana harvests to produce silk grade fiber which is widely used by handicrafts and textile industry.
Target Customers:
In the recent past, banana fiber had a very limited application and was primarily used for making items like ropes, mats, and some other composite materials. With the increasing environmental awareness and growing importance of eco-friendly fabrics, banana fiber has also been recognized for all its good qualities and now its application is increasing in other fields too such as apparel garments and home furnishings. However, in Japan, it is being used for making traditional dresses like kimono, and kamishimo since the Edo period (1600-1868). Due to its being lightweight and comfortable to wear, it is still preferred by people there as summer wear. Banana fiber is also used to make * fine cushion covers, * Neckties, * bags, * table cloths, * Curtains etc.
Rugs made from banana silk yarn fibers are also very popular world over.
The target customers for banana fiber are:
* Garments Industry * Knitting Industry * Handmade Industry * Carpet weaving Industry * Textile Industry * Non-woven fabrics Industry * Medical and Hygienic Clothing & Products * Home Furnishings Fabrics Industry * Handmade Paper Industry
Market Readiness: This paper uses the term “market readiness” to describe the necessary technical, policy and institutional frameworks that a country or its entities need to access and employ, through market mechanisms, private and public financing for low-carbon development. It describes the various elements, or building blocks, needed to make the intended market mechanism operational – i.e. the key components of market readiness. It draws on previous experience to provide insights on the financing needs, timeframes involved, and the need for co-ordinate capacity building efforts. Such information can help the international climate community outline and priorities support for market readiness efforts and focus international negotiations on the topic of market mechanisms and support for establishing new market instruments.
The Competition
At the ASEAN summit in the central city of Philippines, many leaders worn Philippines traditional garment made from banana fiber. Banana fiber can be made into garment, curtain, towel, bed sheet etc due to its characteristics with light, good luster and moisture absorption.
Other Competitors:
Country | India | | China | Indonesia | Pakistan | Uganda | Name of the Company | Vibrant Nature | | Suzhou Shenboo Textile Co. Limited | Setono Craft | Multi Help Marketing | Moses Magala& Co. Limited | Type of Business | Manufacturer | | Manufacturer | Exporter | Exporter | Exporter | Offered Products | Deals in manufacturing and supplying of fashion bags such as banana fiber handbags, kora grass ladies handbags, banana fiber handbags, banana fiber shopping bags, banana fiber designer handbags and banana fiber fashion handbags. | | Deals in natural bamboo fiber yarn, banana fiber yarn and viscose bamboo yarn. | Supplier and exporter of paper products and banana fiber products. | Exporters of agriculture related machinery, tractor mounted sprayers, harvesters, rice threshers, sun flower threshers, banana fiber extractors etc. | Exporters of assorted handicrafts like framed art products, basket wear, wooden curvings, ebony products, banana fiber products, backcloth products, batick products, sand baticks, paintings etc. | Address | No. 13/4 3rd Cross Street, Kasthurbai Nagar, Adyar, Next to NalliChennai - 600020+(91)-(44)-43201616+(91)-9940024372 | | No. 221, Sudai Road, Xiangcheng DistrictSuzhou - 215 132+(86)-(512)-65469306()-65469306+(86)-13812865648 | Surakarta - 57148+(62)-(81)-567812352 | Plot#b-93, Syed GhulamHyder Shah ColonyNawabshah - 67450+(92)-(244)-364402+(92)-(244)-362646+(92)-3003211510/ 3032408594 | P. O. Box 7039Kampala - Uganda+(256)-(77)-671356+(256)-(41)-345580 |
Advantages over Competitors:
* Cheap labor force * Geographic weather of the country for producing banana at a large amount * Availability of raw materials * The weather of this country can keep good absorption ability * Ideal temperature for fiber adaptability
::: Strategic Opportunities:::
We can use the following strategic opportunities that are shown according to our marketing strategy:
Barriers to entry
As banFibe is a born global company so it will face some barriers to enter in the foreign market. We have to face the following barriers- * Government regulations * A large, established firm taking advantage of economies of scale
Barriers to entry can exist as a result of government intervention (industry regulation, legislative limitations on new firms, special tax benefits to existing firms, etc. BanFibe have planned to overcome the barriers by taking help from the garments manufacturers because they have experience in exporting readymade goods.
The legal environment
Most controls from the foreign country revolve around the following issues- * export and import controls, * transfer pricing, * taxes, * regulation of corrupt practices, * embargoed nations, * antitrust, * Expropriation and distribution of equity, \ patents and trademarks.
International law
Marketing implications
The implications of international law on marketing operations are legion. The principle ones are as follows: * Product decisions - physical, chemical, safety, performance, packaging, labelling, warranty * Pricing decisions - price controls, resale price maintenance, price freezes, value added systems and taxation * Distribution - contracts for agents and distribution, physical distribution, insurance * Promotion - advertising codes of practice, product restriction, sales promotion and, * Market research - collection, storage and transmission of data.
Other areas affected are obviously in currency and payments but these will be dealt with in later sections.
Laws, rules, and standards * Rules and conventions specifying entry conditions and boundaries on cooperative and competitive policies also facilitate exchange and coordination. * Licensing also facilitates producers by reducing transaction costs. Performance standards are built in to maintain the licensing agreement.
Terms of access
One particular area where legal/political effects are felt by international marketers is in the terms of access, so the rest of this section will be given over to a discussion of these. The phrase "terms of access" refers to all the conditions that apply to the importation of goods from a foreign country. The major instruments covered by this phrase include import duties, import restrictions or quotas, foreign exchange regulations and preference arrangements.
Types of duty
Customs duties are of two different types. They are calculated either as a specific amount per unit or specific duty, or as a percentage of the value of the goods or ad valorem, or as a combination of both of these methods.
Ad valorem duties:
This duty is expressed as a percentage of the value of goods. The definition of customs value varies from country to country. Therefore an exporter is well advised to secure information about the valuation practices applied to his product in the country of destination.
Specific duties:
These duties are expressed as a specific amount of currency per unit of weight, volume, length or number of other units of measurements; for example, fifty US cents per pound, one dollar per pair, twenty-five cents per square yard.
Alternative duties:
In this case both ad valorem and specific duties are set out in the custom tariff for a given product. Normally, the applicable rate is the one that yields the higher amount of duty, although there are cases where the lower is specified.
Compound or mixed duties: These duties provide for specific plus ad valorem rates to be levied on the same articles.
Anti-dumping dunes: The term dumping refers to the sale of a product at a price lower than that normally charged in a domestic market or country of origin. To offset the impact of dumping, most countries have introduced legislation providing for the imposition of antidumping duties if injury is caused to domestic producers. Such duties take the form of special additional import charges designed to cover the difference between the export price and the "normal" price, which usually refers to the price paid by consumers in the exporting countries. Anti-dumping duties are almost invariably applied to articles that are produced in the importing country.
Foreign Market Entry Modes
The decision of how to enter a foreign market can have a significant impact on the results. Expansion into foreign markets can be achieved via the following four mechanisms: * Exporting * Licensing * Joint Venture * Direct Investment
Exporting
Exporting is the marketing and direct sale of domestically-produced goods in another country. Exporting is a traditional and well-established method of reaching foreign markets. Since exporting does not require that the goods be produced in the target country, no investment in foreign production facilities is required. Most of the costs associated with exporting take the form of marketing expenses.
Exporting commonly requires coordination among four players:
• Exporter
• Importer
• Transport provider
• Government
Licensing
Licensing essentially permits a company in the target country to use the property of the licensor. Such property usually is intangible, such as trademarks, patents, and production techniques. The licensee pays a fee in exchange for the rights to use the intangible property and possibly for technical assistance.
Because little investment on the part of the licensor is required, licensing has the potential to provide a very large ROI. However, because the licensee produces and markets the product, potential returns from manufacturing and marketing activities may be lost.
Joint Venture
There are five common objectives in a joint venture: market entry, risk/reward sharing, technology sharing and joint product development, and conforming to government regulations. Other benefits include political connections and distribution channel access that may depend on relationships.
Such alliances often are favorable when: * the partners' strategic goals converge while their competitive goals diverge; * the partners' size, market power, and resources are small compared to the industry leaders; and * partners' are able to learn from one another while limiting access to their own proprietary skills.
The key issues to consider in a joint venture are ownership, control, length of agreement, pricing, technology transfer, local firm capabilities and resources, and government intentions.
Potential problems include: * conflict over asymmetric new investments * mistrust over proprietary knowledge * performance ambiguity - how to split the pie * lack of parent firm support * cultural clashes * if, how, and when to terminate the relationship * Joint ventures have conflicting pressures to cooperate and compete: * Strategic imperative: the partners want to maximize the advantage gained for the joint venture, but they also want to maximize their own competitive position. * The joint venture attempts to develop shared resources, but each firm wants to develop and protect its own proprietary resources. * The joint venture is controlled through negotiations and coordination processes, while each firm would like to have hierarchical control.
Foreign Direct Investment
Foreign direct investment (FDI) is the direct ownership of facilities in the target country. It involves the transfer of resources including capital, technology, and personnel. Direct foreign investment may be made through the acquisition of an existing entity or the establishment of a new enterprise.
Direct ownership provides a high degree of control in the operations and the ability to better know the consumers and competitive environment. However, it requires a high level of resources and a high degree of commitment.
Chemical composition of banana stem
Risk Assessment
The general risk factors for our business include the following:
Demand Risk:
Dramatic fall of demand can wreck havoc for an industry. In our case, this risk is very low since we have a rapid growth prospect in this industry reflected in the convergence toward natural Fiber - related and bio- degradable products.
Industry Risk:
The entrance of a better, efficient competitor may pose a great threat. Since the barriers to entry in this industry are medium, the risk is also moderate.
Technological Risk:
The advent of new and better technology but a very expensive one may be problematic for us since we are just at the initial phase and have limited opportunity to finance vast sums.
Regulatory Risk:
Abominable government regulatory policies, for example- increase import duty on banana Fiber and related products and new legislations concerning textile industry may pose raise our cost and thus hurt our export competitiveness.
Interest- rate Risk:
Since a large portion of our financing would be from debt- financing, the company is vulnerable to interest- rate hikes.
Supplier risks:
Though banana stem is accessible almost free of cost, it may not continue for a long time. The suppliers might get aware and demand increased prices for their supplies.
Environmental Risks:
The business can also get affected from a huge countrywude natural calamity destroying large number of banana plants or from a new epidemic disease of the banana plants reducing firm yields.
Exchange Rate Risk:
Being in an export- oriented market, the company is very much susceptible to the risks associated with the exchange rate fluctuation. If BDT gains strength against USD, it will hurt companies export competitiveness and the value of its sales revenue
::: market innovation :
TENT INDUSTRY :::
The tent manufacturing business is steadily booming what with the demand coming from the corporate world and the ordinary people. The corporate world nowadays is leaning towards making their marketing strategies staged outdoors which means sheltering hundreds of people in one marketing event. This is the fastest growing clients of tent manufacturers. On the other hand, there are the perennial and always present clients like ordinary people who need tents for their outdoor activities like parties, wedding and birthday celebration. This segment of the market of tent manufacturing business can be said the very blood that makes the industry running robust. With year round possibilities that these people may need tents for their planned out-door activities, the tent manufacturing business is ever robust and healthy.
Classification
Tent can be classified according to * Usage 1. Army tent 2. Beach tent 3. Bed tent 4. Cabin tent 5. Canopy tent 6. Castle tent 7. Dinning tent * Type 1. A-frame 2. Dome 3. Folding 4. Geodestic 5. Pop up tent 6. Water proof
Fabrics used for Tents * Cotton * Hemp * Polyester * Nylon
Making of tent requires such fabrics
Choosing tent industry for our business project’s focus as banana fiber supposed to be a substitute yarn of tent fabric. Tent fabric is an important outdoor fabric for shelter. It has to fulfil all the condition to fight against weather. For this reason, a fabric for tent is UV protected and resistant to moisture. It stands against rain and wind. It is simultaneously flame-retardant and breathable. Tear and abrasion resistant is also an important factor for tent fabric. Tent fabric requires such characteristics that are most important in measuring the quality of. * It is light and strong. * It is opaque to light. * It is flame retardant. * It has a certain degree of impermeability to water. * It resists moisture to pass by. * It is breathable. * It is mildew resistant. * It is resistant to tear and abrasion. * It is durable. * It is susceptible to stretch. * It is UV protected.
These requirements are possibly fulfill through the characteristics of banana fiber as like as cotton or polyester. * The chemical composition of banana fiber is cellulose, hemicelluloses, and lignin. * It is highly strong fiber. * It has smaller elongation. * It has somewhat shiny appearance depending upon the extraction & spinning process. * It is light weight. * It has strong moisture absorption quality. It absorbs as well as releases moisture very fast. * It is bio- degradable and has no negative effect on environment and thus can be categorized as eco-friendly fiber. * Its average fineness is 2400Nm. * It can be spun through almost all the methods of spinning including ring spinning, open-end spinning, bust fiber spinning, and semi-worsted spinning among others.
This presents Layer of banana fiber would be in beneath to resist water. Banana fiber would be mostly alternative in position of cotton especially for canvas tent.
The rationale for choice of this fiber is as follows:
# Use in selected segment: The primary criterion for the selection of banana fiber in the tent industry is for new market possession .
# Easy availability: This fiber is cultivated in Bangladesh in fairly abundant quantity, and therefore is relatively easier to exploit for commercial purpose.
# High growth potential: The selected fiber is currently being imported into several country in a reasonably significant amount. Thus, this signifies world demand for this fiber, and replacement of the high imports is an opportunity.
# Neutrality to other crops: This crop is already being largely grown, and thus do not pose a threat to acreage under the other crops and will use existing biomass.
# State participation: Active state participation is already present in these selected fiber, with considerable institutional support also available, thus allowing policy intervention to yield maximum benefit within a short period.
Growth & Size of Tent Industry
Tent industry is now in obvious point because of today’s interest of hiking and camping. People of world create market of growth for tent business. There is some data presents the proportion of world’ s different areas scenario of camping and hiking that promote tent industry largely. * In Germany, annually 4 million people spend their holidays by camping * In France statistics show that number of overnights on campsites is more than double that for hotels. * 700.000 caravans and countless number of tents generating an income of almost 5 billion Euros for the camping industry. * In Europe there are some 26.000 campsites of which little less than half are located in France, 15 % in United Kingdom and 10 % both in Germany and Italy. * Netherlands more than two-thirds of the total population are using tents. * In USA there are around 25 million camping enthusiasts and more than 16.000 nationwide camping grounds. * In Taiwan there are already 115 registered Camping and Caravanning Parks. * New leisure culture is now making a very strong arrival also to South Korea. * Tent camping is the seventh most popular recreation activity of the U.S. population age 6 and older. * According to the SGMA, 42.2 million Americans camped in tents and 39 million enjoyed day hikes. * Camping and hiking are activities enjoyed by 40 million Americans every year. * In 2009, some 77m bed nights were spent in caravans, tents by UK residents. * One in five people has taken a camping or caravanning holiday in the last three years (source: Mintel 2009). * Some 16% of holiday parks and campsites are open all the year round (source: Pitchup.com).
Our opportunity as a Market innovator
Creation of market for our product through tent industry focusing the usage only in tent camping could be named as market innovation.There are some reasons for being market innovative. * Natural fiber like banana fiber has not yet been used in making of tent fabric. This fiber could be a fast moving strategic tool. * Cost effectiveness of banana fiber could be shown on the contrary of other tent fabrics. * While other suppliers of banana fiber is engrossed in textile industry, that seems to be an opportunity to grasp the tent industry.
Challenges
Challenges that our project plan can face * Hemp is kind of natural fiber that is used for tent making. Thus we might confront competition that challenge us to take part of market. * Quality control of banana fabric as tent fabric is a challenge. * “Why would I buy your product?” the question of buyer countries is a challenge as banana fiber would be absolutely new arrival in this industry. * Political unrest our country as well as world could hamper supply. *
Marketing plan
This marketing plan illustrates our market segments and the strategies we are employing to get customers and create a solid revenue stream. Our unique focus is to distinguish our company by better understanding the needs of its customers and meet up their needs with quality products.
We have planned to manage orders by contacting with the dominant garments manufacturers of our country as they have frequent interactions with foreign buyers. We have plan to contact directly the buyers by enlisted our company as a supplier of banana fiber in numerous websites like Alibaba.com.
We have tried to define the following steps in our marketing plan- * Make consumers aware of our product. * Message that we are trying to convey to consumers about our product and company. * Specific methods we use to deliver and reinforce that message * Way of securing actual sales.
Make consumers aware of our product
We try to make our marketing plan based on the strategic position of the company, emphasizes on offering low price to the customers. Our vision is being ‘the low price leader’ in banana fiber market. We have planned to utilize the following opportunities and being able to offer low price with satisfactory quality level- * Availability of raw materials. * Cheap labor force. * Reputation as a prominent exporter country of RMG goods.
Company’s marketing process will be highly executed with the most popular method, “Four P’s of Marketing”. We wish to present our product with considering four P’s.
1. Product: We have preparation to let the consumers know about our product’s special features and make them concern that banana fiber is much more durable and strong than the other conventional fibers. 2. Price: We will offer a price range comparatively lower than that of our competitors which will be cost effective for our customers. 3. Place: As we establish our factory at Nator. So it brings some advantages for us because of geographical advantages. 4. Promotion: We have planned to give online ad in various websites and social networking sites to promote our product.
Marketing Vehicles
In order to reach the potential customers, we have plan to accelerate our promotional program by using the following marketing vehicles-
* Company Website: Our website represents our products’ special features and will be available to customers everywhere at all hours. It will contain all essential information needed by the buyers. We wish that our low price range will able to attract the buyer’s attention. * Print Media: As it is too expensive, we have plan for it after 5 years of production run. * Broadcast Media: As it is so expensive, we have plan for it after 5 years of production run. * Online Advertising: we will pay for the visibility in other websites that can bring orders for banana fiber as well as contribute to branding our products throughout the world. We will represent our product in various business websites. * Advertising Specialty: Items (calendars, caps and gifts) imprinted with the company name ‘BanFibe’ will be given to the customers. It will help us to build good relation with our customers. * Mailings: Regular mailings to email mail lists, these can be direct advertisements or online newsletters. This also helps us to find new orders. Communicate via email is strongly considered to get new orders of banana fiber. * Public Relations: Building strong public relation is also considered with magnitude. We wish to publish articles (related to banana fiber) to aware people about banana fiber. * Sampling: We have arrangement to distribute free samples of banana fiber to find out the outcome of consumers. Here the famous buyers of banana fiber will get preference. * Informal Marketing/Networking: We have plan to attend the conferences on banana fiber and also use the chance of public speaking in order to advertise our product in the world market.
Marketing Tactics
To promote our company we have some creative strategies and methods. These tactics often involve little or no extra cost but can be the source of substantial increased revenue. We have some unique tactics to reach customers. Some strategies are discussed in below-
* Media Advertising
Advertising is a popular method of reaching the target customers. But Print and Electronic Medias seems expensive and not affordable in the first five tears of production. So we have planned to advertise our product in these Medias after 5 years of production run. Nowadays advertising via internet seems as a popular option of giving commercial ad and we have intended to give our ads in various websites like Facebook, Alibaba.com, Tuitter and the business sites. * Customer-Based Marketing
This is one of the most faithful types of marketing. Two particularly effective approaches are to emphasize repeat sales by positioning our product to be consumed and add-on sales, whereby increase the total revenues per customers through the sale of extra product.
Another approach is point-of-purchase promotion: merchandising displays or other offers presented to customers at time of sale to encourage impulse purchases. * Strategic Partnerships
If we face difficulties with the above two tactics than we try to identify a related company with which to associate for promotion, sales or distribution. For cost effectiveness we may represent ourselves with our strategic partner. Here our company can save huge amount of money because we need to pay part of costs. * Special Offers/Promotions
As BanFibe going to be a new company, we offer special offers in premium rates that lead to increase sales revenue and contribute to expand our business throughout the world.
We will offer the most competitive price to the buyers because we have some advantage over the competitors. These are * Cheap labor force * Geographical Advantage * Availability of raw materials * Low production cost * Transportation facility
* Premiums
The use of premiums in marketing includes encouraging sales and creating goodwill gifts and discounts. We have planned to give special discount to the buyers who will order for remarkable amount of banana fiber (more than?). By doing that we will able to find out some permanent buyers those consume at a large scale.
Distribution Channel
Producing sales is a prerequisite for doing well in any business. BanFibe wish to complete its sales procedure trough a distribution channel and it will be overseen by our supply chain manager. We wish to get orders via merchandising companies and by contacting with the local garment manufacturers. Direct Mailing to the clients is also considered as an opportunity for managing new orders. Our objective is to deliver fiber on time and will be appeared as a reputed banana fiber supplier.
As we have port facility, so we use these port facilities and will be able to deliver fiber to the buyers on time. Our sales division will facilitate the whole process.
Competitive Forces
We have some competitive advantages over the competitors and wish that these driving forces will bring us to the ultimate success. These competitive forces are discussed below- * The best among the natural fibers in terms of overall quality characteristics * Raw material, inputs cheap and available locally. * Cheap labor * Simple process technology * Available machineries from India at an affordable cost * Long shelf life * Ability to keep costs low enough to be competitive
So it seems that we have some effective advantages over the competitors. Now it is important to utilize these opportunities and bring out the best output to be a leading supplier of banana fiber from this region.
::: OPERATION :::
Location :
We have placed a suitable location for the project. We have selected location based on: * Close to the Raw material Source * Easy Transport facility * Close to Port * Labor availability * Easy Training facility * Relative cheap labor cost * Cheap Land and facilities for further expansion.
As the BestFiber bangladesh needs a permanent place for the facilities and Production function, we have managed the to shape the quantity of the land needed and the facility for the production and Storage.
We have selected a suitable Place in BALUCHORA Village of Bonpara Upazilla of Natore district. This place has some beneficial for us as the place meets all the required elements we need to find out for our factory. Location | Bonpara,Natore district | Availability of Raw materials | Highly Available in the district and Neighborhoods | Transport for Raw Material | Easily transportable as the place is linked by road to all the major places of Raw Material Collection | Transport Facility | Location connected to All Major cities by road | Closest port | Mongla Port | Labor availability | Enough and Potential Labor supply | Labor Cost | Cheap relatively to other District areas | Training facility | People are enough educated |
::: Facilities And Buildings:::
As our Manufacturing Firm will be a Medium-sized firm, We have developed a blueprint for the facilities and building. As our Production will deal with raw natural fibers , we will be in need of :
Fully rainproof Building where there would be : * An office room * Storage house for Ready Products * Storage yard for raw Banana Stems * Storage for On-process Products * Rooms for Merchandise Production * Room For Packaging and boxing * Storage Room for Supplementary and Backup machineries * Restroom for the Workers * Living room for the guards * Space for Dumping Garbage | Size ( SFT) | Office Room | 500 | Storage house for Ready Products | 600 | Storage yard for raw Banana Stems | 1400 | Space for Machineries Production | 3000 | Storage for On-process Products | 1000 | Space For Packaging and boxing | 400 | Storage Room for Supplementary and Backup machineries | 400 | Restroom for the Workers | 500 | Living room for the guards | 300 | Space for Dumping Garbage | 400 | Power Supply Room | 300 | Total Space | 90000 |
Utilities & Maintenance
Utilities & Maintenance Cost per Day: | Unit Production (KG) | Cost Per Unit (TK) | Total Cost Daily (TK) | Utility Cost Per YEAR(TK) | Electricity | 60 | 12 | 720 | 216000 | Fuel and Gasoline | 60 | 6 | 360 | 108000 | Water | 60 | 4 | 240 | 72000 | Others | 60 | 5 | 300 | 90000 | Total | | 17 | 1620 | 486000 |
Using of energy saving device, “power tune” that reduce the extra consumption of electricity is the unique aspect of our maintenance sector.
We Will : Use Local Commercial Electricity Supply line for our Production Process In case of interruption in Electricity, our power supply will be continued by our 40kv generator. Local Wasa line will be used as commercial usage rate. Fuels and gasoline will be used in need. Other relative utility cost will be done in sight if occurred
Production Process
As extracting banana fiber is a complicated process, it includes various stages of production. The overall process is described below by consecutive phases:
Phase 1: Extraction of Raw Surface
After storing banana trees in the factory from garden, first step of process is extraction of raw surface of banana stem. This is accomplished manually by workers.
Phase 2: Extraction of Raw Fiber
Extracted raw surface are pushed to the Responder Machine to cut the surface in various lines. This is the first step of fiber shaping and raw shaped fiber is prepared for the next stage, drying.
Phase 3: Drying Raw Fiber
Extracted raw fibers then plunged into the Drying Machine. This machine dries the fibers by dissolving all kinds of liquid materials of the fibers. The machine operates in a closed loop system. Wet material is injected via the blow line and dried in a continued closed superheated steam loop to the desired moisture content. Fibers are discharged via a rotary valve.
The recirculated steam is passed through a heat exchanger for superheating before being used for drying again.
Phase 4: Cleaning and Separating
On this phase, dried fibers are separated, cleaned and combed through Carding Machine. It is important to separate and clean fibers because it gives fiber a further smooth shape.
Phase 5: Rope Making
This phase will only be used if thick ropes are needed to produce, and it will not be applicable for final yarn making. A Single Ply Machine is used for making small rope from cleaned, dried fiber and the machine is used for twisting rope also.
Phase 6: Softening
After cleaning and separating by carding machine, Mechanical Softening Machine is used for giving fiber necessary softness and pliability. This helps to reduce roughness of fibers that is essential for smooth and comfortable clothes.
Phase 7: Dyeing
One of the most important parts of the process is dyeing the fiber. The Banana Yarn has to be hand-dyed and dried, each lot of natural banana yarn is firstly washed and prepped for dyeing and then dyed the following day in larger copper pots, Degumming Vessel.
Phase 8: Dewatering
Hydro extractor is used in this phase of production for dewatering the fiber after dyeing. There are some manual process for dewatering the fibers but through machine this can be done more swiftly and I is also time-saving
Phase 9: Twisting
After dewatering, the fiber mass is referred to as the sliver. Several slivers are combined before this process. A series of rollers rotating at different rates of speed elongate the sliver into a single more uniform strand that is given a small amount of twist and fed into large cans. The sliver is fed through Twisting Machine called the roving frame, where the strands of fiber are further elongated and given additional twist. These strands are called the roving.
Phase 10: Spinning
The sliver is delivered to a rotary beater that separates the fibers into a thin stream that is carried into the rotor by a current of air through a tube or duct and is deposited in a V-shaped groove along the sides of the rotor. As the rotor turns, twist is produced. A constant stream of new fibers enters the rotor, is distributed in the groove, and is removed at the end of the formed yarn.
Phase 11: Weighing
After finishing the final yarn, a weighing scale is used for measuring the weight of fibers.
Phase 12: Packaging
The final stage of process is packaging the fiber for ultimate distribution or supply.
Assessed Production Plan
Labor:
Total number of employees: 47 Permanent: 17 Seasonal: 30
Seasonal employees will be used for cutting and sorting banana trees from field.
Basic qualification of the workers will be their hard-working capability skill and/or experience in various tasks, as there are some new stages of task, laborers will be trained and then efficiency will be measured. Workers will be organized through production line and two supervisors will be appointed for the fiber extraction and yarn processing zone for supervision.
Productivity:
On a full-day operation of 8 hours, fibers can be produced (1 year = 300 days): * In 1 day: 60kgs * In 1 week: 348kgs * In 1 month: 1500kgs * In 1 year: 18000kgs
So each worker can produce 442 grams per hour
Besides, if all the available machines and raw materials are used, 90kgs of fibers can be produced in a working day.
Quality control
As the products will serve to the international customer, maintaining quality will be the core concentration of everyone which can be approached by the popular technique, Total Quality Management (TQM). It is a management approach to long-term success through customer satisfaction.
A quick glance:
Beside this, strategic plan will be framed like randomly sample testing, regular inspection of the production process, reward programs for quality assurance and solicitations of customer comments.
Equipment and Furniture:
A well number of equipments will be needed on the overall process. Equipments will be needed in raw materials transportation, processing, packaging, safety issues, and administrative task and so on. These are listed on the appendix
Inventory Control:
Inventory will be maintained with high concentration, besides, various inventory cost will be diminished like: * There will be no carrying cost because transported banana stem will be processed immediately. And as raw stems rot if stored, need for holding raw materials will be unnecessary. * There will be no shortage cost also as fibers will be extracted and yarn will be stocked in no time. So the risk of opportunity cost for losing orders will be eliminated
The Supply Chain:
Information Cash
Total satisfaction with quality, price, delivery and service
Technology
As extracting fiber from banana tree is overall a technological process, several equipments are used. These equipments are modified version of typical fiber extraction equipments. Required equipments have been listed below consecutively by phases of production: * Big size responder machine * Degumming Vessel * Steam boiler * Carding machine * Single ply machine * Hydro extractor * Water dresser * Mechanical softening machine * Platform weighing scale
Big size Responder machine:
This machine is used at the first stage of fiber production by which raw fiber (long & lined) is extracted from banana trunk. Two men can work together on this machine and 30kgs of banana fiber can be extracted per day. Supplier: Mac-Well Engineering Works, Mumbai, India
Degumming Vessel:
Degumming machine is used where an alkali solution is prepared and raw fibers are boiled for several hours on that solution. Supplier: Mac-Well Engineering Works, Mumbai, India
Carding Machine:
This machine includes S. S. non magnetic cover, 3 phase 2hp ISI electric motor & starter.
Machine size is 1mt x 0.6 mts x 1.3 mts
It is used to separate fiber into small clean fiber for making rope, sutali, fancy articles and etc. Supplier: Mac-Well Engineering Works, Mumbai, India
Single ply machine:
This machine includes 3 phase 1 HP ISI, standard electric motor & starter
It is used for making small rope, twisting sutali.
Weight: 40 kgs
Size: 1.1 mts x 1 mt x 1.1 mts
Production:30 kgs per day Supplier: Mac-Well Engineering Works, Mumbai, India
Hydroextractor
Hydroextractor is used for dewatering cotton, wool, loose fiber after the process of bleaching, dyeing,washing.
The parts contact with wet fibers are made by stainless steal. It's the most advaned dehydrate equipment. it is equiped with:
1, frequency inverter speed control system
2, special direct drive motor
3, balancing technique
4, complete timing, shock-proof and safe control system Supplier: Mac-Well Engineering Works, Mumbai, India
Mechanical Softening Machine
This machine includes a series of fluted rollers that gives the fiber necessary softness and pliability. Although it is widely used in Philippine to process fiber, India is also supplying it besides using. Supplier: Mac-Well Engineering Works, Mumbai, India
In fine, chart is given below to have a quick glance at the technology aspects of the business plan: Sl no. | Machine Name | Use | Capacity | Unit | Supplier | 1 | Big size responder machine | Extraction of raw fiber from banana trunk-surface | 35kgs/day | 2 | Mac-Well Engineering Works, Mumbai, India | 2 | Drying Machine | Drying fibers for further process | 65kgs/day | 1 | Mac-Well Engineering Works, Mumbai, India | 3 | Carding Machine | Separate fiber into clean fiber | 80kgs/day | 1 | Mac-Well Engineering Works, Mumbai, India | 4 | Single Ply Machine | Making small rope, twisting sutali | 35kgs/day | 1 | Mac-Well Engineering Works, Mumbai, India | 5 | Mechanical Softening Machine | Softening the fiber as necessary | 60kgs/day | 1 | Mac-Well Engineering Works, Mumbai, India | 6 | Degumming Vessel | Dyeing the fiber | 80kgs/day | 1 | Mac-Well Engineering Works, Mumbai, India | 7 | Hydro extractor | Dewatering fiber after dyeing | 80kgs/day | 1 | Mac-Well Engineering Works, Mumbai, India | 8 | Twisting Machine | Thickening fiber through twisting | 75kgs/day | 1 | Mac-Well Engineering Works, Mumbai, India | 9 | Spinning Machine | Finally spinning the fiber to bundle | 60kgs/day | 1 | Mac-Well Engineering Works, Mumbai, India | 10 | Platform weighing scale | Weighing the prepared fiber | | 1 | Mac-Well Engineering Works, Mumbai, India |
Responsibility towards Different Interest Groups
After getting some idea about the concept and importance of social responsibility of business let us look into the various responsibilities that our business plan has planned to have towards different groups with whom it interacts. The business generally interacts with owners, investors, employees, suppliers, customers, competitors, government and society. They are called as interest groups because by each and every activity of business, the interest of these groups is affected directly or indirectly.
Responsibility towards owners
Owners are the persons who own the business contribute capital and bear the business risks. The primary responsibilities of business towards its owners would be:
a. Run the business efficiently.
b. Proper utilization of capital and other resources that are planned to be invested.
c. Growth and appreciation of capital.
d. Regular and fair return on capital invested. Responsibility towards Creditors
Investors, those who will provide finance by way of investment in loaning and crediting. Banks, financial institutions, and investing public are all included in this category. The responsibilities of business towards its investors are :
a. Ensuring safety of their investment.
b. Regular payment of interest.
c. Timely repayment of principal amount. Responsibility towards employees The business needs employees or workers to work for it. Employment of (number of workers) would demand such responsibility. The responsibilities of business towards its employees would include:
a. Timely and regular payment of wages and salaries.
b. Proper working conditions.
d. Opportunity for better career prospects.
e. Job security as well as social security like facilities of provident fund, group.
f. Timely training and development. Responsibility towards suppliers
Suppliers supply raw materials of banana fiber and other items required by manufacturers and traders like machineries, dye, and chemicals. Certain suppliers, called distributors, supply finished products to the consumers. The responsibilities of business towards these suppliers would be followed:
a. Giving regular orders for purchase of goods.
b. Dealing on fair terms and conditions.
c. Availing reasonable credit period.
d. Timely payment of dues. Responsibility towards customers
No business can survive without the support of customers. As a part of the responsibility of this business towards them the business should provide the following facilities:
a. Products and services must be able to take care of the target market consumer.
b. Products and services must be qualitative, as we substitute banana fiber to cotton.
c. Implement of effective supply chain.
d. Price (amount) of the goods and services are rational .
f. we ensure proper after-sales service.
g. Grievances of the consumers, if any, would be settled quickly.
h. Quality control is another step as responsibility towards customer of ours. Responsibility towards government The business activities are governed by the rules and regulations framed by the government. The various responsibilities of business towards government are:
a. Setting up units as per guidelines of government
b. Payment of fees, duties and taxes regularly as well as honestly.
c. Not to indulge in monopolistic and restrictive trade practices.
d. Conforming to pollution control norms set up by government. Responsibility towards society
A society consists of individuals, groups, organizations, families etc. They interact with each other and are also dependent on each other in almost all activities. There exists a relationship among them, which may be direct or indirect. We as a business entity, being a part of the society, also will maintain its relationship with all other members of the society. Thus, it has certain responsibilities towards society, which may be as follows:
a. to help the weaker and backward sections of the society.
b. to preserve and promote social and cultural values.
c. to generate employment.
d. to protect the environment.
e. to conserve natural resources and wildlife.
World that searching to be sustainable though engrossing eco- friendly business plan, we are promoting social responsibility formerly as we choose banana fiber, a natural fiber.
:::: Social Responsibility and Community Development :::
Capital | Contribution | Human | The business provided new skill of fiber extraction and product preparation to rural women. A source of supplementary income to the families. Work place healthy and non-hazardous. | Social | SHG women interact with traders, officials of unit and buyers of product from different places - better social interaction. | Physical | As production is manual, many women are involved. The income generated by them enables to access basic necessities like education, health and other services. | Financial | Unemployed women get an additional income by working from their home. This gives them a financial independence and security. Sometimes the members of SHG get annual bonus out of profits. | Natural | Waste is biodegradable and forms manure. The industry does not compete for resources. Harmless to neighbors. |
::: The Financial Projection :::
We have made up some financial assessments relatively to our project. These projections have been done in these sights :
1. Annual Fiber Production :
We Do have a Limit to produce approximately 18000 Kg of Banana Yarn (dyed), We have the machineries to provide the quality that serves best. Being Defensive about the profit, we have illustrated that , we could fail to make the highest optimal production in the First 3 years of operation but the cost we have assumed to be the highest it can get.
Production | Year 1 | Year 2 | Year 3 | Fiber | 12000 kg | 13000 kg | 14000 kg |
2.Employment Generation: We will be in need of people who will work along. There will be 14 people working all along with the machineries. These machineries are not hard to be trained into ease yet the workers will be given proper training for the process. Alongside the workers there will be a full time Driver working with us for transportation. There will be an Operational manager for controlling and a Technical Engineer will maintain the machineries. We will employ 30 contractual-based day laborers who will work in the fields for cutting and storing the Banana Yarns. | Number of Employees | Monthly Payroll(TK) | Annual Payroll (TK) | Direct Employment | 15 | 10000 | 1800,000 | Operational Manager | 1 | 30000 | 360,000 | Maintenance Manager | 1 | 20000 | 240,000 | Seasonal Employment | 30 | - | 300,000 | Total | 47 | | 2700000 |
3. Cost of Raw Materials: ( Up To Factory )
This costing will show how much we will need to make the Raw materials up to factory. (A) Per Acer cost : (App : 1) | Unit | Unit Cost (TK) | Banana Stems Collection | Per Acre / 280 kg | 15000 | Transportation In-warding | Per Acer / 280 Kg | 5000 | Total | 20000 |
(B) Per Kg cost : | Unit | Unit Cost | Banana Stems Collection | Per kg | 54 | Transportation In-warding | Per kg | 18 | Total | 72 |
Approximately 10 kg of Raw Banana Stems produce 1kg of Raw Banana Fibers.
As we have our highest Production Rate of 60 kg Fibers per day.
So we approximately need (60*10) = 600 kg Banana Stems per day. (C) Per Day Raw Materials Cost : (Appendix :2)
These are the cost showing the raw materials cost overall. | Unit | Unit Cost (TK) | Total units | Total Cost (TK) | Banana Stems Collection | Per Kg | 54 | 600 | 32400 | Transportation In-warding | Per Kg | 18 | 600 | 10800 | Chemicals and Dye | | 30 | 600 | 18000 | Overall Cost | | 102 | | 61200 |
(D) Per Week & Year Raw Materials Cost : | Cost Per Day(TK) | Cost Per Week (TK) | Cost Per Year(TK) | Banana Stems Collection | 32400 | 194400 | 9720000 | Transportation In-warding | 10800 | 64800 | 3240000 | Chemicals and Dye | 18000 | 37800 | 1890000 | Overall Cost | 61200 | 261000 | 14850000 |
4.Utilities Cost Per Day:
This is the utility bill that might be used for a year in the production process
| Unit Production (KG) | Cost Per Unit (TK) | Total Cost Daily (TK) | Utility Cost Per YEAR(TK) | Electricity | 60 | 12 | 720 | 216000 | Fuel and Gasoline | 60 | 6 | 360 | 108000 | Water | 60 | 4 | 240 | 72000 | Others | 60 | 5 | 300 | 90000 | Total | | 17 | 1620 | 486000 |
5.Cost Of Production : ( Cost Of Goods Sold)
So this would be the cost of Goods sold (18000 unit) according to the relative costs along with their Daily, Weekly and Yearly costs. | Per Day | Per Week | Per Year | Direct cost | | | | Banana Stems Collection | 32400 | 194400 | 9720000 | Transportation In-warding | 10800 | 64800 | 3240000 | Chemicals and Dye | 18000 | 37800 | 1890000 | Direct labor | 7000 | 42000 | 2100000 | Utilities | 1620 | 9720 | 486000 | Indirect Cost | | | | Salaries And Wages | 2000 | 12000 | 600000 | Utilities | 1500 | 9000 | 450000 | Electricity, and others | 200 | 1200 | 60000 | Depreciations | 2500 | 15000 | 748800 | Total Cost | 76020 | 456120 | 19294800 |
6. Cost of Property, Plant & Equipment (PPE)
We will see the cost of Our PPE according to the Present Market Value PPE | Quantity | Unit Cost | Total Cost | Land | 14 Decimal ( 8000 Sft) | 100000 | 14,00,000/- | Building | | 15,00,000/- | 15,00,000/- | Transport Vehicle ( Loan payment) (Appendix # 3 ) | | | 400,000 | Office Furniture | 2 Sets | 50000/- | 100000/- | Responder Machine | 2 | 142,000 | 284000 | Drying Machine | 1 | 70000 | 70000 | Carding Machine | 1 | 100000 | 100000 | Single Ply machine | 1 | 35000 | 35000 | Mechanical Softening Machine | 1 | 550000 | 550000 | Degumming Machine | 1 | 500000 | 500000 | Hydro Extractor | 1 | 500000 | 500000 | Twisting Machine | 1 | 325000 | 325000 | Spinning machine | 1 | 500000 | 500000 | Platform Weight Machine | 1 | 30000 | 300000 | Generator | 1 | 350,000 | 350000 | Total | | | 6914000 |
8. Administrative Costs :
The Administrative cost consists of All Export processing, Promotional , Head Office and other costs. Particulars | Monthly Cost | Total Cost (TK) | Office Rent | 25000 | 300,000 | Promotional Expenses | | 2500000 | Decorations | | 30000 | Administrative Expenditure | 180000 | 2160000 | Loan Repayment with interest (Partial) | 282330 | 3387850 | Furniture & Stationeries | | 50000 | Utilities | 3000 | 36000 | Pre-Operating Cost (Portion) | | 35000 | Total | | 1451000 |
9.Use of Funds :
Funds from the Promoters and loan will be directed towards these costs. Particulars | Area | Cost | Total | From Capital Of Promoters | Capital Expenditure | | | | Land | 1,400,000 | | | Machineries | 3,514,000 | | | Buildings | 1,500,000 | | | Operational Expenses | 1,858,800 | | | Cost Of Goods Production | 15,546,000 | 161,34,000 | From Cash Loan | Administrative Expenses | | 8,498,850 | Total | | | 25909650 |
11. Cash flow Statement
Another most important aspect of the Financial prospects is Cash Flow statement which will show about the cash flows and other aspects.
| | | Initial investment | 10,201,850 | Tk | NPV | 1,33,026,818 | Tk | Break Even Volume (KG) | 8,665 kg | | Pay Back period | 1 years 3 months | | Average Net Income | 6,459,350 | Tk |
Management organ Gram :::
As our partnership business well run over a certain management under our votes, we have decided to post up this management infrastructure. The Positions and Duties will be selected by the principal partners.
The SWOT Analysis :::
Strength * Raw material freely available * Skill training easily available * Process Technology simple * Machinery available locally * Requires less capital * Product non-perishable
Weaknesses
* Machine made- poor quality * Current prices not attractive * No aggressive marketing * No special incentives * Done by SHG with low capital
Opportunities
* Demand for natural fibers based products increasing * Cost of production is very low. * Scope for export.
Threats/Challenges
* Competition from synthetic fibers
Some Important Qs and our Project: 1. Are there any substantial barriers to entry?
Though the barriers to entry are not that much substantial, it is not very low either. The following factors might pose problems for a newcomer: * Specialized knowledge requirements for the new entrants. * Technical know-how * Lack of access to good distribution channel
2. What is the degree of company’s dependence on its key production personnel?
To utilize the available cheap labor, all that we need is to train them up. Since there are abundant supply of labor and the training cost is relatively low, company’s dependence on them is not very high.
3. What are the company’s efforts to keep production costs low?
To keep the production cost low, we are going to set up our factory at Natore- where most of our required stem would be sourced from. In addition, we will be following the core principles of Total Quality Management (TQM) which will ensure both quality and low cost.
4. Do the respective entrepreneurs have adequate knowledge of products and production?
Yes they do have so. Right from the start, all of them have remained involved in the total planning and decision- making process of the firm.
5. How will the company remain competitive in the coming days?
While we are in a high- growth industry, we believe that maintaining our competitive advantage will be increasingly challenged. So we have a plan in this regard which include the following factors : * Building up a profitable and sustainable relationship with all our buyers and suppliers * Adding up new product line as we proceed * Maintaining the desired quality specifications of the buyers without any compromise.
Assumptions related to our estimations: 1. The financial plan is intended to serve the potential as well as the existing investors a clear and decent sensitivity about the performance of the business in the coming years. 2. The business will run its operation for infinite time period i.e. “Going concern principle” will be followed by the company. This principle will be the basis of all financial decisions taken by the management body of the company. 3. Financial projections are made under the historical cost convention based on generally accepted accounting principle. 4. Growth in sales is calculated on the basis of reasonable forecast. 5. Exchange rate: tk1= BDT 73.00 has been used for the calculation. 6. Depreciation of all relevant fixed assets has been charged according to “Straight-Line Method”. In addition, depreciation for Factory building and machineries has been charged.
Appendix :
Appendix : 1. Estimation Of Raw Materials :
According To , In the World, in common Banana firms, A Hectare of Banana Tree Attitude | Production | 1 Hectare Land | 70 kg Banana Fiber | 1 Kg of Banana FIBER | 10 kg of Banana Stems | 1 Hectare banana cultivation | (70*10)= 700 kg Stems |
According To Mr. Samsul Huda Bhuiya , of an official the Bangladesh Agricultural Extension Department (BAED) in Dhaka , In the Agricultural year of 2010
Attitude | Production (per year) | 1 Hectares= 700 kg Banana Stems | Total banana cultivation In Bangladesh | 40500 hectare | 28350000 Kg Stems | In Northern Region( 61% of Total Banana Cultivation) | 24705 hectare | 17293500 Kg Stems | Around Natore Regions + Dinajpur ,Rajshahi, pabne, Shirajgonj and others ( 59 % of Nothern Region) | 14576 hectare | 10203200 Kg stems | In Natore District ( According to BAED, 2010) | 645 hectare | 451500 kg Stems | In Bonpara Of Natore | 285 hectare | 199500 Kg stems |
2. The Cost of Chemicals And Dye
Overall Chemicals use : cellulose, hemicelluloses, and lignin
Dye Use : Vegetable Colors and Synthetic Colors Chemicals And Dye | Cost | cellulose | 60,000 | hemicelluloses | 60,000 | lignin | 100,000 | Dye | 320,000 | Total | 540,000 |
So per Kg cost : (540,000/180000= 30 tk
3. Vehicle Loan
We will pursue a vehicle loan for a MINI-TRUCK which can load up to 2 ton = 2000 kg. this loan will be for 3 years on a Straight interest rate value of 4,000,000 tk with interest for 11 years.
This will cost us : (4,000,000/10)= 400,000 per year.
After the payment period ends, the Ownership of the Truck will be ours.
4. Calculation: The Break-even Volume Fixed Costs Particulars | Amount | Variable Costs Particulars | Amount | Employee Remuneration | 2700000 | Raw Materials and other Direct Costs | 14850000 | Property,Plant and Equipment | 6914000 | Utilities | 486000 | Administrative Costs | 1451000 | | | Total | 11065000 | Total | 15336000 |
Per- unit Price: Per 200 g = tk7
So, 1 kg price= tk35 which if converted into BDT is (35*73) 2555 TK.
Per- unit Variable Cost: Per- year projected sales volume is 12000 units
So, per- unit variable cost= 15336000/12000=1278 TK.
And our Fixed Cost is= 11065000
So the Break-even Volume= Fixed cost/(Price- Variable Cost) =11065000/(2555-1278) =8665 Kg
Citations: 1. Rhonda Abrams, THE SUCCESSFUL BUSINESS PLAN- secrets and strategies, Fourth Edition, PHI Learning (pvt) Limited, New Delhi. 2. Van Horne & wachowicz Jr. Fundamentals of Financial Management, Eleventh Edition, Pearls education. 3. Kotler & Armstrong, Principles of Marketing, thirteenth Edition, Pearls Education. 4. James T. Russelle, Operations and Supply Chain Management, Sixth edition. 5. Samrat Mukhopadhyay, Raul Fangueiro, Yusuf Arpaç, Ülkü Şentürk “Banana Fibers – Variability and Fracture Behaviour” 6. Ministry of Textiles, Government of India, “Focus Fiber Focus State” 7. Technology Resource Centre (TRC) Philippines.www.trc.dost,.gov.ph
