A Business Plan On A Retail format on womens formal wear and accessories Submitted as an Internship Project Report In Partial fulfillment

of the requirements for the Award of degree of Masters of Business Administration

2010-2012

Submitted By Palak monga Guided By MRS. NEETU JAIN

Bharati Vidyapeeth Institute of Management & Research (BVIMR), New Delhi NAAC Re-Accredited Grade A University An ISO 9001:2008 & ISO 14001:2004 Certified Institute Ranked in Top 50 B-schools in India By Business India CRISIL Grading MBA Programme A*-National Level, A**-State level Recipient of B-school leadership award From Star News

Certificate of Originality

This is to certify that the project report entitled A RETAIL FORMAT ON WOMENS FORMAL WEAR AND ACCESSORIES submitted to Bharati Vidyapeeth University in partial fulfillment of the requirement for the award of the degree of MBA is an original work carried out by Ms. PALAK MONGA under the guidance of MS NEETU JAIN. The matter embodied in this project is genuine work done by PALAK MONGA to the best of my knowledge and belief and has been submitted neither to this University nor to any other University for the fulfillment of the requirement of the course of study.

Signature of the Student

Signature of the Guide

Name

Name & Designation

Certificate

This is to certify that the Business Plan titled A RETAIL FORMAT ON WOMENS FORMAL WEAR AND ACCESSORIES is an academic work done by Ms. Palak monga under the guidance of Ms Neetu jain submitted in the partial fulfillment of the requirement for the award of the Degree of MBA from Bharat Vidyapeeth University, New Delhi. The authenticity of the business plan will be examined by the viva examiner which includes data verification, checking duplicity of information etc. and it may be rejected due to non fulfillment of quality standards set by the Institute.

Dr.Sachin S. Vernekar Director

Acknowledgement

I would like to thank to Ms Neetu jain for giving me the opportunity to prepare a business plan as it would have been difficult for me to understand the details and completing this project in this shape without her necessary guidance and inspiration.

I am obliged to Ms Neetu jain who has helped me in providing me necessary information on formatting our final project.

Palak monga

CHAPTER 1 EXECUTIVE SUMMARY

A Retail outlet for women western formal clothing and accessories

1.Executive Summary
Overview Woman folk is an upscale women's clothing retail outlet that offers wide range of western formal wear outfits for the working professional . The tagline for brand Woman folk is Dress for Success . The clothing store which will be run by the sole proprietor with initial investment of Rs 3000000 Woman folk clothing selections and exclusive personal style services, which include a detailed Style Assessment, will ensure that our customers are well dressed. The business is based on brick and mortar concept of a retail outlet. Woman folk will carry Ready-to-Wear (RTW) designer apparel & accessories for women. The brand focuses on the young , middle and senior level of women employees that spend most of the time at work. The store is approximately 2500 square feet. It contains two dressing rooms.

Target market

The customer of woman folk is a busy professional woman. She enjoys the boutique fashions and wants a place where she can go to get services that meet her busy lifestyle. We target the young professional aspiring for corporate world that want their first impression to be the lasting aspiration , the middle and senior level women that prefer comfort and style in their busy working environment.

CHAPTER 2 OBJECTIVES OF BUSINESS PLAN

2. Objectives
To develop a start-up business, creating a niche in the market. To cater to the growing women empowerment in corporate world by offering them a perfect attire To create a product-based retail store whose primary goal is to exceed customer's expectations To maintain profit margins at 15-20% through close attention to expenses and cost of goods sold To increase the number of clients served by 20% per year by serving an unmet need with outstanding selection and customer service.

CHAPTER 3 MANAGEMENT TEAM

3.People ( Management Team)

sole proprieter

Business development manager

alteration department

Salesperson

salesperson

salesperson

Salesperson

Tailor

Description of management team Sole proprietorship: A sole proprietorship, also known as the sole trader or simply
a proprietorship, is a type of business entity that is owned and run by one individual and in which there is no legal distinction between the owner and the business. The owner receives all profits (subject to taxation specific to the business) and has unlimited responsibility for all losses and debts. The sole proprietor is the decider regarding the outlay of the whole business. From deciding the styles of apparels, quantity ,designs to taking advice from a retail consultancy on how the outlook should look like.

Business development manager: Business development manager is also known as economist or a business planner. A manager should devote his attention to business development and exploiting the business opportunities that are presented to him and his organization. Business development and making your organization successful is reliant on good knowledge of best practice and management theories. He will also undertake the task of entry and exit of salesmen

Salesperson : There are four full time salesperson each assigned with a specific job
responsibility. Each sales individual would be assigned a particular department and they are required to achieve monthly targets. On achieving the sales targets incentives would be given accordingly. The wages for these employees will be Rs5000 monthly. We will not be offering
benefits for the first couple of years. Employees will do the cleaning of the building.

Salesperson 1/2 : He will take care of apparel department. In addition to achieving the sales
target the core responsibility would be to retain the customer. The salesperson are required to greet customers with smile and maintain courtesy while and after customer has shopped.

Salesperson 3/4 : They will take care of accessories and footwear department.

Alteration department Tailor: A skilled tailor would be hired for alterations and perfect fittings. He should be quick
in his task and must understand the customers need. The altered clothes are not meant to be taken back in the outlet.

CHAPTER 4 ENVIRONMENTAL SCANNING OF BUSINESS

4. Environmental Scanning of business Industry Analysis and Trends

The Indian retail industry has grown at a Compounded Annual Growth Rate (CAGR) of 13.3% for the period FY06-10. The growth in the Indian economy since the last decade and the change in consumption pattern of the Indian populace in terms of higher proportion of middle class population, greater proportion of working women etc can unarguably be linked to the growth of the Indian retailing industry. . Of all the segments in retail, the contribution of clothing & footwear segment remaining the second largest contributor occupying 10% of the total retail pie . The Indian retail industry has witnessed rampant growth over the last decade. However, during the economic recession since the latter half of FY09, the retailers especially in the organised segment suffered a set-back in the form of declining revenues and halt in their capex plans. The unemployment situation, further aggravating the fear of job losses during the recession, resulted in muted consumer spending with the consumers choosing to spend on necessities rather than discretionary items; the industry thus witnessed decline in footfalls, conversion rate, which was especially apparent in the decline of same store sales. In spite of the said challenges, the authors expect the Indian retail industry to grow on the backdrop of expectant rise in the countrys Gross Domestic Product (GDP) during the period FY11-FY13. The rise in income level of the Indian populace, in turn, is expected to fuel the domestic consumption ultimately resulting in higher revenues for the Indian retailers. Importantly, the authors expect the penetration of organized retail in the total retail pie to increase by FY13 owing to the expanding reach of the retailers to tier-II & III cities accompanied by higher consumer spend on discretionary items. Also, in an attempt to increase margins, the authors expect the retailers would restore to adapting measures such as increasing the share of private labels in the total store sales, reducing store level operating expenses etc. Retailing has experienced more changes during the past decade than it did in the preceding generations. Although one can argue that retailing is still a domain of small businesses , in recent years slightly more than 80 percent of all sales were generated by stores with sales above $1 million. In addition, the growth of discount retailers has increased at a rate, some experts claim, three times that of the industry. Retail customers of the 21st century are significantly different from retail customers of a decade ago, and retail strategies need to be reassessed in view of the changing demographics and new buying patterns.

SWOT ANALYSIS STENGTHS

1. 2. 3. 4. 5. 6. 7. Availability of women formal wear and matching accessories under one roof Strategic location of outlet at the entrance of amll Quality product and service Products of varied styles and fit Alterations as per sizes within the stipulated time Cost of product lower in relation to competitor A highly dedicated sales team that are expected to meet monthly targets

WEAKNESS 1. Start- up venture with only one outlet 2. Not prone to ups and downs of the market 3. No diversified business in mens formal wear hence less expertise

OPPORTUNITIES
1. E-retailing purchase by customers 2. Catering to the growing population that aim to enter corporate world THREATS 1. 2. 3. 4. 5. Entry of new or existing player in womens wear market Upcoming FD1 in retail sector Shift in preference of style Women may find Indian wear more comfortable and economical Threat from the unorganized retail sector

SWOT ANALYSIS OF COMPETITORS(van heusen)

Strengths 1. Competitors already have experience in mens formal wear market .The expertise of mens formal market could be viably used in womens formal wear market. (eg van heusen) 2. Competitors are offering products from exclusive business units 3. Competitors have their presence in pan India
4. The competitors have positioned themselves in the minds of customer from many years. 5. Competitors are more prone to ups and downs of the market.

Weakness 1. The competitors does not provide western formal wear and accessories like belts and formal shoes or bellies under one roof as against woman folk 2. The competitors like van heusen are not wholly concentrated on woman wear 3. Prices offered to customers are cheaper than competitors 4. Use of Facebook to track corporate indiviuals Opportunities 1. Online registration and booking 2. Increased use of CAD to develop designing capabilities 3. Can invest in trend forecasting to enable growth of the industry 4. Can cater to corporate in other metropolitan cities

Threats 1. The Indian women are still inclined towards Indian wear like kurtis ,suits and sarees. 2. Entry of new or existing player is a threat 3. Change in culture of corporate world

Opportunities and Reasons Of Entry Of Business

The world is talking about gender parity and eliminating the gender gap. Gender diversity is now much emphasized in corporate scenario and the top business organizations are making efforts to promote women in every sphere of activities. IBM, the technology giant has recently launched leadership programs for women. These are the areas which are dominated by males in most organizations. The objective is to create an accelerated leadership pipeline to complement the companys succession program for women in general management that was launched in 2009. Mr. Sripada, IBMs Vice President and HR Head in India says, A diverse workforce is a business imperative. It means greater innovation and creativity at the workplace and better understanding of the marketplace. A recent study conducted by the researchers at Catalyst and Harvard Business School also confirms that the women leadership is the next corporate revolution. The study tracked the philanthropic activities of Fortune 500 companies for 10 years from 1997 to 2007 and it was found that the companies where top positions are mostly occupied by women contribute more charitable funds. McKinsey, the international management consulting firm also proposed in one of its recent studies that gender diversity is not a social concern; rather it can be used to create competitive advantage to face the global challenges. Women portray different leadership styles as compared to males and this can very well be utilized to create a competitive advantage in the marketplace. So the next corporate revolution is emerging at a fast pace and the corporations having made succession plans accordingly will win the race.

Growth drivers Globalisation of Indian businesses, which is a key growth driver in the retail industry, also demands women to wear clothes with an international touch. With video conferencing making the world visibly smaller, the right attire is more important than ever today. Market surveys indicate that though the womens wear market is dominated by traditional wear like sarees, kurtis and salwars, urban western apparel has shown rapid growth. The changing outlook of the society towards working women has also played a key role in the transformation. Women today are opting for clothes that are comfortable, hassle-free and more fashionable in the international context. Foreign apparel retailers and lifestyle brands entering the Indian market have also played a crucial role in changing the tastes. More money in the hands of the urban working woman has also enhanced their purchasing power and this is reflected in the best sellers of some of the formal wear brands like Van Heusen and Allen Solly. According to US based fashion designer Jyoti Khaitan Goel, Indian women today are more exposed to Western ideas than ever before. The rise in the demand of formal western clothes like shirts, trousers and formal dresses is understandable because a large number of Indian businesses today have global clients.

Comfort factor In the Indian business space, women employees today are realising the benefits of western wear as well. These clothes offer more flexibility and comfort. Fusion wear has also risen in popularity in tier II and tier III cities. Combining traditional ethnic tops like kurtis and short kurtis with jeans and other western bottoms has also propelled the retail growth of womens western wear in these regions. Enakshi Kundu, brand expert and business development manager at Ideazfirst, an established event management and experiential marketing firm in Kolkata, explains, In jobs such as PR and corporate communication, where there is a lot of client interaction, formal urban wear has become an absolute necessity. I think they are more convenient for everyday wear. However, when it comes to formal occasions and even certain important corporate parties, wearing a saree is most appropriate, as it is the ultimate Indian formal wear.

Retailers have already understood the huge potential that the womens urban wear has in the Rs 65,000 crore womens wear industry. While the collection just ahead of the festive season may not be the best indicator, it is clear that retailers will shift to their new western to ethnical ratio in the months ahead.

Limitations of business

Analysts say the market is still evolving; some women say the formal, Western wear available is both expensive and unsuitable. And some women say the formal, branded Western wear available in the country is not made with the bodies of Indian women in mind, or both A lukewarm response has forced many of them to either roll back their lines or overhaul them in an effort to expand the customer base. Analysts say its difficult to estimate the market size for a segment thats still evolving in India. Around 95% of working women in India wore salwar suits to work, and perhaps not many of them would be willing to shift to Western corporate wear Womens wear is complicated over menswear as its trends are capricious, and keep changing quickly

5 Manufacturing and Operations A. Location of production facilities

The location for production facility is outsourced. The outsourcing of production facilities is to reduce the cost of operations like fixed cost. Eg Factory rent , Telephone and electricity charges, salaries of workers. Strategies followed to locate outsourced production facilities 1. Networking : Using personal contacts to gather information about manufacturing and production facilities 2. Search engine and other apparel manufacturing sites Factors that influence the location: Transport cost: The proximity of location of the manufacturing house to and from the retail outlet. The closer the manufacturing house to the retail outlet less transportation cost will be incurred. Hub of manufacturing houses: The location of the manufacturing house must in a hub of manufacturing houses, The reason is to get products manufactured at competitive charges/

B. Product modification necessary to adapt to local environment

To venture into a new business it is necessary to adapt to the new/local environment to beat competition. Following points are to be kept in mind while entering into a textile industry 1. Sizes: 2. Quality 3. Color combination 4. Styles and fit 5. Packaging 6. No of range

CHAPTER 6 PERSONNEL STRATEGIES

6. Personnel strategies
Textile is industry oriented field where lots of processes are there to carried out raw material\fibers to finished garment. In this we have required technical skilful and motivated peoples. For textile, a little bit differences in the scope, approach in HR concept, because here peoples think differently, expect differently. In textile, environment is different as compare to other origination or industry, here more interaction to be carryout around 80% manager spend time in handling of human resources . A very common problem always exist in every textile oriented that is conflict ( grievance) in intra department or in worker and management, so this HR(HRM) play as a tool to resoles this problem efficiently .HRM increase the communication ,coordination and involvement so that chances of misunderstanding will be minimum. Even in organizations with educated and experienced staff, due to the lack of cooperation on part of the management, the department cannot carry out its functions. The basic concept of HRM is to attract and retain the right person at right place in right time with right remuneration. In textile HRM should appoint the skillful employ at the right ,appropriate ,correct place where hr express his capabilities ,because if we place sensitive people at spinning production then he will face so many problems. For textile, it is compulsory to that the company treat the employee as an asset of the company. A simple human transform as a asset by selection of right person for right place & trained him and provide adequate career development opportunity. In textile a major issues is the wages and salary with time (promotional), so HR took care about that and make structure in such way that it satisfies both ie worker(employees) and management .HR play just like a bridge between management and employees, some body termed this jobs as a thanks les job. The textile industry had gone through a tough phase, but now textile industries want to capture the global market, so they are thinking on overall improvement. Many issues such as better productivity and production, infrastructure upgradation, social compliance, and labour problems, coordination, customer relationship are still grappling the industry and efforts at small levels towards the betterment of the existing scenario are on However, amidst realization and solutions to all these problems, one necessary aspect - human resource management ,which includes the human resource development - that can definitely help the industry go a long way, has been left out.

A. Personnel needed to manage the business

There seems to be a high level of attrition in the retail sector . 40% Front end jobs are facing an attrition rate as high as even 80%.A retail outlet should have a strong internally developed employee backing which gives a major push to the company's lead position in the retail industry. Under the present circumstances, retention and motivation of personnel has become the major concern of HR. A congenial working atmosphere, support learning and training facilities, a highly competitive pay structure are some of the effective retention practices followed by the retail sector. While money is the main attraction for freshers and starters, career satisfaction is the main reason with experienced personals. Assigning the "right project to the right person" is the organizational motto these days .

B. Experience and expertise of existing personnel

Some of the essential skills required to make sales include your convincing power and persuation. Communication skills are crucial for the sales job applicant because it's not just about education or experience, but how the sales person presents that information to the potential customer. Successful sales individual for sales jobs have more than good written and verbal communication skills they must be able to hold eye contact in a comfortable manner and know when to listen and when to speak. The attitude of the salesperson must be likable and confident. The more likable and reasonable people in sales jobs are, the more successful they tend to be. This attitude coupled with a solid understanding of the product or service being sold can increase sales for a company. Salespeople must also be able to handle rejection well since, no matter how successful they are at sales, there will always be people that don't wish to buy the product or service they're selling.

C. Training needs of expertise personnel

a. Custom Tailors and Seamstresses Custom tailors and seamstresses have additional years of experience in the industry. Some learn sewing skills through high school or community college classes. Seamstresses or tailors may run their own shops. Textile professionals who own businesses may have taken business classes, perhaps through a vocational school or community college.

b. Sales A salesperson in the textile industry must have a degree from an accredited postsecondary school. Also required is solid experience in marketing and promotion; an understanding of the wants of certain demographics; and the ability to negotiate deals with organizations, retailers and designers. Duties of the position include cold calling existing and prospective clients and creating direct sales materials such as brochures and catalogs. Other skills necessary to successfully perform the job include the abilities to work well independently and to motivate sales teams. c. Inventory control manger
There are areas of the textile industry where professionals who receive education and training in this discipline may work include merchandising, inventory control, sales promotion, public relations and human resources.

D. Training policy
The policy states that it is mandatory for each employee to undergo training for 3 months as a part of probation period. The training schedule would be twice a week

CHAPTER 7 MARKET RESEARCH

Market research A. Market conditions 1. Existing demand of target market

Gone are the days when womens wear in India was restricted to ethnic outfits like a sari or salwar kameez. With changing mindsets and more number of women joining the corporate world, now, western wear is dominating shop shelves not only in metros but also in small towns.. From 2009 onwards, there has been a huge jump in demand for womens western wear. According to Technopak Advisors, womens western wear is clocking around 18 per cent growth as against 9 to 10 per cent for ethnic wear. Although the Rs 65,000 crores womens wear market is dominated by traditional clothing like saris and salwar kameez, western wear apparel, which includes trousers, skirts and formals is increasing rapidly. There are sections of women consumers who wear western clothes 4 to 5 times a week, while others like to wear them 2 to 3 times a week. Reliance Trends has a balanced mix of western and ethnic wear in the ratio 50:50. In jobs where client interaction is high, formal urban wear has become an absolute necessity. More money in the hands of the urban working woman has also enhanced her purchasing power. Indian women today are more exposed to western ideas hence, the rise in demand for formal western clothes like shirts, trousers and formal dresses. Moreover, women employees today are realizing the benefits of western wear. These clothes offer more flexibility and comfort. No wonder, brands like Zara, Mango and Esprit are increasing their presence in the India. This is also helping in pushing up awareness about western wear in the country. Fusion wear has also risen in popularity in Tier II-III cities. Combining traditional ethnic tops like kurtis and short kurtis with jeans and other western bottoms has also propelled the retail growth of womens western wear. Meanwhile Pantaloon Retail has been witnessing a shift to western wear in smaller towns as well. Kailash Bhatia, Chief Executive (Fashion), Pantaloon Retail believes the reason for the shift is more awareness about international trends. Nearly 50 per cent of its women wear shelves are stocked with western wear now.

2. Competition
At present, top Indian brands like Allen Solly, Scullers and Van Heusen are active in this space. For them womens western wear is an extension from their men's line. The organised market for formal western women's wear is estimated at only Rs 200 crore. ALLEN SOLLY In September 2002, leading Indian apparel company, Madura Garments (Madura, Refer Exhibit I for a brief profile of the company) launched a line of readymade women's western wear under the brand name 'Allen Solly Women's Wear.

MADAME There are brands like Madame, who offer womens western wear through their EBOs. Madame, for example, has the usual denim and capris, in addition to a range of pleated and flared skirts, collared shirts, cotton day dresses and formal ensembles Buoyed by the growth in this segment, Madame plans to have 150 exclusive stores by 2012 VANHEUSEN Van Heusen Woman is betting big on dresses, which became the fourth largest category in the previous fiscal and continues to grow at an exponential rate. By fiscal year 2012, it is slated to become the dress destination in the country by selling the highest number of dresses by a homegrown western fashion formal brand. RELIANCE TRENDS Reliance Retail's apparel and accessories value chain Reliance Trends has seen a good response for its private brands Network and Netplay that offer the spectrum of pure formal and Indo-western offerings for its women's office-wear category. ARROW (Arvind mills) Textile and apparel major, Arvind has adopted a more aggressive approach towards womens wear. Arrow now operates 65 outlets across India but the womens wear range is available only in top 20 outlets of Arrow.

3. Strengths and weaknesses of the industry barrier to entry

As more and more women enter the corporate sector and Indian businesses go global, western formal clothes have seen a great surge in demand. Retailers are known to research on the market trends to decide on their collections and it looks like womens western wear is likely to occupy the maximum shelves in the days ahead. Some of the major retailers have revealed that they have increased the ratio of western urban wear to ethnic wear to 50:50 keeping in mind the increasing demand of these clothes. Globalization of Indian businesses, which is a key growth driver in the retail industry, also demands women to wear clothes with an international touch. With video conferencing making the world visibly smaller, the right attire is more important than ever today.

CHAPTER 8 MARKETING PLAN

Marketing Plan Product strategy

As more and more women enter the corporate sector and Indian businesses go global, western formal clothes have seen a great surge in demand. Retailers are known to research on the market trends to decide on their collections and it looks like womens western wear is likely to occupy the maximum shelves in the days ahead. Womens Western wear, a term that refers to formal dresses, pants, shirts, skirts and suits .Trendy formal suits with band collar, stylish silhouettes, pockets, and classic lapels will see good market, making the wearer to stand in par with corporate ethics, and give a good appearance as well.

Pricing strategy
The pricing strategy for a retail outlet is adopted keeping in mind the competitive situation of the womens formal western wear market. The competitors move is constantly seen through birds eye view.
A cost leadership strategy aims to exploit scale of production, well defined scope and other economies producing highly standardized products, using high technology. Price penetration strategy is adopted for a start up venture.

ITEMS FORMEL SHIRTS FORMAL TROUSERS FOOTWEAR BELTS AND OTHER ACCESSORIES FORMAL SUIT

PRICE RANGE 250-800 400-1000 300-900 250-600 400-1200

Promotion strategy
Promotion: As a new brand, an aggressive campaign would be required in the initial phases. This would mainly focus on business channels and upmarket publications. The brand name needs to have a strong feminine component. Some of the suggestions for the taglines would be - An idea whose time has come. and I know no ceilings. In addition to the media campaigns, to position itself as the working womans brand, involvement with supporting women-specific initiatives launched by companies (like Infosys Womens Inclusivity Network) can further strengthen the brand. For example, this could take the form of sponsoring a conference to share best practices for supporting women at work. Social media is another medium which can be used for this purpose, for instance, hosting Facebook groups for women to share their experiences and success stories. DISTRIBUTION STRATEGY Distribution strategy is influenced by the market structure, the firm's objectives, its resources and of course its overall marketing strategy.

MANUFACTURER

RETAILOR

Channel of distribution at initial stage

1 MANUFACTURER

2 WHOLESALER

3 RETAILOR

Channel of distribution at later stage

Factors affecting the distribution channel

1. Lead time : The amount of time that elapses between when a process starts and when it is completed. Lead time is examined closely in manufacturing, supply chain management and project management, as companies want to reduce the amount of time it takes to deliver products to the market. In business, lead time minimization is normally preferred.

2. Transportation cost:
3. Product Consideration : The type and the nature of products manufactured is one of the important elements in choosing the distribution channel. An entrepreneur producing a wide range of products may find it economical to set up his own retail outlets and sell directly to the consumers 4. Market Consideration: Another important factor influencing the choice of distribution channel is the nature of the target market. If the number of prospective customers is small or the market for the product is geographically located in a limited area, direct selling is more suitable.

Segmentation. Targeting and Positioning Segmentation Basis for Segmentation of market: 1. Occupation
Working women vs. homemaker As more and more women enter the corporate sector and Indian businesses go global, western formal clothes have seen a great surge in demand. About 30-35 per cent of the estimated 480 million jobs are being performed by women. These are full-time working professional women aims for a perfect look 2. Age( 20-35) The women of India join the corporate world after completing graduation at the age of 20. The target marketfor this brand are the women/young girls aspiring for a job in a corporate world

3. Disposable Income
Increase in the level of their disposable income, has motivated the growth of this segment. With the increase in the income level of women, and a metamorphosis in their lifestyle, positive opportunities await the womens wear market.

Targeting
Targeting: Focusing on younger women (20-35 years) would be ideal as this segment would be better suited for building a premium brand with a deep-seated identity. This brand can be made an aspirational one and extended upwards in terms of age in the future. Only one brand should be created so that the company can focus its resources in this segment. The brand can be targeted at the modern corporate woman in at a junior or middle management. Once established, the brand can be extended to target higher level management. Depending on the brands success, a new/related one can be introduced later on as a smart casuals brand for women.

Positioning:
In the first phase (targeting of younger professionals), the brand can be positioned as one which appreciates the unique nature of women who rise to high level positions while juggling family

responsibilities. The brand shares the journey with them and when they get there, the brand is the
womans way of making a distinctive feminine statement. .The brands position in the minds of young women just stepping into their first jobs as a reassuring, comforting friend who is with them from the very beginning as they start their careers. Later on, a line under the brand can be extended to Women arrived at the very top is the message the brand would send out

CHAPTER 9 FINANCIAL DECISIONS

FINANCIAL DECISION

Current sources of private funding and bank funding

The initial investment that an owner puts into a business is known as capital. The source of this capital may include money from savings, redundancy, inheritance, investments, winnings etc. When the business becomes established, capital may be increased by retaining an amount of profit that the business earns. These are all internal sources of finance. Short Term Sources of Finance Short term sources of finance are usually used to provide additional working capital which is needed to fund the day to day activities of a business. These activities may include replacing stock which has been sold and therefore converted back into cash. Short term finance is generally considered to be over a period of one year or less. These sources of finance include: Overdrafts- This is a type of bank loan is set up on an account which can be used if required to provide additional working capital for a short period of time when there is a cash deficit. This type of loan tends to attract a high interest rate which makes them quite expensive. How much of a risk the bank considers the loan to be will an affect the interest rate considerably which is often determined by a credit rating score. If the business needs money for a fixed period of time which is less than one year it could be more appropriate to set up a short term loan from a bank or even borrow money from family or friends. Banks may charge a set up fee for a bank loan and will be paid back in instalments. Some sort of collateral or security for the loan will usually be required by lenders so that if the business defaults on its payment it can recover any outstanding payments by taking claim to any assets than were used as collateral. For new businesses the collateral used is usually the business owners house or car. Trade credit- This is provided by trade creditors who are a supplier whom the business has purchased goods or services from on a credit basis. This means that the business does not have to pay its supplier straight away and has until the end of the credit period to pay for its purchases. The credit period is a length of time specified by the supplier which is based on a businesss credit rating. This is usually between thirty and ninety days. Suppliers may offer a discount on purchase for prompt payment before or by the due date. Trade credit is not a direct source of finance but it does make it possible for money already within the business to be directed elsewhere until it is needed to pay creditors. Factoring- This is where finance is raised against trade debtors. These are customers who have purchased goods or services from a business on credit but have not yet paid and have usually breached their credit terms. A factoring organisation which is usually a bank or another financial institution will assess how credit worthy the debtors are and proceed to attempt to collect the debts on behalf of the business. This is done for a fee which is determined by the amount of financial risk involved regarding the debtor. Once the debtors have been passed on, the business can get the value of the invoice minus the fee immediately (dependent on the agreed terms).

Medium Term Sources of Finance Medium term sources of finance are usually repaid over a period of five to seven years. This is usually used to purchase assets that are expected to generate income for the business over the medium term which may include office equipment, plant, fixtures and fittings or vehicles. This type of finance is secured against business assets or the owners personal assets depending on what type of company it is. These sources of finance include:

Medium term loan- This could be obtained from a bank, a government scheme or friends and family. It would most likely be used to purchase an asset over a fixed period of time which will be linked to the expected economic life of the asset. The conditions of the loan are similar to that of an overdraft or short term loan. Hire purchase- This is a more flexible approach to traditional borrowing. HP allows a purchaser to start using an asset as soon as a deposit has been paid. The deposit represents the first payment of a number of instalments which are paid over a specified period of time at regular intervals. The ownership of the asset does not pass to the purchaser until the final instalment has been paid. This type of finance can carry quite a high interest rate but may be better for a business as payments are spread out over time. Leasing- This can be used to acquire assets at a lower cost than would be necessary to purchase outright. Leases are usually paid monthly or yearly. A business may use this option is the residual value of an asset is likely to be uncertain when it comes to selling the asset or if an asset is only required for a certain period of time.

Long Term Sources of Finance Long term sources of finance are used to obtain assets that are expected to provide economic gain or benefit to the business in the long term. This type of finance is usually considered to be longer than seven years and can be divided into two categories which are debt finance and equity finance. These are the main sources of debt finance:

Long term loan- This would be suitable for capital investment in fixed assets such as plant and machinery or to expand the business. Mortgage- A form of long term loan that is used to purchase land or premises. A mortgage in usually provided by a financial institution such as a bank or building society. They have a specified time frame over a number of years where the loan has to be paid back which is usually around twenty-five to thirty years. The interest rate can either be fixed or variable. The amount owed can either be paid in instalments or at the end of the term of the loan. Debenture- The most common type of long term loan taken out by a limited liability company. Repayment is usually made in full at a fixed date in the distant future. The holder of the debenture could be a private or corporate investor and typically receives a fixed rate of interest. Debentures are lower risk for the investor than an equity agreement and can be sold on the stock exchange

SETUP COST

Particulars

Laptop Leased office advance @100000for two months Telephone Advertising expenses

100000 200000 30000 250000

ITEM SALARIES Business development manager Salesmen(4*10000) Tailor

TOTL ESTIMATED EXPENSES 29000 40000 10000

Projected trading & Profit & Loss account

Particulars Opening stock Professional outfit Shoes Accessories 800000 200000 100000 Closing stock Gross profit 1050000 300000 Amount Particulars Sales Amount 1850000

Advertisement Showroom rent Electricity (showrooms) Salaries Packaging Transportation cost Depreciation on furniture Depreciation on laptop Depreciation on printer Net profit

250000 100000 25000 79000 5000 20000 40000 8000 1500 521500

Gross profit

1050000

Projected Balance Sheet

Liabilities Capital Less: Drawings Reserves & surplus Amount 2200000 200000 2000000 800000 Assets Cash Furniture at outlets Laptop Printer Amount 2301500 400000 100000 20000

Securities for outlet Closing Stock Net profit 521500 3321500

200000 300000

3321500

CHAPTER 10 RISK IN BUSINESS

RISK IN BUSINESS
1. Political Risk FDI as defined in Dictionary of Economics is investment in a foreign country through the acquisition of a local company or the establishment there of an operation on a new (Greenfield) site. To put in simple words, FDI refers to capital inflows from abroad that is invested in or to enhance the production capacity of the economy. Foreign Investment in India is governed by the FDI policy announced by the Government of India and the provision of the Foreign Exchange Management Act (FEMA) 1999. The Reserve Bank of India (RBI) in this regard had issued a notification, which contains the Foreign Exchange Management (Transfer or issue of security by a person resident outside India) Regulations, 2000. This notification has been amended from time to time. The Ministry of Commerce and Industry, Government of India is the nodal agency for motoring and reviewing the FDI policy on continued basis and changes in sectoral policy/ sectoral equity cap. The FDI policy is notified through Press Notes by the Secretariat for Industrial Assistance (SIA), Department of Industrial Policy and Promotion (DIPP). The foreign investors are free to invest in India, except few sectors/activities, where prior approval from the RBI or Foreign Investment Promotion Board (FIPB) would be required. FDI Policy with Regard to Retailing in India It will be prudent to look into Press Note 4 of 2006 issued by DIPP and consolidated FDI Policy issued in October 2010 which provide the sector specific guidelines for FDI with regard to the conduct of trading activities. a) FDI up to 100% for cash and carry wholesale trading and export trading allowed under the automatic route. b) FDI up to 51 % with prior Government approval (i.e. FIPB) for retail trade of Single Brand products, subject to Press Note 3 (2006 Series). c) FDI is not permitted in Multi Brand Retailing in India. Argument against FDI Move will lead to large-scale job losses. International experience shows supermarkets invariably displace small retailers. Small retail has virtually been wiped out in developed countries like the US and in Europe. South East Asian countries had to impose stringent zoning and licensing regulations to restrict growth of supermarkets after small retailers were getting displaced. India has the highest shopping density in the world with 11 shops per 1,000 people. It has 1.2 crore shops employing over 4 crore people; 95% of these are small shops run by self-employed people. Global retail giants will resort to predatory pricing to create monopoly/oligopoly. This can result in essentials, including food supplies, being controlled by foreign organizations.

2. Technological risk
Indian textile industry is the second largest in the world. For the Indian economy, the textile industry accounts for 20% of its industrial production employing over 15 million people. About 30% of Indias export basket consists of textiles and garments making it the largest contributors. In spite of high capital and power cost, Indian textile and garment sectors strength lies in availability of cotton, lower labour costs, well educated supervisory staff and abundant technical and managerial skills. A very few countries are endowed with such resources. Today, globalization has brought opportunities for Indian textile industry. At the same time it is also exposed to threats, particularly from cheap imported fabrics. Thus, the industry has to fight for its share in international textile trade. Even if it is assumed that WTO will mean better distribution of the world trade, in no way will it be free for all and only the fittest will survive. The WTO benefits for India will not be any different from that of the other developing countries. Indian textile industry should not only rely on its strengths, but should also endeavour to remove its weakness.

Implementation plan

Implementation plan The store will open in pacific mall, subash nagar at the entrance The store will open in October 2012 The store will have winter formal collection and accessories During the first month are aim would be create maximum AWARENESS