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KAWAL‌.

bloom into perfection

Feasibility Study Entrepreneurship & Strategy Jasmine Sahni

2009

Fairleigh Dickinson University, Silberman College of Business, New Jersey, USA


Table of Content

1. Company Overview

2

4

1.1 Entrepreneurial Idea

4

1.2 Target audience

5

1.3 Application of VRIO Analysis

6

1.4 Business / Financial Model

7

1.5 Marketing

9

Study of business feasibility

10

2.1 Industry analysis

10

2.2 Industry Background

11

2.3 Current Scenario

12

2.4 Leading Industry Players

13

2.5 Application of Porter’s Five Competitive Forces that will Shape Kawal’s Business Strategy 3

4

Competitive Advantage

13 16

3.1 SWOT Analysis

16

3.2 Competitor Analysis

19

Conclusion

21

4.1 Start-up Expense

21

4.2 Income Statement

22

4.3 Break – Even analysis

23

5

References & Citations

25

6

Appendix

27 Page | 2


“I certify that this is my own work and if this statement is untrue I acknowledge that I will have committed an academic offence.”

My parents have being in the clothing industry for 38 years and they own a clothing studio in Chennai, India. The boutique, Kawal, is named after my mother, Kawaljit Sahni, who has been an inspiration to me. I grew up looking at my mother being a very busy fairy godmother trying to make every Cinderella’s dream come true by making her look pretty for her big day. Today, as an MBA student and holding a Diploma in Fashion designing, I want to launch my own Indian clothing boutique named “Kawal” to make others’ dreams come true. I decided to open my boutique in USA because I see an opportunity to make my business successful. There are many Indians living in USA, and are away from their country. It is difficult for them to travel to and fro from India to purchase traditional Indian clothes either for their wedding or festivals. Every woman wants to get married in the traditional way on a special occasion and I see this as an opportunity to fulfill their dreams.

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1. Company Overview: Kawal is an exclusive women’s wear boutique targeted towards Indian women in Somerset County, New Jersey, USA. Kawal means “Lotus” in three different Indian languages (Punjabi, Hindi & Sanskrit) and “Perfection” in Arabic. Kawal brings out the unseen beauty and perfection in every woman by fabricating the garment according to their requirement. Kawal believes in providing a personalized touch to every piece of clothing for every woman who wants to attain perfection. Due to this kind of customization provided, Kawal is more specifically targeted towards elite class Indian women. This women oriented sole proprietorship company will be launched in January 2010.

1.1 Entrepreneurial Idea: Kawal specializes in fabricating clothing for only special occasions in a woman’s life. The occasion can be anything right from a wedding day to festivals celebrated throughout the year. We are more focused towards making of Salwar suits and Lehenga-Cholis1 only. Salwar suits are more commonly known as Salwar-Kameez2, it is a three piece outfit. Kameez is like a tunic with or without sleeves and Salwar is a pair of pants which come in two styles. One style is where the pants are wide / loose and gathered. The other style is where the pants are tight fitted like leggings. The third piece of the outfit is a stole to drape around your shoulder or neck. Lehenga- Choli is also a three piece dress. Lehenga is a very long skirt with or without multiple pleats and Choli is a short or mid-waist blouse. Again, the third piece of the outfit is a stole to drape around your shoulder, neck or however it pleases you. As and when the trend in the fashion world is changing, so will Kawal’s interpretation of bringing the unseen Indian beauty with perfection. To satisfy our customers, we will follow the simplest rule - “give what the Page | 4


customer desires”. Kawal aims at designing the garment, keeping in mind to make it personalized / custom - made, detailed, stylish, comfortable, and trendy. Kawal is unique and innovative because she provides services like made-to-order (tailored) and personal appointments with the costume designers. Additionally, the garments will be stitched and embroided (embellished) in India and exported to the USA. Therefore, Kawal’s clientele will comprise Indian women who have a household income over $100,000.

1.2 Target audience

Initially my target audience will be Indian women living in Bernardsville, Somerset County, New Jersey. Therefore my target audience will be approximately 4949 Indian females in Bernardsville. As mentioned earlier my target audiences are those who fall in the criteria of Annual House-hold Income above $100,000. Bernardsville is one of the richest towns in Somerset County and it is ranked as the richest county in New Jersey. According to the government census, Somerset County’s per capita income is $39,465 and Median House-hold Income is $103,249. However, looking at the opportunity available and focusing on my longterm goals, I will expand my target audience to the Indian women living in Middlesex County as well.

I decided to cater my service to the Indian audience because being an Indian I can relate to my audience’s requirements perfectly. I understand the need for an Indian woman to dressup for the special occasion in a traditional outfit and fulfilling the cultural needs. India is a culturally diverse country and every occasion is celebrated very colorfully and is extended for several days. (There are approximately 25 important festivals3 in India and the details are provided in the Appendix). Kawal specializes in making garments for special occasions like weddings and Page | 5


festivals like Diwali, Karva Chauth, Navratri, Guru Nanak Jayanthi, Ugadi and many more. In order to celebrate these occasions, it is not feasible for every woman to travel to and fro to India. Thus, my business will be a medium of fulfilling their desire of carrying on the Indian tradition in USA.

1.3 Application of VRIO Analysis

As per Jay B. Barney, we should look deep into our business to analyse the competitive advantage our business holds against others. There are four important questions about a company’s resources and capabilities that should be answered. (Barney, Jay. B. (1995)) Hence, I have answered those four questions on value, rareness, imitability and organization below:

I consider my business to be valuable as she provides the basic need for her customers and that is to wear a traditional outfit that is made- to-order. Also we will provide personalized service like appointments with the designer.

There are many boutiques in Jersey City and Edison in NJ, which cater to the middle class Indian families. These boutiques also do alteration for their clients, but do not customize it perfectly. There are also boutiques that cater to high society women in NJ, but they are mostly ready-to-wear outfit. Thus, Kawal is rare because she provides perfect customization and also guarantees individualization. For example, my clients will be given the option of choosing designs for themselves and also to keep them. Thereby, no other client will wear each other’s designs and every individual have their designs to wear.

Having a team of experienced advisory board that have 38 years of experience in the clothing industry and designers in India, it makes it tough for any competitor to replicate Page | 6


(Imitable) what I will be providing them with. People generally are used to buying clothes that are ready-to-wear, which are either loose or odd fitted. That is the draw back in the ready-towear clothes, whereas that is not the case with Kawal. Therefore it becomes tough for Kawal’s competitor to imitate her.

The organizational structure of Kawal will be limited to seven people, as this is a new company. The owner of the company “Kawal” will be Jasmine Sahni. Jasmine is currently pursuing MBA in Marketing, and holds a degree in MA Communication and Diploma in Fashion Designing. She has worked two years as a costume designer and store manager for “Deepsha” fashion boutique, and six months as Public Relation consultant in Chennai, India. With this profile, I, Jasmine Sahni, believe that I will do a fair justice to Kawal by launching her under my care.

Kawal will have an advisory team in Chennai, India, who will also be her supplier for the finished product. The advisory board will consist of Kawaljit Sahni and Amarjit Singh; both have 38 years of experience in the fashion boutique industry in India. A contract will be drawn between the two companies, Deepsha (India) and Kawal (USA), where it will be stated that the inventory will be purchased exclusively from Deepsha only. The team working for Kawal will include two sales personnel, and two people to do switching and alterations.

1.4 Business / Financial Model

The business form chosen for Kawal is of sole proprietorship and I will own the company. As mentioned earlier Kawal will cater to those who fall under her target audience criteria. The operation of the company is as follows;

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Kawal is a fashion studio where ready-to-wear Indian traditional Salwar suits and Lehenga-Choli will be available. However, these read-to-wear outfits can also be custom-made to a client’s particular measurements. In one year the total number of units to be sold is estimated as 200 units out of 250 units of garments. The peak season for the sales is predicted to be in the month of January, April, May, October, November and December. This is so, because there are many festivals during these months and also it is considered as wedding season according to Indian calendar.

Kawal will hold an inventory of 250 units of Salwar suits and Lehenga-Choli for one year. There will be five major clothing materials and their variations available like cotton, crepe, silk, georgette and chiffon. Each material will come in ten different colors and 5 sizes each. The most popular colors are red, blue orange, yellow and green, as these colors are considered as part of traditional colors. Whereas white and black both colors is considered less significant according to Indian culture. These 250 units of inventory will be circulated to and fro after every four months, because fashion and trends change very often. Also the 250 units of garment are considered as samples for the clients. If customers require one unit of garment immediately, then they can pick from the choices available to them. Also, if the client chooses to meet me for design consultation and then they will have to wait for at least 15 business days for the final delivery. However, the upscale women population today is more fashionable and trendy; therefore they might prefer to wait for 15 days to get their perfectly customized outfit.

Kawal will hold a team of two marketing personnel, who will work on market research on the industry and also be responsible to make it a target to sell a minimum of 8 units per month per person. This will enable the company to meet the unit sales target of at least 192 per year. As

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the owner of Kawal I will also be providing my service to clients as designer consultant catering to high-end customers. There will also be two employees who will handle switching and alterations. The price range4 of the products is made available in the appendix. The sales are estimated to be approximately $240,100 for one year.

Kawal has an agreement signed with the dealer, Deepsha, in India to conduct business based on credit sales. Deepsha will be providing Kawal with the finished product to be sold directly to the customers. Deepsha currently holds 50 employees handling measurements, switching and alterations and 12 employee working as embroiders. A specific deadline will be provided to Deepsha to send the finished product to Kawal. Kawal will consult clients and collect orders, which will be fulfilled by Deepsha. The products are being shipped in from India, as the raw material cost and labor cost is cheap relative to the USA.

The start up cost for Kawal will be approximately $141,810. The start-up capital will be borrowed from my parents, as a loan with an interest of 8%. On calculating the start up expense of the business and taking in account one year’s profit and loss, the estimated sale is projected to be $240,000 for 200 units of garment. The operation cost is expected to be $165,850 annually. Net profit is expected to be 20% of net income and 10 % of annual income will be reinvested in the business again.

1.5 Marketing Kawal’s target clients are upscale Indian women approximately 1980 number of clients; therefore her marketing will also involve strategies that can influence these women. She will make her way to every woman’s heart through word-of-mouth advertising, initially. The two

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marketing executive hired by Kawal will be responsible for the market research. They are also expected to interact with the target audience and sell a minimum of 8 units each every month.

Since our target clients belong to high society, it is important that Kawal make her space through magazines like Vogue, Cosmopolitan and other fashion magazines. Therefore, the need for excellent public relations is required. Word-of-mouth advertising is also important for Kawal, as it will be one satisfied customer recommending Kawal’s service to other potential client. Therefore, personal visit by the designer, that is me, to community function, weddings and festivals are important to market Kawal.

2. Study of business feasibility

2.1 Industry analysis

Before launching a company, it is very important to understand your industry first. An industrial scenario analysis is required and following are the reasons why I decided to open a business in the clothing industry. According to NAICS Code(s) 448120 – Women’s Clothing Stores - In 2005, $36.7 billion was spent at stores devoted exclusively to women's apparel, a jump of more than $2 billion from 2004 and more than $4 billion from 2003. The more upscale stores were seeing a new surge in spending. The consumer demand for luxury and high quality items was high. (Source: NAICS Code(s)448120)

According to a survey of 84,000 women, conducted by the NPD Group, a market research firm, 36 percent return a product every year because it does not fit. Those returns equal

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12 percent of all clothing sales. As a result, industry executives say, women shop at fewer stores and buy fewer clothes than they would if sizing were more transparent. (Barbaro, 2006) According to NAICS Code(s) 448120 - Women’s Clothing Stores - According to the U.S. Census Bureau, Women's clothing stores employed approximately 328,000 people in 2005, with more than 80 percent of all jobs in the industry sales related. Employment prospects in women's clothing are traditionally most abundant in sales, where the majority of the workforce is female. Prospects for employment of women were expected to remain strong in the sector despite flat growth. (Source: NAICS Code(s)448120) The above snapshot of the women’s clothing industry shows me the demand in the industry and the possibility to grow. It also shows the demand for my product is will increase, as I will provide my target clients what they look for. Due to the demand for the product, the sales increased, which in turn also increased the rate of employment in the industry.

2.2 Industry Background: (Source: NAICS Code(s) 448120) 

Women's clothing stores were introduced in Europe in the late 1700s.

Around this time, seamstresses began opening shops offering custom-made hats, dresses, cloaks, or other garments. These garments of the latest fashion were for those who could afford to hire out the work of stitching.

Heading into the 21st century, dedicated women's stores faced renewed competition from alternative retail venues offering specialty or general line women's apparel in addition to other product lines.

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By the 1960s apparel manufacturers were moving their production facilities out of the United States to markets where the labor was plentiful and cheap. Apparel manufacturing became a global industry.

Apparel imports into the United States increased from 9 percent in 1967 to 62 percent in 1992.

In 2003 women's apparel stores had increases in retail sales from $33 billion to $33.8 billion.

Outsourcing of production to low-cost markets continued to affect the tailored apparel industry.

Companies joined the ranks of firms that produced garments overseas to reduce costs. By 2004, 96% of apparel sold in the USA was manufactured in another country.

(Source: NAICS Code(s) 448120)

2.3 Current Scenario (Source: (Lazich, 2009)) 

The industry generated retail sales of $195.6 billion, with women’s apparel representing 53% of the total. The major trend for the year seemed to be dressed up. Women’s dresses saw sales volume growth of 44% from 2006 to 2007. o Best-Selling Apparel Categories, 2007 – Tailored clothing reported $21 million (Source: Retailing Today Weekly Retail Fix, March 3, 2008, p.3, from NPD Group) o Largest Apparel Markets in Asia/Pacific – India reported $ 23.1 million (Markets are ranked by projected apparel and footwear sales in millions of dollars). (Source: WWD, December 6, 2007, p.14, from Euromonitor.) Page | 12


o Largest Apparel Markets Worldwide, 2006 and 2012 – India reported $52 billion in 2006 and estimated at $115 billion in 2012. (Markets are ranked by retail sales in billions of dollars.) (Source: just-style.com, management briefing, July 2007, p.NA, from just-style estimates.) o Largest Clothing Exporting Countries, 2005 – India ranked at number 3 position with estimated export value of $8,290 million and holding 3.01% share of the market. (Source: CRS Report for Congress, from World Trade Organization, International Trade Statistics, 2006)

2.4 Leading Industry Players (2006-2007)

Some of the major players in the retail clothing industry are Gap Inc., Nike Inc., Limited Brands, VF Corp., Hanesbrands Inc., Polo Ralph Lauren, Levi Strauss & Co., and many more. However, my competitors belong to the tailored clothing industry. Currently, there are over 15 direct competitor in my business, according to research done through Reference USA website. List of competitors5 provided in Appendix. 2.5 Application of Porter’s Five Competitive Forces that will Shape Kawal’s Business Strategy

According to Michael E. Porter, the job of the strategist is to understand and cope with direct and indirect competitions that are the established rivals in the industry and other competitive forces like customers,

Page | 13 Figure 1: Porter's Five Competitive Forces Model (Source: Google Images)


suppliers, potential entrants, and substitute products. (Source: Porter, M. (2008)

a. Rivalry among Existing Competitors: There are approximately 15 Indian clothing boutiques in both Middlesex and Somerset County, New Jersey, which are my potential rivals. Most of these companies have been in this industry for seven years. Keeping in mind the number and capability of my 15 competitors, the chances of surviving and establishing a sustainable base for Kawal is comparatively low. However, no one else in the industry other than Kawal can provide perfect customization that is designed for her target audience. Moreover, women’s dresses saw sales volume growth of 44% from 2006 to 2007. Therefore, the chances for Kawal to outbeat her competitors are relatively high. b. Threat of New Entrants: There is a high possibility for other people to enter my market. This is due to the fact that it costs less time and money, and supply-side of economies of scale is low. The increase in demand in the market for the product and service that I provide, there are a high chances for the competitor to calculate the profitability. No matter if the demand-side benefits of scale is high because of direct customization provided to clients, it is very easy for the competitor’s to reproduce the same. This also makes the switching cost of customers, high. Therefore, overall threat of new entrants is high. c. Power of Suppliers: My supplier is Deepsha, another fully established fashion studio in India, which will provide me the finished product to be sold to my clients in USA. Usually the power of suppliers can be high while negotiating the prices for the inventory. However, in my case the power of supplier is low, because Deepsha is owned by the advisory board that I have hired for my business consultation. Thus, apart from the inventory cost, there is an additional amount of advisory fee paid annually to Deepsha, Page | 14


for their experienced business advice. The point to be noted here is that even though I have the option of many suppliers, I have narrowed it down to Deepsha for its expert advices. Therefore, to keep me satisfied as their buyer, their bargaining power as a supplier is low. d. Power of Buyer: My target audience is 1980 Indian women living in Bernardsville and my target sales are 250 units of garment. Comparatively, the amount of inventory made available to the large target audience is less. Therefore, it is expected that the inventory will be sold out completely. Also, Kawal caters to the audiences that fall under the criterion of having an annual household income of $100,000 and above. The bargaining power of buyer is low because of two reasons. The first reason is that Kawal specializes in servicing to upscale society women, who come to me for design consultation and then look at the product to be bought. The second reason is that the elite society people buy product that match their reputation. Hence, these elite people will choose personal reputation over bargaining for the product. e. Threat of Substitution: As mentioned in threats of new entrant, that it is easy for my customers to get a substitute for my product. However, it is also mentioned in power of buyer that it is because of the reputation involved, my clients will not go for a substitute product. For example: No one expects Paris Hilton to buy a fake Gucci product even though it is less expensive. It is because of her reputation (and she can afford it) that she will buy an original Gucci product. Therefore, the power of substitution is low.

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3. Competitive Advantage Porter’s Generic Strategy: There are two types of competitive advantage of Porter’s Generic Strategy. The first one is the cost leadership generic strategy and the second is the differentiation

Figure 2: Porter's Generic Strategy (Source: Google Images)

strategy. Although not comprehensive and specific porter’s generic strategies help to broadly understand a firm’s strength. Looking at the advantages and the target scope of my business, Kawal comes under the combination of Focus Differentiation. My business comes under Differentiation strategy because my product unique as it provides consumer with added value to the products – custom-made, designer consultation, and reputation. Kawal also falls under the Focus generic strategy as the market segment or my target market is niche.

3.1 SWOT Analysis (Strength, Weakness, Organization and Threats)

A SWOT analysis will help me measure the business unit and the entrepreneurial idea. SWOT is a subjective measurement of data that is organized in a logical order that helps us understand, present, discuss and make decisions. (Source: (Chapman, 2009)) Below is a SWOT Analysis Template that helped me measure Kawal’s strengths, weaknesses, organization and threats. This SWOT example is for a new business opportunity. Many criteria can apply to more than one quadrant.

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criteria examples

Strengths

Weaknesses

Disadvantages of proposition?

Advantages of proposition? Capabilities? Competitive advantages?

Gaps in capabilities?

-

USP's (unique selling points)?

Experienced staff in the industry (38 years of experience)

Resources, Assets, People? Experience, knowledge, data? Financial reserves, likely returns? Marketing - reach, distribution, awareness?

criteria examples

-

-

Personalized designer consultation

-

Advisory board in India

-

Fashion designer with 2 years work experience

Innovative aspects?

-

Starting business in a Lack of competitive new country. Lack of strength? knowledge of rules and regulation in USA Lack of knowledge on the import regulation in USA

Reputation, presence and reach? Financials? Own known vulnerabilities?

Owner & advisory staff have work experience Timescales, deadlines and in the industry in India. pressures? Lack of industry knowledge in USA Cashflow, start-up cashdrain?

Location and geographical?

-

Loan from family with 8% of interest

Continuity, supply chain robustness?

Price, value, quality?

-

Word-of-mouth marketing

Effects on core activities, distraction?

-

Focusing on the cultural aspects of target audience

Accreditations, qualifications, certifications? Processes, systems, IT, communications?

Reliability of data, plan predictability? Morale, commitment, leadership? Accreditations, etc?

Cultural, attitudinal, behavioural?

Processes and systems, etc?

Management cover, succession?

Management cover, succession?

Philosophy and values? criteria examples Market developments?

Opportunities -

Competitors' vulnerabilities? Industry or lifestyle trends? Technology development and innovation? Global influences?

-

-

Understands the target audience perfectly and providing the right product and service

-

Not many competitors in Bernardsville

-

Women’s clothing industry grown by 44%

criteria examples

Threats

Political effects? Interference by government during the Legislative effects? export & import of goods

Environmental effects?

High end product, target towards few particular season of the year. Therefore, it is most likely that there might not be much of sales during other months. That

IT developments? Competitor intentions various? Market demand?

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New markets, vertical, horizontal? Niche target markets? Geographical, export, import?

-

-

New USP's? Tactics: eg, surprise, major contracts? Business and product development? Information and research?

-

Niche target market of 1980 people Importing of good of India, where the cost of labour is cheap. Special seasonal product. Major sales expected months are January, April, May, October, November and December

might cause a scenario New technologies, services, ideas? with immense dead stock held for the rest Vital contracts and of the year partners?

Sustaining internal capabilities? Obstacles faced? Insurmountable weaknesses? Loss of key staff? Sustainable financial backing?

Partnerships, agencies, distribution?

Economy - home, abroad?

Volumes, production, economies?

Seasonality, weather effects?

Seasonal, weather, fashion influences?

Š Alan Chapman 2005-09. Free PDF version of this tool and information about SWOT analysis methods are available at www.businessballs.com/swotanalysisfreetemplate.htm. This is a free resource from www.businessballs.com, which contains lots more useful tools, diagrams and materials. Not to be sold or published.

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3.2 Competitor Analysis This tool helps us to obtain basic information about Kawal’s direct and indirect competitors. For the following exercise, I have taken only four direct competitors of Kawal. Competitor Identification

Key product or service Location (s) Local, regional, national or global? Primary features of product or service Advantages of product or service Disadvantages of product or service Target market (population in particular location) Market Share (estimated on location sale range) Promotional activities Resources (HR) How is your venture distinctive from this competitor?

Business Name

Business Name

Business Name

Business Name

Iselect Collections Indian garment boutique (no specialization) Single Regional

Khaas

Rani Sahiba Inc

S & S Boutique

Indian garment boutique (no specialization) Single Local

Indian garment boutique (no specialization) Single Regional

Indian garment boutique (no specialization) Single Regional

Ready-to-wear Ready-to-wear Ready-to-wear Ready-to-wear garment boutique garment boutique garment boutique garment boutique Items-Retail Items-Retail Items-Retail Items-Retail Easily available

Easily available

Easily available

Easily available

Odd fitting, not trendy

Odd fitting

Odd fitting, not trendy

Odd fitting, not trendy

Middlesex

Somerset

Middlesex

Middlesex

Less Than $500,000

$2.5 - 5 Million

Less Than $500,000

Less Than $500,000

Less than $2,500

Less than $2,500

Less than $2,500

1-4 . Only specialized product (Salwar suit & LehengaCholi)

$10,000 to $25,000 20-49 . Only specialized product (Salwar suit & LehengaCholi)

1-4 . Only specialized product (Salwar suit & LehengaCholi)

1-4 . Only specialized product (Salwar suit & LehengaCholi)

. Tailored and design specific

. Tailored and design specific

. Tailored and design specific

. Tailored and design specific

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. Target population 1980 Indian women who’s household income is above $100,000

. Target population 1980 Indian women who’s household income is above $100,000

. Target population 1980 Indian women who’s household income is above $100,000

. Promotional activity more than $5000/yr

. Promotional activity more than $5000/yr

. Promotional activity more than $5000/yr

. Number of employees – 7

. Number of employees – 7

. Number of employees - 7

The above table shows that the company “Khaas” is located in the same County and share the same target audience. The company “Khass” is a direct competitor to me. This exercise also help me analysis on what grounds I am stronger than my competitors and vice versa.

(Sources: (Gundry, & Kickul, 2007))

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4. Conclusion So far I described my business idea, model, financial analysis and various theories applied to my entrepreneurial idea to analyze, whether my business is feasible or not. Application of various theories like Porter’s five competitive forces, Barney’s VRIO analysis, SWOT analysis and competitor analysis have supported my business idea to launch Kawal. However, it is important that my financial analysis should also support it. Below are the details of Kawal’s start-up cost, first year income statement and also the break even analysis chart.

4.1 Start-up Expense in January, 2010:

Start-up Cost: Company Registration Inventory Rent (800sqft*1530) Equipment Electricity (Account set-up) Furniture Telecom & Internet Computer Mannequin Transportation 5% Export Customes Duty tax 8% (India) VAT tax 4% (India) Property Rental, Shipping & Handeling Insurance 30% (India) Interest 8% (India) Total =

$ 600 127662.25 1,500 3,000 100 2,400 60 500 480 100 851 426 3,192 939 141809.45

My start-up cost comes up to approximately $141,810, which will be borrowed from my family and I will pay a yearly interest of 8%. While making the start-up cost, I took into consideration of the expenses that will occur in USA and India. The Indian price range has been converted into the dollar amount according to the current exchange rate of $1 = Rs.47. Also the Page | 21


prices for other expense like boutique rent, equipment, electricity, furniture, telecom & intenet, computer and mannequin were searched online and quoted the original price. The sources for the price range9 have been provided in the reference list.

4.2 Income Statement

This shows the projected sales to made by Kawal and operating cost during the year. Kawal is expected to make net sales of $225,100 and her operating cost is $165,847. The income statement for the first year shows a loss of $18,425.

Kawal Income Statement For the Year Ended [December 31, 2010] Revenue: Gross Sales

$225,100.0 0

Net Sales

$225,100.0 0

Cost of Goods Sold: Material Costs variable (29%) Custom Duty charges variable (0.5%)

$65,279.00 $1,126.00 $66,405.00

Cost of Goods Sold

$66,405.00

Gross Profit (Loss)

$158,695.0 0

Expenses: Salaries and Benefits (full-time) fix Rent fix Utilities (2%) variable Telephone & Internet fix Office Supplies fix Insurance fix (30%) variable (property & shipping/handeling) Legal Expenses (lawyer) variable Accounting Expenses (accountant)

$109,992.0 0 $18,000.00 $1,328.00 $720.00 $600.00 $19,921.00 $2,400.00 $1,920.00

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Travel Expenses (2%) variable Advertising & Promotions (10%) fix Depreciation fix ($3000 equipment depreciated over 5 years) Miscellaneous variable

$1,328.00 $6,640.00 $600.00 $2,400.00

Total Expenses

$165,849.0 0

Net Operating Income

-$7,154.00

Interest Income

-$11,270.00 -$11,270.00

Net Income (Loss)

-$18,424.00

4.3 Break – Even analysis:

Break-even analysis average variable costs per customer

$

468.91

total fix costs year 1

$

83,338

start-up expenses average sales per customer break-even 1 units break-even 1 sales break-even 2 units break-even 2 sales

$141,810.00

$

$ $

1,125.50 127 142,855 343 385,940

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The break-even chart shows that Kawal will break even in the month of September in year 2 of its operations. That is Kawal will break even after 1 year and 9 months in operation of the business. Based on the data collected and research done to launch this entrepreneurial idea, I consider that this Indian Woman Clothing business is feasible.

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5. References & Citations: 

Gundry, Lisa K. and Kickul, Jill R. Entrepreneurship Strategy, 2007, Thousand Oaks: Sage Publications Inc.

Porter, M. (2008, January). THE FIVE COMPETITIVE FORCES THAT SHAPE STRATEGY. Harvard Business Review, 86(1), 78-93. Retrieved September 4, 2008, from Business Source Premier database.

Barney, Jay. B. (1995, November) LOOKING INSIDE FOR COMPETITIVE ADVANTAGE, The Academy of Management Executive, 9 (4), 49 – 61. Retrieved September 4, 2008 from Business Source Premier database.

Chapman, Alan. (2009). SWOT Analysis. Retrieved from http://www.businessballs.com/swotanalysisfreetemplate.htm

"Women's, Misses, and Juniors' Suits, Skirts, and Coats." Encyclopedia of American Industries. Gale, 2008. Reproduced in Business and Company Resource Center. Farmington Hills, Mich.:Gale Group. 2009. http://galenet.galegroup.com.libaccess.fdu.edu/servlet/BCRC

"Apparel and Accessories, Not Elsewhere Classified." Encyclopedia of American Industries. Online Edition. Gale, 2009. Reproduced in Business and Company Resource Center. Farmington Hills, Mich.:Gale Group. 2009. http://galenet.galegroup.com.libaccess.fdu.edu/servlet/BCRC

"Women's Clothing Stores." Encyclopedia of American Industries. Online Edition. Gale, 2009. Reproduced in Business and Company Resource Center. Farmington Hills, Mich.:Gale Group. 2009. http://galenet.galegroup.com.libaccess.fdu.edu/servlet/BCRC

Page | 25


Barbaro, . (2006). - Clothes That Fit the Woman, Not the Store. The New York Times, pC1(L). Retrieved from http://www.nytimes.com/

Lazich, Initials. (2009). Market Share Reporter. An annual compilation of Reported Market Share Data on Companies, Products & Services.

US Census Bureau. Retrieved from http://www.factfinder.census.gov

BEA: Bearfacts. Retrieved from http://www.bea.gov/regional/bearfacts/action.cfm?FIPS=34035

Wikipedia. Retrieved from http://en.wikipedia.org/wiki/New_Jersey_locations_by_per_capita_income

Reference USA. Retrieved from http://www.referenceusa.com.libaccess.fdu.edu/

Weichert Rental Network. Retrieved from http://www.weichertrents.com/search/realestate/searchresults.aspx?search=bkr&cityid=4 122&q=Bernardsville%2c+NJ

Optimum Business. Retrieved from http://www.optimumbusiness.com/bizcalculator.jsp?ftrack=calculator

Office Furniture.com. Retrieved from http://office-chairs.officefurniture.com/?Page=4

India Finance & Investment Guide. Retrieved from http://finance.indiamart.com/taxation/custom_duty/index.html

Friederike Hense, Eva. (Fall 2008). Eva's German Bakery.

Page | 26


6. Appendix 1. Picture of Lehenga-Choli. Source: Google Images

2. Picture of Salwar Suits. Source: Google Images

Page | 27


3. List of Festivals in India and Wedding Season: January

February March

April May June July August

September

October

November

December

-

Wedding Season New Years Day Guru Gobind Singh Jayanthy Makar Sankranti Pongal Valentine’s Day Good Friday Easter Baisakhi Tamil New Year Akshaya Tiritya Ugadi Wedding Season Wedding Season

-

Ganesh Jayanthi Raksha Bandhan Krishna Jayanthi Durga Pooja Ramadan Navratri Onam Dasera pooja Wedding Season Bhai Dooj Diwali Karva Chauth Wedding Season Guru Nanak Jayanthi Bakrid Wedding Season Christmas

Page | 28


4. Price Range Chart Inventory: Number of units = 250 product: Cotton Silk Crepe Gorgette Chiffon total number of inventory = average price in $ =

$ 501 – 1000 25 units 25 units 25 units 25 units 25 units 125 units 93812.5

total cost of inventory in $=

300125

Projected sales (200 units * $1200.5) in $=

240,100

$ 1001 1500 10 units 10 units 10 units 10 units 10 units 50 units 62525

$1501 - $2000 10 units 10 units 10 units 10 units 10 units 50 units 87525

$ 2001-2500 5 units 5 units 5 units 5 units 5 units 25 units 56262.5

5. Competitors List: Source: Reference USA website (http://www.referenceusa.com.libaccess.fdu.edu/)

Company Name Aanchal Boutique Iselect Collections Khaas Khajana Inc Kiran Boutique Kreations By Iselect Makress Inc Mandy's Boutique Perfect Fit Boutique Rani Sahiba Inc Runway Boutique S & S Boutique Sabrina's Boutique Shagun Inc Traditions Boutique Inc

Location ZIP State Code NJ 08830 NJ 08830

Location ZIP Four 1623 1501

County Code Middlesex Middlesex

NJ NJ NJ NJ NJ NJ

08823 08820 08830 08830 08817 08861

1229 2855 1623 1501 6008 4005

Somerset Middlesex Middlesex Middlesex Middlesex Middlesex

232 French St 1 Plymouth Dr 55 Parsonage Rd 620 Inman Ave 323 Raritan Ave 65 Middlesex Ave

Franklin Park Edison Iselin Iselin Edison Perth Amboy New Brunswick Iselin Edison Colonia Highland Park Iselin

NJ NJ NJ NJ NJ NJ

08901 08830 08837 07067 08904 08830

2332 0000 2480 1000 2701 1748

Middlesex Middlesex Middlesex Middlesex Middlesex Middlesex

75 Middlesex Ave

Metuchen

NJ

08840

0000

Middlesex

Address 1361 Oak Tree Rd 1547 Oak Tree Rd 3001 State Route 27 # 4 1734 Oak Tree Rd 1351 Oak Tree Rd 1547 Oak Tree Rd 16 Executive Ave 277 Smith St # A

City Iselin Iselin

Page | 29


6. Price of postage from India

Sources: http://www.indiapost.gov.in

7. Full Report on break event Analysis: Source: Calculated using http://connection.cwru.edu/mbac424/breakeven/BreakEven.html Variable Unit Cost Fixed Cost Expected Unit Sales Price Per Unit

= $468 = $83,338 = 200

Total Revenue

= $225,100

Total Variable Costs Profit

= $93,782

= $47,980

= $1,125

Page | 30


Break-Even at 126 Units Units Fixed Cost ------ -----------0 $83 10 $83 20 $83 30 $83 40 $83 50 $83 60 $83 70 $83 80 $83 90 $83 100 $83 110 $83 120 $83 130 $83 140 $83 150 $83 160 $83 170 $83 180 $83 190 $83 200 $83

Total Cost -----------$83 $88 $92 $97 $102 $106 $111 $116 $120 $125 $130 $134 $139 $144 $148 $153 $158 $163 $167 $172 $177

Total Revenue Profit ----------------------$0 - $83 $11 - $76 $22 - $70 $33 - $63 $45 - $57 $56 - $50 $67 - $43 $78 - $37 $90 - $30 $101 - $24 $112 - $17 $123 - $11 $135 -$4.54 $146 $2.1 $157 $8 $168 $15 $180 $21 $191 $28 $202 $34 $213 $41 $225 $47

Page | 31


Kawal