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ENTERPRENEURSHIP

Project: Report on

BELLUS DESIGNS LAMPS

Submitted to:

Mam Faiza Hassan

Submitted By:

Sidra Anjum 066Arusa Sarwar F07-014Farah Munawar 020Hissam Mehmood 028Haroon Abbas 022Umair Saeed 048

Dated: 10- Jan- 2011

Management Sciences

COMSATS Institute of Information Technology, Lahore

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TABLE OF CONTENTS:

INITIAL ASSESMENT:

• Need Recognition (Idea Generation)…………………………………….…3

• Market Assessment…………………………………………………………...3

• Appraisal of competition…………………………………………….………..3

• Preliminary Market Forecast…………………………………….…………....4

ENGINEERING AND ECONOMIC ANALYSIS:

• Analysis and synthesis…………………………………………………….….5

• Preliminary Product Design………………………………………………......6

• Preliminary Process Design…………………………………………….…….6

• Cost Estimation…………………………………………………………………8

• Proposal to Engineering and Marketing Department……………………..11

TESTING AND DEVELOPMENT……………………………………………….11

SAMPLES OF BELLUS DESIGNS……………………………………………..11

FINAL PLANNING:

• Marketing Plan………………………………………………………………...12

• Proposal for full scale operation……………………………………….……12

• Financial analysis of profit potential……………………………………......13

LAUNCH:

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• Management Approval………………………………………………….....13

• Production of product and initiation of full scale operation…………...13

INITIAL ASSESMENT:

• Need Recognition (Idea Generation):

Any innovative business plan starts with the search for ideas. Experts believe thatgreatest opportunities and highest leverage with new products are found by uncoveringthe best possible set of unmet customer needs.

There are different creativity techniques that can be used for idea generation. We usednew context technique for idea generation and that is using familiar processes with newcontext.

We decided to make decorative lamps using paper mashie technique and jute work.There is no demand for these lamps in the market because people are not much awareof this technique.

So we designed a questionnaire for creating a need for our product. We make sampleof sample of 400 people from different areas of Lahore and introduce our idea andrecord their response. Out of 400 people 250 appreciated the idea and showed positive

response.• Market Assessment:

Questionnaire results showed that mostly people who were in favor of developing thisproduct belongs to elite or higher middle class so we decided to target elite and higher middle class as our market. The reason for this is that they pay cost for the decor of their homes and offices as they are sensitive in creating attractiveness of their homes.

• Appraisal of competition:

There is not severe competition in the market for producing lamps. There arecompanies who are producing salt, crystal and metallic lamps but no one is using paper mashie technique or jute work. So we did not stop the idea and continued in developingthe product. For catering the competition, we use differentiation strategy i.e. weclearly differentiated our technique that we are using to make lamps.

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We also focused the cost and quality strategies because salt, crystal and other lampscost too much specially the crystal and salt lamps and breakage fear is always attachedwith them and paper mashie lamps costs medium with high quality and reliability.

• Preliminary Market Forecast:

According to the findings, 40% of the market share is captured by the manufacturers of the salt lamps because they look beautiful and different, 30% of the market share is inthe hands of crystal lamps manufacturers and 10% of the market share is captured byothers (metal, marble etc) so our managers expect to capture 20% of the market share.So we will start our production according to the market forecast.

Table Representation:

LAMP MANUFACTURERS MARKET SHARESalt Lamp Manufacturers 40%Crystal Lamp Manufacturers 30%Others Lamp Manufacturers 10%Paper mashie and Jute LampManufacturers

20% expected

Pie Chart Representation:

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ENGINEERING AND ECONOMIC ANALYSIS:

•

Analysis and synthesis:

Before the designing of the product, all the material is analyzed.

PAPER MASHIE LAMPS:

Raw material:

Raw material that will be used in making of product:

- News papers

- White glue

- Water

- Bulbs

- Wires

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- Switches

- Holders

- Thermopile sheet

- Spray and Poster paints

News paper is the basic component of the product so quality of news paper ismaintained properly.

Machinery

- Drying machines

- Drill machines

JUTE LAMPS:

Raw material:

Raw material that will be used in making of product:

- UHU

- Steel Wire

- Wooden sticks

- Jute

- Jute twine

- Spray paints

- Poster and water colors

- Thermopile sheet

- Beats

- Switches

- Wire

- Bulbs

- Holders

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• Preliminary Product Design:

We planned to design standardized products but with some variety that is process of

making the product will be same but there will be variety in the designs. We planned todesign the product by considering following factors:

1. Quality:

Lamps would be made with high quality so that to create high customer satisfactionand in turn to get good return.

2. Cost:

Product design would be so simple that help in reducing the cost because process

used for making the lamps is same.3. Reliability:

Paper mashie lamps would be reliable because there is no fear of breakage isattached with them as they are very hard. Jute lamps are delicate somewhat butthey are also tightly tied by wires.

4. Style:

The product’s looks will be so attractive that customer will pay for it to give his/her home a stylish and attractive look.

• Preliminary Process Design:

We are starting business at small scale so only one plant has installed for theprocessing of lamps on Raiwind road at 1 kanal area. The plant consists of 7 sectionsi.e.

1- Mixing Department for Paper mashie lamps

2- Designing Department for Paper mashie lamps

3- Drying Department for Paper mashie lamps

4- Designing Department for Jute lamps

5- Coloring and Decor Department

6- Fixing Department

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After fixing, lamps are sent to packaging department where two employees pack themseparately in boxes.

• Cost Estimation:

Before starting the product development, possible costs are estimated on the basis of scale of business and quantity of production.

Estimated Calculations:

a. Quantity of Production:

No of units produce per day estimated = 5

No of units produce per month estimated = 5 x 30

= 150

b. Fixed Cost:

The fixed costs are those that do not change with number of units which include thecost of machinery and equipment.

Calculations:

Machinery:

Cost of one drying machine = 50,000 Rs

Cost of two drying machines = 50,000 x 2

= 100,000 Rs

Cost of one drill machine = 2500 Rs

Cost of two drill machines = 2500 x 2

= 5000 Rs

Total machinery Cost = 100,000 + 5000

= 105,000 Rs

Equipment cost:

The equipment used includes tubs, color brushes, scissors, wire cutters and screwdrivers and their total cost estimated is 5000 Rs.

Total Fixed cost:

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Total Fixed cost = Machinery + Equipment

= 105,000+ 5000

= 110,000 Rs

c. Variable Cost:

The cost that can change with the change in number of units is called variable cost. Thevariable costs estimated for starting of this project includes cost of raw materialassuming that per unit cost remains same in the starting month.

Calculations:

Cost of Raw Material:

Cost of one holder = 30

Cost of 150 holders = 30 x 150

= 4500 Rs

Cost of one bulb = 30

Cost of 150 bulbs = 30 x 150

= 4500 Rs

Cost of one switch = 15

Cost of 150 switches = 15 x 150

= 2250 Rs

Cost of wire per meter = 15

Cost of wire for 225 meters = 15 x 225

= 3375 Rs

Cost of one color spray gun = 110

Cost of 12 color spray guns = 110 x 12

= 1320 Rs

Cost of glue = 10,000 Rs

Cost of UHU = 2000 Rs

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Cost of news papers = 3000 Rs

Cost of jute = 1500

Cost of jute twine = 1000

Cost of steel wire = 300

Cost of poster and water colors = 2000

Cost of Wooden sticks, Thermopile sheet, Beats = 1000

Total Raw Material Cost = 4500 + 4500 + 2250 + 3375 + 1320 + 10,000 + 2000 + 3000+ 1500

+ 1000 + 300 + 2000 + 1000

= 36,745 RsSalary Cost:

Salary of one employee per month = 4000

Salary of total employees per month = 4000 x 14

Total salary cost = 56,000 Rs

Total Variable Cost:

Total Variable Cost = Raw material + Salaries

= 36745 + 56000

= 92,745 Rs

d. Other Costs:

Other costs include marketing, administrative, electricity, water and transportation costand these are estimated to be 50,000 Rs collectively.

Total Cost Estimated:

Total Cost Estimated = Variable Cost + Fixed Cost + Other Costs

= 92,745 + 110,000 + 50,000

= 252,745 Rs

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So total expenses estimated for the starting of this business is 252,745 Rs and this costis reasonable for starting a small scale business.

• Proposal to Engineering and Marketing Department:

After designing the product and process and estimating cost to run the project, theproposal is sent to engineering and marketing department. After acceptance fromengineering department that they can process the product, marketing department givesthe acceptance to the proposal for promotion of the product.

TESTING AND DEVELOPMENT:

Before starting the production, 12 samples are made and presented in the exhibition for one day for testing to check the people response towards the product. It costs 5000 Rsin making 12 samples of paper mashie and jute lamps and we crossed the breakevenpoint and earned 5120 Rs by the sale of only 9 lamps in the exhibition. We got positiveresponse from the market as 9 out of the 12 lamps were sold in the exhibition so wedecided to finalize the project.

SAMPLES of BELLUS DESIGNS:

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FINAL PLANNING:

• Marketing Plan:

After testing marketing plan has made for promotion of product. For marketing, wesegment the target market with respect to area. We divided different societies in Lahorei.e. Defense Housing society, Model Town, Wapda Town and Gulberg into segments.Then we make strategies for targeting each segment.

Following ways will be used for promotion:

1. Television adds:

Attractive commercials are made to capture the customer’s attention.

2. Broachers:

We planned to send broachers to the residence of people that belong to thesesocieties to let them aware of our product as our target market is high middle andelite class.

• Proposal for full scale operation:

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After marketing plan, proposal for full scale is send to administration to start theproduction.

•

Financial analysis of profit potential:As the lamps look beautiful and attractive and good in quality, we decided to set pricesin medium range. The price ranges would be 700 to 1500 depending upon size anddesign of the lamp.

As we have planned to produce 150 lamps per month, our estimated cost to install thenew product development is 252,745 Rs.

If we assume that all lamps sell at average price of upper and lower limit i-e 700+1500/2=1100 per unit then:

It will generate revenue at the end of starting month = 1100 x 150 =165,000

Profit = Revenue _Cost

= 165,000_252,745

= _ 87,745

So at the end of first month, loss of 87,745 occurs because of installation cost of newproject. But later, development of this product would generate profit because fixed costsof machinery and equipment would not occur again (just maintenance can occur but itwould be very low).

So if we deduct these costs from the total cost (252,745 _110000 =142,745) and addother maintenance costs than can occur per month (142,745 + 20,000 = 162,745), thenprofit in the future if 150 lamps sell at average price 1100 would be = 165,000 _162,745= 2255 per month. This profit will be generated only if lamps would sell at average pricebut this will be increased when the lamps will be sale at their original prices and whenthe quantity of production would be raised to 10 lamps per day in the third month.

The above forecasts show that development of this product would generate long term

profit if the business gets successful.

LAUNCH:

• Management Approval:

When proposal is accepted, management gives approval for the production on thebasis of the customer’s acceptance of the product.

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• Production of product and initiation of full scale operation:

After approval, production of the product gets started and full scale operations areinitiated and finally the product is launched.

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