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Pre-Feasibility Study Essay Sample

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Pre-Feasibility Study Essay Sample

1.1 Project Brief
The pre-feasibility study focuses on the establishment of women designer wear Kapra Boutique including the operations of apparel designing, manufacturing, selling and marketing. The study has been designed to capture the dynamics of the Kapra Boutique industry, with its many components and possible strategic opportunities. 1.2 Opportunity Rationale

Clothing is a beautiful visual demonstration of the social and emotional needs of people wearing it. It also portrays in a clearly understood visual manner, what people of different cultures and styles want socially. Fashion, through times, has gone through so many rapid changes and bizarre extremes that it has examples of nearly every kind of clothing function.

However, in a Kapra boutique business, the specifications and descriptions of the designs and clothes are so general that they can fit more than one costume, which actually are quite different in nature from each other and this is solely dependent on the taste of the people.

The range of Pakistani dresses is remarkably wide, according to the vast cultures, geographical differences, purchasing capacities, influence of the western culture, and bewildering diversities of the ethnic groups. One has, therefore, to sift and isolate, and then relate and bring together, the ideas for creating various designs, which can fit in the context of the fashion in vogue and the culture in practice. In reference to Pakistan, the Kapra Boutique business is quite in vogue but has yet to be formalized. The market of this enterprise is quite scattered and unorganized. There are a few major players in Kapra Boutique business and these entrepreneurs have also taken an initiative based on their caprice and experience in the field of fashion design. However, there is a massive potential in this field, if one has the ability to design and market his/her products through introducing innovative designs both in stitching as well as the fabric sector.

Furthermore, there is massive export potential in this sector, as the demand of Pakistani dresses, especially in countries like UAE, USA, and UK, is massive due to a high number of Pakistani expatriates who have settled in these countries. The Kapra Boutique business can also be expanded into a more profitable venture by providing stitching facilities to other Kapra boutiques, which do not own a stitching unit or are lacking this facility.

1.3 Proposed Capacity
The Kapra Boutique business capacity is greatly dependent on the market size and the number of potential clientele one can attract. Furthermore, the women fashion wear Pre-Feasibility Study Kapra Boutique (Women Designer Wear)

Garments will be designed through a contracted designer and then stitched through in-house stitching unit. On average, a designer can supply forty designs per month from which nearly twenty designs are selected on average. Approximately, total capacity of the defined unit with 5 stitching machines (basis on 8-10 hours shift) will be about 5001 dresses. The breakup of the total number of dresses will be as follows: Total designs selected by designer 20

Number of dresses in each design 5
Number of dresses in each size 5
Total Number of dresses 500
This production and sales capacity is estimated to be economically viable and justifies the capital as well as operational costs of the project. 1.4 Total Project Cost
The Kapra Boutique shop needs a total investment of about Rs. 1.45 million. This includes a capital investment of Rs.881,920 and a sum of Rs.569,600 as working capital.

CURRENT INDUSTRY STRUCTURE

Currently, the Kapra boutique industry is relatively unorganized and is scattered in and around the posh areas of the metropolitan cities of
Pakistan i.e. Lahore, Islamabad, Karachi, Peshawar, and Quetta. The Kapra boutiques in Peshawar and Quetta, mostly sell the traditional dresses having indigenous/local designs, whereas the ones in Lahore, Islamabad, and Karachi deal in fashion wear greatly influenced by the west and the local trends in vogue. As such, there is no exact detail available of the number of Kapra boutiques, especially in women wear, because there is no association or link between these enterprises. The reason being the business rivalries and the competitive structure of this industry. However, one can name a few major players in the business such as Indifference, Generation, Parahan, Nee Punhal, Bossini, Kapre Waghera, Maria B, Nina’s, and some individual designer players like Beegee’s, Nilofar Shahid, Nadia Mistri, Amir Adnan, Shayan Malik, and Sahar Saigol.

MARKETING

The marketing of Kapra boutique follows the conventional marketing pattern which is dependent on selection of venue of the outlet/s and the product mix (designs and sizes), as well as the promotional strategy. Furthermore, the Kapra boutique owner has to marketing techniques like:

• Usage of print media i.e. printing of posters and pamphlets as well as displaying it and distributing it at proper places
• Advertisement in print media i.e. newspapers and fashion magazines, etc. 1 This production also includes additional suits that will be prepared on orders/outsourcing/CMT (Cutting, Manufacturing and Trimming) per month in order to utilize the maximum capacity of the stitching unit.

• Usage of electronic media i.e. projection of the Kapra boutique in fashion programs, advertisement on television, and provision of dresses to various television plays and films.
• Event arrangement like fashion shows and photo-shoots.
• Usage of e-commerce i.e. launching of website and advertising on web. Moreover, in order to keep abreast with the emerging trends and client tastes, surveys regarding customer satisfaction/needs should be a regular feature of this project.

As this project of Kapra Boutique deals in designer women wear, therefore the product mix will comprise of different styles of the female dresses in different sizes. Whereas, the styles will be Shalwar Kameez, Q-lots, Pajama Kameez, Frocks, Kurta, Peeshwaz, Party dresses, Casual Dresses and other prevalent dresses based on the market trends. The average sale price per dress is assumed to be Rs.2,100. Apart from this, there is a vast export potential in this industry, which is evident from the export figures of 1998-99 (available from the data of Federal Bureau of Statistics-FBS).

SITC2 Code Product Classification 2000 – 2001
Value (Rs. “000”)
8422102 Suit women cotton not knitted 1,415,124
8422103 Suit women synthetic not knitted 501,917
8422104 Suit women (other textile material not knitted)
46,861 8422202 Ensembles women cotton not knitted 2,107
8424002 Dresses women not knitted 463,346
8424003 Dresses women man made fiber not knitted 63,438
8424004 Dress women other textile not knitted 17,723
8424006 Shisha embroided dresses of cotton 286
8427006 Baluchi Kameez of Silk 27

Total 2,510,826
Source: Federal Bureau of Statistics
Even these figures represent the formal export patterns of women dresses from Pakistan and are not representative of the export of these dresses taking place on informal level. Most of the women dresses prepared in Pakistan are exported to USA, UK, Germany, UAE, Saudi Arabia, France, Belgium, Netherlands, and South Africa.

The end users of these dresses in foreign countries are mostly Pakistani and Indian women who have immigrated to these countries.

RAW MATERIAL

4.1 Raw Material
The raw-material required for such sort of projects, would be as follows: • Fabric: The fabric, which is the basic raw material requirement for a Kapra boutique and a major component of the cost, can be obtained from wholesale markets or from markets specializing in designer cloth at Faisalabad, Karachi, and Lahore. • Accessories: Accessories such as buttons, laces, zippers, elastics, threads, needles, embroidery threads, glasses, etc. will be procured from the local market at competitive rates.

• Labels, tags and packaging: Labels and tags can be obtained on order, as these serve as an identity for the Kapra boutique and are useful for promotion.  PRODUCTION PROCESS FLOW

5.1 Production Process Flow
The process for converting fabric in designer wear garments follows the below mentioned sequence:
• Design: The initial process starts from the designing phase. Various patterns of clothing and the fashions in vogue, which also relate to the tastes of the concerned clientele, are designed. This is done by the contracted designer as he/she will provide the basic designs of which the fabric will be converted into the designer wear garment. On average, a designer is supposed to provide 40 designs per month or 100-120 designs per season i.e. three months. From these designs, approximately 50% of the designs are selected for further development of clothes.

• Pattern Making/Cutting: Based on the designs selected, patterns for cutting are developed and based on these patterns, fabric is cut, embroided, block printed, and processed accordingly3.
• Stitching: The cutting is then followed by stitching, which can either be done by the in-house stitching unit or by outsourcing it4. Labels are also attached to the apparels in this process.
• Finishing: The final phase is that of finishing, in which the garment will be checked for quality control and will cleaned (if required) for final presentation at the outlet. The garments will also be tagged for identification of sizes, prices, addresses, handling instructions, etc.

3 After cutting, the fabric is embroided and this is normally outsourced to any locally available commercial embroidery unit.
4 In case of over-lock stitching, it will be done in-house. The stitching of buttonholes as well as elastic embedding will be outsourced. This will cost approximately @Rs.5 per dress. Pre-Feasibility Study Kapra Boutique (Women Designer Wear)

PREF-57/July, 2002/ Rev 01
HUMAN RESOURCE REQUIREMENTS

The project of Kapra Boutique requires the following Human Resources/Staff: Positions Required Salary per
Month
Salary per
Annum
Chief Executive/Owner 1 30,000 360,000
Designer 1 15,000 180,000
Sales Girls 2 5,000 120,000
Production Supervisor/Cutting Master 1 8,000 96,000
Stitchers/Tailors5 5 6,000 360,000
Press/Iron Man/Finishing man 1 3,000 36,000
Office Boy 1 2,000 24,000
Total 12 1,176,000

MACHINERY/EQUIPMENT DETAILS

The Kapra boutique will require a small in-house stitching unit. The cost of the stitching machinery will be as follows:
Stitching Machinery 6 No. Rs/Unit Rs
Single needle lock-stitch machine (Juki China) 4 20,000 80,000 Over-lock stitch machine (Juki China) 1 50,000 50,000
Accessories (Scissors, Cutting Board, Table,
stools, carpet, etc.)
50,000 50,000
Total 180,000

6 Though the prices here are given of the new machines but second hand machines are also widely available which can function properly and can reduce the project cost too. Furthermore, the following will also be required to setup a Kapra Boutique: Other Equipment No. Rs/Unit Rs

Air-conditioner 1 30,000 30,000
Stereo System 1 23,000 23,000
Computer and Printer 1 35,000 35,000
Telephone & Fax 1 10,000 10,000
Credit Card Machine7 1
Total 98,000

PREMISES FOR SHOP AND STITCHING UNIT

8.1 Recommended mode for renting a Shop
It is recommended that the proposed location for the said enterprise be a posh area, where people have the buying capacity for women fashion wear. The size of the shop should be at least 800 Sq.ft i.e. 20 feet front and 40 feet depth. Furthermore, a small building will be required to establishing the stitching unit. One viable option is to rent a small house for this purpose.

The shop will be obtained on rental basis, and the rent estimation for such a shop is Rs 30,000/month. According to the prevailing practice, six months rent as advance and three months rent as security would be required for renting the shop. It is assumed that security is a one-time expenditure, whereas pre-paid rent will only be given at the beginning, while establishing the Kapra boutique. After first six months, rent will be paid on monthly basis.

The cost estimates for setting up the Kapra Boutique are as follows: Rs
Security for renting shop/outlet (Rent @ Rs.30,000
per month. 3 months rent as security)
90,000
Interior decoration (installing lighting, mannequins,
hanging racks, mirrors, glass panes, cash counter, and
other décor, etc.)
300,000
Security for renting a house for installing the stitching
unit (Rent @ Rs.6,000 per month)
9,000
Credit card machines are installed free of cost by the Bank on fulfilling the Bank requirements like having a Bank account, copy of registry or lease agreement of shop, etc. However, these requirements may vary from Bank to Bank.

8.2 Infrastructure requirements
The project will have the following infrastructure components: Infrastructure Requirements Sq.ft
Main shop 600
Try Room 36
Small Store 100
Kitchen 64
Building for Stitching Unit 10 Marla House
Pre-Feasibility Study Kapra Boutique (Women Designer Wear)

PROJECT ECONOMICS

9.1 Project Cost
Description Cost (Rs.)
Machinery & equipment 278,000
Furniture & Fixture (Interior Decoration) 300,000
Security Deposits for Premises8 108,000
Pre-operating expenses
Salaries9 98,000
Promotional Expenses 97,920
Total Capital Cost 881,920
Working Capital
Raw material (Fabric & Accessories) 28,800

Accounts Receivable 108,800
Prepaid Rent (Kapra Boutique and Stitching Unit) 432,000
Total Working capital 569,600
Project Cost 1,451,520
9.2 Project Returns
Internal Rate of Return (IRR) 40.18%
Payback Period (Years) 3.87

Net Present Value (NPV) 2,267,714
9.3 Financing Plan
Financing Rs.
Equity 50% 725,760
Debt 50% 725,760
8 Security Deposit for Kapra Boutique Rs.90,000 (@Rs.30,000 per month for three months), and for Stitching Unit Rs.18,000 (@Rs.6,000 per month for three months). 9 One month salary of staff
Pre-Feasibility Study Kapra Boutique (Women Designer Wear)

KEY SUCCESS FACTORS

There are a number of factors, which contribute towards the success of a project. In case of the project of Kapra Boutique, some of the Key Success Factors are as follows: • Proper care while producing dresses should be adopted

• Proper Inventory management i.e. keeping minimum inventory as per past sales trends.
• The dress designs should be according to the emerging trends and fashions.
• Designing of dresses according to the consumer tastes/preferences gathered through consumer surveys.
• The location of the outlet should be properly selected and attractively decorated so as to target the clientele effectively.
• The customer satisfaction should be given due importance, because it is the customer satisfaction, which can increase the sales. Hence, excellent customer service should be provided.

THREATS FOR THE BUSINESS

• Competitive Structure of the market
The market of the Kapra boutiques is highly competitive, therefore if the entrepreneur is not well responsive to the tastes and response of the clientele as well as the fashions in vogue he/she may not be able to capitalize the opportunity properly. • Pilferage in the designs

The designs which a designer produce can be sold by the staff even before that design is launched and that can pose serious threat to the business because in the fashion industry it is the uniqueness of the design which matters. • Selection of the wrong venue

Selection of the wrong venue can be a major hurdle in achieving the desired business objectives.
• Selection of the wrong design
If the designs are not selected according to the tastes of the clientele then it can be detrimental for the business, so the clientele taste should be properly tracked. • Tax Improper documentation of the sales receipt record may lead to problems with Tax department.
Pre-Feasibility Study Kapra Boutique (Women Designer Wear)

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