Post on 07-Apr-2018
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Establishing an Indian MNC of Gemsand Jewellery in Belgium, UAE and
Nigeria
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INFRASTRUCTURE CUSTOMER
Core Capabilities:know how of the
jewellerydesigning
Target Customer:Dealers / Retailerswith wellestablished brandnames in the hostcountry
ValueConfiguration:stress on Innovation
Partner Network:Strongcommunicationamong partners
OFFER
Value Proposition:Unique designs ofIndian tradition,fashionable, stylish
FINANCE(to be done by Vineeth)
Cost Structure: Revenue Streams:
DistributionChannel: Effectiveand efficientchannel; viaairways
CustomerRelationship:Steps taken to buildlong-term relations
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Entry Barriers Instability of the government Tough competition existing in the host market Tough competition existing in the home country Tough competition from other nations like China and
Thailand
Segmentation: basis of Brand Name of the Dealer /Retailer, his knowledge about the end consumers,years of experience in the field
Targeting: those brands who in turn targetACHIEVER customers segment according to VALS-2 segmentation
Positioning: Fashionable products with high quality
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Product: Gold Jewellery without studded gems Gold Jewellery with studded gems
Price: according to the prevailing rates of Gold and other studded gems lower than the competitors
Distribution: via airways, up to FOB Promotion:
Displays at trade fairs Buy-back allowances
Dealer loadersCompetition: International: Thailand, China Home Country: Nashik, Mumbai, Bangalore Belgium: Gala Jewellers, RELL Diamonds & Jewels, Classic Diamonds
(India) Ltd., Cartier Joaillerie International, etc UAE: Samra Jewellery, Taiba Gold Jewellery, Damas Jewel, Rejee Jewellery, etc
Competitive Advantage: Cheap labour Unique Indian traditional designs Adaptability to design the local needs of the customers at minimal price Continuous innovation
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Factor EndowmentsLandLabourCapitalEnterprise
Related and supporting industriesManufacturer of Cutting & Polishing equipmentsMiningRetail industry
Demand ConditionsHuge demandTarget customersare very consciousabout fashion
Firm Strategy, Structure, RivalryHigh quality productsStylish, fashionableTarget Belgium & UAE via exportsRivalry from China, Thailand
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OverallAttractiveness
RisksNo Political risksNo Economic risks being it a part ofEuropean unionNo Legal risks as strict rules to safeguardproperty rights
CostsLegal costsCorruption(though very lessbut still exists)
BenefitsSize of economyLikely economicgrowth
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OverallAttractiveness
RisksPolitical risks: social unrestNo Economic risksLegal risks: failure to safeguard property rights
CostsCorruptionLegal costsInequality among genders
BenefitsSize of economyLikely economic growth
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Entry Barriers Instability of the government High number of criminal incidents and loots Highly corrupted political parties and civil servants Fear among the suppliers to keep precious and high-valued
items
Segmentation: basis of Brand Name of the Dealer /Retailer, his knowledge about the end consumers,years of experience in the field
Targeting: those brands who in turn targetACHIEVER customers segment according to VALS-2 segmentation
Positioning: Fashionable products with high quality
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Product: Gold Jewellery without studded gems Gold Jewellery with studded gems
Price:
according to the prevailing rates of Gold and other studded gems lower than the competitors
Distribution: via airways, up to FOB Promotion:
Displays at trade fairs Buy-back allowances Dealer loaders Insurance of the products
Competition: No competition Competitive Advantage:
Cheap labour Unique Indian traditional designs Adaptability to design the local needs of the customers at minimal price Continuous innovation
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Factor EndowmentsLandLabourCapitalEnterprise
Related and supporting industriesManufacturer of Cutting & PolishingequipmentsMiningRetail industry in other countries
DemandConditionsHuge demand inother branches ofthe company
Firm Strategy, Structure,
RivalryHigh quality productsStylish, fashionableTarget Nigeria via franchiseRivalry from China, Thailand
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OverallAttractiveness
RisksPolitical risks: social unrest/ anti-business trendsEconomic risks: economic mismanagementLegal risks: failure to safeguard property rights
CostsCorruptionLack of infrastructureLegal costs
BenefitsSize of economyUntapped market
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Enthnocentric staffing policy Function as a multiple CEO rather than going
for a single CEO
Later will move on to be polycentric
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Advisory Board
Head Finance Head Marketing Head Human ResourceHeadOperations(Exports)
International Business
Developments Manager
Belgium UAE Nigeria
Design andDevelopment
HR International
Division
Executive(Do
mestic)
Executive(Interna
tional)
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International Business Development
Manager
Belgium UAE Nigeria
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Compliance with labor laws of Belgium ,Nigeria and UAE
Enforce Standardization of work practices
Recruitment would be culturally sensitive
Training for the international businesstraveler who would further train theexecutives of the host countries
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Goal SettingParent company role conception should be communicatedwell to the HCNs. The HCN receives role expectations andenacts role behaviors in his/her cultural environment.
Performance AppraisalsPerformance Appraisal of the HCNs would also be countryspecific and would be customized.
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Compensation would be given on the going ratebasis
This rate is calculated by conducting a salarysurvey and salary benchmarking.
A separate budget would be provided for meetingthe expenses related to the ad-hoc visits by theIBDM to the host countries, Visa processing Fees
and other administrative expenses.
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Belgium Ad Valorem
Applies the EU common external tariff (CET)
Single duty system
UAE Account for 4% of the CIF value (cost, insurance freight) of
the goods or services deposited at the customs.
Reimbursement of the duty deposit is available for 30 days.
Nigeria Import duty varies from 5% to 60%, averaging 12%.
All imports are also subject to a 7% port surcharge and a 5%VAT.
The paperwork necessary for exporting and importing is
lengthy.
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Uncut, polished diamonds, gold are sourcedfrom Surat.
Consultancy for setting up of factorypremises and other areas of work.
TQM policies.
CAD/CAM setup and availabilty.
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Selection of Factory Premises Planning & Layout of Factory
Interior Work of the Factory
Selection of Machinery Manufacturing Process
Selection of Workers
Quality Control
Jewellery Designing & CAD/CAM
Invisible Setting
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52 Rupees/ 65 Rupees/Particulars Rupees Dollar Euro
Gold 50grams Pure 77000at 1540 per gram
Making, Wastage, CraftingCharges
at 5% of pure gold 3850
Ex-Factory 80850
Inland Transportation 500
Clearing and Forwardingcharges 100
Port and Loading Charges 100
F.O.B Price 81550 1568.269 1254.615
M.O.Q - 10 Pieces 815500 15682.69 12546.15
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Particulars 2009-10 2010-11 2011-12 2012-13 2013-14
Total Income
Total Expenditure
Interest
Gross Profit
Depreciation
Income Tax
PAT
102.18
87.33
4.2
10.65
1.31
0.434
8.90
118.7
93.9
6.7
18.10
1.33
0.912
15.85
149.4
108.2
11.6
29.6
1.49
1.66
26.45
193.9
117.5
19.2
57.20
3.23
3.15
50.82
237.22
133.9
23.2
80.10
5.25
4.72
70.13
Projected Exports Income statement in rupee termsIn million
Foreign exchange Figures converted at current exchange rates
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Handling of Foreign exchange inflows and the fluctuations/volatility in theexchange rates.
The payment terms are solely on the basis of Letter of Credit.
The company would in its growth stages utilize the external currency
borrowing mode to minimize currency risks and foreign exchange issues.
The negotiating bank would conduct the entire process of the receipt of theremittance in the foreign exchange dollar/euro terms.
The period of presenting and clearing of L/c would be 2 days after thesuccessful transfer of documents to the exporters opening bank.
The issues of foreign exchange would be dealt in by following a hedge policyof foreign exchange in the local markets.
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The company would adapt the following foreign exchange management policy:-
Due to the volatility and fluctuations in the foreign exchange markets, especiallyin the US Dollar.
The importers from Nigeria and UAE would open an L/C in US Dollar terms, andthe importers from Belgium would open an L/C in Euro terms and the pricing ofthe products would be done in the same way.
The company would adopt a 45 day forward policy by entering into an agreementwith the domestic bank to book the US dollar and EURO at a rate comfortable to usas concerned with the pricing of our products to the importer.
The policy would be more to safeguard the interests of the company rather thanspeculating the movements in the markets.
The remittances arising out of exports would be maintained in EEFC account inorder to fund the possibility of import of raw material in the future.
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Particulars AmountContribution from partners
Domestic Operations
External Currency Borrowing
1.Nigerian Naira loan fromDiamond Commercial Bank,Lagos (Required for setting upstores in the growth phase)
2.Euro loan from Fortis Bank,Brussels for setting up adiamond polishing unit in
Belgium in the 3rd year ofoperations.
20,00,000 Rupees
30,00,000 Rupees
75,00,000 Naira (26,15,000 Rs)
3,00,000 Euro (2,00,00,000 Rs)
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Particulars Amount
Marketing, Export promotion andestablishment expenses
Procurement of raw material for
exports
Use of External Currency Borrowing
1. Nigerian Naira to set up the retailoutlets and franchises in the growthstage
2.Setting up a diamond polishing unitin Belgium in the 3rd year of operations.
10,00,000 Rupees
40,00,000 Rupees
75,00,000 Naira (26,15,000 Rs)
3,00,000 Euro (2,00,00,000 Rs)
Country specific Problems and Issues to be faced and
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Nigeria
Scams/Fraudulent business activities emanating from Benin
The High Commission of India in Nigeria (accredited to Benin ) has informed at late that
there have been several complaints/enquiries from companies overseas regarding cases of
forgery, cheating perpetuated by dummy companies allegedly based in Republic of Benin
(Cotonou ).
The Company would verify the credentials of Nigerian importers by contacting The
Department of International Economic and Trade Relations of Republic of Benin
adopting the measures to safeguard itself and also utilize the opportunity of dealing with
Nigerian Importers
The Indian Government is promoting the gems and jewellery sector by inviting delegates
from various developing countries.
A delegation from Nigeria and other African countries would be invited to visit the various
hubs of jewellery Industry including cities like Mumbai, Surat, Chennai, Kolkata etc.
The company would promote its products and identify clientele in such exposures and also
win their trust by showcasing the wide variety of products and the excellent manufacturing
facility.
Country specific Problems and Issues to be faced andpossible solutions
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