Post on 07-Apr-2018
transcript
8/6/2019 Global Project Full and Final
1/16
Global Marketing
2011
Final Project
Exports of Leather Shoes
Submitted to:
Prof. Ahmad-Ur-Rehma
Submitted by:
FAIZAN AHMAD AFZAL
L1F08MBAM2075
REHMAN AFZAL
L1F08MBAM2065
AATIF ILYAS
L1F08MBAM0074
Date of Submission:
07 June 2011
8/6/2019 Global Project Full and Final
2/16
8/6/2019 Global Project Full and Final
3/16
LEATHER INDUSTRY
OVERVIEW OF INDUSTRYLeather industry, including leather products, is the second largest export earning sector after
textiles. Currently, this sector is contributing around $800 million a year but has the potential
to multiply volume of exports with the improvement of quality and diversification in
different range of products, specially garments and footwear.
Basically, it is a job-oriented sector providing employment to a very large segment of the
society besides earning foreign exchange for the country.
The leather finishing and made ups industries represent an important sector in Pakistan,
contributing almost more than half a billion US dollars in foreign exchange earnings to the
national exchequer. The leather industry consists of six sub-sectors namely, Tanning,
Leather. Footwear, Leather Garments, Leather Gloves, Leather Shoe Uppers, and Leather
Goods. The Tanning industry plays a vital role in the progress of these sub-sectors by
providing the basic material i.e. leather. Today, Pakistanis among the leading countries in the
production of Leather Garments and Gloves. The leather and leather made-ups industry plays
a significant role in the economy of Pakistan and its share in GDP is 4%. Ten years ago, it
was the fifth most important export industry in the manufacturing sector, and now it is the
second.
HISTORY
The history of leather industry in Pakistan is as old as the country itself. At the time of
independence there were only a few tanneries producing sole leather and that too at a very
small scale. However, since then this industry has been flourishing and has never looked
back. During 1950s, some well-equipped tanneries were set up at Karachi and Lahore, while
during 60s and 70s more units were established at Hyderabad Kasur, Sialkot, Multan,
Sahiwal and Gujranwala. Starting with the production of picked and vegetable tanned hides
and skins, the tanneries, today, are producing not only wet blue and crust, but also fully
finished leather.
3
8/6/2019 Global Project Full and Final
4/16
In the early days of independence some tanneries were established in Karachi. In 1950's
some were established in Lahore and adjoining areas.
The entire production of hides and skins were being exported in a raw form. Thereafter the
local tanning industry making at first semi-finished leather made rapid progress due to
favorable raw material situation, cheap labor and the existence of growing demand and
foreign market.
PRODUCTION CAPACITY
PARTICULARS PRODUCTION
CAPACITY
Tanned Leather 90 million Sq meter
Leather garments
/Apparels
7 million
Leather gloves 10 million
Leather footwear 200 million
Source: Pakistan Tanneries Association
NOTE: Against a capacity of producing 90 million square feet of tanned leather, the
tanneries are presently producing only 60 million square feet tanned leather per year.
Presently, there are some 461 leather garments/apparels making units, which annually
produce some 5.0 million pieces against a capacity of producing 7.0 million pieces. The 524
footwear units in the country are currently producing 100 million pairs against a capacity for
producing 200 million pairs, while 348 leather gloves units are producing 5.0 million pairsagainst a capacity of making 10 million pairs annually.
These statistics clearly show that the capacity of this sector remains highly under-utilized and
with a little extra effort Pakistan can substantially increase the production and exports of its
shoes and other leather products.
4
8/6/2019 Global Project Full and Final
5/16
PRODUCT
Leather Shoes
MARKET
UK (England)
SIGNIFICANCE OF PAKISTAN IN LEATHER SHOES: Pakistan`s Leather shoes are on number 2 in world leather shoes market
Cost of labor is low in Pakistan
There are less environmental laws
Price is low as compare to Italy and providing supreme quality leather shoes
There is no Quota restriction on Pakistan related to leather shoes exports
BARRIERS:
First off all Pakistani exporter have to get the contract form the company in UK
ISO 9002 and 9000 certifications
5
8/6/2019 Global Project Full and Final
6/16
8/6/2019 Global Project Full and Final
7/16
Machining Department, Lasting & Making Department, Finishing Department and the Shoe
Room.
CLICKING OR CUTTING DEPARTMENT
In this department, the top part of the shoe or the "upper" is made. The
clicking operative is given skins of leather, mostly cow leather but not
restricted to this type of leather. Using metal strip knives, the worker cuts
out pieces of various shapes that will take the form of "uppers". This
operation needs a high level of skill as the expensive leather has to be wasted at the
minimum level possible. Leather may also have various defects on the surface such as barbed
wire scratches which needs to be avoided, so that they are not used for the uppers.
CLOSING OR MACHINING DEPARTMENT
Here the component pieces are sewn together by highly skilled machinists
so as to produce the completed upper. The work is divided in stages. In
early stages, the pieces are sewn together on the flat machine. In the later
stages, when the upper is no longer flat and has become three-dimensional,
the machine called post machine is used. The sewing surface of the machine is elevated on a
post to enable the operative to sew the three dimensional upper. Various edge treatments are
also done onto the leather for giving an attractive look to the finished upper. At this stage
only, the eyelets are also inserted in order to accommodate the laces in the finished shoes.
LASTING &MAKING DEPARTMENT
The completed uppers are molded into a shape of foot with the help of a
"Last". Last is a plastic shape that simulates the foot shape. It is later
removed from the finished shoe to be used further in making other shoes.
Firstly, an insole to the bottom of the last is attached. It is only a temporary
attachment. Sometimes, mostly when welted shoes are manufactured, the insole has a rib
attached to its under edge. The upper is stretched and molded over the last and attached to
the insole rib. After the procedure completes, a "lasted shoe" is obtained. Now, the welt- a
7
8/6/2019 Global Project Full and Final
8/16
strip of leather or plastic- is sewn onto the shoe through the rib. The upper and all the surplus
material is trimmed off the seam. The sole is then attached to the welt and both are stitched
together. The heel is then attached which completes the "making" of the shoe. That was the
process for heeled shoes. When a flat shoe is in the making, there are considerably fewer
operations. The insole in this case is flat and when the uppers are 'lasted', they are glued
down to the surface of the inner side of the insole. The part of the upper that is glued down is
then roughed with a wire brush to take off the smooth finish of the leather. This is done
because rough surface absorbs glue to give a stronger bond. The soles are usually cut,
finished and prepared as a separate component so that when they are glued to the lasted
upper, the result is a complete and finished shoe. Soles can also be pre-molded as a separate
component out of various synthetic materials and again glued to the lasted upper to complete
the shoe.
FINISHING DEPARTMENT AND THE SHOE ROOM
The finishing of a shoe depends on the material used for making it. If made
of leather, the sole edge and heel are trimmed and buffed to give a smooth
finish. To give them an attractive finish and to ensure that the edge is
waterproof, they are stained, polished and waxed. The bottom of the sole is
often lightly buffed, stained and polished and different types of patterns are marked on the
surface to give it a craft finished look. A "finished shoe" has now been made. For shoe room
operation, an internal sock is fitted into shoe which can be of any length- full, half or quarter.
They usually have the manufacturers details or a brand name wherever applicable.
Depending on the materials used for the uppers, they are then cleaned, polished and sprayed.
Laces and any tags that might have to be attached to the shoes, such as shoe care instructions,
are also attached. The shoes, at last, get packaged in boxes.
8
8/6/2019 Global Project Full and Final
9/16
PRICING STRATEGIES
The leather grading system employed by leather upholstery manufacturers and suppliers is
used as a means of differentiating and marketing individual types of leather by price, based
on quality or style.
The grading system is the method manufacturers use to present their pricing structures to
retail dealers. Leather suppliers also use a grading system to distinguish their leathers and
prices to manufacturers.
PRICE PER SHOE
Price per Shoe (article)
Article 1 Article 2
Details PKR PKR
Thread cream 10 11
Thread 30 32
Sole 100 200
Foam 14 23
Inner sole pad 25 50
Sheet 20 40
Buckle 30
Banwer (0.3mm) 25 45
EVA sheet 14 23
Cloth 11 21
Leather
Cow leather 200 363
Sheep leather 105 133
Total Material Cost 554 971
Overhead 10% 55 97
Total Cost of Shoe 609 1,068
9
8/6/2019 Global Project Full and Final
10/16
Inward carriage cost 6 10
Shoe Box 31* 31*
Cost of Shoe sold 646 1,109
* Shoe box calculation is in the next table
PACKAGING COST
Packaging cost
PKR Per
Shoe
Positive 3.5/inch
828
Plate 600/p 2,40
0
Printing 800/p 3,20
0
Total Fix Cost 6,42
8
3
Art card 23x36 20/shee
t
20
Lamination 1.5/ft 6
Box maker 2/box 2
Variable cost per
Box
28
Total Cost/box 31
COMPETITORS
LOCAL COMPETITORS
Urbansole
o Owned byShafi (Pvt.) Limited
10
8/6/2019 Global Project Full and Final
11/16
o Estabilished in 1998
o Outlets in europe
o 48 dealers
o Licensee for Pierre Cardin (Paris) in Pakistan
Elegant
o Estabilished in 1994
o Global player
o Parada (most popular brand)
Hush Puppies
o Global player
o Outlets all over the world
INTERNATIONAL COMPETITORS
Fermo (brand names)
o Marc by marc jacobs
o CK
o Tod
o Mans Fermo AGO
Buyers/Importers
B & S Shoes Inc.:
Company Profile:
B & S Shoes Inc. in Drexel Hill, PA is a private company categorized under Shoe Stores. It
was established in 1982 and incorporated in Pennsylvania. It is offering leatherwear shoes of
11
8/6/2019 Global Project Full and Final
12/16
all kinds as well as foot repair as an additional customer service. The company is in business
from 29 years, having a prior experience of U.K market. Current estimates show this
company has annual revenue of $500,000 to $1 million. Companies like B & S Shoes Inc
usually offer: Kids Shoes, Evening Shoes, Jordans Shoes, Simple Shoes and Best Running
Shoes.
Company contact:
Address: 5100 State Road # 1 Drexel Hill, PA 19026-4627
Phone: (610) 284-107Website:www.bsshoes.comEmail:
12
http://www.bsshoes.com/http://www.bsshoes.com/8/6/2019 Global Project Full and Final
13/16
Nicos Shoes:
Company Profile:
Nico's Shoes works as Nicos Buster Brown Shoes in Woodland Hills, CA is a private
company categorized under Shoe Stores. It was started in 1977 and registered in
Pennsylvania. The companys core product is leather shoes. It is in business of import from
34 years. The sources of imports are Far East countries. Numbers of Pakistani companies are
exporting finished leather shoes to Nicos shoes from years. Companys major import is from
china but Pakistan has a great chance to grab market by increasing quality of production as
raw leather of Pakistan is best and renowned worldwide.
Company Contact:
Address:21761 Ventura Boulevard Woodland Hills, CAWebsite: www.nicos.comPhone: (818) 340-6281
Email:
Newmans Footwear:
Company Profile:
Newmans Footwear is a major UK importer of footwear, handbags and fashion accessories.
Based in Blackburn, Lancashire, and supplying many of the UK's leading retailers. The
company is a mature player as it has an experience of over 70 years. The company is highly
quality conscious and imports products from countries with excellent manufacturing
facilities. China is leading exporter to the company but few Pakistan companies are also
working to improve their share. High quality raw leather is one strength for Pakistani
13
8/6/2019 Global Project Full and Final
14/16
companies and have a room for improvement in production quality and increasing their
global market share.
Company Contact
Address: Newman's Footwear Ltd Garden Street Blackburn BB2 1TZ
Phone: 01254 296540Fax. 01254 296541
Website:www.nfw.co.uk
E-mail:info@nfw.co.uk
Negotiation Process
Negotiation Process is start with the sampling of the product. Exporter Company sends its
product samples to Importer Company along with all the specifications of the product. If the
sample of the product is approved by the importer company then the process of costing and
pricing starts. Both the parties negotiate in order to make a best deal which can provide
benefit and profits to both of them.
14
http://www.nfw.co.uk/mailto:info@nfw.co.ukmailto:info@nfw.co.ukhttp://www.nfw.co.uk/mailto:info@nfw.co.uk8/6/2019 Global Project Full and Final
15/16
After setting up the prices the terms and conditions of the trade process is decided. Terms
and conditions include the:
The delivery process
Time of the delivery
Mode of payment
Etc.
When all the terms and conditions of the sale process are completed then order letter is
placed by the importer company which includes all the specifications of the product, quantity
of the product etc. After the acceptance of the of the order letter by the exporter company the
manufacturing process of the products is start and the products go for the shipment.
15
8/6/2019 Global Project Full and Final
16/16
LEGAL DOCUMENTS
FBR CERTIFICATE LAHORE CHAMBER OF COMMERCE
MEMBERSHIP
SALES TAX CERTIFICATE
LETTER OF CREDIT COPY
SHIPPING LETTER
BILL OF LADING
DECLARATION CERTIFICATE CERTIFICATE OF ORIGIN
PACKING LIST
PERFORMA INVIOCE
PURCHASE ORDER
16