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AMITY BUSINESS SCHOOL (AMITY UNIVERSITY, NOIDA)

EXPORT PLANSUBMITTED TO:Mr. ASHOK SHARMA (32) PROGRAM LEADER MBA-MKT & SALES (2007-09) AMITY BUSINESS SCHOOL AMITY UNIVERSITY, NOIDA

SUBMITTED BY:MUKESH KUMAR SINGH ASHISH BHARDWAJ (13) MANAS RASTOGI (28) MANISH KUMAR (29)

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OUR BUSINES PLAN IS A EXPORT PLAN OF HANDICRAFTS FROM INDIA TO GERMANY.

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TABLE OF CONTENTSExecutive summary 4 Mission and history ................................................................5 The Present scenario of crafts and art works...6 Steps of the plan...8 Selection of the product...9 Evaluation of the product...10 Goal settings.10 Industry analysis..10 Company analysis14 Probability of success..16 Market factor assessment....17 Supporting functions...26 Marketing strategy..26 Sales forecast28 Business plan summary...29

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We, INDIAN ART AND CRAFT PVT LTD is interested in giving our customers interior a touch of class, a feel of elegance and a measure of comfort, come to us. It is a measure of our success that we have satisfied clients and trustworthy in abroad. Our premium quality products are appreciated all over the world. We manufacture ethnic and traditional Indian handicrafts in wood and aluminum. Each and every article, painstakingly handcrafted by our skilled craftsmen, who have been mastering these arts for generations. Created with an unerring eye to detail and a stringent check over quality, as per our own designs or according to your designs and specifications. Our exclusive range of products includes aluminum bowls, trays, photo frames, vases etc. and fine quality of wooden products includes crosses, candle holders, boxes, trays, cabinets and many more. India has a rich history of Handicrafts. The significance of handicrafts lies in its selfsufficiency and use of materials. Handicrafts depict craftsman's talent in a way different from the machine -made counterparts. Handicrafts, also known as craft work is a type of work where useful and decorative devices are made completely by hand or using only simple tools. We have earned a respectable position as leading manufacturers and exporters of Wooden and Aluminum handicrafts. At INDIAN ART AND CRAFT PVT LTD, all the handicrafts and art works undergo through various stages of production, which may not necessarily be entirely done by hand. Even if only one stage of the work is done manually, the final product will be called a piece of handicraft. We have engaged traditional and creative designers as we believe that innovation plays a key role in shaping of traditional handicrafts. A combination of skill and sincere workmanship combines to create appealing handicrafts. We collect our products from states like UP (Saharanpur), Jammu & Kashmir (Srinagar), Karnataka, Kerala and Tamilnadu .we also have our own production in Noida. We have a very successful distribution chain in the Indian market. We have experienced that there is not any tough task to perform while distributing these products. As our business in reaching towards saturation in the Indian market, we are planning to export our products in the international market. As a result of a rigorous planning process, we have identified five strategic imperatives on which it must deliver in order to maximize its potential for impact: 1. Ensure that all ingredients in the network are meeting our high standards of performance 2. Strategically add value to the products 3. Explore new themes as a way to expand impact 4. Position our business as a major participant in each and every platform 5. Build an infrastructure to support the initiatives that follow from imperatives 1-4

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Mission and history:Our mission is to make our business break all the horizons and provide our customers a unique experience by providing very good products and services. we want to expand our boundaries in other continents also. So we are now focusing on the expansion part. INDIAN ART AND CRAFT PVT LTD traditional Indian handicrafts, launched in 1999, We realized that Indian handicrafts across the world drew lot of attention and appreciation for their traditionality, and aestheticity. However, there was a gap in the supply of the genuine, traditional Indian handicraft products in the market. We took up the project Crafts in India to provide the appreciators of Indian art an outlet from where they could purchase ethnic Indian handicraft products executed in traditional techniques, designs and colors. The idea was to make ethnic Indian products accessible across the globe with a simple click on a mouse. Besides commercial interest, the genuine desire to promote Indian handicrafts, and create sustainable environment for the craftsmen and artists, guided us in our endeavor. Our locational factor too helped us to access the information on traditional art forms and their practitioners. Today, we have emerged as one of the credible names in providing exquisite Indian handicraft products all across the country. Most of craft products displayed on our site are directly procured from the craftsmen. The idea is to improve their compensation by doing away with the middlemen and also ensure that you receive the product of at a reasonable price.

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Present scenario of crafts and art worksThe roots of Indian art and crafts are entrenched very deep and they are capable of influencing the generations passing by. The present status of craft in India owes much to the rich craft traditions of the past. Most of the crafts from the past continue to flourish due to their utilitarian nature, their availability to the common people, and popularity in domestic and foreign markets. There is a great demand for rich brocades and zari work. The repertoire of saris ranges from Banarsi Amru, Tanchoi from Surat, Paithani, Patola, and Kancheevaram to the cotton saris from the tribal regions of Bihar and Madhya Pradesh etc, to enchant the modern Indian woman. There is a profusion of materials available to the consumers these days. One can get a variety of garments made of different silks and mixed fabrics. Richly embroidered garments, woven shawls and household items are in vogue these days. Mainly craftsmen from Kashmir, Punjab, Gujarat, Rajasthan, Madhya Pradesh, North Eastern states etc create these products. There is a flourishing market for pherans and tablecloths from Kashmir. Woolen shawls from Himachal and North Eastern states too are popular. Products like bed sheets, table mats, napkins, household furnishings etc made out using the various styles of textile printing ranging from tie and dye, block printing, hand printing etc are in great demand now a days. India has an obsession with gems and jewelry since ancient times when India was referred to as the 'golden bird'. This obsession is strong till date and India has become the largest importer of gold in the world. A variety of local jewelry traditions (of different states) are present in India with the modern day gem and diamond cutting and polishing industry. The present day jewelry tradition of India is a fine example of assimilation between traditional and modern designs and techniques. The increasing demand for Indian jewelry and gems has made this craft tradition into a full-fledged large scale organized industry, which is growing by the day. Gems and semi precious stones are not only used in making jewelry, but for medicinal purposes. People wear them under the prescription of astrologers, as it is strongly believed in India that Gems and semi precious stones, affect ones future and destiny. Carpet weaving industry is the largest export oriented craft industry from India. Not only there is a great demand for costly silk carpets from Kashmir, which has become the status symbol in traditional Indian homes, but there is also demand for woolen and non-woolen carpets. A variety of floorings and traditional durries are flooding the markets these days and decorating the floors of Indian homes. There is a huge domestic market for a hoard of utilitarian craft items such as bedcovers,

7 sheets, cushions, curtains, tablemats, bags, metal furniture, mats, boxes, cabinets, wood furniture, toys, utensils, garden pots, terracotta items, brass and silverware, leather products, papier-mch products, cane, jute and coir items, carpets, rugs, durries etc. Most of the units producing utilitarian craft items have attained the status of small-scale industry. The demand for decorative items such as traditional wall hangings, silver cutlery, brass pots, embellished wooden sculptures, marble and wood inlay work, silk carpets, wrought iron furniture and decorative pieces, traditional paintings, enameled furniture, stone and wood carvings, metal, wood and stone sculptures etc is also on the rise in India and abroad. The popularity of these handicraft products is increasing in the domestic markets due to the increasing demand for traditional

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BUSINESS PLANA business plan is a document that summarizes the operational and financial objectives of a business and contains the detailed plans and budgets showing how the objectives are to be realized. Because the business plan contains detailed financial projections, forecasts about your business's performance, and a market plan, it's an incredibly useful tool for business planning. For anyone starting a business, it's a vital first step. OUR BUSINES PLAN IS A EXPORT PLAN OF HANDICRAFTS FROM INDIA TO GERMANY.

International Business Plan: PurposeThe purpose of the International Business Plan is to prepare our business to enter the international marketplace. This plan will serve as a step-by-step guide to lead us through the process of exporting our product to an international market. The whole plan is divided into sections. Once the business plan is completed, an in-depth analysis of our readiness to export can be completed. Again there is one very important thing which has given us.

Our business plan is a export plan. For exporting a product from INDIA to other countries, needs a very good evaluation. So our plan includes these following steps: SELECTION OF THE PRODUCT WITH EXPORT POTENTIAL PLANNING GOAL SETTING (long-term goals AND short-term goals) INDUSTRY ANALYSIS BUSINESS/COMPANY ANALYSIS DETERMINING PROBABILITY OF SUCCESS MARKET FACTOR ASSESSMENT (COUNTRY/RATING) SUPPORT FUNCTIONS MARKETING STRATEGY SALES FORECAST INTERNATIONAL BUSINESS PLAN SUMMARY

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1. SELECTION OF THE PRODUCT:We deal in handicraft and art items like metalware, woodware, handprinted textiles and leather, wood and cane wares, embroidered and crocheted goods, shawls as artware, zari goods, laces, fashion jewelry, Paintings, Notebooks & Albums, Marble Inlay Work, Furnishing, wooden handicraft, Sculpture, and other handicraft products. We have experienced that there is a great potential for products like ------- Hand-knotted carpets, Art metalware, Hand-printed textiles, Marble inlay work, Furnishing, Sculpture, wooden handicraft and other handicraft products etc. These are the basic reason of choosing these products for export: The reputation of India in the handicraft export business. India is one of the important suppliers of handicrafts to the world market. The Indian handicrafts industry is highly labor intensive cottage based industry and decentralized, being spread all over the country in rural and urban areas. EU member states and Asian countries, China and India in particular, are major suppliers of giftware and handicrafts to the German market. Handicraft Industry has been globally considered, as the rich heritage of India. This is why Indian Handicraft is in huge demand all over the world due to its unique appeal and craftsmanship. Indian Handicrafts are available in brass, metal, wood, stone, beads, such as Paintings, Notebooks & Albums, Marble Inlay Work, Furnishing, Sculpture, Artificial Jewelry and other handicraft products. The wooden handicrafts industry plays an important role in the Indian economy. This industry requires low capital investment and other resources. The wooden handicraft sector provides a high ratio of value addition, and has emerged as one of the major sources of foreign exchange earnings for India Our success in the domestic market which says that there is no such complexity in distributing these products.

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2. EVALUATION OF THE PRODUCTIn this stage there is a need to identify some unmatched features provided in our products, and the reason of the sale of our products in the international market The first part----For making the customers know about our product and make them buy is not a big deal. We can use the name of INDIA for it. Not only that our product quality is very good. We use the best ingredients in our products. Again we are offering our products at a very competitive rate. We also have a proper testing department which passes the product through a test. in this test the testing department verifies that the products are not hazardous. These main things make our product different from the others. The second part---- There is a huge demand of these types of products in the countries like GERMANY. So based on these points we have decided that these very products will be exported to GERMANY.

3. GOAL SETTINGS:Long term goals: Our long term goal is to increase the international market coverage and to increase the exports by 15% annually. Within 5 years of the start we, atleast, want to get the desired increment in the exports. Not only this, we also want to reach to the countries which are having similar cultural attributes. Short term goals: first year goals- Attend export seminars, select a freight forwarder etc. From the second year we will try to use our one year experience in Germany. We will try to build a strong relationship with the customers and we will also try to identify some bulk buyers. After spending one year in the German market, we will surely have a insight of the ways of doing business. We will to be familiar with the market conditions and to know the rules as far as possible, so that we can try to get some relief from the GERMAN GOVT.

4. INDUSTRY ANALYSISGenerally considered a cottage industry, Indian Handicrafts and Gifts Industry has outgrown its image to evolve into a rapid growing industry with a turnover from US $ 1.2 million to US$ 1.9 billion in the last decade. There has been a consistent annual growth rate of more than 15 per cent over a 10-year period, from 3.6% to a respectable 10% share in global handicraft exports. In 2005-2006 the exports of Indian handicrafts has shown an increase of US$ 298.87 million, i.e. the exports increases by 10.02% over the similar period during 2004-2005. Though India's share in international handicrafts market

11 is just about 2 %, the world handicrafts market is estimated to be of the order of US $235 billion. The industry is expected to triple its export turnover to Rs. 39,000 crore by 200910 that in turn will also create around 20 lakh new job opportunities. Export Data (Product Wise) 2006-07---According to the provisional data available, the export of handicrafts has shown an increase of Rs. 2761.29 crores, from Rs.14, 526.85 to Rs.17, 288.14 crores (increase of 19.01% in rupees term). In dollar terms, the export figures have shown an increase of US$ 528.70 millions, i.e. the exports increased by 16.11% over the similar period during 2005 - 06. Details are given below STATEMENT PRESENTING PROVISIONAL EXPORT FIGURES OF HANDICRAFTS DURING THE PERIOD APRIL- MARCH 2006 - 07 COMPARED TO THE CORRESPONDING PERIOD OF APRIL- MARCH 2005 2006. INCREASE US$ IN IN % MILLIONS OVER 2005(April-March) 06 2005-06 2006-07 *44.2546 *45.3607 12.89 38.33 20.04 827.90 192.76 464.07 911.60 260.14 543.46 10.14 34.96 17.11

Items

RUPEES IN CR. (April-March) 2005-06 2006-07 4135.06 1180.02 2465.18 5860.35 216.82

INCREASE IN % OVER 2005-06

Artmetal Wares Woodwares Handprinted Textiles & Scaraves Embroidered & Crocheted Goods Shawls as Artwares Zari & Zari Goods Imitation Jewelry Misc. Handicrafts Total

3662.98 853.06 2053.70 4711.45 110.23 347.05 274.86 2513.52 14526.85

1064.62 1291.94 24.91 24.39 78.42 96.70 13.08 40.47 5.52 19.01 62.11 567.97 47.80 21.35 86.52 85.12 584.68 91.89 10.33

392.45 386.09 2652.17 17288.14

3282.56 3811.26 37.05 2.94 16.11

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During the period, the exports of Art Metalware, Woodware, Handprinted Textiles & Scarves, Embroidered & Crochetted Goods, Shawls as Artware, Zari & Zari Goods,Imitation Jewellery & Misc. Handicrafts showed an increasing trend of 12.89%, 38.33%, 20.04%, 24.39%, 96.70%,13.08%, 40.47% & 5.52% in rupees terms respectively and 10.14%,34.96%, 17.11%, 21.35%, 91.89%, 10.33%, 37.05% & 2.94% in US$ terms respectively. Overall an increase in the rupee terms was 19.01% and increase in the US$ terms was 16.11%. REVIEW EXPORTS DURING 2007 - 08 (APRIL) According to the provisional data available the exports of Handicrafts have shown an increase of Rs. 148.93 crores, from Rs.815.55 to Rs.964.48 crores, an increase of 18.26% in rupees term. In dollar terms, the exports have shown the increase of 34.86 millions US$ i.e. the exports increased by 18.92% over the similar period in 2006- 2007. Details are as under: STATEMENT SHOWING PROVISIONAL EXPORT FIGURE OF HANDICRAFTS DURING THE PERIOD APRIL 2007 - 2008 COMPARED TO THE CORRESPONDING PERIOD OF APRIL 2006 - 2007.

US$ at the rate of * RUPEES IN CR. INCREASE US$ IN MILLIONS INCREASE IN 2005- 2006- IN % 2005-06 2006-07 % OVER 06 07 OVER (April-March) 2005-06 (April-March) 2005-06 *44.2546*45.3607 208.47 236.62 13.50 34.45 46.85 35.99 47.09 7.78 25.01 54.02 2.69 3.80 3.82 40.00 184.21 53.75 10.64 29.98 66.49 5.26 4.44 5.14 43.37 219.07 14.14 36.76 19.87 23.08 95.54 16.84 34.55 8.43 18.92

ITEMS

ARTMETAL WARES WOODWARES

HANDPRINTED TEXTILES 110.73 131.98 19.19 & SCARAVES 239.16 292.75 EMBROIDERED & CROCHETTED GOODS 11.92 16.84 23.16 19.53 22.41

SHAWLS AS ARTWARES 16.90 22.64 94.30 ZARI & ZARI GOODS 177.08 190.95 15.97 IMMITATION JEWELLERY 815.55 964.48 33.96 MISC. HANDICRAFTS 7.83 TOTAL 18.26

During the period, the exports of Art Metalware, Woodware, Handprinted Textiles & Scarves, Embroidered & Crochetted Goods, Shawls as Artware, Zari & Zari Goods, Imitation Jewellery & Misc. Handicrafts showed an increasing trend of 13.50%, 35.99%, 19.19%, 22.41%, 94.30%,15.97%, 33.96% & 7.83% in rupees terms respectively and 14.14%,36.76%, 19.87%, 23.08%, 95.54%, 16.84%, 34.55% & 8.43% in US$ terms respectively. Overall an increase in the rupee terms was 18.26% and increase in the US$

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Top Ten Destinations of India's Export for HandicraftsRank Country Name 1 2 3 4 5 6 7 8 9 10 USA UK Germany France Netherlands Spain Italy UAE Canada BelgiumLuxembourg 2000 - 2001 Value (In Million US$) 294.8517 61.6174 37.554 31.013 29.243 21.8287 27.9376 14.6376 15.2344 9.0019 2001 - 2002 Value (In Million US$) 219.176 56.1987 30.4357 29.4103 25.8394 19.0162 19.89 12.205 12.8124 9.5755 Source: DGCI&S 2002 - 2003 Value (In Million US$) 324.6047 79.1673 47.2585 37.5341 37.3164 30.4608 24.0536 20.9196 17.6554 14.5125

Major Importers of Indian Handicraft Products:

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The dynamism of handicrafts industry in India is unparalleled - be it the traditional Indian arts and crafts or a customized version of an overseas art form. Unlike in the past when the industry was battling to carve a niche in the market, there is a great demand for Indian handicrafts today that is being nurtured by different government and non-governmental organizations. The sector is economically important from the point of view of low capital investment, high ratio of value addition, and high potential for export and foreign exchange earnings for the country. The export earnings from Indian handicrafts industry for the period 1998-99 amounted to US$ 1.2 billion. The market is developing due to the huge demand of its products in terms of utility, cost and aesthetics. The nine items that account for nearly 63 percent of export turnover include art metalware, woodware, hand-printed textiles, hand-knotted and embroidered textiles, leather goods, stoneware, carpets and floor coverings. In 2006 Orissa, Jharkhand, Uttaranchal, Chhattisharh, Jammu and Kashmir and the North-Eastern region have been focused on as they have abundant growth prospects. In India handicraft sector is considered the second largest employment generator after agriculture. Indian Handicraft is expected to triple its export turnover to Rs. 39,000 crore (excluding carpets) by 2009-10 which will turn also create around 20 lakh new employment opportunities. To centralize and better organize the sector, the government has also initiated the concept of 'Towns of Excellence' that are providing recognition to production areas where the handicrafts have been traditionally developed. Today, there are 35 urban 'Haats' all across the country, that allow for the allotment of built-up stalls to artisans on a fortnightly rotation basis at nominal costs.The industrial revolution and the increasing productivity had slowed down the growth and the quality of arts and crafts, but for some decades now, the scenario has changed and machine-made products no longer attract the people. Presently handicrafts are being considered as vocational media and it is also opted for style statement and the leisure pursuit. Today, the crafts and craftspeople have a vital role to play in modern India not just as part of its cultural and tradition, but as part of its economic future. The source of this information is Department of IT, Govt. of India.

5. COMPANY ANALYSIS:We use the best ingredients in our products. Again we are offering our products at a very competitive rate. We also have a proper testing department which passes the product through a test. in this test the testing department verifies that the products are not hazardous. These main things make our product different from the others. We deal in handicraft and art items like metalware, woodware, handprinted textiles and leather, wood and cane wares, embroidered and crocheted goods, shawls as artware, zari goods, laces, fashion jewelry, Paintings, Notebooks & Albums, Marble Inlay Work, Furnishing, wooden handicraft, Sculpture, and other handicraft products. We have experienced that there is a great potential for products like Hand-knotted carpets, Art metalware, Handprinted textiles, Marble inlay work, Furnishing, Sculpture, wooden handicraft and other handicraft products.

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SWOT ANALYSIS OF THE COMPANY

StrengthsAbundant and cheap labour hence can compete on price Low capital investment and high ratio of value addition Aesthetic and functional qualities Wrapped in mist of antiquity Hand made and hence has few competitors Variety of products which are unique Exporters willing to handle small orders Increasing emphasis on product development and design upgradation Weaknesses

Inconsistent quality Inadequate market study and marketing strategy Lack of adequate infrastructure and communication facilities Capacity to handle limited orders Untimely delivery schedule Unawareness of international standards by many players in the market

Opportunities

Rising appreciation for handicrafts by consumers in the developed countries Widespread novelty seeking Large discretionary income at disposal of consumer from developed countries Growth in search made by retail chains in major importing countries for suitable products and reliable suppliers. Opportune for agencies to promote marketing activities

Use of e-commerce in direct marketing

Threats ( Decline in Indias share due to)Better quality products produced by competitors from Europe, South Africa, South Asia, etc. Better terms of trade by competing countries Consistent quality and increasing focus on R&D by competing countries Better packaging Stricter international standards

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6. DETERMINING PROBABILITY OF SUCCESSThere are many risks associated with international trade, the most common issues are about intellectual property rights (IPR). While IPR issues may also arise domestically, the mechanisms for protection often stop at country borders. Patent and copyright protections are specific to each country with the laws, rules and remedies varying accordingly. Consider the ramification of IPR theft on your existing business. Would sale or use of your IPR in another country hurt you? Is your product unique enough or difficult enough to reproduce to inherently protect you? You can help protect yourself from illegal fakes coming into the any country by registering your products. Another common risk is currency fluctuation. Currency fluctuations can cause difficulty while processing a transaction. If we are selling a product or service that will be paid immediately upon securing a contract, the risk associated with fluctuation is minimal. However, if you conduct business that has a time-lag prior to payment, a fluctuation in the exchange rate could cause deals to go sour. While currency fluctuation can be a problem during a transaction, it can also open or close markets by changing our competitiveness. For example, today the U.S. dollar is relatively weak when compared to many major foreign currencies. This change may have made your product competitive in an area where you were previously struggling. But again we should not forget the uniqueness of our product and the image of Indian art and craft products in the world. With over 82 million inhabitants, Germany is the largest market for giftware and handicrafts items in Europe. A member of and situated within the European Union, Germany is supplied with giftware and handicrafts from Germany as well as the surrounding European countries such as France, Italy, Switzerland and the United Kingdom and from all other parts of the world: Russia, Latin America, Africa and Asia. The size of the total German giftware and handicrafts market varies according to the definition of giftware and handicrafts. With its present size around DM 29.5 billion it corresponds to a broad definition of giftware and handicrafts that includes the following items: home furnishings, artmetalware, table accessories, Christmas decoration, woodware and furniture, imitation jewellers, artificial flowers/plants, scents/cosmetics, sweets, toys/computer games, books, discs/videos, watches/jewellery, certain apparel/textile items and others. The German giftware and handicrafts market grew from DM 29.1 billion in 1998 to DM 29.5 billion in 1999, and it is growing till now at a good rate of 8.9% per annum. Success rate of small business houses are also very high. Research shows that small business failure rates among new businesses are significantly lower for new businesses that have developed a business plan. So, by analyzing all the pros and corns of the business we can never neglect the success of these products.

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7. MARKET FACTOR ASSESMENT:This part includes demographic, political, Social/Cultural and economical analysis. It also includes the Market Access, Product Potential and Local Distribution and Production analysis.

GeographyArea: 357,000 sq. km. (137,821 sq. mi.); about the size of Montana. Cities: Capital--Berlin (population about 3.4 million). Other cities--Hamburg (1.7 million), Munich (1.2 million), Cologne (964,000), Frankfurt (644,000), Essen (603,000), Dortmund (592,000), Stuttgart (582,000), Dusseldorf (568,000), Bremen (543,000), Hanover (516,000). Terrain: Low plain in the north; high plains, hills, and basins in the center and east; mountainous alpine region in the south. Climate: Temperate; cooler and rainier than much of the United States.

GovernmentType: Federal republic. Founded: 1949 (Basic Law, i.e., Constitution, promulgated on May 23, 1949). On October 3, 1990, the Federal Republic of Germany and the German Democratic Republic unified in accordance with Article 23 of the F.R.G. Basic Law. Branches: Executive--president (titular chief of state), chancellor (executive head of government); legislative--bicameral parliament; judicial--independent, Federal Constitutional Court. Administrative divisions: 16 Laender (states). Major political parties: Social Democratic Party (SPD); Christian Democratic Union (CDU); Christian Social Union (CSU); Alliance 90/Greens; Free Democratic Party (FDP); Left Party (LP). Suffrage: Universal at 18

EconomyGDP (2007 est.): $3.1 trillion. Annual growth rate: (2006) 2.7%; (2007) 2.5%. Per capita income (PPP, 2006): $31,900. Inflation rate (consumer prices, 2007): 2.2%. Natural resources: Iron, hard coal, lignite, potash, natural gas. Agriculture (0.9% of GDP): Products--corn, wheat, potatoes, sugar, beets, barley, hops, viticulture, forestry, fisheries. Industry (29.1% of GDP): Types--car-making; mechanical, electrical, and precision engineering; chemicals; environmental technology; optics; medical technology; biotech

18 and genetic engineering; nanotechnology; aerospace; logistics. Trade (2006): Exports--$1.03 trillion: chemicals, motor vehicles, iron and steel products, manufactured goods, electrical products. Major markets--France, U.S., and U.K. Imports--$844 billion: food, petroleum products, manufactured goods, electrical products, motor vehicles, apparel. Major suppliers--France, Netherlands, U.S. Germany is the world's third-largest economy and the largest in Europe. The German economy showed substantial improvement in 2007 at 2.5% growth due to the effect of recent economic reforms and strong global economic growth. The export-led recovery is now filtering through to the domestic economy where private consumption has long been at a low level. With a more sluggish global economy, lower growth is expected for 2008. From the 1948 currency reform until the early 1970s, West Germany experienced almost continuous economic expansion. Real gross domestic product (GDP) growth slowed down, and even declined, from the mid-1970s through the recession of the early 1980s. The economy then experienced 8 consecutive years of growth that ended with a downturn beginning in late 1992. Since unification, Germany has seen annual average real growth of only about 1.5% and stubbornly high unemployment. In 2006, Germany had its best year since 2000 with 2.7% growth; for 2007, growth was at 2.5% despite a 3 percentage point VAT hike at the beginning of the year. The government forecasts 1.7% growth in GDP for 2008. Unemployment in 2007 dropped to an annualized average of 9.0% nationwide, but it is still significantly higher--15.1%--in the German states that make up the former East Germany. Germans often describe their economic system as a "social market economy." The German Government provides an extensive array of social services. The state intervenes in the economy by providing subsidies to selected sectors and by owning some segments of the economy, while promoting competition and free enterprise. The government has restructured the railroad system on a corporate basis, privatized the national airline, and is privatizing telecommunications and postal services. The German economy is heavily export-oriented, with exports accounting for more than one-third of national output. As a result, exports traditionally have been a key element in German macroeconomic expansion, accounting for over half of the economic growth in recent years. Germany is a strong advocate of closer European economic integration, and its economic and commercial policies are increasingly determined within the European Union (EU). Germany uses the common European currency, the euro, and the European Central Bank sets monetary policy. In the early-mid 2000s, Germany adopted a complex set of labor/social welfare reforms to overcome structural weaknesses of the German welfare state and to create policies more conductive to employment. Defying a skeptical German public, the coalition government of Chancellor Angela Merkel initiated additional reform measures, such as the gradual increase in the mandatory retirement age from 65 to 67--a move that would add 2.5 million to the workforce by 2030. Subsequently, however, there has been active political debate and some rollback of these labor reforms; most notably the government decided to extend the payment period of unemployment benefits to older workers in early 2008.

19 Fifteen years after reunification (October 3, 1990), Germany had made great progress in raising the standard of living in eastern Germany, introducing a market economy and improving its infrastructure. At the same time, the process of convergence between east and west is taking longer than originally expected and, on some measures, has stagnated since the mid-1990s. Eastern economic growth rates have been lower than in the west in recent years, unemployment is twice as high, prompting many skilled easterners to seek work in the west, and productivity continues to lag. Eastern consumption levels are dependent on public net financial transfers from west to east totaling about $13 billion per year. In addition to social assistance payments, the government will extend funds to promote eastern economic development through 2019. The United States is Germany's second-largest trading partner, and U.S.-German trade has continued to grow strongly. Two-way trade in goods totaled $184 billion in 2007. U.S. exports to Germany were $ 71 billion while U.S. imports from Germany were more than $113 billion. At nearly $45 billion, the U.S.'s fifth-largest trade deficit is with Germany. Major U.S. export categories include aircraft, electrical equipment, telecommunications equipment, data processing equipment, and motor vehicles and parts. German export sales are concentrated in motor vehicles, machinery, chemicals, and heavy electrical equipment. Much bilateral trade is intra-industry or intra-firm. Germany has a liberal foreign investment policy. For 2005, the most recent year for which statistics are available, German investment in the U.S. amounted to 233 billion euros (29 % of all German foreign direct investment, or FDI; the U.S. is the number-one destination for German FDI), while U.S. investment in Germany was 45 billion euros (11.5 % of all FDI invested in Germany; U.S. is third-largest source of FDI in Germany). U.S. firms employ about 510,000 people in Germany; German firms likewise employ about 746,000 people in the United States. Despite persistence of some structural rigidities in the labor market and extensive government regulation, the economy remains strong and internationally competitive. Although production costs are very high, Germany is still an export powerhouse, and unit labor costs have decreased in the last 10 years. Additionally, Germany is strategically placed to take advantage of the rapidly growing central European countries. The current government has addressed some of the country's structural problems, with important tax, social security, and financial sector reforms.

Cultural/social analysisMost inhabitants of Germany are ethnic German. There are, however, more than 7 million foreign residents, many of whom are the families and descendents of so-called "guest workers" (foreign workers, mostly from Turkey, invited to Germany in the 1950s and 1960s to fill labor shortages) who remained in Germany. Germany has a sizable ethnic Turkish population. Germany is also a prime destination for political and economic refugees from many developing countries. An ethnic Danish minority lives in the north, and a small Slavic minority known as the Sorbs lives in eastern Germany. Due to restrictive German citizenship laws, most "foreigners" do not hold German citizenship even when born and raised in Germany. However, since the German government undertook citizenship and immigration law reforms in 2002, more foreign residents have had the ability to naturalize.

20 Germany has one of the world's highest levels of education, technological development, and economic productivity. Since the end of World War II, the number of youths entering universities has more than tripled, and the trade and technical schools of the Federal Republic of Germany (F.R.G.) are among the world's best. With a per capita income level of more than $28,700, Germany is a broadly middle class society. A generous social welfare system provides for universal medical care, unemployment compensation, and other social needs. Millions of Germans travel abroad each year.

Market AccessEU member states and Asian countries, China and India in particular, are major suppliers of giftware and handicrafts to the German market. We will first have a comprehensive product literature and data sheets professionally translated into German. Although English is widely understood, a well-prepared translation gives an important marketing edge, particularly in the initial presentation. We will appoint an agent or distributor who can maintain a stock sufficient to answer short-notice orders. Before appointing any such agent we will look at the traditional chain of supply in the GERMAN market. Distribution channels are varied and similar to the United States. There are certain restrictions, however, concerning multi-level networking systems, i.e., so-called snowball or pyramid distribution systems. Documentation and legal requirements For doing business in GERMANY imported goods must be accompanied by a customs declaration, which has to be submitted in writing, and an invoice in duplicate. Normally the German importer files this declaration. The commercial invoice must show the country of purchase and the country of origin of the goods. The invoice should contain: Name (company) and address of seller and buyer; Place and date of issue; Number, kind of packages; Precise description of articles Volume or quantity in normal commercial units; Invoice price (in invoice currency); Terms of delivery and Payment. In addition, a certificate of origin may be required in some cases. Custom duties Customs duties vary according to material and product. Though duties are high for a few items, i.e., dried flowers, potpourri (16.7-20 percent), T-shirts (12.0-13.2) and handwoven, woollen blankets (13.4 percent), the majority of customs duty rates falls in the range of 5-8 percent. For example: Customs Duties (in percent)

21 Ceramics Toys Stationery Plush animals Quilts/blankets Candles Silver jewellery : : : : : : : 4.1 - 7.5 5.6 - 6.3 8.4 6.0 7.5 2.8 2.5

In addition, there is a 19 percent sales tax, which is eventually passed on to the consumer in form of the value-added tax (VAT). But the VAT has to be paid when entering the German market by the exporter/German importer. Items that originate from certain animal species, i.e., snakeskin or hides of some animal, it must be ensured that the export of these products complies with the Convention on Endangered Species (CITES). Regarding sample orders, exporters should be aware that one sample with a maximum value of DM 50 each or, five identical samples of one product group not exceeding a total value of DM 50, are usually customs free. Product Standards In view of the wide field of products that could be considered as giftware and handicrafts, it is difficult to name standards. Compliance with EU standards and regulations is strongly suggested. There are, however, only few product groups in the giftware and handicrafts field that have to follow standards. It is essential that CE-labelling be observed where required. The CE-mark (including conformity statement and technical documentation) is mainly required for toys (88/378/EEC standard). While the quality regulations for candles are obligatory assuring a certain level of quality, the toy regulation and the electronic standards have to be observed because of safety considerations: Tariff barriers Germany's regulations and bureaucratic procedures can be a difficult hurdle for companies wishing to enter the market and require close attention by U.S. exporters. Complex safety standards, not normally discriminatory but sometimes zealously applied, complicate access to the market for many products. We will do our homework homework thoroughly and make sure we know precisely which standards apply to their product, and that they obtain timely testing and certification.Protecting the Intellectual Property

The EUs legislative framework for copyright protection consists of a series of Directives covering areas such as the legal protection of computer programs, the duration of protection of authors rights and neighboring rights, and the legal protection of databases.

22 Almost all Member States have fully implemented the rules into national law, and, the Commission is now focusing on ensuring that the framework is enforced accurately and consistently across the EU. The on-line copyright Directive (2001/29/EC) addresses the vexing problem of protecting rights holders in the online environment while protecting the interests of users, ISPs and hardware manufacturers. It guarantees authors exclusive reproduction rights with a single mandatory exception for technical copies (to allow caching), and an exhaustive list of other exceptions that individual Member States can select and include in national legislation. This list is meant to reflect different cultural and legal traditions, and includes private copying "on condition right holders receive fair compensation.": Trademarks trademarks (Marken) are signs that serve to distinguish the goods and/or services of one enterprise from those of another. They enable their holders to build up, expand, and maintain a market position. Trademarks are regulated by the German Trademark Act, which covers both trademarks that are used although not registered, as well as registered trademarks. The Trademark Act further provides protection of commercial designations (trade names and other company designations, such as titles, and the trading name of works, e.g., for films and books). A German trademark is registered for ten years, after which the term can be extended for another ten-year term. Additional fees become due if the extension fee is not paid in a timely fashion. The EU-wide Community Trademark (CTM) can be obtained via a single language application to the Office of Harmonization in the Internal Market (OHIM) in Alicante, Spain. It lasts ten years and is renewable indefinitely. For companies looking to protect trademarks in three or more EU countries, the CTM is a more cost-effective option than registering separate national trademarks. On October 1, 2004, the European Commission acceded to the World Intellectual Property Organization (WIPO) Madrid Protocol. The accession of the Madrid Protocol establishes a link between the Madrid Protocol system, administered by WIPO, and the Community Trademark system, administered by OHIM. As of October 1, 2004, Community Trademark applicants and holders are allowed to apply for international protection of their trademarks through the filing of an international application under the Madrid Protocol. Conversely, holders of international registrations under the Madrid Protocol will be entitled to apply for protection of their trademarks under the Community Trademark system Designs The EU adopted a regulation introducing a single Community system for the protection of designs in December 2001. The regulation provides for two types of design protection, directly applicable in each EU member state: the registered Community design and the unregistered Community design. Under the registered Community design system, holders of eligible designs can use an inexpensive procedure to register them with the EUs Office for Harmonization in the Internal Market (OHIM), based in Alicante, Spain. They will then be granted exclusive rights to use the designs anywhere in the EU for up to

23 twenty-five years. Unregistered Community designs that meet the Regulations requirements are automatically protected for three years from the date of disclosure of the design to the public. European Trademarks Since 1996, it has been possible to register Community Trademarks at the Office for Harmonization in the Internal Market, Alicante, Spain (http://oami.europa.eu/). This step often makes sense if an enterprise seeks protection not only in one country, but in at least three or four EU member states of the European Union. The Community Trademark offers financial advantages in addition to other significant advantages. For example, the use of a Community Trademark in only one member state is sufficient to meet the requirement of use for the entire territory of the European Union. It is advisable to consider use of both community and single country protection systems simultaneously.

Product potentialMarket insiders estimate the total volume of the seasonal items market, including Christmas, Easter, Valentines Day and the German counterpart of Thanksgiving, at DM 7.7 billion. In 1997, about DM 3 billion were spent alone for Christmas decoration, Christmas floristic items and Christmas trees only. Christmas items are usually imported from China, Taiwan, Thailand, Philippines and India. However, Indian Christmas decorations as candle stands or Christmas tree hangings and soft toys find a ready market in Germany if they are moderately priced. The present market volume of hobby and art supplies in Germany is estimated at about DM 3 billion, while the total European market should amount to DM 12 billion. Insiders believe that this specific market segment still offers some potential for new products. A recent survey shows that apart from their school days, most of the Germans who do regular DIY or hobby work are between 60 and 69 years (10.8 percent of the German adults) old. With the fast ageing of the German population a stronger demand for hobby and crafts is likely. A few well-established German manufacturers of giftware and handicrafts items are: Koziol GmbH, Erbach Barti GmbH, Garching Duni GmbH & Co. KG, Bramsche Rastal, Hoehr-Grenzhausen Fartak, Lahr GIES Kerzen, Glinde Jet Papier GmbH, Bernau Krebs-Glas-Lauscha GmbH, Ernstthal Margarete Steiff GmbH, Giengen WMF AG, Geislingen Rosenthal AG, Seib W. Goebel Porzellanfabrik, Roedental Walther-Glas GmbH, Bad Driburg

24 But even then the GERMANS show good response towards imported products. If we will get success in giving competitive offerings, our product will have huge potential for getting success. Major Distribution Channels in GERMANY In Germany, giftware and handicrafts is distributed through five major channels: Wholesalers Importers/distributors Commission agents/sales representatives Department stores Mail-order Internet sales Tele-shopping

The individual channels are described in detail in the following. Wholesalers: Besides offering wide range of goods to retailers for direct sales, this channel also supplies large quantities of individual articles. They are very particular in maintaining consistency in the kind of products and their quality. One of the distinguishing features of wholesalers is to provide distribution and storage facilities. Specialised wholesalers deal in sales to retailers as well as to final consumers. They maintain high quality standards and but have a narrower and in-depth range of arts and crafts. Importers/distributors: Most Indian giftware and handicrafts companies use importers/distributors to market and sell their giftware and handicrafts lines. They buy and sell on their own account. Thus, the companies take advantage of the distributor's expertise, his sales force and his existing distribution channels. Distributors call on giftware and handicrafts retailers, purchasing groups and supermarkets. The distributors' mark-up varies depending on the giftware and handicrafts item, but at least 50 percent. While the mark-ups vary according to the distributor; they usually also depend on the exclusivity of a product and on its competitiveness in the overall giftware and handicrafts market. Germany hosts more than 45,000 giftware and handicrafts retailers. Several retailers import directly from the United States and sell to the German customer. Usually these are small companies looking for items new to the market and handling small orders only. Commission agents:

25 Commission agents provide Indian companies with direct access to the German market and direct control. Independent commercial agents are normally working on a 15 percent commission and operate on a regional basis. They concentrate on specialist retailers, purchasing groups and department stores. Commission agent contracts are based on stringent EU and German regulations. As an Indian firm wishing to appoint an agent, we should make sure that such standard contracts meet its expectations. In order to facilitate market entry efforts by the agents their initial commission is often a few percent higher than the "usual" commission. These additional payments are to reimburse the agent for substantial advertising and any special efforts facilitating the new product's market entry. Department Stores: As an Indian company interested in establishing business contacts with major department stores, mail-order houses and retailers may also choose the direct approach. Department stores in particular, prefer to deal directly with manufacturers. Their buyers are very specialized and only handle a limited range of products. At some occasions department stores also buy through independent commercial agents. Quite often they have their own buyers as well as a few agents that usually work with them and who know their assortments. If a department store decides to import a particular giftware and handicrafts item, it places bulk rather than small orders. Mail Order: On an average, each German consumer buys products totaling to DM 500 each year from mail-order houses. There are about 200 mail order companies in Germany. In Europe, Germany is the largest mail order market, followed by Great Britain and France. The total European market volume for mail order products is estimated at approximately DM 90 billion. Of the 20 major mail order companies in Europe, 12 have their headquarters located in Germany. Among them are the world's largest mail order companies: Otto Versand in Hamburg and Quelle Schickedanz AG & Co. in Fuerth. In addition, several German mail order companies operate in other European countries, as well. Internet Sales: Germany has become market leader among the EU countries with regard to sales. . A typical German Internet user and a major German mail-order publication is between 2039 years old, is highly educated and earns more money than the average German consumer. This age group consists of about 4.5 million Germans. 70% of these consumers are male. Already today, the Internet is a major sales channel for German mail-order houses. Teleshopping: QVC and HOT are the two tele-shopping channels in Germany. They operate all over Germany and offer various types of giftware and handicrafts; jewellery, fashion, health, beauty; household consumer goods; collectibles and home accessories.

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8.

SUPPORT FUNCTIONSOn our website ( www.indianartandcraft.com) the customers can see the product. We have uploaded all the designs. Customers can see each and every product. If they want their own designed product, they can send their quotations along with the design. We will try to give the exact design in a very competitive rate. We have enough potential to deliver the products on time. Only few product groups in the giftware and handicrafts field that have to follow standards. It is essential that CE-labelling be observed where required. The CE-mark (including conformity statement and technical documentation) is mainly required for toys (88/378/EEC standard). While the quality regulations for candles are obligatory assuring a certain level of quality, the toy regulation and the electronic standards have to be observed because of safety considerations. we will fulfill all these requirements. If required, we will have literature in language other than English. We will have it in GERMAN also so that it can have a proper appeal. We are using the local agent as our representative in GERMANY, so he will forward all the customer disputes to us (if there is any).He will help us in communicating with the customers. In case of handicrafts warranty and servicing is not required, there is no need of keeping theses thins in mind. But, even if there is some assistance required, we will provide each and every service within a reasonable time.

9.

MARKETING STRATEGYAs we are entering the market for he first time, we will use Penetration Pricing, by charging a low price in order to penetrate market quickly and it will be appropriate to saturate market prior to imitation by competitors. Our pricing will be based on flexible cost plus pricing. but we will keep these things in our mind: Currency Fluctuations Inflationary Environment Government Controls, Subsidies, Regulations Competitive Behavior Sourcing Regarding terms of sale, we will try to do several things: Obtain export license for exporting, it is not very tough to gat a export license for Germany (German antitrust law does not, in the absence of a dominant

27 market position, restrict the owners freedom to use her/his industrial property rights, including the exploitation of a patented innovation). Obtain currency permit, Packaging of goods for export, Transport goods to place of departure, Prepare a land bill for landing, Prepare all the custom export papers, Obtain the insurance and certificate of policy, Discount policies: We will use a slab for discounting to the customers. For eg:5% discount for -------5-10% discount for----10-15% for ---------Competitive Situation German giftware and handicrafts consumption is growing more or less in line with the relatively slow growth rate of income during the last years. Thus, expectations for additional growth are not very high. Annual growth rates of between 1.5-2 percent are forecast for the next few years for the overall giftware and handicrafts market. In general the market shows good business opportunities if prices and quality are competitive and delivery schedules are fulfilled. Apart from its own producers, Germany is supplied by giftware and handicrafts from nearly all of the European countries. German firms often import specific product groups from a particular country. Major suppliers of pottery are, for example, Spain and Portugal; fine exclusive stationery comes from Italy, France and Switzerland; candles from Poland, China and Portugal; dried flowers from the Netherlands etc. Fierce price competition in Germany is intensified by the increasing quantity of Chinese and Asian made products on the market. For India this situation coupled with the relatively strong Indian rupee which means that firms proving to be most successful in the recent past have offered niche market giftware and handicrafts, i.e., exclusive to Indian handicrafts items or new-to-market products. We will use this opportunity as a mean of penetrating the market. Promotional strategies We are not a big company which needs huge promotion in other countries. We are exporting handicraft and art items, so we dont think, we need an intensive promotional

28 strategy. But if it is necessary according to the market conditions, we will our agents advice in it. We can have the print ads in newspapers and some popular magazines.

10.

SALES ESTIMATESForecasting sales of our product is the starting point for our financial projections. The sales forecast is extremely important, so it is important to use realistic estimates. As we are entering into exporting for the first time, we dont have any data for forecasting. We will have to the data of other companies. There are 58 Indian companies in the handicraft 14 in the giftware in the export market. By looking at the sales figure of each and every segment of the product category, we have estimated that in the first year we can export atleast 20-30 crores (based on the values shown by the data published by IT dept. of INDIA). The cost of goods sold internationally is partially determined by pricing strategies and terms of sale. To ascertain the costs associated with the different terms of sale, it will be necessary to consult an international freight forwarder. For example, a typical term of sale offered by a U.S. exporter is cost, insurance and freight (CIF) port of destination. Our price includes all the costs to move product to the port of destination. These costs are in addition to the material and labor used in the manufacture of your product. export packing container loading inland freight truck/rail unloading wharfage handling terminal charges ocean freight courier mail telex forwarding documentation consular legalization bank documentation dispatch bank collection fees cargo insurance bunker surcharge other misc

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11. INTERNATIONAL BUSINESS PLAN SUMMARY STEP 1: Verification of the completion of previous steps. We have already done our homework to 10th step. We have finished all the other sections before continuing any further. STEP 2: Identify the business plan audience. We are preparing this plan for competition of our internal assessment in AMITY BUSINESS SCHOOL, AMITY UNIVERSITY, NOIDA. This page will probably be the first read by our PL- Mr. ASHOK SHARMA. It is extremely important the summary be brief yet contains the information most important for him. This very section will make him read the whole plan. STEP 3: Writing a brief summary of the previous sections. Till now we have completed 10 steps. Choosing the products for export was extremely crucial. Actually we have been dealing with so many products that it is quite impossible to draw out only a few best from them. All the sections are equally important, because without completing one, we cant move further. Our swot analysis, industry and company analysis is the most interesting part of this plan. There were huge data available to us. We searched all the possible sources, but getting the useful data and then choosing the best to attach with our plan was the biggest deal. Actually there are so many sights which provide useful information, but our study should have to reveal the recent data. So it took some time to gather these data. When we were trying to measure the probability of success, we passed a lot of hurdles. When we were doing the market factor assessment, we took the help of official website of GERMANY. We have tried to give the best data available regarding the custom duties, tariff barriers and the rule which is to be followed. For forecasting the sale estimate we have used the same data which we have given in the industry analysis. Overall we want to give the links of the websites form which we have taken the data:

www.indiacatalog.com www.iitfonweb.com www.india-crafts.com www.primaryinfo.com www.buyusa.gov

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www.giftsnaccessories.com