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Section 2 Group 14
The RICH Sofa
Miss. Saranrak Kittiratanapaisan ID: 5131205056
Miss. Thanaporn Thareelapraksa ID: 5131207009
Miss. Pattaraporn Pompoung ID: 5131207020
Miss. Karnhathai Malarat ID: 5131207039
Miss. Pattarada Hirunprateep ID: 5131207089
Miss. Suntaree Sangthong ID: 5231207118
Mr. Sirichok Wuthisakul ID: 5131207137
Miss. Varritta Puttajanyawong ID: 5231207509
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Preface
This project is a part of 1203302 Project Feasibility Study and Evaluation
course in the second semester of 2012 year academic. In this project is study the
feasibility of sofa business in Bangkok which are included generally of furniture
industry and business of furniture management, competition analysis, market
feasibility, the technical process in furniture business, financial feasibility and
also risk management. This project makes everyone who interested to get
knowledge and information about furniture business before make decision to
investment, including pre-operation process and operation process of furniture
business, for the benefit to investment and profit of doing this furniture business.
We expect that our project will provide benefit more and more interested person,
moreover, if they are any error in this project or whatever, our group will made
an apologize at this opportunity.
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Contents
PREFACEC ....2
CHAPTER 1..............................................................6
INTRODUCTION
Background and Significance of the project..7
Project Objective.....8
Benefit ofProject........8
Activity Time Frame......9
CHAPTER 2..10
INDUSTRY PROFILE
Nature of Industry...11
Raw materials.13
Product...17
CHAPTER 3..27
MARKETING ANALYSIS
Competition Analysis..30
Customers Analysis.....44
Competitive Analysis..47
STP Analysis..50
Marketing Mix Strategy...53
Sale Forecast/Profit Estimation..56
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CHAPTER 4... .60
INVESTMENT COST
Location.61
Facility Layout61
Decoration in shop......65
Machine/Tools/Equipment.67
CHAPTER 5..78
PRODUCTION AND OPERATIONS ANALYSIS
Product characteristics79
Operating Cost..80
CHAPTER6.82
ADMINISTRATION COST
Organization Management..83
Organization Chart.84
People in the organization...85
Administration cost...89
CHAPTER7....98
FINANCIAL ANALYSIS
Income Statement..99
CHAPTER8 .101
RISK MANAGEMENT
Planning and reducing risk103
Identifying a list of potential risks103
Type of risk..104
External risk ..104
Internal risk.105
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CHAPTER9
SUMMARY
Summary of Project106
REFERENCE. .108
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Chapter 1: Introduction
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Background and Significance of the Project
Nowadays, Thailand is one of the most developing countries in the world.
Thailand is growing up a lot from the past 20 years and developed to the next
step where competitions on every industry are high. As we look into the real
estate industry in Bangkok, Bangkok is one of the most prosperous parts of
Thailand, and heavily dominates the national economy (1),the price of landscape
and real estate are increasing a lot due to the increasing of many constructions
like Sky Train or BTS, Underground Train or MRT, many department stores
and office buildings. Moreover, many company who seeking for new
opportunities, they invest on the properties like Condo, Apartment, Housing
estate, Factory, and etc.
According to the above reason, it responds to the people life styles who
want to have their own home by staying alone or with their own family. When
the real estate industry is increase, it will indicate that our company has a
chance to respond the needs of any people in the market. Moreover, there are
many people who suffer from last years floods. These will be a great chance
for our company to serve needs of the market and also help to stimulate the
economic in our country which we can expand our business to the foreign
market in the future.
Therefore, there is a gap in the market connecting to the real estate
industry that our company can serve the market needs.
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Project Objective(s)
- To study the situation of the sofa business.- To analyze the market in the sofa business.- To learn the technical and management process in sofa business.- To study the market trend of sofa business.- To study the consumers trend/behavior in sofa business.
Benefits of Project
- To know about how to run the business- To learn about the technical and process to do in the furniture business.- To learn about the market of sofa industry.- To learn about how to solve the problem during to do the business.- To know about marketing problem that occurs in business.- To understand about how to analyze the business in the different situation.- To understand the current market trend of the sofa business. - To understand the customer need/want and their behavior when
purchasing sofa products.
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Time Frame of the study
Since November2012-February2013
Activities
2012 2013
November December January February
1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4
To study the general of the sofa business in
Bangkok
To study management in the sofa business.
To study marketing and competition analysis.
To study the technical process in the sofa business.
To study the financial feasibility of sofa business.
To study and analysis risk of sofa business in
Bangkok.
To summary the feasibility of sofa business in
Bangkok.
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Chapter 2
Industry Profile
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Nature of Industry
A History of Sofa
As we take a lightening look at the sofa through the ages, we see it
emerge as an important symbol of modern life. As communities moved away
from a nomadic existence where they often pack up and move at short notice,the sofa comes to represent a settled life of permanence, safety and comfort.
The earliest sofa we know of was found in Egypt around 2000 years BC. In fact,
the word sofa originates from the Arabic word suffah or bench. These
magnificent seats were considered very luxurious and were made especially for
Pharoses and royalty. A little later on, the Romans also enjoyed lavish seatingand we often associate classic luxury with lounging chairs and elegant stone
benches. However, this kind of furniture was reserved for the elites and most
people using thick carpets or tapestry to furnish their homes and insulate them
from the damp and cold. Prior to the 1500s, woven artifacts known as tapestries
were the main source of insulation, protecting inhabitants from the damp and
cold that seeped in through their walls. Seating for two or more people was
usually supplied by a hard bench.
It was only when buildings became more solid that seats started to be seen as a
way to decorate a room. With European designers and textile producers letting
their imagination run wild, the history of the sofa suddenly went into fast-
forward mode. Contributions to interior design, Germans introduced the use of
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horsehair padding, still a central feature of properly upholstered furniture. The
English preferred dried sea moss. Italians introduced backrests and arms during
the Renaissance. Upholstered chairs had been invented already, but were not
popularized until this time. The sofa with a down cushion was an extension of
the upholstered chair. Minor adjustments were made to stuffing methods, such
as using buttons to secure padding rather than the practice of "tufting" (sewing
raised loops or cut pile into the fabric).
In the 18th Century, century "upholder" was a combination designer and
decorator who completed an architect's vision of a room by Cabinet makers
like Hepple white, Matthias Lock, Henry Copland, and the far more renowned
Thomas Chippendale. Thomas Chippendale extended their woodworking
enterprises into this new and exciting field of upholstery. He started publishing
catalogues, which they called pattern books in those days, booklets full of new
furniture design ideas. These included designs for early sofas. It was following
this period that the idea stopped becoming associated with luxurious elites and
became a commonplace household necessity.
During the nineteenth century, the advent of industrial technology had a major
impact on modern methods of upholstery. In 1850, coil springs were invented.
A modern sofa typically, though not always, contains springs to even out weightdistribution. The sewing machine was also developed during this period,
speeding up the upholstery process. New improvements such as modern welting
would not be possible without the sewing machine. When sewing machines
came along, manufacturers were suddenly empowered to make sofas much
more quickly and at more affordable prices. With improved machinery,
factories started to put springs in sofas making them even more bouncy andimproved the level of padding. In the 1960s designers came up with plenty of
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quirky design ideas from inflatable sofas to water cushions as furniture became
a way for people to make a fashion statement through their home.
Nowadays, Society and the fashion world have become obsessed with thelook and feel of leather, and almost to the point of neuroticism. They look cool,
they feel great, they make one seem sharp and chic, and they're easy to clean
with fantastic range of elegant and high quality furniture. (2),(3)
Raw Materials
The frame of a sofa is made most often wood, though newer options
include steel, plastic, and laminated boards or a combination of the above. Kiln-
dried maple wood deemed free of knots, bark, and compromising defects is used
under the upholstery. The show wood of the legs, arms, and back can also be
maple, but sometimes mahogany, walnut, or fruitwoods are used for carved legs
or moldings.
Padding is primarily made from animal hair, particularly hog or horse. Other
paddings used in mass production are foam and polyester fiberfill wrap. Some
preprocessing may be necessary, as with the permitted rubberized hair, where
animal hair is arranged and bonded into shape with glue.
Cushions are fashioned from polyurethane foam, polyester fiber, down,
cotton, latex, or cotton-wrapped springs.
A sofa may be covered with any choice of synthetic, natural, or blended
fabric. Wool and nylon are the best choices in their respective categories of
natural and synthetic fibers, but cotton, acetate, rayon, and polyester have their
own functional properties. Exterior fabric may be finished with a protective
anti-stain coating.
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When used, springs are made of tempered steel. A typical sofa calls for
15 yd (13.71m) of burlap and at least 10 yd (9.14 m) of muslin for the interior.
All materials are fastened with approximately 1,000 or more tacks, over 200 yd
(182.8 m) of twine, and hundreds of yards of machine sewing thread. (4)
Leather
Leather is a durable and flexible material created by the tanningof animal
rawhideand skin, often cattle hide. It can be produced through manufacturing
processes ranging from cottage industry to heavy industry. For leather sofa
industry, they usually use one of three leather :-
Aniline Semi-aniline Pigmented (protected)
The type that leather sofa industry chooses depends on the appearance they
want, the productand the usage which the product receives:-
Figure 2.1
Full grainpigmented
leatherAniline
leatherSemi-aniline
leather
Corrected grainpigmented
leatherPigmented
leatherSemi-aniline
leather
http://en.wikipedia.org/wiki/Tanninghttp://en.wikipedia.org/wiki/Tanninghttp://en.wikipedia.org/wiki/Tanninghttp://en.wikipedia.org/wiki/Rawhide_%28textile%29http://en.wikipedia.org/wiki/Rawhide_%28textile%29http://en.wikipedia.org/wiki/Cottage_industryhttp://en.wikipedia.org/wiki/Cottage_industryhttp://en.wikipedia.org/wiki/Heavy_industryhttp://en.wikipedia.org/wiki/Heavy_industryhttp://en.wikipedia.org/wiki/Heavy_industryhttp://en.wikipedia.org/wiki/Cottage_industryhttp://en.wikipedia.org/wiki/Rawhide_%28textile%29http://en.wikipedia.org/wiki/Tanning7/29/2019 The Rich : Section 2 Seat :14
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Full grain pigmented leather
Full grain leather refers to hides that have not been sanded, buffed, or
snuffed (as opposed to top-grain or corrected leather) to remove imperfections(or natural marks) on the surface of the hide. The grain remains allowing the
fiber strength and durability. The grain also has breathability, resulting in less
moisture from prolonged contact. Rather than wearing out, it will develop a
patina over time. High quality leather furniture and footwear are often made
from full-grain leather. Full-grain leathers are typically available in two finish
types:anilineand semi-aniline.
Aniline leather is the most natural looking leather with the unique
surface characteristics of the hide remaining visible. Aniline leather is coloured
only with dye and not with a surface coating of polymer and pigment. A light
surface coating may be applied to enhance its appearance and offer slight
protection against spillages and soiling. Aniline leather
Semi-aniline leather is more durable than aniline whilst still retaining a
natural appearance. The increased durability is provided by the application of a
light surface coating which contains a small amount of pigment. This ensures
consistent color and imparts some stain resistance.
Corrected grain pigmented leather
Corrected-grain leather is any leather that has had an artificial grain
applied to its surface. The hides used to create corrected leather do not meet the
standards for use in creating vegetable-tanned or aniline leather. The
imperfections are corrected or sanded off, and an artificial grain impressed into
the surface and dressed with stain or dyes. Most corrected-grain leather is used
to make pigmented leather as the solid pigment helps hide the corrections or
http://en.wikipedia.org/wiki/Patinahttp://en.wikipedia.org/wiki/Patinahttp://en.wikipedia.org/wiki/Aniline_leatherhttp://en.wikipedia.org/wiki/Aniline_leatherhttp://en.wikipedia.org/wiki/Aniline_leatherhttp://en.wikipedia.org/wiki/Aniline_leatherhttp://en.wikipedia.org/wiki/Patina7/29/2019 The Rich : Section 2 Seat :14
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imperfections. Corrected grain leathers can mainly be bought as two finish types:
pigmented and semi-aniline.
Pigmented Leather is the most durable and is used in the majority offurniture upholstery and almost all car upholstery. The durability is provided by
a polymer surface coating which contains pigments.
Semi-aniline leather is more durable than aniline whilst still retaining a
natural appearance. The increased durability is provided by the application of a
light surface coating which contains a small amount of pigment. This ensures
consistent color and imparts some stain resistance. (5), (6)
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Leather Products in Thailand
Through marked improvements over the past 20 years, Thailand's leather
industry is establishing itself as a major player on the world stage. Despite
fierce competition from high-end manufacturers based in Europe and low-cost
manufacturers in China, Indonesia and Vietnam, leather exports have been
increasing steadily and appear poised for future success in the global market.
Thailand's leather industry draws support from the extensive leather-
tanning sector present in the country. While imported leather is used extensively
for highest quality exports, over 130 tanneries supply a large portion of the
processed leather used in the production of a variety of products including
luggage, shoes and boots, gloves, toys, pet accessories, handbags, apparel, belts
and purses. Tanneries in Thailand boast an annual production capacity of
approximately 15,000 tons of leather, largely produced from cowhide and
buffalo. Importing hides for processing is common, with over 50% coming from
China and premium quality hides shipped from America for processing. The
majority of these tanneries are located in the SamutPrakarn province, 20
kilometers southeast of Bangkok.
The leather industry in Thailand receives extensive support and
assistance from both government organizations and trade association in thecountry. The Department of Export Promotion (DEP) organizes a yearly
industry trade show in Bangkok, which attracts interested buyers from around
the world. In addition, the DEP champions the export of leather exports abroad
and assists exporters to participate in important overseas tradeshows. Also
supporting the interests of the leather industry are the Thai Leather Goods
Association, the Thai Footwear Association, the Tanning Industry Association,
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the Leather-based Industry Club, the Federation of Thai Industries and the
Footwear Industry Club.
The export of leather goods from Thailand can be broken down into threemain categories. Leather footwear shipments make up 50% of the total export of
leather goods, consisting primarily of name-brand sports shoes produced for
leading international companies sourcing production in Thailand. General
leather goods consisting of handbags, folders, wallets, and premium leather gifts
contribute 27% of total leather exports, while tanned leather used in the
production of furniture, office equipment and in automotive interiors make up
the remaining portion of the category.
Analysts believe that Thailand's export of leather goods will continue to
increase in the near future. At present, most importers of leather elect to order
goods through trading companies based in Hong Kong, Taiwan, Singapore and
South Korea. In turn, these trading companies frequently order products from
countries that have lower production and labor costs, including Thailand, China,
Indonesia and Vietnam among others.
Due to significantly higher labor costs, the Thai leather industry is no
longer able to compete on price alone, and is being pressured to adjust its
production and marketing strategies to ensure export competitiveness over the
long-term. More emphasis is being placed on the development of production
technology and product designs to match industry leaders in the global market
place.
Thailand's leather industry has gone through three distinct stages of
development. Initial efforts by leather product manufacturers resulted in lower
quality products for the domestic market and limited exports, which were
mostly competitive on price. The second phase resulted from the continued
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efforts to increase the quality of products and found Thailand becoming a key
destination for international brands to base their production. The final stage of
development finds Thai manufacturers developing and marketing high quality
products internationally under their own brand name.
While individual companies within Thailand's leather industry operate at
varying stages of development, the DEP and the Thai Leather Goods
Association have been promoting Thailand as a competitive place for foreign
companies to base their production and helping Thai exporters to develop their
own brand names. Over the past four years, Thailand's leather exporters and
designers have been collaborating with Linea Pelle, a renowned Italian design
house, focusing on upcoming fashion trends as well as materials and accessories
needed to transform products into finished collections. Through these efforts, a
select group of Thai leather goods producers is beginning to make progress on
the international scene and are competing directly with Europe's leading
manufacturers.
Despite strong competition from regional countries, Thailand's leather
industry should remain on course for further gains in the future. Liberalized
trade within the Association of Southeast Asian Nations (ASEAN) region slated
for 2003 along with gains in product design, fashion trend awareness and
upgrades in technology will likely allow further increases in the volume of Thai
leather products shipped to destinations around the world.
Our company named The Rich, we establish in year 2012. Our head
office and showroom is located at Central World, the biggest shopping mall in
the central of Bangkok. We are the modern furnitures and decorations shop
who design the furniture or decoration in luxurious style with unique
contemporary designs for all lifestyles.
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We are partnership with the factory which located in the Samutprakarn,
Thailand. We are very fortunate that our partner establish in this industry over
20 years which they have many workforce of skilled technicians who combine
time honored manufacturing techniques, and the highest quality materials, to
hand build each piece of furniture for our customers home. Their dedication to
their craft, combined with our dedication to maintaining the highest product
quality standards, corporate efficiencies, and continuous improvement, make
The Rich Furniture Company vision is to be the furniture industry leader in
producing quality home furnishings. Our mission from the beginning was to be
recognized by our customers as the leader in premium home furnishings by
exceeding their expectations for excellence in quality, fashion, innovation, and
service. The mission still continues. We are very proud to present The Rich
Furniture Company products to you for your home.
The materials used to craft our furniture are selected for their natural
beauty, elegance and quality. The Rich uses the finest quality of leather. The
frame is constructed from selected hardwood lumbers which are carefully dried,
milled and processed to remove any structural defects or weakness. High quality
cushion with pocket springs and duck feather fillings give our furniture
maximum durability and luxurious comfort. Use of the best quality materials
along with exceptional craftsmanship to form the unique design distinguishes
The Rich from other brands.
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Our companies have many products such as sofa, armchair, and stool
-Product/Service (in General)
Sofa
Figure 2.2
Figure 2.3
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Figure 2.4
Figure 2.5
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Figure 2.6
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Figure 2.7
Figure 2.8
Figure 2.9
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Armchair
Figure 2.10
Figure 2.11
Stool
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Figure 2.12
Figure 2.13
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Chapter 3
Market Analysis
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Market Analysis
Thailands furniture industry continues to be one of the strongest in the
region due to production quality, innovative and modern styling, and flexibility
in material use. The quality of its infrastructure is better than most of its
neighbors like Vietnam, Cambodia, Laos, Philippines and Indonesia.
In a report by the vice president for research and planning at Kiatnakin
Bank, PiyasakManason, believes Thailands GDP will contract sharply for at
least two consecutive quarters in 2012. Thailands economy will grow at
between around one percent and 2.8 percent in 2011 - 2012. There are two main
reasons for this.
The first is the structural damage wrought by the floods. Mr. Manason
believes that the floods effect on the economy will be long-lasting. Public as
well as private infrastructure needs to be repaired or reconstructed. During that
reconstruction period, production will not return to full-capacity, which willlead to contraction in the manufacturing dector.
The Kiatnakin Banks second point is the dim outlook for the global
economy is due mainly to the intensifying European debt crisis. European and
IMF inefficiency in coming up with a deal to restore investors confidence will
make matters worse. This matter will not be resolved in the near future,
confidence will erode and financial markets will remain volatile. Subsequently,
the real sector will be hit by a slowdown in consumption and investment in the
West, which will lead to a slowdown in exports from Asia, including Thailand.
However, furniture and furnishings stores have continued to show an
improving trend, showing five percent current value growth in 2010. This is
largely due to government policies to stimulate demand in the Thai property
market. For instance, the government reduced the transferrable fee on property
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purchases from two percent to 0.01 percent, and also introduced a tax
exemption on properties purchased in 2009 until June 2010. (7)
In 2011, Thailand has a GDP at current market prices of THB10.54trillion (USD345.65 billion approx ) with the growth rate of 0.1 percent, much
lower than the expected growth rate of 3.5 percent due to severe damage from
the historic flood the Kingdom confronted mainly in the last quarter of the year.
In 2012, the Thai economy is expected to grow by 5.5-6.0 percent, a V-shaped
recovery from last years flood.(8)
Figure 3.1
However, according to the research of Bangkok University, it shows that
the confidential economic index per economic status in Thailand is 45.57 which
is lower 1.74 from 47.31 on April 2012. They estimate that the index will
decline until Jan 2013. (9)
Competition Analysis
Since sofa industry established for a long time, there are many companies
in the market which we can classify into:-
44.5
45
45.5
46
46.5
47
47.5
Confidential economic index
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1. Direct competitor2. Indirect competitor
- Direct Competitor
Our direct competitors are the company who sell leather sofa with the same
price range and similar quality which are show below:-
Sesia
figure 3.2
Figure 3.3
(Resource:10)
http://www.sesiafurniture.com/http://www.sesiafurniture.com/http://www.sesiafurniture.com/http://www.sesiafurniture.com/7/29/2019 The Rich : Section 2 Seat :14
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Strength
- Good Quality compare with Pricing theproduct
- Design of the products quite easy to fitthe room
- Variety of theproducts
Weakness
- Low communication ininternet or facebook
- Not too many sales staff inthe showroom
Studio 128
Figure 3.
(Resource: 11)
http://www.128studio.com/http://www.128studio.com/http://www.128studio.com/7/29/2019 The Rich : Section 2 Seat :14
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Strength
- Neat quality of the products especially productof Thailand
- Design of the products quite easy tofit the room
- High Brandawareness
- Neat sewingproducts
Weakness
- High price ofproducts
- Design is similar to someimport brand
Kevin Giormani
Figure3.5
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Figure 3.6
(Resource:12)
Strength
- Many type ofleathers
- Design isso simple
Weakness
- Low quality leather (Corrected grain )
http://www.kelvingiormani.com/http://www.kelvingiormani.com/http://www.kelvingiormani.com/http://www.kelvingiormani.com/7/29/2019 The Rich : Section 2 Seat :14
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P9
Figure 3.7
Figure 3.8
(Resource: 13)
Strength
- Sub brand of Studio128
- High Brandawareness
- Neat sewingproducts
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Weakness
- Lowquality
leather
- Design is similar to someimport brand
- Some design looklike old design
JAS
Figure 3.9
Figure 3.10
(Resource: 14)
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Strength
- The cost of the product is notso high
- Products produce from theirown factory
Weakness
- Lowquality
product
- Design isnot
modern
- Indirect CompetitorOur indirect competitors are the company who sell leather and fabric sofa
with high price and great quality, mostly are import from Italy and other countries,
and also sofa with low price and low quality which are show below:-
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Strength
- Very high designproducts
- Many designers design the product that fit toeach life style
- Very good quality of sewingand production
- Very good rawmaterials
Weakness
- Very high price because of the import tax andthe price they set
- Some design is quite hard to fit toThai people house
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B&B
Figure 3.11
Figure 3.12 (Resource: 15)
Chanintr Living
Figure 3.13
Figure 3.14 (Resource: 16)
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Marthastewa
Figure 3.15
Figure 3.16
(Resource: 17)
Plotrona Frau
Figure 3.17
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Figure 3.18
(Resource: 18)
Dellarobbia
Figure 3.19
Figure 3.20
(Resource:19)
http://dellarobbiathailand.com/http://dellarobbiathailand.com/http://dellarobbiathailand.com/http://dellarobbiathailand.com/7/29/2019 The Rich : Section 2 Seat :14
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Index, Concept, Ikea
Strength
- Low priceproducts
- Variety ofdesigns
- Convenience to shop because of they have manyshowrooms
Weakness
- Low quality ofmaterial
- Low quality of sewing andproduction
Index Living mall
Figure 3.21
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Figure 3.22
(Resource: 20)
SB furniture
Figure 3.23
Figure 3.24
(Resource: 21 )
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IKEA
Figure 3.25
Figure 3.26
(Resource: 22)
Koncept Furniture
Figure 3.27
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Figure 3.28
(Resource: 23)
Customer Analysis
Regarding to the customer income rate, the national statistical office had
been study on year 2554 or 2011about the income rate per month of Thai people
and also the percentage of household income rate of all over the country as shown
below:-
Figure 3.29
5,141
9,854.00
14,817.00
22,953.00
63,011.00
0
10,000
20,000
30,000
40,000
50,000
60,000
70,000
Group A Group B Group C Group D Group F
Income
Income
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Regarding to the figure 3.2, we can classify the ranking of income rate per
month into 5 different groups which are
Group A5,141 baht per month
Group B9854 baht per month
Group C14,817 baht per month
Group D22,953 baht per month
Group F63,011 baht per month
It means that Group A is the people who got lowest income per month to
Group F is the people who got the highest income per month.
Figure 3.30
According to the figure 3.3, we can classify the percentage of household
income rate per year into 5 different groups which are
Group A6.6% or 7%
Group B10.3% or 10%
Group A
7%
Group B10%
Group C
14%
Group D
20%
Group F
49%
Percentage of household income rate
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Group C14.3% or 14%
Group D20.2% or 20%
Group F48.6% or 49%
It means that Group F is the highest group percentage of household income
rate per year. On the other hand, the lowest group percentage of household
income rate all over the country is Group A. (24)
Moreover, according to the last year flood, many people had been suffering
from the damage which results after the flood were gone. They need to renovate
their house and furniture. In addition, some people might have to rebuild their
house to protect for the future.
Competitive Analysis
According to the real estate information center news on 28 January 2005,
they said that the overall furniture market is 10 billion baht. The market share of
sofa is 60% which are 40% is fabric sofa and 20% is leather sofa. However, out
of the 60% of sofa market, there are 20% of sofa market are import from other
country. (25), (26)
Nowadays, there are many brands from domestic brands and also some
other countries brands who come to sell their product in Thailand. We can
classify them into 3 different levels as show below:-
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Figure 3.31
For Hi-End market, most of them are import brands like B&B, Minotti,
Poltrona Frau, Baxter, Seasons and etc are placing their price around 300,00
500,000 baht or higher than 1,000,000 baht. This market is very niche and unique
because of the quality of raw materials they use which are very hard to find in
Thailand and the skill of their craftsman are very high.
For Hi-End to Mid-End market, most of them are domestic brands like
Studio 128, Sesia, P9, Jas and etc and also some brands who import their brands
from China which are Kevin Giormani, Mobella. They are placing their price
around 60,000 baht to 200,000 baht. This market will be replaced for the
customer who wants to have good quality product like import brand but they
cannot afford to pay. However, the quality of the product is good refer to the
price.
Hi-Endmarket
Hi to Mid-Endmarket
Low-End market
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For Low-End market, most of them are mass production market like Ikea,
SB furniture, Concept furniture, Index living and etc and also factory brands
which you can see when you go to the furniture fair or exhibition at Bi-Tec
Bangna or Impact Arena Muang Thong Thani. They are placing their price
around 5,000 to 50,000 baht. This market will not concerning about the raw
materials they used on production because they want to sell at low price. (27)
STP Analysis
Market Segmentation
We can classify our segmentation into 2 groups of people:
- Endusers- Interior/Architect
For the first group, endusers, we will segment our market by income.
According to the figure 3.2 and 3.3 on customer analysis, the income of our
customers is the most important factor whether they can afford to pay for our
products or not. Therefore, the group of people who earn 20,000 baht or higher
would be able to afford to purchase our products which are Group D and Group
F.
For Interior/Architect, we will segment our market by needs of
interior/architect and the trend of design. By doing so, the interior or architect
will be able to spec our product in their project that match to the customer need.
However, this segment would be easy to place order but it is also depends on
the price list or discount too.
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Targeting
Our target market in sofa market is a group of people who building a new
house or buying a new condo and looking for new furniture to decorate their
home. Moreover, our target market would be a group of people who love leather
or like the advantage of the leather more than fabric even the price of leather
might higher than fabric.
Positioning
Figure 3.32
-4
-3
-2
-1
0
1
2
3
4
5
6
-4 -2 0 2 4 6
Quality
Price
Brand PositioningThe Rich
Studio 128
B&B
P9
Jas
Index
Ikea
Vinotto
Seasons
Sesia
The Rich
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Marketing Mix Strategy
Product
Our company branding The Rich as Luxuary Leather Furniture which
we sold mainly leather sofa. We use the front that represent smooth and luxury.
For our slogan, we are using We made what you want is to clarify that we try
to design our products to serve to everyone lifestyle. Moreover, we try to design
our products like European style ( Over sizing ). It means that the size of the
sofa would be bigger than normal sofa as you can see in the market.
For our products, we can classify our product into 4 difference categories
which are show below:-
3 Seated
Figure 3.33
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Sofa 3 Seated is the type of sofa with the size around 1.80 meter to 2.60
meter. The smallest size can put into the condo and the bigger size can put in
the house. We try to make our product as the master piece in every house.
L-Shape
Figure 3.34
Sofa L-Shape is the type of sofa that combines 3 Seated with Couch
together. So the sofa is looking like L alphabet as we called it Sofa L-
Shape . The sizing of Sofa L-Shape is from 2.60 meter to 3.20 meter depends
on the size of the cushion which we can add or remove them out.
Armchair/ Cozy Chair
Figure 3.35
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Armchair or Cozy Chair is the type of sofa for 1 person. It is design for
small spaces where you can sit or relax while you reading a book or relax.
Stool/ Ottoman
Figure 3.36
Stool or Ottoman is the type of sofa that we use to put our leg once we sit
on the 3 Seated or Armchair. Stool or Ottoman is very small size 50 meter to 90
meter depends on the design.
Pricing
The Rich plan to sell the product to endusers with B+ grade or higher or
Mid-End or Hi-End. As we calculate the cost of production with the raw
material we use, we can calculate the price as show below:-
Product Price ( in Baht )
3 Seated 50,000120,000
L-Shape 150,000250,000
Armchair/ Cozy Chair 40,00080,000
Stool/ Ottoman 20,00050,000
Figure 3.37
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Place
For the location that we would sell our product, we would choose
department stores or villa market as our first choice because it is easy to travel,
easy to increase awareness of brand, easy to promote and high traffic per day.
Therefore, we choose CentralWorld in Bangkok as our first showroom. It is
located in the center of Bangkok with good transportation like Bus and BTS.
Promotion
Promotion is the most important part for this market because it will create
brand awareness, idea for the customer to decorate their own house, brand
recognition and etc. By doing so, we are choosing the promotion as show
below:-
Discount
Figure 3.38
By using discount, we plan to discount our product randomly one or two
item to motivate sale each year. Moreover, for some events like End year sales,
Mid year sales, Thailand new year, Showroom grand opening and etc will be
special discount for many items.
Magazine
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Figure 3.39
We plan to advertise our brand in the furniture and decoration magazines
every month by asking theme and concept of each month from every magazine
and choose the one that match to our objective.
Events
Figure 3.40
We plan to go out to the exhibition like Architect Fair, Furniture Fair and
etc to gather contact of our customers and try to expose our brand to Interior,
architecture and endusers.
Facebook Activities
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Figure 3.41
We plan to use facebook as another media to advertise and give
knowledge and know-how to our customers who interest in our product to
follow and discuss when they got any problems with the products. Moreover,
we also use facebook as another channel for activities like games, post pictures,
notification and etc.
Sale forecast/ Profit estimation
According to the promotion campaign, we try to use discount promotion
and promote on other media for the first 5th
year to motivate and increase
awareness of our brand. We estimate that our sale forecast in pieces might show
as the follow table:-
YEAR 1 Month
Product Type 1 2 3 4 5 6 7 8 9 10 11 12 Total
3 Seats 2 1 1 2 2 4 2 1 1 4 2 3 25.00
L-Shape 1 0 0 1 2 2 1 1 0 2 2 3 15.00
Armchair & Stool 1 3 1 3 5 5 4 3 2 1 6 5 39.00
Total in Pieces 4 4 2 6 9 11 7 5 3 7 10 11 79.00
Figure 3.41
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YEAR 2 Month
Product Type 1 2 3 4 5 6 7 8 9 10 11 12 Total
3 Seats 3 2 1 2 2 3 2 1 1 2 3 4 26.00
L-Shape 3 1 1 2 1 2 1 1 0 2 2 3 19.00
Armchair & Stool 4 3 2 3 3 6 4 2 3 3 6 6 45.00
Total in Pieces 10 6 4 7 6 11 7 4 4 7 11 13 90.00
Figure 3.42
YEAR 3 Month
Product Type 1 2 3 4 5 6 7 8 9 10 11 12 Total
3 Seats 4 3 2 2 3 3 2 2 2 3 4 5 35.00
L-Shape 3 1 1 2 1 3 2 2 1 3 2 3 24.00Armchair & Stool 6 4 3 5 4 8 6 4 4 5 6 8 63.00
Total in Pieces 13 8 6 9 8 14 10 8 7 11 12 16 122.00
Figure 3.43
According to the figure 3.41-3.43, we forecast that our sales would
growth about 10% for the first year [(90-79)/79] x100 = 13% and increasing
about 30% for the second year [(122-90)/90] x100 = 35%.
EAR 1 Month
roduct Type 1 2 3 4 5 6 7 8 9 10 11 12 Total
Seats 180 90 90 180 180 360 180 90 90 360 180 270 2,250
-Shape 150 0 0 150 300 300 150 150 0 300 300 450 2,250
Armchair & Stool 50 150 50 150 250 250 200 150 100 50 300 250 1,950
otal in Baht(in
housands) 380 240 140 480 730 910 530 390 190 710 780 970 6,450
igure 3.44
EAR 2 Month
roduct Type 1 2 3 4 5 6 7 8 9 10 11 12 Total
Seats 270 180 90 180 180 270 180 90 90 180 270 360 2,340
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-Shape 450 150 150 300 150 300 150 150 0 300 300 450 2,850
Armchair & Stool 200 150 100 150 150 300 200 100 150 150 300 300 2,250
otal in Baht(in
housands) 920 480 340 630 480 870 530 340 240 630 870 1,110 7,440
igure 3.44
EAR 3 Month
roduct Type 1 2 3 4 5 6 7 8 9 10 11 12 Total
Seats 360 270 180 180 270 270 180 180 180 270 360 450 3,150
-Shape 450 150 150 300 150 450 300 300 150 450 300 450 3,600
Armchair & Stool 300 200 150 250 200 400 300 200 200 250 300 400 3,150
otal in Baht(in
housands) 1,110 620 480 730 620 1,120 780 680 530 970 960 1,300 9,900
Figure 3.45
According to the figure 3.43 - 3.45, we calculate the total sale(in
thousand baht) of each month by estimating the selling price to each product
type times with the pieces we estimate to sell on figure 3.4 as show below:-
3 Seated = 90,000 Baht
L-Shape = 150,000 Baht
Armchair & Stool = 50,000 Baht
If we assume that cost of production is 40% of the selling price, then our
profit without any expense except cost of production would be
First year: 6,450,000x40% = 3,870,000 baht
Second year: 7,440,000x40% = 4,464,000 baht
Third year: 9,900,000x40% = 5,940,000 baht
Marketing Expense (Sale incentive)
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As we already mention on Promotion part, we would do advertising in
Magazine, Events, Public relation, Brochure and Catalogue, Media printing,
sticker and etc. We estimate marketing expense on table 3.6
Description Price Quantity
Total
Amount
Magazine 30,000 24 720,000
Event 200,000 2 400,000
Construction for Event 100,000 1 100,000
Brochure and Catalogue 25 3,000 75,000
Media printing 50 500 25,000
Sticker for promotion 6 3,000 18,000
Public relation 5,000 2 10,000
Total 1,348,000
Figure 3.46
For Magazine, we plan to advertise our product in 3 magazines which are
Elle Decoration, Wallpaper, and Casaviva. Our plan to advertise on table 3.7
which shows below:-
Magazine Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Elle Decoration
Wallpaper
Casaviva
Figure 3.47
For Event and Public Relation, we plan to go to exhibition twice a year
with the construction cost for construction booth. We might hire part time sales
or MC to give some information about our products on an event.
For Brochure and Catalog, we plan to print 3,000 pieces for 1 year
because we need to add up some new production inside the catalog every year.
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For Media printing and Sticker, we plan to use them when we have a
promotion of our showroom. We might ask the department to help us promote
but we might have to print all of our promotion printing by ourselves.
For Sales incentive, we plan to give commission to our sales
representative by 3% of total sale each month. The one who got the highest
sales will get 1% commission of total sale each month in order to motivate our
sales representative to compete with each other to get the highest sale.
EAR 1 (in Thousands) 1 2 3 4 5 6 7 8 9 10 11 12 Total
otal Sales 380 240 140 480 730 910 530 390 190 710 780 970 6,450
ales Commission @ 3% 11.4 7.2 4.2 14.4 21.9 27.3 15.9 11.7 5.7 21.3 23.4 29.1 168.5
ales Commission @ 1% 3.8 2.4 1.4 4.8 7.3 9.1 5.3 3.9 1.9 7.1 7.8 9.7 64.5
gure 3.48
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Chapter 4: Investment Cost
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Chapter 4: Investment Cost
Location
- 8*15 meter
- Central world Bangkok
- Near Platinum, Pantip
- Next to Patumvanaram Temple, Siam Paragon
- 165,000 Bath/2 big rooms
We will rent 2 big rooms in Central WorldRent Cost = 165,000 Bath
Building
Cost of real estate = 165,000 baht / 2 big rooms
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Facility Layout
Pattern of the store building structure
The building of the Rich Sofa has just one floor. The size of the building
is 8*15 meter. There are 2 big rooms inside the place. The wall is height 3
meters and width 8 meters.
3
8
The pattern inside the store
The size of the building is 8*15 meter. There are 2 big rooms inside the
place. Inside our store has to set the sofa zone in many style, a small office that
to support the customer service and staff room.
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Staff room Zone A-E
Small office Relax zone
Zone A
Zone B
Zone C
Zone D
Zone E
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Staff room
Small office
Relax zone
Sofa
Table and chairs
Water cooler
Table and chairs
Water cooler
Sofa
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Zone A-E
Decoration in shop.
Sofa in many
style
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Machine/Tools/ Equipment
Office- Computer Acer
-Intel PDC E2220 (2.4 GHz)
-Linux, MEM
-1GB DDRII 800-HDD 320GB SATAII
-SATA-DVD-RW
-Multi in One Card Reader
- (PS.V740C.007LE)
-Acer LCD 17 inch X193WAbd 5ms, 10000:1, DVI (ET.CX3WA.A01)
-Price with vat 15,900 baht
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Printer cannon image CLASS MF4412
Stylish, space-saving design
Easy to use intuitive 5-line LCD display
23ppm (A4), 9 seconds First Copy out Time
Up to 1200 x 600dpi resolution for prints and copies
All-in-one cartridge system for cost-efficient supplies replacements
Energy Star Qualified
The Canon image CLASS MF4410 features a simple and intuitive5
lines LCD interface designed for easy operation. Scan up to 9600 x 9600dpi.
Files can be scanned directly to e -mail, or as searchable PDF using the MF
Toolbox, enabling easy text searching
Price with 5900 baht.
Office desk-Price disk size 150* 80*70cm
-Price 3000 bath.
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Chair
-Price 1200 baht.
Fax mfc 3360c
- Fax machine paper roll.
-Auto cut paper (fax, photocopying, answering machine)
-Modem Speed 14,400 bps.
-send a time sheet 10 bit. Price 6590 baht.
Paper A4
-Photocopying paper: Double A
-Photocopying: 80 Grammy for the photocopying and Printing.
-Quantity: 500 sheets/Dream
-Price 90 baht per pack
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Clip files s-size 240*350cm
-Price 50 bath
Laser stamp pad Horse stamp ink
-Size 7.9*12-Two color red and blue -Size 30 cc-Price 50 bath -Price 10 bath
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Max Stable max
-Price 60 bath. -Price 50 baht
Punch machines Scissors
-Price 300 baht -price 100 baht
Pencil Easer
-Price 70 baht -Price 10 baht.
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Pen Liquid paper
-Price 5 baht -Price 70 baht
Scotch tape Plug
-Price 50 baht -Price 300 baht
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Air- Conditioner HITACHI RAS-S24CE
- Air Wall Type- Size 23700 BTU- Disinfection of bacteria with light & UV-
Nano Titanium filter discs eliminate bacteria- Speed Cool cooling system;
accelerate faster- Silent Cool system noise reduction-Panel cooling large
increases in thermal efficiency
-price 39900 baht
Glass Rubber Stamp
-Size 20cm* 10cm-Price 40 baht. -Price 160 baht
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Bill Book Shelves documents
-Price 15 baht -Price 315 baht
Clip Highlight Pen
-Price 54 baht -Price 20 baht
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Capet
-Price 1,090 baht
Capet feet
-Price 150 baht
Tissues
-Price 45 baht
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I phone 4s
-Price 16000 baht
Chandeliers Refrigerator
-Price 12000 baht - Price 21,990 baht
Water filter
-Price 23,500 baht
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Pail Swab
-Price 20 baht -Price 1,290 baht
Internet
-3BB
-Price 699 baht
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Chapter 5: Production and
Operations Analysis
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Chapter 5: Production and Operations Analysis
Product Characteristics
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Operating Cost
Operating costs are recurring expenses (per month) which are related to the
operation of a business, such as sales and administration, as opposed to
production, also called operating expenses. It includes;
Location
- 8*15 mater
Cost of Labor (per month)
Position Amount Salary Total
Safe staff 2 15,000 30,000
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Overhead Cost (per month)
Charge Total
Electricity 4,000
Fee Of Department Store 50,000
Rent 165,000
Logistics Management
- Rent a car from a private company to deliver a product.
- Shipping rate.
- Bangkok Metropolitan Area 1800-2500 Baht.
- Country (depending on distance).
Facility Management
- Air conditioner
- Sofa
- Table
- Chair
- Water cooler
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Chapter 6: Administration
Cost
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Chapter 6: Administration Cost
Organization management
The Rich is a company owned and operated by 8 partnerships, as a limited
company. Each partnership is the developer of the products and manages the
company.
This below is the name of the partnership who invest in The Rich company.
Miss Saranrak Kittiratanapaisan
Miss Thanaporn Thareelapraksa
Miss Pattaraporn Pompoung
Miss Karnhathai Malarat
Mr. Sirichok Wuthisakul
Miss Pattarada Hirunprateep
Miss Suntaree Sangthong
Miss Varritta Puttajanyawong
The company have approximately 7 staffs including 5departments :
1. General management department
2. Sale and marketing department
3. Financial department
4. Production department
5. Human Resource department
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The board of directors has five functional departments; they are the
general department, the finance department, production department, human
resource department and sale and marketing department. Every department have
a clear division of work, the unity cooperation, forming a tight unit.
The production department colleagues have quite a number of workers
and management personnel go into workshop production first line, responsible
for the real-time supervision and production.
Sales department consists of a group of experienced sales personal; they
are responsible for the network promotion and marketing of companys
products.
Organization Chart
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People in the organization
General Manager (1 position)
Task
Training the employee To report to the managing director Having direct responsibilities for all the day-to-day company operations To plan, implement and control the overall management of the business To prepare reports of the company activities for the shareholders Being responsible for the human resource management To approve the price decision proposed by the marketing manager To advise and monitor the marketing and sales activities To monitor the service quality to ensure customer satisfaction To order and check the products.
Characteristics
Female age 25-45 Bachelor Degree in related field Strong communication skills (verbal, listening, writing), strong
presentation and platform skills
Able to effectively manage labor productivity in addition to usingstandard software applications and FHB systems including other related
software.
Ability to develop and implement successful sales strategies forindividual accounts of revenue management functions and account
profitability
Financial management skills e.g. ability to analyze P&L statements,develop operating budgets, forecasting and capital expenditure planning
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Designer (1 position)
Task
Help ensure the usability and appearance of the site ishigh class.
Play a key role in the visual design of new featureslaunching on the site.
Strive for design perfection but love to release anditerate.
Designing and creating comfortable and functionalenvironments that represent client's lifestyle, taste
and budget
Characteristics
Male/female age 24up Bachelor Degree in related field Can use HTML, CSS, AJAX, prototype.js, jQuery, etc.
Accountant (1 position)
Task
Accounts payable and fixed assets / VAT /Withholding Tax
Characteristics
Male/Female age 25-35 Bachelors degree in Accounting or higher 3 - 5 years experience in MANUFACTURING / Accounting function /
or ELECTRONIC company background is preferable
Satisfy English communication both in writing and reading
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Good in Excel / word processing / Power point Good communicate and relationship with all concern
Cashier (1 position)
Task
Receive payment by cash, check, credit cards, vouchers, or automaticdebits.
Issue receipts, refunds, credits, or change due to customers. Count money in cash drawers at the beginning of shifts to ensure that
amounts are correct and that there is adequate change.
Greet customers entering establishments. Maintain clean and orderly checkout areas. Establish or identify prices of goods, services or admission, and tabulate
bills using calculators, cash registers, or optical price scanners.
Resolve customer complaints. Answer customers' questions, and provide information on procedures or
policies.
Characteristics
Male/Female age 24-38 Bachelor Degree in related field Honest Endure Flexibility
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Sales personal (2 positions)
Task
To establish better relationship and follow up with the customers to closesales
Handle sales and marketing activity to meet customer inquiries andcompany market
Prepare documents, conduct marketing plan and sales plan
Characteristics
Male/Female, Age about 25-34 years old Bachelor Degree in related field Experience about 1 years in Sales Fair command in English Both Reading & Writing Computer literate (Microsoft Office, Outlook and Internet).
Maid (1 position)
Task
Sweep, scrub, wax, and/or polish floors, using brooms, mops, and/orpowered scrubbing and waxing machines.
Dust and polish furniture and equipment
Characteristics
Female age 20-50 Honest Endure
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Administration cost
Employee salary
Wage rate for the Rich Company
General Manager 1 person 35,000 baht
Designer 1 person 32,000 baht
Accountant 1 person 18,000 baht
Sale person 2 person (2
12,000) 24,000 baht
Maid 1 person 9,000 baht
Total salary Expense per month 118,000 baht
** Remark Give 0.02% commission of total sale for sale person, which is not
include the salary
Rental fee
We plan to rent area at Central World for sales and show our products.
The price for rent area 1 square meter equal to 1,500 baht and also have to pay
center service 100,000 baht. Centre service is all service that renter provide for
leaseholder; such as, electricity, water, security, housekeeping, telephone fee
internet and etc. So, we choose to rent the area 110 square meter.
110m21,500 baht = 165,000 baht
165,000 + 100,000 = 265,000 baht
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Therefore, each month we have to pay 265,000 baht per month for rental
fee. Stationary expense
Item Product Description Quantity
(Unit)
Price
(Baht)
Amount
(Baht)
1 Calculator 2 410.00 820.00
2 Paper A4 3 110.00 330.00
3 Fax paper 5 125.00 625.00
4 Ink tank 1 590.00 590.00
5 Film fax 2 390.00 780.00
6 Stamper 3 90.00 270.00
7 Max 2 60.00 120.00
8 Staple max 2 65.00 130.00
9 Punch machine 1 280.00 280.00
10 Scissors 3 75.00 225.00
11 Thermal paper 5 180.00 900.00
12 Pen 12 10.00 120.00
13 Liquid paper 3 50.00 150.00
14 Scotch tape 5 32.00 160.00
15 Cutter 2 95.00 190.00
16 Clipboard 2 80.00 160.00
17 Highlight 2 20.00 40.00Total stationary
expense
5,890.00
Table 1 : Stationary expense
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Insurance
We choose to making insurance with Bangkok Insurance for protect our
store at Central world. We choose the insurance protect our store like Politicalviolence, strikes, riots, civil war, terrorism, sabotage, disaster. Property
insurance coverage to insure the event and unrest offers comprehensive
coverage of assets fully. Home mortgage stores, shop in the department store
and factory in the limit of a maximum of 10 million baht.
If we want to get 5 million baht from the insurance, we will have to pay
12,630 baht per month for insurance fee.
Figure6.1
1 2 3 4 5
1,080 1,900 2,580 3,440 4,050
1,050 1,850 2,500 3,350 3,900
/ 2,970 5,910 8,060 10,750 12,630
2,920 5,850 7,950 10,600 12,500
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6 7 8 9 10
4850 5240 5990 6270 6970
4,750 5,100 5,800 6,050 6,750
/ 15,150 16,360 18,700 19,580 21,760
2,920 5,850 7,950 10,600 12,500
Figure 6.2 (28)
StaffsUniform
Our company has a uniform for the employees. Uniform differenced
depending on employees position. So, we will pay for staffs uniform in the
first year of doing the business or the first time that the employee start to work
with us.
We order our staffs uniform from Song Samai Company. Price of general
managers uniform is 2,790 baht (including the nameplate120) per 1 uniform
and 2,190 baht for sales personal and cashier uniform (including the
nameplate120baht) per 1 uniform. And the price of shirts 250 baht (per 1shirst)
for Designer, Accountant, and Maid shirts.
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Sample of uniform
Figure6.3: General Manager
Figure6.4: Sales personal and Cashier (woman)
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Figure6.5: Sales personal and Cashier (Man uniform)
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Figure 6.6: Designer, Accountant, and Maid
Figure6.7: Nameplate1Figure6.8: Nameplate2
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Address
Song Samai Bang kapi Co., Ltd.
166/29-30 Serithai Rd., Khlong Chan,
Bang Kapi, Bangkok, 10240
Tel :02-3776360,02-7333121,02-3779254,
089-6681908
Fax :02-7333122
Figure6.9
Song Samai Bang Kapi tailor is produces our companys staffuniform.
Staffs uniform Expense
General Managers uniform (1 position) 2,790 baht
Sales personal and Cashier (3positions) (2,1903) 6,570baht
Designer, Accountant, and Maid (3 positions) (2503) 750 baht
Total price staff uniform10, 110 baht
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Table : Administration Cost Year 1
Table: Administration Cost Year 2
Table: Administration Cost Year 3
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Chapter 7: Financial
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ncome Statement
Income Statement Year 1
Income Statement Year 2
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Income Statement Year 3
Income Statement Year 4
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Income Statement Year 5
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Chapter 8: Risk Management
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Risk Management
Risk management is a logical process or approach that seeks to eliminate or at least
minimize the level of risk associated with a business operation. Essentially, the process
identifies any type of situation that could result in damage to any resource within the
possession of the company, including personnel, then take steps to correct factors that are
highly likely to result in that damage.
Once the business model is understood, it is possible to identify specific risks that are
present throughout the production process, including the delivery of goods and services to
buyers. As those risks are identified, they are analyzed for ways to alter the process so that
the end result is still achieved, but the degree of risk is minimized or removed altogether.
Risk management may be an extremely complicated process or require nothing more than
making a few minor adjustments. (29)
Planning and reducing risk
- The risk of delivery product, when our company delivery the product, it can be on
some risk and cant be avoid. So, we must have the solutions that can fix the problem
immediately. For example when have traffic jam or car accident, it will used long time to
send order to the customer. This situation we will fix the problem by contact with the
transportation companies to transfer our products for fast and enhance efficient service and
shipping. Its can making reliability of customers to our company.
Identifying a list of potential risks.
Risk is a measure of the ability. The purpose of the work to be carried out
successfully. Under the budget, schedule, and technical constraints faced such a project is a
set of activities. To take action on an issue in the future. Using the limited resources available.
Continue to be successful. Under a limited time frame which is scheduled to perform in the
future. Risks that may occur at any time. Because of the uncertainty and resource constraints
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of the project. A project manager must manage the risk of the project. So the problem is
reduced. And can be operated successfully. Set goals effectively and efficiently.
Types of risk
- Power of purchasing risk: The risk that the purchasing power of money decreases.
Which mainly affect the purchasing power is inflation.
- Market Risk: Deals with different types of market risks, such as interest rate risk,
equity risk, commodity risk, and currency risk.
- Business risk: The risk arising from changes in the profitability of the company. As
a result, investors have lost money, Financial or investment risks,
- Risks in the industry: Market risk is the loss of investments due to changes in the
price of the securities to investors. Which is based on demand and supply of the market.
- Financial Risk Management: The process of financial risk management can be
defined as minimizing exposure of a firm to market risk and credit risk using various
financial instruments. Financial risk managers also deal with other risks related to foreign
exchange, liquidity, inflation, non-payment of clients and increased rate of interest.
- Interest rate risk: The risk that arises from changes in the rate of return on
investment. Due to changes in market interest rates.
External risk
- Risk form the factory : Our Company is required to order the leather from factory if
the factory have a problem about delayed delivery it make delayed for customers order.
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Internal risk
- Risk of the customer need and customer behavior: Sometimes you may be a delay
for transportation which is to satisfy the customer. You will lose the income of the delayed
delivery. Sometimes food may be damaged during transportation. All customers who do not
want to wait too long.
- Financial risk: Risk arising from insufficient funding for operational and/or strategic
priorities examples of risk events insufficient program funding, inability to recapitalize in
infrastructure.
- Partner and supplier risk: Risk that actions taken by partners or suppliers may
negatively affect the product. So should make understand that matching between our business
and other factory and check communicate system for ensure that not have the problem.
Risk of sale growth 35% in Year 4 and growth 30% in Year 5
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Chapter 9
Summary
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The Rich sofa project is the sofa company that operates in Bangkok. Our project
business is sofa store. Sofa store businesses have many types for sale and response to
customer need and want such as3 Seated, L-shape sofa, Armchair/ Cozy Chair Stool/
Ottoman and etc. In the middle of Thailand, furniture store is possible business that can make
high profit and easy to growth especially in Bangkok .In the market feasibility study we
found that there many information thats support the market to be feasible for example the
growth rate of gross provincial profit, personal and household good, and the growth rate of
population in the Bangkok. The Rich sofa has the core competency about the middle-end to
hi-end cost of sofa, because we will selective more about the suppler, who will give us the
middle-end to hi-end price as much as possible especially, from Samutprakan. The Rich Sofa
also provides the variety way of purchasing for the customer. There are three mainly type
of product of The Rich sofa which are L-shape sofa, 3 Seated of a, and Armchair. We set the
main target market at the middle-end to high-end market. And the target group is people who
just married. For the sale forecast from feasibility of the potential market, the target market of
The Rich sofa, as well as strategy and core competency of The Rich sofa, we confident that
The Rich sofas can generate the sale 1% of the potential marketer about-2,355,140.00 baht
that at the first year and continuously growth every year. We rent the land in Central World
which we need to pay in advance for each year. The Rich sofa need to build our own
company that there are 1 mainly zoned. We find out the source of funding from the investor
that we will offer the interest rate about 15% per year and will pay all of the interest rate at
the end of year 5that we guarantee the all of principal of the investor by we have the backup
plan forth investor In the financial analysis that represent in 3 financial statement, The Rich
sofa have strong in the financial status that also represent in the ratio analysis. For the risk the
mainly of risk for The Rich sofa in both business risk and financial risk is quite be and can beacceptable. However, we also prepare about the handle of risk by using the risk management.
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Reference
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28.http://www.ancbroker.com/Knowledge/Knowledge-Show.asp?kno29.(www.wisegeek.com)
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BY:
Miss. Saranrak Kittiratanapaisan ID: 5131205056
Miss. Thanaporn Thareelapraksa ID: 5131207009
Miss. Pattaraporn Pompoung ID: 5131207020
Miss. Karnhathai Malarat ID: 5131207039
Miss. Pattarada Hirunprateep ID: 5131207089Miss. Suntaree Sangthong ID: 5231207118
Mr. Sirichok Wuthisakul ID: 5131207137
Miss. Varritta Puttajanyawong ID: 5231207509