Discuss about the Global Entrepreneurship and Development.
Nepal`s handicrafts industry has been growing and achieving milestones since the stone age. With a diversification in culture, the religion of the people greatly influenced the making of these goods. Originality in production and being rare of its kind, the country has manifested in an export of these products over the last few years. Further, the government promotes the idea of manufacturing handicrafts to provide job opportunities to the population and also safeguard the heritage of the nation. Along with meeting domestic demands, these exclusive products have emerged as one of Nepal`s most profiting exporting industry.
The project discusses exports of Nepalese art and craft to Australia. The large country providing a home to a small number of people has actively interacted with Nepal to facilitate an inflow of handcrafted products. Analysing Australia, it is noticed that the market produces and supplies its customer with goods that perfectly meet their demand. Handicrafts for Nepal is typically divided into two types, textile and non-textile segments. According to Munemo (2014), the export of goods to Australia has not only benefitted Nepal financially but also in many other ways. Unlike the slow-developing country, Australia is fast and rapidly changing, every day becoming more developed. Despite possessing large capital resources and high technology, the people of the country appeals more to the imported handicrafts as compared to those produced in the nation.
For this project, a new entrepreneurship start-up named Himalayan Importers is taken into consideration. The company is a new entrepreneurship looking forward to starting business in Australia. Also, the report focuses on studying the foreign market and implementing strategies to start up and carry a business of handicrafts effectively in the nation. Further, sources of fundraising, a positioning of the business, determining of cost and a system of demand and supply is also taken into consideration. Additionally, the process of SWOT analysis is carried out along with the setting of objectives and mission for the company. Moreover, the report focuses on steps for achieving the goal, lowering of total cost and ultimately maximises profitability for a sustainable future of the business. After a proper technical analysis, financial research and risk study of the company is done to ensure and check the feasibility of the newly set up business.
The Nepalese handicraft business aims to intervene in the Australian market and provide the people with a high quality and uncommon products. Also, the companies aim for a sustainable future and to be among the leaders with ethical and moral trade practices.
To achieve the well-developed visions, Himalayan Importers targets to seize the available opportunities in the Australian market. Regarding the steps taken to achieve recognition in the nation, managers plan the following:
Provide the citizens with a proper livelihood
To promote Nepalese art and culture
Gain competitive advantage over existing companies
Develop free and fair marketing policies
Improve worker and managerial efficiency
Lower productions cost and maximise profits.
The entrepreneurs immensely studies Australian people in order to find out about their taste and preferences. In addition to a love for fashion, consumers appreciate handcrafted accessories. Himalayan Importers desires to export their Pashmina Cardigan and woollen products like headbands, gloves, woollen shoes, caps, hand covers and jackets. Additionally, the company thinks an export of the Green Bhirab, Stone Earring, Ghau Pendants and Tebetan Rings would also attract customers (Gupta and Sen 2013). Among all other products handcrafted masks gather a special attention because of the nation`s peculiar taste in foreign cultures. Business supervisors also effectively look forward to export bracelets, necklaces and a list of various pashmina goods.
Himalayan Importers greatly rely on its shareholders for raising funds. Also with a motive of preserving the country`s cultural values and making them famous in the world, the government tends to supply the business with capital sources to carry out exporting functions. Emerging from Nepal, managers seek to collect money from the visitors for business purpose. Profits from sales in the home country add up to fund rising (Haines 2016). Also, collaborating with Australian art companies or pursuing investors to invest in the company are considered as a last option.
Nepal is a landlocked country with rich cultural and traditional values. Being the neighbour to India, the nation is among the best producers of handcrafted products in the world. As opined by Pandey and Pandey (2013), as compared to the current situation, the art and craft industry was considered as one of the most advancing economies before the industrial revolution. Recently, with an uplifting in cultural values, there has been a growth in the handicraft industry. In addition to contributing to the GDP, the small-scale business efficiently contributes to the development of the country.
Most of the products are manufactured in workshops that are operated by few people. In countries like Nepal, handcrafted products are of great importance as they are the source of foreign currency. Concerning strengthening of the economy, the government promotes a need for exporting for these well-designed and exclusive goods to developed countries. Handicraft businesses of the country are highly labour intensive and mostly located in cottages. Himalayan Importers recognises the huge potential in foreign markets (Bridge and O’Neill 2012). Further the company seeks to employ a large section of the society. Managers greatly seek to maximise profits by exporting to Australia and hope for a safe future.
According to Dyster and Meredith (2012), the Australian art and craft market has been facing a wide range of challenges. With a growth of the IT and technological sectors in the country, there has been a sufficient downfall in traditional values of the country. The market has become a money oriented network over time. Although in response to all the negativities, the Australian government has taken an initiative to give the crafts industry a new face thereby attracting more customers. Fluctuations in policies and lack of appreciation for traditional values are the two factors that affected the success of the industry. Historically, a lack of diversity and environment reversal acted as hurdles to its growth.
On the other hand, the introduction of innovative education and training centres has created opportunities for expansion of the art industry. Also, the government of Australia has taken part in restoring business conditions. As stated by Kiznyte, Welker and Dechange (2016), the advancement of infrastructure and machinery has also facilitated organisations to build new working models and adapt tactfully to the changing environment. Regarding demands, there has been a sufficient rise as the people of Australia desires a return of retro style in the country.
In regions like Sydney and Melbourne, the tourism industry has induced the idea of imported products. Moreover, with a willingness of the people to work in handicraft companies has lead to excellence and innovation (Drucker 2014). Queensland and South Australia organise exhibitions and programs to promote sales in the domestic regions. To attract more customers businesses in Tasmania, Victoria and Western Australia indulge in a mechanical production process. Despite a small size, buyers of the nation aim to maximise the value of cost. Analysing the market it can be seen that with a proper management and high efficiency of the task force there is a great scope for success in the art and craft industry of Australia.
Though there exist similar kinds of products, the Nepalese firm aims to sell better goods at a comparatively low price. Setting up of stores in different parts of Australia would consequently lead to a significant rise in demands because of authenticity.
In relation to Dyster and Meredith (2012), Australia is known to be one of most rapidly enlarging markets in the world. With an intervention by Himalayan Importers in the foreign industry, the company is expected to face a wide range of competition from many domestic enterprises (Malik et al. 2014). Some of the companies that would influence the performance of the new business are, Handmade Samford, Alive Orange, Seaford Handmade and many others. Further an active part in exhibitions, trade fairs, and craft market would give rise to scopes of rivalry.
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1. Strengths: a. Large diversification of products b. Strong infrastructure c. Production flexibility d. Increased brand value e. Availability of capital sources |
2. Weakness: a. Lack of communication b. Inadaptability to new technology c. Lack of promotion d. Increased transportation cost e. Inadequate data on demand and supply mechanism |
|
3. Opportunities: a. Increase in demand b. Developing fashion sense c. Collaboration chances d. Increase in tourism market |
4. Threats: a. High competition level b. Presence of similar goods c. Better technology and R&D facility in rival firms d. Increased product prices |
(Table: SWOT Analysis)
(Source: As created by author)
The SWOT analysis of Himalayan Importers Pvt. Ltd. provides the management with knowledge of strengths, weaknesses, opportunities and threats for setting up a new business in Australia. The company imports a line of different kinds of authentic products that would grab a special attention of the customers. Though there is a presence of similar kinds of products in the market, the firm channels an exclusive line of goods that is not available in the Australian market (Acs, Szerb and Autio 2016). Further, with a strong infrastructure and an ability to minimise production cost adds to the list of strengths. In comparison to Australian companies the labor-intensive factor and inadaptability to the new technological methods will affect the company`s growth.
In addition to the growing opportunities in the foreign market, Himalayan Importers is confronted with various threats as well. A lack of promotion in the increased tourism industry will lead to a downfall of revenue. Additionally, the presence of well-develop R&D facilities in rival companies would lower stakeholders interest in the organisation. To benefit most from the foreign country, the brand`s increase in export cost will affect its performance. Australian people aim to maximise utility and find the best value for cost from every commodity they buy. A failure to import according to the environmental or internal changes will act as a weakness and threat of the company (Kuratko 2016).
Himalayan Importers primarily targets the fashion industry of Australia for selling its products. Further with an increase in art institutions the brands hopes to fulfil their demands too. Based on the geographical diversification of the country, managers divide the market into several individual segments depending upon the differences in taste, buying patterns, lifestyle and income levels. In terms of sales, the import company effectively uses exhibitions and programs organised by the government. Moreover, the firm segregates the market into smaller sectors particularly based on the different age groups because of their perception to judge the same commodity differently.
According to Mogindol and Bagul (2016), especially with an increase in visitors in Sydney, Melbourne and New South Wales, Himalayan Importers focuses on grabbing their attention in the market. Also, the market study of the country confers that the textile would be benefitted from the firm`s imports. Based on the demographic factors of the country, business managers target customers depending upon their race and religion distinctions. The psychographic variations act as an individual element that affects the target market of the setup firm (Kumar 2014). Products like accessories and fashion appeal to females more than males. Relying on the prices of the goods, supervisors aim to sell goods to people earning less than $50,000 as compared to any other income segments.
(Fig: Handicraft purchases by males and females, Australia)
(Source: Dyster and Meredith 2012)
Product
Himalayan Importers primarily deals in fashion and accessory products. In relation to Yayla (2013), Pashima goods of Nepal are also among its specialisation. A launch of a new business in Australia is a step towards expanding the international business of the company. Apart from dealing in woollen and other seasonal products, the firm has focused to develop several other commodities in order to attract more people of the country. Further to develop a strong competitive advantage over the rival companies, managers aim to import goods that are unique and fulfil consumer demands.
Commodities like Conchshell Beads, Crystal Kapala, Om Mane bracelets, prayer wheels, handmade cards, and many others are among options to choose from. Moreover, Mandala art and Mithila Thanka are an addition to art products in the business. Also, the unparallel taste of customers in foreign cultures is met by the company`s introduction of modern stuff. Managers also aim to import status and household merchandises for that would benefit the people of Australia (Baum, Frese and Baron 2014).
The cost of a product plays a vital role in deciding a firm`s future. Himalayan Importers aims to maximise profitability and exert dominance over the market with a well-organized price policy. The company objects to fulfil economies of scale in a bigger and better way. Further, a setting up of a price ceiling will contribute to the efficiency of the marketing mix. Absorption of the bulk buying of art and craft goods from Nepal and its surroundings will lead to minimising of the total cost.
According to Kotler et al. (2015), cheap commodities appeal better to the people. Also, the business might take into consideration consumer feedbacks to bring in necessary price alterations. Himalayan Importers focus on selling products ranging from one dollar to hundreds. The company to accomplish the aim of serving all kinds of people takes a deep interest in the pricing of the imported goods (Deegan 2013).
As stated by Wasan and Tripathi (2014), choosing of an active distribution channel is another factor that affects the success of the business. The entrepreneur business being new to the extensive Australian market needs to select best possible channel mix. Despite a small sized country, people are highly reactive to the market. In addition to building up retail stores not only in Sydney, Melbourne and other famous parts of the nation, Himalayan Importers chooses distribution through art exhibitions.
Concerning small regions, managers claim to pursue sales through apparel stores and supermarkets. The door to door selling and teleshopping may also be thought to be one of the methods (Dhaouadi, Benmiled and Ghédira 2014). With an ever growing population on the internet, the business is desperate in a collaborating and positioning their goods on most visited Australian shopping websites to maximise profits.
It is important to develop a well-organized promotional plan to voice among all other companies in the market of Australia. Advertisement on televisions and social networking sites can be beneficial for the new business (O’Cass and Heirati 2015). Additionally, personal relationship management, free sampling, word of mouth and similar techniques can be used by the managers. Taking part in educational programs organised by art institutions and letting the people know about Nepal`s cultures would also interest them into purchasing products from the company.
In order to improve sales, entrepreneurs might work in cooperation with advertisement experts to bring up new and unique ideas to promote the imported goods. Apart from all the common processes, Himalayan Importers build an extraordinary eye-catching advertisement to introduce new products in the market.
(Fig: Advertisement poster of Himalayan Importers)
(Source: As created by author)
Himalayan Importer’s managers need to carry out a risk analysis and take necessary steps towards its elimination. As compared to any other business, foreign importing start-ups are extremely risky. Even though a well-organized marketing is created, the Australian market tends to act differently than studied. There should a zero level developmental risk in the company with the sustainability of working prototypes. Concerning a growth of the business, it takes time in the initial stage and thereby arise financial risk matters (Könnecke 2015). As the importing business greatly depends on its capital sources to import and effectively carry out supply mechanism there should exist a minimal risk tolerance. In terms of revenue and management, Himalayan Importers should function in accordance with the plan. Marketing risks is another element in the analysis that needs to be taken care of.
Collaboration with Australian companies in promoting and distribution will cause the plan to perform successfully. Being new to the foreign environment, the import company is likely to be influenced by governmental fiscal policies and tax schemes. Further, with a launch of the company it will be faced by strong competitive risks from the existing handicraft firms. As opined by Bhabra (2014), managers shall abide by the lawful rules and regulations to carry out import on goods in the country and also not face legality risks.
The revenue generation and overall performance of the business depend on the financial analysis and the following assumptions:
It will take a period of six months to set up business in Australia.
The firm will work for 360 days of a financial year on a daily routine basis.
Business is expected to officially start from 1st April 2017. Maximum expected capacity will be 50% in 2017, 60% in 2018 and 75% on 2019 and so on.
An amount of Rs. 10, 20,000 will be divided among employees as salary.
Administration expenses should not exceed Rs. 4, 00,000 annually.
Loans from government and bank should be treated as first priority when paying off liabilities.
Depreciation rates for the firm will be:
Building : 2.23%
Plant and Machinery : 7.66%
Fixed Assets : 4.00%
Supplier credit facility will be for 20 days.
Import taxes rate is 33.75% per annum.
In the case of insolvency, partner`s personal assets are to be brought in for payment of liabilities.
|
Cost of Project |
|
|
Particulars |
Cost (Rs.) |
|
Land Development |
10,68,900 |
|
Head Office |
9,98,750 |
|
Retail Stores |
16,02,600 |
|
Fixed Assets |
5,00,000 |
|
Preoperative Expenses |
6,41,500 |
|
Preliminary Expenses |
2,23,000 |
|
Import Cost |
20,00,000 |
|
Tax Liabilities |
9,23,400 |
|
Risk IT-Model |
56,200 |
|
Distribution Channel |
2,00,000 |
|
Product Promotion |
2,00,000 |
|
Contingency Provision |
3,00,000 |
|
Total Cost |
87,14,350 |
(Table: Annual cost estimation for business set up)
(Source: As created by author)
|
YEAR |
2017 |
2018 |
2019 |
|
SALES |
1500000 |
2100000 |
2500000 |
(Table: Sales forecasting for business commencement)
(Source: As created by author)
Conclusion
Analysing the Australian market it is seen it is that the startup of Himalayan Importers in the foreign country would progress at a steady rate when a good business plan is followed. Though the company would face some threats and fall weak at some points, the increased managerial efficiency in the firm would overcome the hurdles. It is important for the company to maximise its strengths and opportunities as well. Most of all, an increased sale of cheap products will be accomplished only when a bulk of the commodities are imported into the country at a time. Moreover, managers will need to effectively implement the 4P`s marketing mix strategy to ensure business prosperity.
Also, a proper utilisation of finances is equivalently important for the firm to function properly. Further, scrutinising the competitive situation and risks involved in the business, it can be concluded that the organisation needs to work together for a sustainable future. In addition to successfully delivering products and earning high profits, the firm will need to look after the welfare of the people, safeguard their interest and develop a sense of Nepal`s rich cultural values.
References
Acs, Z.J., Szerb, L. and Autio, E., 2016. The global entrepreneurship and development index. In Global Entrepreneurship and Development Index 2015(pp. 11-31). Springer International Publishing.
Baum, J.R., Frese, M. and Baron, R.A., 2014. The psychology of entrepreneurship. Psychology Press.
Bhabra, R.K., 2014. An examination of growth stages and factors affecting the performance of business incubators: the case of Australia.
Bridge, S. and O’Neill, K., 2012. Understanding enterprise: entrepreneurship and small business. Palgrave Macmillan.
Deegan, C., 2013. Financial accounting theory. McGraw-Hill Education Australia.
Dhaouadi, R., Benmiled, A. and Ghédira, K., 2014. Ontology based multi agent system for improved procurement process: Application for the handicraft domain. Procedia Computer Science, 35, pp.251-260.
Drucker, P., 2014. Innovation and entrepreneurship. Routledge.
Dyster, B. and Meredith, D., 2012. Australia in the global economy: continuity and change. Cambridge University Press.
Dyster, B. and Meredith, D., 2012. Australia in the global economy: continuity and change. Cambridge University Press.
Gupta, M.D. and Sen, S., 2013. Handicrafts of Meghalaya: An Analysis of the Marketing Practices. Indian Journal of Marketing, 43(5), pp.49-57.
Haines, T., 2016. Developing a Startup and Innovation Ecosystem in Regional Australia. Technology Innovation Management Review, 6(6), p.24.
Harris, T., 2013. Trading places: New economic geographies across Himalayan borderlands. Political Geography, 35, pp.60-68.
Kiznyte, J., Welker, M. and Dechange, A., 2016. Applying Project Management Methods to the Creation of a Start-up Business Plan: The Case of Blendlee.
Könnecke, C., 2015. Social Capital in Handicraft Clusters for Business Startup and Growth.
Kotler, P., Burton, S., Deans, K., Brown, L. and Armstrong, G., 2015.Marketing. Pearson Higher Education AU.
Kumar, N., 2014. Indian Exports of Handicrafts and Global Markets: An Empirical Analysis. Journal of International Economics, 5(2), p.59.
Kuratko, D.F., 2016. Entrepreneurship: Theory, process, and practice. Cengage Learning.
Malik, A., Lenzen, M., Ely, R.N. and Dietzenbacher, E., 2014. Simulating the impact of new industries on the economy: The case of biorefining in Australia. Ecological Economics, 107, pp.84-93.
Mogindol, S.H. and Bagul, A.H.B.B.P., 2016. Tourists’ Perceptions about an Appealing Handicraft. tourism, leisure and Global change, 1(1), pp.10-24.
Munemo, J., 2014. Business start-up regulations and the complementarity between foreign and domestic investment. Review of World Economics,150(4), pp.745-761.
O’Cass, A. and Heirati, N., 2015. Mastering the complementarity between marketing mix and customer-focused capabilities to enhance new product performance. Journal of Business & Industrial Marketing, 30(1), pp.60-71.
Pandey, H. and Pandey, P.R., 2013. Socio-economic development through agro-tourism: A case study of Bhaktapur, Nepal. Journal of Agriculture and Environment, 12, pp.59-66.
Wasan, P.G. and Tripathi, G., 2014. Revisiting social marketing mix: a socio-cultural perspective. Journal of Services Research, 14(2), p.127.
Yayla, Z., 2013. Utilisation of clay in Nepal (part II). Ceramics Technical, (36), p.42.
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