The Big Picture of Dúji? Creations

Vision

To offer products that best fulfills the social needs of customers.

Mission

To introduce handicraft items that spread happiness, are unique and affordable.

Aims/Objectives

Our business aims to target youngsters to indulge a feeling of love for arts and crafts in them. Through our products we want to remove the depression and hatred from society as we are targeting the physiological need of people which is the need to be social. 

The Business of Dúji? Creations

Overview of the Chinese Handicraft Industry

According to Ernst and Young (2012), handicrafts are usually liked and made almost in all countries. These are ways to develop and maintain the heritage of a culture. Usually, craftsman and artisans use handicrafts to express the unique heritage of culture to the whole world. Asian countries are famous for having a rich cultural heritage. Therefore, crafting activities are more common in Asian countries because of high demand. These countries do not only produce for domestic customers, but for international customers as well. Now, this industry is playing a significant role in the development of Chinese economy. The involvement of rural women has proved quite successful in this industry. China is one of the major exporters of crafting items and is handmade crafts are famous all over the world. The most famous crafts of China are Bronze Craft, Jade Art, Ceramic Pottery, and Ancient Fine Embroidery, Silk Figurines, Sculpture and craving, lacquer art and glass ware. China is exporting all these crafts all over the world. A segment wise description can be found in the appendix [Exhibit 1].

Overview of the Business

Dúji? Creations is an online business of crafting items where novelty and affordability goes parallel. We at Dúji? Creations create memories through our innovative ideas and unique themes. It is a business of handmade cards and crafted items which includes wall hangings, goblets, handmade accessories, decorated baskets, favor boxes, etc. All the handmade stuff is unique in their design as each of the pieces is innovative. Some of our handmade stuff uses up recycle material up to which we gather from the scrap available at home or at local shops at very low cost. For the upcoming years we will be training different women with different crafting projects and techniques so they can earn up their living.

Value Addition Model for Dúji? Creations

The most important aim for all businesses is to add value to business and offer the greatest value to end customers. Dúji? Creations also aims to do so. To add value, following steps will be followed:

1. First of all, we have to identify the target market
2. Make a proper business plan
3. Introduce products in limited quantity and conduct a pilot study to test the acceptance of products. If products are acceptable then introduce them properly
4. Upgrade the technology and operations effectively
5. Hire those people who have desired skills, to train and develop the workforce and compensate them with appropriate rewards. In short, effectively manage the human resource of enterprise
6. Ensure cost effectiveness in production and establish standards of quality either through the bench marking, or the six sigma
7. Set the appropriate pricing strategy for newly launched products
8. Develop distribution channels that are cost effective and fast
9. Target national plus international customers.

My business will follow these points for starting my entrepreneurial challenge to ensure maximum value addition.

The Product

We provide solutions for the social need of people by providing them with customized and theme based crafted stuff. We offer them with handmade cards, decorated baskets, bangles, jewellery, gifts and favor boxes, wall hangings etc. Product line of our business is given in exhibit 2 in appendix. Our products are reasonable and high quality products which are offered online and can easily be purchased. We offer door to door delivery service which increases the convenience for customers and save their time. Our products are the most reasonably priced and Dúji? ones which just start from the price of $2.

Current and potential customers

Our current customers are the young generation of China, who are Facebook/Internet users belonging to the age group of 16-30 years and the upper and middle social class. Event/wedding planners, retailer e.g. local stationary shops, gift shops and bakers are also our current customers. Our potential customers are children of the age group 5-14 years. In the future, we can introduce crafts for kids, e.g. handmade greeting cards with cartoon themes.

Go to market strategy

We will use both direct and indirect selling market strategy. We sell directly to our customers through our Facebook page/Website. We deliver everything at customers’ doorstep by using currier service of FedEx We will also sell through intermediaries. We have contacted many retailers, wedding planers and bakers. In the next few months, we will start selling through these intermediaries.

Model 1:

 

Customers

Dúji? Creations

                                                                        Internet

 

 

 

Customers

Dúji? Creations

Retailers

Model 2:

 

                                                                       

 

Evaluation of the Chosen Product

As with the current times people are more interested in handmade crafts and an inclination in the demand of hand crafted products are seen, our products are up to trend that absorbs the desires of customers. Our handmade items serve the purpose of the revival of the trend of greetings to loved ones via cards, and unique gifts which stays special forever.  People have love for handmade stuff and they need them to be affordable, our products are unique as well as affordable. Human beings always tend to look for such products that fulfill their social needs. There is a gap as not many products are available that satisfy the need of being social. We aim to satisfy and fulfill this social need.

Operations

The production of crafting items will be done by trained staff. We will hire those employees who are specialized in making of crafting items. This business will be based on very few machines. Only few machines will be needed and all members will be given training for that.

1. Automatic cutters and Scissors
2. Machineries of crafting
3. Quelling Machines
4. Punches

Opportunity Size

Our business has a vast opportunity. We target upper class as well as middle class. Core customers of our business are youth of these classes. The Young generation comprises of 33% of total population. Internet users also includes in our opportunity size. China is ranked the number one in terms of internet usage. According to U.S. Census Bureau (2012), there is 42.3% penetration of the internet in China. Thus, this business has a vast opportunity size.

Our target market includes internet users of China between the ages of 16-30 Years. We are reaching to our customers through our Facebook page (www.facebook.com/Dúji?Creations) and Website (www.Dúji?creations.com). Our other target customers include Wedding and Event Planners, Interior Designers, Retail outlets and Bakeries. We can sell our crafts to these businesses for B2B commerce.

Growth Plan

The company aims to follow the product development strategy for Growth. In the near future, Dúji? Creations will introduce a new range of products for the Chinese Market.

 

 

 

 

 

 

 

 

 

Exit Strategy

Our exit strategy will be to sell our business or to merge it with another company. We would like to sell it due to the fact it currently is earring profits and merging will also be an alternative plan as we can enhance our business by merging with some international business

Market Appreciation

PEST Analysis

Political Factors

According to Tian (2007), China has a communist system for governing the economy. The government of China is in position to take all actions to control the whole economy. As the government plays the lead role in China, therefore, our business must have to be prepared from  a different kind of sanctions from the government. On the other hand, the government’ role can also be proved beneficial for us the Chinese government keeps taking initiatives for promoting export of crafts through easy terms and conditions, tax reductions and subsidies. Overall, The Chinese political system is quite stable so our business will not face any harm from instability of the political system. The taxation system of China is quite strict. Detail of economic data is provided in the appendix [Exhibit 3]. 

Economic Factors

According to Tian (2007), the freedom score of economy decides the overall condition of a country. China has the economic freedom score of 51.0 [Exhibit 4]. The other economic indicators of China are:

 

When compared with the world economy, the freedom of China is quite favorable.

 

The disposable income of Chinese is high, so they can spend money on handicrafts.

Social Factors

According to Tian (2007), social factors are also favorable in the China market. There are many ethnic groups that are living in China. Most of the people are atheists and there exist very few Muslims as well. The literacy rate is also very high so awareness can be created easily.

Technological Factors

China is very high in terms of adoption of technological advancements. Even though, our business is not technology intensive, but technology availability is good for research and development in our business. In the future, we can think about producing products in a more effective way (Tian, 2007).

SWOT Analysis of Dúji? Creations

Strengths       

• Market of China is very large and there is a huge potential for handicrafts.
• Acceptance for a wide range of crafting items exists in China due to the diversified culture.
• The retail infrastructure is strong and supportive.
• Online shopping is also possible as there are many internet users in China
• Cheap labor is available for making crafting products for Dúji? Creations.
• This business does not need heavy investment as it is low capital intensive business.
• Flexible production is possible.
• There are very few barriers of entry for new businesses in crafting industry
• Production centres can be developed very easily.
• Business can be started with micro-investment.
• This will provide employment opportunity to many unemployed people.
• It can become a source of foreign revenue.
• Customized orders facility

Weaknesses

• As Dúji? creations is just entering into market, there might be problems of lack of infrastructure or communication
• We are introducing different and unique crafts, so there might be fewer acceptances
• Problems might occur because of less coordination in government entities and small enterprises. Our target market is young people. we would be first to target only young people and they might show less interest
• lack of creative and skilled labor

Opportunities

• We can become a born global enterprise and start taking orders from all over the world
• Fashion industry is also developing and we can enter in that market in near future as we can have a strategic fit in our strategic business units consisting of crafting items and fashion
• We can develop our own retail stores. We can do forward and backward integration

Threats

• There is a high threat from existing competition of Chinese market
• Developed Research and development departments of existing handicraft companies
• Friendly terms and agreements by the government for competitors

Competitor Analysis

Our competition is with all those domestic and Chinese companies that are offering handicrafts. There are many companies that are offering handicrafts, so we are going to face a tough competition in market.

Competitive Advantage of Dúji? Creations

As Dúji? Creations is facing competition of high intensity, it is important to differentiate its products in order to achieve competitive advantage. Dúji? Creations will achieve competitive advantage by following two strategies, namely differentiation and overall cost leadership.  It offers all crafts that are not very common in Chinese Market. These all are unique and different. Along with this, we will introduce products on a very reasonable cost. Thus, we will gain advantage over competitors with differentiation and cost leadership.

 

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Economic Benefit:

Our customer gets the cost reduction by 20-30% for the products they buy, retailers can get their profit increased by 15-20% and event planners can double their profits by reducing their cost to half.

Business Model:

We will make money through our business. We will use internet marketing, telemarketing and conventional marketing strategies to promote our business. In internet marketing, we will write blogs (Dúji? Creations on Blogger) and the article to get the top ranking on Google. We will use the technique of ad posting on different websites. Email marketing would be best way to attract our customers so we will get email id of our target population and will invite them on our Facebook page. Giveaways on Facebook page are a quite effective technique. We will use this technique for attracting potential customers. By sending messages and calling to our target customers, we will let them know about our business. We will maintain the data base of our customers. We can market our new products by using that data base. We are going to post posters in all universities of China. We will distribute Brochures and flyers in Shopping Malls, Parks, outside college and in other general public places of China.

The Physical Resources

Location:

Dúji? Creations will be located at Beijing. It will have its office consisting of one room and production area consisting of three rooms. Dúji? Creations will not purchase and building or office, but in the start it will take office building on rent.

Current Assets

• Automatic cutters and Scissors
• Machineries of crafting
• Quelling Machines
• Punches
• Computer/Laptop
• Website

Expenses

• Salary
• Rent of office and production area
• Marketing expense
• Energy

Financials

We need funding for purchasing fixed assets i.e. crafting machines, laptop, Website, registered the name of  business, patents, and Google-top ranking. We need additional funding for purchasing direct material, supplies, transport expense, electricity, internet connection, telephone, salaries, rent, and for marketing of our business.

A table of Projections in shown in following exhibit:

	Year 1 (In dollars)	Year2 (In dollars)	Year3 (In dollars)
Revenue	1,500,000	2,000,000	2,000,000
Expenses	654,000	800,000	750,000
Gross Profit	846,000	1,200,000	1,250,000
Net Profit	710,640	1,008,000	1,050,000
Initial Investment	1,000,000	1,000,000	750,000
Profit (%)	71%	100%	140%
ROR	-28%	8%	40%

Human Resource

Staff Requirement

 

 

Dúji? Creations will have 11 people in the start. I will be head of the Dúji? Creations. I am head of this business because I have extensive experience in this field. There will be a crafting expert and he/she will be leading seven workers. The crafting expert will train these workers to produce unique crafts that are good in quality and low in cost. Later on, these workers will be converted into leaders and Dúji? Creations will hire more workers to produce more handicrafts. There will be one manager who will directly report to the head of Dúji? Creations. This manager will have to handle all administrative tasks, including marketing, finance and accounts and human resource management. He/she will be provided with an assistant manager who will assist him/her in all administrative and managerial tasks.

The Use of professional Services

In the start, our business does not need any professional service. But in near future, we will be taking services of professional trainers who will train our staff for producing creative, unique and cost effective handicrafts.

Future Milestones

Our target for next few years is to design and create stuff to bring smiles, to be officially registered Company, the official retailer for scrap-booking material, and to capture 15% market share in China, to expand our business to UK and USA and to increase our revenue by 100% by March 2015.

Risks and Mitigation Strategies

At first, we will start selling through facebook and website. The key risk is that if online shopping does not prove successful for our products. There is a possibility that customers will not be able to purchase through website because crafting items does not look same in pictures and its quality and uniqueness cannot be judged from website pictures only.  To deal with this risk, we will sell through intermediaries so that we can easily retain our customer through our retailers.

 

 

References

U.S. Census Bureau, 2012. Calculated using penetration rate and population data from "Countries and Areas Ranked by Population: 2012". Population data, International Programs [Accessed on 5th May, 2014].

Ernst & Young, 2012. Competitive study on Handicrafts Sector in China. [Online]. Available at: http://www.epch.in/ChinaStudy/Report.pdf. [Accessed on 5th May, 2014].

 

Tian, X., 2007. Managing International Business in China, South Western: Cengage Learning

 

 

Appendices

Segment Wise Distribution of Crafts Export

Exhibit 1:

 

Products Line of Dúji? Creations

Exhibit 2

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Exhibit 3: Economic Data of China

 

Exhibit 4: Economic Freedom Score of China