Diesel Business Plan

[BUSINESS PLAN ASSIGNMENT]| | Creating your own brand jeans We are going to introduce a business where we with the help of recognized jeans brands all over the world will give ordinary people a chance of creating their own pair of jeans, but still maintaining the quality and the status that the specific brand maintain for their customers. We will basically be a jeans selling store but with a niche that we introduce our customers to â€Å"custom made† jeans instead of the regular ones. We will use the existing bran with its cut, bootleg and design but we will give our customers the opportunity to choose some of the details themselves. For people who for example want to have a wear on jeans which don’t have any wear from the original reseller we offer the possibility that at an expert level giving a pair of jeans the wear that the customer wants. Also we will be able to give the jeans another wash if the customer is interested in a light tone of the fabric but there isn’t any available from the Label/Brand/maker. If someone wants to have any other color or size on the main buttons we are able to provide that, if one wants any other kind of back pockets we are also able to provide that. Someone might want some additional motives or fabrics on their jeans. We will always try to be as flexible as possible and serve our clients in any way that we best can. Why work with Diesel We have chosen to work with the brand Diesel, because of many factors. We will work with an established brand that has a solid customer base here in Sweden. Regarding to the survey done by ISI Wissing, Diesel is the number 3 popular jeans brand in Sweden, also it qualifies for the 3rd place when it comes to customer satisfaction. When it comes to using the brand, regarding this survey, it ends on 4th place. And that for us shows that there are opportunities to take this even further. Also there is a mentality among younger people that they are attractive to the Diesel brand. One of the reasons why, are their outstanding and peculiar commercials. They try to show the brand as very attractive and cool and also with all their different products they want to make a valid point that Diesel is something else then all the other brands. It’s more attractive and aggressive and it’s there for the people who know what they want. One of their later commercial campaign are the â€Å"Be Stupid† commercial where they address their clothes and products to specific people that want to be something else. An example of their commercial is the following quotes: â€Å"Smart may have the brains, but stupid has the balls. †, â€Å"Stupid might fail. Smart doesn’t even try. †, â€Å"Smart may have the answers, but stupid has all the interesting questions†, â€Å"Smart has the plans, stupid has the stories†. So these are examples that they really try to have their own approach and make something amusing and attractive to their customer base. And we think this is one of the things that make Diesel stand out and be an attractive and popular brand to work with. (Willebrand, P, 2007), (Habitat. se, 2009) This type of product we offer is focused on a relatively young, between 18 and 35 years as a textile style, young, dynamic, unique and with character. Our target is to focus sales in a single product with its own identity, a trend and a reference in the textile market, developing products for a demanding consumer sector, where each product can be distinguished from the rest. This product is so expensive, it’s focused on one type of consumer with a high economic level, but that is why our service is striking, since it is an affordable way to get what the customer as to the characteristics mentioned, looking at the market. We don’t think that the segment with low paying jobs will be that particular interested in our business because we think it will be too much money for them to spend on clothes. So our business is rather directed to people who are at the average salary and more. Preferably we find this customer base in larger urban cities where there are enough to offer for people being interested in specific branding clothes. What we can see a connection to might be an independent employee or an entrepreneur that already are going their own path and following their own lifestyle, not bounded to any specific rules or dress code at their jobs. We also think that people with a specific identity can benefit from this of business venture, if you work at some place where you have a dress code that is suits or jackets for example, you are not able to wear your average blue jeans, but you still might be a jeans guy. We then offer the possibility to change the color on your jeans to make them look as much as suit pants as possible and so they not stand out and look really different and inappropriate from what expected. An attractive base product Our service is not unique since there are companies like Indicustom and Somconceptshop that gives the costumer the chance to customize their own jeans. But our service offers the customer a new feature in the market of customizing jeans. We want to use an â€Å"attractive† base product and let the customer personalize it. We looked at the other companies that were operating in the same market as us. We understood that we needed to concentrate on points of difference the benefits that set our product apart from the competition. Such points of differentiation are, in many cases, what consumers remember about a product. No one of the existing companies that we studied used brand/labeled jeans as the product that you could personalize. So we thought that if we use a well-known brand like Diesel as a base product that the customers could customize the way they personally want them to look but still have the quality that Diesel provides. It would unquestioningly set our product apart from the competition. About Diesel Diesel is an international brand, present on the clothing industry market in over 80 countries with 5500 points of sale, throughout all 5 continents. In terms of projected-in the population interested in buying clothes and brand accessories is more and more important that’s why the companies of the clothing industry have to offer varied products to boost their sells and their fame. The brand sells almost 3000 products from the basic pair of jeans, to the bags, belts and the house furniture. Diesel also owns 200 companies and having partnership with 100 local distributors, such as L’Oreal, Ford or Adidas. The main goal is to be everywhere geographically, in different strategic areas, expanding, in that way, their international presence. Concerning the sales and profits, the company realized a revenue of 1,2 billionsâ‚ ¬ en 2008, 80 millions in France. But even with these good results the revenue global of the group doesn’t really know a huge growth and on the contrary decrease of 3. 5% in 2009, whereas there was a rise of 3% in 2008. Then, even if the company has a healthy financial position as its campaigns, its results and its growth shows there is no extra revenue since 5 years. That’s why we decided to create this personalize service. (Pavarini, M, 2010) Tailored e-commerce in Sweden Tailored e-commerce is on the rise if you ask the CEO of Tailor store. He expects an annual growth of 30 percent because the distance trade is on the rise and growing faster than the regular store trade. Tailor Store had a sales report of 40 million last year and reported a profit of 5 million after net financial items. He thinks the reason of the success is because consumers have benefited greatly by including the ability to investigate and compare the products of a larger range of products and services that can be purchased at any time and from anywhere and a greater opportunity to get more customized products to satisfy personal needs. And e-commerce is getting popular in the whole of Sweden; 28 billion in turnover was from distance trade, e-commerce and mail order, in 2010. If you look at the numbers you can see that it has been a doubling in sales in the last five years and today it represents 4. percent of the total retail sales. (Melkersson, E, 2011) Competitors When we look at the biggest competitors it’s hard to say who will be the biggest competitor for our business. Obviously every brand will be a competitor since we will only work with Diesel, also other stores who sell Jeans will also be a competitor to us and in Sweden especially Brothers & Sisters, JC and H&M are big competitor s. Also companies who sell other brand that are big will be a competitor for us, such as resellers for Lee who is number one in Sweden and Levis which is number two. But if we focus specifically on our distinction from the other resellers, the custom made part, we think that companies like Tailor Store will be a big competitor for us. A company that already made themselves a name on the market of custom made clothes, even though they are not only limited to specific brands. If we look in to the sector with custom made clothes a lot of them are not resellers and dealing with bigger worldwide brands. It’s often some smaller brand which they import and give people the opportunity to make changes to. Here is where we have a problem identifying any specific company that are selling luxury brand jeans, designer jeans, with the opportunity for the customer to have the jeans custom made after their wishes. If we look at the jeans market here in Sweden it has suffered from a little fallback. About 15 million pair of jeans is sold in Sweden every year. And the competition from companies like H&M, Kappahl and Lindex are getting bigger at the cost of specialized jeans resellers revenue. (Willebrand, P, 2007), (Habitat. se, 2009) External Factors Affecting A Business There are a couple of external factors we are looking into when it comes to how they can affect our business: 1. GENERAL ECONOMIC AND INDUSTRY CONDITIONS Any general economic, business or industry conditions that cause customers or potential customers to reduce or delay their investments in the jeans industry could have a negative effect on the company's strength and profitability. Currently, the world economic conditions had a bad and considerable impact on every commercial fields of the society, and the jean’s industry couldn’t escape from that either. Trying to launch this custom made project can be profitable for us, of course, but with that we will also try to help in a way the Diesel company. 2. COMPETITION The jeans industry is highly competitive. The intense competition inherent in the industry could result in the loss of customers or pricing pressures. 3. LOCAL ACTIVITIES The company's future growth rates and success are in-part dependent on continued growth and success in local market at first, as we’ll try to open the custom made project worldwide after studying the results in Sweden. (Essays. cc, u. d. ). The Swedish economy emerged from the financial crisis as one of the strongest in Europe. A high-tech local economy and a comprehensive system of welfare benefits allow Sweden to enjoy one of the highest standards of living in the world. Sweden has one of the most globalized and competitive economies today. GDP is expected to increase by 4% in 2010 and by 3. 7% in 2011. The welfare has been able to be maintained because of the high tax levels, even if they recently have begun to decrease. Also, concerning government regulations, Sweden’s economic freedom score is 71. ; it appears that the overall regulatory and legal environment, transparent and efficient, encourages robust entrepreneurial activity. (Traveldocs. com, u. d. ). 4. SOCIAL FACTORS The profit margins realized by the company vary somewhat among its products and its customer business units. Like we said before this custom made opportunity that we are going to submit to Diesel is a product to a narrow customers base (1 8-35 years), and they maybe don’t have the possibility to pay this kind of services. That’s why we are trying to make an arrangement with a company like Diesel who stay affordable. . TECHNOLOGICAL CHANGES AND PRODUCT TRANSITIONS The jeans industry is characterized by continuing improvements in fashion and design which result in frequent introduction of new products, short product life cycles and continual improvement in product price/design characteristics. 6. INVENTORY MANAGEMENT/SUPPLIES The company's ability to manage its inventory has been enhanced by favorable supply conditions in the industry. The company's manufacturing process requires a high volume of quality components that are procured from third party suppliers. The six external factors highlighted in this paper are identified as primary factors in this industry (Essays. cc, u. d. ) Enterprise resource planning and organization First of all we have to have our wholesale to buy the jeans from, we obviously by our jeans from a supplier since it’s a specific brand that we will be using. We need a workstation where we do our tweaks on the jeans, since we will do the tailoring in-house and not outsourced. Meaning we will have a department changing buttons, sawing on new pockets on the back of the jeans, wearing them and washing them. We will buy the raw jeans models from Diesel and all the tailoring we do will be done in-house. This way we get a overview over the whole process and we will be able to overlook it and see what works and what does not to be able to make changes and develop our working process and expand. In long term we possibly would like our tailoring to be outsourced as well but then we have to get a lot of bigger volumes and sales. Our company needs to be of a local medium proportion, after asking prices we have chosen an office in the center of Linkoping, over 90m2 warehouse 100m2. The rental price â‚ ¬ 1000 per month. Costs of production / initiation of the company: Machines and Computer products| Manufacturer| Units| Euros| Sewing Machine| | 2| 1000| Washing machine| | 1| 1000| Mac Pro| Apple| 1| 1200| Jet color laser multifunctional printer | Hp| 2| 750| Textil Studio 8| Macromedia| 1| 480| Quark Xpress 6. 1 Passport Diseno| Quark| 1| 2. 200| Norton Internet Security 2007 Antivirus | Symantec| 1| 60| | Total| 6. 990| Furniture Product| manufacturer| Units| Euros| Computer table ERISTER| IKEA| 4| 520| Chair STEFANO| IKEA| 4| 320| shelf FJUS| IKEA| 4| 400| Chairs| IKEA| 4| 80| filings| IKEA| 4| 180| Ceiling fluorescent bars| IKEA| 6| 180| | Total| 1. 680| Total computer equipment and furniture company| Computer equipment| 6. 990| Furniture company| 1. 680| | Total| 8. 670| Telephone rental and adsl| Local callsADSL Internet 10MG | 40Per month| Production process of our company First Phase In the first instance, we take care of developing the product design, according to the specifications and style that the customer provided to us. We need the measurements of the client to make the program design Textile Studio 8. Second Phase Then perform the design by computer program, the design is sent to our textile machinery in the warehouse where the design is recreated in the pants, is embroidered, sewn and glued, additional accessories or tweaks that you must do the product. Third Phase. In third phase, the products pass an exhaustive examination of tissue and finishes, in order to verify that the product is done with the selected design and has no damage. Distribution Our field is nationwide, with an eye to expanding our international infrastructure over the medium term. As our company turnover grow fence on the market performance will be broader. The distribution is provided by our company is an outsourced process by which we have a freight agreement with the company MRW light which provides an optimum distribution at a reasonable price, short and medium term by increasing our relationships grow if our trade with other countries. The cost of distribution affects the final price, so that the customer pays, revenue is recorded in the product itself. Marketing (advertising) In the field of marketing, the company will open a website with a catalog of examples, price list, contact, and an application through which you can perform orders. We have thought hiring advertising space in newspapers to national newspapers, the expenses are high, we will follow up weekly to see the number of people responding to advertising, if it is positive we will find these services. Also we will do advertising in social networks, starting a group of our company, our website advertising, adding to people that this profile for potential buyers to our profile social. So as included in online media websites such as www. undoanuncio. com. Regarding marketing we will also try to use SEO(Search engine optimization) as much as possible to get more hits when our possible customer base browse the web and search for companies that does custom made clothes. Implementation Plan We need to contact Diesel / a Wholesale to be able to secure our purchases of the Jeans. We need to establish a workplace where we change the Jeans into the customer’s wishes. Since our main sales channel will be via the internet we need to establish a homepage with the possibility to tailor your jeans and also a web store on the homepage so our customers can buy the jeans they want. We have to get some it-system that will be able to trace our orders and the specific changes the customer wants so we can make them and then ship them out to our customer. Activity| COMPLETED OR UNDERTAKEN in RELEVANT Quarter OF 2011-12| Development| | Finding investor interested in investing in the business. | 2011 – Q1| Attaining the site for thebusiness and making any needed physical developments| 2011Q1- Q2| Proof-of-concept development. Need to develop a prototype for the investors to see. | 2011Q1- Q4| Marketing| | Choose our target market, the group of customers we want to target| 2011 – Q3| Plan how to reach and address your customers, with specific measures coveringproduct design, pricing, distribution and communication| 2011 Q3 – Q4| Promote the service to potential investors and buyers. | 2011 – Q42012 – Q2| Management| | Recruit personal for the development of the service. | 2011Q1- Q4| Training of personnel| 2011Q1 – Q3| Forming a team| 2011 – Q32012 – Q2| Financial plan First of all our initial cost for our company is the cost for starting it up and register it as a incorporated company and for that cost we calculate 7  000 euro. Next up is our warehouse and office with its equipment needed. For the first month we need the capital for investing in our equipment that we estimate to 8  700 euro. After that we will have cost for our rent and staff, also for our purchases and a onetime fee to our web developer and a cost for every time we need to update our website. We estimate that the web developers onetime charge would be about 10  000 euro. Our rent will be 1  000 euro with a down payment for 3 months. Also we have a OTC for the officer and warehouse for 500 euro. That would mean that our total initial cost would be 29  200 â‚ ¬ and we count with a big miscalculation so we would say 30  000 â‚ ¬ as initial cost. Our monthly cost will be: Rent : 1000 â‚ ¬Telecome: 40 â‚ ¬Salary: 3000â‚ ¬ for 1. 5 fulltime employee Utilities: 500 â‚ ¬Distribution: 500 â‚ ¬Raw Material: 50â‚ ¬/jeans +5-15â‚ ¬depending on what customer choos to add to the jeans Promotion : 2000 â‚ ¬Other expenses: 400 â‚ ¬ That would be a total of 7  500 â‚ ¬ in monthly expenses but also a additional part depending on how many jeans we manufacture Sales forecast: We think that we can start with selling 75 pair of jeans the first month, meaning 2,5 jeans per day. And then we count with an increase of 10 % per month. Our price range on the jeans will be 120 – 200 â‚ ¬ and we have counted with an average price on 140 â‚ ¬ per pair of jeans We count with an increase in sales as soon as our website is up and running and getting some regular visitors and that they spread the word. Also it will take some time for our promotion and marketing to get effective What we would like to offer our investors are 20% of the shares in our company for the price of 15  000 â‚ ¬, the rest we would make up as a loan from the bank with a low mortgage and try to pay only the interest. Bibliography Melkersson, Erik (01-04-2011). Skraddarsydd e-handel pa frammarsch, www. hd. se. Avaible at: http://hd. se/ekonomi/2011/04/02/skraddarsydd-e-handel-pa/ [13-10-2011] Willebrand, Peter (16-08-2007). Jeansjattarna haller greppet om svenskarna, www. resume. se. Avaible at: http://www. resume. se/nyheter/2007/08/16/jeansjattarna-haller-grepp/index. xml [10-10-2011] Habit. se (17-12-2009). Jeansmarknaden tappar fart, Habit. se. Avaible at: http://www. habit. se/iuware. aspx? pageid=1780&ssoid=112504[12-10-2011] Pavarini, Maria (07-05-2010). DIESEL NAMES NEW CEO, RESTRUCTURES ONLY THE BRAVE, www. sportswearnet. com. 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