Plastic Furniture Industry Due to the very low consumption as compared to developed countries and even in India, a large

gap is to be filled by introducing new and cost effective products. Customers with low purchasing power dont have any option other than plastic furniture. Middle and lower classes in Pakistan is major buyer and these classes are 65% of total population. Also there are very few players in this business. The business of Molded Furniture has marked its place in the country through growth during the last ten years. This growth has opened up new opportunities. The prime reason for this is awareness about the product. Along with that, companies are offering conditional warranty of plastic chairs minimizing risk of customer. Molded Furniture is basically produces in developed countries to be used as Lawn Furniture and outdoor restaurants. As trends are from developed countries, it was introduced in Pakistan around 1984-1985 by a Karachi based firm. Then a factory was installed in Gujranwala and then with the passage of time now there are some main 7 units producing plastic chairs, tables, baby products, etc day and nights. Due to low purchasing power people in Pakistan found this product cheap, associated with warranty covering the risk of consumers. Customer bank is increasing day by day with the penetration of companies, by introducing new and economical models, variety of colors, exports to Afghanistan, etc. International Trade: In 2007 the trade value of plastic furniture in 2007 is $149,613 exports and $219,410 imports. In 2008 it was increased and trade value of plastic furniture was $555,519 exports and $253,114 imports. It is clear that in 2007 the imports are more than exports but in 2008 exports are twice to imports. (Exhibit 1) The Government of Pakistan has offering Rs.3.5 per kg rebate on exports. However Government has offered D.T.R.E. (duties and taxes remission exemption) for the

Materials to be imported for export purpose only. Plastic furniture includes, All Model Chairs, All Model Tables, Baby Swings, Shoe Racks, Stool. (Exhibit 2) The main raw material of molded furniture is plastic. Pre feasibility report of moulde furniture (SMEDA) Plastic: A plastic is a type of synthetic or man-made polymer; similar in many ways to natural resins found in trees and other plants. Webster's Dictionary defines polymers as: any of various complex organic compounds produced by polymerization, capable of being molded, extruded, cast into various shapes and films, or drawn into filaments and then used as textile fibers.

Plastics are used because they are: Attractive Hard Soft & Rubbery Easy to Clean Flexible Good insulators of heat or electricity Light weight Hygienic Easy to Shape & Color Economical Apart from some of the properties of plastics mentioned above, one important feature of plastic is that it is a non-rusting material, which makes it a very usable commodity especially in coastal areas where there is a lot of humidity. As stated earlier, the use of plastics is increasing all the time as they replace materials

such as metal, wood, paper, ceramics and glass in a wide variety of uses. More over the overall demand and local supply gap that prevails in the market remains largely unmet which also provides opportunities for entering in to this business Market Overview The per capita consumption of plastic in Pakistan was 3.1 kilograms, while this was 3.3 kg in India and 7 kg in China. The highest per capita consumption of plastic was in United States and Germany, where per capita consumption was 120 kg per annum. Globally, the per capita plastic consumption worked out to be around 24 kg per annum. The consumption of plastic was less in Pakistan as the local industries were not developing as rapidly as they were growing in the other parts of the world. Market Players There were some 6,000 plastic products manufacturers in the country and 600,000 people were directly and indirectly engaged with this business. The plastic industry fall in cottage industry and there were some manufacturers, who were medium-sized industries. (Exhibit 3) Consumption & Imports Pakistan used to import 80-90 percent raw material for plastic making from different countries. The total consumption of raw material used in the plastic industry in the country was around 450,000 tonnes. The country imported 70 percent raw material from UAE and Far Eastern countries. The special grade raw material was imported from Germany and USA, which was 20 percent of total raw material consumption. India was also a major producer of plastics raw material. The total consumption of plastic raw material in India was two million tones annually. The prices of raw material of plastic industry depend on international scenario. During Iraq war, the prices shot up by 70 percent. The raw material of plastic industry is a byproduct of crude oil. The prices are directly related to crude oil prices as the raw material is made from Naphtha, which is a by-product of crude oil.

Moreover, the recent penetration of cheap Chinese products into Pakistan had made the competitive situation in the local plastic industry very intense. Local manufacturers had to import raw material which is a substantive cost of their total produce while Chinese products offering a large variety at affordable rates had made survival difficult for the local industry. Diagnostic study of plastic (SMEDA Pakistan) Introduction of Plastic Furniture Plastic furniture is made with poly propylene (Plastic Dana) that is currently not manufacturing in Pakistan. It is imported from Turkey, Korea, Saudi Arabia, Thailand, Hong Kong, Australia, china. It also made with recyclable material because plastic is 100% recyclable material. Plastic scrap recycling had developed into an industry in Pakistan. About 400 units were engaged in recycling of plastic scrap in Punjab. The sources for collection of scrap were house hold waste of broken unusable plastic items, Industrial plastic waste, plastic cans, container, etc., hospital waste such as disposables syringes, canolas, etc. Plastic is shaped in furniture through molding machines. Molding machines melt and inject plastic in moulds and required plastic furniture is made. Manufacturing Process: The following steps are included in the manufacturing process. 1) Initially mixing of color with plastic Resin. 2) Input the material into the injection molding the machine. 3) Receive chairs and parts of table as output. 4) Assembling and packing. (Exhibit no. 4)

Companys History/Introduction Boss: The company was invented in 1991, and has been working to produce high quality moulded furniture, plastic steel furniture, households. The brand name of Pakson Industries in Pakistan is BOSS. Over the years BOSS has earned great respect in markets all over the country. The company strictly abides by the sovereignty, keeping the honesty as its priority. It has the clear goal which states, a complete well coordinated moulded furniture, plastic steel furniture & households etc. The statement clearly shows that the company keeps it employees motivated towards providing high quality products. Pakson International Plastic Industry (BOSS) services, policies of competitive prices, strict quality control and regular delivery are the cause of its success. (BOSS official website) Sonica: Sonica Plastic industries started its business in 1978 by manufacturing spare parts of Plastic washing machices on a small scale under the supervision of Muhammad Munawar. But continuously and gradually this small unit started manufacturing of Plastic Furniture on a large scale in 2009.Sonica Plastic Industries has its own automatic machinery. this is all achieved by sharing committed management and experienced employees. Sonica Plastic Industries is now become a prominentname in Plastic Furniture industry in Pakistan. Sonica Plastic Industries satisfying hundred of million customer all over Pakistan and abroad too. (Sonica official website) Citizen:

Citizen established in 1987, produces high class furniture both in plastic and steel materials. Haji Bashir Ullah (Late) was the founder of the company. He started production on a small scale. Today citizen is recognized as one of the biggest plastic and steel plastic furniture manufacturers in Pakistan. Through continuous improvement & innovation, has tremendously developed to become well reputed for its advanced technology, fine product quality and excellent after sale service, with more than 100 sale networks all over the Pakistan. Precision machining and strict quality control at all stages of production to meet exacting requirements of this modern world in the hallmark of citizen. (Citizen official website)

TOYO: After citizen the first mover, TOYO enter in to this industry. Two partners Mr. Azam and Mr. Iftikhar introduce TOYO plastic industries than in 1991 one partner made separate firm with the name of BOSS. Environmental Analysis In Pakistan CITIZEN firstly introduce plastic furniture, they start with steel plastic in 1987. Steel plastic mean plastic chair with steel foot. Than TOYO enter in to this industry. Two partners Mr. Azam and Mr. Iftikhar introduce TOYO plastic industries than in 1991 one partner made separate firm with the name of BOSS. BOSS firstly highlights the plastic furniture industry in Pakistan. Now TOYO is in stage of recession in plastic furniture. A good development made in this industry in near past because of need and demand of people for plastic furniture and recent trend of plastic furniture in Pakistan. Dilawar Hasan Shah(General manager sonica)

PEST Analysis

POLITICAL, GOVERNMENTAL, & LEGAL FACTORS 1. Exporters and importers of Pakistan are facing problems to get visa from the foreign embassies due to security issues. 2. Establishment of EIS (Export Investment Support) for the purpose of research and development centers. 3. Government is charging heavy duty on raw materials. 4. Government is not providing any subsidy to the plastic furniture industry. 5. High prices of petroleum are also affecting the prices of finished goods. 6. There is no or very short relief on the import of polypropylene. 7. Companies are paying heavy import duty on raw materials due to which per unit cost is increasing. 8. The duties on the import of polypropylene need to be further reduced.

SOCIAL, CULTURAL, & OTHER FACTORS 1. Buyers are quality conscious, so to meet standards of the buyers, manufacturers must maintain high quality in moderate rates which is a big task. 2. Firms in Gujranwala are running by family ownership because of lack of trust on the others. 3. All plastic furniture companies are importing their raw material from different countries due to which they are increasing prices of their products. 4. Plastic furniture manufacturing sector in Pakistan rising due to shifting of the people towards plastic furniture.

TECHNOLOGICAL FACTORS 1. Lack of skilled labor is another problem faced by the firms existing in plastic furniture industry in Gujranwala. 2. Labor in plastic furniture industry is not mostly familiar with the usage of machinery. 3. The machinery is mostly imported which can be technologically inferior as compare to international market. 4. G ov ern me n t d ep art me n ts. is not f ocusin g on re sea rch and d evelop me n t

ECONOMIC FACTORS 1. Introduction of VAT (Value Added Tax) and new governmental policies are also affecting. 2. The rising in the utilities cost such as electricity, telephone, gas etc. increased the cost of production. 3. The rise in the services charges and interest rates on loans of the Banks is also a drawback to the growth of plastic furniture industry. 4. High rates on the export re-finance also drawback for the plastic furniture industry. 5. Fluctuation in foreign exchange rates also affects the prices of raw material. Mr. Abdul Rehman(General manager BOSS)

SWOT Analysis of BOSS

Strength: y y y Good Brand Image. Pioneer in Plastic chairs. Cover almost 60% of the total sale of plastic chairs in Pakistan.

Manufacture huge range of plastic products as never other company manufacture.

y y y y y

Quality Products based on the best available raw materials. A wide range of plastic chairs (main product) and other products. Strong financial position due to strong background of the CEO. Qualified and skilled labor in the region. Adoption of new technology

Weaknesses: y y y y Weak corporate culture (lack of communication among the departments). Employees are under stress by the management. Non participative management. Lack of fully functional and authorized HR department

Opportunities: y y y Large domestic markets (lack of customers for Chinese products). Company has good market image so they can add new product lines Increasing trend of plastic furniture

Threats: y Low price competitors are the main threats for the company. (Toyo, Citizen and other local firms) y Threats from Chinese market due to low price products of same range.

SWOT Analysis of Sonica Strengths: y Good Relationship with customers

y y y y y y y

New technology introduce A wide range of plastic furniture Skilled labor Provide cheaper products to its customers Increasing Preference of Plastic furniture Good communication among the departments Personal relationing with distributors

Weaknesses: y y y Lack of Research & Development efforts. Lack of vision / Planning Not getting benefits from support institutions

Opportunities: y Increasing Preference of Plastic furniture 65% middle income group of whole population y Competitive rates

Threats: y increasing prices of raw material

Porters five forces model

Competitor Analysis In Pakistan main players of this industry are; 1st Boss 2nd Sonica 3rd Citizen

The other firms are TOYO, VENUS, UNIQUE, TIGER, PHATA, PARADISE etc also working in the industry in Pakistan. In the view of international basis, India is a big name in plastic furniture industry and then China and other countries. The main competitors are BOSS, SONICA and CITIZEN. The BOSS and SONICA are the main two big size companies; they have new and famous mold machines and totally new plants but the other local firms use old and second hand plants. The BOSSs market share is about 30% in the industry in this way BOSS is the market leader of the industry. Than SONICA has 10-15 share and other share is acquired by the other firms. SONICA consider BOSS as his competitor and they are growing in the industry. There is a high competition in the industry and competition affect the prices and consumer mind because consumers always in search of good quality, reliability, availability and affordable prices. The BOSS plays in the industry for about 17-18 years and they are highly penetrated in the market. Now BOSS is the market leader of plastic furniture industry in Pakistan, they are in the industry for about 17-18 years and are highly penetrated in the market. They use high advertisement in print media, TV ads, sign boards, the main advantage is that they are old player and they create a good will in the market and consumer minds. The main strategy used by BOSS is high advertisement and BOSS in the first company who highlights the plastic furniture industry in true sense. Boss increasing there size day by day from 2009 to 2010 they expand their outlets from 15 to 24. (Exhibit 5). Mr. Dilawar hasan Shah(General manager sonica) Reason of Success of Sonica: Sonica group of industries started plasted furniture buseness in 2009 and in a very short time they made 10 to 15 percent share in the market. The main reason of there success is that, they hire old bosss employees who have a great relationing in market and distributor dealers. 1st time they sell there products to the dealers on the basis of bosss employees to the dealers. The old employees of boss have great experience of market

in this way they speedy penetrate in market. The general manager of sonica group of industries, Mr. dilawar Hasan Shah was also the general manager of boss and give their services in boss for 10 year, he has a great experience of plastic furniture. Sonica hire all experienced and well reputed employees from boss and it is the success of sonica. Mr. Umair Javed (Area sales manager, sonica) Advantages and Limitations of Industry The material used in plastic furniture is totally recyclable and easily available, this is the main advantage for this industry and many local suppliers are available, skilled labor is also easily available. When we talk about consumer benefit to this industry, there is less space houses, low purchasing power and inflation people want economical products and plastic furniture is economical and its use is everywhere such as in houses, classes, colleges, public places, gardens etc, so the demand for plastic furniture is increasing. The limitation of the industry is electricity shortage and no government support. There are mold machines which run best on electricity, electricity provide specific temperature to the electric heater in molding machines, in the shortage of electricity, the molding machines run on gas and gas does not provide accurate temperature in result low efficiency production. Another limitation is that there is no manufacturing of POLY PROPLEEEN (which is the main raw material) in Pakistan and it import from other countries such as Turkey, Korea, Saudi Arabia, and government does not provide any subsidy in import of raw material. The main buyers of plastic furniture are middle income and above middle income people who want economical prices and also there is a great demand of plastic furniture. The cities in which high sale of plastic furniture are Rawalpindi, Karachi, Multan, Murry and south Punjab region. There are many small local suppliers available to this industry and they provide material at reasonable prices, there is no problem of suppliers, raw material also import from other countries. Also suppliers available those are provide recyclable plastic material that is used in production.

Problems of Industry: The main problems are electricity crises, high import taxes and no support of government. The alternatives available are generators and power plants but they consumed so much fuel in result the manufacturing cost is high and alternative of imports are use of local raw material and use of recyclable material. The days of huge electricity load shedding the industry become totally close and no working will b made. High prices of petroleum also increase plastic prices because plastic is a petroleum product. Interview with Sonica general manager Consumer Analysis Consumer analysis describe about the consumer point of view about the industry and about market players. Consumers buy plastic furniture because of economical prices, require less space it mean plastic chairs are pack with each other and it also easy to move because of light weight and better quality. The research describe that 60% consumers prefer plastic furniture because it is easy to move and light weight. (Exhibit 6) When we ask to the consumers that which companys plastic furniture you want to buy than more than 40% consumer prefer to BOSS it describe the positioning of firms. (Exhibit 7) Plastic furniture capture the market of other furnitures such as wood and iron furniture. (Exhibit 8, 9) Consumers feel that it is a profitable industry when we ask them would you invest in plastic furniture business, more than 50% people agree. (Exhibit 10) Brand loyality is very important for a firm loyal consumers are na switch to other brand when prices are increase. (Exhibit 11)

Exhibit no. 1 Exports of Pakistan 2007 Countries World Afghanistan United Arab Emirates Seychellies Canada
160,000 140,000 120,000 100,000 80,000 60,000 40,000 20,000 0

Trade value $ 149,613 143,316 5,992 168 136

Quantity (kgs) 35,406 33,916 1,418 40 32

World Afghanistan United Arab Emirates Seychellies Canada

Exports of Pakistan 2008 Countries World Afghanistan UAE Mauritius Trade value $ 555,519 372,493 109,350 65,885 Quantity (kgs) 127,838 85,719 25,164 14,931

UK Switzerland 600,000 500,000 400,000 300,000 200,000 100,000 0

3,682 1,385

847 319

Exhibit no. 2

World Afghanistan UAE Mauritius UK Switzerland

600,000 500,000
World

400,000 300,000 200,000 100,000 Exhibit no. 3 0

Afghanistan UAE Mauritius UK Switzerland

Exhibit no. 4

Exhibit no 5
Date sales December 2008 5647000 January 2009 5805000 February 2009 5420000 Mar-09 5525000 Apr-09 4800000 May-09 4850000 Jun-09 4600000 Jul-09 4650000 Aug-09 4450000 Sep-09 4800000 Oct-09 5200000 Nov-09 5500000 Dec-09 5920000 January 2010 6200000 Feb-10 6000000 Mar-10 5800000 Apr-10 5500000 May-10 5200000 Jun-10 4900000 Jul-10 5100000 Aug-10 4950000 Sep-10 5500000 Oct-10 6000000 Nov-10 6600000 Dec-10 7000000 No. Of outlets 15 15 14 14 14 15 15 15 15 16 19 19 19 18 19 20 20 19 19 19 20 20 22 23 24 sale staff incentive 15000 15000 10000 10000 8000 8000 8000 8000 8000 10000 15000 15000 18000 18000 18000 16000 16000 10000 8000 10000 10000 18000 20000 20000 25000 advertising 705000 650000 625000 325000 300000 320000 400000 400000 425000 650000 700000 900000 800000 750000 700000 550000 400000 300000 325000 280000 325000 680000 750000 800000 1000000

Exhibit no. 6

Exhibit no. 7

Exhibit no. 8

Exhibit no. 9

Exhibit no. 10

Exhibit no. 11

count

Increase price, switch to other brand Yes No 16% 2% 4% 4% 4% May be 10% 4% 2% 10% 6% Total 48% 6% 6% 24% 16%

Company's Furniture Prefer to buy

Boss Sonica Venus citizen Toyo

22% 0% 0% 10% 6%