Acknowledgement

Firstly, the most heartfelt thanks go to our course instructor as well as supervisor, Mohammad
Ali Arafat, for providing us such an interesting task. His valuable guidance and advice made this
task achievable in a smooth, easy, and organized way for all of us. His ways of being helpful,
approachable, and understanding to us made it easy for us to communicate with him and tell him
about our problems freely.
Also, we must not overlook the fact, that we are truly amazed at ourselves for being the most cooperative team-members. We showed ourselves respect, understanding, we were prompt with our
work, no one slacked, and each of us contributed with passion and enthusiasm.
We thank the authors of the books, articles, and websites that we referred to, for giving us such
wonderful information, which has really been great help for us to attain this task.
And last but not least, we would like to thank our friends and family, because without their
unending support and encouragement, this task would not have been possible.

Declaration
We do here by declare that this study work titled Business Plan of Timberland has been
submitted to the School of Business, Independent University Bangladesh; in partial fulfillment of
the requirement for the degree of Bachelor of Business Administration (BBA) is our original
work and not submitted for the award of any degree, Diploma, Fellowship of any other Institute /
University.

Section- 4
School of Business
Independent University, Bangladesh
Name

ID

Falil Mohiuddin Gaalib

0930083

Aniqa Hasin

0930027

Rahat Bin Shahid

1111017

Sheikh Ripon Hossain

1030336

Mahamudul Hasan

1120139

Farjana Sultana

1221283

Signature

Table of Contents
2.0 Executive Summary------------------------------------------------------------------------

(06)

3.0 Transcom-----------------------------------------------------------------------

(07)

3.i) List of companies-------------------------------------------------------------------

(07-09)

3.ii) Transcom into footwear industry-----------------------------------------------

(09)

3.1 Timberland--------------------------------------------------------------------------------

(10)

3.2 History of Timberland-------------------------------------------------------------------

(10)

3.3 Number of Employees-------------------------------------------------------------------

(10)

3.4 Financial status of Timberland--------------------------------------------------------

(11)

3.5 Products of Timberland-----------------------------------------------------------------

(11)

3.6 Target market-----------------------------------------------------------------------------

(11)

4.0 The Products and Services--------------------------------------------------------------

(12)

4.1 Footwear------------------------------------------------------------------------------------

(12)

4.2 Why Timberland is unique compared to other shoes available in market---

(13)

4.3 Why people will buy Timberland-----------------------------------------------------

(13)

4.3.i) The quality of the product------------------------------------------------------

(13)

4.3.ii) Waterproof------------------------------------------------------------------------

(13)

4.3.iii) Slip proof-------------------------------------------------------------------------

(13)

4.3.iv) Timelessness---------------------------------------------------------------------

(14)

4.3.v) Variety of products-------------------------------------------------------------

(14)

5.0 Business environment analysis--------------------------------------------------------

(14)

5.1 Type of Industry-------------------------------------------------------------------------

(14-15)

5.2 Characteristics of the Footwear Industry-----------------------------------------

(15)

5.3 Competitors within the industry----------------------------------------------------

(15)

5.4 Market location------------------------------------------------------------------------

(16)

5.5 Customers------------------------------------------------------------------------------

(16-17)
3

6.0 Industry Background---------------------------------------------------------------

(17)

6.1 Production capacity, unit sale, profitability and growth rate--------------

(17-18)

6.2 Industry location--------------------------------------------------------------------

(18)

6.3 Pattern of the industry-------------------------------------------------------------

(18)

6.4 Control of the industry------------------------------------------------------------

(18)

7.0 Competitive Analysis--------------------------------------------------------------

(19)

7.1 Direct Competitors-----------------------------------------------------------------

(19)

7.2 List of Direct competitors and Competitive review of competitors------

(20-21)

7.2.v) Fortuna Shoes Ltd

7.2.iv) Bay Emporium
7.2.iii) Jennys
7.2.ii) Apex
7.2.i) Bata

7.3 Key success factors-----------------------------------------------------------------

(22)

7.4 Competitive analysis through Porters five forces--------------------------

(23-25)

8.0 Market Analysis-------------------------------------------------------------------

(25)

8.1 Market summary-----------------------------------------------------------------

(25)

8.2 Market size and Growth--------------------------------------------------------

(25)

8.3 Target market--------------------------------------------------------------------

(25-27)

8.4 Value proposition----------------------------------------------------------------

(28)

9.0 Sales and Marketing Plan-----------------------------------------------------

(29)

9.1 Brand Recognition--------------------------------------------------------------

(29)

9.2 Demand Analysis---------------------------------------------------------------

(30)

9.3 Factors affecting the marketing of timberland--------------------------

(31-37)

9.3.i) Customer problems Timberland is solving

10.0 Operational plan--------------------------------------------------------------------

(38)

10.1 General operating hours----------------------------------------------------------

(38)

10.2 Arrangement of Raw Materials / Product------------------------------------

(38)

10.3 Distribution System---------------------------------------------------------------

(39)

10.4 Technology utilization------------------------------------------------------------

(39)

10.5 Skilled employees-----------------------------------------------------------------

(39)

10.6 Pricing strategy-------------------------------------------------------------------

(39)

11.0 Management Summary---------------------------------------------------------

(40)

11.1 Personnel plan--------------------------------------------------------------------

(40)

12.0 Financial Plan--------------------------------------------------------------------

(42)

12.1 Anticipating readers concern------------------------------------------------

(42)

12.2 The Initial investment----------------------------------------------------------

(42)

12.3 The Pro Forma Income statements------------------------------------------

(43-45)

12.4 Pro Forma Cash flow Statements-------------------------------------------

(46-51)

12.5 Pro forma balance sheets-----------------------------------------------------

(51-57)

12.6 Definitions and assumptions of financial statements-------------------

(57-58)

12.7 Break even analysis-----------------------------------------------------------

(59-60)

12.8 Calculation of IRR------------------------------------------------------------

(60)

12.9 NPV analysis-------------------------------------------------------------------

(61)

13.0 Risk management plan------------------------------------------------------

(62)

13.1 Risks related business-------------------------------------------------------

(62-63)

13.3 Probability Impact Matrix------------------------------------------------

(63)

13.4 Risk minimization----------------------------------------------------------

(64)

14.0 Proposal for loan-----------------------------------------------------------

(65-66)

15.0 Conclusion--------------------------------------------------------------------

(67)

16.0 Appendix---------------------------------------------------------------------

(68)

2.0 Executive Summary

The Timberland Shoe Company is an American success story that started with Nathan Swartz
from Boston, Massachusetts. Swartz was a determined and hard-working gentleman who worked
his way up from an apprentice boot stitcher in 1918 until he owned part interest in the Abington
Shoe Company in 1952. Three years later he became the sole owner, and quickly brought his
kids on board.
Our Aim is to provide the people Of Dhaka City with premium quality footwear for both men
and women and make Timberland an ideal place for people who care what they wear. The
Timberland BD will offer wide range of high quality shoes for both men and women and this
will differentiate Timberland from the rest of the competitors. We will associate the Timberland
BD with Transcom Limited by making it its franchisee.
The capital we require to start the project is 20,661,000 which cover all initial development
expenses, ongoing expenses will be covered by sales and by taking working loan from bank.
Among the 20,661,000 we will take 8,500,000 loans. The loan will be paid off over a 3.5 year
period.
Our expected market share will grow most rapidly in the first 5 years then stabilize after 8 to 10
years. Our promotion strategy includes: billboard, magazine advertisements, website
advertisements, newspaper.
The financial prospective is very lucrative as it will generate high profit and its IRR is around
60% which is much higher the Transcoms hurdle rate.

3.0 Transcom:
Transcom Limited is a Bangladeshi business conglomerate. Originated with tea plantations in
1885, TRANSCOM today is one of the leading and fastest growing diversified business houses
in the country employing over 10000 people. Not many industrial groups in Bangladesh can
claim a history of continuous business pursuits stretching back over 125 years! Initially tea and
later jute formed the backbone of the family business. Although these are still part of the
activities and contributing marginally to the overall group turnover. Presently those early
industrial ventures have moved over to businesses involving high-tech manufacturing,
international trading and distribution, forming strong ties with a host of blue chip multinational
companies. In recent years, TRANSCOM has emerged as the largest media house in Bangladesh.
3.i) List of companies:
Transcom Electronics Ltd: Transcom Digital is the outlet started in the early 2005
through which TEL is retailing products directly to end consumers in the metro and
urban cities. In 2008, the company re-introduced itself as Transcom Digital as a
multi brand, multi-category retailer catering for all Electronics, Appliances and IT
products. Currently it is successfully running with 48 outlets throughout the country
and expects to increase the total outlet number eventually.
Through the Electronics & Appliances Distribution Consumer Electronics, Home &
Domestic Appliances from global brands such as Samsung, Philips, Whirlpool and
home brand Transtec are sold throughout the country via a nationwide dealer
network.
Transcom Foods Ltd: Transcom Foods Limited (TFL) started its journey in 2003 as
a franchisee of Pizza Hut, the first International Chain Restaurant in Bangladesh, and
went on to sign the contract to become the franchisee of Kentucky Fried Chicken
(KFC) in the year 2006. Both Pizza Hut and KFC are subsidiaries of the worlds
largest restaurant company Yum! Restaurants International. In a span of seven years,
TFL has opened 4 Pizza Hut and 7 KFC outlets so far throughout the country.
Transcom Beverages Ltd: Transcom Beverage Ltd (TBL) is the exclusive PepsiCo
Franchisee for Bangladesh. TBL owns and operates modern plants in Dhaka and
Chittagong for bottling the renowned soft drink brands such as, Pepsi, 7UP, Mirinda,
Slice, Mountain Dew, Pepsi Diet and 7UP Light.
7

 Transcom Mobile Ltd: Transcom Mobile Limited (TML) is the TRANSCOM's

latest venture into the Mobile Handset business and the company is exclusively
distributing Mobile phones to all over the country. It started its' operation on 22nd
June, 2010. At present TML operates nationwide as a single distributor with trade
marketing operation of SAMSUNG Mobile.
Transcom Cables Ltd: Transcom Cables Limited is one of the largest
conglomerates in Bangladesh has established in July 2009 for manufacturing of
cables, wires and Conductors. The company started its' commercial production in
May 2010.
Transcom Distribution Co. Ltd: Transcom Distribution Company Limited (TDCL) has the
largest independent distribution setup in Bangladesh with full infrastructural facilities
provided by a countrywide network of 23 branch offices along with one main office. The
company started its business with the distribution of quality pharmaceutical products
manufactured by ESKAYEF, NOVO NORDISK, SERVIER, ALLERGAN and consumer
brands like Frito Lay, Heinz, Wrigley, Mars, Energizer, Schick, L'Oreal, Garnier, ConAgra
Foods, McVities and Hemas.

Bangladesh Electrical Industries Ltd: Bangladesh Electrical Industries (BEIL) is a

leading producer of televisions and radios in Bangladesh and is the official licensee of
PHILIPS Electronics N.V. Holland. The company was incorporated in 1960 as a
subsidiary of PHILIPS, Holland. In March 1993, PHILIPS sold its entire shares to
TRANSCOM.
Eskayef Bangladesh Ltd: Eskayef Bangladesh Limited (SK+F), a successor of
Smith Kline and French in Bangladesh was acquired by TRANSCOM in 1990, is one
of the leading and fastest growing pharmaceutical company of Bangladesh
Mediastar Ltd: Mediastar Limited is an affiliate, emerging electronic media and
newspaper concerns within TRANSCOM group. The company is currently consist of
the following media associates: 1. Prothom-Alo 2. Abc radio 3. The daily star.
Reliance Insurance Ltd: Reliance Insurance Ltd was the fourteenth in line to start
general insurance business in the private sector. It is basically one of the associates of
TRANSCOM group. True to their vision to become the premier insurance
organization and the insurer of first choice in Bangladesh with a sound reputation for
dependability, professionalism and the highest standard of customer services, it is
working in the following areas:
8

1.
2.
3.
4.
5.
6.
7.

Underwriting of Fire Insurance

Underwriting of Marine (Cargo & Hull) Insurance
Underwriting of Motor Insurance
Underwriting of Overseas Med claim & Holiday Insurance
Underwriting of Miscellaneous Insurance
Underwriting of Public Issue of Shares & Debentures
Investment of Shares & Debentures

3.ii) Transcom into footwear industry: As it is already clear that Transcom ltd is a diversified
company which is competing in almost every industry except the footwear industry and they are
very successful too in those industries. So, to fill the gap of the footwear industry transcom is
coming with the brand timberland and want franchise it in Bangladesh.
Timberland is already a well known brand worldwide and Transcom feels that it will also do well
in Bangladesh. As it is popular and famous brand it will lower cost of promotion and advertising.
It is the best time to diversify because the footwear industry has a weak competitive position and
also the market growth rate is slow. It will not be a problem to coming into new industry because
transcom has a well availability of adequate financial and organizational resources. It will create
opportunities to achieve economies of scale and scope.

3.1 Timberland
The Timberland Shoe Company is an American success story that started with Nathan Swartz
from Boston, Massachusetts. Swartz was a determined and hard-working gentleman who worked
his way up from an apprentice boot stitcher in 1918 until he owned part interest in the Abington
Shoe Company in 1952. Three years later he became the sole owner, and quickly brought his
kids on board.

3.2 History of Timberland

The Abington Shoe Company mostly manufactured shoes for other companies until 1965 when
they introduced injection-molding technology to the footwear industry. This innovative
9

technology fused the sole to the leather upper without stitching, enabling the production of a
virtually waterproof boot. This waterproof boot gained popularity quickly, and was named the
"Timberland." Due to its immense popularity, in 1978, the Abington Shoe Company officially
changed their name to the Timberland Shoe Company.
With their roots firmly placed in the rugged boot market, the Timberland Shoe Company started
to expand its collection to include casual classics, boat shoes, and eventually, clothing.
Everything in the line-up continued to display a commitment to quality, and thanks to the urban
fashion community in the late 80s, Timberland began to look equally at home on the city streets
as it did in the great outdoors.
Today, the Timberland Shoe Company is still thriving in the footwear market. They even
introduced an exclusive collection of boots and shoes appropriately named, the Abington
Collection. With fashion changing constantly and new shoe companies popping up every day,
Timberland has stood the test of time. And, they are not going anywhere.

3.3 Number of Employees

Timberland has approximately 5,600 full and part-time employees worldwide at December 31,
2012.
Employees
U.S Employees
Employees Outside U.S

Number
2198
3402

3.4 Financial status of Timberland

Companys current financial conditions give an overview about how company is doing
financially. From the given information we can see how company has done in the year of 2013.
Revenues: Revenues increased 15 percent to a record $10.9 billion from $9.5 billion in 2013. On
a constant dollar basis, full year revenues increased 17 percent. The Timberland acquisition
accounted for 9 percentage points, or $907 million, of the revenue growth in 2012. International
revenues on a constant dollar basis were up 29 percent, of which Timberland accounted for 17
percent. Direct-to-consumer revenues were up 25 percent, with Timberland accounting for 15
percentage points of the growth.

10

Gross margin: Gross margin rose by 75 basis points to a record 46.5 percent, compared with
45.8 percent in 2012, with improvements in nearly every business. The improvement in gross
margin reflects the continued shift in our revenue mix towards higher margin businesses.
Operating income: Operating income on an adjusted basis increased 17 percent to $1.5 billion
in 2013. The Timberland acquisition accounted for 6 percentage points of the increase. On a
GAAP basis, full year operating income rose 18 percent to $1.5 billion from $1.2 billion in 2012.
Net Income: Net income on an adjusted basis rose 18 percent to $1.1 billion compared to $913
million in 2012.

3.5 Products of Timberland

Timberlands products fall into two primary categories
1. Footwear
2. Apparel and accessories.
They also derive royalty revenue from third party licensees and distributors that produce and/or
sell Timberlands products under license.

3.6 Target market

Timberland has identified its target market are both men and women, whose age from 18 to 40,
are very stylish, like to wear comfortable product. Most of the existing footwear company in our
country has a common trend. If they focus on style they forgot about the comfort or they focus
on comfort and forgot about the style. But Timberland will give the customer very good looking,
stylish footwear with comfort in a reasonable price. Initially we select our place in Gulshan. The
college and university students and the other working people who want stylish and comfortable
footwear will be our main targeted customer. The organization would propose an expansion
phase into other sector of the city.

Timberlands mission is to equip people to make a difference in their world. We do this by

creating outstanding products and by trying to make a difference in the communities where we
live and work. Timberland has a rich New England heritage that inspires the way they make their
products and run their business. They make boots, shoes, clothes and gear that are comfortable
enough to wear all day and rugged enough for all year.
Timberlands vision is to become number one outdoor brand on earth, and to achieve that they
are committed to do the right thing. Whether it's making products with the environment in mind,
volunteering in communities, or having one of the toughest Codes of Conduct around,
Timberland cares about their colleagues, their community and planet because how they do their
business matters to them.
11

4.0 The Products and Services

Today Timberland can be found over 60 different countries and more than 230 company-owned
stores and through department and athletic shops in Asia, Canada, Europe, Latin America, the
Middle East, and the US.
As we mentioned about products of Timberland previous section, we already know that their
major products are Footwear, Apparel and Accessories, but for our business we will be focusing
on Footwear only which generates 75% of companys total revenue.
4.1 Footwear
In 1973, Timberland produced their first pair of waterproof leather boots under the Timberland
brand. Timberland now offers a broad variety of footwear products for men, women and
children, featuring premium materials and state-of-the-art design and construction. Timberlands
mens footwear products emphasize durability, comfort and craftsmanship. Timberlands
womens footwear line combines beautiful styling, performance features and eco-conscious
materials. Timberlands kids footwear products are designed and engineered specifically for kids
with the same high-quality standards and materials as their adult footwear products, combining
Timberlands heritage of premium leathers and craftsmanship with a focus on fit, functionality
and convenience.
Timberland brand footwear offerings within each of our mens, womens and kids lines include
I.
II.
III.

Basic, premium and sports boots, including hikers.

Hand sewn oxfords, boat shoes and casual footwear.
Performance footwear.

The Timberland PRO series for skilled tradespeople and working professionals is an additional
footwear category being developed to address those consumers distinct needs.

4.2 Why Timberland is unique compared to other shoes available in market

Some of the principal features of Timberland boot products include premium waterproof leather,
direct-attach and seam-sealed waterproof construction, rubber lug outsoles for superior traction
and abrasion resistance, shock diffusion plates, durable laces, padded collars for comfortable fit,
enhanced insulation, rustproof hardware for durability and moisture-wicking components for
comfort and breathability. Timberlands casual footwear is rooted in their commitment to the
environment, craftsmanship and innovation, a design ethos which results in products made from
superior earth-conscious materials and characterized by enhanced comfort. Timberlands
performance footwear continues to address the needs of outdoor recreationalists and enthusiasts
of all levels, offering technical, end-use driven products for outdoor adventures from summit to
sea and everywhere in between.
12

4.3 Why people will buy Timberland

As a brand Timberland has an image of being tough, innovative and economically efficient but
these things are not considered when people intend to buy their product. Maximum customers of
Timberland buy their product because of their quality, durability and longevity of the products
and beside all the factors there are some other factors are contributed Timberlands success in the
footwear industry which are discussed below.
4.3.i) The quality of the product
The main reason people buy Timberland because of the high quality. It is safe to say that they are
the bit expensive but also the most reliable shoes compared to other brands available in the
market. It's definitely an investment but it pays off big time. With the Timberland boots it holds
true that when people purchase a high quality product they get their money's worth. Timberland
assures that their customer gets an excellent shoe from the premium segment.

4.3.ii) Waterproof
In a country like Bangladesh where roads go under water in the rainy season Timberland shoes
are best suited in this type of environment, because Timberland shoes are waterproof, that means
users of Timberland do not need to worry about weather conditions. Customers of Timberland
really appreciate the fact that boots are waterproof especially compared to the boots previously
owned.
4.3.iii) Slip proof
In the rainy season the roads of our country become so slippery but for Timberland users this
thing matters a bit because the durable and thick outsole of the shoe delivers superb traction, this
means the users of Timberland shoes will not fall so easily. This slip proof feature is a must need
for an outdoor enthusiast those who love to go for hiking in the mountains because we all know
the roads of highlands are muddy and slippery.

4.3.iv) Timelessness
Timberland boots are timeless. People wore Timberland boots all the way back in the 1950s and
there hasn't been a decade since that declared them as 'out'. No one can't go wrong with some
simple straightforward boots. Those who are using Timberland boots will never go out of style
because quality never goes out of style.
4.3.v) Variety of products
Timberland offers a wide range of shoes to match customers choice within price range, beside
this Timberland boots look great too.
13

Finally we can say that, people will purchase the products of Timberland because of the quality
of the product and the brand name associated with the product. The products of Timberland have
the capability to attract customer because it is unique in its own way. Timberland can attract
young aged people and also attract people of medium ages because they manufacture shoes for
people of all ages. People always like changes, wants changes, like to switch. As Timberland is
very unusual people can easily attract by our product.

5.0 Business environment analysis

5.1 Type of Industry
The footwear industry is a diverse industry which covers a wide variety of products from
different types of men's, women's and children's footwear to more specialized products like
snowboard boots and protective footwear. This diversity of end products corresponds to a
multitude of industrial processes, enterprises and market structures.
Recent statistical index collected from Bangladesh economic review indicates that there is a
positive growth in this sector which is fueled by the growth of the domestic middle class and
high rate of GDP growth. According to a study conduct by Dhaka University, it is assumed that
about 31.3% ( around 47 million) of total population are now officially categorized as middle
class group with another 4 million is consider to be rich and affluent. Increase in living standard
has encouraged many international brands to come to Bangladesh and began its journey when in
2006 first international brand Hush Puppies were introduced by Bata.
The retail footwear market size is approximately BDT 16billion and estimated to be expanding at
a rate of 20% per year, according to newspaper reports. With 160mn people in Bangladesh,
demand for quality footwear is high. At present, 90% demand for footwear is met by the local
companies. The industry is fragmented; with millions of small shoe manufacturing companies
that produce footwear in small scale. However, large brands still compose a significant portion of
the national footwear market. With increase of per capita income to $1044 in 2013 from $ 848 in
2012 and population growth of around 6% per year, the footwear market is bound to expand in
the future.
In our outlet we will mainly provide various types of mens and womens footwear. Our business
will operate under retail footwear industry. Our provided products will be:
Men

Hiking Shoes
Boots

Women

Sandals
Shoes
14

Shoes
Sandals

Boots

5.2 Characteristics of the Footwear Industry

The Shoe Industry consists of a multitude of footwear manufacturers, wholesalers, and retailers.
The major manufacturer of the Bangladesh market is owners of a brand name and they
manufacture their own shoes. Like as Bata, Apex, Jennys, Fortuna, Bay emporium etc. But there
are some other wholesaler whose product are not a brand typically they collect their shoes from
independent manufacturers. Such as reakhi shoes, classic shoes, infinity, ecstasy etc. The retail
segment of the industry ranges from owners of large multinational chains to small local
businesses. Many shoe companies operate in both the retail and wholesale arenas. Shoe
companies covered by Value Line generally adhere to the standard industrial page format.
5.3 Competitors within the industry
There are various types of Footwear Companies in Bangladesh and the maximum of their
products are very same. The products we are offering is bit different compared to traditional
shoes available in the market so on that basis we can say that we do not have any competitors. If
we think overall resources, manufacturing facility and cost we have some competition.
Timberlands major competitors are

Apex
Bata
Jannys
Ecstacy
Cats Eye
Bay Emporium
Woodland (Recently Introduced)

When it comes to footwear there are no substitute products for it and it can only be substituted by
going bare foot which is impossible in this civilized society. So in this scenario we will have to
compete only with competitors which are not so threatening.
5.4 Market location
Initially our store will be opened at Gulshan 1. In our country there is a concept for developing
or establishing a brand its necessary to open an outlet in Gulshan. It is considered that the people
who live in these areas (Gulshan, Banani & Baridhara) are rich and has stable income and they
are easily attracted to stylish, luxurious and quality full products. The current demographic of
Bangladesh population shows that around 55% of the total population is between the age group
of 18 to 45 years that are considered as the target customer of our product. Initially located in
15

Dhaka, our aim will be to capture the consumer this demographic part of population in Dhaka. In
this area scope of geographic competition is very high but also for the peoples living standard,
income and their clean choice will help us to get market share very easily and effectively.

5.5 Customers
We already mentioned in earlier section our target market will be both men and women between
the age group of 18-45. From this segment we can separate some who will definitely buy
Timberland shoes.
Students
Students of universities and colleges will choose Timberland because this brand represents
youth. Now a days students of universities spend good amount of money in non-branded shoes
but if they have the option to buy an internationally recognized branded shoes with adding some
more money they will definitely choose Timberland.
Workers
This category encompasses primarily workers who need a sturdy, durable boot for everyday use.
Comfort and support are of utmost importance. In addition, reasonable prices and high value are
also key since this demographic is not particularly wealthy. They expect to get their moneys
worth by investing in Timberlands product.
Outdoor enthusiasts
These are more recreational users of our footwear and apparel. This group enjoys outdoor leisure
activities such as hiking and camping. This category is very family oriented. Value, comfort, and
durability are key factors for customers when choosing their products. Because this
demographics use of the product is primarily recreational, they have greater disposable income.
Fashionistas
This category covers high income, more urban, female consumers purchasing boots for fashion,
rather than work purposes. Those spent over 2.5 times more than those in a lower income
bracket.
6.0 Industry Background
Footwear Industry has grown in Bangladesh territory since the colonial era although its
modernization took place only in the late 1980s. During the British period, there was no footwear
manufacturing firm producing on a mass scale in East Bengal. However, traditional cottage type
footwear industry with limited production facilities existed in a skeleton form in the district
towns at this time. Various types of footwear were imported, mainly from Calcutta. After
Partition of Bengal in 1947, footwear started being imported from West Pakistan. When Bata
Shoe Company established its manufacturing plant at Tongi in 1962, it was the first
manufacturing plant to produce shoes on a large scale in East Pakistan. Eastern Progressive Shoe
16

Industries (EPSI) established its production plant in 1967 and started exporting footwear to
USSR, Czechoslovakia and England. Bata and EPSI held a major share in the local footwear
market also. The industry suffered a major setback during the war of liberation but was
rehabilitated after independence. Many new footwear manufacturing units have been established
recently. Notable among them are Apex Footwear, Excelsior Shoes, and Paragon Leather and
Footwear Industries. The industry structure is very competitive.

6.1 Production capacity, unit sale, profitability and growth rate

The footwear industry now exceeds more than 3000 production units. Most units are, however,
small and medium in size and only 23 are relatively large and have mechanized and semimechanized production technology. The annual production capacity of the industry is about 46.8
million pairs of leather and non-leather footwear. Of this 36.50 million is produced by
mechanized and semi-mechanized units. These units generates revenue of BDT 18.0bn or US.
Bata Shoe and Apex Adelchi are the only large players in an otherwise fragmented industry. Bata
has the largest market share of ~20% and Apex ~5-7%. Bata has two manufacturing plants in
Tongi and Dhamrai with production capacity of 110,000 pairs/day. Apex has a production
capacity of 15,000 pairs/day for export and another 5000/day for domestic sales.
The industry provides direct employment to about 33,000 people. Nearly 50% of them are
engaged in mechanized and semi-mechanized units and are classified, on the basis of employees,
as large, medium, and small.
Women workers are predominant (55%-60%) in the mechanized sector. About 80% of all
footwear units are located in Dhaka and Chittagong. Production in small units is processed
manually. The total volume produced by these indigenous units account for about 7 million pairs
per year.
Top local footwear makers and exporters are set to increase their production capacity to utilize
the growing international demand for low-cost Bangladeshi shoes, industry insiders said.
Meanwhile, the footwear sector has earned $335.51 million in export during the just concluded
fiscal year (FY) 2011-12 against $297.8 million of a year ago, Export Promotion Bureau (EPB)
data revealed. The leading manufacturers, including Apex-Adelchi Footwear Ltd, Jennys,
Landmark, Leatherex, Bay Footwear and Picard Bangladesh, are increasing their production
capacity by opening new factories and importing sophisticated machinery with latest technology.
The continuous growth in footwear export is the main reason that encouraged local companies to
go for expansion, and the enhanced capacity will help the exports to the increased manifold in
the coming years, industry people said. Currently, the local companies make leather footwear
worth around Tk 17 billion yearly, of which 40 to 45 per cent products are meant for shipment.
The country exports around sixty five million pairs of leather footwear a year, with ApexAdelchi being the largest exporter. With this analysis we identified that the growth rate of
Bangladesh footwear industry in 2007-2008 was 10.22 %, in 2008-2009 was 9.18%and in 20092010 was 48% which was the highest growth in the history of Bangladesh footwear industry.
17

Footwear units vary in product line, production capacity and exposure to domestic and foreign
markets. The relatively large ones manufacture multiple items such as leather shoes, sports and
trainer shoes, canvas and leather sandals, jute shoes, chappals (slippers) and shoe uppers. These
units constitute the largest share of the export market.
6.2 Industry location
It is an undeniable fact that, shoes are necessary and that is the main reason that the industry is
spread out geographically all over the Bangladesh, so that it can reach out to all the customers
and it is not concentrated near the source of raw materials. But the industry outlets are situated in
near the end users for efficient distribution. This industry is currently strong because there is a
growing desire for footwear in the proposed location.
6.3 Pattern of the industry
If we look at some features of footwear industry like, diverse buyers demand, low entry barriers,
absence of scale of economies, requirements of small amounts of customized or made to order
products we can easily say that the industry is fragmented. Many local and big companies are
operating in this industry simultaneously but none of them are considered as market leader or
hold a major portion of market share.
6.4 Control of the industry
With all other benefit its true that actually the footwear industry is controlled by some of our
competitors. For cost, comfort, durability and design we determine that the Bata, apex, jennys,
Fortuna and Bay emporium are our competitors. They are in this business from many years. They
have a huge production capacity, goodwill, loyal group of customers and their cost is lower than
us. They can serve the customer with a nominal price but it is not possible for us. Rather than we
should have to maintain our price. If we charged a high price we cant compete with them. So it
is easily proved that the industry is controlling by some of our competitors. But it will not be a
big deal for us. With our design, style and comfort we can compete with them and very fast we
will able to make a place for us in the industry. In terms of use of technology in manufacturing
our competitors are not as good as ours rather they offer traditional stable products. The products
of Timberland will be manufactured outside this country i.e China and India. Their technology is
much more advanced compared to technology our competitors are using to manufacture their
products.
Bangladesh is very densely populated, with over one thousand people per square kilometer and
in a place like Gulshan it is more than that and also increasing which will make sure the potential
end customer for Timberland. As mentioned earlier the acceptance of western culture along with
increase in living standard and presence of many international brands in Bangladesh indicates
that the investment in this particular section of HRI will be a huge success. Timberland will be
located near our target customers to efficiently fulfill their demands. Though there are few local
based and international chain exist in this sector which can be a potential threats to us but our
niche market strategy along with internationally recognized brand image will leave very
competitive in the market.
18

7.0 Competitive Analysis

Footwear products are marketed in highly competitive environments that are subject to changes
in consumer preference. Product quality, performance, design, styling and pricing, as well as
consumer awareness, are all important elements of competition in the footwear. Competitive
analysis in strategic management is an assessment of the strengths and weaknesses of current and
potential competitors. This analysis provides both an offensive and defensive strategic context to
identify opportunities and threats. Although the footwear industry is fragmented to a great
degree, many of our competitors are larger and have substantially greater resources than we do.
The competition from some of these competitors is particularly strong where such competitors
business is focused on one or a few product categories or geographic regions in which we also
compete. However, we do not believe that any of our principal competitors offers a complete line
of products that provides the same quality and performance as the complete line of Timberland
products.

7.1 Direct Competitors

In the footwear industry of Bangladesh, Timberland will face direct competition from direct
competitors, as Timberland will be providing similar products with some extra value.
Competition will be tough because they exist in this footwear industry for a very long time. As
our competitors are in the industry for a very long time, so they are aware of the industries
dominants trends and demands of customers.

7.2 List of Direct competitors and Competitive review of competitors

7.2.i) Bata: The Bata Shoe Organization was founded in 1894 by Czech businessman Tomas
Bata in the city of Zlin (Czechoslovakia). Bata started operating in Bangladesh in 1962. Having
contributed BDT 1.2 billion (year 2009), which is 70% of the entire amount paid by the footwear
sector, it became one of the largest tax-paying corporate bodies. Currently Bata Shoe Company
(Bangladesh) Limited has two factories one in Tongi and the other in Dhamrai with a
production capacity of 110,000 pairs of shoes daily. The company also has a modern tannery
facility with an output of 5 million square feet of leather annually. Annual shoe sales currently
stand at slightly more than 30 million pairs with a turnover for the year 2009 of Tk 5 billion.
Bata is playing a pivotal role in developing the leather industry of the country. Bata has
introduced internationally renowned brands like Bata Comfit, Marie Claire, Hush Puppies,
Scholl, Nike, Bubblegummers, Sandak, Weinbrenner etc in Bangladesh and added a new
dimension in branded shoe market of the country. At present, Bata operates 242 retail outlets and
13 Wholesale depots all over Bangladesh.
19

Strengths and Weakness of Bata

Strengths

Weaknesses

Brand Image

Lack of design variety

Quality of Products and Services

Unavailability of some shoes in all the stores

Good-value Pricing

Failed to exploit new mediums of

advertisements like online marketing.

Targeting consumers of all income segments

Training employees for better service
Strong Distribution Channel

7.2.ii) Apex: After Bata, Apex is one of Timberlands most notable competitors. Apexadelchi
Footwear Limited, a manufacturer and exporter of leather footwear grew from a potential power
in footwear market of Bangladesh to major shoe retailers in Western Europe, North America and
Japan. The company has revenues of USD 100 million in 2010. AAFL pioneered the export of
value added finished products export in the

Strengths and Weakness of Apex

Strengths

Weaknesses

Best quality provider

Mixture of difference culture

Packaging design

Limitation of offering

Fast mover advantage

Price structure

Stylish product with comfort

Distribution channel strategy

7.2.iii) Jennys: Jennys started their journey with ideas of quality products manufacturing and a
winners vision in the name of Jennys Shoes Ltd from 1990. Though they started their journey
long time ago but still their product is not very mature and does not hold a notable part of the
market share. The company lacks in product variety and class.
20

7.2.iv) Bay Emporium: Bay is relatively a new name in the footwear industry of Bangladesh.
With outlets in some of the premium locations of Dhaka and other major cities, Bay Emporium
has the potential to become one of the big competitors in the market. Bay Footwear Ltd has a
production quantity of 5000 pairs from the companys 2 production facilities. Turnover is USD
$10 million.
Strengths and weaknesses of Bay Emporium
Strengths

Weaknesses

Niche Market

Limitations of products

High Profitability

Distribution channel strategy

Foreign Product

Insufficient numbers of stores

Stylish Product

7.2.v) Fortuna Shoes Ltd: Fortuna is a new state of the art footwear manufacturing plant with a
capacity to produce 2500 pairs of shoes per day. The 40,000-sqft factory is located in Fortuna
Park, Kunia, Gazipur Bangladesh. The company also produces leather bags, sandals, and other
accessories. Fortuna is opening in retail outlets to sell shoes, leather bags and accessories under
its own brand Fortuna. The company is open to joint ventures and strategic partnerships.
Strength of Competitors
In this footwear industry the main strength of our competitors is that, their strategy in terms of
changes in market demand and consumer preference and due to this strategic strength they have
survived for a long time. They know how to spread out through marketing their product on this
industry. Most importantly they have customers who are loyal to their respective brands.
Weaknesses of Competitors
In terms of weakness, our competitors dont have those things that we have and those are quality
of the product, variation of the products, ability to customize according to customer preference.
Skilled labor turnover is another weakness of our competitors. It takes so many times to make a
skilled labor. But if another company offer good salary to that skilled employee and if they move
from the company then its become a threats for our competitors.
Timberland is an internationally recognized brand and the products are being designed for the
customers of Timberland all over the world, which means in any part where Timberland shoes
are sold they all are same so it will help customers of Timberland in this country to match with
international fashion trends.
7.3 Key success factors
21

Timberland considers every company of footwear industry as their competitors or rivals but
some of them are considered as their direct competitors (Bata, Apex, Bay Emporium). Now we
are going to focus on their key success factors which helped them survive in this competitive
industry for long time.
Company

Bata

Apex

Bay Emporium

Success Factors
Low-cost production efficiency
High labor productivity
Strong network of wholesale
distributors/dealers
Having company-owned retail outlets
Low distribution costs
Favorable image/reputation with buyers
Overall low-cost
Convenient locations
Product innovation capability
Quality of manufacture
Flexibility to make a range of products
Breadth of product line
Attractive styling
Courteous employees
Having company-owned retail outlets
Quality control know-how
Ability to develop innovative products
Ability to get new products to market quickly
Clever advertising
Having company-owned retail outlets

Timberlands competitors possess major threat in terms of Goodwill, Numbers of showrooms,

Experience and Customer loyalty. Due to mentioned factors our competitors definitely enjoy
strong brand recognition of their products and due to brand recognition they dont have to market
their products aggressively. Competitors of this industry dont block the entrance of a new rival
because they know any type of healthy competition for their business is helpful because then
they can come up with innovative ideas and product, which will eventually help them to survive
in the long run. Our competitors will certainly recognize differentiating attributes (in our case
which is quality of the product and brand value of our product) but they will not be able to
include these features in their product. If they want to include one feature (quality of the
product), then the cost of their product will increase, as a result the price of their product will
increase and they will end up losing their customers.
7.4 Competitive analysis through Porters five forces
Competitive Rivalry within The Industry: Intense competition from established and upcoming
rivals could threaten Timberlands market share growth

22

The market for footwear is characterized by intense competition, with presence of a large number
of players such as Bata, Apex, Bay Emporium, Jennys, etc.
The footwear products industry is exposed to continuous changes in consumer preferences and
technology; if Timberland is unable to adapt to these changes quickly, it could suffer losses in its
market share.
Rising competition from emerging players such as Woodland, which focus on niche market
segments also pose a threat to Nikes share of selected markets.
Timberland also faces rising competition from local players in emerging markets, who are
increasingly improving their product quality.
Having said that, Timberland has a strong brand reputation which likely will continue to propel
strong demand for its products. Further, Timberland continues to differentiate its products within
an innovative product portfolio, leveraging a particularly strong brand with enhanced marketing
activities.
Bargaining Power Of Suppliers: While no single supplier holds significant bargaining power,
footwear production is concentrated in Vietnam, China and Indonesia and India. This means if
one supplier has the bargaining leverage then we can switch supplier which may increase our
cost in the short run but in the long run it will help us survive in the industry.
No single footwear factory accounted for more than 6% of total Timberland brand footwear
production in fiscal 2013; hence, due to a large base of suppliers, we believe their bargaining
power is limited.
Suppliers generally share the inflationary pressure (related to raw material costs and labor
expenses) with Timberland through manufacturing service pricing.
Bargaining Power of Customers: Big wholesale customers could exert some bargaining power.
Timberland caters to its customers through both the wholesale and direct-to-consumer channels,
which accounted for 80.6% and 18.9% of total Timberland brands sales respectively, in fiscal
2013.
Direct-to-consumer sales rose by 23% in fiscal 2013, as compared to 6% growth in the wholesale
channel; hence Timberland is looking to strengthen its direct channel.
Certain big wholesale customers hold bargaining power as they could widen their partnership
with Timberlands competitors or provide their own private label offerings to earn higher
profitability.
Bargaining power of end-customers is low as Timberland has a very strong brand image and
holds an innovative product portfolio.
However, customers could also choose other brands owing to factors such as price, advertising,
product sponsorship, and changing styles.

23

Threat of New Entrants: Requirement for high capital and research investments could limit the
entry of new players; however, there is a threat from new e-commerce players
Significant capital resources are required for creating a new brand as large investments are
needed for marketing and procuring floor space; hence, this restricts the entry of newer players.
Timberland enjoys a great degree of brand recognition and loyalty, and it will be a difficult for a
new player to match its level.
Having said that, we believe more Internet companies could start selling competitors footwear,
apparel and equipment online as the barriers to entry are low in this business.
Threat of Substitute Products: Counterfeit products represent the biggest threat in this area
The problem of counterfeit products is an area to watch. As the quality of counterfeit products
has been improving over the recent past, we believe this could threaten the companys sales in
emerging markets and could also potentially dilute Timberlands brand value.
According to our analysis, competitive rivalry within the industry is a key force which has the
potential to curtail Timberlands growth. The competition is increasing from both established, as
well as upcoming and local footwear companies. In case Timberland is unable to adapt to
changing trends, its growth could be impacted. The company relies heavily on wholesale channel
and big wholesale customers could exert leverage to attain higher product discounts/ better credit
terms. The low barriers to entry in the Internet retailing business could enhance the competition
in the industry. Also, Timberland needs to address the problem of counterfeit products to dilute
the threat from small players.
The final result of Porter analysis of Timberland at a glance
Porter Five Forces
Competitive Rivalry Within The Industry
Bargaining Power Of Customers
Threat Of New Entrants
Bargaining Power Of Suppliers
Threat Of Substitute Products

Intensity
High
Low to Medium
Low to Medium
Low
Low

8.0 Market Analysis

8.1 Market summary
Shoe business has become one of the most successful businesses in the industry. Everyone needs
shoe for their necessity or their style. The major competitors in the market are undoubtedly Bata,
Apex, Jennys, Fortuna etc .They offer huge range of footwear with huge collection and
showrooms. But Timberland will step forward to gain a first movers advantage in this field by
introducing the first huge collection of rugged boots, shoes for both men and women.
8.2 Market size and Growth
24

Footwear sector is now consider to be a competitive market and with few intentional chain
present indicates that the future of this sector is brilliant and worth investing. Acceptance of
western culture in Bangladesh indicates that franchisee of Timberland will be a success. As
Timberland shops is a specialized shop which offer special kind of products and serves a
particular market it will be consider as a niche market. With a raise in income and living
standard, people in mega cities like Dhaka will be more willing to spend their time and money in
high quality and internationally recognized branded products. A higher living standard in mega
cities, people demand international standard of product with superior quality. Timberland will be
the first brand to open their store and selling only their product only therefore there is a huge
scope for Timberland to enter the market and make profit.
8.3 Target market
After determining the marketing object a firm must need to select its target market. This means
choosing one or more profitable customer segment. We have targeted multiple segments
consisting of students, outdoor enthusiasts & professionals. For getting the maximum market
share and respect of the product in the minds of the consumer, as per our observation and market
survey we have concluded that Timberland market segmentation is based on the following
points.

Geographic Segmentation:
Calls for dividing the market into different geographical units such as nations, regions, states,
counties, cities, or even neighborhoods. Initially we will open our outlet in Dhaka as it is the
capital of Bangladesh and the living standard of this city is higher than other cities. As we will
target middle class, upper middle class and high class part of the society we decided that the idle
place for opening our first outlet should be in Gulshan.
Demographic segmentation: demographic segmentation is divided into following sectors.
Age:
Our targeted customer will be between the age of 18 to 45 due to their quick acceptance of
western fashion. Moreover we will be selling converse and boots which is very popular among
students.
Income:
To sustain in footwear industry the minimum level of profit that should be earned by the
international chain is 200%. Even though we will operate on niche market strategy, we need to
make enough profit to sustain in long run. Therefore, a relatively higher price will be charged
when compared to locally based competitors. So people based on income are segmented in
following segments: 40,00060,000 / 60,000+
Occupation:

25

We will target urban corporate workers/ business people and students who dont hesitate to spend
their money in high quality and internationally recognized products.
Psychographic segmentation:
Branded shoes are becoming quite popular in our country as people have accept the western
culture with open heart and due to globalization people are also aware of different brands.
Therefore now people do not want same old typical boring shoes but people demand of high
quality and stylish shoes. Being aware of the international standard, people want a great pair of
shoes with international brand recognition and higher quality. We will fulfill this need of
customers as we are an international recognized brand that produces high quality shoes desired
by this specific segment.
People of our country belong to several social classes. Their income and way of living reflect
them that which social classes they are belong to. It is very useful path to segment and mark
desired customer. Here our people have been segmented into three social classes:
Lower Upper class
Upper middle class
Middle class.

Behavioral segmentation
From behavioral segmentation benefits is more appropriate term to segment the market for us. It
is very tough to find out what kinds of benefits every individual wants. Some class of people
want economy, some want quality, some wants both quality and service. So it would be better to
segment in following phases:
Economy
Quality & service
Convenience
Timberlands target market at a glance

Density

Urban
Dhaka (Gulshan)

Geographic

Region
18 to 45
Age

26

40,000-60,000 & 60,000+

Demographic

Income

Occupation

Psychographic

Behavioral

Social class

Students, Professionals, outdoor

enthusiasts.
Upper middle, lower upper, upper
class

Occasions

Regular

Benefits

Quality ,service & convenient

User status

Regular

User rates

Medium & heavy

Loyalty status

Strong

Attitude towards
service

Enthusiastic, positive

8.4 Value proposition

To deliver the ultimate service to our customers we will not only provide a comfortable
atmosphere for our customer but also train our employee in regular basis so that they can provide
maximum customer service. The targeted customer will buy our products because we will offer
them high quality and unique products, and due to these reasons the demand of our product will
increase. Our customer will be able to differentiate our products from our competitors because
we will introduce very first shoes with customizable facility. Not only these we will also offer
our customer wide range of products from which they can choose according to their style and
budget.

27

9.0 Sales and Marketing Plan

Since our aim is to provide premium quality footwear to our customers, the initial startup costs
of setting up the shop is relatively high because of initial Franchise Fee & Marketing startup fee.
So the sales and marketing activity of Timberland is extremely vital to gain enough profit by
selling our product. Hence the sales and marketing plan for Timberland needs to be prepared for
the long term consequences.
For this to be achieved, we will foster an environment in which all our employees can play a part
through continued training in excellence, emphasis on teamwork, effective communication
toward the customer and innovation in all the areas of the our shop.
Our efforts are designed to create distinctive brand image and a cost effective campaign with
various advertising focused on publicity and attract potential customer.

9.1 Brand Recognition

The Swartz family began producing boots in 1933, some of which closely represent the
Timberland Classic style today. To many customers, this small family-held boot company
remains the primary representation of Timberland and Mr. Jeffrey Swartz, the key steward of the
community-centric company. Timberlands brand represents quality, dependability, and a return
to nature. This long-standing brand promise is of great significance to Timberland and its loyal
consumers around the world. Development of the Timberland brand has taken many years (and
28

three family generations) of consistency in action and messaging. This unique aspirational
positioning is apparent in the company culture and is signaled through its actions including:
community activism, boot-centric offerings, earthy and innovative product designs, and dynamic
marketing campaigns. The strong tie to nature and community serve as the key differentiator
among competition and resonates with its many environmentally conscious customers. It also
allows for Timberland to charge a slight premium on its products over its competitors.
Timberland must continue to remain authentic to its company roots and manage its business in an
authentic, consistent, and focused manner as to avoid brand dilution as it has experienced in the
past.

9.2 Demand Analysis

The main objective of the Timberland is catering to the needs of that customer whose are aware
about fashion and want to lead their life with the new fashion trend and at the same time will set
out on a path to continuous innovation to meet the changing needs of this segment. Initially
Timberland will fulfill the demand in Dhaka city and later on other parts of the country.

Gender

Products

Market
Demand

29

Hiking Shoes

Yes

Boots

Yes

Shoes

Yes

Sandals

yes

Men

Women

Sandals

Yes

Shoes

Yes

boots

Yes

9.3 Factors affecting the marketing of timberland

9.3.i) Customer problems Timberland is solving
Timberland wants to be at the top of the mind of the customers. It will provide them with extra
features or benefits in terms of quality which will assure them that they have made the right
decision by purchasing this product. Timberland aims towards branding this sector so that
consumers see a significant brand difference between this and other shops providing such
product. Consumers today also like being more involved with their favorite brands. This gives
Timberland an opportunity to build up in terms of brand loyalty by hosting events that brings the
organization closer to the target market. In terms of demography, the target market of Timberland
30

is mostly university students, corporate people, outdoor enthusiasts/activist and those people who
are very careful about fashion and footwear design.
Timberland promises to

Delight customers by providing high quality of products

Considers their customers as top priority
Excellent value for money to the customer will be provide
Deliver the product timely and efficiently

9.4 Positioning
We have done a research and based on the participants perception we have done perceptual
mapping on Timberland. In the perceptual map, we have plotted Comfort versus high price
matrix. In x axis we have put the Quality factor and in Y axis we have put the low price. As
Timberland has got a quality assurance along with less low price, we have plotted it in the upper
right gap of the perceptual map.

9.5 Product life cycle

Sales

31

//

High Cost

//As we are already established in Dhaka and its a renowned brand so our business is in the
Growth stage. Our sales are increasing as well as our profit. We are following the High Quality
strategy to retain customers.

9.6 Marketing plan objectives

Social impact
Timberland has established a tradition of creating quality, environmentally friendly products, and
they intend to expand upon this philosophy. Timberlands competitive advantage is their focus on
corporate responsibility. Timberland will continue to emphasize the importance of community
involvement and charitable contributions to eco-friendly organizations, and they will expand
their product line to involve our customers in this lifestyle. Timberlands goal is to educate their
customers about the importance of being environmentally conscious and providing them with
quality products to lead them in the right direction. By purchasing from Timberland, they are not
only receiving a top of the line product, but are also making a difference in the environment.

Profit
Timberland has continued growing despite the economic recession. Their revenues are increasing
steadily following a dip during the recession, and company is confident that they will continue
on a positive path.
Market share
Our primary focus is on footwear namely boots. Initially we dont have any market share but
through an aggressive marketing campaign, we hope to increase the appeal of our product which
will, in turn, grow the market in this category to 10 percent by 2016. Timberland will then take
advantage of this growth and will be the go-to brand for this consumer.
32

9.7 Customers buying behavior

Buyer behavior is at the heart of the marketing concept. Most of the progress over the past few
centuries has focused on understanding and identifying observable similarities consumers share.
The research and measurement of buyer behavior is vitally important to the field of marketing
because it can provide insight into a possible future success.
The Company offers its high quality products under multiple brands and sub-brands. With a
diverse product mix, Timberland sells products that encourage outdoor exploration to active men,
women and children, without sacrificing fashion. Timberland product brands and sub-brands
speak to many customer segments seeking different benefits and have grown by way of line
extensions. Product purpose, design, and price vary greatly depending on the product category
and customer. The majority of Timberlands products fall into the BDT 2000-20000 price ranges
which is slightly higher than competitors. Timberland has focused its product positioning on
selling fewer, higher value, classic offerings. Acquisitions of smaller niche brands that serve
small, but growing loyal customers have allowed Timberland to reach target segments previously
out of reach and provide access to past distribution and sales channels. Our consumers can buy
our product from our authorized outlet which is located at Gulshan. But there is always a
question Why people will buy Timberland shoes with a high price? to answer that question all
we can say that no can put a price tag on quality

9.8 Marketing Mix

Marketing mix consists of 4Ps, product, price, place and promotion.

33

Product: As our items tend to be more lucrative, and famous brand product, people will focus on
more our foods and beverage rather than other local brand. We will be offering footwear for both
men and women. The Timberland boot is known for its comfort and durability. Whether its
bought to make a fashion statement, hike through a dirt trail, the boot is iconic. The product line
of green boots will also emphasize eco-friendliness. Timberland will also introduce a revamped
Classic Boot to customers to satisfy Outdoor Enthusiasts. The lip at the top, the stitching, and the
line at the bottom of the boot will all be green, symbolizing the boots eco-friendliness. In
addition, there will be a green Timberland logo on the side. To allow customers to see their
impact in a more tangible manner, the sole of the boot will come with a tree imprint that will
stamp the ground customers walk on. As for the Fashionistas, a stylish boot, chiefly intended for
women, has been created. We have set our products and services on three levels. In term of
product we are going to come up with strategies in quality, warranty and customization
Quality: As we are entering in a highly competitive market where all the products are identical,
so what makes Timberland different is the quality of the product. We will assure that, money the
customer will spend on their shoes will worth it.
Warranty: To gain customer loyalty we will provide one month warranty to every customer that
if any fault has been seen after purchase we will exchange with a new pair of shoes.
Customization: this is the most unique feature of Timberland compared to other footwear
manufacturing companies. With some extra money customer of Timberland has the privilege to
customize their shoes in terms of Body, Collar, Hardware, Laces Midsole, Outsole even
Monogram too.
Price: Now a days customers are quality oriented rather than price oriented. We will provide
customer best quality of products at a premium price. We keep our price higher than the other
shops as our items are much better than them. Prices of our products are following

34

Gender

Products

Price
Range
(BDT)

Hiking Shoes

5000-10000

Boots

14000-24000

Shoes

8000-20000

Sandals

2500-7500

Sandals

5000-9500

Shoes

6000-16000

boots

10000-24000

Men

Women

Place: Primarily we will open our outlet at Gulshan but later we are planning to open more retail
outlets in places like Banani, Uttara and shopping malls like Pink city, Bashundhara city and
Jamuna Future Park where there is consistent foot traffic with all the latest design and product of
Timberland. We are trying to provide information of our latest promotions and product range
through mobiles to our customers. It can be easy for anyone to retrieve information regarding our
brand anywhere and anytime. This will definitely attract more customers to our Timberland
stores and help building a strong brand image.

Promotion: Timberland is an internationally recognized brand but in this country they are new
so we put much emphasis in promotional activities. This has to be done using a massive
advertising and promotion strategy. The promotion will be done in the following ways to ensure
effective marketing for Timberland.
35

Transcom is associated with many famous international brands like KFC and Pizza Hut and now
we will be introducing Timberland in this country, so will have the benefit of promotion done by
Timberland internationally with famous celebrities like David Duchovny, Julia Roberts.
Formulating easy to understand comprehensive and eye-catching brochures, leaflets and
pamphlets with convincing words and circulate it at a mass level to the public in Dhaka city. The
brochures will be distributed free of cost via agents at different parts of Dhaka. Leaflet can also
be provided with daily newspaper circulation at various households, distributed at mass
gatherings like after Friday prayers at mosques or in shopping complexes and University
students.
We will use online social media to gain mass attention from customers all around the country. We
will also use online marketing in the form of Facebook fan page and a twitter account. In this
way, it can spread its word to local online users. Timberland might provide special discounts or
offers once in a while for its Facebook fans or Twitter followers.
For students we will offer special discount up to 20% depending on the product.
To create awareness we will be using billboards in the prominent locations like Uttara, Banani
and Bijay Sharani.
On the day o inauguration we will arrange a fashion show with famous celebrities of our country
as our products model.
Running regular advertisements on all popular local and English newspapers and magazines.
Along with advertisements, promotional brochures can also be printed as newspaper supplements
to catch peoples attention.
Total Budget for Advertising Plan:
Advertisement Sectors
Billboards
Newspapers
Web Page Design
Magazines
Leaflets
Banners
Brochures
Total

Amount (BDT)
15,00,000
15,00,000
100,000
600,000
100,000
100,000
100,000
40,00,000

9.9 Expanded Mix for services

We will use expanded marketing mix strategy that includes people, physical evidence and
process.
People: Employees can play a vital role in selling products and influence customer perceptions.
Their dressed and personal appearance influence customer perception of the services. So we hire
good quality employee and train them so that they can persuade our customer to perceive
36

positively about our services. There will be 15 permanent employees with 5 part-time employees
for the rush hour. Also there will be a highly qualified manager who will be capable of managing
everything perfectly.
Physical evidence: The shop environment in where products will be sold and any components
that facilitate performance and communication of services. We will focus on interior design,
Bouchers, Surrounding environment, music and the entire physical thing that can attract our
customer.
Process: The flow of activities by which service is delivered. We will provide services to our
customer efficiently and effectively.
Evaluation Sheet
We will prepare this sort of sheet because this would help us to know about the expectations of
the customers. We can improve our service as we will know about their wants and expectations.
If customers are dissatisfied with our service then we will be able to bring in a change with the
help of our 'experts'. The suggestion box in the sheet might let us make familiar about the main
problem being faced by the customers.
Criteria

Rating
Delighted (4)

Satisfied(3)

Moderate(2)

Dissatisfied(1)

Product Quality
Store Environment
Employee behavior
Overall service quality
Suggestions :

10.0 Operational plan

The following section will identify the proposed operational plan for Timberland. Included are
the general operating procedures, sources of materials, geographical location, human resources,
pricing strategy and breakeven point of the business.
10.1 General operating hours
Timberland intends to operate every day from 10.00am to 10.00pm. We also expected to get
more customers in the weekend and in various festivals like Eid, Puja so we will keep open our
shop 12.00pm on the weekend and also in other festivals and occasions.
37

10.2 Arrangement of Raw Materials / Product

As we are not manufacturing our products in our country so we dont have to import any sort of
raw materials from any supplier rather we need to import our finished goods or final product.
After considering all the facts we have decided that our primary choice for import footwear is
China, second choice is Vietnam. Reasons for choosing both the country for the import of our
product is the cost of production is of these countries are low compared to other countries
manufacturing products of Timberland which in turn will help us to set our price in a way so that
we can earn higher profit.
The flowchart drawn below will help understand the overall process.
Distributor 2

Distributor 1
IF Fail

(CHINA)

Import in every
two months

Transport in
own van

Customer comes
to the outlet

10.3 Distribution System

(VIETNAM)

Store in a
warehouse

Move to outlet
for sales

Sales
manage
r

Cash counter

38

Customer
1

Customer
2

Customer
3

Customer
4

10.4 Technology utilization

We already mentioned that we are not manufacturing our products in this country so when it
comes to the fact of technology utilization we are restricted in areas like selling, customer
retention and maintaining our daily operations.
We will use latest accounting and other necessary softwares to keep track our daily sales and it
will help us to create quarterly reports.
We will store all the necessary information which includes contact address and email address of
our respective customers in our database system so that we stay connected with our customers
and let them know about latest products and offers.
10.5 Skilled employees
We will not offer any sort of people who is looking for an internship rather we will hire college
and university students looking for a part-time job and want to earn handsome money, beside we
will have regular employees who are trained by Timberland.
10.6 Pricing strategy
The price of our product is bit higher than other products available in the market due to the
superior quality of our product but we will offer special discount to students.

Future plan
In the future Timberland will introduce more and more new product to the customers. We have
plans to open new outlets at other areas in Dhaka, Chittagong and Sylhet. Internet based
customer service will soon be introduced. We will provide 3 types of Cards to our special
customers to buy the product with discount.
11.0 Management Summary
The businesss management philosophy is based on responsibility and mutual respect,
Timberland has an environment and structure that encourages productivity and respect for
39

customers and fellow employees. We will concentrate on communicating with employee and be
honest with them. We also share with our employees about our objectives, mission and vision for
the business with the intent of generating a heighten level of motivation and support. We listen to
the employees because we believe that they have intimate knowledge of business and its
strengths and weakness and they can express valuable suggestions.
11.1 Personnel plan
As Transcom is entering in a new industry (Footwear industry) and we consider ourselves as
employees of Trasncom who are in charge of their footwear section. Overall, Timberland will
have 20 personnel. How many personnel requires on the basis of time in two branches that is
given bellow:
Type of employees

Number of Employees

Position of Employees

Full time employees

20

Business Manager (1),

Accountant (1),
Operation Manager (2) ,
Sales man (10),
Cash counter (2) ,
Security guard (4)

Total

20

Business manager
As initially we have only one outlet we will hire one person who will work as business manager
and whose main job monitor the outlet and keep track all the transaction.
Accountant
In the beginning we will hire an accountant on weekly basis whose main job will be to come
once in a week and cross check all the transactions and then enter those transaction data in the
database.
Operation Manager
40

The main job of our operation manager will be to check the inventories while clearing the port
and then again recheck those inventories while storing in the warehouse and finally they have to
keep track of those inventories which are running short and notify the purchase department,
Sales man
We will have eight full time and two part time sales employees to run our day to day selling
activities.
Cash counter
In the outlet we will have two cash counters so that our customers dont need to wait in line after
the purchase of our product.
Security guards
We will employ four security guards to guard our outlet and warehouse.

12.0 Financial Plan:

12.1 Anticipating readers concern:
Transcom will only the interested to bring the Franchise of Timberlands is the ROI and IRR is
greater than the Transcoms Hurdle rate. Hurdle rate in simple form is considered as the
minimum rate of return for investment. The hurdle rate for Transcom is 9.99%. The calculation
of the hurdle rate is shown in Appendix.
12.2 The Initial investment:
The capital required for initial investment is TK 20,661,000 out of which Transcom will invest
TK 12,161,000, the remaining 8,500,000 Tk will be taken as bank loan. The bank loan will be
41

used for the down payment of land and remaining cost will be supported from the investment of
Transcom. The detail of initial investment is given below:
Initial Cost

US Dollar ($)

Taka

Initial Franchise Fee

100,000

7,780,000

Marketing Startup Fee

20,000

1,556,000

Down payment for land

8,500,000

Electronic Cash Register

25,000

Site Development

850,000

Furniture

1,000,000

Employee Training

500,000

Miscellaneous Cost

450,000

Total

20,661,000

12.3 The Pro Forma Income statements for next five years are given below:
Profit and loss Account

Year 1
Taka

Sales
Cost of Goods sold
Gross Profit

Year 2
Taka

Taka

35,000,000

40,250,000

8,500,000

9,095,000
26,500,000

Taka

31,155,000

Less: oparating Expenses

42

Salaries

950,000

1,045,000

Depreciation

600,000

600,000

Amortization of Intangible Assets

350,000

350,000

2,450,000

2,012,500

500,000

535,000

1,200,000

1,200,000

(8,500,000)

(8,500,000)

450,000

450,000

Utilities

1,000,000

1,000,000

Marketing

4,000,000

3,800,000

Royalty Fees
Miscellanous Expenses
Rent
Prepaid Rent
Insurance

Total Expenses

3,000,000

2,492,500

EBIT

23,500,000

28,662,500

3,525,000

4,299,375

EBT

19,975,000

24,363,125

Tax

8,988,750

10,963,406

10,986,250

13,399,719

Interest

Net Profit

Profit and loss Account

Year 3
Taka

Year 4
Taka

Taka

Sales

46,287,500

53,230,625

Cost of Goods sold

10,004,500

11,505,175

Gross Profit

36,283,000

Taka

41,725,450

Less: operating Expenses

43

Salaries

1,170,400

1,310,848

Depreciation

600,000

600,000

Amortization of Intangible Assets

350,000

350,000

2,314,375

2,661,531

561,750

606,690

1,400,000

1,400,000

(8,500,000)

(8,500,000)

450,000

450,000

Utilities

1,200,000

1,200,000

Marketing

3,781,000

3,591,950

Royalty Fees
Miscellaneous Expenses
Rent
Prepaid Rent
Insurance

Total Expenses

3,327,525

3,671,019

EBIT

32,955,475

38,054,431

Interest

4,943,321

5,708,165

EBT

28,012,154

32,346,266

Tax

12,605,469

14,555,820

Net Profit

15,406,685

17,790,446

Profit and loss Account

Year 5
Taka

Sales

61,215,219

Cost of Goods sold

13,115,900

Gross Profit

Taka

48,099,319

Less: operating Expenses

Salaries
Depreciation

1,468,150
600,000
44

Amortization of Intangible Assets

350,000

Royalty Fees

3,060,761

Miscellaneous Expenses

679,493

Rent

1,800,000

Prepaid Rent

(8,500,000)

Insurance

450,000

Utilities

1,400,000

Marketing

3,053,158

Total Expenses

4,361,561

EBIT

43,737,758

Interest

6,560,664

EBT

37,177,094

Tax

16,729,692

Net Profit

20,447,402

he pro forma income statements for five years shows

Net profit in year 1: 10,986,250 , Net profit in year 2: 13,399,719, Net profit in year 3:
15,406,685, Net profit in year 4: 17,790,446,Net profit in year 5: 20,447,402
12.4 Pro Forma Cash flow Statements for next five years
Pro forma Cash flow statement for
Year 1

Year 1
Q1

Opening Balance

Q2

Q3

16,329,500 28,265,750

Q4
40,202,000

Net Cash provided by Operating

activities
Net Income

10,986,250

Depreciation

600,000

Ammortization of intangible assets

350,000

Net Cash provided by Operating

activities

11,936,250

11,936,250

11,936,250 11,936,250

45

Net cash provided by Investing

Activities
Capital Investment

(20,661,000)

Net cash used by investment

activities

(20,661,000)

Cash from Financing Activities

Capital Received from Transcom
Bank loan

12,396,600
8,264,400

Interest Paid

(3,525,000)

Net Cash used by financing

activities

20,661,000

Net increase/Decrease in Cash

11,936,250

11,936,250

11,936,250

8,411,250

Closing Balance

16,329,500

28,265,750 40,202,000

48,613,250

Pro forma Cash flow statement for

Year 2

Year 2
Q1

Opening Balance

Q2

Q3

Q4

48,613,250 62,962,969 77,312,688

91,662,407

14,349,719 14,349,719 14,349,719

14,349,719

Net Cash provided by Operating

activities
Net Income

13,399,719

Depreciation

600,000

Amortization of intangible assets

350,000

Net Cash provided by Operating

activities

46

Net cash provided by Investing

Activities
Capital Investment
Net cash used by investment activities

Cash from Financing Activities

Capital Received from Transcom
Bank loan
Interest Paid

(4,299,375)

Net Cash used by financing activities

Net increase/Decrease in Cash

14,349,719 14,349,719 14,349,719

10,050,344

Closing Balance

62,962,969 77,312,688 91,662,407

101,712,751

Pro forma Cash flow statement

for Year 3

Year 3
Q1

Opening Balance

Q2

Q3

Q4

101,712,751

118,069,436 134,426,121

150,782,806

16,356,685

16,356,685

16,356,685

Net Cash provided by Operating

activities
Net Income

15,406,685

Depreciation

600,000

Amortization of intangible assets

350,000

Net Cash provided by Operating

activities

16,356,685

Net cash provided by Investing

47

Activities
Capital Investment
Net cash used by investment
activities

Cash from Financing Activities

Capital Received from Transcom
Bank loan
Interest Paid

(4,943,321)

Net Cash used by financing

activities

Net increase/Decrease in Cash

16,356,685

16,356,685

11,413,364

Closing Balance

118,069,436 134,426,121 150,782,806

162,196,170

Pro forma Cash flow statement

for Year 4

16,356,685

Year 4

Opening Balance

Q1

Q2

Q3

Q4

162,196,170

180,936,616

199,677,063

218,417,509

18,740,446

18,740,446

18,740,446

18,740,446

Net Cash provided by Operating

activities
Net Income

17,790,446

Depreciation

600,000

Amortization of intangible assets

350,000

Net Cash provided by Operating

activities

48

Net cash provided by Investing

Activities
Capital Investment
Net cash used by investment
activities

Cash from Financing Activities

Capital Received from Transcom
Bank loan
Interest Paid

(5,708,165)

Net Cash used by financing

activities

Net increase/Decrease in Cash

18,740,446

18,740,446

18,740,446

13,032,282

Closing Balance

180,936,616

199,677,063

218,417,509

231,449,791

Q3

Q4

Pro forma Cash flow

statement for Year 5

Year 5
Q1

Opening Balance

Q2

231,449,791 252,847,193 274,244,594

295,641,996

21,397,402

21,397,402

Net Cash provided by

Operating activities
Net Income

20,447,402

Depreciation

600,000

Amortization of intangible
assets

350,000

Net Cash provided by

Operating activities

21,397,402

21,397,402

49

Net cash provided by

Investing Activities
Capital Investment
Net cash used by investment
activities

Cash from Financing

Activities
Capital Received from
Transcom
Bank loan
Interest Paid

(6,560,664)

Net Cash used by financing

activities

Net increase/Decrease in Cash

21,397,402

21,397,402

21,397,402

14,836,738

Closing Balance

252,847,193 274,244,594 295,641,996

310,478,734

12.5 Pro forma balance sheet for next five years

Pro Forma Balance sheet For Year 1

Taka

Dep(Taka)

Net(Taka)

Assets
Current Assets
Cash

48,613,250

Prepaid Rent

8,500,000

Other Current Assets

1,107,350

Total Current Assets

58,220,600

Property, Plant & Equipment

Furniture

1,000,000

100,000

900,000
50

Cash Register

25,000

2,500

22,500

Franchise Fee

7,780,000

778,000

7,002,000

Marketing Startup Fee

1,556,000

155,600

1,400,400

Site Development

850,000

85,000

765,000

Training

500,000

50,000

450,000

Intangible Assets

Total Assets

68,760,500

Current Liabilities
Working Capital Loan

21,107,350

Working Capital

37,113,250

Capital Employed

Owner's equity
Capital

12,396,600

Net profit

10,986,250

Long term Loan

8,264,400

31,647,250

Total Liabilities & Owner's Equity

Pro Forma Balance sheet For Year

2

68,760,500

Taka

Dep
(Taka)

Net (Taka)

Assets
Current Assets
Cash
Prepaid Rent
Total Current Assets

101,712,751
6,500,000
108,212,751

51

Property, Plant & Equipment

Furniture

1,000,000

200,000

800,000

25,000

5,000

20,000

Cash Register
Total Fixed Asset

820,000

Intangible Assets
Franchise Fee

7,780,000

1,556,000

6,224,000

Marketing Startup Fee

1,556,000

311,200

1,244,800

Site Development

850,000

170,000

680,000

Training

500,000

100,000

400,000

Total Assets

123,805,551

Current Liabilities
Working Capital Loan

40,000,000

Working Capital

68,212,751

Accounts Payable

5,272,916

Accrued Liabilities

5,272,916

Owner's equity
Capital

12,396,600

Retained Earning

24,385,969

Long term Loan

8,264,400

Total Liabilities & Owner's Equity

Pro Forma Balance

sheet For Year 3

Taka

123,805,551

Dep
(Taka)

Net (Taka)

Assets
52

Current Assets
Cash

162,196,170

Prepaid Rent

4,500,000

Total Current Assets

166,696,170

Property, Plant &

Equipment
Furniture
Cash Register

1,000,000

300,000

700,000

25,000

7,500

17,500

Total Fixed Asset

717,500

Intangible Assets
Franchise Fee

7,780,000

2,334,000

5,446,000

Marketing Startup Fee

1,556,000

466,800

1,089,200

Site Development

850,000

255,000

595,000

Training

500,000

150,000

350,000

Total Assets

174,893,870

Current Liabilities
Working Capital Loan

80,000,000

Working Capital

86,696,170

Accounts Payable

3,635,895

Accrued Liabilities

24,108,152

Owner's equity
Capital

12,396,600

Retained Earning

39,792,653

Long term Loan

8,264,400

53

Total Liabilities &

Owner's Equity

Pro Forma Balance sheet For

Year 4

174,893,870

Taka

Dep (Taka)

Net (Taka)

Assets
Current Assets
Cash

231,449,791

Prepaid Rent

2,500,000

Total Current Assets

233,949,791

Property, Plant & Equipment

Furniture
Cash Register
Total Fixed Asset

1,000,000

400,000

600,000

25,000

10,000

15,000
615,000
54

Intangible Assets
Franchise Fee

7,780,000

3,112,000

4,668,000

Marketing Startup Fee

1,556,000

622,400

933,600

Site Development

850,000

340,000

510,000

Training

500,000

200,000

300,000

Total Assets

240,976,391

Current Liabilities
Working Capital Loan

113,912,604

Working Capital

120,037,187

Accounts Payable

25,617,062

Accrued Liabilities

17,078,042

Owner's equity
Capital

12,396,600

Retained Earning

57,583,100

Long term Loan

8,264,400

Total Liabilities & Owner's

Equity

Pro Forma Balance sheet For Year 5

240,976,391

Taka

Dep
(Taka)

Net (Taka)

Assets
Current Assets
Cash

310,478,734
55

Prepaid Rent

1,500,000

Total Current Assets

311,978,734

Property, Plant & Equipment

Furniture
Cash Register

1,000,000

500,000

500,000

25,000

12,500

12,500

Total Fixed Asset

512,500

Intangible Assets
Franchise Fee

7,780,000

3,890,000

3,890,000

Marketing Startup Fee

1,556,000

778,000

778,000

Site Development

850,000

425,000

425,000

Training

500,000

250,000

250,000

Total Assets

317,834,234

Current Liabilities
Working Capital Loan

164,357,050

Working Capital

147,621,684

Accounts Payable

46,488,682

Accrued Liabilities

25,032,367

Owner's equity
Capital

12,396,600

Retained Earning

78,030,501

Long term Loan

Total Liabilities And Owner's Equity

8,264,400

317,834,234

56

12.6 Definitions and assumptions of few elements of financial statements

Sales:
Each year there will be an increase in sales by 15%. It is because we believe that that Timberland
is a well-known international brand and its the huge range of premium quality shoes that
differentiate us from our competitors. Our wide range of products will allow us to attract more
customers as the time pass. Timberland will be maintaining its premium quality thereby, that will
not only retain the existing customers but also attract new customers. Therefore we believe that
the sales may increase above this mentioned percentage.
Cost of Goods sold:
The cost of goods sold is estimated to 15% of the total sales. This percentage will be maintained
for following years. The cost of goods sold is minimum we will not be manufacturing any
products. We will be purchasing from Timberland Franchisor at wholesale price.
Gross Profit:
The Gross profit margin is estimated to 75% of the total sales. The reason behind maintain such
high profit margin is that Timberland BD will be required to provide a royalty fee to its
franchisor.

Depreciation and Amortization

The calculation for depreciation is done through straight line basis with ten years life and with no
scrap value. The details of depreciation and Amortization are given below:
Year 1
Cash Register

Year 2

Year 3

Year 4

Year 5

25,000

2,500

5,000

7,500

10,000

12,500

1,000,000

100,000

200,000

300,000

400,000

500,000

Franchise Fee

7,780,000

778,000

1,556,000

2,334,000

3,112,000

3,890,000

Marketing Startup Fee

1,556,000

155,600

311,200

466,800

622,400

778,000

Site Development

850,000

85,000

170,000

255,000

340,000

425,000

Training

500,000

50,000

100,000

150,000

200,000

250,000

Furniture

Amortization of Intangible
Assets

57

Royalty Fees:
Royalty fee is the percentage of sales that is given to Franchisor. The royalty fee for Timberland
is fixed at 5% of total sales of the year.
Miscellaneous Expenses:
These expenses include the travelling cost, telephone cost etc. we observed that the change is
inflation rate for the years is on average 3 point basis. Therefore we assumed that expected rate
of inflation will be will 3 point basis at will be increasing at an increasing rate. Therefore, there
will be a .03% change in miscellaneous expense for the years.
Marketing Expense:
40000000 TK is allocated yearly for marketing expenses that include advertisement on paper and
maintaining web domain and bill board advertisement.

12.7 The Break even analysis for first year:

Timberlands products can be classified in two broad categories: Men and women shoes. As
Timberland is well known for its Men shoe items we are assuming that 65% of our revenue will
be generated from men shoes. The remaining 35% revenue will be generated from women shoes.
The total revenue generated for the first year is assumed to TK 35,000,000 and it is multiply by
the above mentioned percentage to find the revenue generated by each category. The calculation
is shown below:
Category

Calculation

Revenue Generated by Each

Section

Men Footwear

35,000,000*65%

22,750,000

Women Footwear

35,000,000*35%

12,250,000

We are assuming that the cost of good that is the variable cost will be 30% of the selling price.
To find the unit contribution margin for each category of product we first have to find the
variable cost of the each category. Following shows the average price of each category and its
variable cost:
Items

Average Selling

Variable Cost per

Contribution Margin
58

Price

Unit

per unit

Men Footwear

6,625

1988

4673

Women Footwear

9,667

2900

6767

Now to find the contribution margin ratio for each category the unit contribution margin will be
divided by the selling price. The calculation is given below:
Items

Calculation

Contribution margin ratio

Men Footwear

4673/6,625* 100%

70%

Women Footwear

2900/9,667*100%

30%

Annual Contribution margin for each category

Men Footwear: 22,750,000*70% = 15,925,000 (BDT)
Women Footwear: 12,250,000*30% = 3,675,000 (BDT)
Contribution margin for entire business: 19,600,000/35,000,000*100% = 56%
The fixed cost for the Timberland BD is assumed to 1,65,0000 TK. Therefore the breakeven
point for Timberland is
Break-even Point in TK= annual fixed expenses/ contribution margin ratio for the entire business
1,65,0000*56% = 924,000 (BDT)

12.8 The Calculation of IRR:

The Internal Rate of Return, or IRR for short, is a measure of your investment performance, and
is expressed as percent return per year. The calculation if IRR for Timberland is given below:
Calculation of IRR
Initial Investment

(20,396,000)

Net profit for year 1

10,986,250

Net profit for year 2

13,399,719

Net profit for year 3

15,406,685

59

Net profit for year 4

17,790,446

Net profit for year 5

20,447,402

IRR

60%

The IRR is much higher than the Hurdle rate of Transcom therefore Transcom should invest in
this project.

12.9 The NPV analysis

Data

Description

10%

Annual discount rate

(12,396,600)

Initial cost of Investment

15,516,033

Return from first year

34,540,125

return from second year

47,675,484

return from third year

76,783,890

return from fourth year

112,039,288

return from fifth year

170,987,047

NPV

Form the above analysis we can see that the NPV for this project is positive so Transcom should
proceed with this project.
60

13.0 Risk management plan

In this risk management plan we will mention risk factors for our business and how can we
reduce risk.
13.1 Risks related to our business
We operate in a highly competitive industry
We market our products in highly competitive environments. Many of our competitors are larger
and have substantially greater resources for marketing, research and development and other
purposes. Furthermore, efforts by our competitors to dispose of their excess inventory could put
downward pressure on retail prices and could cause to redirect some of their purchases away
from our products.
Difficulties matching our products to consumer preferences and demand
As we continue to sell established products our success depends in large part on our ability to
anticipate, understand and react to changing consumer demands. We believe that our more
fashion-focused products are more susceptible to changing fashion trends and consumer
preferences than our other products. Our products must appeal to a broad range of consumers
whose preferences cannot be predicted with certainty and are subject to rapid change. The
success of our products and marketing strategy will also depend on a favorable reception by our
customers. Any failure on our part to anticipate, identify and respond effectively to changing
consumer demands and fashion trends could adversely affect retail and consumer acceptance of
our products and leave us with unsold inventory or missed opportunities. If that occurs, we may
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be forced to rely on markdowns or promotional sales to dispose of excess, slow-moving

inventory, which may harm our business.
Unable to execute key strategic initiatives
We continue to take actions to restructure our business operations to maximize operating
effectiveness and efficiency and to reduce costs. Achievement of the targeted benefits depends in
part on our ability to identify, develop and execute strategies and initiatives appropriately and
effectively. We cannot assure you that we will achieve the targeted benefits under these programs
within a targeted timeframe or within targeted costs or that the benefits, even if achieved, will be
adequate.
Inflation, import restriction and taxes
Inflation, recession or other economic downturn might lead to the reduction in the purchasing
power of our target market, in effect of which the revenue will be affected negatively, beside all
these if government restrict our import or increase import duty that will lead to increase of price
and eventually it will have an impact our sales.

Disruption to the supply of our products

We are dependent only on two suppliers; if one of them backs out or unable to supply our
products that will adversely affect our business
Inability to attract and retain qualified employees could impact our business
We compete for talented employees within our industry. We must maintain competitive
compensation packages to recruit and retain qualified employees. Our failure to attract and retain
qualified employees could adversely affect the sales, design and engineering of our products.
Business is affected by seasonality, which could result in fluctuations in our operating
results
The mix of product sales may vary considerably from time to time as a result of changes in
seasonal and geographic demand for particular types of footwear. As a result, we may not be able
to predict our quarterly sales accurately. Accordingly, our results of operations are likely to
fluctuate significantly from period to period. Results of operations in any period should not be
considered indicative of the results to be expected for any future period.
Business could be adversely affected by governmental policies and regulation
Our business is affected by changes in government and regulatory policies in Bangladesh and in
other countries. Changes in interest rates, tax laws, duties, tariffs and quotas could have a
negative impact on our ability to produce and market our products at competitive prices.
13.3 Probability Impact Matrix
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Risk Factors

Low

Medium

Competition Within Industry

Consumer preferences and demand

P
R
O
B
A
B
I
L
I
T
Y

Execution of key strategic initiatives

Inflation, import restrictions

Disruption in supply

Inability to attract and retain qualified

employees

Business is affected by seasonality

Affected by governmental policies and

regulation
Customers financial condition

13.4 Risk minimization

High

IMPACT

In our country various shoe companies are operating but not all of them are considered as our
competitors. Our main competitors are offering various types of products and to beat them all we
need is to introduce new line of products.
Consumer demand and preference is changing day by day and to catch up with them we need to
focus more on consumer preference and to do that we should do surveys.
In order to attract qualified employees we need to offer them handsome salary and other
facilities. After finding the right employees for our business we can retain them by giving them
promotions, bonuses and if those employees are from sales department commission on per unit
sales.

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14.0 Proposal for Loan

Since lots of investment is required to enter into new industry. It is not possible to enter into such
a business with just the capitals from the investors. The business should also have loan back up
plan in order to run the business. Overall the capital part of a business consists of both loan and
personal capital from owners.
Timberland is an innovative with a reputation for integrity, quality craftsmanship, and excellence
in management. As mentioned earlier, the business plan will be carried out by Transcom Limited.
Since it is a franchiser business it would be financed by 2 corers bank loan. We have already
taken information regarding the loan and have selected Bank al Arafah as our business loan
financer.
The total set up cost of the business is estimated to be BDT.2 cores. Tk. 1cores will be invested
by the working capital which rate is 18.80% and the rest Tk. 1 cores will be invested by the fixed
loan which rate is 6.50%. The main purpose of the loan is to help in the initial set up cost of the
business like leasing land, construction, purchasing the furniture, hiring manpower etc. The
repayment of the loan will be done in 72 monthly equal installments, at the end of every month
with an annual interest of 15%

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14.1 Cover Letter for loan Proposal

Date: March 22, 2014
To
Mr. FazluzSobhan
Loan Officer
Bank Al Arafah,
Dhaka
Dear Sir,
Please find enclosed all of the required documentation for a Small Business Loan from Bank
AlArafaha detailed by you.
In addition to application forms I have also included the business plan of Timberland. In this
summary you will find details of our activities, current assets, projected growth and expected
financial objectives.
Please review the enclosed business plan and loan proposal, and of course feel free to ask for any
additional information or explanations you may want. I will call you in about one week's time to
arrange an appointment so we can discuss the loan in person.
I look forward to working with Bank Al Arafah in the future.
Yours sincerely,
___________________
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Falil Mohiuddin Gaalib

15.0 Conclusion
The Internet has totally changed the way we communicate and the way the public is informed,
while compelling businesses to listen to the demands of the consumer. We now live in a
consumer-driven business world where instant and easy access to information is not only what
consumers want but what they expect.
When we developing our business plan we keep ourselves in our customer place and thought that
why should I come here and why should I buy Timberland footwear? After realizing this entire
situation we plan our product and make plan how we decorate our shop and what type of facility
we provide in our shop.
As quality is our main concern we will be assuring to every buyers of our product that their
investment is worth to the service of their products. Timberlands age-long experience and brand
image have given it a competitive advantage over all other brands. People prefer and know
Timberland as a quality footwear manufacturer. Although Timberland has been quite successful
with its marketing strategies, we will get more involved with advertisement and promotional
activities and focus more on their products and services as competitors will emerge in the
footwear market. With advanced planning and proper implementation of the plans, Timberland is
expected to maintain its position in the footwear market, giving a good competition to all other
footwear manufacturers of the country.

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Appendix
Calculations
Calculation of risk free rate (Rf):
Average inflation rate for last five years (year 2008 to year 2012) = 0.08664
American T-bill rate = 0.0248
Risk free rate ( Rf) = 0.11144
Calculation of Return on market (Rm) using all price index:
Index return on January 2008 = 2,529.66
Index return on December 2012 = 3,577.21
Average index return for last five years (Rm) = 0.41/5 = 0.082821
Calculation of Cost of capital for Transcom Ltd:
Formula: Rf + ( Rm Rf)
= 0.11144 + 0.65 (0.082821- 0.11144)
= 0.09283765
Beta for Fu-Wang Food Ltd = 0.65
Calculation of Cost of Debt for Transcom Ltd:
Formula: interest rate/ debt liabilities
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= 5,213,605/ 66,497,124
= 0.078403
Calculation of weight of Debt for Transcom Ltd:
Total equity = 739,787,545
Total Debt =66,497,124
Total debt and equity = 806,284,669
Wd = 66,497,124 / 806,284,669
= 0.082474

Calculation of weight of equity for Transcom Ltd:

We = 739,787,545 / 806,284,669
= 0.917526
Weighted Average Cost of Capital for Fu- Transcom Ltd:
Formula: We Ce + Wd Cd (1 T)
= 0.917526 0.09283765 + 0.082474 0.078403 (1 - .37.50)
= 0.089222= 8.9222%
Hurdle Rate= 8.9222% + 9.283765% = 18.205965%

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