Business Plan

Java Design Furniture

Muhammad Mirza Maulana

IPMI INTERNATIONAL BUSINESS SCHOOL,

JL. RAWAJATI TIMUR I/1, KALIBATA
JAKARTA SELATAN 12750
Website: www.ipmi.ac.id
A. Introduction

PT. Backlight Group Indonesia - Minister is new furniture manufacturing

company provide expertise and high quality products market while meeting the
demanding organizational, scheduling, and quality needs of architects, owners, and
construction professionals. Minister is owned by Five founder included Muhammad
Mirza Maulana and established a year ago in 2016. Our factory is located in pondok
kelapa East Jakarta and we have 25 workers in daily operations. Businesses in this
industry mainly manufacture or make household (living room, dining room and bedroom
furniture, upholstered, coffee tables, sofa tables, end tables, sofas, love seats, chairs,
bookshelves, ottomans, display cabinets, consoles and TV stands and otherwise), outdoor
and office furniture (Desks and home office goods, lamps, recliners, rugs and outdoor
furniture make up the rest of sales). We are aware that there are several large and small
furniture manufacturing companies all around Jakarta, which is why we spent time and
resources to conduct a thorough feasibility studies and market survey so as to be well
positioned to favorably compete with all our competitors.

B. Our Vision & Mission Statement

Our vision is to become the leading brand in the furniture manufacturing industry in
Indonesia and to establish a one furniture manufacturing company in Jakarta

Our mission is to establish a world class furniture manufacturing business whose

products will not only be retailed in Indonesia, but also be exported to other countries of
the world especially Western Countries.

C. Products & Services

Minister is in the furniture manufacturing industry to manufacture both home and

office furniture; to service a wide range of clients and of course to make profits, which is
why we will ensure we go all the way to give our clients and potential clients options.We
will do all that is permitted by the law of the Indonesia Government to achieve our
business goal, aim and ambition of starting the business. The service aspect of Minister

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marketing mix is limited in traditional terms. That is, due to our high degree of quality in
manufacturing and assembly, our product lines do not require continued maintenance or
service. However, we do consider our customer service to be key to the retention of
customers.

Minister manufactures many accessories in addition to our main, executive desk

lines. As a result, we offer a fully integrated office environment, including peripherals
such as lamps, cabinets, tables, and chairs. Therefore, a Minister Furniture customer is
not considered to be a one time buyer. The establishment of a quality office environment
can be an on-going process. Minister will continue to offer additional pieces to our
customers, targeting them based on their previous purchases.

Our product offerings are listed below;

1. Manufacturing of household furniture (living room, dining room and bedroom

furniture, upholstered, coffee tables, sofa tables, end tables, sofas, love seats, )
2. Manufacturing stationary sofas/sofa-sleepers
3. Manufacturing metal household and office furniture
4. Manufacturing custom architectural woodwork and other fixtures
5. Manufacturing showcases, partitions, shelving and lockers.

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D. Price
Minister competes with various global retail chains as well as local company.
Medium prices constitute the Minister vision, business idea and concept.. It focusses on
cost control and efficient operational details. Even we using solid wood and solid design
it could be more efficient caused we are closed to raw material suppliers and low wages.
For the price we divided two categories B to B and B to C is on approximately Rp
500,000-Rp 9.500.000, depend on degree of quality and quantity.
E. Promotion
Minister using social media to advertise our products. Facebook, instagram,
twitter etc is the fastest way to extract our product to worldwide especially to europe.
Campaigns differ from everyday social media efforts because of their increased focus,
targeting, and measurability. Low cost and reached is the reason we using this strategy.
F. Place
Minister has got an excellent place and distribution strategy as a part of its
marketing mix. Distribution is based on the following principles. It has huge volumes on
manufacturing side and flat packages i.e. it is useful in increasing value to weight ratio..
Procuring some materials in proximity with supply chain to reduce transport costs and
using more of ocean transport than road transports by. This reduces handling costs,
reduces transport and lowers the carbon footprint. Also. warehouses are attached to retail
stores.

G. Analysis Industry Indonesia Market and Entry International Market

Indonesia has an established reputation within the furniture and handicrafts sector
within the regional and global market due to the countrys strong historical traditions in
woodwork and artistic crafts such as batik. The countrys abundant natural resources as
the worlds largest rattan producer and with access to a variety of wood types like teak
have served as the basis for Indonesias extensive furniture and homeware industry with
exports reaching $2.2 billion USD in 2011 and expected to reach $2.7 billion USD in
2012 (ASMINDO, The Indonesia Furniture Industry and Handicraft Association). The
industry faces solid growth prospects from not only its traditional export markets but

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increasingly from the ASEAN region as well as the domestic market. Indonesias
domestic furniture and homeware sector has been growing steadily in line with the
growth of the middle class and consumer purchasing power as well as home ownership
among those of productive and working age. Furniture and homeware imports have been
rising presenting new opportunities to foreign brands while simultaneously local retail
brands have matured and are gaining notoriety at both ends of the market spectrum
thereby making their mark on the furniture and interior design industry. Indonesias
furniture industry has long been viewed as an export orientated industry only, however
with private consumption largely driving the countrys economic growth the potential in
the domestic market is now taking centre stage. Indonesias domestic sales in furniture
and homeware are worth over $700 million USD annually according to ASMINDO and
retail sales have grown by 12.1% CAGR from 2004-2009 (Datamonitor). The industry
displays interesting cyclical trends such as a peak in sales prior to the Ramadan month of
fasting and the Idul Fitri holidays as it is customary to receive family and friends
frequently throughout this period and therefore a necessity to ensure that home decor and
furnishings are at their best. The custom of gift giving also contributes to sales in
homeware and accessory products at this time significantly. Such cultural attributes
combined with the increasing affluence of the middle and upper class make the market
attractive for both local and international furniture brands as well as increasingly
lucrative for offshoot industries such as interior design, lighting, landscaping and
artwork.
Research and Markets has announced the addition of the "Home Furnishings
Market in Europe 2016-2020" report to their offering. The home furnishings market in
Europe to grow at a CAGR of 3.5% during the period 2016-2020.Home Furnishings
Market in Europe 2016-2020, has been prepared based on an in-depth market analysis
with inputs from industry experts. The report covers the market landscape and its growth
prospects over the coming years. The report also includes a discussion of the key vendors
operating in this market.In 2015, the home furniture market in Europe accounted for the
highest market share in the home furnishings market in Europe. Multi-functional
furniture is gaining in popularity in the home furniture market in Europe. The demand for
luxury home furniture is expected to increase during the forecast period, boosting the

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 market growth. The living room and bedroom furniture segments generate the majority of
the sales, followed by the kitchen segment in terms of consumer spending on luxury
home furniture. A major trend in the bathroom furniture segment is the use of the country
or rustic style, involving the use of pale, pastel colors and traditional styling. IKEA's
STORJORM mirror cabinets cater to the bathroom furniture segment and have gained
considerable consumer interest due to the unique styling of this range. IKEA and
Steinhoff are the major players in the market. A trend which is positively impacting the
market is the rising demand for eco-friendly furnishings. Growing environmental
consciousness and concern for a healthy and green environment have led to the increased
demand for eco-friendly furniture and other furnishings. Awareness of the effect of
deforestation on climate change and the effects of toxic finishes in the air inside homes
has led to many furniture manufacturers going green. Manufacturers, for instance, offer a
wide range of aesthetic furniture using only Moso bamboo, which is stronger and harder
than oak. According to the report, a key growth driver is the growing home improvement
market. The growth of the home improvement market is likely to play a major role in
market growth. The home improvement market is highly fragmented providing many
opportunities for manufacturers to explore the market. In Europe, the market for home
improvement stood around $362.5 billion in 2014. With globalization, major
manufacturers are expanding their presence globally to meet the unmet needs of the
diverse population. Further, the report states that one challenge that could hinder market
growth is the shortage of high-quality raw materials and long product replacement cycle.
Wood is the most commonly used raw material in this market, with 40%-50% of
furniture made of timber. The furniture industry is seeing a shortage in the supply of
timber with the growing population demanding more products.

H. Technology
We depend on our dominance of the latest in technology of ergonomics,
combined with classic design elements of fine furniture. We must remain on top of new
technologies in display, input and output, and communications. For example, our latest
models are already assuming the desktop digital scanner as a frequent accessory, and
audio for use in creating presentations, email attachments, etc.

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 Our assembly patents are an important competitive edge. No competitor can
match the way we turn a drawback--having to assemble the product--into a feature. Our
customer surveys confirm that customers take the interlocking assembly system as an
enhancement to the sense of quality.

I. Target Market
1. Corporate executives: Our market research indicates about 250,000
potential customers in Europe and Asia Pacific. The target customer is
going to be at a high executive level, in most cases, because the purchase
price is relatively steep compared to standard office furniture.
2. Small business owners: Our surveys indicate a strong market among the
owners of businesses. There are 3 million such businesses, most of them
with concentrated ownership that makes the owners potential customers.
3. Home offices / Personal: The home office business has proliferated during
the 1990s,. This is a big market some 5 million home offices growing faster
than other markets. A home office does not necessarily imply a home
business--just that a homeowner has designated a room in their home as an
office.

We will be focusing on contacting Real estate,contractors and architects dealing

with the luxury home market. Making ourselves known to these entities will generate
some strong leads, along with getting personal recommendations to the home
owners.There are plans to upgrade office space to a showroom in a high visibility
location. This will give us exposure to new home builders that are looking for our
product. In this plan, we accelerate our business to collaborate with big company such as,
Henderson Land Development, Trump Real Estate , Dalian Wanda Group which is they
have portfolio to build real estate in Asia Pacific and Europe. We as sub-contractor are
willing to create best customize products as well home real estate.

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J. Action Plan for 2 years Local Market and International Market

1. Establish relationship with designers of unique, fine furniture

2. Establish relationship with quality wholesale suppliers of lumber and hardware

3. Establish our name and image in the community as a specialty manufacturer of custom
designed within the next three years.

4. Targeting 30% of total sales acquire from export to Europe and Asia Pacific

5. To increase sales at least Rp. 1.500.000.000 per month over 2 years

6. Intruduce some different unique product furniture at least once per 3 months

7. Incorporate or collaboration with big real estate company that will build in overseas

8. Enroll to as member of ASMINDO to get preference of export market

9. Propose to Kementrian Perindustrian, Perdagangan and Sucofindo to get SVLK and Export
License

10. Use advance technology to get sophisticated product through efficiency and effectivenes

K. Strategy

There are indicators Minister has competitive advantage and strength of furniture
industries are:
1. High technical knowledge (skillful crafters)
2. Mature infrastructure resources
3. Family adoption of company governance
4. High accessibility of raw material resources
Because of that competitive advantage,We will use differentiate strategy through
making unique design from any other countries, we have employees from Jepara and
Yogyakarta who expert make unusual design through handcraft imply wood solid and
carving in some part of door, table, chair etc, as results it will give more added value and

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 art-touch sense. Abundance natural resource is one of the competitive advantage that we
will optimized. These attributes coupled with the countrys artistic heritage make it ideal
for furniture designers and manufacturers wishing to construct prototypes and try out new
techniques. it is necessary to set up a working group comprised of the experts from the
sector and the area of business development, who would recommend the most efficient
method of providing professional services to the companies in the area of improving the
management, which is prerequisite for further development of business operations. In
majority of cases, the training modules will be defined for the groups of companies
experiencing the same problems, but it is possible to provide specialized trainings as
well.

L. Entry Strategy
Partnership for B TO B: We collaboration or inpartner with Global multinational
company to expand and extend our products such as: Henderson Land Development,
Trump Real Estate , Dalian Wanda Group . They have real estate development abroad in
Europe and Asia Pacific. So we asked them to invite our company to be part of making
design interior furniture as well being sub-contractor. After we see reference and
preference we try collaborate with home country contractor to explore any other
opportunities.
Business Alliance for B TO C: We going incorporate with home country as sales
representative to facilitate end user customer with small order quantity or based on
request. We will offer authentic furniture to the home company and work together to
accelerate our business. We will offer profit sharing as scheme of the part of cooperation.
Eventhough we must increase our quality and adapt preference with local market, our
team also prepare requirement any aspect to enter international market:
1. Regulations
We must be thoroughly familiar and must actively apply all regulatory provisions
on the target markets. This will, of course, impact the aforementioned functions in the
production process, such as the choice of the raw material, the quality control process,
the information stated on declarations and packaging, the country of origin of the raw
material, etc

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2. Legality of business and social responsibility
We must be able to pass a serious safety control of our products and social
responsibility, which is part of a due diligence. Manufacturers must realize that it is
only the question of time when such audits will be required and they must start
organizing their production and business activities in line and other regulations.
3. Design
We want to export will have to understand the customers taste and needs on a target
market, and they can differ much from Indonesia. Therefore, it will be necessary to
carry out a research by visiting fairs and discussing with customers even before
launching a sales campaign. Manufacturers will have to define the strategy and
specify the type of the desired customer, retail or other manufacturers and to
understand what is required by either alternative. Manufacturers will then have to be
capable of designing and making a product that foreign customers will want to have,
and that can be sold at the price which yields a satisfactory profit, and which suits
customers and manufacturers alike. This will include a type of management team who
closely links those in charge of sales promotion with the production plants in
Indonesia. General and specialized consulting should be available for enhancing the
marketing strategy and managerial skills.
4. Quality control
Is necessary for the production of identical products without errors and for the
purpose of identifying and removing the problems in production affecting the quality,
owing to feedback and control. This is even more important when the furniture is
dispatched to great distances (as is the case with export). In this case, the quality gets
more important, as the costs of complaints and removing derogations from the
contracted quality inflate logarithmically with the increase of distance from the place
of the dispatch. In order for the industry to become successful, specific training in the
sphere of quality control should be ensured, in a form of a set of training tools
dedicated to specific types of manufacturers.

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M. Marketing Strategy
Minister must acquire the skill of recognizing the demand trends, Minister has to
adjust the design and models of furniture to market trends, to understand the market
expectations, to schedule and implement realistic and development-oriented
marketing goals and manage the marketing accordingly. Our past marketing strategy
assumes that we need to go into specialty channels to address our target customer's
needs. The tie-in with the high-end quality catalogs like Sharper Image is perfect,
because these catalogs cater to our kind of customers. We position our products as the
highest quality and design top level.

By including our products in these high-end catalogs, we were able to

successfully target the specific niche that was our marketing milestone. This has
provided the foundation for a move to internal catalog production. With a higher
degree of information control internally, these catalogs will target the same audience,
but will include more extensive information in terms of quality, examples,
testimonials, and information tailored to past sales experiences.

Marketing strategy, which has been already briefly addressed, is the direction in
which the company would like to move in order to find business opportunities.
Distribution of products is actually the implementation of marketing that consists of
expanding the sale and the existing scope of operations. In order to create a
sustainable and strong wood furniture sector, export-oriented, the sales force will
have to: work on the international market using foreign languages; be incentivized to
contribute to increased sale, harness negotiating skills and possess certain level of
delegated authority in the negotiating process. The key segment of the sale is also the
introduction of customer service. So, the company must adopt and maintain the
mechanisms of responding without delay in terms of providing assistance to
customers in negotiations and also providing the services even to remotely located
customers after the sale has been completed.

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 This is the summary of the SWOT analysis that was conducted for Minister:
Strength:
Our core strength lies in the high quality of our finished furniture, the power of our
team and the state of the art and well equipped furniture making factory that we
own. We have a team of highly trained and experienced carpenters and support staff
members that can go all the way to produce top notch office and household furniture.
We are well positioned and we know we will attract loads of clients from the first day
we open our furniture manufacturing company for business.
Weakness:
A major weakness that may count against us is the fact that we are a new furniture
manufacturing company and we dont have the financial capacity to compete with
multi billion dollars furniture manufacturing companies such as IKEA, Vivere, or
Olympus that also doing export et al when it comes to manufacturing furniture at a
rock bottom prices. So also, we may not have enough cash reserve to promote our
furniture manufacturing company the way we would want to do.
Opportunities:
The fact that we are going to operate our furniture manufacturing company provides
us with unlimited opportunities to sell our furniture to a large number of individuals
and corporate organizations in outside countries especially in West Europe. We have
been able to conduct thorough feasibility studies and market survey and we know
what our potential clients will be looking for when they visit our furniture
manufacturing workshop; we are well positioned to take on the opportunities that will
come our way.
Threat:
Just like any other business, one of the major threats that we are likely going to be
faced with is economic downturn. It is a fact that economic downturn affects
purchasing / spending power.. So also, any barriers from local company may effect
the business likes regulations and tarrifs. Unfavorable government policies may also
pose a threat for businesses such as ours.

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 In addition, the following are several key points on the Busniness Plan conclusion.

1. There is growing International demand, in which could be a channel for Minister

furniture business to grow their demands.
2. The improvement of fast-moving product development for the furniture industry
has been a necessary needs. It is because the fast moving adoptions of both
international and domestic market has pushed furniture business to innovate
faster.
3. In order to increasing the trade value of Minister furniture industry, Increasing
demand on Business-to-business as result of increasing entrepreneurship activities
and interests in Indonesia and Asia Pacific, Increasing demand on business-to-
customer Customers strong product preferences on design and quality, Increasing
domestic and International market size.

Minister has struggling to expand business to several area and still need the balance
proportion between B to B and end-customer based companies. The balance will support
the industry in the future. The collaboration between these two types of business will help
the industry to be more sustainable and significantly increasing the value of the product.

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