WHY THE SALES OF
COMPANY IS CONTINUOUSLY DECLINING
Prepared
for:
SAATH
INTENATONAL
Presented
by:
BSU
RESEARCH COMPANY.
May 07, 2012
REASONS
OF CONTINOUS DECLINING IN SALES OF SAATH INTERNATIONS.
BSU RESEARCH COMPANY
TEL: 042-2689776, FAX: 042-8765678
APRIL 22, 2012
Mr. Sámi Ullah
Managing Director
SAATH INTERNATIONAL
Subject:
Final Report
Dear Mr.Sami;
As you were authorize us to do
research in your company, find out problems leads to decline in sales. So, we
have done it. We analyze data collected from financial record and interviews. A
lot of problems are responsible for it like inflation, power crisis, marketing
strategy error etc, causes continuous decline in your revenue.
We recommend you to move
towards solar energy, open outlets in Pakistan
Cordially,
Bilal Mahmood
Customer Relation
officer.
Enclosure: Report
BM: jm
Table of Contents
Letter of Authorization -------------------------------------------------
I
Letter of Transmittal
------------------------------------------------- ii
Executive
Summary……………………………………………………………………… IV
I.
Introduction…………………………………………………………………………………….1
II.
Related
Literature……………………………………………………………………………1
III.
Procedures………………………………………………………………………………………1
IV.
Findings………………………………..…………………………………………………………2
V.
Analysis………………………..…………………………………………………………………
2
VI.
Conclusion &
Recommendation……………………………………………………….2
VII.
Bibliography…………………………………………………………………………………….3
Introduction:
This company manufacture a variety of products
under the brand name of 'Salt Rays' from Natural Salt Crystal Rocks
which acquired from the biggest
worldwide well renowned Himalayan
Mountain Ranges of Pakistan like Warcha, Khewra and Kalabagh mines and supply
it to both retail as well as on
wholesale market throughout the world. This company has 50—100 employees.
Initially they manufactacture the
product in Pakistan and then they decided to export
various countries of the world including North America, South America, Western Europe,
Eastern Europe, Eastern Asia, Southeast Ashamed East, Worldwide and many
others.Mr.sami ullah khan is the CEO and managing director of the SAATH INTERNATIONAL and this company belongs to Natural Craft industry.
Many people are well aware of Salt Crystal Lamps.
These lamps produce Negative Ions, which are essential for health and general
upkeep of human body as they kill the contaminated particles (positive ions)
from the air. These lamps are manufactured in different colors, shades and
designs. Though today human-made machines are marketed to emit negative charges
in the air but these are too much expensive as well as unnatural whereas the
Salt Crystal Lamps and allied products are Allah’s gift to humanity specially
the ailing ones. This company usually manufacture
Rock Salt Lamps and many other allied products from Natural Crystal acquired the world biggest renowned Himalayan Mountain ranges of Pakistan
This company also
manufactures the products according to customer demand i.e. as per requirement
of the customers, maintained quality at each level i.e. from selection of rock
salt to its manufacturing, assembling and ultimate packing. Their motto is to
establish trustworthy relationship with suppliers, dealers and potential
customers.
Statement
of problem:
Why the sales of SAATH INTERNATIONAL are continuously declining?
Purpose of
study:
Our purpose study is to determine all the problems which are
responsible for declining in sales of the SAATH INTERNATIONAL.
Scope:
Sales actually means gross amount that firms gets in regard
of sale of its products. It includes cost of production, operating expense, raw
material cost and so many other expenses. So, this report will identify the problems
which affect the sales of SAATh International.
Related
literature review:
In today’s lifestyles, lamps is a product
utilized as internal decoration to decorate offices, homes etc as they restore and endorse energy. Today the
demand of decorated lamps worked with fine wooden and handmade architecture and
designed made them more beautiful. Definitely, one of the best examples of salt
lamps in Pakistan is
Himalayan Salt line enterprises and USA
Starline Enterprises produce and
export different rock salt products like Himalayan crystal rock salt lamps,
Candle holders, Animals sculptures salt tea light candleholders, Animal
figurines salt lamps, Wildlife salt statues, etc.
Salt lamp
for less manufactures different Rock Salt Products like Himalayan Salt Lamps
and Salt Tea Lights obtained in blocks from Himalayan range of mountains. It is
also in crisis like financial problems, inflation, which leads to declining in
profits. Gama International is manufacturing Rock Salt Products for over a
decade. It manufactures Himalayan Rock
Salt Products. It has many talented craftsmen. One of its best policies is not
to hire under age employees to reduce the production cost. It thinks that the
best place for children is school. They also facing crisis in reduction of
sales. But the problem is in internal management.
Sohail international is a leading manufacturer of Rock Salt Products
like Lamp
Salt, Salt
Candle, Table
Salt, Bath
Salts, Animal
Salt, Salt
Block, Salt
Pipe etc. It has two factories, one in Lahore
Methodology:
Many procedures to conduct research like questionnaires,
survey and interviews but we have chosen most reliable, authentic and suitable
procedure to collect data i.e. interview. In interviewing process we have
conducted detail interview with Managing Director and other important employee
of the of SAATH INTERNATONAL and collected information about the products of
the firms and their marketing strategy. Due to time constraint, we are only focusing
on the Rock Salt Lamps. All the group members personally observe all offices during
their working hours to determine the reasons of continuous declining in sales.
We analyzed all financial record of the company, its prospectus and other
available printed papers. Then apply conceptual and empirical analyze to make
the data refine and also compare it with our pre-determine reasons that have
found through literature review.
Findings:
Main Products:
This company is dealing in variety
of products; they also made the product according to customer demand i.e. as
per customer requirement. So, some of
the emerged products of company are as follow:
Salt Crystal Globe:
Salt Crystal Globes both
Ceiling and Pedestal Globes are made with their idealistic attributes. Besides its
medical factor, Ceiling Globes give fancy, attractive and decorative look when they
hanged over tables in hotels, restaurants, dining rooms and smoking areas. And Pedestal
Globes are placed in lounges, waiting rooms and beside the executive tables in
the offices provide very beautiful environment and worthy scene.
Tea Light:
Tea lights are
available in different natural and finished shapes when they glow with the help
of inside candles, it not only emit negative ions but also add stunning beauty
to the environment and make it romantic also. The flickering fire creates a
quiet and calm environment. These also do not deteriorate in any way by its usage.
Bath Salt Soap is used for
massage during bath. It helps in finishing the dullness, keeps the body fresh
and cleansing the skin naturally. It is made in different beautiful shapes of
soap
Blocks and tiles are
used to place on the walls of bedroom with lighting behind them, especially for
asthma and allergic patients and also for the well being of the other residents
of home.
Salt Crystal
Salt Crystal
Lamps are totally made from Natural Salt Crystal Rocks, which accumulated for
millions of years in salt mines underground (700ft. to 800ft.) approximately. Each Salt Lamp is unique in shape,
color, crystal composition and its dimensions. None of them will be accurately
similar. Its weight is 2 kg and its size is measuring from in 20 inches. With
the passage of time, it does not depreciate with reference to weight, size,
color and/or shape and does not lose capacity in terms of ions.
Reasons of Fluctuation:
There are many reasons which are responsible for the
continuous decline in the sales of the SAATh. But most burning problems which
badly affect the sales of the company are as follow.
Finding
includes:
1) Online sales
2) Inflationary pressure
3) Saturation in international market
4) Load shedding
5) Local sales are nil
6) Lack of outlets
7) Luxury items
Online sales:
We know that world is progressing day by day towards
technology. For sake of ease in life everyone wants to buy products online
communication. But there are large numbers of people in Pakistan
Inflationary pressure:
We know that the
prices of fuel are increasing over the night which directly affects the cost of
production and raw material used by the firm. According to statically bureau of
Pakistan 17% inflation rate
is prevailing in Pakistan
Saturation in International Market:
In any organizational environment
there always exist competition to some extend, sometime it is too much sever ,
cause difficult for the firm to survive but sometime it helps the firms to
increase its sales by producing variety, quality, promotion e.t.c Same thing
happen with SAATH INTERNATIONAL due to attractiveness of this sector any
international firms are also divert to it. So most of the firm purchaser are
foreigners, they prefer to buy at their locality. This leads to decline in
firm’s sales.
Local Sales:
The SAATH INTERNATIONAL is international brand. So most of
the customer of the firm is also foreigners. The biggest unfortunate for the
firm is that they are not deals to the local dealers or customers. As we know
that in any firm’s growth the local community plays vital role to increase it.
New product firstly check on them and after full satisfaction apply to all over
world. Unfortunately SAATh INTERNATIONAL are not having local community person,
this also leads to declining sales of firm.
Load shedding:
As we know that load
shedding is one of the most burning and important issue in Pakistan
Lack of outlets:
In any business
environment outlets plays a vital role in increases its sales. In these outlets
firms decorate the samples of their main product which attracts the potential
customers. Unfortunately SAATH INTERNATIONAL doesn’t have any such arrangement,
so firms unable to attract its potential customers which mostly are the
businesses and buy in bullock. So, lack of outlets gives negative affect to the
firm’s sales.
Luxury Items:
Due to increase in prices of commodities and decline in
purchasing power of the consumers. The buying pattern of the consumer is also
change. They prefer to spend money on needy items rather then luxury items .As
we know that Salt lamp are luxury, the people only buy it when they have sufficient
money for completing needy item first and then remaining money spend on luxury
items. So people don’t have sufficient money which leads to decline in
sales of the company.
Income Statement (fig-1)
For the
year ended June 31, 2010
Sales 13158448
Less Cost of good sold (11055344)
Gross profit 2603104
Less Admin. Expenses:
Salaries 588286
Utilities 171096
Repairs
& Maintenance (office) 56648
Courier
& Postage 86820
Insurance 34276
Entertainment 38358
Miscellaneous
Expenses 36500
Depreciation
(office equipment) 12720 (1024704)
1578400
Less Marketing, Selling & Distributing
Expenses:
Sample cost 38829
Foreign commission 240086
Marketing Expenses 58178 (337093)
1241307
Less Financial Expenses (31670)
NPBT 1209637
Less Taxes (78018)
NPAT 6,31,619
Income Statement (Fig-2)
For the
year ended June 31, 2011
Sales 12,934,560
Less Cost of good sold (106,95631)
Gross profit 2,238,929
Less Admin. Expenses:
Salaries 687456
Utilities 21674
Repairs
& Maintenance (office) 58456
Courier
& Postage 88795
Insurance 32346
Entertainment 30457
Miscellaneous
Expenses 40500
Depreciation
(office equipment) 10238 (969922)
1269007
Less Marketing, Selling & Distributing
Expenses:
Sample cost 26679
Foreign commission 208928
Marketing Expenses 50389 (285996)
983011
Less Financial Expenses (35898)
NPBT 947,113
Less Taxes (80018)
NPAT 867,095
Fig-3)
This
also depict with the help of graph. It shows that in 2010 the sales of company
is 131,52,448 and its net profit is 11,31,619 and in the next year i.e. 2011
the gross sales of the company is 12,034,560 and its net profit is 86,70,95
Conclusion:
The sales of rock salt lamps are
declining due to inflation, load shedding, saturation in the international
market and zero local sales.
Inflation affects the production
process from the raw material to the final product. Load shedding cause’s
wastage of labor hours and reduces the efficiency effectiveness. Both inflation
and load shedding are responsible for increase in the price of product. Due to
it, the sales are declining.
SAATh International is just
focusing on the online international customers. There are no local sales in the
form of outlets in different cities of Pakistan
Rock salt lamps are luxury items
and only those people afford it that has excess of money. So, shortage of money
leads to declining in sales.
Recommendations:
Ø They
turn their dependency from LESCO to solar supply of electricity. This helps to
reduce the cost and increase efficiency and effectiveness.
Ø They
should produce innovative products like wireless rock salt lamps and rock salt
bulbs etc.
Ø They
should focus towards local sales by opening outlets in different famous cities
of Pakistan
Ø They
should change their marketing strategy and adopt modern advertisement
techniques like sign boards, TV commercials, flex printing to attract the
potential customers.
Ø They
should open outlets in the international market also.
Ø They
should establish Research and Development Department (R & D) for better
future.
Ø They
should conduct downsizing according to changing scenario.
Bibliography:
Always love to read post about Himalayan Edible Salt. StandardSalt known as Top Himalayan Salt Exporters and best Himalayan Salt Company to buy Wholesale and Bulk Salt rocks, Salt Chunks, Salt Crystals, Salt Lamps, Salt Tiles.
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