The Changing Landscape for Chinese Small Business: the Case of ‘‘Bags of Luck’’

3242 Words Nov 21st, 2011 13 Pages
The changing landscape for Chinese small business: the case of ‘‘Bags of Luck’’ | | Submitted to: Professor Payal Mehra Date: 10/23/2011 | |
Submitted by –
Amey Rambole
ABM 08009
Submitted by –
Amey Rambole
ABM 08009
INDIAN INSTITUTE OF MANAGEMENT - LUCKNOW

Contents Letter of Transmittal 1 1. Synopsis 3 2. Introduction 4 2.1 Problem Statement 4 2.2 Statement of Purpose 4 2.3 Methodology 4 3. Case Analysis 4 3.1 Stated Problems 4 3.2 Unstated Problems 5 4. Relevant Facts 5 4.1 Organizational Structure 5 4.2 Procurement and material handling 5 4.3 Stock evaluation 5 4.4 Products and production 5 4.5 Sales, Marketing and Distribution 6 4.6
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A few internet sources were also used for reference.

3. Case Analysis
3.1 Stated Problems
Following are the major problems faced by BoL: 1. Increased demand for labour has led to substantial increase in labour wages. Continuous labour shortage has affected BoL’s profits adversely. They are unable to accept large contracts because of their inability to complete them on time. This forced them to dispatch goods by air-freight rather than by sea-freight which again reduced their profit margin. 2. Appreciation of Yuan with respect to US $ has impacted the bottom-line of BoL and made it difficult for BoL to increase its prices even though production costs have continuously been spiralling up. 3. Since BoL makes export quality designer bags, they have to maintain exclusivity in their product for which it is required that the industry be labour intensive. But the labourers are not skilled and experienced and hence, the percentage of defects during production increased the production cost of good products. 4. There is neither proper accounting of the stock nor a formal budgetary control at BoL because of which there are a lot of discrepancies in the information that is at hand with the finance department. 5. Emergence of problems between the four joint owners has caused communication issues. They handle independent functions and at times they felt that the others are not trying as hard as they should.

3.2 Unstated Problems

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