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Business and Management: Extended Essay
Business and Management: Extended Essay
Research Question:
Should Mirrar Jewels (a jewellery manufacturing company) open a retail outlet, at Hughes
Road (Mumbai), in order to increase profitability and increase market share?
__________________________________________________________________________
Date Submitted:
ACKNOWLEDGEMENT
I would like to take the time to thank my Business and Management teacher, Ms.
Vidhi Kanjani for her invaluable advice and guidance throughout my Extended Essay. Also, I
would like to thank my IB coordinator Mr. Husien Burhani for his inestimable expertise and
supervision. Without them and their excellent guidance, my Extended Essay research and
project would not have been so successful.
I also want to thank Mirrar Jewels Pvt. Ltd for their support throughout my Extended
Essay. The chairman, Himanshu Shah provided me with all the data I required in order to
make this research a successful one by being a valuable source of primary data.
Without them, my Extended Essay would not have been the same. I gratefully thank
them for their time.
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Name: Rushabh Shah Candidate Number: 004733 0013 Extended Essay
ABSTRACT
Conducting the SWOT and Lewin’s Force Field analysis helped me get a better
understanding of Mirrars various strengths and weaknesses. At the same time these tools
showed the possible opporutnites and threats in this expansion strategy. The Ansoff Matrix
and Porter’s Generic Strategies helped me weigh the pros and cons of this growth strategy as
well as identify Mirrars Unique Selling Point . Finally, the Investment Appraisal gave a
financial approach to the analysis and showed the feasiblity of this project.
On fulfilment of this Extended Essay, I have concluded that even though are a few
threats and restraining forces the opportunities out number them thus Mirrar should look to
open their own retail outlet. This is because, in the long term, it would help to boost the
company’s performance and increase profitability and market share.
3
Name: Rushabh Shah Candidate Number: 004733 0013 Extended Essay
Table of Contents
INTRODUCTION.................................................................................................................... 5
RESEARCH QUESTIION AND RATIONALE ................................................................... 7
METHODOLOGY .................................................................................................................. 8
SWOT ANALYSIS .................................................................................................................. 9
Evaluation of SWOT Analysis................................................................................................. 12
ANSOFF MATRIX ................................................................................................................ 13
Analysis of Ansoff Matrix ....................................................................................................... 13
PORTER’S GENERIC STRATEGIES ............................................................................... 15
Analysis of Porter’s Generic Strategies ................................................................................... 15
INVESTMENT APPRAISAL ............................................................................................... 16
Analysis of Investment Appraisal ............................................................................................ 16
LEWIN’S FORCE FIELD ANALYSIS ............................................................................... 18
Analysis of Lewin’s Force Field .............................................................................................. 19
Evaluation of Lewin’s Force Field Analysis ........................................................................... 22
CONCLUSION ...................................................................................................................... 23
EVLUATION ......................................................................................................................... 24
WORKS CITED..................................................................................................................... 25
APPENDIX ............................................................................................................................. 28
Appendix 1: Interview with chairman Himanshu Shah ........................................................... 28
Appendix 2: Interview with Marketing Manger ...................................................................... 32
Appendix 3: Balance sheet of Mirrar Jewels as at 31st March 2013 ........................................ 33
Appendix 4: Profit & Loss sheet of Mirrar Jewels for year ended 31st March 2013 ............... 34
Appendix 5: Calculations of financial ratios ........................................................................... 35
Appendix 6: Financial figures obtained from Mirrar Jewels ................................................... 36
Appendix 7: Calculation of Pay Back Period and ARR (Investment Appraisal) .................... 38
4
Name: Rushabh Shah Candidate Number: 004733 0013 Extended Essay
INTRODUCTION
1
Appendix 1: Interview with chairman
2
"About Us." Mirrar Jewels. N.p., n.d. Web. 28 June 2013.
<http://www.mirrarjewels.com/pages/About-Us/pgid-84980.aspx>.
5
Name: Rushabh Shah Candidate Number: 004733 0013 Extended Essay
3
Fig. 1 – New Urban SEC System
3
Urban - New Sec System. Digital image. Market Research Society of India. N.p., 3 May 2011. Web. 2 July
2013. <http://www.mrsi.in/TheNewSECSystem3May2011.pdf>
6
Name: Rushabh Shah Candidate Number: 004733 0013 Extended Essay
Mirrar Jewels is a young company which has been only manufacturing and
wholesaling studded jewellery to retailers around the country.
Although it has been manufacturing and selling jewellery successfully, it does not
have a retail outlet in the domestic market. Many of its competitors have their own retail
outlets which gives them an edge in the hyper competitive market.
Most of the retail outlets to which Mirrar supplies jewellery to, stock products of competing
manufacturers as well, because of which, the shelf space dedicated to Mirrar Jewels’ products
is very limited and this restricts sales. Thus, opening a retail outlet will give Mirrar Jewels the
opportunity to showcase all their products and enable them to increase sales and profitability.
A Hindu Business Line forecasts a growth rate of 15-25% in jewellery retail for the
next year.5
Thus, the retail model does hold a lot of promise, and therefore through this Extended
Essay, I plan to evaluate the following research question, “Should Mirrar Jewels (a
jewellery manufacturing company) open a retail outlet, at Hughes Road (Mumbai), in
order to increase profitability and increase market share?”
4
"Gold Jewellery Retailers to Maintain Revenue Growth." Business Standard. N.p.,
n.d. Web. 10 July 2013. <http://www.business-standard.com/article/ markets/
gold-jewellery-retailers-to-maintain-revenue-growth-112092600196_1.html>.
5
"Jewellery retailers may face lower revenue growth in 2013: Report." The Hindu
Business Line. N.p., n.d. Web. 11 July 2013.
<http://www.thehindubusinessline.com/industry-and-economy/
jewellery-retailers-may-face-lower-revenue-growth-in-2013-report/
article4439320.ece>.
7
Name: Rushabh Shah Candidate Number: 004733 0013 Extended Essay
METHODOLOGY
Primary and Secondary research was conducted to collect data to answer the research
question.
The interview with chairman of Mirrar, Mr. Himanshu Shah gave detailed
information about the type of company Mirrar Jewels is. It also gave an insight into the
company’s main products and major target markets in India. The interview also provided
details about the main threats faced by the company.
Secondary data from the Internet has been collected to help analyze the jewellery
retail market, the current economic situation and growth of the market to help gauge whether
there is sufficient demand and opportunity for Mirrar to go ahead with the decision to open
their own retail outlet.
SWOT analysis was the first tool that helped to analyze and understand the major
strengths and weaknesses of the company and also the external opportunities and threats that
Mirrar would face if they went ahead with the decision of opening a retail outlet.
Along with this an Investment Appraisal was done to determine whether investing in
opening a retail outlet was financially feasible for the company.
Porter’s Generic Strategies was used to outline the ways that Mirrar Jewels can gain a
competitive advantage in the market.
Ansoff’s Matrix was used to analyze whether Mirrar Jewels should alter their product
and market growth strategies. Emphasis was on Market Development, as Mirrar will have to
sell their current products in a new market (retail).
Lastly Lewin’s force field analysis was carried out to understand whether the forces
supporting the decision are stronger than the restraining ones while making this decision.
8
Name: Rushabh Shah Candidate Number: 004733 0013 Extended Essay
SWOT Analysis
Strengths:
Himanshu Shah and Prabir Chatterjee have over 25 years of experience in the fields of
manufacturing and marketing of studded jewellery in the international and domestic
market.6 Mirrar is “equipped with technical expertise, excellent domain knowledge
and extensive cross-functional experience”7 enabling them to produce high quality
jewellery products for its customers.
Mirrar Jewel’s is currently a manufacturer and wholesaler of jewellery. With
numerous orders coming into the firm for manufacturing, the company has an in-
depth knowledge about the current market trends and tastes and preferences of
consumers.
Mirrar provides a one of its kind customization service (design) for its jewellery
products.8 This gives the customers a better overall experience while purchasing their
products.
Mirrar Jewels is a relatively new company and has been in the market for only three
years now. But “their customer-centric approach to business and a dedication to
maintaining high quality standards has resulted in a very committed and loyal
customer-base.” 9
Mirrar has established relationships with vendors in its supply chain and this enables
it to procure raw materials at very competitive prices. This is especially because of
Chairman, Himanshu Shah, who has had a great working relationship with these
vendors for numerous years.10
Mirrar Jewels has a tall organizational structure, which suggests that there is good
communication and control present among the staff. Also the staff turnover ratio is
just 2.22%11, which shows that Mirrar keeps good relations with its staff.
6
Appendix 1: Interview with chairman – Question 2
7
"About Us." Mirrar Jewels. N.p., n.d. Web. 24 July 2013.
<http://www.mirrarjewels.com/pages/About-Us/pgid-84980.aspx>.
8
Appendix 1: Interview with chairman – Question 4
9
"About Us." Mirrar Jewels. N.p., n.d. Web. 24 July 2013.
<http://www.mirrarjewels.com/pages/About-Us/pgid-84980.aspx>.
10
Appendix 1: Interview with chairman – Question 2
11
Appendix 1: Interview with chairman – Question 7
9
Name: Rushabh Shah Candidate Number: 004733 0013 Extended Essay
Weaknesses:
One of the major weaknesses for the firm is the lack of brand recognition. This is
because it was only started in 2010,12 and thus is a fairly new company.
The company needs to strengthen the procurement and manufacturing of plain gold
jewellery as a segment because this is a fast growing segment. 13
Due to the small size of the company, they sometimes finds it difficult to meet the
demand of customers on a regular basis, thus impacting the image and reputation of
the company.11
Mirrar would need to invest in recruitment and training of new staff for the retail
store, which will increase the costs that the company will incur.
Opportunities:
10
Name: Rushabh Shah Candidate Number: 004733 0013 Extended Essay
metals like platinum.”17 This provides Mirrar with a great opportunity as the company
currently designs and makes both diamond and gold jewellery.18
Threats:
Slow pace of economic development and growth implies that “Jewellery retailers are
likely to report lower revenue growth with a possible decline in volumes this year
compared to 2012, along with slightly lower margins, according to India Ratings.”19
The prices of raw material have risen significantly in the past 12 months. Most of
India’s gold and diamond is imported from overseas. With the devaluation of the
Indian Rupee imports have become more expensive. “The Indian rupee slipped for
third consecutive day in a row on Tuesday and breached its key psychological level of
67 plunging to the fresh record low of 67.52 against the US dollar,”20 at the end of
August’13. This will have a significant impact on the profit margins of the company.
Another major threat is the increase in import duties on gold. Recently, “India hiked
the import duty on gold to a record 10 percent, the third such increase in eight
21
months, while also raising excise duty on the metal.” This leads to an increase in
raw material cost which drives up the manufacturing cost of jewellery.
The biggest threat for Mirrar is the hyper competition present in the jewellery vertical.
“India possesses the world’s most competitive gems and jewellery market due to its
low cost of production and availability of skilled labor.”22
17
Singh, Renu. "Gold Loses Its Lustre, Demand for Diamond Rises." Times of India.
Bennett, Coleman, 30 Oct. 2013. Web. 2 Feb. 2014.
<http://articles.timesofindia.indiatimes.com/2013-10-30/trends/
43526325_1_gold-jewellery-diamond-jewellery-silver-jewellery>.
18
Appendix 1: Interview with chairman – Question 1
19
"Lower revenue growth for jewellery retailers in 2013: Report." The Economic
Times. N.p., n.d. Web. 9 Aug. 2013.
<http://articles.economictimes.indiatimes.com/2013-02-21/news/
37221700_1_jewellery-retailers-jewellery-exports-gems-and-jewellery>.
20
"Rupee hits fresh record low of 67.52/USD; slips over 10% in August." The
Economic Times. N.p., n.d. Web. 28 Aug. 2013.
<http://articles.economictimes.indiatimes.com/2013-08-28/news/
41538691_1_trade-today-indian-rupee-fresh-record-low>.
21
"Gold duty raised to record 10 percent as imports revive." Reuters. N.p., n.d.
Web. 18 Aug. 2013. <http://in.reuters.com/article/2013/08/13/
india-tax-finmin-idINDEE97C03J20130813>.
22
Research and Markets. N.p., n.d. Web. 19 Aug. 2013.
<http://www.researchandmarkets.com/reports/1445132/
indian_gems_and_jewellery_market_forecast_to_2013.pdf>.
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Name: Rushabh Shah Candidate Number: 004733 0013 Extended Essay
However, the company is relatively new and hence lacks the brand recognition
compared to the companies already present in the market. The company’s size also creates a
hindrance in terms of meeting customer demands. At the same time, economic growth in
India has been slow and the cost of raw materials has increased over the past year as can be
seen in Mirrar’s profit and loss sheet.23 Thus, these weaknesses and threats would pose a
significant challenge to Mirrar’s expansion strategy.
23
Appendix 4 – Profit and Loss for the year ended 31st March 2013
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Name: Rushabh Shah Candidate Number: 004733 0013 Extended Essay
ANSOFF MATRIX
PRODUCTS
Existing New
Existing
New
Mirrar Jewels currently design and create their own products and sells them to
retailers. The growth strategy Mirrar is currently contemplating is opening a new retail outlet.
Therefore, Mirrar will sell their existing products in a new market. Getting into a new market
involves high risks because of existing competitors.“India possesses the world’s most
competitive gems and jewelry market.”24 This is the biggest threat for Mirrar. Further, the
company is mainly into designing and wholesaling of jewellery. They do not have any retail
experience nor do they have any manpower skilled for retailing a luxury product like
jewellery to end-users. According to Roohi Dmello, an Associate Principal Consultant –
Retail with recruitment firm ABC Consultants, “ the Indian luxury market is facing a
manpower shortage of at least 30-40%, especially for front-end staff, which is the direct
interface with customers.”25
24
India Gems and Jewellery Market Forecast to 2013." RNCOS Business Consultancy.
RNCOS, n.d. Web. 27 Dec. 2013. <http://www.rncos.com/Report/
IM284.htm>.
25
Tewari, Mansi. "Lack of Trained Salesmen May Hit Luxury Sales." The Economics
Times. Bennett, Coleman, 7 Jan. 2012. Web. 28 Dec. 2013.
<http://articles.economictimes.indiatimes.com/2012-01-07/news/
30601997_1_luxury-brands-luxury-watches-watch-jewellery-india>.
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Name: Rushabh Shah Candidate Number: 004733 0013 Extended Essay
“Luxury retail is different from regular retail. Store staff is not looked down as
normal sales people, clients instead take our suggestions and advice on what they should
buy.”26
26
Rathore, Vijaya. "Luxury Retailers in India Face Shortage of Skilled Manpower."
The Economic Times. Bennett, Coleman, 27 Dec. 2012. Web. 29 Dec. 2013.
<http://articles.economictimes.indiatimes.com/2012-12-27/news/
36022100_1_luxury-abhay-gupta-shortage-of-skilled-manpower>.
27
"Upsides to Investing in Branded Jewellery Companies." Zee News. Zee Media, 27
Mar. 2012. Web. 20 Jan. 2014. <http://zeenews.india.com/exclusive/
upsides-to-investing-in-branded-jewellery-companies_5163.html>.
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Name: Rushabh Shah Candidate Number: 004733 0013 Extended Essay
This tool analyses the way a business can gain a competitive advantage over it’s
competitors.
COMPETITIVE ADVANTAGE
Cost Uniqueness
Mass
Narrow
28
Appendix 1: Interview with chairman – Question 8
29
"Tanishq Plans Pilot Ancillary Jewellery Unit." Tata. Tata Sons, 6 June 2002.
Web. 9 Jan. 2014. <http://tata.com/article/inside/GiWQ6oUB!$$$!UE=/
TLYVr3YPkMU=>.
15
Name: Rushabh Shah Candidate Number: 004733 0013 Extended Essay
INVESTMENT APPRAISAL
Thus the forecasted returns that this strategy will provide the business makes this
strategy a viable and feasible one. Comparing the ARR with the present fixed deposit rates
offered by a couple of leading banks of India such as Axis and State Bank of India, we see
that ARR is well over the same (ROI offered for fixed deposit is 9% p.a.)32
Thus the opportunity cost of going ahead with this strategy is (-24.34%) which
indicates that this investment decision is better than the alternative one. Also, the company’s
current Profit Margin is 4.16%. The ARR for the retail outlet project is vastly greater
showing that the project could be a successful one in terms of profits gained.
A World Gold Council report indicates that, “ in the first nine months of 2013 the
total demand for jewellery is up by 13% and investment demand is up 30% in India.”This
implies that it would be possible for the business to meet the forecasted sales targets. “The
World Bank has projected that India's economy will grow at over 6 per cent in 2014-15 and
7.1 per cent by 2016-17 as global demand recovers and domestic investment increases.”33
Thus, even the macro economic indicators for the next two years are positive which
would help drive demand and growth and thus an investment in a new outlet would be a
30
Appendix 8 – Calculation of Pay Back Period and ARR (Investment Appraisal)
31
"Shopping." Frommer's. FrommerMedia LLC, n.d. Web. 2 Feb. 2014.
<http://www.frommers.com/destinations/mumbai/274076>.
32
"Bank Fixed Deposits." Money Control. N.p., n.d. Web. 26 Dec. 2013.
<http://www.moneycontrol.com/fixed-income/banks-deposits/>.
33
"Indian Economy: Rating Downgrade Not on the Cards, Says Moody's." The Financial
Express. N.p., 16 Jan. 2014. Web. 2 Feb. 2014.
<http://www.financialexpress.com/news/
indian-economy-rating-downgrade-not-on-the-cards-says-moodys/1218598>
16
Name: Rushabh Shah Candidate Number: 004733 0013 Extended Essay
feasible one. The price of raw materials (gold and diamonds) is the single biggest contributor
to the overall price of jewellery.
The Indian Rupee has from the last quarter of 2013 shown signs of recovery and
stabilization. Keeping the World Bank statistics stated above and the recent stability of the
Rupee, the gold prices have been calculated at Rs 31,000 per 10 grams.
However, if the economic growth slumps or the rupee continues its free fall like we had in the
first three quarters of 2013 where “the rupee lost 16% of its value”34, the gold prices would
go beyond this level which would lead to a rise in prices and further a fall in demand (that
will impact the sales forecasted)
34
"Why Indian Rupee Is in Free-Fall, Showing No Signs of Recovery." India Today.
India Today Group, 23 Aug. 2013. Web. 3 Feb. 2014.
<http://indiatoday.intoday.in/story/
why-indian-rupee-is-in-free-fall-showing-no-signs-of-recovery/1/300982.html>
17
Name: Rushabh Shah Candidate Number: 004733 0013 Extended Essay
retail outlet.
5 – Growth of branded
jewellery as a segment
Total = 22 Total = 19
18
Name: Rushabh Shah Candidate Number: 004733 0013 Extended Essay
When Mirrar opens their retail outlet, they will require more raw materials such as
diamonds, gold and metal alloys because they will need to manufacture more products to
supply to the increased demands of having a retail outlet and selling only their products.
Mirrar already has good and long relationsips with their suppliers.36 An increase in
requirement for raw materials will result in Mirrar achieving economies of scale as per unit
cost comes down.
35
Levin, Naomi. "Secrets of Jewellery Branding Success." Jeweller Magazine.
Gunnamatta Media, 23 June 2012. Web. 6 Feb. 2014.
<http://www.jewellermagazine.com/Article.aspx?id=1682>.
36
Appendix 1: Interview with chairman – Question 8
37
Appendix 1: Interview with chairman – Question 7
19
Name: Rushabh Shah Candidate Number: 004733 0013 Extended Essay
4. Job Enrichment
According to Herzberg’s non-financial motivational theory, one way to improve
motivation is by making a job more interesting or challenging. If Mirrar opens it’s retail
outlet, there will be a increase in workload for all of the staff but more importantly the senior
managers. They will have a “greater independence and authority in their work and have
better opportunities to express and develop their own ideas.”38 This will thus motivate them
and result in psychological growth and higher commitment to their work increasing
productivity and efficiency.
38
Hoang, Paul. BUSINESS AND MANAGEMENT. N.p.: n.p., n.d. Print.
39
Choksi, Mehul. "India Gems and Jewellery Sector." Dun & Bradstreet - D&B India.
Dun & Bradstreet Information Services India, n.d. Web. 6 Feb. 2014.
<http://www.dnb.co.in/IndianGemsandJewellerySector/Gitanjali.asp>
40
Ghosal, Sutanuka. "Platinum Sales Rise as Men’s Affection for the Metal
Grows." The Economic Times. Bennett, Coleman, 24 Dec. 2013. Web. 6 Feb.
2014. <http://articles.economictimes.indiatimes.com/2013-12-24/news/
45540157_1_vaishali-banerjee-platinum-costs-rs-platinum-love-bands>.
41
Appendix 1: Interview with chairman – Question 4
20
Name: Rushabh Shah Candidate Number: 004733 0013 Extended Essay
Restraining Forces:
1. High allocation of working capital to marketing and human resource
department
Mirrar Jewels willl be entering a new market and will not have the brand image like some
of it’s competitors who are already present in the market. Hence they will require strong
marketing campaigns in order to attract customer attention towards them and their products.
Currently Mirrar neither have a very strong marketing team nor a strong enough marketing
campaign. “The only form of above the line promotion carried out by Mirrar Jewels is the
B2B advertisements done in Jewellery Magazines and the promotion carried out through
their own website.”42 Further, recruiment and training of candidates for the retail outlet
would require increasing the human resource budgetary allocations too.
42
Appendix 2: Interview with marketing manager – Question 2
43
Appendix 5 – Calculations of financial ratios
21
Name: Rushabh Shah Candidate Number: 004733 0013 Extended Essay
44
Appendix 3 – Balance sheet of Mirrar Jewels as at 31st March 2013
45
Appendix 3 – Balance sheet of Mirrar Jewels as at 31st March 2013
22
Name: Rushabh Shah Candidate Number: 004733 0013 Extended Essay
CONCLUSION
Mirrar has great strengths in terms of market and field experience in Himanshu Shah
and Prabir Chatterjee coupled with knowledge of current trends of the jewellery market.
There is also an increase in demand for gold and diamond jewellery. This along with high
potential in the jewellery retail market is a big positive for Mirrar. As the Porter’s Generic
tool shows, Mirrar is in a good position to become a cost leader in the market. Mainly
because they will then have a shorter channel of distribution which will then avoid markup
prices by the other retailers enabling customers to save money.
Financial analysis shows that even though the initial cost of purchasing the outlet is
quite high, the project looks to be successful in the long term because of a pay back period of
3 years and 1 month and a high ARR of 33.4% which much greater than both, bank interest
rate as well as Mirrar’s current net profit margin.
The Lewin’s Force Field Analysis clearly shows that the driving forces outnumber the
restraining forces in terms of value. There are strong driving forces such as Mirrar having it’s
own identity as well as catering to a growing market segment of branded jewellery and men’s
jewellery. But there are very strong restraining forces too. High percentage of the working
capital can be locked in inventories, as is already the case with Mirrar.
Based on the research conducted above using the various business tools, Mirrar
Jewels should go ahead an set up their own retail outlet as this will help them increase
profitability and market share.
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Name: Rushabh Shah Candidate Number: 004733 0013 Extended Essay
EVALUTATION
Retailing will be a new market for Mirrar. The company will need to undertake an
extensive market research that will give them data about the new market. This will give them
a better understanding of the market. They should carry out competitor survey because the
jewellery retail market is very competitive.
All the values and figures used for the investmnet appraisal are assumptions given by
the company based on past records. Therefore the pay back period and ARR could differ
from the calculated values. Hence, even though the calculated values suggest that Mirrar
should open the outlet, other future unforseen economic factors could alter this.
Finally, only one location has been taken into consideration to open the retail outlet.
Since, Hughes Road is a prime location, the prices and competition is bound to be high.
Hence, Mirrar could also consider other locations and compare the analysis in order to select
the best location for the retail outlet.
24
Name: Rushabh Shah Candidate Number: 004733 0013 Extended Essay
WORKS CITED
25
Name: Rushabh Shah Candidate Number: 004733 0013 Extended Essay
"Jewellery retailers may face lower revenue growth in 2013: Report." The Hindu Business
Line. N.p., n.d. Web. 11 July 2013. <http://www.thehindubusinessline.com/industry-
and-economy/jewellery-retailers-may-face-lower-revenue-growth-in-2013-
report/article4439320.ece>.
Levin, Naomi. "Secrets of Jewellery Branding Success." Jeweller Magazine. Gunnamatta
Media, 23 June 2012. Web. 6 Feb. 2014.
<http://www.jewellermagazine.com/Article.aspx?id=1682>.
"Lower revenue growth for jewellery retailers in 2013: Report." The Economic Times. N.p.,
n.d. Web. 9 Aug. 2013. <http://articles.economictimes.indiatimes.com/2013-02-
21/news/37221700_1_jewellery-retailers-jewellery-exports-gems-and-jewellery>.
Magic Bricks. Times Business Solutions, 24 Oct. 2013. Web. 2 Feb. 2014.
<http://www.magicbricks.com/propertyDetails/2860-Sq-ft-Commercial-Showroom-
FOR-Sale-Gamdevi-in-Mumbai&id=elmAx70S+kdzpSvf+uAgZw==>.
"Porter's Generic Competitive Strategies (Ways of Competing)." Institute of Manufacturing.
U of Cambridge, n.d. Web. 17 Jan. 2014.
<http://www.ifm.eng.cam.ac.uk/research/dstools/porters-generic-competitive-
strategies/>.
Rathore, Vijaya. "Luxury Retailers in India Face Shortage of Skilled Manpower." The
Economic Times. Bennett, Coleman, 27 Dec. 2012. Web. 29 Dec. 2013.
<http://articles.economictimes.indiatimes.com/2012-12-27/news/36022100_1_luxury-
abhay-gupta-shortage-of-skilled-manpower>.
Research and Markets. N.p., n.d. Web. 19 Aug. 2013.
<http://www.researchandmarkets.com/reports/1445132/indian_gems_and_jewellery_
market_forecast_to_2013.pdf>.
"Rupee hits fresh record low of 67.52/USD; slips over 10% in August." The Economic Times.
N.p., n.d. Web. 28 Aug. 2013. <http://articles.economictimes.indiatimes.com/2013-
08-28/news/41538691_1_trade-today-indian-rupee-fresh-record-low>.
"Shopping." Frommer's. FrommerMedia LLC, n.d. Web. 2 Feb. 2014.
<http://www.frommers.com/destinations/mumbai/274076>.
Singh, Renu. "Gold Loses Its Lustre, Demand for Diamond Rises." Times of India. Bennett,
Coleman, 30 Oct. 2013. Web. 2 Feb. 2014.
<http://articles.timesofindia.indiatimes.com/2013-10-30/trends/43526325_1_gold-
jewellery-diamond-jewellery-silver-jewellery>.
26
Name: Rushabh Shah Candidate Number: 004733 0013 Extended Essay
"Tanishq Plans Pilot Ancillary Jewellery Unit." Tata. Tata Sons, 6 June 2002. Web. 9 Jan.
2014. <http://tata.com/article/inside/GiWQ6oUB!$$$!UE=/TLYVr3YPkMU=>.
Tewari, Mansi. "Lack of Trained Salesmen May Hit Luxury Sales." The Economics Times.
Bennett, Coleman, 7 Jan. 2012. Web. 28 Dec. 2013.
<http://articles.economictimes.indiatimes.com/2012-01-07/news/30601997_1_luxury-
brands-luxury-watches-watch-jewellery-india>.
"Upsides to Investing in Branded Jewellery Companies." Zee News. Zee Media, 27 Mar.
2012. Web. 20 Jan. 2014. <http://zeenews.india.com/exclusive/upsides-to-investing-
in-branded-jewellery-companies_5163.html>.
Urban - New Sec System. Digital image. Market Research Society of India. N.p., 3 May 2011.
Web. 2 July 2013. <http://www.mrsi.in/TheNewSECSystem3May2011.pdf>.
"Why Indian Rupee Is in Free-Fall, Showing No Signs of Recovery." India Today. India
Today Group, 23 Aug. 2013. Web. 3 Feb. 2014.
<http://indiatoday.intoday.in/story/why-indian-rupee-is-in-free-fall-showing-no-signs-
of-recovery/1/300982.html>.
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Name: Rushabh Shah Candidate Number: 004733 0013 Extended Essay
Date: 29/07/2013
1. When and why was Mirrar Jewels founded and what type of company is it?
Mirrar Jewels Pvt. Ltd. was formed to help their customers backward integrate without
investments, by allowing them to reduce their costs of manufacturing through finished
products backed by innovation in design, research and development and marketing concepts.
2. Who were the people who started the company and what was their main aim?
Himanshu Shah and Prabir Chatterjee founded Mirrar Jewels Pvt. Ltd.. They have a vast
experience of over 25 years in this business. Their main aim is to see that their organization
effectively meets their set goal of providing high quality products and services to its clients.
3. Who are the owners/directors and what is their experience in this field?
Himanshu Shah is the chairman of Mirrar Jewels Pvt Ltd. He also serves on the Board of
Directors of Mini Diamonds India Ltd., a public limited company. In 1990 he made his mark
in the industry by becoming one of the first to introduce laser technology for cutting and
polishing diamonds. In 1993 he incorporated Devidoll Jewellery Pvt. Ltd. that catered to the
Studded jewellery export market. He was awarded as one of the largest exporters of studded
jewellery from SEEPZ for the year 2000 – 2001. He was introduced on the Board of
Directors of Concept Jewellery Pvt. Ltd. in the year 2004 and later as a director of M.Suresh
export Pvt. Ltd. (A DTC SIGHT HOLDER).
Prabir Chatterjee, the Managing Director, ventured into the domestic jewellery market in the
year 1981, incorporated PC Jewels in the year 1993 and in 1994 he started a factory along
with A.S.Exports to cater to the U.S. market.
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Name: Rushabh Shah Candidate Number: 004733 0013 Extended Essay
Prabir and Himanshu serve on the Advisory Board of the Indian Institute of Gems and
Jewellery (IIGJ), and are also active members of the All India Gems and jewellery federation,
which is a national body for the Gems and Jewellery trade of India.
4. What is the target market and what major types of products does Mirrar Jewels
focus on selling?
Mirrar Jewels is primarily targeting the top retailers pan India and the company has a
customer base of over 500 families in the SEC A+ and A categories in Tier I, Tier II and
sometimes in Tier III cities. Over the past 3 years Mirrar has become a supplier to most of the
retailers across India, and to name a few zone wise:
Mirrar Jewels creates jewellery with themes and story line to bring about an aspiration for its
customers and derive higher value addition. Mirrar manufactures both diamond and gold
jewellery. The company has started using computer based methods such as CAD and CAM to
producr better products in a shorter time frame. Mirrar also provides customers the
opportunity to customize their jewellery products.
Bridal Sets
Bangles
Necklace Sets
Tanmaniya Sets
Pendant Sets
Rings
Earrings
Men’s Jewellery and accessories.
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Name: Rushabh Shah Candidate Number: 004733 0013 Extended Essay
5. What are some of the internal and external threats currently faced by Mirrar
Jewels?
Mirrar Jewels is not a very large jewellery company when compared to some of its
competitors and therefore the company does sometimes face a few problems in different
fields. The cost of producing jewellery has been increasing and Mirrar sometimes finds it
difficult to match the much bigger companies in the market. Also because of this lower
budget, advertising is lesser and not as strong as other competitors. Another problem is the
company’s inability to meet demand on a regular basis because of the small size of the
company.
Also, the government has curbed imports because of Current Account Deficit. The Reserve
Bank of India has also instructed other banks not to import gold on consignment and has also
further told them not to give gold on loan. The government has increased the import duty to
8%.
The devaluation of the rupee from 55 to 60 to the USD has increased the price of gold
making it difficult for consumers to purchase jewellery.
6. What are the major raw materials required by the company and who are the
primary suppliers?
The major raw materials required are diamonds, gold, gemstones, silver, alloys and rhodium.
The primary suppliers for diamonds are:
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Name: Rushabh Shah Candidate Number: 004733 0013 Extended Essay
The number of years specified indicate the length of my working relationship with them
even before Mirrar Jewels.
Our employees have been working with me from the past numerous years, even before the
inception of Mirrar Jewels. Our organizational structure is as follows:
Two Administrators – Factory Manager – Floor Manager – Supervisors for each department
(We have a total of 12 departments) – Workers in each department
We currently have a total of 135 employees with only 3 having left the job in the last year.
Hence our labor turnover rate is just 2.22%.
8. How does Mirrar Jewels sell its products to retailers/wholesalers as well as final
consumer? How much markup do these retailers add to your prices?
Our sales people carry sample lines to the retailers and wholesalers and they take orders from
them. We then manufacture their orders and supply the products to the customers.
Sales people also carry ready jewellery pieces and customers select from these. We then bill
them for each piece they purchase.
We also sell through exhibitions all around year. These are usually B2B (Business to
Business) and B2C (Business to Customer) exhibitions. Customers give orders as to what
they want and we supply them their ordered products.
On an average, the usual markup retailers add to our products is within the range of 55-60%.
This is for a jewellery product made of diamond and gold jewellery. For plain gold jewellery,
the markup is between 5-12%.
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Name: Rushabh Shah Candidate Number: 004733 0013 Extended Essay
I. Direct sales: These are achieved by marketing personnel across India to procure
orders from retailers and ensure timely delivery and service
II. Indirect sales: the company’s distributors and wholesalers, who market the products
to the retailers in their respective markets, achieve this form of marketing.
The only form of above the line promotion carried out by Mirrar Jewels is the B2B
advertisements done in Jewellery Magazines and the promotion carried out through their own
website. For below the line promotion, Mirrar carries out sponsorships. It also does B2B
marketing and exhibitions for jewelers and consumers. Mirrar also has it’s own sales and
marketing team for direct and personal selling as mentioned previously.
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Name: Rushabh Shah Candidate Number: 004733 0013 Extended Essay
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Name: Rushabh Shah Candidate Number: 004733 0013 Extended Essay
APPENDIX 4 – PROFIT & LOSS OF MIRRAR JEWELS FOR YEAR ENDED 31ST
MARCH 2013
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Name: Rushabh Shah Candidate Number: 004733 0013 Extended Essay
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Appendix 3 – Balance sheet of Mirrar Jewels as at 31st March 2013
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Appendix 4 – Profit and Loss for the year ended 31st March 2013
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Name: Rushabh Shah Candidate Number: 004733 0013 Extended Essay
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Name: Rushabh Shah Candidate Number: 004733 0013 Extended Essay
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Name: Rushabh Shah Candidate Number: 004733 0013 Extended Essay
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Appendix 6 – Financial Figures obtained from Mirrar Jewels
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Name: Rushabh Shah Candidate Number: 004733 0013 Extended Essay
2014 4,89,58,432
2015 7,01,05,004
2016 11,10,90,494
2017 14,74,05,399
2018 16,34,44,962
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Appendix 6 – Financial Figures obtained from Mirrar Jewels
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Name: Rushabh Shah Candidate Number: 004733 0013 Extended Essay
The initial cost of setting up a retail outlet (outright purchase of the outlet) would be
Rs 69,930,000 (sixty nine million nine hundred and thirty thousand). This is the rate
as per present day prices (Rs 69,930 per square foot)50 of an outlet at Hughes Road,
Mumbai, with an area measuring 1000 square feet.
The amount invested is 69,930,000. Mirrar will get this invested money back during
the fourth year of the project (as can be seen from the cash flow shown in the table
above.)
The money received after the third year, 2016, will be 6,98,46,071. The amount left to
be regained will be, 6,99,30,000 - 6,98,46,071= 83,929
The total money Mirrar Jewels will receive during the year 2017 will be 5,50,94,601
Hence, the amount profited during each month will be 5,50,94,601÷12 = 45,91,216.75
Therefore, the number months required to receive the remaining invested amount is
83,929 ÷ 45,91,216.75= 0.018 months = 1 month
The Payback Period for this project for Mirrar Jewels is 3 years 1 month.
50
Magic Bricks. Times Business Solutions, 24 Oct. 2013. Web. 2 Feb. 2014.
<http://www.magicbricks.com/propertyDetails/
2860-Sq-ft-Commercial-Showroom-FOR-Sale-Gamdevi-in-Mumbai&id=elmAx70S+kdzpSvf+uAg
Zw==>.
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Name: Rushabh Shah Candidate Number: 004733 0013 Extended Essay
ARR = × 100
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