BAHIR DAR UNIVERSITY

BAHIRDAR INSTITUTE OF TECHNOLOGY

FACULTY OF MECHANICAL AND INDUSTRIAL ENGINEERING
DEPARTMENT OF MECHANICAL ENGINEERING
GROUP MEMBERS:

1.YOSEPH HAILU.......................1203458

2.YEABSIRA MEKURIA ............1203311

3.YOHANNES ADNEW................12033380

4.TAMIRAT HAILU ......................1203051

5.YOHANNES GASHAW ...............1203388

Submitted to: Mr. Zelalem

Submission date: 8/9/2015 E.C

 CHAPTER ONE
Description of the Business

1.1 Identification and exploration of business scenarios

Women love shoes; it’s an indisputable fact! Some women love high heels; some women love shoes that
are bejeweled and bedazzled, some love thick, heavy boots.

This study investigates the economic and technical feasibility of installing a small factory of women’s
shoes the project aims mainly at making a variety new brands and fashionable shoe that fits to a
women’s liking.

The project is located in bahirdar papirus. It is a preferable location because papirus is the main town
and most of marketing is conducted in this place. The market survey conducted in connection with this
project has revealed a number of important points. There is no question about the fact that women love
shoes. Many women cannot resist buying a new pair of shoes every time they pass by a shoe store and
also according to experts women appear to enjoy shopping for shoes more than any other item.

The factory mainly requires an inventory room and raw material.

The size of the enterprise depends on the number of employees, number of costumers. In the beginning,
the enterprise starts with 10 employees. After the business obtains profit, the number of employees can
be increased.

1.2 How women’s shoe production makes money

Women's shoe production can be a profitable business in Bahir Dar city if it is done properly. Here are
some ways that women's shoe production can make money in Bahir Dar city:

1. Selling directly to customers: Women's shoe manufacturers can sell their products directly to
customers through their own retail stores or online platforms. This allows them to earn a higher profit
margin and build a loyal customer base.

2. Selling to wholesalers and retailers: Women's shoe manufacturers can also sell their products to
wholesalers and retailers who will then sell them to customers. This can be a good way to reach a larger
market and increase sales volume.

3. Exporting to other countries: Bahir Dar city is located in Ethiopia, which has a growing economy and a
large population. Women's shoe manufacturers can take advantage of this by exporting their products
to other countries in the region or beyond. This can be a lucrative market for high-quality, locally-made
shoes.
4. Offering customization and bespoke services: Women's shoe manufacturers can differentiate
themselves from competitors by offering customization and bespoke services. This allows customers to
design their own shoes and creates a unique selling proposition for the manufacturer.

5. Partnering with fashion designers and influencers: Women's shoe manufacturers can partner with
fashion designers and influencers to promote their products and reach a wider audience. This can be a
cost-effective way to increase brand awareness and drive sales.

From different aspect our firm choose to sell our product to the customers directly

Directly selling women's shoes to customers in Bahir Dar can be a profitable business strategy. Here are
some steps that can be taken to successfully sell women's shoes directly to customers in Bahir Dar:

1. Identify the target market: The first step is to identify the target market for the women's shoes. This
can include women of different ages, professions, and lifestyles. Understanding the needs and
preferences of the target market can help in designing and marketing the shoes.

2. Set up a retail store: Setting up a retail store in a strategic location in Bahir Dar can help in attracting
customers. The store should be well-designed and visually appealing to attract customers. It should also
be easily accessible and have ample parking space.

3. Offer a variety of shoes: Offering a variety of women's shoes can help in catering to the diverse needs
of customers. This can include different styles, colors, and sizes. The shoes should be of high quality and
competitively priced.

4. Provide excellent customer service: Providing excellent customer service can help in building a loyal
customer base. This can include offering personalized recommendations, providing a comfortable
shopping experience, and offering after-sales services.

5. Use social media and online platforms: Using social media and online platforms can help in reaching a
wider audience. This can include creating a website, using social media platforms like Facebook and
Instagram, and using online marketplaces like Jumia and Amazon.

6. Offer promotions and discounts: Offering promotions and discounts can help in attracting customers
and increasing sales. This can include offering discounts on bulk purchases, offering seasonal promotions,
and offering loyalty programs.

By following these steps, women's shoe manufacturers can successfully sell their products directly to
customers in Bahir Dar and build a profitable business.

1.3 Type of women shoe to be made

When deciding on the type of women's shoes to produce in Bahir Dar city, it's important to consider the
needs and preferences of the target market. Here are some types of women's shoes that could be
produced in Bahir Dar city:
1. Comfortable flats: Comfortable flats are a popular choice for women who want a comfortable and
stylish shoe for everyday wear. They can be made from a variety of materials, including leather, suede,
and synthetic materials.

2. Sandals: Sandals are a great choice for warm weather and can be made in a variety of styles, including
flip-flops, gladiator sandals, and slide sandals.

3. Wedges: Wedges are a comfortable alternative to traditional heels and can be made in a variety of
styles, including wedge sandals and wedge boots.

4. Ankle boots: Ankle boots are a versatile shoe that can be worn with a variety of outfits. They can be
made from a variety of materials, including leather, suede, and synthetic materials.

5. Athletic shoes: Athletic shoes are a popular choice for women who are active and enjoy sports and
physical activities. They can be made from a variety of materials and come in a variety of styles,
including running shoes, tennis shoes, and basketball shoes.

6. Heels: Heels are a popular choice for formal occasions and can be made in a variety of styles,
including pumps, stilettos, and wedges.

By producing a variety of women's shoes in Bahir Dar city, manufacturers can cater to the diverse needs
and preferences of the target market and build a successful business.

1.4 Technical processes on production

The technical process in women's shoe production can vary depending on the type of shoe being
produced and the materials used. However, the general process typically involves the following steps:

1. Design: The shoe design is created by a designer or design team. This involves creating sketches,
selecting materials, and determining the construction method.

2. Pattern making: A pattern maker creates a pattern for the shoe design. This involves creating a 2D
template of the shoe design that will be used to cut the materials.

3. Cutting: The materials, such as leather, fabric, and rubber, are cut according to the pattern. This is
typically done using a cutting machine or by hand.

4. Stitching: The cut materials are then stitched together using a sewing machine or by hand. This
involves attaching the upper part of the shoe to the sole and adding any additional details, such as laces
or buckles.

5. Lasting: The shoe is then placed on a last, which is a mold that gives the shoe its shape. The upper
part of the shoe is stretched and attached to the last.

6. Finishing: The shoe is then finished by trimming any excess materials, adding any final details, and
polishing the shoe.
7. Quality control: The finished shoe is inspected for quality and any defects are corrected.

8. Packaging and shipping: The shoes are then packaged and shipped to retailers or customers.

Overall, the technical process in women's shoe production involves a combination of design, pattern
making, cutting, stitching, lasting, finishing, and quality control.

The size, location, and kind of inputs required to make women's shoes in Bahir Dar city as a firm can
vary depending on the scale of production and the type of shoes being produced. However, here are
some general inputs that are typically required:

1.Size: The size of the firm can vary depending on the scale of production. A small-scale firm may have
a few employees and produce a limited number of shoes, while a larger firm may have a larger
workforce and produce a higher volume of shoes. but for our case we went to start our business as small
scale firm by having small employees 5 to 9

2. Location: The location of the firm is important for access to raw materials, transportation, and
market access. A firm producing women's shoes in Bahir Dar city may be located in an industrial area or
a commercial district.

3. Raw materials: The raw materials required for women's shoe production can vary
depending on the type of shoe being produced and the design specifications. However, here
are some common raw materials used in women's shoe production:

- Leather: Leather is a popular material for women's shoes, as it is durable, flexible, and can be dyed in
a variety of colors. Leather can be sourced from cowhide, sheepskin, or other animal hides.

- Fabric: Fabric is another common material used in women's shoe production, particularly for casual or
athletic shoes. Canvas, denim, and mesh are popular fabric choices.

- Rubber: Rubber is used for the soles of women's shoes, as it provides traction and durability. It can be
molded into different shapes and sizes to fit the design of the shoe.

- Synthetic materials: Synthetic materials such as polyurethane, PVC, and EVA are often used in women's
shoe production, particularly for athletic or performance shoes. These materials are lightweight, flexible,
and can be molded into different shapes.

- Adhesives: Adhesives are used to bond different materials together in the shoe production process.
Different types of adhesives are used depending on the materials being bonded.

- Decorative materials: Decorative materials such as beads, sequins, and embroidery thread may be
used to add embellishments to women's shoes.
Overall, the raw materials used in women's shoe production can vary depending on the design and style
of the shoe, but leather, fabric, rubber, synthetic materials, adhesives, and decorative materials are
commonly used.

4. Machinery and equipment: The firm will require machinery and equipment such as
cutting machines, sewing machines, and finishing equipment. These may be purchased or leased
depending on the firm's financial resources.

5. Skilled labor: The firm will require skilled labor such as designers, pattern makers, cutters,
stitchers, and quality control personnel. These employees may be trained on the job or hired from other
firms.

6. Capital: The firm will require capital to purchase raw materials, machinery and equipment, and
pay for labor and other expenses. This capital may be obtained through loans, investments, or other
sources.

Overall, the inputs required to make women's shoes in Bahir Dar city as a firm include raw materials,
machinery and equipment, skilled labor, and capital. The size and location of the firm will depend on the
scale of production and market demand.

1.5 Time needed to initiate and running at the capacity

The time horizon for a women's shoe production project in Bahir Dar city can vary depending on several
factors, including the scale of production, availability of resources, and the complexity of the project.
However, here is a general timeline for a medium-sized production facility:

1. Planning and feasibility study: This phase can take 1-3 months and involves conducting market
research, identifying potential suppliers, and assessing the feasibility of the project.

2. Site selection and construction: This phase can take 6-12 months and involves selecting a suitable site
for the production facility, obtaining necessary permits, and constructing the building and necessary
infrastructure.

3. Equipment installation and testing: This phase can take 2-4 months and involves installing the
necessary machinery and equipment, testing the production process, and making any necessary
adjustments.

4. Hiring and training staff: This phase can take 1-2 months and involves hiring and training staff for
various roles, including designers, pattern makers, cutters, stitchers, and quality control personnel.

5. Raw material sourcing and inventory management: This phase can take 1-2 months and involves
identifying suppliers for raw materials, establishing relationships with them, and setting up inventory
management systems.
6. Production and marketing: Once the production facility is up and running, it can take 6-12 months to
reach full capacity and establish a customer base. During this time, marketing efforts will be ongoing to
promote the brand and products.

Overall, the time horizon for a women's shoe production project in Bahir Dar city can range from 18
months to 3 years, depending on the factors mentioned above.

1.6 Economic, social and environmental impact of the business

The shoe business is an important industry that can have significant economic and social impacts on
local communities. In Bahirdar, the shoe business has been growing in recent years, and it has had both
positive and negative impacts on the local communities. In this essay, we will identify the economic and
social impacts of the shoe business on the local communities of Bahirdar.

Economic Impact:

1. Employment: The shoe business has created employment opportunities for the local communities.
The industry requires skilled and unskilled labor, and it has provided jobs for many people in Bahirdar.

2. Income Generation: The shoe business has provided a source of income for many people in Bahirdar.
The industry has created opportunities for entrepreneurship, and many people have started their own
shoe businesses, which has helped to generate income for themselves and their families.

3. Export: The shoe business in Bahirdar has the potential to export shoes to other countries, which can
generate foreign exchange for the country. This can help to improve the balance of payments and
contribute to the economic growth of the country.

Social Impact:

1. Skill Development: The shoe business has provided opportunities for skill development for the local
communities. The industry requires skilled labor, and it has provided training and development
opportunities for people to acquire new skills.

2. Social Cohesion: The shoe business has brought people from different backgrounds together, creating
a sense of community and social cohesion. The industry has provided opportunities for people to work
together and build relationships, which can help to improve social harmony in the community.

3. Environmental Impact: The shoe business can have a negative impact on the environment if not
managed properly. However, the industry can also have a positive impact on the environment if it
adopts sustainable practices. The shoe business can contribute to environmental conservation by using
eco-friendly materials and adopting sustainable production practices.

In conclusion, the shoe business in Bahirdar has had significant economic and social impacts on the local
communities. The industry has created employment opportunities, generated income, and provided
opportunities for skill development. The shoe business has also contributed to social cohesion and
environmental conservation. However, it is important to ensure that the industry is managed
sustainably and that the benefits are shared equitably among all members of the community.

CHAPTER TWO

MARKET FEASIBILITY
2.1 Enterprise description

2.1.1 Size and scope of the company

Ethiopia is known for its leather industry, and the country has been working to develop its footwear
manufacturing sector in recent years. The Ethiopian government has identified the footwear industry as
a priority sector for development, and it has implemented policies to attract foreign investment and
promote local production.

According to a report by the Ethiopian Investment Commission, the country's footwear industry has
been growing at an average rate of 20% per year, and it is expected to continue to grow in the coming
years. The report also notes that the majority of footwear production in Ethiopia is focused on exports,
with the European Union being the largest market.

In terms of gender-specific footwear, there is a growing demand for women's shoes in Ethiopia,
particularly in urban areas. Women's shoes are available in a variety of styles, including casual, formal,
and athletic shoes. However, it is unclear how much of this production is concentrated in Bahirdar city
specifically.

In conclusion, while specific data on the size and scope of the women's shoe manufacturing industry,
market, and/or market segments in Bahirdar city is not readily available, it is clear that the footwear
industry in Ethiopia is growing and that there is a demand for women's shoes in the country.

The scope of production management applies to directing, controlling, planning, and organizing
production operations. This is the process that helps encourage raw material conversion into finished
goods so clients can efficiently leverage them. The size and scope of our manufacturing firm
development depends on the following points:

-Number of employees

- Availability of Finance

-Demands of the customer

-Capital investment
2.1.2 Future direction of the firm
Bahirdar city is located in Ethiopia, which is known for its leather industry and has been working to
develop its footwear manufacturing sector in recent years. The Ethiopian government has identified the
footwear industry as a priority sector for development, and it has implemented policies to attract
foreign investment and promote local production.

In terms of the women's shoe making industry, there is a growing demand for women's shoes in
Ethiopia, particularly in urban areas. Women's shoes are available in a variety of styles, including casual,
formal, and athletic shoes. This trend is likely to continue in the future, as the country's population is
growing and becoming more urbanized, leading to an increase in demand for footwear.

Furthermore, the COVID-19 pandemic has accelerated the shift towards online shopping, and this trend
is likely to continue in the future. As a result, there may be an increased focus on e-commerce and
online sales channels for women's shoes in Bahirdar city.

In conclusion, the future direction of the women's shoe making industry, market, and/or market
segments in Bahirdar city is likely to be influenced by factors such as population growth, urbanization,
and the shift towards online shopping. The industry is expected to continue to grow, and there may be
an increased focus on e-commerce and online sales channels in the future.

There is an immense demand from customers and no enterprise currently able to satisfy these needs.
Therefore, to rectify this imbalance between demand and available service, our enterprise has set its
sights on fulfilling this demand for women's shoes going forward.

To adequately meet the burgeoning desires of our clientele and provide the footwear solutions they
eagerly seek, we have embarked upon an ambitious expansion and innovation initiative. New designs,
materials, and styles will be continually developed and released to keep pace with the latest fashion
trends and ensure we offer the most fashionable and coveted shoes for women.

Through dedicated research and development, strategic partnerships, and attentive listening to
customer feedback, we aim to not just meet demand but exceed expectations. It is our goal to become
the premier provider of women's shoes by offering an unparalleled collection, unrivaled quality, and
unbeatable service. Only then will we have truly achieved the balance and satisfied the needs of both
our customers and our company.

The road ahead is long, but our vision is clear. We hope to build a brand that women can trust and rely
upon to keep their feet fashionably happy for years to come!.

Generally In the future our firm has the following directions.

- Increasing the number of manufacturing place

- Increasing the number of employees.

- Design, manufacture and maintain machine with different model.

- Establish servicing & distribution centers in different parts of our country to fulfill large population
demand.

- Increasing market share of our products.

- Changing size of enterprise from small business to medium scale producing firm.

- Increasing our Scope from regional to national level

2.1.3 Nature of the market

The shoe making industry, market, and/or market segments are going through rapid change and
restructuring in many parts of the world, including Bahirdar city in Ethiopia. There are several factors
driving this change, including technological advancements, changes in consumer behavior, and global
economic trends.

One of the major changes in the shoe making industry is the increasing use of technology in the
manufacturing process. Automation and robotics are being used to streamline production and reduce
costs, while 3D printing is being used to create customized shoes. This is leading to a shift in the skills
required for workers in the industry, with a greater emphasis on technical and digital skills.

Another factor driving change in the shoe making industry is changing consumer behavior. Consumers
are becoming more conscious of the environmental impact of their purchases, and there is a growing
demand for sustainable and ethically produced shoes. This is leading to a shift towards more eco-
friendly materials and production methods.

In addition, the COVID-19 pandemic has had a significant impact on the shoe making industry, market,
and/or market segments. The pandemic has disrupted supply chains and led to a decline in consumer
spending, particularly in the luxury segment. This has forced many companies to restructure their
operations and adapt to the new market conditions.

In conclusion, the shoe making industry, market, and/or market segments are going through rapid
change and restructuring, driven by technological advancements, changing consumer behavior, and the
impact of the COVID-19 pandemic. Companies in the industry will need to adapt to these changes in
order to remain competitive and meet the evolving needs of consumers.

Women's interest in shoes has increased dramatically over time due to the quality and affordable prices
of shoes available. The demand for these products continues to grow consistently. The business will
have to evolve and restructure quickly to meet the large consumer demands. As the business gains more
profits from its various services and wider market reach, it will continue expanding rapidly. Therefore, in
order to satisfy all consumer needs, the business must grow quickly. The company will have to adapt to
withstand any challenges for the long term and remain competitive in the market.

2.1.4 Life cycle of industry

The life-cycle of the shoe making industry, market, and/or market segments can vary depending on the
specific segment and geographic location. However, in general, the shoe making industry can be
considered a mature market in many parts of the world, including Bahirdar city in Ethiopia.

A mature market is characterized by slow growth, intense competition, and a focus on cost-cutting and
efficiency. In the shoe making industry, this is reflected in the consolidation of companies, the use of
automation and robotics to reduce costs, and the focus on established brands and products.

However, there are also emerging segments within the shoe making industry that are experiencing
growth and innovation. For example, the market for sustainable and ethically produced shoes is an
emerging segment that is gaining traction among consumers. This segment is characterized by a focus
on eco-friendly materials, transparent supply chains, and fair labor practices.

In addition, the COVID-19 pandemic has created new challenges and opportunities for the shoe making
industry, market, and/or market segments. The pandemic has accelerated the shift towards e-
commerce and online sales channels, creating new opportunities for companies that are able to adapt
to this new reality.

The industry life cycle refers to the succession of stages an industry goes through. It's a method to
trace the stages of product acceptance from its introduction to its decline (end or downfall). Identifying
the life cycle helps the industry in several ways:

-It helps determine where the product currently stands at this moment in time. This allows businesses to
gain valuable insights into how well the product is selling and performing on the market.

-It allows businesses to predict what may happen to the product and industry in the future. As the life
cycle progresses, businesses can anticipate changes in customer demand, competition level, and the
need for product innovation.

-It helps identify competitors at different stages of the life cycle. Early stage competitors pursue
different strategies compared to competitors in mature or declining stages.

-It helps businesses select the appropriate strategies to follow at each stage. Different strategies are
needed to maximize profits and growth for products in introduction, growth, maturity, and decline.

Our business industry can be involved in different stages of its life cycle. These are:

1. Introduction {emerging state}.

2. The growth stage, where the company expands and profits increase.

3. The maturity stage, where sales level off but profits remain stable.

4. The decline stage, where sales and profits begin to fall.

 The life cycle of an industry depends on the acceptance of our products by customers. Considering the
product of our firm, shoes, the products have continuous demand and that demand increases for
several reasons:

The number of people and the economic standard of our country increases over time, leading to more
potential customers. The number of people using these types of products increases over time as they
become more mainstream.

Therefore, if other factors like management and supply remain stable, the enterprise will have a long
life cycle. So, to determine a company's life cycle, it is important to pay special attention to the
introduction, growth and maturity stages. Careful planning at each stage can help maximize profits and
ensure the company's longevity.

1. Introduction stage

At the introduction or emerging stage, the enterprise has the following characteristics:

-Sales of the service grows slowly, indicating that the new product or service has just been launched and
is still relatively unknown to most potential customers.

-High machine and other costs related to setting up operations and preparing for the launch of the new
service.

-Skimming pricing strategy is utilized to recover the high development costs. Prices are set

relatively high initially.

-Selective distribution of the service until customer demand and acceptance of it has been established.
The service is only available through a limited number of distribution channels.

-Promotion through advertising and other promotional methods is crucial during this stage in order to
create awareness of the new service and generate initial sales.

-On the marketing front, communication seeks to build product awareness and educate potential
customers about the new service. Advertising aims to explain how the service works and its key benefits.

2. Growth stage

After an enterprise's initial founding and survival, the growth stage sees it strive to build preference for
its brand and services while expanding its market share. At this stage, the enterprise will likely share
these traits:

-They focus on keeping up their product's quality and adding helpful new features.

-They keep prices the same even as demand increases.

-They have the ability to widen their product offerings.

-They add more ways for customers to access their products.

-They promote their products to a broader audience.

3.Maturity stage

At this stage the service sales are decrease or not as such grow, due competitors with the same product.
So, it is better to use different technique to compete at this stage. Some of them are:

-We should try to differentiate our servicing type by adding different washing mechanisms and
technologies. This will make our services stand out.

-We can offer incentives and promotions to encourage more customers to prefer our products and
services over competitors. Discounts, loyalty programs, and rewards can help attract new customers.

-We will expand our product line. Adding new products and services can help attract new customers and
drive further growth.

-We will utilize our high production capacity to produce quality products efficiently. Producing high
quality products at competitive costs will help us compete effectively.

In general, product or industry life cycle analysis is used to determine the life cycle stage of a product
or industry with respect to business metrics like costs, sales, and revenue. It helps marketing managers
of the industry to plan alternative marketing strategies to address the challenges that their products are
likely to face.

In conclusion, while the shoe making industry can be considered a mature market in many parts of the
world, there are also emerging segments that are experiencing growth and innovation. The COVID-19
pandemic has created new challenges and opportunities for the industry, and companies will need to
adapt to these changes in order to remain competitive.

2.2 Enterprise competitiveness

2.2.1 Industry concentration

In Bahirdar city in Ethiopia, the shoe making industry is characterized by many small producers.
There are numerous small and medium-sized enterprises (SMEs) that are involved in the
production of shoes, ranging from small family-owned businesses to larger companies with
several employees.

This high level of fragmentation in the industry can make it difficult for individual companies to
compete on a global scale. Small producers may struggle to achieve economies of scale and
may face challenges in accessing financing and technology. However, the high level of
competition in the market can also drive innovation and creativity, as companies seek to
differentiate themselves from their competitors.
In addition, the concentration of the shoe making industry in Bahirdar city is relatively low
compared to other regions in Ethiopia. The majority of shoe production in Ethiopia is
concentrated in the capital city of Addis Ababa, where there are several large producers that
dominate the market.

Overall, the high level of fragmentation in the shoe making industry in Bahirdar city can present
both challenges and opportunities for individual companies. While it may be difficult to
compete on a global scale, the high level of competition can drive innovation and creativity, and
there may be opportunities for niche players to carve out a market for themselves.

The shoe making industry in Bahirdar city in Ethiopia is highly price competitive. This is due to
the large number of small and medium-sized enterprises (SMEs) involved in the production of
shoes, which creates a highly fragmented market with many competitors. As a result, shoe
manufacturers must compete on price in order to attract customers and remain competitive.

In addition, the shoe making industry in Ethiopia is characterized by a relatively low level of
technology and automation, which can limit the ability of manufacturers to achieve economies
of scale and reduce production costs. This further reinforces the need for shoe manufacturers
to compete on price in order to remain competitive.

Furthermore, the shoe market in Ethiopia is highly price-sensitive, with many consumers
prioritizing affordability over other factors such as brand or design. This means that shoe
manufacturers must keep their prices low in order to attract customers and remain competitive
in the market.

Overall, the shoe making industry in Bahirdar city is highly price competitive, with many small
and medium-sized enterprises competing on price to attract customers. The low level of
technology and automation in the industry, as well as the price sensitivity of consumers, further
reinforces the need for shoe manufacturers to keep their prices low in order to remain
competitive.

2.2.2 Analyze major competitors

In Bahirdar city in Ethiopia, the shoe making industry is characterized by many small and medium-
sized enterprises (SMEs) that are involved in the production of shoes. As a result, there are no major
competitors that dominate the market. Instead, competition is intense among the numerous small
producers, each of which may specialize in a particular type of shoe or market segment.

However, there are some larger companies in Ethiopia that are involved in the shoe making industry,
particularly in the capital city of Addis Ababa. These companies may have more resources and
economies of scale than the smaller producers in Bahirdar city, which could give them a competitive
advantage.
In addition, there are also international competitors in the shoe making industry that could potentially
enter the Ethiopian market. For example, China is a major producer of shoes and has been increasing its
exports to Ethiopia in recent years. These international competitors may have lower production costs
and more advanced technology than local producers, which could make it difficult for them to compete.

Overall, the shoe making industry in Bahirdar city is characterized by intense competition among
numerous small producers, with some larger companies in other parts of Ethiopia and potential
international competitors also present. Companies in this industry will need to focus on innovation,
quality, and cost efficiency in order to remain competitive in the market.

2.2.3 Barriers of the business

The shoe making industry in Bahirdar city in Ethiopia is characterized by a relatively low barrier
to entry for new competitors. This is because the industry is fragmented, with many small and
medium-sized enterprises (SMEs) involved in the production of shoes. As a result, it is relatively
easy for new companies to enter the market and start producing shoes.

However, there are some challenges that new competitors may face. For example, access to
financing can be difficult for small businesses in Ethiopia, which could limit their ability to invest
in equipment, technology, and marketing. In addition, the shoe making industry requires
specialized skills and knowledge, particularly in areas such as design, materials sourcing, and
production processes. New competitors may need to invest in training and development in
order to build these capabilities.

There are also some regulatory barriers to entry in the shoe making industry in Ethiopia. For
example, companies must comply with labor laws and environmental regulations, which can
add to their costs and administrative burden. In addition, there are import restrictions on
certain materials and equipment, which could limit the ability of new competitors to access the
inputs they need to produce shoes.

Overall, while the shoe making industry in Bahirdar city has a relatively low barrier to entry for
new competitors, there are still some challenges that companies may face. Access to financing,
specialized skills and knowledge, and regulatory compliance are all factors that could impact
the ease of entry for new competitors in this industry.

2.3 Market potential

The demand for shoes in Bahirdar city in Ethiopia is relatively high, as shoes are a basic
necessity for many people. However, the usage trends and preferences of consumers in the
market can vary depending on factors such as age, gender, income level, and lifestyle.
One trend in the market is a growing preference for comfortable and durable shoes, particularly
among younger consumers. This has led to an increase in demand for athletic shoes and
sneakers, which are often designed with features such as cushioning and support to provide
maximum comfort during physical activity.

Another trend in the market is a growing interest in fashion and style, particularly among
middle and upper-income consumers. This has led to an increase in demand for high-end,
designer shoes, as well as shoes with unique designs and features that can help consumers
express their personal style.

In addition, there is a growing awareness of the importance of sustainability and ethical

production practices among consumers in the market. This has led to an increase in demand for
shoes made from sustainable materials, as well as shoes produced using ethical and
environmentally-friendly production methods.

Overall, the demand for shoes in Bahirdar city is relatively high, with usage trends and
preferences varying depending on factors such as age, gender, income level, and lifestyle. Some
of the key trends in the market include a growing preference for comfortable and durable shoes,
a growing interest in fashion and style, and a growing awareness of sustainability and ethical
production practices.

Demand analysis
Demand analysis is an important aspect of any business, especially for those in the manufacturing
industry. For a business manufacturing women's shoes in Bahirdar city, it is crucial to understand the
demand for their products in order to make informed decisions about production, pricing, and
marketing.

To conduct a demand analysis, the business should first identify their target market. In this case, the
target market would be women in Bahirdar city who are interested in purchasing shoes. The business
can gather data on the size of this market, their purchasing habits, and their preferences through
surveys, focus groups, and market research.

Once the target market has been identified, the business can analyze the demand for their products.
This can be done by examining historical sales data, monitoring trends in the market, and forecasting
future demand based on factors such as seasonality and economic conditions.

The business should also consider the competition in the market. They can analyze the pricing and
marketing strategies of their competitors to determine how they can differentiate themselves and
attract customers.
Overall, a thorough demand analysis can help the business manufacturing women's shoes in Bahirdar
city make informed decisions about production, pricing, and marketing, ultimately leading to increased
sales and profitability.

As previously stated, the demand for women's shoes in Bahirdar city is very high. The number of
population residing in Bahirdar city is 455,901 and from these, number of female population is 227,712.
This suggests that there is a large number of demand to be addressed. We strive to provide our products
encompassing various ages of women and children, depending upon the needed size and comfort. We
aim to fulfill the needs of women of all ages, from young girls to the elderly, by providing shoes in a wide
range of sizes and styles that cater to different requirements for comfort and support.

The demand for shoe depends heavily on the season of the year. We aim to fulfill this seasonal demand
by producing shoes made with warm, insulating materials like fur during the rainy and cold season, and
utilizing lighter materials and styles considering the hotter conditions during the hot and sunny season.
For example, during the cold season boots are in high demand. While in the hot season, sandals and
other open-toe styles are much preferred. For this reason, our production strives to cover the different
demands that arise throughout the year to match consumers' changing needs. We produce boots,
booties, flats, heels, sneakers, and sandals so that we offer options for women regardless of the time of
year.

The demand for shoe also depends on the frequency of buying the shoe within a certain period of time.
On average let us say a person buys two shoes in a year. This frequency determines the rate of selling
shoes.

Therefore, the demand for women's shoes depends on these factors:

1)Number of people residing in the city

2)Weather conditions that are variable on different seasons

3)The frequency of an individual buying shoes.

Sales Projection

Expected demand 111,356

Production capacity 5,475

Price per shoes in average 450

Total sales for the first year 2,463750

 CHAPTER THREE

Technical Feasibility

3.1 Facilities need for women shoe production

The facilities needed for women's shoe production will depend on the scale and nature of the
production. However, some common facilities that may be required include:

1. Production space: A dedicated space for shoe production is necessary, which should be well-
ventilated, well-lit, and spacious enough to accommodate the production process.

2. Equipment and machinery: Depending on the type of shoes being produced, various equipment and
machinery may be required, such as cutting machines, sewing machines, and finishing machines.

3. Raw materials storage: A storage area for raw materials such as leather, fabric, and other materials
used in shoe production is necessary.

4. Finished goods storage: A storage area for finished shoes is necessary to keep them safe and
organized before they are shipped to customers.

5. Quality control area: A dedicated area for quality control is necessary to ensure that the shoes meet
the required standards.

6. Office space: An office space is necessary for administrativetasks such as record-keeping, accounting,
and customer service.

7. Restrooms and break areas: Restrooms and break areas are necessary to provide a comfortable and
safe working environment for the workers.

8. Utilities: Access to electricity, water, and other utilities is necessary for the production process.

Overall, the facilities needed for women's shoe production will depend on the specific requirements of
the production process, but the above facilities are some of the most common ones that are required.

DEVELOPMENT

The first stage of shoe making begins in the development room. That is where our design team delivers
the technical file containing all the information obtained thru their development and research. Once
there, this file passes onto the hands of the pattern maker, who will sketch the shoe onto the last. From
this sketch, we will have what we call the “shoe standard”, which is a two-dimensional spread of the
last’s shape, allowing a 2D drawing to be turned into a three-dimensional puzzle.

RAW MATERIALS INVENTORY ROOM

This is where all the materials, present in the technical file, are sorted and prepared. The type of leather
or fabric that will be used, metals, laces, insoles, etc. Our team inspects the quality of each item, before
sending them to the production team.

CUTTING

Once the necessary materials are sorted and verified, they are taken to cutting. cutting can be done by a
automated machine or through an old-school manual process. In this sector, we cut all the pieces that
the pattern maker drew from the last. After being cut, the pieces are taken to the skiving sector – which
is where the cutted pieces are made to have uniform thicknesses.

STICHING

At stitching, the pieces are joined to form the upper, which is what we call the external area of the shoe.
In a group usually made of 3 people, we make the necessary folds and add glue, to secure the parts until
they can be joined by the stitching threads.

WORK-IN-PROCESS INVENTORY

It is in this step, between stitching and assembly, our team will match all the other materials sorted in
the raw materials inventory room, with the finished upper and outsole, so the footwear can advance to
assembly.

ASSEMBLY

This is a three-step process: first we wrap the upper over the last and prepare it to have the outsole
attached to it. This is done by a mounting machine, that handles much of the process automatically.
Glue is added to adhere the toe region of the upper to the mounting-insole, holding the last’s base
design. On step-two, the sides of the footwear are closed, and on step-three the heel area is closed as
well. Both of this steps are also assisted by machines.

FINISHING

At the finishing sector, we take take the final steps to make sure that the shoe is even more beautiful. In
the uppers containing parts of Vegan Leather, we use carnauba wax, which polishes the shoe, giving it
shine, smothiness and adding durability to the material. After that, the shoe it is ready to receive the
outsole

QUALITY CONTROL AND PACKAGING

Finally, the shoe is prepared for packaging. Insoles and laces are added, and the shoe proceeds to be
quality checked and packaged. Once all details are verified, our team tidys everything by adding the
shoe bag to the box, and finishes by placing a letter signed by our entire team.

Building
With space added for cutting and stitching, you can fit a 700 pair per day factory into a space 7 meters
long by 4 meters wide. Extra space will be required for raw material and finished product storage.

Auxiliary Equipment

The auxiliary equipment’s are required in the shoes manufacturing room for proper usage.

The following are the lists of auxiliary equipment’s required in this project. These are:

- Fire extinguishers: for fire hazard control

-Fan to ventilates the room

-designed lists of shoes photo for customers to provide good service.

-Table and guest chairs: in which the customers take rest.

3.2 Suitability of production technology

The project aims at substituting the current manual cutting and stitching operations with a modern

by comparing the available technologies we select the best sewing machine for leather Juki DDL8700H
High-Speed Lock-Stitch Sewing Machine which is an industrial sewing machine.

The limitation or constraints of technologies

The current limitations of shoes manufacturing technology is it requires the full control of the operator
to do the required task as a result this drags the quality of the shoes unless a skilled operator uses the
machine.

Related buildings, equipment, and rolling-stock are important components of women's shoe
production. Here are some of the key needs for each:

1. Buildings: In addition to the production space, there may be a need for other buildings such as
warehouses for storing raw materials and finished products, offices for administrative tasks, and
showrooms for displaying the shoes to potential customers.

2. Equipment: The equipment needed for women's shoe production will depend on the specific
production process. Some common equipment includes cutting machines, sewing machines, finishing
machines, and molds for shaping the shoes. Other equipment such as computers, printers, and scanners
may also be needed for administrative tasks.

3. Rolling-stock: Rolling-stock refers to the vehicles used for transporting goods and materials. In the
context of women's shoe production, rolling-stock may include trucks or vans for transporting raw
materials and finished products to and from the production site.
It is important to note that the specific needs for buildings, equipment, and rolling-stock will depend on
the scale and nature of the production. For example, a small-scale production operation may not require
a large warehouse or a fleet of trucks, while a larger operation may require multiple buildings and a
larger fleet of vehicles. It is important to carefully assess the needs of the production process and invest
in the appropriate buildings, equipment, and rolling-stock to ensure efficient and effective production.

3.3. Availability and suitability of site

Proximity to customers is one of the main factors which influence the choice of location for a project.

The project could therefore be located in the center of bahir dar city papirus this site is the main place
for marketing different kinds of goods.

-Access to markets

Hence the proposed project womens shoe making business it mainly targets womens. and hence it is
located at good marketing place of the city customers are drawn in to the the shop.

-Access to raw materials.

The main raw material is leather and some other materials may be used to decorate the shoes.

-Access to service input

The main inputs for this project is electricity. Papirus there is good access of electricity. Thus, there is no
deficiency of inputs.

Investigation and comparison on technology providers in women shoe production

There are several technology providers in the women's shoe production industry. Here are some of the
most notable ones:

1. Lectra: Lectra is a technology provider that offers software and hardware solutions for the fashion
and apparel industry, including shoe production. Their solutions include CAD software for designing
shoes, cutting machines for precision cutting of materials, and software for optimizing material usage.

2. Gerber Technology: Gerber Technology is another technology provider that offers solutions for the
fashion and apparel industry, including shoe production. Their solutions include CAD software for
designing shoes, cutting machines for precision cutting of materials, and software for managing the
production process.

3. Atom: Atom is a technology provider that specializes in shoe production machinery. Their solutions
include cutting machines, skiving machines, and other machinery for the production process.

4. Comelz: Comelz is another technology provider that specializes in shoe production machinery. Their
solutions include cutting machines, stitching machines, and other machinery for the production process.
5. Shoemaster: Shoemaster is a technology provider that offers software solutions for shoe design and
production. Their solutions include CAD software for designing shoes, as well as software for managing
the production process.

When comparing these technology providers, it is important to consider factors such as the specific
needs of the production process, the cost of the solutions, and the level of support and training
provided by the provider. It may also be helpful to read reviews and case studies from other companies
in the industry to get a better understanding of the effectiveness of each provider's solutions.

Limitation in women shoes production

Here are some of the limitations or constraints of technology in women's shoe production:

1. Design limitations: While technology can assist in the design process, it may not be able to fully
replace the creativity and intuition of human designers. Some designs may be difficult or impossible to
create using technology alone.

2. Material limitations: Technology can assist in the production of shoes, but it may not be able to work
with all materials. Some materials may require specialized machinery or techniques that are not
available with current technology.

3. Production volume limitations: While technology can increase production efficiency, there may be
limitations on the volume of shoes that can be produced. This may be due to the capacity of the
machinery or the availability of materials.

4. Quality control limitations: While technology can assist in quality control, it may not be able to detect
all defects or issues. Human inspection may still be necessary to ensure the quality of the final product.

5. Cost limitations: As mentioned earlier, the cost of technology can be a limitation for smaller
companies or those with limited resources. Investing in new technology may not be feasible for all
companies.

6. Environmental impact: The production and disposal of technology can have a significant
environmental impact, including the use of non-renewable resources and the generation of electronic
waste. Companies need to consider the environmental impact of their technology use and take steps to
minimize it.

It is important for companies in the women's shoe production industry to carefully consider these
limitations and constraints when evaluating the use of technology in their production processes. By
doing so, they can make informed decisions about which technologies to invest in and how to effectively
integrate them into their operations.

Availability and suitability of site

Access to transportation
The city has a well-developed transportation system that includes buses, taxis, and minibusses. There
are also several private transportation companies that offer transportation services to different parts of
the city.

If you are looking for transportation services for manufactured women's shoes in Bahirdar, you can
consider the following options:

1. Local delivery services: There are several local delivery services in Bahirdar that offer transportation
services for goods and products. You can contact these services to inquire about their rates and delivery
options.

2. Public transportation: You can use public transportation such as buses, taxis, and minibusses to
transport your manufactured women's shoes to different parts of the city. However, you may need to
pack and secure your products properly to avoid damage during transportation.

3. Private transportation companies: There are several private transportation companies in Bahirdar
that offer transportation services for goods and products. You can contact these companies to inquire
about their rates and delivery options.

It is important to note that transportation services in Bahirdar may vary in terms of quality and reliability.
Therefore, it is recommended to do some research and choose a reputable and reliable transportation
service provider to ensure the safe and timely delivery of your manufactured women's shoes.

Emission potential of women's shoe manufacturing

Investigating the emissions potential of women's shoe manufacturing in Bahirdar would require a
comprehensive study that takes into account various factors such as the type of materials used, the
manufacturing process, the energy sources used, and the transportation of the finished products.

To conduct such a study, one would need to gather data on the different stages of the manufacturing
process, including the extraction and processing of raw materials, the production of shoe components,
the assembly of the shoes, and the transportation of the finished products.

It would also be important to assess the energy sources used in the manufacturing process, such as
electricity, natural gas, or diesel fuel, and to evaluate the emissions associated with each source.

Additionally, the study would need to consider the environmental impact of waste generated during the
manufacturing process, such as scrap materials and chemicals used in the production process.

Overall, investigating the emissions potential of women's shoe manufacturing in Bahirdar would require
a multidisciplinary approach that involves experts in environmental science, engineering, and
manufacturing.
3.4 RAW MATERIAL NEEDED

The raw materials used in women's shoe production can vary depending on the type of shoe being
produced and the manufacturer's preferences. However, some common raw materials used in women's
shoe production include:

1. Leather: Leather is a popular material for women's shoes due to its durability, flexibility, and aesthetic
appeal. It can be sourced from a variety of animals, including cows, goats, and sheep.

2. Synthetic materials: Synthetic materials such as polyurethane (PU) and polyvinyl chloride (PVC) are
often used as a cheaper alternative to leather. They are also lightweight and easy to clean.

3. Textiles: Textiles such as cotton, canvas, and denim can be used to create casual and athletic shoes.
They are lightweight and breathable, making them ideal for warm weather.

4. Rubber: Rubber is commonly used for the soles of shoes due to its durability and slip-resistant
properties.

5. Foam: Foam is used for cushioning and support in the insoles and midsoles of shoes. It can be made
from a variety of materials, including polyurethane and ethylene-vinyl acetate (EVA).

6. Adhesives: Adhesives are used to bond the various components of the shoe together. They can be
made from a variety of materials, including synthetic rubber and polyurethane.

It is important for manufacturers in the women's shoe production industry to carefully select their raw
materials based on factors such as quality, cost, and availability. They may also need to consider the
environmental impact of their raw materials and production processes.

THE AMOUNT OF MATERIAL NEEDED

Estimating the amount of raw materials needed for women's shoe manufacturing in Bahirdar would
depend on several factors, including the type of shoe being produced, the size of the production run,
and the specific materials being used. However, some general estimates can be made based on industry
standards and typical production processes.

For example, a typical pair of women's shoes may require the following raw materials:

- Leather: 1-2 square feet per pair

- Synthetic materials (such as rubber or plastic): 1-2 square feet per pair

- Thread: 1-2 meters per pair

- Insole and lining materials: 1-2 square feet per pair

- Adhesives: 10-20 grams per pair

These estimates are based on industry standards and may vary depending on the specific shoe design
and production process. Additionally, it's important to note that these estimates do not include any
waste or scrap materials that may be generated during the production process.

To get a more accurate estimate of the amount of raw materials needed for women's shoe
manufacturing in Bahirdar, it would be necessary to consult with suppliers and manufacturers in the
area and to conduct a detailed analysis of the production process.

Current and future availability and access to raw materials.

Investigating the current and future availability and access to raw materials for women's shoe
manufacturing in Bahirdar would require a thorough analysis of the local and regional supply chains for
the materials needed. Some of the key factors to consider include:

1. Local suppliers: Are there local suppliers of the raw materials needed for shoe manufacturing, such as
leather, synthetic materials, thread, and adhesives? If so, what is the current availability of these
materials, and what is the projected future availability?

2. Regional suppliers: Are there suppliers of the raw materials needed for shoe manufacturing in nearby
regions or countries? If so, what is the current availability of these materials, and what is the projected
future availability?

3. Transportation and logistics: What are the transportation and logistics challenges associated with
sourcing raw materials for shoe manufacturing in Bahirdar? Are there reliable transportation networks
in place to bring materials to the area, and what are the costs associated with transportation?

4. Market demand: What is the current and projected market demand for women's shoes in Bahirdar
and the surrounding regions? Will there be enough demand to support the production of shoes using
locally sourced materials, or will it be necessary to import materials from other regions or countries?

5. Sustainability: Are the raw materials being sourced in a sustainable and environmentally responsible
manner? Are there opportunities to source materials from local or regional suppliers who prioritize
sustainability and ethical sourcing practices?

To investigate the current and future availability and access to raw materials for women's shoe
manufacturing in Bahirdar, it would be necessary to conduct a detailed analysis of the local and regional
supply chains, consult with suppliers and manufacturers in the area, and consider the broader economic
and environmental factors that may impact the availability of raw materials.
Quality and cost of raw materials and markets of easily substituted inputs.

Assessing the quality and cost of raw materials and markets of easily substituted inputs for women's
shoe manufacturing in Bahirdar would require a detailed analysis of the local and regional supply chains
for the materials needed. Some of the key factors to consider include:

1. Quality of raw materials: What is the quality of the raw materials available in the local and regional
markets? Are there any quality issues that could impact the production process or the final product?

2. Cost of raw materials: What is the cost of the raw materials available in the local and regional markets?
How does this cost compare to the cost of similar materials in other regions or countries?

3. Availability of substitutes: Are there easily substituted inputs available in the local and regional
markets? For example, if leather is not readily available or is too expensive, are there synthetic materials
that could be used instead?

4. Quality of substitutes: What is the quality of the substitutes available in the local and regional markets?
Are there any quality issues that could impact the production process or the final product?

5. Cost of substitutes: What is the cost of the substitutes available in the local and regional markets?
How does this cost compare to the cost of the original materials?

6. Market demand: What is the current and projected market demand for women's shoes in Bahirdar
and the surrounding regions? Will there be enough demand to support the production of shoes using
substitutes, or will it be necessary to import materials from other regions or countries?

7. Sustainability: Are the substitutes being sourced in a sustainable and environmentally responsible
manner? Are there opportunities to source substitutes from local or regional suppliers who prioritize
sustainability and ethical sourcing practices?

To assess the quality and cost of raw materials and markets of easily substituted inputs for women's
shoe manufacturing in Bahirdar, it would be necessary to conduct a detailed analysis of the local and
regional supply chains, consult with suppliers and manufacturers in the area, and consider the broader
economic and environmental factors that may impact the availability and cost of raw materials and
substitutes.
 Chapter Four
4. Financial Feasibility
Financial analysis is the ability of a project to achieve sufficient income, credit, and cash flow to
financially sustain the project over the long term and meet all debt obligations.

4.1 Estimate the total capital requirements

It is the overall capital requirement to start the project. This capital requirement for the enterprise
includes all fixed assets like fixed investment costs and startup costs.

4.1.1. Fixed Investment Cost

The fixed investment cost of the project includes the following :

Table 4.1 fixed investment cost schedule

Description Amount in birr

Building & Civil Works 10000

Machinery Equipment 100000

Auxiliary Equipment 5000

Office Furniture 2500

Total 117500

4.1.2. Pre-Operation cost /Startup cost

It includes all items that are incurred prior to commercial operation of the project. The items included in
this cost category are the following

Table 4.2 pre operation expenditure schedule

Description Amount in birr

Feasibility Study Cost 2500

Architects & Survey Fee 1200

Other Project planning costs 2500

Total 6200
4.1.3. Fixed Assets
The fixed assets of the project will be the sum of fixed investment costs and pre operation expenditures
described above.

Table 4.3 fixed asset schedule

Description Amount in birr

Fixed investment costs 117500

Pre operation expenditures 6200

Total 123700

4.2 Capital requirements for facilities, equipment and inventories

4.2.1 Inventory
The project has one inventory item that holds in its stock , it has a shoe sole for different size and in
addition it gives a service for repairing damaged shoes.

4.2.2 Replacement capital requirements and timing for facilities and equipment
The substitution replacement or reconstruction of a piece of existing equipment, machinery, utility lines
the item must also have a lifespan of more than a year.

Table 4.4 Replacement capital requirements

Description Amount in birr

Machinery repair and maintenance 10000

Electricity 2500

Water 1000

Total 13500

4.2.3 working capital requirement

The amount of money required to cover the project operating cost and the money available to meet the
short term financing requirements. To make sure the working capital working capital works for the
project. The current levels, project future needs need to be calculated to make sure that the founders
have enough cash
Table 4.5 working capital requirement

Description Amount in birr

Raw material 50000

Payment for salaries 2500

Payment for utilities 3000

Office supplies 600

Prepaid insurance 1000

Total 57100

4.2.4 Start up capitals needs until revenues are realized at full capacity
Typically include all the costs associated with starting and running a business until it reaches a point
where it is generating enough revenue to cover all its expenses on an ongoing basis.

Table 4.6 Start up capitals needs until revenues are realized at full capacity

Description Amount in birr

Working capital requirement 57100

4.2.5 Contingency capital needs

The unforeseen expenses or emergencies that the factory must deal with, To insure that the factory has
enough capital to manage such occurrences it is important to have a contingency plan.

A technology malfunction can have a serious implications on the shoe factory operations productivity
reputation and financial stability.

If Economy slows down it could affect the factories cash flow and sales, resulting in a need for some
extra capital to keep the operation running smoothly.

If the factory loses a client or there are no customers it is needed for additional capotal to maintain the
operations while look for the clients.

Table 4.7 Contingency capital needs capital needs and their budget

Description Amount in birr

Technology malfunction 10000

Economic slow down 20000

Sudden loss of clients 30000

4.2. Estimate equity and credit needs

While specifics can vary based on the region, there are several alternative equity sources and capital
availability options for women's shoe production in Bahirdar City, Ethiopia. Here are some examples:

1. Ethiopian Women's Network (EWN) - EWN is a network of businesswomen in Ethiopia providing

support, training, and education opportunities, as well as access to funding for women starting their
own businesses.

2. Ethiopian Investment Commission (EIC) - the EIC is an Ethiopian government organization focused on
promoting Investment in the country. They help connect entrepreneurs with foreign investors as well as
provide different opportunities from time to time such as #InvestorsRoadShow, Participating in
international exhibitions, Trade Fairs and Conference, link women's shoe production businesses with
appropriate funding opportunities.

3. Venture Capital firms - there are increasingly more international and local VC funds which help
Ethiopian startups grow, from Boom Capital Investing in a wide range of Ethiopian startups as well as
Injera Ventures, which has a more specific social investment focus, something which could align with
women's shoe production.

It's essential to research and investigate which funding options are best suited for individual business
objectives and requirements. Additionally, it may be helpful to talk to other small businesses in the area
and seek guidance from professional organizations.

Capital availability for manufacturing in bahirdar city

There are several financing options or sources of funds that the small company in Bahir Dar city can
consider to meet the different types of capital requirements for the women's shoe-making project.
These include:

- Personal Savings: Investing personal savings into the business is a great way to help secure funds and
show investors and lenders that the company has put its own money into the project, demonstrating
good faith and commitment towards it.

- Loans: Banks, microfinance institutions, and other lending institutions offer loans that the company
can apply for. This can be a good option if the company has a solid business plan and the ability to pay
back the loan with interest during a certain period.

- Family and Friends: Another option is to approach family and friends who may be willing to lend or
invest in the company to help it get started and grow, and this source usually does not have severe
structure such as high interest rates or requiring collateral.
- Angel Investors: Angel investors are wealthy individuals who invest in small companies and startups
with the intention of profiting from the business's success.

- Crowdfunding: Crowdfunding is a way to fund the project by asking individual donors for small
contributions via platforms like Kickstarter or GoFundMe.

- Government Grants: Some business agencies and governmental organization may grant the project-
cash, or low-interest loans and even subsidies.

4.3 Means of financing our project

The principal capitals required for the project are:

Capital for raw materials: This includes money needed to purchase quality leather, textiles, rubber, glue,
and other materials needed to manufacture the shoes.

Equipment and machinery: The company will need machines and equipment such as cutting machines,
sewing machines, and finishing machines, which are essential in shoe manufacturing such as stitching,
cementing, lasting, etc.

Salaries and payments: The company will need money to pay its staff such as designers, seamstresses,
cutters, salespersons, and other required staff.

Rent: A space to produce the shoes, which could be a workshop or store to display and sell shoes to
customers.

Marketing and advertising: Marketing costs like creating a website, branding, and advertising to local
customers.

Operating expenses: These include utilities, transportation costs, and taxes associated with running a
shoe-making business.

It is important to create a realistic business plan outlining the estimated cost of each of these items to
achieve success in the business.

To meet these different types of capital requirements there are the following options of financing or
sources of funds those are:

- Loans from commercial bank of Ethiopia

- Family and Friends.

The enterprise is to be financed by these two financing system in ratio of 60:40, with loans providing
60% of the financing and family and friends providing 40%. This split allows for a balance between
leveraging external resources and not overburdening the business with debt. It is important to carefully
manage the debt-to-equity ratio to ensure that the business has sufficient resources to grow and meet
financial obligations. Additionally, it is crucial to establish clear communication and agreements with
family and friends to avoid any potential misunderstandings or conflicts down the line. There for from
the total project seed capital of 85440 birr

the proportion of equity and debt are as follows:

- Equity= 33.33%*7000000=233,100birr

- Debt= 66.67%*700000= 466,500birr.

1. Loans Financing

A loan is when money is given to another party in exchange for repayment of the loan principal amount
plus interest.

Loan financing requires paying back the amount of money borrowed with its interest. In Ethiopia
generally bank debt has an interest rate of 12% per annum. Therefore, we have to pay back the debt at
the end of the first year.

466,500+0.12*466,500=522,480birr

But, it is good to borrow this debt from Ethiopian development bank to pay back at a 5-years term and
paying 20% of the borrowed money and interest of loan at the end of each year.

That means:

0.20*466,500+0.12*466500=149,480 birr per each year

2. Family and Friends

Financing from family and friends can be a great option for businesses, as these connections may be
more willing to invest in your business than traditional lenders due to pre-existing relationships and
trust. Here are a few tips to consider when seeking financing from family and friends:

1. Treat it like a business: It is important to approach seeking financial support from family and friends in
a professional and business-like manner. Have a solid business plan and financial projections, and be
clear about expectations for repayment and returns on investment.

2. Be transparent: It is important to be open and honest with your family and friends about the risks and
rewards of investing in a small business. Set clear boundaries and expectations for both sides, and
ensure that everyone is comfortable with the terms of the investment.

3. Consider written agreements: Even though the investment may be from someone you know and trust,
it is still important to have written agreements to protect everyone involved. These agreements should
detail the amount of the investment, repayment terms, and potential returns on investment.
 Profit Analysis
total cost vs total sale

Total cost of the business for first year

Total sale of the business for first year

Breakeven analysis
Breakeven point occurs when the cost of producing commodity is equal to the total revenue of the
commodity. The level of operation utilized percentage of material capacity is computed when relatively
simple model of revenue & costs are equated. To analyze or estimate profit or loss, it is often necessary
to determine the quantity of service at which revenue & costs will be equal. As unit price is increased
the revenue curve becomes steeper. Costs which are linear or nonlinear are composed of two
components. These are listed below

1. Fixed cost which contains :-

- Building and civil works

- Machinery Equipment

- Auxiliary Equipment

- office furniture

2. Variable cost

- Raw material

- Payment for salaries

- Office supplier

- prepaid insurance

The total cost needed to produce the service is the sum of the variable cost & the fixed cost of the
service.
# Know let as analysis the break-even point quantity
Fixed cost= 107500+(120000)=227,500

Variable cost= 75000+(2500*8*12)+(3000*12)+600+12000=363,600

Total sale of year = 1,125,000

Break even point(BP) = FC /USP-UVC
Let FC ....... fixed cost = 227,500
 USP.......unit selling price = 450

UVC.........unit variable cost= total variable cost per year/ total quantity per year = 363,600/2500
=145

So BP = FC/ USP-UVC

BP = 227,500/(450-145)

BP= 227,500/145

BP= 745 unit

Thus breakeven quantity is 745 unit

So Breakeven point is attained when 745 unit of shoes is manufactured.

 CHAPTER FIVE

Organizational/Managerial Feasibility

5.1 Business structure

5.1.1. Legal structure of the business

There are several legal structures that can be adopted for a shoe factory in Bahirdar, Ethiopia,
including:

1. Sole Proprietorship: This is the simplest and most common form of business structure. It is owned and
operated by a single individual and has unlimited liability for its debts and obligations.

2. Partnership: This is a structure where two or more people come together to run a business. Liabilities
are shared among partners based on their level of investment.

3. Limited Liability Company (LLC): This is a common business structure that gives owners limited
personal liability for the company's debts and obligations.

4. Public Limited Company (PLC): This is a business structure that allows a company to sell the shares to
the public and also to secure external financing for expansion.

According to these legal structures our business is based on partnership between our group
members. Our group consists of five persons and we share our profits and our liabilities based on each
person's level of investment.

5.1.2. Potential joint venture partners, alliances or other important stakeholders.

Joint venture partners, alliances, and other important stakeholders can provide numerous benefits for
a shoe factory, including:

A. Access to new markets: Partnerships with distributors, retailers, and other stakeholders can enable
the shoe factory to expand its reach and penetrate new markets, allowing the business to grow and
increase its profitability.

B. Cost savings: By joining hands with manufacturers, suppliers, and government stakeholders, the shoe
factory could benefit from economies of scale and reduced costs for raw materials, services, and
machinery.

C. Pooling of resources: Through collaborations, a shoe factory could pool resources with partners thus
leveraging expertise, technology transfer, equipment, and expertise, and other resources to jointly
achieve common goals.
D. Spread risk: collaborating with a range of stakeholders can reduce a business's overall risks by
diversifying sources of income and services provision points. Through sharing risks, a shoe factory share
burdens of unforeseen circumstances and challenges.

E. Cooperation and innovation: Strong partnerships between a shoe factory and its stakeholders can
foster cooperation, idea-exchanges, joint research and development, and effective knowledge sharing of
industry insights, policymaking, and business practices.

These collaborations could enhance the chances for the factory's long-term success. Some general
stakeholders that may be important are:

1. Shoe Manufacturers or Shoe Material Suppliers: To establish a shoe factory in Bahirdar, partnerships
with shoe manufacturers or shoe material suppliers may be beneficial for securing the necessary
materials and equipment, as well as for sharing expertise.

2. Local Farmers or Herders: Leather is an important raw material for shoe production. Therefore,
developing strategic partnerships with local farmers or herders for the supply of quality leather could be
a significant advantage for the shoe factory.

3. Government: The government plays a vital role in regulating the manufacturing industry and
providing legal and policy guidance. Engaging with government agencies can help the shoe factory to
stay up-to-date as well as comply with laws, regulations and policies.

4. Distributors and Retailers: Getting access to target markets is often challenging for new businesses.
Collaboration with distributors and retailers who have an existing market presence could also be
instrumental in ensuring that the shoe products manufactured in Bahirdar reach potential customers
throughout the country.

5.1.3. Consultants and service providers

Using consultants and service providers with the skills needed to realize a project can provide many
benefits, such as:

* Expertise

* Flexibility

* Cost-effective

* Outside perspectivr

* Time-saving

* Mitigation of Risk
 By using consultants and service providers with the skills needed to realize a project, businesses can
minimize risk, stay flexible and save cost while increasing expertise. The overall result will be higher
returns on investment and more successful outcomes in project realization.

To identify the availability of consultants and service providers with the skills needed to realize the
project, the following steps can be taken:

-Research: Research online and offline to identify consulting firms, professional organizations, and
freelance consultants/service providers who specialize in the skills required for the project. Look for
reviews and feedback from past clients to determine their reliability and expertise.

-Networking: Reach out to colleagues within the industry and request recommendation for individuals
or firms that provide these skills

-Industry conferences: Attending industry conferences is one of the ways to expand your network of
professionals. Attending those conferences would help build connections with professionals that may
have the necessary skills needed for the project.

-Contact Professional Associations: Check with professional organizations to give recommendations, and
also provide access to their network of skilled consultants and service providers.

-Referral from regulatory or licensing agencies: Licensing Agencies can also recommend Insurance
Company, Legal, and Accounting firms for new projects

-Online platforms like LinkedIn: Professional platforms like LinkedIn have a section where users with
specific skills are sorted based on users' profiles. You can search for professionals that contain certain
keywords and choose from their list of availability based on where they are located.

5.1.4. Governance, lines of authority and decision making structure.

Governance refers to the processes by which an organization is directed and controlled. It involves the
establishment of policies, procedures, and guidelines to ensure that the organization operates in an
effective and efficient manner. A clear governance structure provides accountability to stakeholders,
transparency in decision making, and helps to ensure that the organization is meeting its objectives and
goals.

- Board of Directors: This is the highest level of governance in most organizations. The board provides
oversight and strategic direction for the organization. It is responsible for setting policies, reviewing
financial reports, and ensuring that the organization meets its legal and regulatory obligations.

- Functional Heads: These are the heads of key functional areas within the organization, such as finance,
marketing, sales, and operations. They implement policies and procedures set by senior management,
and are responsible for meeting functional objectives and goals.
- Employees: Frontline staff carries out the day-to-day activities that support the organization's
operations. They follow policies and procedures established by functional heads, manage resources
allocated to them and reports management.

- Decision Making: Decision making regarding strategic, financial and operation decisions cut across
these levels of authority. Generally, individuals at a higher levels in the hierarchy make decisions based
on the area of responsibility such and proper consultations are usually put in place before actual
decisions are made.

The governance structure identifies the roles, responsibilities and decision limits of people in
different positions. It is important to have clear lines of authority and communication to avoid any
confusion that can significantly affect the operations of organizations.

5.2 Business founders

The peoples involved in this business have their own character. Most of them have admirable
quality on the business. This will help the business to reach its goal and to be succeeded. Some of the
members have outstanding quality and more than enough knowledge on the business. This will be a
good opportunity for others to get more knowledge and experience on the titled business.

Exactly, the founders of this business are skillful and well-trained. Hopefully, believed that they can
complete the project and fulfill the requirements of the business accurately and within the right
dimension.

Each individual in this business have key role to build up and run the business. As mentioned before
individuals in this business are open minded and have good self-esteem. Their participation will be a
good part at building up the business. As they will share their experience and expert view.

To appreciate and build morals of the founders there is a reward system based on the business
performance. If the business goes well the profit will be high and the share of the founders also goes up.
This by itself is a reward for the founders. As they done their work appropriately they will be honored by
reward. That builds there morals and be a good appreciation for their next journey within the business.

As it is their first business they use their effective power to construct their base. Once the base
constructed the rest work will be halved. There psychologically wellbeing and good mood will be a
driving factor for the business.
 Conclusion
It can be concluded that the company will invest 33333 birr to initiate the company. It’s 40% is
covered from partners deposit and the rest 60% from 5 year extended loan of commercial bank of
Ethiopia. From this initial capital the working place rent, machinery cost, raw material, showroom rent,
insurance, building and civil works, contingency capital needs (emergencies), employers salary, electrical
power fee, water fee, show room furniture, auxiliary equipment’s will occupy 5000,100000,50000,5000,
12000,10000,50000,17500,2500,500,2500,5000 Br respectively.

The company aimed to produce seven shoes per day by participating ten employers with monthly
salary 2500 br. The quantity of the material per day will increased through time as the business run well.

Currently, the company creates job opportunity for 10 employers with the beginning capital. It is
also under long term plan to expand the company and increase the number of employers by three digits.
Also, improving employer’s monthly salary and part time bonus is under plan.

The company aims to sell 35 shoes within a week. This means the company must stay 5 months
without acquiring any profit then it starts. Since, the breakeven point is 745 where the company starts
to acquire profit. The company gains 300 to 400 thousand birr in the first year then it will be doubled in
the next years parallel with the quantity produced. Gross income will be more than a million and half in
a year.

It is expected that it will be good engine for driving profit and improving local manufacturing
within local raw materials.