The Jewelry Industry - Essay Example

?Section (a) Gold and silver have been used for making or nts since prehistoric times. Human beings are naturally considerate about their appearances. Apart from using personal care products such as oils and lotions, jewelry has been very popular with the women in particular. Traditionally, gold and silver (collectively referred to as noble metals) were used for making these ornaments but recently, platinum has also been extensively used. However, with the increase in prices of other essential commodities, prices of these metals have also shown steep rise (Lior, 2011). But the need to look attractive has never decreased. Hence, a good demand exists for the alternatives that are cheaper and equally attractive. The Industry: Jewelry industry is a very developed enterprise in the world. Scores of world famous brands of Gold, Platinum and Diamond are popular in New York and other big cities throughout the USA. The sales have however dropped a great deal in the recent times due to acute rise in the prices (Wallop, 2011). Jewelers have now developed a new breed of artificial jewelry that looks exactly like the original gold but costs way lesser than the original. An alloy with 82% by mass of pure copper, 11.5% zinc, 4.9% tin and small quantities of ammoniac salt and limestone shines exactly like gold with the same color. And once the alloy is obtained in ingots, the process of making jewelry from it is essentially the same as from original gold. Similarly, other alloys such as Mosaic Gold, Nuremberg Gold and French Gold all resemble original gold in appearance and manufacturability without having traces of pure gold in them. The idea presented to Triangular Solutions is to market artificial jewelry made up of any of these alloys and decorated with semi-precious stones. We can observe that, apart from eye-catching appearance, designers’ brand names are what make the jewelry attractive. Hence, it is proposed that the jewelry must be marketed under a proper brand name. Market Size: Gold jewelry is equally popular among men and women in the country. From earrings, bracelets, bangles to crowns, a great variety of jewelry items exist that are in style among the women. Men’s variety includes bracelets, watches etc. Reports indicate that the gold sales have dropped by more than 50% in the past three years from 45 tons to about 15 tons per annum (Finch, 2009). Clearly, the reason for this drop is the rise in gold prices. Hence, if an alternative is given to the customer which is affordable and as good as the original gold, then it is expected that the people will be attracted towards it in large numbers. Team Requirements: The team must have following members for successful execution of this business plan: Chief Executive Officer: His job will be to look after the overall operations of the business and coordinate between the teams. Jewelry Designer: His job will be to come up with new and attractive jewelry designs. Domain / Market Expert: His job will be to understand and explain market trends to the team Marketing Manager: He will be responsible for marketing and sales departments. Finance Manager: He will be responsible of the financial matters of the business Scalability of the Product: The business idea suggested here is reasonably scalable over a range of business volumes. The jewelry will be manufactured by individual workers without use of any sophisticated machine tools in general. The increase in the demand will be met easily by increasing the number of workers. Another feasible option will be to get the jewelry manufactured abroad in India or China where labor is comparatively cheap. This option can specially be considered if mass production is required to meet a very high demand. If however, the product does not gain expected popularity, the productions can simply be scaled down by decreasing the labor force. Financials: The price of gold in US markets is around $1500/oz. This amounts to around $10/carat. On the other hand, artificial gold alloys discussed above cost $0.15/carat on average. The major cost incurred in manufacturing a gold set is of the raw material itself. This clearly indicates that the cost of manufacturing a jewelry set with artificial gold can be 50 times lower as compared to original gold. An average 18 carat designer’s gold necklace varies in rates from $2000 to $4000. The same set if made with artificial gold will cost only $2.7/carat. Considering an average rate of $25/hour as labor cost on making jewelry (‘Hourly Rate Snapshot for Jewelry Designer Jobs’, 2011), we can estimate the total cost to be around $300 per set including marketing costs and other overheads. Such a set, which perfectly matches with original gold in design, style and appearance, can be sold in the market at a price around $500 to $800. Hence, a good profit margin can be obtained per jewelry item sold. The budget required for initially starting the business will be around $50,000 which includes rents of real estate, marketing and organizational costs. A payback can be achieved on selling of around 200 units of jewelry. As the setup of the business will be exactly like an ordinary jewelry shop, the business can have a reasonable salvage value as well. Section (b): This idea requires a diverse team for its effective implementation as discussed above. It requires an effective collaboration between finance, marketing and design personnel. However, it is proposed that the idea should be implemented through a special team formed by Triangular Solutions employees. The organization already has Finance and Marketing Departments. Suitable persons for the new project can be selected from these departments. Spirit of Intrapreneurship can only be invoked in an organization if employees are challenged to work on innovative ideas and adventurous business plans. This will not only help in identifying and grooming new talent but will also inspire other employees to follow the example and work with a new spirit of growth within the company, with the company. The domain experts for the jewelry designs can be hired from outside the company which can guide the rest of the team and brief them about the special requirements of the business. Similar the designer can be either employed in the company, or designed can be purchased to reduce cost. Working within triangular solutions will also help reducing a large portion of organizational costs which would otherwise have burdened the newly established business. Forming a subsidiary company for this is not recommended in order to avoid the added organizational costs incurred thereof. Moreover, by doing this the positive impacts of starting a new project within the organization will be lost. References Burns, P. (2011). Entrepreneurship and Small Business (First). Palgrave Macmillan. Finch, J. (2009, January 9). * Business * Signet Group Signet suffers 15% drop in jewellery sales. In The Guardian. Retrieved April 20, 2011, from http://www.guardian.co.uk/business/2009/jan/09/signet-sales-drop-jewellery Hisrich, R. D. (1990). Leaders for Tomorrow: Entrepreneurship/Intrapreneurship. American Psychologist, 45(2), 209 - 222. Hourly Rate Snapshot for Jewelry Designer Jobs. (2011, April 20). In PayScale. Retrieved April 20, 2011, from http://www.payscale.com/research/US/Job=Jewelry_Designer/Hourly_Rate Lior. (2011, February 7). Is gold a safe heaven investment compare to S&P500. In Trading Energy. Retrieved April 19, 2011, from http://www.tradingnrg.com/is-spot-gold-price-a-safe-heaven-investment-compare-to-sp500/ Munni, M. (2010, August 15). Gold jewellery sales drop by 50pc in 3 years. Retrieved April 18, 2011, from http://www.thefinancialexpress-bd.com/more.php?news_id=109108 Wallop, H. (2011, April 21). Jewellery sales collapse as gold hits new record price. In The Telegraph. Retrieved April 21, 2011, from http://www.telegraph.co.uk/finance/personalfinance/investing/gold/8466497/Jewellery-sales-collapse-as-gold-hits-new-record-price.html Read More