ACase Study of NGO types of Handicraft Shop in Nepal: Mahaguthi Shops

Mission Statement

Providing high quality  product development and design assistance to craft producers, offering effective and efficient  retail outlet linking producers and markets, and to contribute for the development of Nepalese handicraft production as an income generating activity for poor and disadvantaged groups within Nepal by supporting program of rehabilitation for destitute women and children.

Introduction

Mahaguthi Shops formed in 1994 under Nepal Chakra Pracharak Gandhi Smarak  Mahaguthi (NCPGSM) umbrella. It offers Nepalese handicraft retailer, wholesaler, exporter and social service agency than as a profit-seeking, competitive retailer. As social service it provides food, shelter, health facilities, literacy courses, vocational training and sewing and weaving to poor women, schooling for children. Its contribution of Profit 76% profit in purchasing the material woven by the women trainees of Tulsi Mehar Ashram and 25% profit distributed as producer incentives or retained by the shop. Shop had gross profit margin of 23% in the first year and sales of NRS. 2.8 million. Mahaguthi shops offer Hand woven fabrics, block printed material, cushion covers and simple clothing and goods manufactured are primarily for  export. Although the mahaguthi exports had grown, total sales growth had slowed for the past three years. Raw materials come from India and purchased on the open markets. Presence of inconsistency and unreliability among producers is one of the biggest problem, where most of the producers were uneducated, subsistence farmer first and handicrafts producer second. Beside that there are  two types of competitors in market .

– Dhukuti & Hastakala 

– Commercial retailer

SWOT analysis of Mahaguthi Shops

Strengths

• Increasing numbers of order from overseas.

• Potential sources of employment.

• Provides financial support so that the producer received appropriate entrepreneurial and business start-up training.

• Well –developed network of suppliers and those were charitable and commercial, rural and urban men and women.

• Mahaguthi is created as a social service agency who support destitute women and disadvantages villagers of Nepal so the customer who shopped at Mahaguthi were willing to pay more for social benefit.

Weakness

• Lack of knowledge about international requirements and market.

• Lack of marketing or promotion plan of products to reach export markets.

• Unaware about production capabilities because producer groups tried to fill orders that were too large for their production capabilities.

• Lack of support from government bodies.

• Lack of skilled labor force.

• Lack of proper arrangement of training program to the unskilled labor force.

• Lack of infrastructure and communication facilities.

• Lack of understanding and awareness of quality issues.

Opportunities

• Increasing attraction of primary tourist and expatriates living in Nepal towards Nepalese handicraft.

• E-Commerce and Internet are emerged as promissory distribution channels to market and sell the craft products.

• Time to time availability of grants to implement producer programs.

• Rising demand for handicraft products in foreign countries.

Threats

• Unreliable raw materials suppliers and producers.

• Market supply was dependent with good trade relations with India.

• Inconsistency and unreliability among producers.

• Quality products produced by  competitors with low price than Mahaguthi .

Strategy recommendation to revitalize Mahaguthi Shops

I would have recommended following strategies plan and functional plans and policies to Surendra to revitalize the mahaguthi shops.

Design strategy:

Design is a very crucial aspect. Mahaguthi shops should hire a full time permanent designer . Designer should get an attractive salary plus various other incentives .

Marketing strategy

• Marketing mix:

• Product: Handicrafts products including wood carvings, silver jewelry, traditional wood dolls and puzzles handmade Nepali paper, wool knit sweaters etc

• Price: Price on par with the products of “Hastakala” and “Dhukuti

• Place: Retail outlets in Thamel, Durbarmarg etc where the arrival of tourists is maximum.

• Promotion strategies: advertisements in Nepal traveler magazine, the mirror. Also, emphasis should be given on personal selling.

• Mahaguthi shops must have their own websites and online business must be encouraged.

HRM strategy:

• Proper training of the sales people on how to deal with customers plus “effective communication”

• Sales people --- motivation by giving incentives on the basis of sales performance.

• Sales people must trained, how to do sales through Internet and Websites.

Strategic plan and functional plans and policie