Porters Five Forces Framework:

Very Weak

Weak

Nuetral

Strong

Fierce

Bargaining Power of Buyer Bargaining Power of Supplier Threat of Substitute

Threat of New Entrants

Competitive Rivalry

Some Concerns for Handicrafts in India:

Inspite of having diversified products, some part of Indian market is still untapped and market is price sensitive. India has a very rich and diverse culture which is truly reflected in the variety of handicrafts produced in India. But, some part of the Indian Market is still untapped. This is mainly due to lack of infrastructure, insurgency and incompatibility issues

with the tribes producing handicrafts. Market is highly price sensitive because major customer segment in India is middle-class which has relatively low disposable income compared to other parts of the world. The Govt. should work towards resolving insurgency issues and should focus on developing infrastructure. This will also help in bringing down the prices. Products are high priced in big and metro cities, which are beyond the reach of people belonging middle and lower middle class. Due to very complex distribution channels the prices of handicrafts are quite high. Infact in cities like Mumbai, Chennai, Bangalore etc. the prices are so high that they are beyond the reach of middle class and lower middle class. We should focus on removing the unnecessary middlemen as they take away majority of the profit. The actual producer gets very little profits as he is uneducated and unaware. By removing the unnecessary middleman we can make the overall supply-chain more efficient and profitable. This will bring down the prices which will make customers happy, which in-turn will boost the demand and make the producer happy. The actual producer will also realize better margins. Craft producers have to compete on price, quality and delivery for different segments. The handicraft market is very complex. Producers compete on price in some segments while in other segments they compete on quality and responsiveness. Therefore, the supply chain should be flexible and should incorporate both efficiency and responsiveness. This will help them in satisfying the different needs of different customer segments. There is poor promotion for craft products in national market. There is poor or no-promotion of handicraft products in India. People are not aware of many kinds of handicrafts and distinctive product attributes associated with them. This has left them vulnerable to spurious products. Also, the lack of awareness has adversely affected the demand for the industry. The solution for this is that if big conglomerates like Relaince or ITC enter the industry, they do everything from procurement to market the product and sell it at a reasonable price. The model similar

to that of e-Choupal for ITC. Also, each state should promote their handicrafts in effective media. Lack of Technological support and training.

There is little or no technological support. The methods and techniques used in producing these product s and delivering it to customers are primitive. The Govt. should teach them latest techniques and methods of production and delivery so that the producers are able to realize greater profits. Again a model similar to that of eChoupal of ITC will come in handy. Training is another issue which is of prime importance. With ample training under the belt, the producers can implement tools like ERP, CRM and CPFR to make their supply chain more efficient and responsive.

Lack of R&D for key handicraft sectors like, ceramics, paper making etc. There is no R&D happening in this sector and the current methods used in manufacturing are primitive. They need to come up with new age innovative methods to increase the productivity and enhance the quality of products. They need blend the age old artistry with new age methods and techniques of production to come up with better value proposition.

There is shortage of skilled craftsmen and labour to match the competition.

There are no formal training institutes for most of these art forms. These art forms generally runs in the family are traditionally passed from one generation to another. However, with advent of new career opportunities and revolution in Information Technology and Communication, the new generation of these families are opting for new careers. Since, there are no formal training institutes to pass on these beautiful art-forms they are getting extinct. Govt. should open institutes to save these art-forms, it will also provide employment to greater number of people.

Lack of ability to produce in large scale and create economies of scale.

Most of these products are produced in cottage industries and thus are costly because of greater cost of production. If the producers are able to consolidate the industry and achieve economies of scale, the cost of production will come down significantly. This will increase the demand and hence greater profits for the manufacturer. This way the industry will grow and overall supply chain will become more profitable. This can be done if a big producer or retailer decides to align the incentives with that of the supply chain. Revenue sharing model can be used to achieve economies of scale.