International Business of Bangladeshi and 3 foreign companies

University of Dhaka

Term Paper on “International Business of Bangladeshi and 3 foreign companies”

Course: International Business
Course Code: MIS- 302

Submitted To
Rabeya Sultana
Professor
Department of Management Information Systems
Faculty of Business Studies

Submitted By:
Name ID

Md. Barkat Ullah Zarish 029-14-027

Naimur Rahman Porag 029-14-035

Jarin Sobah Oyshi 029-14-047

Rachayeta Roy 029-14-049

Sumiya Akter Kona 029-14-093

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 Letter of Submission

10 May 2022

Rabeya Sultana

Professor

Department of MIS

University of Dhaka

Subject: Submission of Term paper on International Business of Bangladeshi and 3 foreign

companies.

Madam,

It is our great pleasure to submit to you our report on “Industrialization of Bangladeshi and foreign
companies”. This is a unique opportunity for us to work and identify with such on topic and help us to get
a clear concept. For making this term paper we have studied a lot and used the internet for collecting
information. We hope it will meet your expected standard.

Therefore, we are submitting the term paper to you for your kind consideration, and thank you for your
constant assistance and guidance.

Sincerely,

Md. Barkat Ullah Zarish ( ID: 029-14-027)

Naimur Rahman Porag ( ID: 029-14-035)

Jarin Sobah Oyshi ( ID: 029-14-047)

Rachayeta Roy ( ID: 029-14-049)

Sumiya Akter Kona ( ID: 029-14-093)

Department of MIS

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 Executive Summary

We were instructed to write about the overall industrialization of the Bangladesh market and the different
modes and strategies used by Bangladeshi and foreign companies to enter new markets. We studied the
field of international business a lot this semester. This was our opportunity to learn how these things are
done practically with real examples. We mainly sought help from the internet to gather all the data and
statistics to write this term paper. There are numerous articles, think pieces, and analyses on this subject.
We went through a number of them and thoroughly studied them to properly write this paper. We found
out about the industrialization of the Bangladesh market, various methods of engaging in international
business, the entry strategies companies use to enter a foreign market, specific modes of entry for some
specific companies foreign and domestic, and why certain foreign companies are operating in Bangladesh
and the factors that influenced them to enter the Bangladesh market. Through this paper, we touched upon
almost every strategy and mode of entry that companies deploy in order to enter a foreign market. The
arena of international business is quite complex and dynamic. Companies have to look out for a number
of things to stay competitive and succeed. Their strategies and policies have to be effective in order for
them to gain market share in a foreign country. We now have a clearer and more focused understanding
of the subject after completing this term paper.

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 Table of Content

Executive Summary....................................................................................................................................iv
Introduction: Bangladeshi companies’ industrialization.........................................................................1
An overview of PRAN-RFL Company.......................................................................................................2
An Overview of Unilever PLC....................................................................................................................5
An overview of The Coca-Cola Company.................................................................................................7
An overview of the Nestle company...........................................................................................................9
Conclusion..................................................................................................................................................11
References:..................................................................................................................................................12

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 Introduction: Bangladeshi companies’ industrialization

Personal relationships are important when marketing products in Bangladesh. Many companies identify
distributors or local agents to market their products on an exclusive basis. U.S. companies can evaluate
potential business partners based on technical capacity, market experience, and other factors. The United
States Trade Center at the U.S. Embassy works in coordination with the Foreign Commercial Service
office in Kolkata, India to offer services to help identify and assess Bangladesh companies as potential
business partners. Many firms service Bangladesh from their regional offices in India, Singapore, and
other locations in South or Southeast Asia or the Middle East. As companies become more established in
the market, an increasing number choose to open branches or subsidiary offices in Bangladesh. Due to a
complex shared history, Bangladeshis at times express a preference for foreign companies establishing
regional offices outside of India.

Consumer goods companies are beginning to establish manufacturing facilities in Bangladesh. In

addition, some companies have begun granting franchise licenses in Bangladesh, including casual
restaurants, clothing stores, health spas, and specialty goods enterprises. Successful companies adapt their
products to the demands of the local marketplace. This may include smaller packaging to reduce retail
pricing and marketing strategies that appeal to local consumer preferences.

Today, local entrepreneurs have a strong presence in the global apparel market thanks to their courage
and resilience, putting Bangladesh on the list of the top three garment exporters in the world. On the
domestic front, a number of sectors - steel, cement, pharmaceuticals, food and agro processing - have
staged a strong emergence over the last two to three decades. And the expansion drive by entrepreneurs
continues. Now, a growing number of entrepreneurs have set their sights on international markets to grow
by joining the global value chain. The Bangladesh Bank started allowing local firms to make investments
abroad in 2014. Till last year, it gave the nod to 10 firms to establish subsidiaries or open offices in
various countries such as Malaysia, Singapore, Ethiopia and Kenya, according to a central bank document

The companies are the NASSA Group of Industries, Pran-RFL Group, Bangladesh Steel Re-Rolling Mills
(BSRM), Incepta Pharmaceuticals, Renata, and MBM Garments Ltd. Of the first 10 firms, Akij Jute Mills
poured the whole $20 million it had received permission for into its subsidiary, Akij Resources SDN
BHD, in Malaysia. Beximco Pharmaceuticals made three strategies for getting entry into the international
market. BEXIMCO's subsidiaries export products to 103 countries worldwide.[It has retail outlets in
South Asia and Eastern Euro. Recently SEARL enters an exclusive license agreement with Beximco
Pharma for Remdesivir. Beximco Pharmaceuticals announced the creation of a joint venture with BioCare
Manufacturing based in Malaysia.

Square Pharmaceuticals also made strategy by investing $10 million to establish a pharmaceuticals plant
in an export processing zone in Kenya from the approved amount of $16 million. It is yet to begin
production.

DBL, one of the leading apparel exporters, set up a garment factory in Ethiopia, investing $5.5 million. It
started production on a limited scale but could not make a profit, the BB said in a document prepared in
the middle of 2021.

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Another major firm, MJL Bangladesh Ltd, made a joint venture and invested over $5 million in its
subsidiary MJL AKT Petroleum Company Limited in Myanmar.

An overview of PRAN-RFL Company

 'PRAN' has started its operation in 1981 as a processors of fruit and vegetable in Bangladesh.

 The organization later revealed that they can't add more value in the agricultural based economy
without entering into the production and entering into the international market.
 Hence develop the idea of establishing PRAN.

Current status
Manager (export) PRAN Company, he says their current market situation is very good in the local and
foreign markets. PRAN group now makes a great position in the market of Bangladesh. Welfare measures
are very important for a well-structured and well-recognized organization to gear up its working
conditions and run its work in a disciplined and smooth way. They have already captured the local market
as well as captured some portion of the foreign market. According to our survey, right now PRAN exports
its products to 106 different countries.

Mode of Entry
PRAN -RFL Company mainly follows two types of entry mode strategy for marketing Drinks, Bakery &
confectionary items:

 Exporting &
 Investment

Export Procedure:

PRAN started its export operation firstly in 1996 by exporting their products like Drinks, Bakery &
confectionary items in France.

• From then they have expanded their export business worldwide.

• PRAN Company usually uses direct exporting procedure for entering the overseas market.

PRAN Export Limited is thus engaged with two types of exporting:

A) Foreign distribution channel

B) Foreign subsidiary channel

A) Foreign distribution channel:

 Currently PRAN distributes its products in more than 118 countries in the world.

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  At present PRAN Export limited divided its foreign distribution channel into 6 units. These are
India, Asia, Middle-East, Africa, Europe, America, and Others.

 The Indian market is one of the largest markets of export and PRAN has created a strong entity
in the Indian market.

B) Foreign branch/ subsidiary channel:

 In many countries, especially the USA (NY), Australia, UAE, Saudi-Arabia, Qatar, Oman,
Malaysia, Singapore, and Somalia PRAN-RFL company have got its own foreign branch or
subsidiary channel for Drinks, Bakery, and confectionary items equipped with full-fledged office,
warehouse, distribution vehicles, salesforce, & other sophisticated supports.

Exporting process of Drinks, Bakery and confectionary items overseas Market:

 For the export purpose generally the buyer contact with PRAN through The Chamber of
Commerce. Besides it PRAN take part in different trade fair around the globe which attracts more
potential buyer.
 After getting a response from the potential buyers the organization sends the sample to the buyer
according to their demand and preference.
 If the buyer is satisfied then the organization starts negotiating with the buyer regarding the price
and the total value chain.
 After the buyer is agreed with the pricing and the value chain then both the buyer and the
organization have to agree on the term FOB (Freight on Board) or CNF (Cost and Freight).
 After deciding the consignment mode the company needs to prepare sale contract & the buyer set
the payment mode and payment procedure.

Other types of entry strategies followed by PRAN Company

• There are many other strategies followed by PRAN Company to do international business. As like-

Licensing:

Recently the organization took the initiative of doing licensing business as its successfully worked with
the Coca-cola company in Bangladesh.

Investments:

To accelerate continuous growth, it already set up production plants in India to produce its Drinks,
Bakery, and confectionery items and production has already been started.

Exporting Issues:

Here all information are gathered from Md. Tanvir Islam (GM) of PRAN Group in exporting department.
He says that their chocolate pran 2 in éclair are exporting per month about 50, 00,000 lakh tk.

Exporting country:

 Nepal

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 Africa

 PRAN

 India

 USA

 Middle-east.

 Indonesia etc.

All of that country they can create large position in Nepal market. They also capture some portion of
Indian market but their pran 2 in has a big competitor "alpenliebe". So it is a big threat to capture the full
market of India. Right now they are trying to enter the Middle East market through their expected taste
with ingredients. When they export their product that means pran 2 in 1 éclair enter into new country to
introduce their product, most of the time they use their festival, occasions or special event or they make a
concert. Sometimes they offer their product's to the Bangladeshi people those are living in that country.
By the exporting they earn a big amount of money but they do not share their profit with the employee, as
it is a new product so they are always try to increase that products capital. For that reason they use
reinvest their revenue. When they export their product they also provide their expertise to understanding
the customer about their product.

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 An Overview of Unilever PLC

Unilever plc is a British multinational consumer goods company that was founded on 2 September 1929,
by the merger of the British soapmaker Lever Brothers and the Dutch Margarine producer Margarine
Unie. During the second half of the 20th century, the company increasingly diversified from being a
maker of products made of oils and fats and expanded its operations worldwide. It is a global company
with a global purpose and makes sustainable living commonplace. Unilever's products are available in
around 190 countries and it owns over 400 brands with 148000 people across the world. Every day 3.4
billion people use its products all over the world.

Unilever derives its competitive advantage from its global footprint and its track record of enhancing
value for consumers around the world. The term globalization comes to reality because of multinational
businesses like Unilever. With the development of interweaved economy, Unilever began to modify its
management strategies in the 1990s, concentrating on its advantageous products and brands. At the same
time, Unilever pays great attention to combining globalization with localization. Unilever has to employ a
global organizational strategy that addresses its global complexity and the diversity of its product
portfolio and also needs to modify some products to suit the local preferences. Striving for high global
integration where products can be introduced to new markets without modification and for high local
responsiveness where there is a need for modification to meet local preferences. That’s why Unilever
employs a transnational strategy in the most basic sense: We think globally as well as act locally, which
is best suited for its global operations, as it is faced with high pressure for both local responsiveness and
global integration. This strategy enables Unilever to leverage the advantages of low cost in conjunction
with the advantages of differentiation.

Entry Strategy
Unilever Bangladesh Ltd. is one of the world’s most successful fast-moving consumer goods
manufacturing companies. On 25th February 1964, the eastern plant of Lever Brothers Pakistan Ltd. was
inaugurated at Kalurghat, Chittagong with a soap production capacity. It was a private limited company
with a 55% share held by Unilever and the rest by the Government of Pakistan. After independence, on
5th July 1973, it was registered under the name of Lever Brothers Bangladesh Ltd. as a joint venture
company of Unilever PLC and the Govt. of Bangladesh with a share arrangement of 60.75% to Unilever
and 39.25% to the Bangladesh Govt.

Mode of Entry
Unilever Bangladesh is a joint venture of the Government of Bangladesh and Unilever. A joint venture
entails establishing a firm that is jointly owned by two or more otherwise independent firms. It has long
been a popular mode for entering a new market because of its advantages. First, a firm benefits from a
local partner's knowledge of the host country's competitive conditions, culture, language, political
systems, and business systems. Thus, for many BD firms, joint ventures have involved the BD company
providing technological know, how and products and the local partner providing the marketing expertise
and the local knowledge necessary for competing in Bangladesh. When the development costs or risks of
opening a foreign market are high, a firm might gain by sharing these costs and or risks with a local
partner. Joint ventures with local partners face a low risk of being subject to nationalization or other

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forms of adverse government interference. That’s why Unilever choose Joint Venture for entering
Bangladesh.

Why Functioning in BD
Over the last four decades, Unilever Bangladesh has been constantly bringing new and world-class
products for the Bangladeshi people to remove the daily necessary need of life. Today, Unilever
Bangladesh produces three lakh tones of products annually. The personal care business accounts for
nearly 60 percent of the business. There are a few reasons why Unilever decided to function in
Bangladesh. They are as follows:

 Growing consumer market.

 Higher disposable incomes.

 Growing younger population and middle-class families.

 Consumers’ increasing interest in healthful products and changing lifestyles.

 Media Proliferation.

 The growing workforce and low-cost labor class.

 The abundance of raw material

Factors that influenced Unilever in Bangladesh’s market

 The new emerging market for consumer products is developing rapidly, for Bangladesh stands for
$150 million every year. The speed of development in new emerging economies is much faster than
that of developed countries. Increasing GDP and increasing rate of middle-class families also
influence Unilever in Bangladesh’s market. Unilever has done well in capitalizing its advantages into
growth.

 Bangladesh is an overpopulated country where most of the job opportunities are centralized in urban
areas. The enlarged urban population of the country has stimulated reasonable growth for food and
consumer goods and has caused sizable needs for the related products. Consumers are increasingly
interested to spend on products and services that provide convenience and high-order benefits at low
prices. That highly influence Unilever to capture Bangladesh’s market easily as a low-cost leader.

 The climatic condition of Bangladesh is suitable for which it makes a large raw material base for
many FMCG companies like Unilever. Moreover, importing required raw materials is very cost-
efficient for the geographical location of Bangladesh.

 In Bangladesh, the labor force and their participation rates are increasing day by day. So, The lifestyle
of the employed population has changed and consumption pattern too. This huge working population
is a major driver of the growth of Unilever over the year. Besides low labor cost in Bangladesh is

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 another driver of the growth of the FMCG industry in this country. Low labor cost supports the low
cost of production which makes Bangladesh a favorable investment destination.

An overview of The Coca-Cola Company

The Coca-Cola Company had its inception on May 8, 1886, when the first bottle of Coke was sold in
Atlanta, Georgia in the United States. From there they have now evolved into a total beverage company.
They operate in more than 200 countries now employing about 700,000 individuals. This ever-growing
business is fueled by its 225+ bottling partners and nearly 450 brands across the globe.

The company began building its global network in the 1920s. A century later, they have become a wildly
successful global brand. This success is mostly owed to the Coca-Cola system’s implementation of a
simple formula on a global scale: they provide a moment of refreshment for a very small amount of
money - a billion times a day.

Entry Strategy
The Coca-Cola company implemented the “franchising” strategy while entering the Bangladesh market.

Mode of entry
Coca-Cola first entered Bangladesh in 1965 when it was still East Pakistan. They entered into a franchise
agreement with Tabani Beverage. After independence, in 1972, the plant was handed over to Bangladesh
and put under Muktijodha Kalyan Trust. Tabani was the sole franchisee of Coca-Cola in Bangladesh till
1978. Then Coca-Cola made new agreements with Abdul Monem Limited due to Tabani’s inability to
increase its capacity. Abdul Monem Limited started its operation by gaining a bottling license and
distributorship of Coca-Cola in 1982 after they acquired the plant of K.Rahman & Company. They
quickly expanded their market by installing a new H & K bottling line along with more capacity and
establishing a new bottling plant in Chattogram. The state-of-the-art bottling plant is the most modern
plant in the country and is equipped with the straight-line-technology from KHS German.

Why Functioning in Bangladesh

Coca-Cola is heavily invested in Bangladesh. They are constantly raising and evolving their involvement
in the Bangladeshi market. They announced a US $200m investment of funds into the Bangladeshi
market in March of 2020. There are a few reasons why Coca-Cola decided to function in Bangladesh.
They are as follows:

 Bangladesh is considered one of the rising economies of the world. The purchasing
power of the citizens is increasing every year

 Consumption of soft drinks is significantly growing in emerging markets such as the

Bangladesh market

 One of Coca-Cola’s biggest focuses in Bangladesh is women empowerment. They found

that this field needed some work and decided to focus on lifting women up economically.

 It is fairly easy to get permission to invest in plants and licenses done.

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Factors that Influenced Coca-Cola’s Entry in Bangladesh Market:

There are two types of factors influencing Coca-Cola’s entry into Bangladesh market-

1. External Factors

2. Internal Factors

The “external factors” are as follows:

 Market Size and growth: Bangladesh has an ever-growing market size when it comes to
carbonated soft drinks. The market for soft drinks was equal to 286.00 million USD in 2015 and
is projected to increase at a CAGR of 10.14% per annum for the period 2020-2025. This trend
began around the time Coca-Cola decided to enter the Bangladesh market.

 Level of competition: Coca-Cola entered Bangladesh as the first foreign soft drinks company.
The competition was seemingly absent at that time. Even now, after 50 years Coca-Cola remains
the leading soft drinks brand in Bangladesh.

 Physical Infrastructure: Tabani Beverages ensured the infrastructures such as bottling plants
and factories that would be necessary for Coca-Cola to start its business in Bangladesh.

The “internal factors” are as follows:

 Company objectives: Coca-Cola’s objectives include a heavy emphasis on global business.

They are a global business. Their entry into Bangladesh was influenced by this objective.

 Availability of company resources: Coca-Cola being the leading soft drinks brand in the world
had the resources required to enter a market such as Bangladesh.

 Level of commitment: Coca-Cola is committed to growing its business through

internationalization. They remain committed while entering markets like Bangladesh.

 International experience: For a global business, international experience is crucial. Until Coca-
Cola entered Bangladesh, they didn’t have much experience doing business in a mid-level
economy. That’s one of the influences behind them entering a growing economy like
Bangladesh.

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 An overview of the Nestle company

Nestle is the world’s largest food group that provides us the daily nutrition. In every country around the
world, nestle foods are available on a large basis. They are using a statement that is also helpful in their
marketing process named “Good Food, Good Life”. Day by day the demand for their product is growing
and they have developed their own factories to meet the large demand globally. They are not
Switzerland’s industrial company but also the world’s largest food company with 81.4 billion Swiss Franc
annual turnover and 479 factories all over the world.

The Entry Strategy

Nestle is implementing the international strategy to capture the global market and its competitive
strategies are associated with foreign direct investment. But particularly to enter in Bangladeshi market
they used wholly-owned subsidiary mode.

Mode of Entry
Nestlé Bangladesh Limited, a wholly-owned subsidiary started its commercial production in 1994 and
currently employs 400 people in the company and 1000 people indirectly in the industry. The only factory
of the company in Bangladesh is situated at Sreepur. The factory produces Maggi noodles, Munch, and
cereals and repacks kinds of milk, soups, beverages, and infant nutrition products. After the liberation war
of 1971, they targeted our market by exporting Cerelac, and Lactogen to provide the nutrition because at
that time we were facing hunger issues. Year after year the demand increased and they decided to produce
products inside our country and they implemented a wholly-owned subsidiary mode which is they owned
above 51% stake of the company. By owning the company, they easily make the production, and supply
decisions according to the customer taste. They implement wholly-owned subsidiaries because of these-

 To avoid the risk of losing control over its research and innovation

 To control the operations

 To achieve cost leadership through the lean system

 To increase diversification in the product

 To do value-creating activities efficiently

Why functioning in Bangladesh

Initially, Nestle entered the Bangladesh market with the objective of expanding the market of their
domestic product offerings by selling those products in the Bangladesh market. To capture the market of
Asia, they acquire some local companies to know the culture of the consumers’ tastes and then they start
their production according to their taste and start to export from the host country. Although Nestle started

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its operations in BD in 1992, they have increased its investment by adding new product lines in the
factory to provide a better product to the consumers. There are currently 80 distributors of Nestlé
Bangladesh products. There are some advantages they saw to functioning in Bd. These are-

 High demand for the nutrition product

 Inward flow of foreign earnings to the home country

 Economic growth of Bangladesh

 Cost of manufacturing is relatively low

 Efficient packaging materials available

Factors influencing Nestle’s entry into BD market

Nestle has a lot of factories all around the world and has large demand for their product. There are two
types of factors that influence them to do entry into the Bangladeshi market. These types are-

 External factors and

 Internal factors

External factors are described below:

1. Economic growth rate and inflation: Bangladesh is growing economically with an average 8%
rate and that is enough to gain the attraction of foreign companies to entry the in market and the
inflation rate is relatively low than other countries.

2. Political laws: The government set rules and regulations to set up industry and as we are growing
economies govt is friendly to establish foreign industry so that they can earn tax more and more.

3. Social factors: In this modern world, people are more health-conscious and wanted to live
healthily. There is an opportunity to sell high-quality products full of nutrition to the daily
consumers.

4. Labor laws: Bangladeshi labor hours are fixed by the government as well as the payment. So, it
will be not hard to bargain with the workers and can easily meet up their needs.

5. Foreign trade regulation: Nestle operates internationally and Bangladesh is providing information
to the investors to invest here with open border regulation because govt. can earn money through
the investment thus increasing economic growth.

Internal factors are described below:

1. Parent company support: As it’s the world’s largest processed food and beverage company,
Nestle Bangladesh has access to the benefits and various products of the parent company.

2. Image of the company: Nestle is a very much known and renowned name. It has a worldwide
reputation for its quality products. So, it helps Nestle a lot to retain market share in difficult
situations and hard times in any country globally.

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 3. High quality and product control system: Nestle has high ideals for its quality. It doesn’t
compromise its quality in any situation. It wants to give its customers 100% nutritious products.

4. Research and development: The company spends a lot in the R&D department. So, it’s giving its
customer various types of new products. By using technology Nestle copes up with any difficult
market situation and grabs the market shares.

Conclusion

A number of foreign companies are operating in Bangladesh. Besides these, there is a long list of
franchise foreign companies operating by the Bangladeshi entrepreneurs with their brand names against
paying royalty to the original foreign brand. But how many Bangladeshi companies are working abroad?
Only a few are working abroad with Bangladeshi brand names. We have a good number of companies
exporting their products to foreign markets and the buyers sell these at their outlets. We would like to
develop Bangladeshi-originated companies to operate globally at least in more than one foreign country.
Finally, we could state that the internationalization of Bangladeshi companies is a demand of the time
now. Otherwise, we will never be able to promote branding Bangladesh issue and get any Bangladeshi
Originated Global Brand like Bata or Unilever. Critics could argue that it will harm the Bangladeshi
economy by sending foreign currency abroad. But we could strongly state that the internationalization of
Bangladeshi companies will give us more benefits than risks. It will strengthen employment generation
and increase our GNI per capita. Finally, it will be helpful to achieve a higher middle-income country's
status sooner than the projected time.

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 References:

1. Unilever Consumer Care Limited | Unilever

2. Unilever goes from strength to strength | The Daily Star

3. Fast Moving Consumer Goods — A Beacon of Economic Stability? - LightCastle

Partners (lightcastlebd.com)

4. Companies going global to expand footprint | The Daily Star

5. Bangladesh - Market Entry Strategy (trade.gov)
6. Coca-Cola Global Home | Site Locator Coca-Cola Global
7. Home Coca-Cola Bangladesh
8. Coca-Cola to invest more in Bangladesh | The Daily Star
9. Home | Nestlé Bangladesh | Nestlé (nestle.com.bd)
10. Current Market Position Of Nestle In Bangladesh | The Lawyers & Jurists
(lawyersnjurists.com)

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