North South University

SBE Department of Marketing and IB

Semester: Spring 2016

Course Code: INB 372, Section: __1___

Final Report

Faculty: __SMI___ Date: _27.03,2016__________

Marks obtained:

(This space is for faculty’s usage. Do not write here.)

GROUP DETAILS

Name ID Roll

1) Farah Khan 1130071030 1 2) Erteza Ahmed 1310395030 12

3)Mouri Nabila Tabassum 1210262030 4 4)Sk. Md. Asif Rahman 1130450030 2

5) Mustafizur Rahman 1320937030 25

TABLE OF CONTENTS

SL NO. TOPIC Pg. no.

1. Company Overview 3

2. Political And

Economic Analysis

4

3. Social Analysis 4

4. Technological

Analysis

5

5. Racial Issues 6

6. Religious Issues 6

7. Government

Intervention In The

Economy

7-8

8. ECONOMIC

INTEGRATION

8-9

9. FDI ISSUES 9

10. CHOOSING ENTRY

STRATEGY

9-10

11. STRATEGICAL

REASONS

10-11

12. RECOMMENDATION 12

13. BIBLIOGRAPHY 12

COMPANY OVERVIEW

Bengal is a company of Bengal Group of Industries, which started back in 1969. Today Bengal

plastic, is the largest plastic industry in Bangladesh processing more than 3,000 metric ton raw

materials per month.

Our Quality Control (QC) lab tests a wide range of incoming raw materials and components to

meet our customer's quality requirements. To exceed the ever changing taste of our global

customers, we have developed modern tool room with latest technology & highly skilled

technician to ensure consistent product quality in the production process.

To support the logistics, we have build more than 100,000 SFT (9,291 square meter) of

warehousing area to deliver the products efficiently. All of our efforts are dedicated to make our

customers‟ life better, easier, & happier.

Vision of Bengal

To be the best leading company in our industry and to deliver total quality goods and services to

all of our Customers.

Core Values

Integrity Team work

Excellence

Accountability

Market

We don't just talk about the quality of our products, we are committed to it. we accomplish this

by operating and maintaining modern and efficient state-of-the-art production plants accredited

with ISO 9001:2008 & ISO 14001:2004. In B2C market we have 30 categories product

containing more than 300 SKU and in B2B market we have 2 categories product in 40 SKU.

Brand Values

The essence Our employees play a vital role in ensuring the success of our daily business

activities. Every employee, manager and director throughout the organization is expected to

adhere to our core values of Integrity, Teamwork, Excellence and Accountability. These values

are also the basis on which we build the trust and integrity that will allow our businesses to

continue to succeed. What the consumer believes is to put simply, “100% trustworthy.”

Political and Economic Analysis

In the country‟s fifty years of post-independence existence, the military has ruled it for thirty odd

years; there have been nearly 7 coup d‟états including palace and attempted coups; and numerous

religious and ethnic eruptions have garnished and beclouded its political arena. Years of military

dictatorship, corruption, political instability and poor governance have meant insufficient

investments in the country‟s infrastructure and basic services. Corruption is one of the principal

challenges in Nigeria, raising the cost and risk of doing business in the country and making the

country unattractive to investors.

Nigeria is a middle income, mixed economy and emerging market, with expanding financial,

service, communications, and technology and entertainment sectors. It is ranked as the 21st

largest economy in the world in terms of nominal GDP, and the 20th largest in terms of

Purchasing Power Parity. It is the largest economy in Africa; its re-emergent, though currently

underperforming, manufacturing sector is the third-largest on the continent, and produces a large

proportion of goods and services for the West African sub region.

Social Analysis

Analysis of Demographics by Age Group

The population of Nigeria is increasing every year. Most of them are young and continued to be

so until 2030 because of a really high fertility rate. It will be fifth most populous country by

2050. If everything remains same 64+ and 15-64 groups will not experience notable growth in

next 20 years. On the other hand, People who are under 14 is expected to decrease in that time.

Analysis of Age on Healthcare

There is low life expectancy in Nigeria which is now 52.11 years. The primary reason for this is

very poor healthcare system, malnutrition, and pure water unavailability. They must need to

undergo proper underpinning to be considered a match for other developing countries like South

Africa.

Population Dynamics

Nigeria is becoming an urban nation and the ratio is nearly 1:1 between urban and rural. Lagos

are the largest city and the population is 14 million there. It becomes the primary harbor for

migration within the country.

Technological Analysis

Nigeria is one of the fastest growing telecommunication sectors in the world. Former President

Goodluck Jonathan encouraged improvement of telecommunication industry and current

president Mummadu Buhari continued to do so although in a recent interactive forum with the

member of the Nigerian community in Abu Dhabi he warned telecom companies to follow the

rules of the Nigerian Communication Commission. He wanted the telecom companies not to put

profit above the security of Nigerian people. They rely heavily on Western Europe and the

United State of America for supply. Nearly 30 percent Nigerian have access to the internet and it

has an approximate 1400 internet hosts and 45 million internet users. Nigeria is ranked 169 out

of 189 countries in the last survey by World Bank regarding the „ease of doing business.‟

Nigerian National Identity Management Commission plans to introduce more or less 100 million

cards for 173.6 million citizens. MasterCard is already doing business in there and they are just

getting started.

Racial, Religious and Cultural Issues

If we analyze Nigerian culture through Hofstede‟s six cultural dimensions, we can see Nigeria is

currently scored high on power distance (score of 80) which means they maintain a strictly

hierarchical culture. Business leaders don‟t need anyone‟s affirmation to make a decision and

their decision is final regardless of the rationality. Managers often take a fatherly role with regard

to peers. People ask the boss for advice on professional as well as personal life.

Nigeria scored 30 which means they are considered as a collectivist society. They are very

relationship oriented and there is no „I‟ in the team. Everyone shares the responsibility of others.

If a team is formed and working well together, it will be best to leave it in place. Team follow the

guidelines only when an authoritative leader takes the charge.

Nigeria scored 60 which is considered to be a Masculine society. People want to be the best and

that‟s what motivates people. Managers have the ability to make decisions quickly and

effectively.

Nigeria scored 55 on uncertainty avoidance which is an in-between situation. This score doesn‟t

clearly show a preference.

Nigeria scored 13, a very low score in terms of orientation. They have great respect for their

tradition and they naturally intertwine their past with the present. They search for the concrete

truth, which means their culture is normative instead of pragmatic. They always focus on

achieving immediate results.

Nigeria scored 84, which is considered to be one of indulgence. They have a positive attitude in

life and have a knack towards optimism. They enjoy their life, have fun and put great emphasize

on leisure time. They act how they want to be and spend money in the same way.

Racial Issues

There are nearly 250 ethnic groups in Nigeria. The Nigerian identity is very heterogeneous.

Hausa and Fulani, Yoruba and Igbo are the largest of them and they compromised two-thirds of

the country‟s population. Racial discrimination is always there although constitutes prohibit

ethnics discrimination. Petroleum issues, accusing government to favor and patronize certain

ethnic groups, issues of environmental degradation are always there. There is a long history of

tension in some ethnic groups.

Religious Issues

Half-Christian, half-Muslim, Nigeria is a country where faith needs to be restored if they don‟t

want to die in great numbers. The recent kidnapping of children and savage killing of Boko

haram is a perfect example for that. So to do business religion is an important factor to consider.

Muslim north and Christian south are often heard from commentators on Nigeria but in the

southwest part of Nigeria, Yoruba ethnic group which is made up of Muslims and Christians

proves otherwise. They lived peacefully together for the most part. It is more complex than it

seems. So in which part of the country business will operate efficiently that is an important

question to answer.

Government Intervention in The Economy

There is bilateral relation between Bangladesh and Nigeria and they both are the members of

Organization of Islamic Cooperation, Developing 8 countries and others. The Bangladesh

government plans to sign free trade agreements with Nigeria to increase the export in the African

countries. Nigeria already lifted the barrier on importing o import various apparel items. The

both governments having a friendly relationship in boosting their economy. Nigeria is a country

of 1584million people, with a per capita income of US$1,091, could be a promising export

market for Bangladesh products. It is beneficial to do business in Nigeria. Nigeria‟s

infrastructure spending has increased recently. The Nigerian government is developing the

infrastructure using both public and private partnership (PPP) mechanisms.

Entering the market of Nigeria the company has to focus on the favorable sides of the market, is

the market is politically stable, low inflation rate, private sector debt and others.

INFLATION RATE: Nigeria has a current inflation rate of 11.4%, in the month of January it

was 9.6%. The rate increases to 1.8% in just two months. Inflation rate of 2% is said to be stable

ensures that economy is able to grow and the business are profitable enough to maintain and

increase workforces. Inflation above 2% let to increase the price of the product due to the high

demands of consumers. High inflation thus let to increase the profit of business as the demand

increases.

POLITICAL SITUATION: The current political situation in Nigeria puts a threat to the foreign

investor due to ethnics groups like Boka Haram. But the government are helping and giving

opportunities to the foreign companies to invest and expand their market in Nigeria in very low

tarrifs.

Market of Plastic Furniture in Nigeria:

There are very few local renowned plastic furniture manufacturers in Nigeria like Black Horse

plastic with a very low product lines. Some other foreign manufacturers enter the market in few

years back and giving a good competition as the people of Nigeria are tends to like more the

outside goods. As the local manufacturers are failing to fulfill the needs and demands of the

customers and the foreign manufactures are targeting the upper class group as their products are

highly expensive. Thus it will help the Bengal Plastic to enter the markets to and full filling the

customer demands and needs giving those imported products in low prices than any other

competitors. The following Strategy will let the Bengal Plastic to reduce their cost on exporting

to Nigeria.

Pioneer tax incentives: Upon satisfaction of certain fixed conditions, pioneer status is

given to companies in furniture industry and these companies that qualify get a tax

holiday for five years, three years initially and that again have to be renewable for a

further 1 or 2 years upon application or request.

Under the Capital Gains Tax Act: Foreign companies and investor doing business in

Nigeria are immune from capital gain tax on disposal of assets.

Economic Integration

Nigeria's trade relations with its neighbors exist at a relatively low level when compared with the

country's links with the advanced western economies. Although the structure of its West African

trade network is complex and dynamic, involving a lot of informal trade, formal trade has been

limited by a host of historical, political, attitudinal and social factors.

Few challenge the notion that Nigerian businesses and the economy as a whole would benefit

from greater trade with its neighbors. In its 2012 country strategy for Nigeria, the African

Development Bank cited greater regional trade among the potential “strengths and

opportunities”.

Experts predict that it will soon become Africa‟s largest economy, overtaking South Africa. „If

confirmed, the 40 percent upward revision would bring Nigeria‟s GDP to about $370 billion, just

shy of South Africa‟s output ($391 billion forecast for 2012), with the country subsequently

becoming the largest economy in Africa within a year or two,” Samir Gadio, an Emerging

Markets Strategist at Standard Bank, said concerning the Nigeria‟s forthcoming GDP rebasing

exercise.

But the country is not doing enough business in Africa, thus, missing an opportunity to capitalize

and to benefit from Africa‟s fast-growing consumer markets. But the country continues to do

more business with countries in Europe, Asia and America, as revealed by the Visa Africa

Integration Index, which pegs the depth component of its global integration at 26.1 against 9.6

regionally.

So there is an opportunity for the Bengal Group of Industries (BGI) to enter the market of

Nigeria with their house ware products and furniture.

Economic Integration (EI) and its influence:

It will be an attempt to exploit the gains from free trade and investment.

Allows BGI to opens new markets in Nigeria

Allows BGI to realize cost economies by centralizing production in Nigeria where

the mix of factor costs and skills is optimal

Provides agreements between Bangladesh & Nigeria to reduce tariff and non-

tariff barriers to the free flow of goods, services, and factors of production

between each other

Linking both countries together, making them more dependent on each other

Creates incentives for political cooperation and reduces the likelihood of violent

conflict

It will be only beneficial if the amount of trade BGI would create exceeds the

amount it diverts

Trade diversion can occur as higher cost suppliers will replace lower cost external

suppliers

Together, the countries have the economic clout to enhance trade with other

countries or trading blocs.

FDI Related Issues

A foreign direct investment (FDI) is a controlling ownership in a business enterprise in one

country by an entity based in another country. Nigeria is one of the economies with great

demand for goods and services and has attracted some FDI over the years. Nigeria is a country of

vast economic opportunity. It famously became the biggest economy in Africa in 2014, after an

economic rebase almost doubled the size of its gross domestic product (GDP). At about $510bn,

its economy is now bigger than South Africa‟s (and among the top 30 in the world). That news

came as a profound endorsement for Nigeria, which – if it wasn‟t already – is now the centre of

the African growth story; a nation impossible for investors to ignore.

Bengal Group of Industries will follow the greenfield strategy. As a greenfield venture is better

when the firm needs to transfer organizationally embedded competencies, skills, routines, and

culture. The main advantage of a greenfield venture is that it gives the firm a greater ability to

build the kind of subsidiary company that it wants.

Choosing the Entry Strategy

Bengal Group of Industries (BGI) has to establish a whole new operation in Nigeria if they want

to invest in this country. Then it would become a multinational enterprise. So the entry mode

BGI need to decide and implement is to establishing a new wholly owned subsidiary. This choice

of entry mode will have to deal with the transport cost, trade barriers, political risks, economic

risks, costs, and firm‟s strategy.

Benefits of choosing wholly owned subsidiarry for BGI:

It can reduce the risk of losing control over core competencies.

It will give BGI the tight control in the foreign country which is necessary for global

strategic coordination.

It is required in order to realize location and experience curve economies.

Disadvantages of choosing wholly owned subsidiary for BGI:

BGI will have to bear the full cost and risk of setting up overseas operations.

Strategy Related Reasons for Expanding To Specific

Country

Nigeria‟s economy is growing rapidly. Foreign investors are also becoming interested to invest

here. It is the most populous country in Africa. Besides her huge oil and gas deposits, Nigeria has

abundant deposits of other natural resources which include but are not limited to bitumen,

limestone, coal, iron ore, lead and zinc. Most of these resources are largely unexploited. The

Nigerian market is also quite large. With a population of over 160,000,000 persons, Nigeria is

undoubtedly the largest market for virtually all products in Africa. Further, Nigeria is largely a

free market. The Government of Nigeria is gradually taking its hands off several sectors of the

economy and there have been very serious talks about deregulating most sectors of the economy

including the power and oil and gas sectors (the privatization of the power sector is on-going).

The various incentives that have been put in place to encourage investments are also reasons to

consider and make investments in Nigeria. (Yung-Heng Lee, 2009)

Ownership Advantages:

Ownership advantages involves investing firm‟s size, their international experience and firm‟s

specific assets (the company‟s ability to develop differentiated products).

Bengal Group of Industries is one of the largest plastic processing companies in the Southeast

Asia producing 1.5 million pieces of plastic apparel hangers, more than 500,000 pieces of poly

bags, 200,000 meters of strapping bands, 100,000 pieces of packaging tapes, and 150,000 pieces

of woven sacks each day. Bengal Polymer Wares Limited has captured 35% market share in

Molded Furniture Industry and 20% in the Molded House Hold Industry in the local market. So,

it‟s a large market to invest in Nigeria. Bengal‟s Research & Development Division of the group

is continuously busy developing quality, moulds, shapes and myriads of product lines. Steps are

taken to make products readily available through proper distribution chain. A huge number of

field-forces have been deployed to support the distribution procedure. And, continuous research

is the logical sequence for that matter. (Bengal Polymer Wares Limited)

Location Advantages:

The location specific advantages in Nigeria include economic variables including production

factors, transport and telecommunications costs and scope and size of the market. The political

variables include common and specific government policies towards Foreign Direct Investment

and trade issues, and social- cultural variables such as psychic distance between the home and

host country, language and cultural diversities, general attitude towards foreigners. Based on

these factors Bengal Polymer decided to invest in Nigeria. (Yung-Heng Lee, 2009)

Internationalization Advantages:

Internalization advantages refer to the advantages of controlling, coordinating ownership and

location specific advantages within the firms rather than selling the right to use those advantages

to domestic firms in the host country. The benefits to the firm of better planning, coordination,

and opportunities to increase profits must be weighed against communication and control

difficulties. Bengal keeping these things in mind they wanted to expand their business in Nigeria.

Because in Nigeria Bengal can minimize the transaction costs caused by the transfer of firm-

specific assets and can avoid the risk of free-riding the firm‟s reputation to balance the trade-off

between uncertainty of country risk and achieving economies of scales of economies in their host

market expansion. (Ogba, 2013)

RECOMMENDATIONS

Bribery and corruption of Nigeria should come to a limit position.

Judicial system needs to be faster.

Change should come in Laws and Government policies of Nigeria.

Actually Bangladesh governmental intervention in this sector is very much essential. If

government create better opportunities for the owner of the plastics company in case of

import and export activities like faster customs activities, install modern technology,

change the old Procedure of official activities etc. then it will better for import and export

activities of Bengal Plastic Industries Ltd. Beside this the company needs to ensure their

effectiveness in all the activities to perform better in this sector.

BIBLIOGRAPHY

(n.d.). Retrieved from http://www.superbrands.com/bd/images/PDF/07.pdf

Bengal Polymer Wares Limited. (n.d.). Retrieved from Bengal Group of Industries:

http://www.superbrands.com/bd/images/PDF/07.pdf

Ogba, D. (2013, march). Hogan Lovells. Retrieved march 26, 2016, from www.hoganlovells.com:

http://www.hoganlovells.com/files/Publication/b45cd8d0-8481-4d52-ac2e-

044ae2d08cac/Presentation/PublicationAttachment/fd65d5e4-1855-4e50-8ba5-

067c6a106cc0/Foreign%20Investments%20in%20Nigeria_preliminiary%20legal%20issues.pdf

Yung-Heng Lee, Y. H. (2009). AN EMPIRICAL STUDY OF WHOLLY-OWNED SUBSIDIARIES AND JOINT

VENTURES FOR ENTRYINTO CHINA MARKETS . GLOBAL JOURNAL OF BUSINESS RESEARCH, 14.