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An Analysis of the Application of Strategic Management Tools in Family Owned Businesses in Bangladesh Mgt489.9

Submitted By: Name G.M. Farhan Morshed Khan

ID 1621273030

Submitted To: Mr. Bobby Hajjaj Lecturer Department of Management School of Business & Economics North South University

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Table of Contents Literature Review .................................................................................... 3 Hypothesis ................................................................................................ 4 Methodology ............................................................................................. 4 Qualitative Analysis ................................................................................ 4 Progoti Systems Limited ...................................................................... 5 Rashad Group ....................................................................................... 5 MB Traders ........................................................................................... 6 Fulkoli Bread and Biscuit .................................................................... 6 Sky View Foundation ........................................................................... 7 Polycon Limited .................................................................................... 8 Findings .................................................................................................... 9 Reference ................................................................................................ 11 Appendices ............................................................................................. 12

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Literature Review Strategic management is a continuing process that consists of an organizational plan, monitor, analyze, and evaluate all necessary needs to fulfill its goals and purposes (Rouse, 2020). Promptly strategic management is especially propitious for all sorts of small & large businesses. Each objective can be easily accomplished by achieving forecasted strategic consequences for observing key performance Indicators (KPI) and stakeholder action through strategic management. Now to develop strategic direction, it is required to understand and practice the mechanisms of strategic management. Firms around the globe use various strategic tools to fulfill their purposes and achieve their goals. One foremost factor in Bangladeshi businesses is that they do not think much while implementing strategic management tools in any family-owned or non-family firms. According to Inc.com's article, when two or more members regulate or own the preponderance portion of a business, that is called a family-owned firm (2020). These days, family-owned firms are the more traditional form of business. They do not implement structured strategic tools always. Family's authority, values, and benefits impact family businesses, and as such, they are different from other non-family firms (Sharma, Chrisman, & Chua, 1997). The family business definition will help us know their goals, mechanisms, strategies, and regulate the firms' growth. Asc to Chua et al., a family business is "A business supervised and conducted on a sustainable, conceivably crossgenerational, support to develop and perhaps pursue the lawful or certain vision of the business dominated by members of the same family or a little number of families." According to PwC Bangladesh, 84% of family businesses grew financially in the last year, and 91% of family firms will develop much more in the next two years (2019). According to The Daily Star, it was said that the family-owned companies have the overall flexibility and steadiness in the unfavorable Bangladeshi condition to support more than some other non-family or global firms do (2019). There are explicit challenges in abilities, competence, reform, internal dispute, and the soaring costs of raw supplies, yet every family business is rising, respectively. It is stated that in south Asia, Almost 85% of Page | 3

firms are run by the family members & one-third of the Global Fortune 500 companies are established, maintained, or endowed by families (Report, 2019). Big indigenous companies like Meghna group, Transcom, Basundhara group, Jamuna group, and more family-owned corporations hold most of the shares in Bangladesh Market. There must be some reasons behind the flourishment regarding familyowned firms, such as the engagement of the next generations' in the dispute between siblings or relatives or even the continuous business goal changes. Yet, the numbers unmistakably show that these organizations are predominant and financially transcending over other organizations. Hence, this paper centers on the positive vital strategic management tools that the family firms follow in dealing with their business.

Hypothesis Depending on the size of Bangladesh's family-owned businesses, implement strategic management tools that positively influence the business and obtain massive revenue. Moreover, the family members' participation in decision making makes the company more sustainable rather than rivalry.

Methodology The initial research method was conducted through telephone calls and video calls because of this pandemic situation. Besides, I did some secondary research on those companies. The sample size is 6.

Qualitative Analysis I have taken six interviews with some structured questions over the phone and video call. The participants are the top hierarchies. I have tried to know their business insight as much as I can. The companies I have chosen from different sectors to make this analysis diversified. This analysis is a combination of a medium, large, and big family business. A qualitative analysis of these family businesses is given underneath-

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Progoti Systems Limited

Businessland limited founded in 1985. They supply computer equipment and IT support. Later in 2010; they introduced a new venture named Progoti Systems limited. Their main job is software and net development. They are the introducer of two famous services, Surecash & Tally Khata. Mr. Fayzullah Khan is the Chairperson, and his brother Dr.Md. Shahadat Khan is the Chief executive Officer of the company. The daughter of Mr.Fayzullah Khan, Ms. Nazia Khan, is also working in the marketing department. According to Mr.fayzullah and her daughter, Nazia Khan, their main goal is to digitalize the semi-urban people. In the future, expanding globally, SWOT Analysis is a must for their business. Before launching any product, they do the SWOT and a PILOT run for two months. If the product passes the pilot run, then only they do further procedures with the product. It seems like they are not bothered about the BCG matrix that much. They are more concerned about PESTEL and Porters Analysis. They merged with Rupali Bank for their Sure Cash Service because No organization without a bank can do this sort of financial service. For the SME and little business, they have an app named tally Khata for financial tracing. They Follow Pareto analysis here. The 80/20 rule is applicable for their two products. They make decisions along with Chairperson, CEO, and all the respective department head. They play the majority wins the game to dissolve conflict. According to Nazia Khan, she is working in Progoti System ltd. from a very root level so that there is a good practice of bringing the capable leader in front. According to them, biasness for family members in business affects much—that’s why they encourage coming in front by working from the grass-root level. Rashad Group

Rashad Group is a family-owned business that's thick and thin I have observed. It was established by five brothers Md. Shahjahan, Kamal Pasha, Anwar Pasha (Chairman), Abdul Baset, and Mahmudul Haque in 1997.After the sudden demise of M.D. Abdul Haque, his son Md. Rubel Mahmood joined their business. According to Mr.Abdul Baset, they have multiple ventures.Their Hotel(Muscat Holiday Resort,Cox's Bazar) is their Star product, Their readymade garments Rashad Textile is cash Cow, and H.N. Filling station is DOG as per BCG matrix. According to Porter's three generic strategies, they always focus on porters' cost Page | 5

leadership strategy in every business. They use other strategies aligned with their mission and vision. They always make decisions considered every fact. However, they were used to run their company traditionally.But recently, Their chairman's son joined their company, who is an NSU graduate. He always tries to implement theories to check threats, competitors, and substitutes by Porter's Five forces. PESTEL analysis as scenario analysis helps them make their garments eco-friendly as they are setting up an ETP plant in their factory, and other strategic management tools. They make decisions altogether, which does not create conflict, and they all trust each other. MB Traders

In 1965 there was a famous packaging company in Chittagong named Karnaphuli Paper mart, established by Md.Ismail.Later in 1990, they have expanded their business in industrial machinery and garment packaging and named Liberty group. M.B. Traders is a concern of the Liberty group.Mr. Belal and his brothers are concerned about their business. M.B. Traders use a strategy based on their Mission & Vision, goals, & KPI's. They do Socio-economic assessment, SWOT analysis, and conduct Execution review & Performance analysis. According to Mr.Belal Hossain, the CEO of M.B. Traders, they have constant goals; they change their plans accordingly to that continuous goal. In a familyowned firm, they don't have a long-term sustainable growth plan; therefore, they prefer to hire less capable people at a low cost. It decreases their operational cost. Though it hampers their operation a bit, it is manageable.Mr. Belal also mentioned that Internal disagreement & dispute between brothers sometime create delinquent to formulate & implement the strategy. As a CEO, he always tries to apply his ideology & opinions to remain the discipline intact in business, which sometimes creates conflict with formulating strategy & execution in pre-decided strategy." Fulkoli Bread and Biscuit

Al-Haj Md. Shah Alam established the Fulkoli brand in 2002. It is the most famous bakery, confectionery items manufacturer in Chittagong. Before starting the company, Mr.Sha Alam had the export-import business. He is the Chairman, and his son Mr.Iqbal & Mr.Kafil are acting as Director. Page | 6

According to Mr.Jamal Uddin Rashel, who is with Fulkoli from the day, it has started saying that Fulkoli Bread & Biscuits Ind. Ltd. has a great mission in front of the opening door by which they are acting in fundamental globalization all over the world. In the global village, time to time, generation by generation. They have confidence & a tremendous responsibility for customers. They always round up before their mission. They are going operation to fit against worldly competitive marketing policy. They try to give finishing such a serial competitive development for better products for better sales—they emphasize providing the product at fewer prices, maintaining the ISO standard. Become the number one confectionery brand in their industry by more innovation and reaching customers with less priced products keeping the hygiene is their vision. According to Mr. Jamal Uddin Rasel, They do not have any fixed tools to implement the strategy. They act on the situation. They set a goal for six months. Always they are the first mover regarding innovation. They observe customer demand and produce accordingly. One strategy they follow is cost reduction and as much as sells. They use the BCG Matrix. According to this, their Bakery items are their cash cows, and confectionaries are divided into dogs, question mark, and Star. They produce the product and market with a concrete marketing plan. They always try to focus on value innovation. Though Chairman can make the decisions, he prefers to make decisions in the board meeting that increases everyone's work enthusiasm. Which also helps not to create any conflicts. Sky View Foundation

Sky View foundation started its journey in 1998 with project SKY VIEW TOWER. Mr. Dr. Nuruzzaman is the Chairman, & Mr. N. Zoha is the Managing Director of Sky View Foundation. Mr.Rakib, son of Dr.Nuruzzaman, is the ViceChairman of Sky View group. According to Mr.Rakib, They also have other ventures. They have a medical college, a Chemical company, a painting company, an engineering solution company, and some other ventures. Their goal is to provide the ultimate solution for building and maintaining a good relationship with customers providing a better living place. Principally they prefer SWOT & PESTLE Analysis. By doing SWOT, They analyze their Strengths, Weaknesses, and Opportunities. To get a precise thought about what they should do, they do PESTEL to observe the industry under all six Page | 7

circumstances and the drivers molding it. Gradually they are entering into various sectors. Doing this, they used SWOT Analysis less and concentrated more on PESTLE Analysis, Porter’s Five Forces, McKinsey 7S, and Pareto Analysis. Pareto analysis is standard in the real estate business. They entered into other sectors. They had to do BCG Matrix and PORTES as their new business needs a concrete plan over their competitor and a good liaison with other stakeholders. As they are expanding their business, they cannot stick to one. All of their decisions taken by Mr. Nuruzzaman and Mr. Zoha try to implement their experience while making decisions. Others are obliged to carry out that decision. Polycon Limited

Polycon Limited is a family-owned business that manufactures mainly industrial plastics and one time cups. The Executive Director of the organization Mr. Md. Faisal Zahir talked about their essential apparatuses. Due to his father's sickness, he and his brother are responsible for the business, and they have a good understanding. Polycon Limited is conducting its business for the last 35 years. So at first, they were not bothered about any strategic management tools. Gradually, they started with a Vision Framework and done SWOT Analysis and PESTLE Analysis of the business. Even though the drive was highly diluted, in the previous 15 years, it has begun to grow hugely. Since Last scantily any years, they are rehearsing the management strategy in their items in a BCG Matrix model to eliminate their least income generating unit. They had bought a new one-time cupmaking machine when the pandemic started as they did scenario analysis and the projected that their demand would increase. Later on, their market has increased three times than before. Since they are thinking for global expansion, as per their BCG Matrix, their Plastic Pipes are the Cash Cow, Plastic containers, and cups are Star, Plastic ropes are Question Mark, and Industrial Brush is Dog having an intense rivalry in the business. Hence their plastic ropes don't have any growth. So they may eliminate this unit and start the global expansion through their Plastic pipe soon.

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Findings Decision making in the family business in our country is much severe than any other country. For the purpose of the sustainability of the business, all the members must have resilience power. The world is evolving, and the administration of different companies supporting diverse sectors faces diverse challenges, and the pandemic sit has made things more critical. However, it is to be perceived that family-owned businesses were proliferating in Bangladesh as stated that 91% of the family-owned firms would have seen enormous business growth by the end of 2022 (PricewaterhouseCoopers, 2019). There is no other dilemma in succeeding than focusing on different strategic management tools necessary for the companies. Few credentials have been given based on the above findings from the interviews that can be provided for the future reference for above mention six companies are given underneath: • Using different strategic management tools will make small firms more sustainable in the industry. • Family Businesses should introduce a neutral policy for the family members to entry in the business. • Progoti limited should have to do BCG analysis as they have the intention of going global. • They should start using various strategic management tools to bring out more transparent results to enhance their further market growth chances. Tools like Core competencies, Cost-benefit analysis, proper vision framework, Porter’s Five Forces, 3 Generic Strategy, Game theory, Blue Ocean Strategy, and many other advanced tools should be used regularly by these family-owned businesses. The businesses should not limit themselves to SWOT, PESTLE, and BCG only. • The firm should have a strategic fix plan, and then they should use the tools and techniques accordingly. Pros & Cons must be considered. • All family businesses should have a recovery strategy by using strategic tools.

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All this recommendation can be helpful for the family business firms to gain success in the long term. This recommendation will help the business firm to be sustainable.

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Reference Report, T. (2019, December 1). “Family business growth in Bangladesh higher than in any other country in the world.” The Business Standard. https://tbsnews.net/economy/familybusiness-growth-bangladesh-higher-any-othercountry-world Star Business Desk. (2019, January 31). 91pc family businesses expect to grow in 2yrs. The Daily Star. https://www.thedailystar.net/business/news/91pc-familybusinesses-expectgrow-2yrs-1695445 Inc. Editorial. (2020, February 6). Family-Owned Businesses. Inc.Com. https://www.inc.com/encyclopedia/family ownedbusinesses.html#:%7E:text=A%20familyowned%20business%20may,oldest %20form%20of%20business%20organization. Federer, D. (2018, February 15). Avoid sibling rivalry in your family business: Business Observer. Business Observer. https://www.businessobserverfl.com/article/avoid-siblingrivalry-your-familybusiness.

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Appendices

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