INB301 Sonali Bag Report PDF

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Course Title: International Business Course ID: INB 301 Section: 02, Semester: Autumn, 2020 Submitted to: Hanif Mahtab Submitted by – Sumaiya Akter

1920450

Shah Mohammad Ibrahim

1920921

MD. Ashikul Islam

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Sharmin Akter

1921784

Nawshoba Rahman

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Submission Date: 12th January 2021

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Letter of Transmittal January 12th, 2021 Hanif Mahtab Lecturer Independent University, Bangladesh. Subject: Submission of report. Dear Sir, We the potential students from your section of IBN 301 are delighted to produce our report before you. We are thoroughly honored and more than satisfied with the learnings we are taking ourselves with. Though we are in the learning curve, this report has enabled us to gain insight into the core fact of business organization. Therefore, it becomes an extremely challenging and interesting experience. Thank you for your supportive consideration for formulating an idea. Without your inspiration this report would have been an incomplete one. We have poured, our hard work, time and most importantly great deal of sincerity in shaping this marketing report. Lastly, we would be thankful once again if you please give your judicious advice on effort. Yours’ sincerely, Sumaiya Akter Shah Mohammad Ibrahim MD. Ashikul Islam Sharmin Akter Nawshoba Rahman

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Acknowledgements

We would like to express our deepest gratitude to the faculty of Independent University Bangladesh (IUB) School of business department for providing such a professional yet learning platform for exposing our talents and potentials in the field of business. Our eternal respect towards our International Business (INB301) Faculty Hanif Mahtab. We are eternally grateful to him for sharing valuable and incalculable knowledge and guiding us through all the way in making a successful, neat and clean marketing report. Our journey with his in this course has been truly a worthwhile learning experience. At the same time, we acknowledge and value the efforts of the team members who have put their dedication and sincerity upon successfully completing this report work, without their contributions it would have been an incredibly difficult job to accomplish. We the group members have spent considerable amount of time and put effort into designing this very marketing report. We hope and firmly believe that our faculty will be pleased with the work we are presenting with.

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Table of Contents Letter of Transmitta Transmittall...................................................................................................................................... 2 Acknowledgements ....................................................................................................................................... 3 Executive Summary ....................................................................................................................................... 5 Product Overview .......................................................................................................................................... 6 World Wide Demand for Sonali Bag as a Biodegrable Packaging Packaging………………………….…………………………………….7 Strategies for Comm Commercialization ercialization ercialization……………………………………………………………………….………………………………………8 SWOT Analysis Analysis……………………………………………………………………………………………………….……………………………….….8 PESTLE Analysis of USA, UK & China China………………………………………………………………………….………………………….……9 Comparision Comparision………………………………………………………………………………………………………………………………………….…11 Market Entry Strateg Strategyy……………………………………………………………………………………………………….……………………..12 Conclusion Conclusion…………………………..………………………………………………………………..…………………………………………………12

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Executive Summary Bangladesh Jute Mills Corporations goal is to develop a type of plastic that can naturally break down to non-toxic compound. Some companies already commercialized some biodegradable packaging which are mainly starch or synthetic bio-plastic based compound. However, several drawbacks are still there such as low strength and low stability. Currently, BASF does make biodegradable polyester called Ecoflex that is used for food packaging applications. Unfortunately, carbon gets locked up in these biodegradable plastics and is released into the atmosphere as carbon dioxide. Another downside to these biodegradable plastics is that they require sunlight to degrade. Plastics buried in landfills will not receive the sun they need to degrade and, therefore, can still last for decades. In one-word, answer of the unresolved problem is our new product jute base biodegradable packaging materials because if its low cost, high biodegradability, higher strength, renewable raw materials, higher stability in water. Which is called Sonali Bag meaning Golden Bag invented by Mubarak Ahmed Khan, a scientific officer of Bangladesh Jute Mills Corporation. Sonali Bag is a synthesized polymer from jute fiber, which can be used to create a kind of bag that works, looks and feels like a polythene bag but without the negative environmental impact. In this report, we will discuss our products SWOT analysis. We will go through the demand for bio-degradable packaging in the world. We will look into the PESTLE analysis of our initially three chosen country, namely: USA, UK and China. We will discuss strategy for commercializing, pricing strategy, sales and promotion and transportation strategy for exporting out product and lastly, we will explain why we chose UK as our most favorable country to export or product to.

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Product Overview

Biodegradable packaging made from renewable resources and is essential for a less polluted and greener planet. Many researchers have developed biodegradable packages and some of them are already in the market. But none of them are cost effective. This is why even Bangladesh banned the use of polythene in 2002, there are still in use everything due to lack of suitable alternative. This is why Bangladesh Jute Mills Corporation has been working on to develop affordable biodegradable packaging material from local raw material. After many years of research, they successfully developed a cost-effective biodegradable sheet from modified jute cellulose. The mechanical properties are higher than polythene and physical properties are quite similar. The product showed complete biodegradability within three months. The packaging material is named Sonali Bag. The Sonali Bag (Golden Bag) is a cellulose-based biodegradable bioplastic option in contrast to plastic sacks, especially polythene packs, created by Mubarak Ahmad Khan, a researcher of Bangladesh Jute Mills Corporations. The cellulose utilized in Sonali Bags is separated from jute. The bag closely resembles plastic as well as compostable and totally biodegradable. Mubarak Ahmad Khan invented the bag from jute in 2017 which isn’t just eco-accommodating yet additionally reasonable in price. The new jute-made bag, which is as helpful as polybag, should have potential for effectively finishing the utilization of polythene in our nation and save our current circumstance. Polythene bags were prohibited in Bangladesh in 2002 on account of ecological concern. The enactment added catalyst to the innovative work of common fiber composite (NFC) material as an option in contrast to polythene. Mubarak Ahmad Khan built up a scope of NFC material in a decades-in length exertion. In this manner, in 2018, Bangladesh Jute Mills Corporation (BJMC) began the business creation of Sonali Bag utilizing a Jute-based NFC. 6

The key constituent of the packaging is jute cellulose which gives us benefits in two way. ✓ By increasing production of jute. ✓ Reducing the foreign currencies outflow. Jute is not only biodegradable but it also prevents carbon dioxide emission.

World Wide Demand for Sonali Bag as a Biodegradable Packaging The biodegradable packaging market is expected to witness the fastest growth than that compared to the plastics market. The biodegradable packaging is a relatively new market however; it is expected to capture the existing market of the non-biodegradable plastic market. The food packaging and beverage packaging market is expected to play an essential role in driving the overall global biodegradable packaging market. The presence of huge price difference between the biodegradable packaging and other conventional packaging is further expected to help the growth of the market. However, lack of government support especially in this market is expected to slow the growth. USA & UK are expected to dominate the overall market of biodegradable packaging. America is expected to be the largest consumer of the biodegradable packaging market. The developed regions are expected to dominate the overall biodegradable packaging market. In addition, the presence of high-spending population is also expected to increase the overall demand for biodegradable packaging in the developed regions. There are also mature markets that consist of highly environmental conscious consumers The presence of large population in China expected to boost the biodegradable packaging market. Helping to the increase in the contract manufacturing process coupled with increased governmental interest to promote biodegradable products by providing incentives in some contribute to the growth of the market. Europe dominated the global biodegradable packaging market and this trend is expected to remain same due to the various factors such as increasing environmental awareness among consumers, implementation of environment friendly laws. The UK passed a strict resolution to reduce the overall consumption of plastic bag which in turn is expected to create major growth opportunities for biodegradable products. The reduction in the usage of plastic bags is directly going to boost the consumption of biodegradable plastic bags in malls, retail outlets and loose packaging applications.

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Strategies for Commercialization ❖ Several units of the developed continuous production facility will be established and their productivity will be increased by optimizing the production parameters. Completely separate site has been selected for the establishment of the Jute-polymer unit. Physical construction for the new facility will be started very soon. ❖ A research and development facility will also be established to increase physical and mechanical properties of the biodegradable packaging material (Sonali bag). There will also be a quality assurance and quantity control team to ensure the product quantity. ❖ Finally, the technology will be transferred to the private entrepreneurs to meet up the huge demand worldwide.

SWOT Analysis of Sonali Bag Strenghts • •

Sonali Bags are reusable and renewable. It helps control the amount of Carbon Dioxide.

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Can be composted into the soil. They are much easier to recycle.

Weakness • • • •

Lack of Industrial Biodegradation Infrastructure. Lack of Consumer Awareness. Lack of Government Support. Limited production.

Opportunities • • •

Production of local raw material (Jute). Can increase the foreign currency inflow and reduce outflow. Can replace polythene which in turn will help the environment.

Threats • •

Number of Bio-based chemicals are limited. Limited local raw materials.

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Relatively high cost of production. 8

Pestle Analysis of USA, UK and China Political Factors: This factor shows how the government influences the economy. Political environment can affect business environment in many ways. It can add a risk factor and leads to a major loss. Some issues that will arise in this decision factor are the support and priorities of the government. USA: USA has a strong democratic setup. It’s also has effective rule of law. The country is recognized as the leading superpower in the world. US government has already taken steps to reduce plastic use. The US government will surely support our product. UK: The UK maintains very good relations with the US, and many other countries in the world. It is a modern parliamentary democracy and a constitutional monarchy with the monarch being the Head of State. Increasing environmental concerns and effective regulatory policies implemented by UK governments will significantly boost demand for eco-friendly packaging in coming years. China: China has a very strong strict government. Many people claim that China’s political force is the most unsettled force. They have many rules which the firms must abide by.

Economic Factors: Refers to the issue of taxes, taxation changes, economic growth, inflation and exchange rates. USA: USA has the largest economy in the world. Their economic system is well-developed. They gather their strength from its service and manufacturing industries. Factors that can influence a business plan include inflation rates, interest rates, Economic growth, exchange rates and property prices. UK: UK is the 5th largest economy in the world by nominal GDP. British households faced certain challenges in 2017. Price in the shops rose at fast rates as the weak pound increased the cost of importing goods to the UK. China: Over the past five years, China’s economy experienced significant GDP growth rate. Reports suggest that if china continues to excel at this rate, it will surpass US GDP soon . The growth rate is impressive, but it can slow down. Some of the worrying trends in China are: high inflation rate and high property prices.

Sociological Factors: Change in this trend will have an impact on the demand for a firm’s products and the availability and willingness of individuals to work. USA: US citizens are becoming aware about global warming. Private institutes and the government are working towards solving this problem. The citizens are willing to help towards a better future. It is expected that they will happily accept our eco-friendly product. 9

UK: The UK has historically been influenced by the concept of social class. The UK is no. 3 in the rank of overall best countries. Same as USA, awareness about the environment is increasing in UK. China: The social aspect of China plays an important role as the demographics constantly change. Chinese citizens generally dislike products that harms their environment. If BJMC can come up with a good market plan, they surely make a place in the market of China.

Technological Factors: This trend creates new products and new processes in the same time as it can reduce costs, improve quality and lead to innovation which is a result of better technology. USA: As USA is the one of the most developed country in the world, they have updated technologies and machines. If BJMC can partner up with a local private institution with the same eco-friendly goal, BJMC can greatly increase the production of Sonali Bag. UK: The UK is one of the most technologically advanced countries in the world. London is the great hub for both financial and technological institutions. The advanced technological infrastructure offers unlimited opportunities to do business in the UK. China: China is developing new technologies every year. A major technological problem in china is that the development of the B2C industry does not have a safe and stable online payment system.

Legal Factors: A growing interest to protect the environment has occurred as a result of climate and weather changes but also because of the awareness and availability of more environmentally friendly products. The growing aspiration to protect the environment is affecting demand patterns and creating new business opportunities. USA: USA is Bangladesh’s one of the most important trading partner. But is USA’s perspective, Bangladesh is their 51st largest trading partner. USA has a complex tax system, high tax tariffs and some explicit trade barriers. USA has 10% tax tariff on plastic bags and they are looking to suspend import tax on eco-friendly packaging. Both of which will surely help BJMC enter US market. UK: The UK has said imports from 47 of the world’s least developed countries, including Bangladesh, will not face any tariffs after the end of the Brexit transition period, supporting their economic development through business and trade. This little detail will definitely help BJMC to enter UK market. China: There are a number of laws that regulate business and employment practices in China. China’s tariffs and non-tariff barriers are significantly higher than those of the US for most tradable goods.

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Environmental Factors: Is related to the legal environment in which firms operate such as minimum wages, better work conditions and also recycling nowadays in some countries. USA: Environmental issues in the US include climate change, deforestation, pollution. All of these issues will help Sonali Bag grow in the market. UK: The government, local councils, newspaper, charities and many others have taken a variety of initiatives to create environmental awareness and reduce the negative impact of economic growth on the environment. The UK sometimes faces challenging weather conditions. China: China rapid economic development has impacted on its natural environment severely. Water and air pollution, industrial waste, deforestation, climate change, and biodiversity loss are some of the examples of environmental challenges facing China today. It should be mentioned that the Chines government has taken a number a number of initiatives to address the environmental concerns.

Comparison Country Political Favorable USA Favorable UK China Unfavorable

Economic

Social

Technology

Legal

Environment

Unfavorable

Favorable

Favorable

Favorable

Favorable

Unfavorable Unfavorable

Favorable Favorable

Favorable Favorable

Favorable Unfavorable

Favorable Favorable

USA: Like many other countries, USA has already shown interest in Sonali Bag. Bangladesh Jute Mills Corporation has already samples to USA and that made a huge demand around the world. One American company has already approached Dr. Khan about partnering in the production of the Sonali Bag. The California-based start-up, has funding already in place to the tune of millions of dollars, worked out a certification plan with California’s state plastics regulatory agency, put together a marketing plan, purchased samples of Sonali Bags and had them preliminarily tested by the most trusted testing & certificated agency in the US. UK: UK also has shown interest towards Sonali Bag. On October 2, 2018, the BJMC and UK based Futamura Chemical Ltd inked the Memorandum of Understanding (MoU). Under the agreement, the UK firm will provide technical support to the BJMC for commercial production of Sonali Bag. China: Out of the three countries, China is the only one who hasn’t shown any interest. As Chinese government wants their citizens to use their own products and dislikes foreign products, it will be difficult make a place in their market.

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Market Entry Strategy There are many ways of entering a market of a country. As BJMC is a government run industry. The best possible way is to partner up with local company of the country we want to import to, which is the International Strategic Alliance. A Strategic Alliance is an arrangement between two companies to undertake a mutually beneficial project. We previously discussed about a California based start-up company is willing to partner up with BJMC and UK based Futamura Chemical Ltd already signed a Memorandum of Understanding with BJMC. As BJMC is desperately in need of funding, any one of the two will prove to be a huge help. Pricing Strategy: As this is a new product, the best price for now is to be 10tk. The price isn’t that high when you consider the environmental cost. As Sonali bag is renewable & reusable, we expect once ...