In recent years, European and Asian electronic firms have established technical collaboration with their Bangladeshi counterparts to produce some electronic goods at competitive prices. This has tremendous potentiality for expansion. The Government of Bangladesh has adopted National Telecommunication Policy, 1998. Investment is encouraged through BLT-BOT/BOO/BTO and other joint venture schemes which by greatly increasing the capacity.
To meet the telecommunication requirements of the country the government has been developing and expanding the systems and services of BTTB. Private sector operations in the rural telecommunication, paging and cellular telephones have already been allowed. In accordance with overall national policy, liberalization of the telecommunications sector will continue. That is why we have chosen cell phone industry to comply with this potential growth and to take the advantage of this growth stage of the telecommunication technologies in Bangladesh.
REASON BEHIND SELECTING THE INDUSTRY & COUNTRY
The number of mobile subscribers in Bangladesh grew by more than twelve million, or 120%, in 2006, to stand at 22 million at the end of the year, according to the Telecommunications Regulatory Commission. Doubling (or bettering that) the number of cell phone subscribers has become the standard throughout the developing world, so let’s project another doubling in 2007, which would bring the number of subscribers to 44 million.
That’s nearly one cell phone for every three people. Since cell phone is completely handset depended service, so there is a huge demand for the handset is expected in the country which is one of the main reason for choosing mobile industry. Even after such a huge growth during last couple of years, only 16% of the populations are using mobile phone in Bangladesh. As majority of the population are still beyond the coverage of mobile phone, there is a huge potential for the handset manufacturers in this country.
Moreover, in Bangladesh the cell phone manufacturers don’t have any production base to support this rapidly growing industry. They are importing these sets from other countries, for which the price of the handsets are relatively high. As the majority of the population lives in the rural areas and are poor, so the higher handset price discouraging them to use cell phone. So if we establish our own manufacturing plant here then we will be able to supply handset at a cheaper rate than the existing importers.
Beside this Bangladesh government has liberalized the industrial and investment policies in recent years by reducing bureaucratic control over private investment and opening up many areas. Bangladesh is not a country where technology is readily accessible to the population, particularly in rural areas. According to World Bank statistics, over 60% of rural Bangladeshi residents are poor, and almost half live in extreme poverty. There are 68 000 villages in rural Bangladesh, with 100 million inhabitants.
As majority of these poor Bangladeshis have the access to the cell phone, it has become a huge market for the cell phone manufacturers and will continue to do so as Grameen ; other telecommunication companies are expanding. Considering the above conditions we believe that Bangladeshi Mobile Phone Set industry is the most attractive sector to invest. CONTENTS OF THE REPORT Throughout the project we have analyzed the Political, Economical, Social and Technological condition of Bangladesh.
After that we have identified some the Strengths, Weaknesses, Opportunities and Threats of the selected industry based on Porter’s Diamond Analysis. Finally at the end of the project we have decided which entry mode will be appropriate for us and then identified some Recommendations. 2. PEST ANALYSIS 2. 1 Political Analysis 2. 1. 1 System of Government: Bangladesh is a moderate, democratic and homogeneous country. But being an eighth largest populated nation in the world, Bangladesh needs immediate attention from the strategic planners.
It is her people who can shape our desired destiny by utilizing their energy and creativity in productive sector. The democratically elected government under the leadership of Begum Khaleda Zia came in 1991 with refreshing ideas and a sense of urgency to transform a poverty-stricken economy to NIE within a short time. As a result, the change in FDI inflow during the next decade though not spectacular, but was definitely significant. In BOI registered investment proposals, the share of local and foreign investment was 88% and 12% respectively during 1981-1991.
During 1991-2001, this trend has shown a gradual change and it is 42. 5% and 57. 5% respectively. Concessionary duty on imported capital machinery: An import duty, at the rate of 5 percent is payable on capital machinery and spares imported for initial installation. For 100 percent export oriented industries, no import duty is charged in the case of capital machinery and spares. Duties and taxes on the import of goods that are produced locally are higher than those applicable to imports of raw materials for the production of such goods.
Political Stability 1. Political environment in Bangladesh is somewhat unstable that might affect Industry operation. 2. There are complexities related to law and regulations in Bangladesh. Few years back when army was in charge in ‘Operation Clean heart’ of eliminating crime, it was reported that they broke students’ cell phones because they thought it was not required by them. This type of situation might have negative impact on parents and this might protect them to buy cell phones of their children.
Economic Analysis Bangladesh has a very insignificant GDP and GNP. Per capita income for the people of Bangladesh is also low. But what is impressive is that it is improving over time. The current inflation rate (more than 6%) is higher than what it was in the past years. High tax imposition by the government will reduce the buying power of the consumers. Worldwide negative economic impact after September 11, 2001 is affecting Bangladesh too. Recent Iraq war is another reason for potential future sluggish situation of the economy.