Analysis of the different business model

A large number of people involved in different types of activities to fulfill the human requirement and need. In the case of their involvement, they try to make a profit by performing their activities. People are interested to make a profit and maximize their wealth. But some of them can be able to reach their destination, some of them continue their activities moderately and some of them are lost and close their activities. Today we try to discuss the term of business, it's form, advantages, and disadvantages of the different forms of businesses separately from my point of view.

Business

People involve various kinds of activities as a producer, service provider, inter mediators to gain or earn profit to maximize their wealth is called business. It requires a large number of people gathering to achieve business goals. We can say very simply when people involve in any activities to serve the consumers demand-supply gap with earning profit and maximizing the wealth of the people is called business.

Here, we find some keyword like products, services, demand, supply, and demand-supply gap, profit realization and finally maximize wealth, etc. any elements among them are the absent business can not be possible to reach its final destination and success. Anyone can design products and services according to people's demand-supply gap. Without analyzing the demand-supply gap, it is not possible to create a consumer's attraction and fulfill their demand and grow in the future once after another.

We find there are three different forms of business which are Sole proprietorship, partnership, and the corporate form of business.

 

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Food Industry (Flour) in Bangladesh

Since there is little domestic production of wheat the flour industry fully depends on the imported raw materials from the different countries.  Most of the flour mill concerns procured from bulk importers of the domestic market which parties import bulk amount wheat from the international market as a result wheat price depends on the price movements in the International market; foreign currency fluctuations, as well as order size, impact the prices. For this reason, flour mills and traders in Bangladesh are exposed to foreign currency risk. Moderate entry and exit barriers also create a highly competitive market scenario. All the flour mills in Bangladesh have to pay the full amount in advance during wheat procurement but the situation is different in the case of sales resulting in accounts receivables which creates stress on working capital. The huge fund is also required to maintain the minimum level of inventory to avoid the risk arising from import as well as to mitigate the seasonal consequences of wheat production.

Many competitors compete with the company in the Feni region. Close competitors of the Company are Ahmadia Rice and flour mills, Saudia flour, and Dollar flour of Taher Food Industries in the Chittagong region. Other competitors are Star Line Flour, Mohammedia Flour, Hamidia Flour, Bilder Flour, Sakura Flour, Rajib Flour, Fresh Flour, City Group’s Teer, and Sena Kalyan Songstha’s Horse Flour, etc in the Feni region.

The price movement of wheat in the international market also a vital factor to impact industry growth and profitability. Wheat prices in the international market were showing a downtrend from 2014 to 2016. Wheat Production last year was 735.59 million tons. This year’s 748.24 estimated million tons could represent an increase of 12.65 million tons or 1.72% in wheat production around the world. 

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Logistics Business Prospectus in Bangladesh

The local logistics sector, particularly the transport service, is continuing to grow significantly, keeping pace with the rapid expansion of trade and economic activities in the country. This sector has been playing a crucial role in facilitating the growth of every sector of the country’s economy including industrialization, agriculture, infrastructure, and trade, and commercial activities. Recently, around 150,000 covered vans, trucks, pickups, and prime mover are engaged across the country for transportation of goods including those of export-import items, construction materials, agro-produce, industrial products, and essential items. The numbers of covered vans, trucks, pickups, and prime movers are thus increasing by leaps and bounds as these are the only means of inland transport for ensuring smooth operation related to manufacturing and goods movement. Every day about 90 percent of vehicles constantly carry freights across the country and a small number of these remain stuck due to mechanical or other problems. The fare is not fixed; it is determined through negotiation and it varies from time to time. The average fare of a truck running from Dhaka to Chittagong is Tk 12,000 to Tk 15,000. Around 75 percent of their trips are made for the RMG (readymade garment) sector and thus transport service is constantly playing a crucial role to ensure a competitive edge for the sector. The main highways, especially Dhaka-Chittagong, Dhaka-Mymensingh and Dhaka-Tangail, through which RMG products and the raw materials are transported from factories to the port, are being widened (from two lanes to four lanes) facilitating the transport sector to grow.

However, sometimes owners of the vehicles often face various obstacles including extortion, robbery of vehicles, and harassments by traffic police and political groups especially at different points of the highway. Besides, they also face problems in parking as space is scarce at different parking points where they also have to confront harassment. They often fall victim to forced payment of tolls at many points and sometimes driver and helper of the vehicles are wounded due to attack of robbers. There is none to look after the matter. Even in the name of checking documents highway police claim illegal money though they have valid documents. Growth of the transport sector there has been importing of different types of vehicles which have marked a significant rise over the years; most of such vehicles are imported from India. On the other hand, a significant number of age-old trucks and oil tankers are also plying the roads posing a threat to accidents and causing increased air pollution.

However, Bangladesh's transport and logistics sectors offer immense opportunities for investors, as the country is found most wanting in the area. Given the country's growth forecasts, there is huge scope for investments in infrastructure. A modern multimodal transport system is a must to improve Bangladesh's competitiveness in the global economy and to increase access to goods at reasonable prices. The upgrading of the logistics workforce and technology systems is also needed for ensuring that the transport system is scalable and sustainable. In particular, the road and rail freight transportation companies can set up partnerships with internal shipping lines or logistics providers to increase trade with multinational companies. New modes of transport such as barge services for transporting containers between Chittagong and Dhaka instead of trucking by the road can also help improve logistics. Improvements in ports, road, rail, and air services are all essential for a country that is in the midst of historic growth. Streamlining of government procedures is also needed. Bangladesh specifically needs improvement in customs, infrastructure, the competence of logistics service providers, and tracking and tracing.

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Project Requirement to establish Drinking water plant

Implementation risk is moderate due to the scarcity of funding. Any Company was incorporated in a specific year. In the one and half years of its construction period, the Company has procured the last portion of machinery. The entrepreneurs do not fully depend on a bank loan for local machinery.

The management does not have sufficient experience in the mineral water industry. The Directors are new in this business arena. It observes the shortfall in the management planning of the project. It also observes the management did not make detailed homework for the project. The management might need to hire a competent human resource for successful operation. Moreover, the labor shortage is observed in Sitakunda region for the related industry, which may affect the production.

The minimum amount of product portfolio. Revenue of the Company based on only different sizes of mineral water bottles which may create a business risk in case of ensuring a stable profit margin during the operation period. Since it has to defend only one product. If it can maintain a combined product portfolio it may ensure its stable business operation and profitability.

Has a moderate backward linkage may stable the profit margin. The Company has a backward linkage for providing an uninterrupted water supply to the product line. It plans to procure raw materials from different places of the country and outside of the Country. Since the Company has an established backward linkage, the profitability may not shrink due to little value addition of the product line.

The low brand may increase the ramp-up period. The company is in the initial stage of its branding preparation. It also has a plan to introduce its products in the name of the “Fresh Drinking Water” brand. In its developing stage, the Company may face huge completion from the known brands of the same product lines. The company has low competitive advantages over known brand products. Product quality and quality control are crucial for the success of the business.

Timely raw material procurement is crucial for smooth production. The Company has planned to procure raw materials from different international producers and local importers of the country. The Company does not have any plan of making a contract with raw material suppliers or local importers. The raw material crisis and price hike may affect the smooth operation, company turnover, and profitability.

A proper distribution channel is crucial for expected selling. Management of the Company has not yet planned to establish its distribution channel but has a plan to make a distributor channel with monitoring an effective marketing team. Since proper distribution channel and good collection team is crucial for the smooth operation of the Company.

Financial risk is high due to a high credit burden i.e. financial leverage. Company ABC has already availed loan approximately BDT 24.12 million for purchasing PET bottle, cork, label production, and wrapping machines. The Company has also taken a loan from shareholders to develop its land, civil construction, and procuring machinery from the local market which will have to be paid within several years. Bank finance is near about BDT 26.31 million including IDCP for six months grace period that may impact the Company's profitability. 

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The Real Estate Business in Bangladesh

The Building, Construction, and real estate industries encompass a broad spectrum of interests. These include the traditional players such as owners, investors, developers, lenders, and engineering and construction firms as well as non-traditional players, such as banks, insurance companies, and special servicers. From the early 1980 the real estate business started to flourish and showed robust growth. By 1990 the REHAB established and in 1991 there were listed members was 11. At present, more than 1,500 companies are active in the real estate sector with 1,191 of them registered with REHAB. In the last two decades, private developers have supplied more than 100,000 units of apartments to the nation will be supplying 25,000 more units in the next three years. The approximate turnover of the real-estate sector is BDT 28, 000.0 million.

With a rising population and increasing housing demand, apartment culture has grown up in Divisional regions such as Dhaka, Chittagong, etc. sharply. The growth in this sector is also facilitated fast growth in many linkage industries like the glass industry, bricks industry, cement industry, ceramic industry, iron industry, steel industry, etc. over the last decade. Such consistent growth in the real estate sector is mainly due to a consistent demand at the customer end High charge in the financial sector has also increased the cost of business. The real estate sector is often used as an indicator to measure a nation's economic growth. The housing industry in Bangladesh, especially in Dhaka and Chittagong, has made remarkable progress in the last ten years. Real estate industry growth has been slowed down by various risks and challenges faced by all players in the industry due to Bangladesh’s economic and policy-related issues. The major risk and challenges that our real estate industry facing today include- Non-availability of utility connection, Lack of urban planning policy, high rate of the cost of debt finance, the Price hike of land, and rising material and labor cost, etc. Amid today’s turbulent economic landscape, all players in the real estate industry face increasingly complex challenges. Thus, to maintain a competitive edge company need to ensure they are taking calculated risks and seizing the right opportunities.

Paper Industry in Bangladesh

Production of paper in Bangladesh is moderately lesser than the average production of Asia. The utilization of paper in Bangladesh is around 5 kg for each individual on a usual. This figure is much lower than the average of Asia per capita paper consumption which is 30 kg. An increase in universities, an increase of education rate, offices, newspapers, increased pressure from the environmentalists of banning polythene packaging materials, increased social and environmental awareness –all of these indicate a worthy sign of a future increase in paper demand. In addition, the use of electronic and online media as a substitute for paper is less popular which indicates a constant positive growth in the industry demand.

Given this promising and profitable scenario, the presence of few paper mills in Bangladesh has led to increased demand for importing paper and paper-related materials. The major obstacles in entering the sector are the lack of easy availability of resources like gas, water, electricity, raw materials. As a result, the major portion of domestic demand either is filled up by imported papers or not met at all. However, the presence of the recycling industry provides a portion of the pulp, the raw material of paper, which meets some of the domestic demand in newsprint and white print paper.

The major players in the paper and pulp industry have been set up in Dhaka and Chittagong region. The aggregate production capacity of this industry is around 500,000 MT to 600,000 MT per year. At present, 80 paper mills are running throughout the country, but only Karnaphuli Paper Mills Limited has an integrated paper and pulp production capacity of 30,000 MT per year. Other than the Karnaphuli Paper Mill Limited, all others use imported pulp and/or recycled fiber. However, the prospect of the industry is high but the acute crisis of energy, raw materials and trained human resources are the major reasons for non-utilization of maximum production capacity.

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Salt Industry prospectus in Bangladesh

Salt Industry is established for producing salt from saline water of the sea in the coastal areas of Bangladesh especially in Chattogram and Cox's Bazar region. Salt is produced seasonally from December to Mid of May. Recently salt cultivation has also started in the coastal belts of Khulna and Satkhira.  

The Government has decided on 5th July 2017 to again temporarily suspend the prohibition set on the import of salt in the country's import policy and authorize the import of 500 K metric tons of crude salt in order to meet the domestic demand.  Estimates made by the ministry of Industries stated that demand for salt in the Country this year stands at 1.58 million tons in 2019. Present salt production is 1.36 million tons, a deficit of demand was about 0.21 million tons during the period. It pushed up the market price of local salt to TK 40.0 per KG. The government makes the decision in order to meet the demand-supply gap by importing a deficit amount of salt in the year.  In this way government also controls the market inflation of the goods. 

Traditionally, salt was produced by vaporizing seawater by fire heat or sunlight. From 2000-2001 salt was produced in a different way known as the polythene process, in which salt can be produced 17.25 metric ton per acre. While initiating a new cultivation method to produce salt, it can help to produce near about 21.00 metric tons of standard quality salt than traditional salt production per acre.

Bangladesh's available assessed yearly prerequisite is around 2.00 million Metric tons which are expanding at a pace of 5% for each year with the expanding of populace and extension of businesses where salt is required as crude materials, for example, tannery, fishery and horticulture part, and sub-segments Chemical ventures and so forth. The crude materials – crude or foul salt specifically produced by using brackish water is accessible in the nation from indigenous sources at some specific areas in the southernmost locale of Bangladesh: Cox’s Bazar – containing the world’s longest 117 km uninterrupted sea beach. In spite of the fact that Bangladesh's aggregate length of the seaside line is more than one thousand km – from the Indian outskirt in the eastern part (Khulna) toward the south-east part bordering Myanmar. But due to some scientific reason, the raw salt production process is suitable in the lone district area of Cox’s Bazar as economic viability to make raw salt depends on the chemical composition and salinity of brine – seawater: the minimum level is to be 2.50% which is available only in some selected areas on the coastline of Cox’s Bazar. Salinity in brine in the rest of the country’s coastline contains below this minimum 2.50% mark: around 1.70% only.

With the increase of population, cattle heads, and growers of industries, the demand for salt is also showing a rising trend. To meet the growing demands of salt and to achieve self-sufficiency in salt production.

 

During the surveillance period, a huge amount of crude salt imported from India and Myanmar for meeting up the shortage of our local production and adjusting salt price at a sustainable level. Since import crude slat price lower than local procured crude salt.

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