Automobile Industry in Bangldesh Essay

1. 1 Introduction Now day’s education is not just confined to books and classrooms. Internship is such a program that helps to test the knowledge and understanding of the courses and to use them in a practical field. Internship training gives this opportunity to be engaged in an organization where it is possible to have an experience of the real business world and to see different practical aspects of education. Marketing Department of Chittagong University is committed to produce marketing professionals for the market who will not only benefit the society as a whole but also make path of a better future for the next generation.

Internship program is a step towards fulfill this commitment by giving the students an opportunity to get ready for the real world before they enter into it. 1. 2 Research Issue This research is a requirement of the internship program for my MBA program. My supervisor Professor A. J. M. Nuruddin Chowdhury assigned me the topic. I have tried my level best to make it as an excellent one.

I used all the latest data and information. I have been serving this company as an intern under Sales & Marketing Department for two months. I got privilege to put latest data.

My job responsibility is to create relationship with our present and potential customers, sales products and provide service time to time by giving latest product’s information. So, I am getting the opportunity to be very close to the customer. I have the idea why customer choose, the reason of leave and the reason of using pragoti Industries Product. My supervisor Mr. Khayrul Haue officer of Sales & Marketing Department guides me time to time to make this report fruitful. 1. 3 Research Objectives The main objective of this report is to have an assessment about overall activities of sales & marketing department.

How they manage all the selling process, what services it is providing to the customer and how agents are getting benefit from it and finally what is the gain for pragoti from this project, in short how it is meeting up the requirements of the three stakeholders of the company. The objectives of the study are as follow: • To get the practical experience by doing job with expert of sales & marketing manager. • To understand the drive structure of PIL. • To understand the channels of PIL. • To observe the production process & know the inputs procurement system, warehousing system and the selling and distribution system of the company.

• To know the marketing and pricing policies of their products • To know about the products & the quality of products produced by the company. • To know the accounting system and the transparency in the preparation of the financial statements. • To know the application of the Corporate Governance in PIL • To produce a report that will give a guideline to the future researchers or customers of the Pragoti Industries Ltd on the different aspects that are covered in this report.

• Finally, to suggest the management with some recommendations so that the management can identify some of the faulty areas in the organization and initiate necessary steps to bring changes in those areas. 1. 4 Research Methodology The current study is conducted primarily in participatory research analysis method and secondary on practical and theoretical analysis. The research supervisor proposed research topic. Primary and secondary data was collected from every possible source. The primary sources are as follows: • Observation of the production and management sector of the company. • Face-to-face conversation with the respective offices and stuffs of the industry.

• Related field study as provided by the officer concerned. The secondary sources of data and the information are: • Web site address • Book basis articles • Internal magazine published by PIL • Different brochures of PIL • Information provided by my supervisor 1. 5 SCOPE OF THE STUDY This internship report covers all the aspects of retail environment from all the three perspective, UBL, retailers and agent. This report also gives an overview about the company like about the mission and goals of the company, the marketing mix & the strategies, competitive strategies etc.

This report has been prepared through extensive discussion with the customer, sales development manager, and agent and with the other stakeholder. While preparing this report, I had a great opportunity to have an in depth knowledge of sales activities of the “Pragoti Industries Ltd. ” It also helped me to acquire a first-hand perception of a leading state run automobile industry in Bangladesh. 1. 6 Limitation of the Study I have tried my best to collect the maximum information from the authority, management, production department and marketing department.

But I have faced the following problems: • To make a report it is very trouble full to collect the information from various personal for the job constrain. • Planning & production department’s has no appropriate maintenance of planning procedure and articles. • Time is not sufficient for various activities to prepare a report. • Non-availability of published data. • Information was not provided due to business secrecy. • Lack of adequate knowledge about research by new employee • Non-availability of secondary data. Chapter- 2 Literature Review 2. 1 Introduction.

Bangladesh is totally underdeveloped in the sector of automobile industry. As It has no automobile industry, the sector is totally depended on import, except a few automobile-assembling units. Due to increase amount of demand, requirement and increased every year it has to import a huge amount of automobiles from the other countries. But in recent times, Bangladesh automobile industry is turning around, as a result local and foreign investor are interest about this sector for investment. So the sector has a great potentiality and prospect in the development.

Pragoti is the only state own automobile company in Bangladesh and it made & repair only government related automation production. Bangladesh machine tools Factory (BMTF) was establish in February 11, 1979 and it is the commercial automobile assembly plant, maintain by Bangladesh Army, especially for defense industry. Walton & Aftab is the largest Bangladeshi private automobile company in Bangladesh. Walton Company establish a large plant for motorcycle production, on the other hand Aftab automobile is famous for bus accessories assembling. [pic].

Mitsubishi Pajero will be assembling in Bangladesh Mitsubishi Pajero, Hino Bus, Tata bus/Truck, Proton automobile manufacturer company already buildup their production assemble plant in Bangladesh and here is the important news, near Dhaka, location name is Dolaikhal, is the largest automobile market in Bangladesh for expire & new automobile parts. 2. 2 Bangladesh most popular Automobile company List • Aftab Automobiles • Pragoti • TagAZ Bangladesh (Proposed) • Mitsubishi Pajero • Walton • Bangladesh Machine Tools Factory 2. 3 Auto parts market of Bangladesh.

Bangladesh automobile industry is not a big industry and maximum automobile parts are imported from other countries . Besides, there is no quality local manufacturer of parts and components. So, parts and components are mainly imported from countries like Japan, UK, Taiwan, China, Korea, Malaysia, USA, India, Indonesia, Pakistan, etc. The market of parts and components of this country is very small but expanding rapidly. Commercial importers import a bulk amount of parts and components that are distributed through wholesalers and retailers.

Final users get the parts from the retailers and the retailers buy parts from the importers. However, there are also importers who have their own retail outlets. An assembler may also be an importer who requires a large quantity of parts and components for its assembling unit. A limited number of commercial importers import parts and components from different sources. In most cases, the assembler imports parts and components from the country where the brand is originated. Some assemblers even purchase parts and components directly from the big importers.

There is another group within the distribution channel of parts and components i. e. auto servicing centers like garage, mechanical workshop, body building units, etc. The servicing centers purchase parts from the whole seller as well as from the retailer. End users get parts and components from retailers dealing in different type and brand of automobile. Although no local manufacturer of quality parts does exist, but active negotiations are going on to set up joint venture parts and component manufacturing units with China, Korea and Taiwan.

Present structure of parts and components market is graphically shown below: [pic] In Bangladesh, neither we have an automobile industry nor a quality auto parts industry. So, the people of Bangladesh have no clear idea about the automobile industry or auto parts and components and their usage. The market of auto parts and components is influenced by couple of elements.

People while purchase auto parts and components, they are influenced by several factors and these auto servicing centers, workshop and garage, motor pool managers, Institutional Importers (i. e.embassy), retailers, agents of branded automobile, 2. 4 Domestic parts and components industry Presently, there is no well-organized and quality manufacturer of parts and components in Bangladesh. Some low quality indigenous manufacturing of parts and components are there but they are carried out against specific order to meet emergency requirement. There is no mass production to meet the requirements. Given below is some idea of what the local manufacturers try to produce: Filters, radiators, radiator hoses, air filter housing; Brake pads, brake drum, brake disc;

Electrical parts such as battery, horn, wiring, wiper and washer assembly, head lights and other lights; Trim and upholstery such as carpet, floor mat, rear parcel shelf, seat assembly, safety belt and melt damping sheet; General parts such as paint and thinner, under seal, tires and tube, and mirrors. Chapter- 3 Growth & Development of Automobile Industry in Bangladesh 3. 1 Bangladesh Automobile Prospect Bangladesh has a great prospect and potentiality in the development of automobile industry there has been an increasing trend in the use of all sorts of automobiles/vehicles in Bangladesh.

However, the increased demand of individual types of automobile varies from case to case. As a result of increasing demand of individual the annual demand for automobile is increasing with a great speed an statistic show the demand has increased into 30 percent than the last year with the Improvement of roads and highways and increased number of bridge and culverts are also responsible for motivating people to buy vehicles for their day to day activities. Again the Improvement of life style in the urban areas is also responsible for the development automobile industry .

With the passage of time the living standard of general people of BD has increased and they also turn into low class to middle class, middle class to upper class and in recent times the amount of upper middle class has increased which means additional demand for automobile There are also some another key reason for whom Bangladesh has a great potentiality in this industry. They are mentioned below: • Government annual development plan has given priority on development of automobile industry • Special attraction for Japan made vehicles • Withdrawn of Rickshaw gradually.

• Getting popularity of Small car/sports vehicle • Rent-a-car getting popularity • Reduction of tax on the new motor vehicles • Govt. initiative to float 10,000 commercial vehicles • Expanded and increased volume of export and import 3. 2 Comparative scenario of different types of automobiles in Bangladesh A comparative scenario of different vehicles and their usage trend may be explained as below: (a) Motorcycle The use of motorcycle in Bangladesh is increasing day by day by a new group of users. Motorcycle is extensively used in Bangladesh in both rural and urban areas.

The use of motorcycle has gradually increased in Bangladesh due to easy to drive; easy access to remote location; cheapest transport; Longevity of the vehicle; easy to handle and park at any place. The general users are the students, individual businessmen, officials of marketing companies and pharmaceutical industries. Over the last one and a half decades, the field level officials of different non- government organizations have been using a large number of motorcycles. In Bangladesh, both locally assembled motorcycle and imported motorcycle are available for intending users as detailed below:

(i) Locally assembled motorcycle: Mainly, there are about 20 locally assembled brands. For example: ATLAS, EMMA, NITOL and SINGER. List of the local motorcycle assembling houses is given in the annex. (ii) Imported motorcycle: There are at least 7-8 different regular brands of motorcycle and these are: Honda CD 80, Yamaha, Suzuki from Japan, Xinfu, Jangshen, Jailing, Hero, TVS Victor, Yamaha, Suzuki, Bajaj, Vespa, etc. (b) Auto rickshaw / Three wheelers There has been a phenomenal increase in the number of auto rickshaw and tampoo in Bangladesh. Now, it is an important vehicle in Bangladesh.

Low and middle class family members mainly use these vehicles. But, the government of Bangladesh has already banned these two vehicles to avoid environmental pollution. It is estimated that presently there are 160,000 auto rickshaws including unauthorized units in Dhaka City alone. There has been a phenomenal. – However, effective 1st September,2002, the two stroke auto rickshaw will be totally banned, which is expected to dramatically reduce the requirement of parts for these type of vehicles, but increase demand for the new CNG auto rickshaw and three stroke auto rickshaws will be there with increased demand for parts and components.

(c) Motorcars Increased demand, economic development and changed life style have resulted in a great increase in the number of motor cars and the demand for motor cars is still increasing day by day. Both brand new and reconditioned cars are imported into the country. Statistics show that majority of the people usually prefer reconditioned motorcars more than brand new cars due to lower price. In Bangladesh, more than 65% of the total motorcars are coming from Japan. Many Bangladeshis living in Japan involve themselves in reconditioned car business.

Recently, the government has put an age restriction on the import of reconditioned motor cars. Reconditioned cars more than 3 years old can not be imported. The government has also reduced the duties and taxes on the import of new cars to discourage reconditioned car import. Impact is that people now can buy new cars at a reasonable price having longer durability. The government has introduced new system of taxicab in 1998. As a result, the number of motorcars has been increasing. But, the requirement of spare parts and components will be lesser.

Again, after the 1st September 2002, the ban of auto rickshaw will lead to a significant increase in motorcars mainly in the form of taxi cabs. Use of motorcars has increased tremendously, which is evident from the statistics for the last five years shown in the chart below: (d) Light & heavy commercial vehicles (bus, minibus, truck, pick-up, etc) Like the motorcar, there has been an increasing trend in the number of light and heavy commercial vehicles that include mini bus, bus, human howlers, passenger carriers, trucks, pick-ups, covered vans, large covered vans, etc.

Over the last one decade, the use of these types of vehicles has increased at a high rate. This is due to increased demand for the these types of vehicles/automobiles effectively backed by institutional financial support to procure them. This growth rate will continue to increase in the near future. The average growth rate is 5. 63% and 4,644 in the number of vehicles annually. (e) Farm and agricultural equipment/vehicles Also, there is an increasing trend in the number of farm and agricultural equipment/vehicles due to increased application of modern tools and techniques in farming and agricultural production.

Now-a-day, agricultural vehicles like power tiller, tractor and trailers are being used in the rural areas more frequently than the past. During the last one decade, various agricultural development projects funded by the different donor agencies have been implemented in the rural areas and under those programs, the farmers were given financial facilities through NGOs and banks to procure modern agricultural equipment including farm vehicles. One of the key elements that made this possible is the availability of lease financing facilities in the country and the large amount of agricultural credit funds.

It has been observed that there is a reasonable growth in the number of agricultural equipment every year. This growth rate will continue to increase in the near future provided there is no drastic change in the government policy relating to agricultural sector like reduction in the subsidy and assistance and low cost fund for the farmers. The average annual growth rate is 2. 5% and 125 in number of vehicles every year. 3. 3 Estimated demand of automobile /vehicles in Bangladesh.

Taking into consideration the future prospects and also keeping the resent growth pace influenced by various elements discussed earlier, it is expected that there would an additional increase in the use of vehicles. In view of the possible new avenues and prospects and looking into the weighted average growth rate of 6%, table below shows estimated demand for the next five years. Table: Projected demand of automobile /vehicles in Bangladesh |Vehicle/Year | |Taxi | |Bus/ Minibus | |Tractor |3,646 | |Headquarters |11, Agrabad C/A, Finley House (3rd floor) P.

|25 Lakhs, Divided into 25,000 no. of Ordinary Shares. | |Products |Car Assembling, Automotive Parts | |Main sources of CMD Kits from |: Vauxhall Motors of England; American Motors Corporation (AMC) of USA; Isuzu Motors | | |Corporation, Mitsubishi Motors Corporation, Nissan & Toyota Motors of Japan; KIA | | |Motors, Daewoo Motors of Korea; Aelous, Dong Feng of China; HML TATA, Swaraj Mazda, | | |Mahindra & Mahindra, Maruti, Eicher and Ashok Leyland of India | |Recent Initiative |A CNG Conversation Unit is established in Tejgoan Workshop at Dhaka.

4. 2 Aim of Pragoti Industries Limited The sky is not the limit for them but their expectations are within limit. Their imagination soars beyond conventional barriers. They share their destiny with their beloved motherland. They want to serve her the better in the greater quest for national economic emancipation.. 4. 3 Mission of PIL We shall be at the forefront of automobile industry development by: • Anticipating automobiles required by all our customers everywhere and innovatively supplying them beyond expectation.

• Setting industry benchmarks of world class standard in delivering customer value through our comprehensive product range, customer service and all our activities • Building an exciting team-based working environment that will attract, develop and retain employees of exceptional ability who help celebrate the success of our business, of our customers and of national development • Maintaining the highest ethical standards and a community responsibility worthy of a leading corporate citizen • Continuously improving productivity and profitability. 4. 4 Vision of PIL.

To be in thee forefront of national development by providing all the customers inspirational strength, dependable support and the most comprehensive range of vehicle solutions, through our team of professionals who work passionately to be outstanding in everything we do. 4. 5 Organizational structure of the Pragoti Industries Ltd. (Agrabad Branch) Branches of Pragoti Industries Limited Chittagong Office 11, Agrabad C/A, Finley House (3rd floor), post box no. 73, Chittagong. Production Factory Barabkund, Dhaka-Chittagong Highway, Sitakund, Chittagong. Dhaka Office 151-152, Tejgaon C/A, Dhaka-1208.

In this department, there are one DGM (Depute general manager), two assistant manager and four executives. They are smart, energetic, experienced and high educated. They are capable of handling clients and selling the products in the efficient and effective way. [pic] Role & Responsibilities of “Marketing & Sales Department”: ? Providing Quotation among prospect about inquiry. ? Receiving order from different prospect or customer. ? Selecting specific model for customer from factory on behalf of their choice. ? Direction to factory engineer for made up pre requisite model base on customer choice. ? Delivery the order pre specific date.

? Receiving product price through cash, chque, or money receipt. ? Deposit that amount into accounts department. ? Attending seminar, symposium as part of marketing activities. ? Input all of sales & money receipt in respective journal. Chapter- 6 Marketing Mix strategies of Pragoti Industries 6. 1 Product: As we have known that Pragoti industries limited does not produce auto mobiles but only assembles the auto mobiles. After assembling it mainly markets the following products: Product name and model, origin of CKD & country of origin |Sl No |Product name |Model |Origin of CKD ( ClOSE KNOCK DOWN) |Country of origin | |1 |MITSUBISHI PAJERO 4.

2 cylinder, 86 k. w. | | |L-300 | |horse power/114 PS/5750 RPS, drive by right hand, hard top metal, power steering, 1 | | | | |additional wheel with cover, bilt in ac . | | | | |Co lour – WHITE | 6. 2 Services: In case of providing services Pragoti industries limited is not exception. Like other automobiles industries it provides services which are followings every product has one year warrantee. All repairmen services are provided through 7 (seven) servicing agents of Pragoti Industries Ltd which are situated at Dhaka and Chittagong. A. Dhaka city: No. of agents -05.

The servicing agents are at Motijeel, Fakirarpul, Tejgaon, Baridhara and Tongi. B. Chittagong City: No. of servicing agents – 02. The servicing agents are at Sholoshahar and Jamal Khan Lane Product. 6. 3 Pricing: Price is the element of the marketing mix that produces revenue; the other elements produce costs. Price is the easiest marketing mix elements to adjust; product features, channel, and even promotion take more time. Price also communicates to the market the company’s intended value position of its product and brand. Companies set prices by selecting a general pricing approach that includes one or more of three sets of factors.

We examine these approaches: the cost base approach (cost plus pricing, break-even analysis, and target profit pricing); the buyer-based approach (value-based pricing); and the competition-based approach (going rate and sealed bid pricing) Pragoti’s pricing Method: Pragoti fo0llows the cost- based method in setting prices of all its products. They consider different prices and estimate break-even volumes, probable demand, and profits for each. Pragoti Industries ltd. Product name, price per unit & payment terms: |Sl No |Product Name |Price per unit |Payment terms | | | | | | |1 |MITSUBISHI PAJERO 4.

4 |55,00,000 |Fully cash | | | |3,05,000 | | | | |Total=58,05,000 | | |2 |MITSUBISHI PAJERO CR-45 |75,00,000/= |Fully cash | | | |76,000/= | | | |With additional fittings |Total=75,76,000 | | |3 |TATA TC BUS |24,58,000 |35% in down payment, additional 65% paid 18% interest with 36 monthly | | | | |installment. | |4 |TATA MINI TRUCK |16,50,000 |Fully cash | |5 |ASHOK LEYLAND MINI Truck |16,50,000 |Fully cash | |6 |NISSAN NAVARA PIC UP |41,72,000 |Fully cash | |7 |MITSUBISHI MICROBUS |28,50,000 |Fully cash | | |L-300 | | | 6. 4 Promotion:

In recent time marketing not only calls for just developing a good product but also pricing it attractively and making it available to the targeted customer. Companies also must communicate with their customers and they try to create a good customer relation among them. To communicate well, the firm often hires advertising agencies to develop effective advertisement, give appointment to active experienced officers and executives, give on – line services to the big businessmen or organization, and create a private relationship with clients. As PIL assembles automobiles for selective customers it spends less than the others.

It mainly uses two types promotion. They are: • Consumer promotion tools & Advertising • 6. 4. 1 Consumer promotion tools: Short term incentive to encourage the sales of service or products of the firm is called sales promotion. PIL uses the following Consumer promotion tools they are: Price Pack: At the time of festival PIL offer some special discount for Suzuki vehicles. Cash refund offer: PIL still thinking about it. Patronage reward: For corporate sales (Huge quantity) special discount offering. 6. 4. 2 Advertising: Advertisement is the fine art of convincing people that the doors to open standards are never closed.

The Advertisement plan & campaign plan are similar in outline & structure. It matches the right audience to the right Message & represents it in the right medium to reach that audience. • Objective of advertising plan are • Create awareness among 60% of target audience. Pragoti industries use the following media for advertising its products. They are Newspaper: Advertise publish in The Daily Newspaper with multi colour, regarding after sales service facilities. Direct mail: New product’s catalogue sends by direct mail with product specification, advantage and design.

Calendar: Every year Pragoti Publishes colourful and attractive calendar with picture of their products. Direct mail: New product’s catalogue sends by direct mail with product specification. Advertising problems: PIL often can not advertise in the media since it is very expensive and difficulty in the corporate level. Finance 6. 4. 3 Distribution Channel: Most of the Producers use intermediaries to bring their products to market. They try to forge a distribution channel—a set of interdependent organizations involved in the process of making a product or service available for use or consumption by the consumer or business user.

The distribution functions of PIL are made by 32 dealers. Functions of the dealers: • Sell the cars to the private company, people or NGO which are produced by the 1st party. Here Pragoti is the 1st party, • They cannot sell other company’s cars except the Pragoti within the duration of the contract, • The full payment will be collected by them from the buyers, • Help the buyers in taking permission from BRTA, • Will sell at least 40 cars within the deed duration, The performance will be evaluated after 6 months. Dealership will be cancelled if they fail to achieve the quota.