Sonali Jute LTD: Export Plan On Eco-Friendly Bag
Sonali Jute LTD: Export Plan On Eco-Friendly Bag
Sonali Jute LTD: Export Plan On Eco-Friendly Bag
We have primarily decided to expand our business to Qatar, France, and South Africa. As these
country promises to produce a good amount of revenue. After overall research, we have selected
South Africa to export our goods.
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Introduction History
The Company was founded in 2017.When the company identified an Opportunity to provide a
practical solution to companies and consumers who wanted an Ecological alternative to a plastic
bag. Sonali jute Ltd the provider of jute items is committed to the advancement of items and
administrations that advance the creation of an biologically maintainable future. This company is
located at the Munshiganj, and Narayanganj.
Goal
Jute is the golden fiber of Bangladesh. It has a golden history. Bangladesh is the leading jute
producer country. Our Jute plants are closing & on the other side Indian jute plants are rising. In
this situation, we are trying to create a new market for jute products. We are committed to return
our glorious history by expanding certainty of Jute rancher to deliver expansive scale of crude jute,
setting up jute industry with R&D, creating quality of jute products and make an worldwide
advertise of jute items in Bangladesh Moreover, to pick up authority in tall value-added jute item
within the world and rule its markets in high quality.
Product description
The company’s jute is woven on conventional fashion looms. The products are made up of 70%
jute and 30% cotton. They are dyed to consumer’s or buyers’ preference colors. Sonali jute offers
wholesale jute products in a wide range of different colored shopping packs, conference bags,
innovative crafts and handy gift items.
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Jute Bags:
Jute Hand Bags, Jute Shopping packs, Jute Beach Bags, Jute Sling Bags, Jute Sacking Bag, Jute
Promotional Bags, Jute Christmas packs, Jute Bottle Bags, Jute Hessian Cloth packs ,Jute Food
Grade packs, Jute Hydro-Carbon Free Bags.
Jute Handicrafts:
Pen holder box, Greeting cards, Notebook, Photo frame, file folder, Memo Box, Tissue Box, Slip
Pad Holder, Gift Box, Jute Wall Hangings, Jute Table Mats, Jute Lamp Shades, Jute Coasters, Jute
Stationery, Jute Coasters.
Main product
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Sonali Bag
Polythene bags were banned in Bangladesh in 2002 because of environmental issue. The
enactment included impulse to the investigate and improvement of characteristic fiber composite
(NFC) fabric as an elective to polythene. Mubarak Ahmad Khan, a researcher at Bangladesh
Nuclear Vitality Commission, in collaboration with other analysts from Bangladesh, created a
run of NFC fabric in a decades-long exertion. In this way, in 2018, Bangladesh Jute Plants
Organization (BJMC) begun the commercial generation of Sonali Pack employing a Jute-based
NFC created.
Export opportunity
Controlling global warming, CO2, climate change, and environmental pollution is a major
problem across the world. Many countries, particularly in the last decade, have been limiting the
use of products that pollute the environment and emphasizing the use of environmentally
friendly products. Many nations have already banned anti-environmental items such as plastic
bags and emphasized the need of eco-friendly alternatives like jute. For example, Qatar is
making an effort to be environmentally friendly in preparation for the 2022 FIFA World Cup.
According to a worldwide jute study report, 55 nations have passed laws prohibiting the use of
polyethylene bags. 23 countries have imposed high tariffs and taxes on polyethylene bags,
resulting in a 60% reduction in their use. According to a worldwide jute study report, 55 nations
have passed laws prohibiting the use of polyethylene bags. 23 countries put high tariffs and taxes
on polyethylene bags, resulting in a 60% reduction in their use. This anti-environmental
substance was also outlawed in 13 cities. Around the world, 686.5 billion pieces are used each
day, but that number has already dropped to 165 billion pieces per day. This is a significant shift.
As a result, there was a need for 33 billion pieces of environmentally friendly jute bags.
According to a poll, demand for jute shopping bags grew dramatically in EU countries such as
Italy, the Netherlands, France, Bulgaria, Switzerland, Ireland, and Denmark from 2008 to 2012.
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There are also new markets to explore such as Tanzania and Denmark. According to the
International Jute Study Group, polyethylene bags are prohibited in 12 Asian nations, including
the Philippines and the United Arab Emirates.
Approximately 60 manufacturers in Bangladesh, both large and small, make jute products, such
as bags. It's a golden chance to expand the use of our own arable lands to produce jute,
decreasing unemployment, boosting foreign currency, and regaining historical market position, if
we can capture at least a couple of billion dollars’ worth of market from home and abroad. In
order to compete with India, our jute quality is superior to theirs. Bangladesh exports to
Indonesia at a 10 percent premium over the previous year.
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product are becoming more and more demand full, and in coming 2022 world cup championship
we want to see our product there in Qatar market before world championship.
France
Generally, France is easily tradable country with strong economy. Asia jute consider this country
as a target market because they are highly encouraging ecofriendly product. In addition, to
discourage global warming they band plastic bag almost all over the country.
South Africa
Sonali Jute LTD is considering South Africa as very potential market because of already
established market. On the other hand, the country banned plastic bag from May 9, 2003, for
controlling environment pollution that created opportunity for eco-friendly product such as jute
products. South Africa is being considered as a possible market. Numerous factors are responsible
for the increase in consumer spending, including an increase in multi-cultural immigrants,
government policy against synthetic/polypropylene products, and local consumers' awareness of
the product's environmental role and impact, as well as the presence a variety of consumer
segments.
Country profile
The comparable country profile for getting some basic information in a tabular format about the
countries has selected to export.
Country Bangladesh Qatar France South Africa
Capital Dhaka Doha Paris Pretoria
Political view parliamentarypolitical semi- parliamentary republic
republic parties are presidential
banned republic
Currency Taka Qatari rails Euros Rand
Per capita GDP $1,358.78 $59,330.86 $36,854.97 $5273.59
GDP(PPP) $3319.40million $334.5 $34653.55 $12260.20billion
billion trillion
Population 167.6million 2.74 57.5 57.9 million
million million
Tariff GSP
benefit
99.0% duty
free
coverage.
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Labor force by agriculture: 47% agriculture: agriculture: 4%
occupation industry: 13% 3% industry: 18%
services: 40% industry: services: 66%
21.3%
Services:
75.7%
(2013 est.)
Risk management
Country risk
Qatar
Qatar has one of the most stable short-term political risk profiles of any nation in the region.
Despite the lack of democratic freedoms, Qataris profit from huge hydrocarbon wealth, which is
liberally distributed across the country's native people, and have the highest per capita GDP in
the world. Large public disturbance will be avoided in the short term because of the country's
tiny population and lack of desire to protest the administration.
France
French economic growth may lag in next two years as investment growth and external demand
remain lackluster. Meanwhile, little wage growth and high unemployment mean that household
consumption; traditionally the key driver of the economy will become less able to support growth.
South Africa
Corporate payment behavior can be influenced by political and economic uncertainty, as well as a
sometimes-tough business climate. The risk of a corporate default is significant.
Currency risk
Qatar
As Qatar is one of the leading oil exporter and gold reserving country the world and the current
situation is not good of oil price in world market, so the currency of Qatar randomly fluctuates.
France
In France, exchange rates fluctuate owing to a variety of causes. Some are purely financial, but
political events can also have an impact on currency exchange rates.
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South Africa
The rand's volatility is a big issue for businesses in South Africa. In a currency risk management
study, 91% of respondents said their firms are sensitive to the exchange rate. The less systematic
a company's enclosing procedures were, the more susceptible it was to currency rate changes. The
study indicates that a strong framework for currency risk management has been developed, and
that hedging products have been well comprehended. Small and medium-sized businesses, on the
other hand, were more likely to have a less methodical approach to currency risk and be less
comfortable with it.
Market risk
Qatar
The Foreign and Commonwealth Office has released a report on the possible dangers for
Bangladeshi firms operating in Qatar. Economic and political dangers, human rights concerns,
bribery and corruption, terrorism and security, organized crime, and intellectual property are
among the topics covered.
France
France is a highly developed country with a very competitive market. Exporting goods must be of
higher quality or they will not be able to compete in the France market.
South Africa
Open economy can result in currency and external account pressures. Lower dependence on
mining (now accounting for around 13%of (GDP) vulnerability to commodity price fluctuations.
Current and fiscal account deficits. Inward investment weighted to portfolio flows rather than FDI.
Lack of investment in power generation has resulted in some rationing of supplies to homes and
industry. Labor market inflexibility.
Political risk
Qatar
Qatar has a stable political situation. It does not have democracy, although it does have some
freedom of expression. Qatar does not have a totalitarian system, even if it is not democratic.
Hamadi bin Khalifa th-Thani, the emir, wields absolute power. He is the only one who appoints
cabinet ministers (there are 15 of them), and he is the only one who makes new laws. Only other
members of the Ath-Thani family must answer to him (who represent close to 10 percent of the
entire Qatari population). Because rulers have been ousted several times throughout Qatar's
history, the emir must weigh the interests of both his family and other powerful factions in the
country. As a result, the danger is minimal.
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France
The political environment in France is good enough for export, even if the GDP is down from last
year. However, the political outlook in France is favorable for export, thus export opportunities in
France are better than before, despite the government's strict laws and regulations.
South Africa
South Africa is a young, relatively stable democracy, dominated by political party. Now South
Africa politely stable but has some little risk. It is important to note that laws and regulatory
practices can change very fast when government changes in SA.
Country Selection
The Sonali Bag, also known as the Golden Bag, Jute Polymer, or Eco-friendly Poly Bag, was
created in Bangladesh and is a cellulose-based biodegradable bioplastic alternative to plastic bags,
notably polythene bags. Within three months of being buried in the soil, the substance was
completely biodegradable. As a result, several countries have expressed interest in our
environmentally friendly poly bag. Considering changing global market prospects, Bangladesh has
a once-in-a-lifetime opportunity to reclaim its jute grandeur. SOUTH AFRICA is the most suitable
country since it has no legal tariff limitations and has a lower labor force, unemployment, and
inflation rate than other countries.
Entry Mode
After deciding the country to execute our business, the most important matter we need to
focus on is Entry / Investment Mode. We know there are different entry modes to expand
our business in foreign markets. Among them some common and famous are discussed and
compared with each other below.
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1. Exporting: The procedure of selling goods or marketing of a product or goods
domestically produced in another country is called exporting. Exporting could even be a
typical and well-established method of reaching foreign markets. Since it doesn't require
that the products be produced within the target country, no investment in foreign production
facilities is required. Most of the prices related to exporting take the shape of selling
expenses.
3. Acquisition: A sale could also be a transaction during which a firm gains control of
another firm by purchasing its stock, exchanging the stock for its own or within the case of
a personal firm, paying the owners a sale price. Cross-border acquisitions have risen
dramatically nowadays. Nowadays 60 percent of all acquisitions completed worldwide are
cross-border acquisition.
5. Foreign Direct Investment (FDI): Without investing in foreign plants and facilities,
many of the approaches to global expansion allow companies to participate in international
markets. As markets expand, however, a firm might plan to enhance its competitive
advantage by making an instant investment in operations conducted in another country.
All of these entry modes have their own particular Pros and Cons. From the upper
description we get idea of all these 5 modes. So we can select Foreign Direct Investment
(FDI) as your entry mode to start business in SOUTH AFRICA.
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Reason behind Choosing Foreign Direct Investment (FDI):
One of the main reasons behind choosing Foreign Direct Investment (FDI) as our entry
mode is, in the new country a company can avoid the Substantial Costs of establishing its
own operations using FDI though the company must find a way to market and distribute its
goods in that country.
➢ The currency rates are 5 time higher in South Africa than Bangladesh. And unique
items like Sonali Bag will be sold in huge number of units were. So, every unit’s
countries. In that case, FDI is helpful. And South Africa’s market is friendly for
➢ On the other hand, a production site can be built by a company in the foreign
According to the facilities we found before we can say FDI is a good choice for our business.
There is other 4 available options but why we are choosing FDI instead of them it will be clearer
if we make a comparison between FDI and them along with every of their Pros and Cons.
i) PROS: The amount of total investment that a company needs to make could be reduced by
Partnerships and strategic alliances as the costs are shared with the partners. Not only that, In
the way of making the new entrant, Partnerships is also helpful as it appears to be more local
because it enters the market with a local partner.
ii) CONS: The overall costs of partnerships and alliances are higher than any of the other 4s. So
according to the cost, partnership won’t be a good idea.
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i) PROS: Licensing or Franchising could be chosen for its offerings, and it would lower its
financial risks partially, which is an advantage.
ii) CONS: It would have to give up its control over the manufacturing and marketing of its
products in the new country where our one of the main goals is to have control on our business as
it’s we have unique product, and we need to keep our business information safe.
i) PROS: In exporting there would be fewer risk as the company is no longer solely dependent on
sales within the local market and because of that if economic conditions become unfavorable
domestically, company’s operations might not be hugely affected if the company is able to expand
its business to foreign markets.
ii) CONS: Developing an export market is time consuming process and costly to develop new
packaging and assign new personnel to travel, to develop new promotional/marketing materials,
and to undertake other administrative and operational tasks.
i) PROS: From the standpoint the operations will be established and known if we would choose
Acquisitions and it would help to enable fast entry with a lower risk.
ii) CONS: As a negative side we can see this is costly which may result in integration issues of
the acquired firm to the home office.
Moreover, as we selected SOUTH AFRICA there, we will get some extra advantages in FDI too.
Such as-
1) FDI stock is increasing day by day in South Africa which represent legal restrictions is tolerable
in that country.
2) By using FDI in South Africa there is no chance to lose our important data of our innovation.
3) On the other hand in FDI, advantages for the company investing in a foreign market include
access to the market, access to resources, and reduction in the cost of production.
4) Like every others, FDI also have disadvantage such as in FDI, an unstable and unpredictable
situation can be occurred on foreign economy, unstable political systems, and underdeveloped
legal systems. But the disadvantage won’t be able to affect our company as SOUTH AFRICA is
a developing country, but it has stable political system and legal systems are quite developed here.
And it is the most advanced economy on the African continent
5) As we are producing most of the product in our country, we could choose exporting. But by
that we could not undertake other administrative and operational tasks and we would lose local
market. And as some of our product is an invention, we don’t want to lose any control on the
product and marketing and the patent need to be kept safe. So FDI will give more facility than
exporting.
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6) As we have multiple products of jute, the design would be original. So to keep that copyright
unharmed, FDI will be helpful.
7) By FDI we can open there our own shops of jute products of many designs. We will be able to
execute our business and one day it has chance to be a famous brand. So, we want total control
on our business.
8) FDI is a good option for countries with open economies system like South Africa.
So by analyzing all of the points above we can say as the way of selecting INVESTMENT MODE
will depend on the firm’s size, political, cultural, legal and technological and the economic
conditions, so according to that for the company and target market SOUTH AFRICA Foreign
Direct Investment (FDI) will be the perfect investment mode.
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It retains moisture for which this fiber can be soaked in water for longer than 5-6 hours.
Depending on the percentage of cellulose, this bag takes from 2-3 months to 1 year to
decompose and on the other hand plastics take about a thousand years to decompose.
This is a great threat to our environment and animals living in our surroundings. This bag has a
strength which is much similar with the polybags. It can be used for a varied number of purposes
and for multiple times. The pricing range will be from $0.25 to $0.40 after ending our
promotional stage which will be full free of cost for about a week.
Place Strategy
We will establish a Business to Business (B2B) system to communicate where we will be
targeting their local fashion stores as well as the international ones.
We will reach to different popular and trendy brands to promote our products. In that case, we
will include direct material and labor costs along with other costs while marketing our products
in the system.
We alone will carry the freight and insurance costs at the first stage of our marketing and will
keep providing our products at a price lesser than our competitors, if there is any.
We will be following this strategy as we will be aiming to acquire goodwill by giving them some
benefits in return for the advanced flourishment of our business.
At the preliminary stage of launching our business, we will be beginning our transaction related
activities through Letter of Credit (LOC) then after achieving the satisfactory goodwill and
establishing a profitable environment, we will demand for transactions which might include
advance cash payment or cash on arrival while supplying our products.
Price Strategy
Structure For the smooth operation of our business, we will adopt Penetration Pricing Strategy
where we will aim to gain the market share by selling our products at a price lower than that of
our competitors, if there is any. This strategy will help us in raising the customer awareness
about the benefits of jute bags which will induce them in buying our products.
We wipe supply our products through local vendors and suppliers in the market. We are working
on more in-depth research for the appropriate pricing about the local market. The pricing is done
on a trial basis to see the market acceptance with that settled price. If there is a green signal, we
might gradually set it permanent and move further with our business with that price.
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Promotion Strategy
For the advent of promotional strategy of our product, we will be adopting Push Strategy where
we will be taking our products directly to the local retailers. It will ensure that they know enough
about the benefits of our products in terms of gaining adequate profit.
Besides, we will be ensuring a proper supply chain of our products and will disseminate its
information by providing brochures to the retailers. We can also arrange a seminar on the uses of
this biodegradable jute bag which will reduce the uses of polythene that harms our environment.
Other than that, we will make sure that the local retailers and wholesalers are also aware of the
eco-friendly future and know in depth about the benefits of this product.
CONCLUTION
South Africa is one of the most welcoming country and it is our belief that we will achieve to
expand our business successfully, if we follow our strategies punctually and we may also benefit
from earning foreign currency that may develop our economy too. We have compared three
country's aspects to find out this country which can be used for internationalization. After
comparing Qatar, France, and South Africa we have come to the conclusion that South Africa is
the best country among the others. We have selected South Africa for several reasons as a
democratic region it encourages more of new businesses also helps in protecting the intellectual
properties of new business and provides various opportunities. The specific approach that we have
to must for entering South Africa is licensing as it would help us to come over the trade expenses
low capital requirements and also coming over the failure of production. And we also have decided
that we are going to do with the standardization strategy to increase profitability and profit growth
by reaping the cost reductions from economies of scale.
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