Entry modes of pran
- 1. Assignment on International Business Topic: Entry Strategy of PRAN-RFL company into overseas counties: A study on Drinks, Bakery and confectionary items. Submitted to: Mr. Golam Mohammad Forkan Associate Professor Eastern University Submitted by: Jasfia Khanam Fama ID: 133200105 Group: 2 Course Code: BUS 303 Fall semester,2015 Eastern University Date of submission: 2-11-2015
- 2. An overview about PRAN-RFL Company: PRAN-RFL Group started in the year 1981 as RFL (Rangpur Foundry Limited) at the BISIC. At the beginning they used to make products like Kodal, Shovel, Belcha, Tubewell and similar sort of products. That time the adage was to make the available supply of agricultural products and the products related to agriculture. At first the organization believed that the agriculture of Bangladesh needs exposure and focus in order to reduce poverty and to develop the rural population and their lifestyle. The organization later on revealed that they can’t add more value in the agricultural based economy without entering into the production and entering into international market. Hence develop the idea of establishing PRAN. PRAN stands for: “Program for Rural Advancement Nationally”. PRAN has started its business concentrating on the beverage products. PRAN is the pioneer domestic company of the braverage industry in Bangladesh. All the PRAN products are produced as per international standards maintaining highest level of quality at every stages of its production process “PRAN” is currently one of the most admired food & beverages brands among the millions of people of Bangladesh and other 118 countries of the world where PRAN Products are regularly being exported. Products: PRAN takes a comprehensive approach to all kinds of agro processed food products, considering all of the ways ensuring hygienic and quality food products. PRAN is currently producing more than 200 food products under 10 different categories i.e. Drinks: Juice, Mineral water, soft drinks, Energy Drinks, Bakery Items: cake, toasts and biscuits, Dairy farm products: milk, culinary items: Rice, Dal, oil, spices, sauce & ketchup, Noodles, Soup; confectionary Items: chocolates, candy, toffee loly-poop, edible jell, Fruits Bar etc. Entry Strategy of Drinks, Bakery and confectionary items of PRAN-RFL Company into the overseas market: Primarily PRAN started with the production of PRAN Mango Juice a very popular juice brand in our country. Company was established their own mango pulp factory in Natore. Later on the organization concentrated on producing Pineapple, Lemon, Guava and Litchi juice. Then gradually expanded their business and started producing other food and beverage products. After meeting the huge domestic demand PRAN has leap forward with a global venture. Gradually PRAN–RFL
- 3. Company expands and started to do international business into the overseas countries for more profits. PRAN -RFL Company mainly follows two types of entry mode strategy for marketing Drinks, Bakery and confectionary items: 1. Exporting and 2. Investment The following strategies are described below: 1. Export Procedure of PRAN-RFL company’s Drinks, Bakery and confectionary items : PRAN-RFL Company usually uses direct exporting procedure for entering the overseas market with Drinks, Bakery and confectionary items of the Company. PRAN Export Limited is thus engaged with two types of exporting. For doing that they mainly use: A) Foreign distribution channel: It is used for trading and B) Foreign subsidiary channel: This is used for manufacturing products. A) Foreign distribution channel: PRAN, the largest exporter of processed food from Bangladesh, had a vision of creating a huge demand globally of those agro based products produced by native farmers. PRAN started its export operation back in 1996 with exporting their products like Drinks, Bakery and confectionary items in France. From then they have expanded their export business worldwide. Now they are distributing their products in more than 118 countries in the world.
- 4. PRAN Export Limited was formed with a view to join global business and to create a strong entity of Bangladesh in the world’s economic map. At present PRAN Export limited divided their export market in 6 units. Those are India, Asia, Middle-East, Africa, Europe, America and Others. The Indian market is one of the largest markets of export and PRAN have created a strong entity in the Indian market. The overall Indian market is divided into three segments North-East India, South-India and Greater West Bengal. The Asian market of PRAN-RFL company’s Drinks, Bakery and confectionary items includes Srilanka Nepal, Bhutan, Maldives, Afghanistan, and Myanmar, Malaysia, China, Singapore, Hong Kong, Korea, Cambodia and others. Middle East is a huge market of export for Bangladeshi products as there live many Bangladeshi immigrants and workers. The Middle Eastern market includes Dubai, Bahrain, Kuwait, Qatar, Jordan, Oman, Iraq, and Iran, Lebanon, UAE and others. Africa is the largest unnerved segment of the world market. PRAN started to distribute their Drinks, Bakery and confectionary items in Africa in the year 2001. At first the importer country was Benin. At present PRAN export their products in 38 countries of the West and East Africa including Angola, Liberia, Benin, Ethiopia, Congo, Senegal, Ghana, Somali Land, South Africa and others. The EU market consists of UK, Spain, Italy, Sweden, France, Germany, Russia, Cyprus and other European countries. The European market is still developing and most of the customers are from Bangladeshi origin. Recently the Dairy, Beverage and Confectionery products got positive exposures from different countries of the EU. America and Others includes USA, Canada and Australia. The organization is trying to enter the North American market. PRAN is conducting survey to enter this part of the world it their Drinks, Bakery and confectionary items. Exporting process of Drinks, Bakery and confectionary items overseas Market: For the export purpose generally the buyer contact with PRAN through The Chamber of Commerce. Besides it PRAN take part in different trade fair around the globe which attracts more potential buyer. Sometimes the foreign ministry of our country facilitates the international trade. According to the Export Development Team participating in the trade fairs facilitates the export, and makes the export more progressive.
- 5. After getting response from the potential buyers the organization send sample to the buyer according to his demand and preference. The organization is very much aware about sending sample. For sending in foreign market the organization doesn’t hesitate to place order according to the buyers demand. As the organization believes that in the initial stage any form of hesitation could hinder the total export procedure. Very often the buyer visits the Factory in order to check the product quality and the environment. Generally the organization always welcomes the buyers and this form of approach as because through this form of procedure the organization can read the potential importer and the involvement of the buyer increased. If the buyer is satisfied with all sort of production facilities and the products of his preference then the organization start negotiating with the buyer regarding the price and the total value chain. After the buyer is agreed with the pricing and the value chain then both the buyer and the organization have to agree on the term FOB (Freight on Board) or CNF (Cost and Freight). For the FOB the duty from our end finishes with the movement of consignment to the preferred port. For the CNF the total responsibility remain on us to send the consignment to the buyers’ warehouse. After deciding the consignment mode the company needs to prepare sale contract. The sales contact is the agreement between Buyer and seller with the procedure specification and other formalities. After receiving the sales contract the buyer set the payment mode and payment procedure. Payment Procedures: Generally there are 4 way of transferring the fund which PRAN-RFL company follows: I. Cash in Advance: The buyers pay the total amount or certain amount of the consignment in advance. Sometimes the buyer pays the certain amount like 30%-40% in advance with buyer’s document. II. Telegraphic Transfer/Electronic Transfer: In this procedure the buyer pay the consignment value through telegraphic transfer or electronic transfer. III. L/C: - In this procedure the export is done through Letter of Credit.
- 6. IV. Full Party Payment: The buyer fully pays the amount after receiving the goods. Generally these types of transaction are done with long term buyers. 2) Foreign branch/ subsidiary channel: In many countries, especially USA (NY), Australia, UAE, Saudi-Arabia, Qatar, Oman, Malaysia, Singapore, Somalia PRAN-RFL company have got its own foreign branch or subsidiary channel for Drinks, Bakery and confectionary items equipped with full fledged office, warehouse, distribution vehicles, sales force, & other sophisticated supports. PRAN-RFL Company is extremely aggressive to be the market leader in each and every category they operate. Other types of entry strategies followed by PRAN-RFL Company: There are many other strategies followed by PRAN-RFL Company with its products like Drinks, Bakery and confectionary items to do the international business. As like- I. Licensing: Recently the organization took the initiatives of doing licensing business as its successfully working with the Coca cola in Bangladesh. II. Investments: In global market, the company truly strives to exceed itself every year. Therefore, the company is growing with its Drinks, Bakery and confectionary items into the overseas countries. To accelerate continuous growth, it already set up production plants in India to produce its Drinks, Bakery and confectionary items and production has already been started. PRAN-RFL Group is a leading food, beverage & plastic industrial company & market leader in Bangladesh. It is one of the most profitable companies of Bangladesh. Their mission and vision is to eliminate poverty and develop the agricultural sector of Bangladesh. Their motto is to generate employment and earn dignity and self respect for our competitors. Thus the company is doing international business more successfully in to the overseas countries throughout the world.
- 7. Bakery Items: cake, toasts and biscuits Drinks: Juice, Mineral water, soft drinks, Energy Drinks Confectionary Items: chocolates, candy, toffee loly-poop, edible jell, Fruits Bar etc.