Executive Summary

In todays competitive world of Business competitive advantage can be gain by proper

information system and developing that information system. Aarong information system is a sign
of the modern business organization of Bangladesh. Aarong is a chain of retail outlet located in
major cities in Bangladesh an enterprise of BRAC. It established in 1978, Aarong is a fair trade
organization dedicated to bring about positive changes in the lives of disadvantages ascertains
and underprivileged
rural woman by reviving and promoting their skills and craft. Reaching out to weavers, potters,
brass workers, jewellary, jute workers, basket weavers, wood carvers, leather workers and
more, Aarong, to embraces and nurtures a diverse representation of 65000 artisans work with
the collaboration of 85% of whom are women. Today, Aarong has become the foundation upon
which independent cooperative groups and family based artisans market their craft, in an effort
to position the nations handicraft industry on a world platform of appreciation and
acknowledgement. Aarongs supply chain management (SCM) is the integration and
management of supply chain organizations and activities through collaboration, effective
business processes and information sharing with women co-operatives. It has become a great
tool for Aarong to deal with competition and increasing customer demand for value. To provide
complete satisfaction to its domestic and foreign buyers, the information must be available in
real time across the supply chain and this is achieved by Aarongs integrated software system
for supply chain management. Web technologies enable Aarong to become more effective, to
trade with suppliers and customers over the Internet in real time. Implementation of the supply
chain information systems in Aarongs facilitates an increase in its competitiveness and profits.

Background:

Aarong emanated from BRACs core mission of alleviating poverty and empowering people. In
the 1970s, BRAC was examining any and all possibilities for alternative forms of productive
livelihood, especially for women, and the proper commercialization of art and crafts turned out to
be a promising option. In December 1978 when BRAC decided to open its own retail outlet
under the brand name Aarong, meaning village fair, it broadened its arms to include other
artisans and master craftsmen throughout Bangladesh who were involved in the making of
handicrafts for generations, and were finding it extremely difficult to survive in the newly formed
country. Ever since then Aarong has been helping to establish market linkages for rural artisans,
revive crafts and interpret them for the contemporary marketplace.

Todays Aarong:
Today, Aarong's reach has spread from where it started, Manikganj, to the rest of the country.
From a single shop, Aarong has grown into one of Bangladesh's biggest retail chains offering
one-stop shopping experience through 10 stores spread across the major metropolitan areas of
the country - in Dhaka, Chittagong, Khulna and Sylhet and one in London, UK. Aarong
showcases over 100 product categories from clothing to household items, gifts and fashion
accessories to childrens toys, ethnic wear to beautiful crafts, from silks, handloom cotton, Endi
to Terracotta, bamboo, jute and much more.
Today, few urban consumers will argue that Aarong is the local Mecca for deshi handicraft.
Aarongs product designs has brought consumer attention back to the products and styles that
are indigenous to Bangladesh, its designers blending the traditional with the contemporary in a
manner that has won instant consumer appeal, starting a revolution in trends that has now been
taken up by countless other boutiques and stores. Aarongs product designs focus on the
diverse types and textures of crafts and patterns that have been passed along from generation
to generation among weavers and artisans in craft hubs around the country.
Aarong also plays the role of protector and promoter of traditional Bangladeshi products and
designs. It houses an extensive design library where remnants of our rich craft heritage, such as
Nakshikantha art and Jamdani patterns, have been widely researched and archived for present
as well as future use.

Aarongs Mission:
Aarongs mission is to help sustain rural craftsmanship and find a wider market for their product
nationally and internationally.

Aarongs Vision:
Aarong has one outlet in London and exporting to other countries of North America, Europe and
some Asian countries. Because of migrating Bangladeshis in those areas, they are targeting to
make more franchising activities in those North American and European region. They basically
are targeting those activities after fulfillment the customer demand in domestic market.

Products of Aarong:

MEN'S PRODUCTS:
Traditional, Executive Shirts, Maanza , Fotua, Short Kurta, T-shirts,
Sandal etc.

Stoles/Shawls,

WOMEN'S PRODUCTS:
Traditional, Western Nightwear,, Shawls/Scarves, Shoes, Bags , Fabrics.

CHILDREN'S PRODUCTS:
Clothes, Toys, Books, Shoes
Others:
Home Textile, Home Accessories, Jewellary, Leather Terracotta Bamboo/Cane/Leaf, Metal,
Candles, Jute, Ceramics, Nakshi Kantha, Paper, Wood, Glass

ECONOMIC OPTIMIZATION PROCESS ON ARONG

A. Optimal Decisions: The best decision produces the result most consistent with managerial
objectives.
1. Economic concepts and methodology are used to select the optimal course of action in
light of available options and objectives.
B. Maximizing the Value of the Firm: In managerial economics, the primary objective of
management is maximization of the value of the firm. Influences that must be considered
include:
1. prices and the quantity sold.
2. cost relations.

the appropriate discount rate.

II. REVENUE RELATIONS
A. Price and Total Revenue: Total revenue is the amount sold in dollars.
1. Like all financial data, revenue figures are often studied using computer spreadsheets that
show functional relations using formulas and equations.
2. If price is constant regardless of the quantity sold, the relation between quantity sold and
total revenue is simply TR = P Q.
Generally speaking, TR = f (Q).
Total revenue (TR), the variable to the left of the equal sign, is called the
dependent variable. Its value depends on the size of the variable variables
to the right of the equal sign.
Variables on the right-hand side of the equal sign are called independent
variables. Their values are determined independently of the functional
relation expressed by the equation.
B. Marginal Revenue: Marginal revenue is the change in total revenue caused by a one-unit
change in the number of units sold (Q). In calculus terminology, MR = TR/Q.
1. Generally speaking, a marginal relation is the change in the dependent variable caused by
a one-unit change in an independent variable.
2. When marginal revenue is positive, total revenue is increasing. If marginal revenue is
negative, total revenue is decreasing.
3. When a linear relation exists between price and the number of units sold, both price and
marginal revenue relations begin at the same point on the Y-axis, but marginal revenue
falls twice as fast as price with respect to output.
B. Revenue Maximization Example: Revenue maximization occurs at the point of greatest
total revenues.
1. Revenue maximization involves consideration of revenue relations only. Cost relations
are not considered.
2. To find the revenue-maximizing output level, set MR = 0, and solve for Q.

3. To be consistent with long-run profit maximization, the advantages of short-run revenue

maximization must be at least sufficient to compensate for the corresponding loss in
short-run profitability.
III. COST RELATIONS
B. Total Cost: Total costs are comprised of fixed costs and variable expenses that fluctuate with
output.
4. Because all costs are variable in the long run, long-run fixed costs always equal zero. In
the long run, the firm has complete flexibility with respect to input use.
5. The short run is the operating period during which the availability of at least one input is
fixed.
C. Marginal and Average Cost: Marginal cost is the basis for short-run operating decisions;
average cost is the basis for long-run planning decisions.
6. Marginal cost is the change in cost associated with a 1-unit change in output. In calculus
terminology, MC = TC/Q. Marginal costs must be covered by added revenues to justify
production in the short run.
7. Average cost is total cost divided by output, or AC = TC/Q. In the long run, average costs
must be covered by revenues or the company will go out of business.
1. When marginal cost is greater (less) than average cost, average cost is increasing
(decreasing).
D. Average Cost Minimization Example: The average-cost minimizing activity level is the
optimal production level for a target level of output.
8. Average cost is minimized when MC = AC.
9. Average cost maximization involves consideration of cost relations only. Revenue
relations are not considered.
IV. PROFIT RELATIONS
E. Total and Marginal Profit: Total profit is maximized when the optimal level of output is
produced efficiently.
2. Total profit equals total revenue minus total cost. Graphically, it is equivalent to the
vertical distance between the total revenue and total cost curves at any output level.

3. Marginal profit is the change in total profit associated with a 1-unit change in output. In
calculus terminology, M = /Q. (Economists use the Roman letter P for price and
the Greek letter pi for profit.).
F. Profit Maximization Example: The profit-maximizing activity level is the optimal
production level for an optimal level of output.
1. Total profit is maximized when M = MR MC = 0. Equivalently, profits are maximized
when MR = MC.
10. The slopes of the total revenue and total cost curves measure marginal revenues (MR) and
marginal costs (MC). Where these slopes are equal, MR = MC and profit is maximized.
11. Whereas revenue maximization involves consideration of revenue relations only and
average cost maximization involves consideration of cost relations only, profit
maximization involves consideration of both revenue and cost relations.
II. THE INCREMENTAL CONCEPT IN ECONOMIC ANALYSIS
A. Marginal Versus Incremental Concept: Incremental analysis involves examining the
impact of alternative managerial decisions on revenues, costs, and profits. It focuses on
changes or differences between available alternatives.
1. The incremental change is the difference resulting from a given decision.
2. Marginal relations measure only the effect associated with unitary changes in output.
B. Incremental Profits: Incremental profit is the profit gain or loss associated with a given
managerial decision.
1. When incremental profit is negative, total profit declines.
2. Incremental profit is positive (and total profit increases) if the incremental revenue
associated with a decision exceeds incremental cost.
B. Incremental Concept Example: The incremental concept is important for managerial
decision making because it focuses attention on the differences among available alternatives.

Optimization Techniques:

Methods for maximizing or minimizing an objective function

Examples

Consumers maximize utility by purchasing an optimal combination of

goods

Firms maximize profit by producing and selling an optimal quantity of

goods

Firms minimize their cost of production by using an optimal

combination of inputs

Expressing Economic Relationships

TR = 100Q - 10Q 2

Equations:

Tables:

Q
TR

0
0

1
90

2
160

3
210

4
240

5
250

6
240

Graphs:
TR
300
250
200
150
100
50
0
0

7
Q

Total, Average, and Marginal Revenue:

TR = PQ

AR = TR/Q
MR = TR/Q

Total Revenue

Average and
Marginal Revenue
Total, Average, and
Marginal Cost

AC = TC/Q

Q
0
1
2
3
4
5

TC
20
140
160
180
240
480

AC
140
80
60
60
96

MC
120
20
20
60
240

MC = TC/Q

Geometric Relationships:

The slope of a tangent to a total curve at a point is equal to the marginal

value at that point

The slope of a ray from the origin to a point on a total curve is equal to the
average value at that point

A marginal value is positive, zero, and negative, respectively, when a total

curve slopes upward, is horizontal, and slopes downward

A marginal value is above, equal to, and below an average value,

respectively, when the slope of the average curve is positive, zero, and
negative

Profit Maximization:

Q
0
1
2
3
4
5

TR
0
90
160
210
240
250

TC
Profit
20
-20
140
-50
160
0
180
30
240
0
480
-230

Aarongs Supply Chain:

Aarongs supply chain is the movement of materials as they flow from their source to the end
customer. The whole supply chain of Aarong includes purchasing, manufacturing, warehousing,
transportation, customer service; demand planning, supply planning and Supply Chain
management. It is made up of the employees, activities, information and resources involved in
moving a product from Aarongs supplier to its customer.

How Aarongs Supply Chain Management System is

build:

Aarongs supply chain management system is a group of things working together. Computers,
fax machines, data storage system, operating personals, procedures for the employees and the
most vital components of Aarongs supply chain management system are its telecommunication

system. Cell phones helped Aarong to create a communication network with every suppliers and
transportation partners across the country. All this components work together to provide
information to collect products, manage the suppliers, to provide services, create report etc.
Different computer softwares are also used in the supply chain management of Aarong but the
main supply chain management software is developed by Aarong. This software is used for both
supply chain planning and to help them to execute the supply chain steps. Aarong has hired
trained professionals to operate its supply chain management system and keep updating.
Aarongs supply chain management system can be divided into two systems. Both of this
system is vital for Aarongs business. One is Supply Chain Planning System and another one is
Supply Chain Execution System.

1. Supply Chain Planning System:

Aarongs supply chain planning helps Aarong to create a model for its existing supply chain, its
helps management to measure demand forecasts for different products and develop a way to
find best source for meeting those demands and manufacturing plans.
Aarong have turned to their customers for help. By communicating directly with customers about
what they want and by getting their feedback on existing products, management are able to
more accurately understand the needs and wants of their target audiences. With this
information, they can make a forecast that reflects customer reality. Furthermore, improved
technology has of Aarong made it even easier to get their hands on customer feedback. The
Website of Aarong for example, makes it possible for organization to communicate with
customers in real-time, so they can then use the data immediately in their forecasts. Aarong has
developed a central database for all the information and it gives access to suppliers and
partners. These technology improvements along with real-time customer feedback have made it
possible to more accurately predict revenue, profit, and sales in the near future. More accurate

planning means that Aarong can work together with their vendors and distributors to outline a
plan that makes sense based on those forecasts so that no one is put into a negative situation.
Overall, supply chain planning is a critical component of Aarongs supply chain management.
Without accurate planning abilities, businesses end up cutting into their revenue unnecessarily
and possibly putting vendors and distributors into difficult situations that may strain the supply
chain relationships in the long run.

2. Supply Chain Execution System:

Aarongs supply chain execution system is mainly consists of its transportation partners. They
manage the flow of products though distribution centers and warehouses to ensure the products
are delivered to the right locations in the most efficient manner. Aarong track the physical status
of goods, the
Management of materials, warehouses, transportation operations and financial information
involving all parties.

Aarongs Supply Chain Management Process

Plan: Aarongs supply chain management planning starts at the top of the management.
Management tries to balance out the demand and supply to meet Aarongs sourcing,
production, delivery and return requirements.

Source: Aarong has large pool of sources to meets it supply. As the demand requires suppliers
come up with raw materials and goods. Then it creates a product which we can exploit.

Make: Co-operatives comes up with final goods and they deliver them to the final processing
section of Aarong. The goods or products are ready to use for the customers.

Deliver: Aarongs delivering process is managed by its own transportation. Aarong directly
distributes its product to the consumers. Their job is to distribute shipments properly. Just-intime is followed in delivery process.

Return: Return process is consisting of product returns and post delivery customer support
which is done by Aarong. Generally Aarong obtained their products to their consumers within
30days.Its also includes Aarongs return process.

Logistics: Aarongs top level management plans, supportive relation to their consumers and
control of all other factors that have an impact on the supply chain.

Aarongs Supply Chain Management Information Flow

Information flows from customers to Employee or from employees to operating personnel in

the information system. Then information goes to the floor manager. Floor manager shows it to

the consultants of Aarong. Consultant shows it to the top level management of Aarong. Top level
orders its suppliers to modify, improve or create product to meet the customer demand.

Aarongs Supply Chain Management Backend incorporation:

Aarongs supply chain management system can exemplify into Upstream portion where the
supply chain includes Aarongs suppliers or co-operatives, and their suppliers who are the raw
material providers Aarongs. Aarong tries stay connected with the raw material providers
through telecommunications. Co-operatives have all sorts of facilities. They stay connected
though telecommunication. Aarongs database is open to its suppliers; it provides them with
inventory data. And suppliers also can provide information to Aarong through the web. Because
of the real time data availability suppliers are at no harm position when they are dealing with
Aarong. There is alsoDownstream portion consists of the Aarongs processes for distributing
and delivering products to the final customers. Aarong has its own internal supply chain
processes for transforming materials, components, and services by their suppliers into finished
products or intermediate products for their customers and for managing materials and inventory.

Aarongs wants to satisfy, so Aarong provides operational data to its highly loyal customers and
contractors. Aarongs big buyers can gain data about their order through Aarongs website or by
extracting data from its database. Aarongs website provides the progress about orders from
foreign buyers. Buyers can also get along about the operational process.

Aarongs suppliers also have the concession to exchange register data. They are aware of what
Aarong wants and the price its willing to pay. They also get the cut-off date and operational
instruction from website. If anything changes they will know because Aarongs web application
automatically incorporated with back office information system and database which they can
easily way in.

Aarong has a central database which is updated by the operational employees. So if any
changes come Aarongs Supply Chain Management will send mail to upstream and downstream
suppliers its suppliers.

Managerial Skills:
Aarong has trained operating personnel for its accounting department and website. Operating
personnel job is to maintain the information system and repair if any error ever occurs. Aarongs
operating personnel are highly qualified in their job sectors. Aarongs information system is
designed to be employee friendly. Employees do not have to know lot about technology to
operate its regular applications. Its information system is very secure. Employees strictly follow
all the principled rules. All customers orders, addresses or any kind of information is remaining
private. Accuracy is practiced and monitored by operating personnels. Access of employee
information is strictly forbidden. So Aarong has the ability to adjust technology strategy
alignment to accommodate the use of IT and manage business process.
The Internet has emerged in the recent past as a dynamic medium for channeling transactions
between customers and firms in virtual marketplace. In particular, the World Wide Web has
emerged as a powerful new channel for supply chain, rendering many intermediaries obsolete,
and drastically revamping the value chain. So Aarong has taken the opportunity to expand its
business through net. Aarongs employees can see as an asset for this kind of expansion. But in
our country the growth in e-business seems slow although internet is challenging the traditional
supply chain structures that firms have employed to get goods and services to market. Aarong
has re-evaluated their value proposition to customers, and meet the challenges of more nimble
rivals. Aarong seems to be one of the organization which is interested provide online based
order and information system to its customer. So Aarong has a very dazzling managerial skill in
internet based supply chain.

Aarongs performance improvements by SCM:

1. Accurate information for suppliers and buyers: Because of the proper Supply Chain
Management Aarong gets accurate information. Distort information is a major problem of govt.
funded organization but Aarong is different because of its supply chain management.
2. Easily stored data & access: SCM has provided easy way to store data. Information can be
easily stored. This made suppliers and front line employees very efficient about their job.

3. Information sharing through Upstream and Downstream: Without network, information

sharing would take lots of time. But in Aarong, can share information very easily with its
upstream and downstream partners and suppliers.
4. Work efficiencies: Supply Chain Management System has increased Aarongs work
efficiency.
5. Speed: SCM has increased speed of the work. Employees are working with more speed in
Aarong.
6. Proper storage system: Supply Chain Management System gave a proper storage system.
Employees can store data and also can see it whenever they want. Suppliers can store data
too. Any changes can be seen through website. Customers get big help from that.

7. Report making became very easy: Procurement Managers work became easier with
information system. Managers can make their marketing and financial plan more easily.

8. Improved working environment: Through establishing an information system Aarong has

developed its working environment. Suppliers do not have to wait for hours for their papers of
order.

9. Improvement in Training employees: Power point has improved training programmers for
employees.
10. Improved customer satisfaction: Aarong has improved customer satisfaction with its
supply chain management system. Customers are more satisfied than before. They are getting
what they want. Total 83% customers are happy with Aarongs customers services. SCM has
given Aarong chance to customize products.

11. Improved product and service quality: SCM has improved Aarongs product and service
quality. Customers can get their desired products and better service.
12. Improved Employee Satisfaction: Employee satisfaction has increased. Employees are
happy with their work and they are clear about what to do & what not to do.

13. Improved communication: Video and teleconferencing has improved communication in

Aarong. Employees can communicate with customers, suppliers and their supervisors more
easily.
14. Up to date information: Information is up to date because of the proper data entry.
Employees gets up to data to work with which bring efficiency.
Competitive Advantage of Aarongs Supply Chain Management System:
Competitor analysis in marketing is an assessment of the strengths and weaknesses of current
and potential competitors. This analysis provides both an offensive and defensive strategic
context through which to identify opportunities and threats. Competitor profiling coalesces all of
the relevant sources of competitor analysis into one framework in the support of efficient and
effective strategy formulation, implementation, monitoring and adjustment.

Aarong has its own version of the competitive analysis and its function is clear: to line up your
product with other products and show where yours falls short and where yours is superior. Each
industry brings a different spin to this old favorite and user experience design has its own set of
criteria by which to judge competitors.

SWOT Analysis of Aarong

Strength
Aarong is a very reputed organization. They are now capturing 68% of total handicraft market
share in Bangladesh. Its a local brand and now exporting their products outside of the
country. Aarong has good reputation for fine quality products. It has a strong management
team who are continuously giving their great effort to make it a successful one. Another
important fact is that, Aarong has almost Zero production damage rate which reduces their
cost. They are innovative and always bring some new product in the market which meets
customer requirement and expectations. The organization is a respected employer that
values its workforce.
Weakness
Aarong has a reputation for new product development and creativity. However, they remain
vulnerable to the possibility that their producer may not be able to produce product timely
due to their inability. The collection channel of the organization is not that much structured so
that they can get the products from the producer on time and it may create problem for them
in future. If any producer is not able to make the product on time due to some personnel
problem then the company will also not be able to deliver their product on time. This is a big
problem and it happens most of the time on delivery. Aarong charges higher price relatively
than their other competitors as a result some times customers lose their interest to by
product from them. Its sales force or sales girls within the outlet are not properly trained up.
Sometimes they make customers disappointed by their attitude and customer doesnt feel

good to buy from there. Sometimes they suffer for financial problem, although its a rare
situation.
Opportunities
Aarong is very good at capturing the advantage of opportunities. It can go for new
distribution channel like it can make some joint venture with some other small Boutique and
sales its products in more places. Through that it can capture more market share in the
handicraft industry in Bangladesh. Aarong can expand its business globally. New market for
handicraft such as Europe and America are beginning to emerge. People are now trendier
about local events & functions like Pahela Falgun, Pahela Baisakh, Victory day,
Independence Day etc and they buy new and special products for these events. Aarong can
make new products to sell in those special occasions. According to the season change,
people are also changing their preference in buying products and considering this scenario
Aarong can produce products on the basis of seasonal variations.
Threats
Aarong doesnt have any big competitors right now. But they have some small competitors
like KayKraft, Anjans, Deshal, Jattra, Khubsurti, Rina Latif, OZ, Rang and some other
Boutiques established at Banani 11, who are taking their 32% customer and increasing in a
slow rate. Aarong always face price wars with their competitors. Its competitors have some
superior products like OGs Panjabi shape, Khubsurtis design of Salwar kamiz Rangs
Sharis color, which is decreasing Aarongs market share as well as sales. But now they are
repositioning their Brand to compete with them.

Competitors Analysis of Aarong:

From the above diagram it is seen that Aarong has competitive advantage over its competitors
on almost every factors. Only few companies have ability to chase some sort of advantage like
Aarong. Such as Rina Latifs product features, qualities and innovativeness, Kay-Kraft and
Anjans supplier, Rangs color and Khubsoortis cost.
Aarong has gain competitive advantage through its supply chain management system. Aarong
has a vast network system with its thousands of suppliers and manufacturers which gave
Aarong superior production and resource allocation power. Competitors do not have power that
can match Aarongs production capability so they are losing shelves. SCM keeps track of its
supplier and its inventory properly so there less costly and hustle free for the employees.
Performance of service has increased more than its competitors so there are more satisfied
customers of Aarong.

Conclusion:
There is a reason why Aarong is at the forefront of the urban fashion-scene. Their innovative
clothing line fuses ethnic wear with global trends using traditional Bangladeshi materials. Aarong
is a support enterprise of BRAC. A significant portion of their earnings are invested towards
improving the socio-economic standards of disadvantaged artisans and underprivileged rural
women of various communities. Aarong organizational vision will be achieved smoothly and that
is the women will be empowered through grass-root level women entrepreneur development
and this empowerment will change the overall scenario of economic condition.