Assignment of MGT 2133 (Section: 08)

Submitted By
Name ID
Sajid Ahmed 2015010000066
Raihan Ahsan 2015010000068
Samaun Akter 2015010000069
Rafsan Ahmed Bhuiyan 2015010000070
Sheikh Kawsar Zaman 2015010000111
Tanzida Islam Jhuti 2015010000342
Jerin Fathma Suchana 2014010000207

Submitted to
Noor-E-Zannat

Lecturer SBS, SEU

Date of Submission: 24st August 2017

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 Executive Summary

Firms interested in servicing foreign markets face a difficult decision with regards to the
choice of an entry mode. The options available to a firm include exporting, licensing, joint
venture and sole venture. Several factors that determine the choice of a specific foreign
market entry mode have been identified in previous literature. These factors can be
classified into three categories: ownership advantages of a firm, location advantages of a
market, and nalization advantages of integrating transactions. Many environmental tasks of
the investment have to be cleared before entering a new market. The right combination of
market entry strategies help to succeed such a huge investment. Every strategy has
advantages and disadvantages which have to be considered if the investment should lead
into a success. In this report we choose Coca-Cola enter in to Bangladesh market through
Licensing with Abdul Monem Limited and Pran. Abdul monem limited and Pran are the
official bottler of Coca-cola in Bangladesh. Here we discuss about how Coca-Cola enter into
global market by a real life example. Here we have the overview of the companies and entry
decision, entry mode, their strategy and everything related with it.

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 Table of contents

SL Heal Line Page Number

1 Introduction 04
Background, objective, Limitation of the study

2 Overview of the company 05-07

Coca-cola 05

Abdul Monem Limited 06

Pran Food Limited 07

3 Overview of the industry 08-09

4 Key Decision 10-13

Which market to Enter 10

When to enter 11-12

Scale of Entry 13

5 Chosen mode of entry 14

6 SWOT Analysis 15

7 Conclusion and Recommendation 16

8 References 17

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 1. Introduction

Background of the Study:

Every entrepreneur has a dream that their idea and their company should grow and turn
into a global known company with high earnings per share. In this report we discuss about
many different kind of entry strategies. There are various modes to enter into a foreign
market such as exporting, licensing, joint venture and sole venture. Here we get knowledge
about different entry strategies and advantage and disadvantage of entry strategies. In this
report we discuss about Coca-cola licensing with Abdul Monem limited and Pran to enter
into Bangladesh market and their advantages and disadvantages. As we work with the real
life examples we learn about those companies.

Objective of report

This study provides valuable practical knowledge about entry modes strategies. There are
some objectives are following

 Evaluate the entry modes.

 Evaluate the the performance of particular company under particular strategy.
 Evaluate the SWOT analysis to selected entry mode with another entry mode
 Analysis the advantage and disadvantage of selected entry mode

Limitation of the study

At the time of Doing this report we also face some limitations. These are

 Limitation of time
 Resource allocation Problem
 Unable to visit organization so we have no direct information
 Depend on Google and relevant book.

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 2. Overview of the company

When coca-cola enter into Bangladesh with licensing entry mode they give license to two
company in Bangladesh for their official bottler

1. Abdul Monem Limited

2. Pran Foods limited

Licensor company

Coca-Cola

The Coca-Cola company is the „world‟s largest beverage company and is the leading
producer and marketer of soft drinks. Today, Coca-Cola is consumed throughout the world
at the rate of more than 600 million times per day and this figure is continuing to rise.
However Coca-Cola is not the sort of company to live in its past glories instead it looks to the
future as a challenge and constantly seeks new markets and ways of increasing its market
share in areas where it currently has a strong presence. It is the world‟s largest producer
and distributer of syrups and concentrates for soft drinks. As we all know, the Coca is
today‟s one of the biggest corporation that offers different refreshment in form of a soft-
drink. But aside from their historical success, the Coca Cola Company is still a typical
business that is affected and at the same time affecting the different type of communities.
Coca-Cola has sold more than one billion servings every day. More than 10,450 beverages
are consumed every second. The company achieved earnings of $4,347,000,000 in 2003. It is
present on all seven continents and is recognized by 94% of the world population. How did
Coca-Cola grow from its humble roots as a home-brewed Georgia-based patent medicine to
be the international soft drink powerhouse that it is today. Coca-Cola used numerous
technologies to achieve its rise to the top of the soft drink industry, defining new
technologies and establishing paradigms that popped the status quo like a cap from a soda
bottle. Through technology, Coca-Cola perfected Coke as a beverage and spread it
throughout the world. Even today, the US soft drink industry is organized on this principle.
"The Coca-Cola Company" is now the largest soft drink company in the world. Every year
800,000,000 servings of just "Coca-Cola" are sold in the U.S alone.

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 Licensing company

1. Abdul Monem Limited

Abdul Monem Limited is one of the leading diversified business conglomerates of

Bangladesh. Established in 1956 and having faced the challenges of almost 04 decades of
political turbulence, economic instability and socio-cultural changes as well as the present
day global scope of Bangladeshi businesses.

AML is contributing the nation by many diversified works of its own. The company is also
renowned for its internal and external environment. The organization has over 10000
employees all around Bangladesh. It has a very effective management which is running this
vast organization properly. Around the years, AML has taken some domestic and
international changes that have affected the organization’s business environment. In some
extent, AML has introduced new business plan, converted a unit to a limited company and
has taken extensive decisions to cope with the modern time, laws and for the welfare of the
organization & society. AML has been active in its Corporate Social Responsibility (CSR)
through philanthropic activities. The organization has a foundation, run a campaign for the
poor children and mothers, helped the government in natural calamities and recovery
programs and for the welfare of the employees it has taken some initiatives. Today, in the
constantly growing and ever changing world of trade and technology Abdul Monem Limited
has a new challenge, the challenge to keep itself competitive in the Millennium with the
leading edge technologies as well as products and services. It has long experience in
accomplishing that in the past and it is sure that would be able to meet this challenge.

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 2. Pran Food Limited

‘PRAN’ has started its operation in 1981 as a processors fruit and vegetable in Bangladesh.
Over the years, the company has not only grown in stature but also contributed significantly
to the overall socio-economic development of the country.

“PRAN” is currently one of the most admired food & beverages brands among the millions
of people of Bangladesh and other 134 countries of the world where PRAN Products are
regularly being exported.

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 producing more than 400 food products under 10 different categories i.e.
Juices, Drinks, Mineral Water, Bakery, Carbonated beverages, Snacks, Culinary,
Confectionery, Biscuits & Dairy. The company has adopted ISO 9001 as a guiding principle of
its management system. The company is compliant to HACCP & certified with HALAL which
ensures that only the best quality products are reaches to the consumers table across the
Globe.

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 3. Overview of the Industry

As Coca-cola enter in to Bangladesh there are also some local related company they are
Tanscom beverage limited, Akij Group limited , Frooto etc. These Companies are considerd
as Competitor of Coca-cola.

Transcom Beverage ltd

Transcom Beverage Ltd is the exclusive PepsiCo Franchisee or Bangladesh. TBL owns
and operates modern plants in Dhaka and Chittagong for bottling the renowned soft
drink brands such as, Pepsi, 7UP, Mirinda, Slice, Mountain Dew, Pepsi Diet and 7UP
Light. The company is emerging with the motto to deliver sustained growth in
Bangladesh and move towards dominant Beverage Company, delighting & nourishing
every Bangladeshi, by best meeting their everyday beverages needs & stakeholders by
delivering performance with purpose, through talented people. 2009 has been an
amazing year for TBL, winning several spectacular awards as PepsiCo's exclusive
bottling partner in Bangladesh. For its' extraordinary and outstanding venture through
excellence TBL has been rewarded with several prestigious national and international
recognitions

Akij group limited

AFBL started business operations in Bangladesh with initial offering of MOJO, LEMU and
SPEED. They had a vast amount of resources available to them due to being a part of a
successful group of Bangladesh, Akij Group. They have implemented state of the art
machineries and purchases raw materials mostly from Switzerland. MOJO was officially
launched as a flagship product of AFBL in the year 2006. Their initial promotional campaigns
as well as product designing caught the eye of their target segment very efficiently. The
initial market leader in the cola market was Coca-Cola when they were launched. There was
also tough competition from RC Cola, Pepsi and Euro Cola. Despite the tough competition
they managed to fight hard; thus grabbing a respectable 23% share within their first year of
launching. Not only did they manage to grab a large market share, they also managed to

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revive the cola market that was struggling due to the overwhelming negative idea people
had about cola products. Their popularity continued to rise through the preceding year,
managing to grab a towering 37% market share. As we have worked on data dated on the
end of the year 2008, MOJO was the market leader followed closely by Coca-Cola.

Frooto

Frooto was launched in Bangladesh in 2007 as refreshing mango juice & quickly went
on to become the leader in juice category market.
Since launching of Frooto, consumers fall in love with its unique taste & packaging. With
new pack graphic & clutter breaking communication, Frooto created a strong &
powerful appeal among the target group of people. 
With the launching of “Mango & it’s future” campaign in 2009 it’s winning taste &
unique communication Frooto created a great deal of excitement in its category and
celebrated the indulgence in mangoes like no other brand have done before. While other
players have portrayed mango as a simple & innocent fruit juice, Frooto made its
“synonyms of mango”. As Bangladeshi consumer had a mango mania & desire to have
mango round the year so it was rather easier for us to reach consumer insight to have a
good appeal about the product
Pran:

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 4. Key Decision

Which market to enter

When a company wants to enter into another market for business purpose first they think
which market they want to enter.For entering in to a new market a company have to think
about favorable and unfavorable condition,economic condition,legal system,social
system,cost of doing business,rules and regulation,demand and supply the product. After
making invesment in the Middle East, Africa and U.S , Coca-Cola is investing $50 million in
Bangladesh to set up its first bottling plant in the coutry because Bangladesh is an important
market for carbonated soft drink makers it has a population of about 150 million. Coca-Cola
opens its first boottling plant in Bangladesh to meet its growing demand. Muslim countries
like Bangladesh where alcholic drinks are forbidden Coca-Cola enter in this market with their
soft drinks by adding “100% Halal” tag line. This Country has global recession remarkably
well averaging 6-7% growth per year. Technology is also the main focus for Coca-Cola to
enter in to Bangladesh. Nearly 83% of Bangladeshi unit case volume is manufactured and
distributed by their bottling partners in whom the company does not have controlling
power. Bangladesh all sector of economy which is favorable, inflation rate is low, GDP
growth is suitable enough, Labor cost is low and also has the demand for the product, legal
and social system is also favorable for doing business. Coca-Cola has had presence in
Bangladesh since 1965. Its initial agreement with Tabani Beverages under which Cocacola
will sell the liquid concentrate to Tabani who would distribute and market it. In 1982 Coca-
cola give license and distribution ship to Abdul Monem Limited. Due to difference between
two companies on quality issue Coca-Cola inability to increase capacity then coca-Cola
finally terminated the contract of Tabani beverage in 2008. Then opened its bottling plant in
september 2013 which is owned by Pran group and Abdul Monem limited and produce 222
million bottle annually and its worth over $109.8 million.

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 When to enter market

When attractive market have been identified then it is most important thing to consider the
timing of entry. As Coca-Cola start their business in Bangladesh since 1965 and Pepsi start
sice 1976. So When Coca-Cola enter into bangladesh they are first mover entrant and they
get first mover advantages and they also have to face pioneering cost.

Coca Cola are having these three primary sources of first-mover advantages are
technological leadership, preemption of scarce assets, and switching costs buyer choice
under.

1. Switching costs and buyer choice under uncertainty:

Switching costs are extra resources that Pepsi must invest in order to attract customers
away from the Coca Cola.  Buyer choice under uncertainty refers to the concept that buyers
may rationally stick with the first brand they encounter that performs the job satisfactorily.
If the pioneer is able to achieve significant consumer trial, it can define the attributes that
are perceived as important within a product category. For individual customers the benefits
of finding a superior brand are seldom great enough to justify the additional search costs
that must be incurred. Switching costs for corporate buyers can be more readily justified
because they purchase in larger amounts.

2. Technological leadership:

The first of the three is technological leadership. Coca Cola gaining FMA when it has had
a unique breakthrough in its  research and development  (R&D). Innovative technology
can provide sustainable cost advantage for the early entrant; if the technology, and
the learning curve to acquire it, can be kept proprietary, and Coca Cola are maintain
leadership in market share. The diffusion of innovation can diminish the first-mover
advantages over time, through workforce mobility, publication of research, informal
technical communication, reverse engineering, and plant tours. Technological pioneers can
protect their R&D through patents. However, in most industries, patents confer only weak

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protection, are easy to invent around, or have transitory value given the pace of
technological change. With their short life-cycles, patent-races can actually prove to be the
downfall of a slower moving first-mover firm.

3. Preemption of scarce assets:

Coca Cola has superior information; it may be able to purchase assets at market prices
below those that will prevail later in the evolution of the market. In many markets there is
room for only a limited number of profitable firms; Coca Cola can often select the most
attractive niches and may be able to take strategic actions that limit the amount of space
available for subsequent entrants. Coca Cola established positions in geographic or product
space such that latecomers find it unprofitable to occupy the interstices.  Entry is repelled
through the threat of price warfare, which is more intense when Coca Cola were positioned
more closely.  Incumbent commitment is provided through sunken investment cost. When
economies of scale are large, first-mover advantages are typically enhanced. The enlarged
capacity of the incumbent serves as a commitment to maintain greater output following
entry, with the threat of price cuts against late entrants.

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 Scale of entry

This is the another issue that an international business needs to consider when
contemplating market entry is the scale of entry. Entering a market on a large scale involves
the commitment of significant resources. Entering a market on a large scale implies rapid
entry but some big firms prefer to enter in a foreign market on a small scale so that they can
build slowly and become more familiar with the market. In the case of Coca-Cola they enter
in to foreign market with small scale also capture the first mover advantage associated with
demand preemption, scale economies and switching costs. There are some advantages to
enter in to a market with small scale

 Small scale entry reduce risk of loss

 Learn about the market culture
 Gather information about the foreign market

As Coca-Cola enter in to a foreign market with small scale they have some advantages like if
they enter with small scale they have low risk than high scale enter. Coca-Cola can learn
about the market culture gather information about the market well about customer taste
and preference what they want what they dislike. That may be helpful for coca-cola may be
they enter in to the market with high sale of amount like FDI.

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 5. Chosen mode of entry
When a firm decide to enter in a foreign market then the investor think about the enty
mode. Here Coca-Cola select the licensing mode to enter in to Bangladesh. As Coca-Cola is
well established and well known company and their Product demand is quite well among
the people give another local company Such as Pran and abdul monem limited to use their
product and technology and also share the technical know-how inreturns of loyalty fee. This
mode is less risky than any other entry mode because there is no need any establishment
cost like FDI and exporting. As it is beverage company it is not suitable for them to select
Greenfield or Acquisition or Exporting or turnkey project. This is very easy way to enter into
the foreign market when Government give barrier to other entry mode like Exporting. If
Coca-Cola wants they enter into Bangladesh through FDI but in that case they need
establishment cost,marketing cost but in licensing they just share the technology and
technical know-how and tell the lisensing compant that if they make sell product then give
the royalty fee to licensor.It has both advantage and disadvantage.

Advantage of licensing:

 There is no marketing and establishment cost for lisensor

 Less risky than other entry mode
 Just share their technology and get the royalty fee from the licensing company

Disadvantage of licensing:

 Less controll on the product quality and taste

 Competitor creat

Inspite of some disadvantages Coca-Cola choose this entry method because they are well-
known and have good position in people’s mind. People will choose their product because
there is no confusion in customer’s mind about the quality of Coca-cola. If in Bangladeshi
market Coca-Cola was not sold there is no loss for them because in this entry mode they
don’t need any cost for establish business they give license to the local company and receive
the royalty fee if the lisencing company sell their product. This is the main strategy to enter
inthis market.

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 6. SWOT Analysis
As Coca-Cola choose licensing to enter in to a foreign market. In this strategy there are some
opportunities and cost

The opportunities can be

 As Coca-Cola is well-known and well established company for this they need not to
promote their product too much to capture the market.
 Already product has the demand and also creating a good position in customer’s
mind
 They can capture the large market
 This is less risky than other strategy because they don’t have any establish ment cost
and marketing cost
 All Cost and risk faced by licensing company
 In this strategy there is no entry barrier to enter into a foreign market

So if we analysis this are mainly their opportunities

The Cost can be

 Other competitor already captures the market

 They could not maintain the same taste in different area
 Create new Competitor
 Coca-cola has no power to control the licensing company
 There is no profit if the licensing company could not sell their product
 Contractual difficulties due to misunderstanding between licensor and licensing
company

S by analyzing we can find these are the cost for coca-cola for using this strategy.

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 7. Conclusion and recommendation

In the end, we want to say that it was a challenging experience. Working on

established and hugely popular products like Coca-Cola was a big learning
experience for us. One of the hurdles was to analyze Coca-Cola, as they have little
activity in the Bangladeshi market. As we have put all the necessary theories taught
in our designated course into the analysis of marketing strategy of Coca-Cola, we
believe that our analysis is a success. Exercising and enforcing the right enter
strategy will ensure their existence and improvement of current standings. It was our
pleasure in practicing all the theories of this course in real life examples.

In the entry mode system different organization follow different entry strategy.
When an organization enters in to foreign market organization may have high risk or
low risk. Organization may face loss or profit. In the case of Coca-cola they enter in
to foreign market with small scale entry they also get the advantages of first mover.
Coca-Cola first enter in to Bangladesh market by provide licensing to tabani group
then after some year they provide licensing to Abdul Monem group though the
difference of taste they and Due to difference between two companies on quality
issue Coca-Cola inability to increase capacity then coca-Cola finally terminated the
contract of Tabani beverage in 2008 because coca-cola enter in to this market with
small scale. The entry strategy sometimes profitable and sometimes it face loss.
Coca-cola offer various types of cola to their customer to attract them and their
product gaining popularity day by day. From this entry strategy coca-cola have the
advantage to know about their weakness because they have chances of low risk they
know or gather information to invest on a high scale amount to enter this foreign
market. Through this entry strategy coca-cola can identify their weakness they also
know the culture of the market through the local company and if their any wrong
they can make correction on it.

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 8. References

Website Links

https://www.google.com/

https://en.wikipedia.org/wiki/Coca-Cola

https://en.wikipedia.org/w/index.php?search=abdul+monem+group

https://en.wikipedia.org/wiki/Pran

https://www.transcombd.com/transcom-beverages-ltd.html

https://en.wikipedia.org/wiki/Akij

http://www.businesshabit.com/2014/12/top-10-beverage-company-in-bangladesh.html

Book

International Business 10th Edition (Arun kumar Jain)

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