International Business

INB 301 Sec:05

Date of Submission: 2 July 2017

Submitted To
Kazi Md. Jamshed

Department of school of business

Submitted By

Sumaiya Islam 1410961

Mohammad Rakib 1510161

Uzzaman

Sharmin Akhter Shipa 1431137

Md. SarwarJahan 1410294

TanziaAfsana

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Dated: 02 july 2017
Kazi Md. Jamshed

School of Business Administration

Independent University, Bangladesh

Bashundhara, Dhaka

Subject:
Dear Sir,
Here is the assignment that we assigned on the topic as per your instruction. The
assignment has been completed by the knowledge that we have gathered from the
course Inb 301.
We are thankful to all those persons who provided us important information and gave
us valuable advices. We would be happy if you read the report carefully and we will
be trying to answer all the questions that you have about the assignment.
We have tried our level best to complete this assignment meaningfully and correctly,
as much as possible. We do believe that our tiresome effort will help you to get ahead
with this sort of venture. In this case it will be meaningful to us. However, if you need
any assistance in interpreting this assignment please contact us without any kind of
hesitation.

Thanking you.
Yours obediently,
Sumaiya Islam

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 EXECUTIVE SUMMARY

Beximco Fashions Ltd is a leading manufacturer of clothing active in Bangladesh. The

company is the largest exporter of cloth item in the country and its state-of-the-art
manufacturingfacilities are certified by global regulatory bodies of Australia, European
Union, Gulf nations,Brazil, among others. Beximcom Fashion is the 2 nd place in
Bangladesh . Beximco Fashions Limited produces over 6 million pcs of high quality
dress/casual shirts for prominent brands and retails in USA, Canada & Europe.We
produce MEN’S DRESS & CASUAL SHIRTS AND LADIES BLOUSES.

Main key element of our export are increased growth,profits,extended product/service

life cycles, increasing numbers of our customers,tax advantages,improving
competitiveness. Gain global market share,reduce dependence on existing
markets,extend the sales potential of existing products.sell excess production
capacity.Gain information about foreign competition.

By doing this project we want to reduce the operative cost or process loss as well as to
improve the quality of finishing & goods manufacturing operation. Improve quality as
well as to increase productivity. Implement updated technology in manufacturing
process.

Company description
History

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 The BEXIMCO Group ("BEXIMCO" or the "Group") is the largest private sector
group in Bangladesh. BEXIMCO was founded in the 1970's by two brothers -
Ahmed Sohail Fasiur Rahman and Ahmed Salman Fazlur Rahman. Since the early
days, the Group has evolved from being primarily a commodities trading company
to a leading, diversified group with a presence in industry sectors that account for
nearly 75% of Bangladesh's GDP. BEXIMCO's corporate mission is "Taking
Bangladesh to the world"
Beximco Fashions Limited (BFSL) a member of Beximco Group
started its commercial production during July 1997. BFSL is a 100%
export oriented garment industry, located at Dhaka Export Processing
Zone at Savar, Dhaka.
Beximco Fashions Limited produces over 6 million pcs of high quality
dress/casual shirts for prominent brands and retails in USA, Canada &
Europe.
Beximco Fashions Limited is managed by a group of professionals
including expatriates and aims at producing high quality garments
through an effective quality control system right from sourcing of fabric
to end product. The number of employees at the beginning of year 2009
is 2,220.

3. Product/Service Description:

 Export Opportunities:

Beximco Fashion Ltd mainly exports in USA, Canada AndEupore. They get good
opportunities like shipping by air, shipping by vessel and many more as the
political situation of these countries are well as they are developed countries. They
could have find more country like, Brazil, Russia, Mexico, Japan e.t.c. They could
also export their high quality garment products in Latin America. Most of the
international garments market are unexplored.

 Growth potential :
Growth potential is an organization's future ability to generate larger profits,
expand its workforce and increase production. Growth potential is an
organization's future ability to generate larger profits, expand its workforce and
increase production. In the business sense, an organization's growth potential

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depends heavily upon its leadership's expectations for success, and the quantitative
and qualitative measures used to determine expansion readiness.

 Product strategy:

Yarn Products

 Count - Ranging from 6 – 120

 Fiber - Cotton ( super – combed, combed, carded)
 CVC - 60% cotton, 40% polyester
 TC - 65% polyester-35% cotton; 100% polyester both regular and sewing thread
          Lyocell, Tencel, Modal, Rayon, Viscose etc.

Fabric Products
Solid Dyed Yarn Dyed Finishing

 Poplins  Ginghams  Wrinkle Free

 Twills  Stripes  Easy Care
 Dobbies  Fil-a-fils/End-on-ends  Peach
 Oxfords  Chambrays  Chintz
 Seersuckers  Seersuckers  Paper Touch
 Canvas  Pinpoint  Teflon Coated
 Ribstops in 100%  Oxfords  Water Repellent
Combed Cotton  Dobbies  Water Resistance
 CVC and CVS/TC  Plaids in 100%  Rubberized
 Stretch Combed Cotton
 Satten  CVC and CVS/TC
 Stretch
 Satten

       
  Dobby Designs Yarn Count 

 Herringbones  Ranging from 7 to 120

 Bedford Cords/Coteles
 Waffles and various
structures in 100%
Combed Cotton
 CVC and CVS/TC

Knit Products
 Jersey : In 100% Combed Cotton, CVC, CVS/TC, and Lycra mix
 Polo Pique : In 100% Combed Cotton, CVC and CVS/TC
 Back Pique : In 100% Combed Cotton, CVC and CVS/TC

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  Herringbone : In 100% Combed Cotton and CVS/TC
 Popcorn : In 100% Combed Cotton and CVS/TC
 Bubble Knit : In 100% Combed Cotton, CVC and CVS/TC
 Crepe : In 100% Combed Cotton and CVS/TC
 Engineering Stripe : In 100% Combed Cotton and CVS/TC
 Feeder Stripe : In 100% Combed Cotton and CVS/TC
 Auto Stripe : In 100% Combed Cotton and CVS/TC
 Rib : In 100% Combed Cotton and CVS/TC
 Jacquard : In 100% Combed Cotton and CVS/TC

     
  Denim Products    
     
   Chambray : In classic indigo colours ranging from 4oz to 5.5oz/Yd2
 Denim (blue) : In classic indigo colours ranging from 4oz to 15oz/ Yd2
 Denim (black) : In sulfur black colour ranging from 4oz to 15oz/ Yd2
 Coloured Denim : In a variety of colours - both in sulfur & reactive dyes(warp
dyed)
 Overdyed Denim : In a variety of colours on indigo blue & sulfur black
 Bull Denim : In a variety of reactive colours ranging from 10oz to 13oz/ Yd2
(piece dyed)
 Stretch Denim : In classic indigo colours ranging from 4.5 oz to 13.75 oz/Yd2

   
  Special Yarn Products    
   
  Plied Yarn, Fancy Yarn, Slub Yarn (7's to 20's), Stretch both Lycra (10's to 40's) and
Spandex and other Core Spun, Multi count, Multi Twist etc.
   
  Unique Wrinkle-Free product  
   
  CORTEK-2000

mbedded filament core, which makes it permanently wrinkle-free. no resins or chemicals

are used making the fabric ecologically friendly as well as highly durable.
The technology provides the soft, natural comfort of cotton and the wrinkle-free
convenience and strength of synthetic fibre. Beximco is the manufacturer and exclusive
licensee in bangladesh of Cortex-2000, USA.
   
  COTRA DP 3.5 +

This is a 100% cotton fabric, which is chemically, treated in a hi-tech precure process
which is safe, clean and ecologically friendly. The result achieved meets a durable press
rating of dp 3.5+ (aatcc - 124).

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 Previously, this result could only be achieved by ammonia processing which is rapidly
becoming obsolete, as it is hazardous to health and environment.
Beximco is the manufacturer and exclusive licensee in bangladesh of Cotradp 3.5 +, USA.

4. Market Entry Strategy:

 Direct exports
Direct exports are when market, sell and deliver products directly to the client. In
the case of services, negotiate, contract and work directly with the client. By
avoiding a middleman, get a higher return on investment, set lower prices and
become more competitive. Furthermore, Beximcohave a direct relationship with
their customers.

 Indirect exports
Beximco export indirectly through an intermediary, such as a trading house, an
agent, a representative or foreign distributor. Depending on the arrangement.

 Partnerships and alliance

Beximcohave alliance or partnership with a domestic or foreign company.
Partnering with a foreign company can provide the expertise, technology, capital or
market access that beximco might not be able to afford.Beximco allying with a
Canadian company whose products or services complement can reduce costs
through joint marketing efforts or the sharing of distribution channels.

 Agents and representatives

An agent secures orders from foreign customers in exchange for a commission. A
representative is a specialized agent who operates within a specific geographic area
and who sells related lines of goods or services.

Both agents and representatives may be authorized to enter into contractual sales
agreements with foreign customers onbehalf of beximco. Normallybeximcopay
them a commission only when they sellbeximco product or service.

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  Trading houses
Trading houses are domestic intermediaries that market secure beximco goods or
services abroad. A full-service trading house can handle many aspects of
exporting, such as market research, transportation, appointing distributors or
agents, exhibiting at trade fairs, advertising and preparing documentation.

 Foreign distributors
Unlike agents, distributors actually purchase beximco product or service and resell
it to local customers. Often, they set the selling price, provide buyer financing and
look after warranty and service needs. They also usually provide after-sales service
in the foreign market.

 Product selection and pricing:

As I said before our product will be American Thread, Zipper, Interlining, Button
for example: Snap button, Plastic button, .Metal button. Label, Motif. So, all of our
products will be free from harmful elements and environmental friendly and it will
be clearly mentioned in our campaign. There will be such a variety in our product
line. For pricing, we have to be very careful, because of the sustainability and
competition issue in that industry. We have to be very careful about our pricing.

 Distribution method:

Our distribution method will be solely dependent on ordering companies

requirement. With the governance of that association, all exports will be monitored
and controlled. We will place our products on online b2b agents, such as Amazon,
Aliabad etc. Basically this types of products are being distributed through shipment
services and freight cost will be adjusted through mutual understanding between
two companies.

 Terms and condition:

There will be terms and conditions written clearly on our website. Here is a list of
important points about terms and condition of our company:

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1. How to order: phone call, email, pre-pay, and cash of delivery system.
2. Order quantity: minimum quantity, large quantity discounts.
3. International order issues: fees, tax, shipping and handling charge and other
costs.
4. Product quality: Quality certificates
5. Customer service: phone support and others
6. Protection from fraud
7. About the delivery of products
8. Warranty and safety of products
9. Return guarantee and policy
10. Privacy policy.

 Product pricing:

The strategy for setting a product’s price often has to be changed when the product
is part of a product mix. In this case we look for a set of prices that maximizes the
profits on the total product mix. Pricing is difficult because the various products
have related demand and costs and face different degrees of competition.

For our product we select penetration pricing.

Penetration pricing refers to a marketing strategy used by businesses to attract

customers to a new product or service. Penetration pricing is the practice of
offering a low price for a new product or service during its initial offering in order
to lure customers away from competitors. This marketing strategy relies on the
idea that low prices can help make a customer aware of and more willing to buy a

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new product.

Advantages

Low prices create positive branding among initial customers who will then share
that opinion with other possible customers. Increasing market share can lead to
high sales volume and hence, lower production costs. Finally, a customer who buys
a low price product will often buy a regular or high-priced related product out of
convenience.

All though we are newly exporting our products to America, we are trying to
attract our customer at low price.

Manufacturing Cost:

Item Cost
Thread Tk.20
Zipper Tk. 80/ Piece
Interlining Tk. 2.80/ piece
button Tk.80 box

Transportation Cost:

Item Cost
Thread Tk.05
Zipper Tk. .10
Interlining Tk. .05
button Tk. . 10

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By adding up manufacturing, transportation and all other costs, our export price of
the products will be,

Selected Export Price:

Item Cost
Thread € 0.20
Zipper € 1.00
Interlining € 0.30
button € 0.12

5. Financial Analysis:

Types of Expenses Percentage Amount

Value of the goods
1000000$
Cost of handling carriage
1000$
before

Fixed cost of export

5000$
Customs formalities

Handling costs
2000$
Total cost of the main
10000$
transport

Cost of insurance for the

3000$
main transport

Cost of handling on arrival

4500$
Customs duties
3% 24000$
Import taxes
5% 36000$

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Flat rate(rant)
32000$
Cost of carriage after
2800$
Delivered Duty Paid
879700$

6. Risk Management:

 Country risk:

Country riskrefers to the risk of investing or lending in a country, arising from

possible changes in the business environment Country risk is a collection of risks
associated with investing in a foreign country. These risks include political risk,
exchange rate risk, economic risk, sovereign risk and transfer risk, which is the risk
of capital being locked up or frozen by government actionthat may adversely affect
operating profits or the value of assets in the country. Generally, risk is defined as
a performance variance, whether it impacts the business operation positively or
negatively. The country risk means the potential risk that likely caused by
engaging in credit, investment and financial transaction across national borders.
Commonly, the occurrence of the country risk is caused by the act of country's
sovereignty in the international economic activity.

 Commercial risk :

1. Competition: Market is getting tuff day by day. There are huge competition.
Lots of companies are making same product. Competition is a big
commercial risk. Means, if your product can not have adaptability to change
to the conditions of foreign market requirements, you may fail in exporting
such product. Customer taste are changing daily globally. So, if we fail to
update features of your product, our market to sell will comes down. So taste
and preference of end users of our product plays an important role in any
business market especially in export import trade.

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 2. Knowledge about foreign market: One of the major commercial risks is
lack of knowledge about the international market. If an exporter who does
not have proper knowledge about the area of sales where he markets his
product, no doubt, he may fail in international business. So, an exporter
should have studied thoroughly about the foreign market about selling of his
export product.

3. Distance: International business is taken place from one country to another

country where the distance between exporter’s place and importer’s place is
too far. So meeting requirements of our overseas buyer is a crucial one. Due
to longer transit time, if shipped by sea or delay in transit to inland
destinations may lead to reject the export goods as our overseas buyer may
not be able to use goods based on his commitments to customer.

4. Export order cancellation: In international business sometime importer

cancel the order. That make a huge loss of exporter. In this situation,
exporter should be in a position to handle the issues which had not
anticipated before export.

 Credit Risk:

Due to labor and political tension credits are in risk. Rapid fluctuation of interest,
unpredictability in the policy making of the country and natural calamities could
make the credit in huge risk.

 Currency risk:
Involved in foreign exchange markets in any capacity, we may face foreign
exchange risk. Exporting firms may have accounts receivable in foreign currency.
The foreign exchange risk of these firms is the possibility of depreciation in
foreign currency. In this case, when the exporting firm exchanges foreign currency
for the domestic currency, it receives a smaller amount of domestic currency for
the same amount of foreign currency.

We export garments products to America, and our accounts receivable are

denominated in taka, totaling $10,000. As a Bangladeshi firm, we don’t use dollar

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in our daily operations. Therefore, as soon as we receive the dollar from the
American importer — say, a week from now — we plan to convert them into taka.

Suppose that the current taka–dollar rate is 80.64 tk, and we observe the dollar
appreciating every day until it reaches an exchange rate of 79.50tk a week from
now, when we convert the dollar to taka.

If the exchange rate of 80.64 tk had remained constant, our firm would have
received 8,06,400tk ($10,000 x 80.64tk). However, because the dollar depreciated
(or the taka appreciated), we receives only 7, 95,000 ($100,000 x 79.50 tk).

There is always a risk of currency. So The Financial records of the company are
maintained and the financial statements are stated in Bangladesh Taka. The assets
and
Liabilities denominated in foreign currencies at the financial position date are
translated at the applicable rates of exchanges ruling at that date. Exchange
difference is charged off as revenue expenditure in compliance with the provisions
of BAS 21: The Effectsof Changes in Foreign Exchange Rates. Foreign currency
transactions are recorded at the applicable rates of exchange ruling at the
transaction date.

 Market risk:

Short Term Market Risk:

*Beximco Fashion Ltd mainly exports in USA, Canada and Europe. Due to the
poor environment of labor safety it could have stopped the free trade. Any
incidence like "RANA PLAZA", international market will be in risk.

*Rapid Fluctuations cost of raw materials and garment accessories could reduce
the competitiveness of the product in the international market.

*Lack of modernization and skilled labor could also threat the international
market.

*Unpredictability of production due to the labor tension could risk the market.

Long Term Market Risk:

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Bangladesh will be no more least developed country in near future. So, Bangladesh
will not enjoy 100 duty free, quota free access. So buyer could find new sourcing
country before 2021.So export could be hampered.

 Political risk:
Political risk refers to the risk that a host country will make political decisions that
will prove to have adverse effects on the multinational's profits and/or goals. When
any company exports its product generally it faces some political risks. Beximco
Fashions Limited manufactures and exports garments for brands and retails in the
United States, Canada, and Europe. There are various political risks in these
counties, such as

1. Very open to and highly dependent

2. Inadequate research and development spending

3. Loss of competitiveness of manufacturing companies against growth of

emerging economy competitors

4. High level of household debt

5.Energy exports under threat (natural gas resources in United States)

6 . Inadequate gas pipeline infrastructures

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