BUSINESS STRATEGY

Nov-Dec 2021
Time allowed- 3:30 hours
Total marks- 100
[N.B. - The figures in the margin indicate full marks. Questions must be answered in English. Examiner will take account of the
quality of language and of the manner in which the answers are presented. Different parts, if any, of the same question
must be answered in one place in order of sequence.]
Marks
1. (a) Eco Plus is a local electronic manufacturing company operating in Bangladesh. Eco Plus plans
to grow by offering a sound system, the EP5000, that is superior and unique from the competition.
Eco Plus believes that putting additional resources into R&D and staying ahead of the
competition with technological innovations is critical to implementing its strategy. Eco Plus's
strategy is:
a. product differentiation
b. downsizing
c. reengineering
d. cost leadership
Requirements:
i) Among all the above four strategies, which one you think is the business strategy and why
other three should not qualify as business strategy here? 2
ii) How should organizations deal with corporate strategy where technology changes rapidly
and start-ups can be more powerful than expected? 3
iii) What is the difference between corporate culture and organizational culture? 4
iv) What is blue ocean and red ocean strategies? Is it possible to use these two strategies for
launching products at the same time? 2
(b) (i) Business ethics play an important role in an organisation’s success or failure. Discuss
impact of ethics on business strategy. 3
(ii) Manager’s performance and businesses are frequently evaluated on short term successes such
as profits. Strategic thinking requires that managers consider the long-term growth and
survival of the business. Strategic management and strategic planning therefore often
distinguished from operational issues by the length of time concerned: the planning horizon.
Requirement: Describe the factors having influence on planning horizon in strategic
business management. 4
(c) In recent years, Bangladesh has seen a rise in electronic commerce (e-commerce) along with
other countries around the world. Many young entrepreneurs have come up with various digital
products and services for customers. The availability of the internet and convenience in terms of
saving time spent in traffic have helped this growth. However, the sector is yet to reach its full
potential. Several challenges hinder its further expansion. Given the significance of the sector in
terms of business potential, employment generation and customer service, a research organistion
held a webinar on Digital Platform Economy in Bangladesh recently. The keynote presentation
and experts highlighted how the e-commerce sector can be expanded to serve more customers
and also detailed which policy supports are needed for it to become an efficient sector.
A couple of days before the webinar, the e-commerce sector in Bangladesh came to the limelight
in connection with a huge scam of certain e-commerce ventures. Customers paid advances but
the companies failed to deliver their products and refund their payments. Even before this
revelation, there were red flags regarding the integrity of some online businesses which have
been conducting e-commerce. The quality and price of products, delay in delivery of products to
customers, difficulty in returning products, risk of not getting refunds, and overall quality of
customer service have been the common complaints against a number of companies. The most
talked-about company among the lot seemed to have performed every trick to cheat its customers
and siphoned off a large amount of money by not refunding customers' advance payments, even
though they failed to deliver goods for a long time.
This whole episode of huge fraud by a widely promoted e-commerce platform even by some of
the country's respected media has shaken not only the integrity of the company itself, but also of
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those which have been advertising the services of the company. Of course, in a welcome move,
a reputed financial transaction company has immediately disassociated itself with this fraudulent
e-commerce platform.
At a time when there is a growing demand for e-commerce in Bangladesh, such irregular practice
has destroyed the trust of consumers greatly. E-commerce is performed between businesses and
customers based solely on trust as there is no face-to-face interaction between them. Customers
rely on the e-commerce entities and pay for whatever product is displayed on the screen. Once
the trust is gone, the sector will lose its customers. Retrieving the trust will require a lot of hard
work and dedication. Even many large global e-commerce establishments have failed to survive
once their reputation was at stake.
In our country there is a section of people who wants to thrive using only unfair means.
Unfortunately, this number is increasing every day and not just in the e-commerce sector. The
financial sector is another example where incidences of even bigger irregularities are unearthed
regularly. The number of willful bank defaulters is increasing. Additionally, dealing with
occurrences when people are taking out money from banks and non-bank financial institutions
through deceitful ways is also a major challenge for the financial sector. One of the reasons for
irregularities with public money is that wrongdoers are rarely punished as they have connections
with powerful people. Besides, these new rich with ill-gotten money are adored by society. A
section of our society appreciates their wealth, gives them special attention and tries to follow
their path in order to earn a luxurious lifestyle just like them. The definition of success to them
is to possess wealth by any means and to flaunt the illegal wealth shamelessly.
The case of e-commerce is of course different from other established sectors. This is a new sector
in Bangladesh. Regardless, during the ongoing Covid-19 pandemic the e-commerce sector has
flourished significantly. Sales through digital platforms increased by 70 percent in 2020
compared to the previous year, according to the e-Commerce Association of Bangladesh. But the
size of the sector is still small. Besides, if one goes by the strict definition of "e-commerce",
many businesses will not qualify to be e-commerce entities at all. It is not only about having a
license to operate the business. The e-commerce company should also have proper policies about
shipping, delivery, returns and refunds. Full disclosure on the product and also on the company
about its assets and liabilities is a must. Besides, privacy policy on customer information is also
an essential requirement for conducting e-commerce. Since many e-commerce companies do not
fulfil these pre-conditions, the customers are being deprived of having value for their money and
even being cheated by not receiving either the product or a refund.
The absence of a regulatory framework for the e-commerce sector has helped dishonest people
to take the opportunity and commit fraud. Many digital commerce operators do not have license
or a Tax Identification Number. Recently, the Ministry of Commerce has launched Digital
Commerce Operations Guidelines 2021. The guideline instructs that the maximum number of
days for the delivery of products will be five days once an advance payment is made by the
customer. There are also details on when a company would hand over the ordered product for
delivery and what will be the penalty if products are not delivered on time. It also instructs
companies to inform customers about order updates through mobile text messages, emails or
telephone calls. In case of failure to comply with the guidelines, the government can close down
the company. Consumers can also lodge complaints with the Consumer Rights Protection
Department and relevant courts.
Increasing customer literacy on digital business is also very important. Due to lack of awareness,
customers fall prey to the businesses' tricks which ultimately leave them in distress. Consumer
rights associations and media can help such consumers by providing regular information on
which companies they should be careful of and how to protect themselves from being cheated.
Requirements:
i) Explain the nature and importance of e-commerce business in the context of Bangladesh. 3
ii) Discuss the advantages and disadvantages of e-commerce business. 3
iii) What are the causes of slow development of e-commerce business in Bangladesh? 3
iv) What remedial measures can be taken by the government to safeguard interest of the
customers? 2

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2. In the wake of the Covid-19 pandemic in March 2020, most global brands and buyers had either
cancelled or postponed imports of apparel from Bangladesh. Later, towards August and September
2020, many buyers reinstated their orders which helped apparel exports rise. Driven by ready-made
garments (RMG), the export sector of the country bounced back to a large extent during the pandemic
though it remained lower than the pre-Covid period. Recently, however, RMG exporters have
expressed concerns as many buyers have once again cancelled their orders as the country went into
lockdown to tackle the spread of coronavirus.
As the government has no choice but to go for a strict lockdown during this wave of the pandemic,
worries over economic recovery continue. But lockdown is only a temporary solution and has a high
cost. Therefore, vaccination of all eligible people at the earliest is the only solution to survive.
Otherwise, the cycle of lockdown and opening up will continue for quite some time. This will cost the
economy dearly. Various surveys have indicated a rise in unemployment and poverty as economic
activities have shrunk. The cancellation of RMG export orders is indeed a great concern as the sector
is a strong pillar of the economy. It is the source of about 3.6 million jobs and over 80 percent of income
from exports. While the apparel sector has to think of overcoming the current challenges and staying
afloat during the pandemic, there are also a number of important medium and long-term issues which
need to be addressed parallelly. These are related to Bangladesh's new identity as a developing country,
and stringent compliance issues and competition from other players in the global market.
As we recall, following the Rana Plaza tragedy in 2013, Bangladesh's apparel sector came under
tremendous pressure for improving compliance and safety in its factories. Accordingly, the RMG
industry made an important transition towards improved compliance in the sector. Major compliance
measures were undertaken to ensure the safety of factories and workers through collaboration among
Bangladeshi entrepreneurs, the Accord on Fire and Building Safety, the Alliance of Bangladesh
Worker Safety, and the Partnership for Cleaner Textile. The labour law of the country was amended
and the right to form trade unions in factories, including in the special economic zones, was approved.
The minimum wage of RMG workers was raised in an attempt to make it comparable to other
competing countries. These initiatives were useful in developing standards and ensuring transparency
and compliance. These had also helped attain higher RMG exports though there were some periodic
fluctuations.
Compliance measures have helped in bringing more credibility to the RMG sector. But compliance
is not a one-off initiative. It is an ongoing process and has to be pursued continuously for sustainable
growth of the sector. It is encouraging to note that a number of RMG entrepreneurs have accepted
compliance as an integral part of their business. Many entrepreneurs have taken self-motivated
initiatives to stay ahead of the curve and maintain competitiveness. This has been critical since the
Accord and Alliance left in 2018; with their departure, monitoring safety issues in factories is to be
continued with similar rigour by the entrepreneurs themselves.
Of course, higher compliance by the industry also means higher costs of production while
entrepreneurs face stiff price competition in the global market. In such a situation, some may opt for
reduced production capacity to make up for additional expenditure on compliance requirements. This
is obviously not desirable as the sector plays a crucial role in the economy. One of the ways to make
up for increased costs is through higher productivity and moving towards high value products in
high-end markets. Higher productivity will require technological upgradation in the industry.
The role of buyers as a major stakeholder cannot be overlooked in the case of improving compliance
in the RMG industry. They have to collaborate with suppliers in improving productivity. Ironically,
in a fiercely competitive market, brands and retailers are always on the lookout for the lowest prices.
Many buyers source from Bangladesh to maximise their profits through low prices. Ethical buying
and fair price are not always under the purview of profit-making brands. If that was so, then some
other competing countries would have been dropped from their sourcing list. This emphasises the
need for investing in higher productivity. Wages and labour rights related issues also have to be taken
seriously into cognisance. If the sector can invest in safety, compliance, and technological
upgradation, it can also increase labour wages. In the short run, an increase in labour costs will lead
to higher production costs; however, in the long-run these costs can be internalised by higher
productivity and efficiency.
Higher compliance in the sector has become all the more important as Bangladesh is going to graduate
from the least developed country (LDC) category by 2026. There will be many challenges after
graduation. One important challenge is the loss of preferential market access of Bangladeshi products,

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 including RMG products, in many countries. For example, as an LDC, Bangladesh gets duty-free quota-
free access to the European Union (EU) market under the Generalised System of Preferences (GSP).
The EU is a major destination of Bangladeshi exports. In these new circumstances, Bangladesh will
have to compete with other countries to enter the global market by paying the existing tariff which will
make the country less competitive. While there will be GSP+ opportunities during the post-graduation
period, in order to avail these facilities, Bangladesh will have to ratify 27 core international conventions.
Among these, 15 are human and labour rights related conventions.
Therefore, without adequate preparation from now on, fulfilment of stringent compliance issues
could be difficult. This will require a comprehensive work plan by the government, which has to be
implemented in a collaborative manner. The government, Bangladesh Garment Manufacturers and
Exporters Association (BGMEA), workers' associations and trade unions, buyers, development
partners, civil society, and the media are all a part of this journey.
Requirements:
(a) What are the challenges faced by the RMG sector during COVID 19 era? 4
(b) Suggest what measures need to be taken after post covid situation for business recovery of the
RMG sector? 4
(c) Government support, compliance of the rules and regulation, are prerequisites and also a
comprehensive work plan is required to recover the market. Justify this arguments. 4
3. Far Ceramics Limited (FCL) is a quality tableware manufacturer based in Savar, Dhaka, with its
corporate office in Dhaka, Bangladesh. It was established by Mr. Forhad Rahman, a local
businessman and entrepreneur as a private limited company. It was founded in 1997. Main raw
material for the ceramic industry, white stone is available in the surrounding area of Mymensingh
district. It is specialized in the design and manufacture of exclusive ceramic tableware, which are
exported to European countries and also sold in local Bangladesh market through different own
outlets and agents’ showrooms.
From the beginning, FCL created a reputation for manufacturing of tableware of the highest quality
which it originally sold to wealthy individuals. For more than two centuries, Far tableware are used
by the sophisticated household, hotels and restaurants. Its name became a brand name associated
with elegant life style in home and abroad.
FCL did very well in terms of profitability and was converted to a public limited company in 2010
at the peak of its success, when it was listed in the Dhaka and Chittagong Stock exchange. 30 % of
the share of the equity share capital remains in the hands of Rahman family, 40% by the institutional
investors, and the remaining by the individual investors.
Now, after several years after listing, FCL’s results began to deteriorate. FCL decided to outsource
some of its manufacturing operation to other place of Bangladesh in an attempt to reduce cost and to
address competition from the following sources:
i) Cheaper raw material cost and low labour cost
ii) Few new group of companies started to introduce new product designed to resemble high
quality tableware;
iii) Government has allowed to import foreign branded low quality products
These sources of competition have become more powerful since 2020 and sales and profits have
continued to decline, despite the outsourcing decision. The most recent results for the year ended 30
June, 2020 show a fall in revenue of 15%, fall in profit 25%, and negative operating cash flow. The
business urgently needs to change policy, marketing plan, other operating issues if it wants to avoid
loss making and continue business.
For nearly a year, institutional shareholders have been openly critical of the chairman and CEO, Mr.
Sohel Rahman (son of Mr. Farhad Rahman). Chairman & CEO runs the company in an authoritarian
manner. He has refused to appoint non-executive directors, on the basis that they would not be as
committed to the company as its executive directors, whose remuneration is based on the financial
performance of the business. Some institutional investors have suggested that the company should
consider seeking a buyer from other manufacturer.
A Board meeting was held on the issues regarding future strategic options. Following were opinion
expressed by the directors:

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 Marketing Director: for years’ we have set worldwide standards in tableware design and
manufacturing, but people’s attitudes to dining have changed. As formal dining has given a way to
more relaxed eating habits, so our traditional products has become unfashionable. As a result, our
sales to individual customers are now concentrated on a very narrow market, consisting customers
over 40 years of age. What’s more the recession is unlikely to help matters as it will inevitably depress
sales of what is seen as a luxury item.
I think we have taken too narrow a view of SAARC market as the solution to our manufacturing. I
believe we should also focus on SAARC countries as a new sales market. There is an opportunity
here to build a brand image of exclusive tableware, based on our English style and heritage.
We also need to target the new, younger generation who are unfamiliar with our products. The
recession may work in our favour here, as more people choose to dine at home instead of eating out.
We can exploit this by introducing a new range of everyday designer tableware. One of the famous
chefs, owns a well-respected design and marketing business. He has agreed to cooperate with us in a
joint venture to launch such a product.
Production Director: I think the lack of sales is more about supply chain issues than anything else
and these have impacted on our customer service capabilities. At the moment there is mismatch
between the high quality of our product and the level of service we are providing to the customers.
Although, we carry high level of inventory, these are not always of the right product lines. Because
of the lead times associated with overseas manufacturing, production and delivery times have
increased and our level of overdue orders is unacceptably high.
The problem is exacerbated by the fact that all our key strategic and operational decision making is
carried out by the board, so production is based on centrally produced sales forecast and not driven
by real customer demand. Our centralized management structure has given rise to inflexibility and
slow response times. It has also stifled local sales initiatives and design innovations. I believe that
we need to address our supply chain issues and at the same time change our decision making structure
so that more authority is delegated, and sales planning is undertaken by local managers within each
sales market.
A former colleague of mine now works at Popular Electronics Ltd. (PEL), a company which
manufactures portable consumers electronics such as digital radio, MP3, and DVD players. They
have just completed a review of their supply chain with amazing results, and they have published
some of their data on this. I think we could learn something from what they have achieved.
Chairman and CEO: I really don’t see how we can learn anything from PEL- they are in a
completely different industry from us. Surely they don’t know anything about the manufacture of
ceramic tableware and any targets they set for their supply chain will not be a relevant benchmarks
for ours.
Requirements: Acting as a consultant to the Board of Directors answer the following:
(a) Using Ansoff matrix, analyse the proposals made by the Marketing Director regarding product
marketing. 5
(b) Evaluate the Production Director’s proposal to decentralize decision making. 5
(c) Evaluate the comments made by production director and the chairman regarding PEL’s issue as
a case of benchmarking. 4
(d) Explain the principles of good corporate governance which would be relevant and the ways in
which non-executive directors would be of benefit to the running of FCL. 4
4. (a) The management of state funded “Dhaka General Hospital” is considering outsourcing the
cleaning of its premises. This will mean private firms taking over as employers of existing
cleaning staff and assuming responsibility for the cleaning of the areas around beds, corridors
and communal spaces.
Increases in incidents of infections during hospital stays by patients, some resulting in death,
have been widely attributed by the media to poor hospital hygiene. Several legal cases for
compensation have been decided against hospitals on the grounds of negligence by management.
Requirement: What factors should management consider in evaluating the proposal to outsource
its cleaning? 10

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 (b) BD Best Leather and Leather Products Limited (BLPL) is a composite leather and leather related
products manufacturing facility in Bangladesh. BLPL is a 100% export oriented family owned
private limited company located in Ashulia about 20 kilometers from Dhaka in “BLPL Leather
Park”. BLPL started it commercial operation in 2014 with its composite leather manufacturing
facility which includes leather processing, cutting, sewing and lasting units, all located in 10
acres company owned “BLPL Leather park”. Only 30% of the land are being utilised by existing
production facility and the rest are available and suitable for future expansion if required.
BLPL established by Mr. Saleh Rahman after his retirement from a leading multinational leather
company in Bangladesh is positioned as a leading exporter of leather products and has top brands
in the world in its customer list. Mr. Rahman now actively looking for a strategic partner to
finance expansion and modernisation to remain competitive and cope with enhanced customer
demand from abroad.
Al Suhail Group in Dubai (Al Suhail) engaged in manufacturing and marketing leather products
is in talks with BLPL regarding acquiring a majority stakes in the company. CEO, CFO and
Production Head of Al Suhail recently visited BLPL and had initial discussions with Mr. Rahman
and senior management of the company. They reviewed past business performance, financial
statements and found that the plant condition is satisfactory. They are excited about the customer
profile of BLPL, the empty land is suitable for Al Suhail’s expansion plan to cater growing
customer demand.
Al Suhail CEO and CFO are in talks with you to work as their financial advisor for the transaction
and requested for a proposal to be placed to their board for your appointment as an advisor to
help Al Suhail in due diligence and valuation of the target.
Requirements: Prepare a proposal for consideration of Al Suhail Board containing:
i) The scope of “due diligence audit” for finalising acquisition of BLPL by Al Suhail. 5
ii) Different valuation techniques to assess the value of an acquisition. Which valuation you
would recommend for acquisition of BLPL? Why? 4
5. (a) Torrecid Lamination Limited (TCL) has been trading for many years making specialist glass
products for military uses. Its main customers have been manufacturers in the defence sector which
need glass that can withstand special conditions, such as windscreens in jet fighter aeroplanes.
Annual sales of TCL was BDT 220,000,000 with net profit of around 10% after tax in 2018.
TCL customer base eroded over last two years. Sale have fallen to a likely BDT 140,000,000 in
2022. Although some cost savings were possible, TCL lost BDT 5,000,000 for the year ended
on June 30, 2021.
TCL has the advantage of very modern computer-controlled equipment which allows it great
flexibility and enables the company to new markets by applying expertise gained in the (now
rapidly shrinking) defence sector.
Staff and management have become very anxious but are loyal and keen to change the direction
of company. Managers see themselves as experienced, yet modern.
Customers are historically defence based but as, TCL has realised, these are fewer in number.
New customer would include private sector firms such as high street private and foreign banks
in Bangladesh, which need security glass. Major customer potential exists overseas, but here the
problems of bad debt and risk and uncertain cash flow are key factors that need to be considered.
Rivals are largely niche operators, except for a few big companies, but tend to be small because
each customer has a unique problem to solve. Product quality and innovative design are crucial
elements, but branding is not important.
Technology is continually evolving but pricing is not a major problem because customers value
quality above all and are prepared to pay a premium for new technology that can (for example,
with bomb-proof glass) save them a fortune.
Suppliers are plentiful, except that key skilled staff are highly sought after.
The managing director of TCL Zaara Mahjabin has proposed to the board that a bold expansion
programme is implemented. She believes that TCL has the skills to attack the private sector

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 financial services sector and diplomatic protection market. To fund the sales team and working
capital, she proposes to use NAM Financial Services Limited which should advance up to 80%
of current receivables, yielding about BDT 28,000,000, which will be adequate to fund growth.
She also proposes to change the company name to Suez Glass Limited.
TCL has a non-executive director, Sartaj Islam, who convinces the board that a proper business
plan is needed. He argues that, NAM Financial Service will only agree to the proposal if such a
plan is produced. However, he is unsure, how to go about this and advises that TCL’s accountants
become involved.
Requirement:
As a member of staff of TCL’s accountants, write a memorandum to Zaara Mahjabin which
explains the steps required to create, implement and review a business plan. You need not specify
detailed strategies but must identify the critical factors for successful implementation of the plan. 10
(b) Change management involves management of stakeholders’ expectations and attitudes. The
reasons for the initiated change process in the organisation therefore should be clearly
communicated among the stakeholders. Suggest ways in which an organisation can successfully
communicate the changes to: 7
(i) Shareholders (ii) The Press (iii) Suppliers (iv) Customers
(v) Senior Managers (vi) Staff (vii) Line Managers
(c) Discuss different types of Business Risks. 5

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