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Independent University Bangladesh (IUB)

MBA: 514 International Business: Autumn 2022 (S-3)

Assignment Topic: Impacts of the Russia-Ukraine war on Pizza Hut as

well as on the economy of Bangladesh.

Submitted By:
Group Name: Creative Stars
Student Name Student ID
1. Shaon Chandra Saha 2231258
2. Shamik Roy 2222289
3. Mohammad Rizvee Bhuiyan 2231703
4. Jannatul Kowser 2221259

Submitted To:
Dr. Md. Mahbub Alam

Submission date: 06 December 2022

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ABSTRACT
Since the war between Russia and Ukraine began on February 24, 2022, the global
economy has entered a new terrain of uncertainty. The war-induced challenges
have surfaced on various fronts. With global economic integration, a crisis of such
nature, which involves a country like Russia, is bound to impact other economies.
Pizza Hut is an American restaurant chain. It operates franchises internationally.
The company operates in the food industry and offers food items like pizzas, pasta,
garlic pasta breadsticks, drinks, and desserts. Pizza hut covers 36% market share in
Bangladesh among their competitors like Domino’s. Pizza hut captures a large
portion of the market share. Pizza Hut increased the price of its pizza worldwide
because its pizza-making ingredients price is so high right now due to Russia and
Ukraine Wars. American company Yum! Brands, which owns fast-food
restaurants- KFC and Pizza Hut, has suspended investments in Russia.

This report shows various impacts on Bangladesh’s economy. The impact of the
Russia-Ukraine conflict is also being felt in Bangladesh. Russia and Ukraine have
trade and import trade relations with Bangladesh. Due to the closure of Swift in
Russia, many payments were blocked, and shipping with Russia was reduced, so
new orders were cancelled. Local exporters and importers are struggling with bills
payment, falling exports coupled with higher import bills. Bank and business
sources say businessmen are facing problems in opening Letter of Credit (LC) after
Russian banks were excluded from the SWIFT system, while exports to Russia
have faced a severe setback.
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Table of Content

Serial No. Topic Name Page No.

Abstract 2
Chapter-1 Introduction 4
1.1 The objective of this study 4
1.2 Source of Data 4
Chapter-2 Impact on Pizza Hut 5
2.1 Pizza Hut In Bangladesh 6
2.2 Market share of various companies 6
How is the war in Ukraine & Russia affecting
2.3 Pizza Hut operations? 7-9
2.4 Pizza hut situation in Bangladesh 9-11
Chapter-3 Impact on Bangladesh’s Economy 12
3.1 Impact on Export 12-15
3.2 Impact on Import 15-16
Impact on Development Project of
3.3 Bangladesh 16-17
3.4 Focus on Globally 17-18
3.5 Balance of payment 18
Currency Trend and Reason for Increasing
3.6 Dollar Value Against BDT 18
Chapter-4 Findings of this report 19
Conclusion 19
List of References 20

Introduction: The Economic impact of war is so bad on this integrated

interdependent economy is more costly than the war itself. We have been
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experiencing this since the onset of the Russia-Ukraine war. With the responses of
many countries, the situation emerged with uncertainties and challenges from
many fronts. Being an import-dependent country Bangladesh’s economy was
mostly affected negatively which also hampered the recovery from the pandemic
stress. In this report, we try to show impacts of Russia-Ukraine war on Pizza hut’s
sales, prices, and ingredients prices also give various reasons why pizza prices
increased.

This report covers impact on Bangladesh’s economy such as impact on export,

import, development projects, and focus on global issues also cover the balance of
payment issues and currency trend and the reason for increasing dollar value
against BDT etc.

1.1 The objective of this study: To find out the impact of the Russia-Ukraine
war on Pizza Hut as well as on the economy of Bangladesh.

1.2 Source of Data: This report will be descriptive and quantitative. This report
is mainly based on secondary data as well as primary collected data. Secondary
data will be used to conduct this report.

Impact on Pizza Hut

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Pizza Hut is an American restaurant chain. It operates franchises internationally.

The company operates in the food industry and offers food items like pizzas, pasta,
garlic pasta breadsticks, drinks, and desserts. It provides catering service and
fanservice opportunities. The company was founded in 1958 by Dan and Frank
Carney and is based in Plano, Texas. It is a subsidiary of Yum Brands Inc. (Pizza
hut, 2015). Pizza hut runs three different formats of restaurants – first is the family
dining in restaurants, second is the delivery and carry-on types, and carry-and is
where the first and second are merged. Pizza hut aims at providing the best quality
product and services to their services. The vision of the company at inception was

to provide a special pizza-eating. 55 years later, the company still prioritizes

customer satisfaction above everything. The vision of the company is to be the
number one pizza company in the world and the mission of the company is to bring
flavor to life. Pizza Hut’s objective or “customer promise” as they call it, is to
invent the most flavorful experiences and never be boring. The chain has 15,605
restaurants in 92 countries worldwide in 2014. However, the largest number of
chains is still in the US, which is the largest market for Pizza Hut.
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2.1 Pizza Hut in Bangladesh:

Pizza Hut opened its doors to the Bangladeshi market on the 6th of December,
2003 and ever since then it has been one of the most popular fast-food outlets in
Bangladesh. Pizza Hut is an international restaurant chain operated in Bangladesh
by Transcom Foods Ltd. Currently there are four outlets, three in Dhaka and one in
Chittagong. The outlets in Dhaka are in the posh areas of Dhanmondi and Gulshan.
While the one in Chittagong is situated at GEC Mor. In Bangladesh, Pizza hut and
domino’s pizza both are the market leader. Pizza hut approximately cover 36%
market share, dominus is the same and other organization covers the rest of the
share.

2.2 Market share of various companies:

Below this graph, we have found that pizza hut covers 36% market share,
domino’s 30%, shawarma’s 16% and others 18%. So, we can say pizza hut
captures a large portion of the market share.
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2.3 How is the war in Ukraine & Russia affecting Pizza Hut
operations?

Russia’s invasion of Ukraine is raising food prices across the world. Developing
and emerging economies are being hit hardest due to their reliance on the region
for fuel and grain imports.

Ukraine is the world’s largest producer of sunflower oil. Combined with Russia, it
is responsible for more than half of global exports of vegetable oils. The region
also exports over a third (36%) of the world’s wheat. The war in Ukraine, as well
as sanctions against Russia, have resulted in a massive decline in the supply of
major staple foods. Many developing and emerging market countries rely on food
imported from Ukraine and Russia – known as ‘the breadbasket of Europe’ – to
augment local food production. For example, the top three importers of Russian
wheat in 2018 were Turkey, Vietnam and Indonesia. Similarly, Indonesia, the
Philippines and Morocco imported the largest share of Ukrainian wheat that year.
Instability caused by the war will therefore negatively affect the food supply in
these importing nations.

Pizza Hut resents increases in the price of wheat due to the conflict between Russia
and Ukraine Wars. Wheat has been on a steady upward price climb, fueling
concern of runaway futures prices in the wake of a Russian ban on grain exports.
Supply of main ingredients like Wheat has reduced because of war as a major
portion of these Ingredients supplied both Russia and Ukraine.
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Several large fast-food companies have withdrawn from the Russian market. The
closure of 850 McDonald’s restaurants in Russia made headlines, but the
withdrawal of Pizza Hut and Burger King was also important because a significant
portion of the population frequently eats at fast-food outlets. Consequently,
movements in the international oil market affect local fuel prices in these markets.
Eventually, the burden of higher costs of production, storage and transport is
passed on to the consumers in the form of higher food prices.

Oil prices largely determine the cost of running farm equipment and transporting
harvested grain. Natural gas prices are even more important to farmers because
nitrogen, used to produce fertilizers like ammonia and urea, is produced from
natural gas. It’s not just about grain prices, it’s shipping costs and fuel prices and
fertilizer prices and so on. Russia, the largest producer of fertilizer in the world,
has steadily restricted the flow of natural gas to Europe, not only driving fuel
prices higher but also nudging up the cost of nitrogen-based fertilizers. As fertilizer
prices have risen, so have wheat prices, ticking up for the war. Along with that,
Higher costs for fuel and fertilizer eat into the profit that farmers can make and
create a quandary for wheat-producing nations. That is particularly true for
Ukraine, where transporting wheat to buyers abroad has become costly because of
the war. While high prices hurt countries that import wheat, low prices might
dissuade farmers from planting extra this year, especially in Ukraine as they
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contend with challenges selling their current crop, which could make them unable
to afford to grow more.

Pizza Hut Adds Rice Bases to Menu as Wheat Costs Soar in Japan. Russia’s
invasion of Ukraine drove the cost of grains higher Rice pizzas available for a
limited time, may join regular men Japan’s Pizza Hut is turning to rice to make its
pizzas after wheat prices soared following Russia’s invasion of Ukraine earlier this
year. The fast-food chain has started offering a selection of mini-pizzas using rice
as a base rather than wheat flour from Aug. 22, The price of grain has skyrocketed
since the Russian invasion of Ukraine. The war and sanctions against Russia have
hit the grain exports of these major producers. The higher grain prices are being
felt worldwide. Several companies indicate that they are looking for alternatives as
a basis for bread, pastries, pasta and other foods.

2.4 Pizza hut situation in Bangladesh:

This Russia- Ukraine war creates affects the Bangladesh market also. Bangladesh
is a developing country. Food oil and wheat are purchased from Russia- Ukraine.
Recently Bangladesh on Wednesday approved the import of 500,000 tons of wheat
from Russia to stabilize the commodity's price. Bangladesh will pay Russia in US
dollars for this wheat, which will be purchased at $430 per ton. This recent blog
post by International Food Policy Research Institute (IFPRI) illustrates how
disruptions in wheat, vegetable oil, and fertilizer markets drive up prices and
threaten supplies in Bangladesh. In today’s market, the wholesale price of wheat is
65-70 tk. But before the war, the price was 35-40tk per kg. if we talk about all
vegetables and meats price and vegetable oil, everything goes high. Even though
black olive and green olive cost before the war was 70-85tk (160g packed bottle)
now we should pay about 100 to 110tk per packed bottle. This all things are the
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basic ingredient of Pizza making. If all price rises, then the production cost will be
high naturally.

Pan pizza

Personal Medium Family

Pizza name Price Price 19- Price Price 19- Price Price 19-
2022 20 2022 20 2022 20
Classic Margherita 199 ৳ 169 ৳ 389 ৳ 359 ৳ 719 ৳ 689 ৳
Veggie Lovera 209 ৳ 189 ৳ 429 ৳ 399 ৳ 789 ৳ 759 ৳
Classic Beef 289 ৳ 249 ৳ 429 ৳ 399 ৳ 789 ৳ 750 ৳
Ultimate Hot 289 ৳ 259 ৳ 549 ৳ 510 ৳ 888 ৳ 849 ৳
Chicken

Handcraft Pizza

Pizza Name Personal Medium

Price 2022 Price 19-20 Price 2022 Price 19-20
Classic Margherita- Hc 199 ৳ 169 ৳ 389 ৳ 359 ৳
Veggie Lovera- Hc 209 ৳ 180 ৳ 429 ৳ 399 ৳
Classic Beef-Hc 289 ৳ 250 ৳ 549 ৳ 510 ৳
Ultimate Hot Chicken 289 ৳ 260 ৳ 549 ৳ 510 ৳

Chessy Bite

Pizza Name Personal Medium

Price 2022 Price 19-20 Price 2022 Price 19-20
Beef Lovers (C.B) 1099 ৳ 1069 ৳ 1639 ৳ 1610 ৳
Spicy Chicken (C.B) 1099 ৳ 1069 ৳ 1638 ৳ 1610 ৳
Chicken Delight (C.B) 1199 ৳ 1179 ৳ 1749 ৳ 1710 ৳
Red N Hot (C.B) 1199 ৳ 1169 ৳ 1749 ৳ 1710 ৳
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Sausage Crust

Pizza Name Personal Medium

Price 2022 Price 19-20 Price 2022 Price 19-20
BBQ Temptation (S.C) 1529 ৳ 1509 ৳ 2009 ৳ 1989 ৳
Red n Hot (S.C) 1529 ৳ 1499 ৳ 2009 ৳ 1980 ৳
Chicken Classic (S.C) 1529 ৳ 1509 ৳ 2009 ৳ 1980 ৳
Chicken Delight (S.C) 1529 ৳ 1509 ৳ 2009 ৳ 1990 ৳

As we see that Pizza Hut provides right now this 4-category pizza. And in every
category, they increase the price by around 15 to 30 tk. Because every raw material
is needed for production at the wholesale level also the price increases. So, they
added extra value to the products. And also in the recent era, they face few
customers lacking from expected numbers. And they predict that

 Price increase: As we see all pizza prices are increasing. So maybe that’s why
fewer people are coming to buy.
 Less interest in that kind of foodstuff: After Covid time people become very
health conscious. So many people try to avoid this kind of stuff.
 Saving mentality: The majority of target customers are middle class as well as
higher class. Pizza is just for relishing a good snack. But not as a core item for
their day-to-day food list. So, in this high time, they might be thought it is not
necessary right now to consume. Rather save money and use only as much
required.
 Use the money only for necessary things: Right now, all the things’ price is
increasing day by day. People are trying to minimize their day-to-day costs and
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save for the future. So, in this run time spending money to eat pizza is not worth
enough.

Impact on Bangladesh’s Economy

Russia is one of the world’s superpowers and the 11 th-largest country in terms of
GDP. In terms of gas production, the country was the second-largest in the world
in 2021, with 17 per cent of the world’s total output and 12 per cent of the world’s
total oil production, the third. Russia exports coal, gold, fertilizers, and other
metals in addition to gas and oil. Although Russian forces launched a full-scale
attack on Ukraine on the 24th of February, Russia has been preparing for the attack
on Ukraine for months.

The impact of the Russia-Ukraine conflict is also being felt in Bangladesh. Russia
and Ukraine have trade and import trade relations with Bangladesh. Due to the
closure of Swift in Russia, many payments were blocked, and shipping with Russia
was reduced, so new orders were cancelled. Besides, Russia is directly involved in
Bangladesh’s first nuclear power plant mega project. Russia is providing technical
assistance as well as financial assistance for this project. Sanctions on SWIFT and
Russia’s central bank have raised concerns about the loan.

3.1 Impact on Export:

Europe is one of Bangladesh's main export markets. Fifty-eight percent of

Bangladesh’s total exports are exported to the European Union region countries. In
contrast, Bangladesh's overall export revenue from Russia for the 2019–20 fiscal
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year is 1.72 percent. More than 91 percent of Bangladesh's exports to Russia were
RMG items. In the fiscal year 2019-2020, the total export income of Bangladesh
from Russia shows in pie chart given below:

Here we can see that the highest percentage of income came from Knitwear which
is $373.25 million (58.2%). The second highest position is Woven Garments which
is $220.41 million (34.3%), then followed by jute and jute goods $22.72 million
(3.5%), Income from Home textiles was $13.09 million (2%). Lastly, earnings
from Crustaceans were $12.39 million (1.9%).
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Bangladesh’s exports to Russia have increased every year. In the 2011-12 fiscal
year, Bangladesh’s exports to Russia amounted to more than $133 million
(133.25), which a decade later stood at more than $665 million (665.32). The graph
is given below:

On the other hand, in the same fiscal year, Bangladesh’s exports to Ukraine
exceeded $26 million (26.85). Of which about 44 percent (43.72) are RMG
products and more than 25 percent (25.51%) are vegetables, and more than 21
percent (21.45) are footwear products.
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Collectively, the export earnings of Bangladesh from Russia and Ukraine are less
than 2% of the total export earnings of Bangladesh. If the conflict between Russia
and Ukraine continues, Bangladesh may be deprived of these export earnings.
However, the Bangladesh Consulate in Russia proposed a Barter System,
Government-to-Government Initiative to continue imports and exports with Russia.
Thirteen percent of Russia's entire foreign reserves, or 77 billion, are held in
Chinese yuan. A multibillion-dollar currency exchange arrangement between the
central banks of the two nations will support continued trade between them.

In the meantime, Bangladesh and China have several other bilateral trade and
financial agreements. Using the agreements with China, trade between Bangladesh
and Russia can continue if Russia wants to import from Bangladesh. But the US
has already warned China not to allow Russia to evade the economic sanctions put
in place by the US and its western allies. 

In this situation, the concept of exporting to Russia should be abandoned if it

continues its invasion of Ukraine. However, the biggest problem will be if Russia
extends its invasion of Ukraine and if NATO and European countries also engage
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in direct conflict with Russia to protect Ukraine. In that case, the Russia-Ukraine
war could spread to Europe. Whatever the duration of the war, it will directly
impact Bangladesh because 58% of the total export earnings of Bangladesh come
from the countries of the European Union.

3.2 Impact on Import:

According to the Export Promotion Bureau, various goods worth $466.7 million
were imported from Russia to Bangladesh in 2020-21. Bangladesh mainly imports
wheat, edible oil, fertilizers and chemicals, steel or aluminum, and many more
from Russia. Russia and Ukraine export 29 percent of the world’s wheat, 19
percent of corn, and 80 percent of sunflower oil. As the war has made it difficult to
import these essential commodities, the prices of these commodities in the world
market have also increased.

The closure of Swift in Russia has made transactions quite challenging. Now,
importing goods from Russia has become a difficult task as the shipping of
Bangladesh with Russia has also stopped. This has a negative impact on the
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economy of Bangladesh. Bangladesh has to import these alternative products from

any country to overcome such a situation. However, the issue will be quite time-
consuming and costly due to the effects of the war. The cost of imports will
increase further especially considering the distance and duty fee.

3.3 Impact on Development Project of Bangladesh:

Rooppur Nuclear Power Plant is Bangladesh’s first nuclear power plant. The
estimated cost of this project is estimated at 1 lakh 13 thousand crores. According
to the BBC, 90 percent of the total funding for the project is provided by Russia’s
VB Bank as loan assistance. However, in the wake of the Russia-Ukraine war,
several Russian banks, including the state-owned VB Bank, have been banned
from Western countries. In the current context of the war, Russia will not be able
to fund the Rooppur nuclear power plant in Bangladesh. The ongoing war and
economic sanctions against Russia could delay this expensive project, which
means cost escalation in Bangladesh. This implies higher loans and a burden on the
country. Bangladesh’s government thinks that since Russia is working on the
project itself, Russia will be able to provide loans from other banks even if its
state-owned VEB Bank is banned.

3.4 Focus on Globally:

In terms of edible oil, Bangladesh has an annual demand of 2 million tons of edible
oil, against which Bangladesh produces only 0.2-0.3 million tons. This means that
Bangladesh has to import the remaining 90 percent of the oil. Although
Bangladesh procures minimal oil seeds from Russia and Ukraine, most edible oil is
imported from Argentina, and soybean seeds are imported from Brazil. According
to a report in The Daily Star, the price of soybean oil, which was $1,460 per ton in
January 2022, rose to $1,598 the following month. Many countries have stopped
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importing oil from Russia due to the Ukraine-Russia war. As a result, the oil price
in the world market has increased several times. Due to the war, if the edible oil
price continues to rise around the world, there is a possibility of a further increase
in Bangladesh, which will hurt the country’s economy.

In such a global market environment, instability is also seen in the US and

European economies. Because of the war, the economies of these nations are under
pressure from the growing prices of numerous commodities, especially oil and gas,
which will lower peoples' purchasing power. Bangladesh receives 75.73% of its
export revenue from the US, Canada, and the UK in addition to the EU. If the
purchasing power of the people of these countries decreases, the number of imports
from Bangladesh will also decrease. The biggest blow will come to the country’s
RMG sector because 64% of the exports of the RMG sector are generated from the
countries of the European Union.

3.5 Balance of payment:

The balance of payment will be under pressure due to high prices and trade
sanctions. At the end of January of FY2021-22, the current account deficit reached
USD 10 billion as there was an increase in import payments and reduction in
remittances. If high current account deficit persists for a longer period, the
exchange rate will also fall under pressure.

3.6 Currency Trend and Reason for Increasing Dollar Value

Against BDT: This is an extraordinary time from a global perspective. The
ongoing Russia-Ukraine war and related sanctions are impacting all economies in
the world. The euro has fallen below the dollar for the second time. Similarly, BDT
and Rupee also lost value against the dollar by 10.08% and 7.02% respectively
July this year. The slide was mainly caused by the Federal Reserve of the USA’s
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hiking interest rate which led foreign investors to move money to the USA and
Russia’s invasion of Ukraine pushed up commodity prices globally. A graph is
given below that shows the dollar value increase against BDT.

Findings of the study

1. We have found that pizza hut covers 36% market share among their
competitors like Domino’s. Pizza hut captures a large portion of the market
share.
2. Pizza Hut increased the price of its pizza worldwide because its pizza-
making ingredients price is so high right now due to Russia and Ukraine
Wars.
3. American company Yum! Brands, which owns fast-food restaurants- KFC
and Pizza Hut, has suspended investments in Russia.
4. The western world has slapped unprecedented sanctions on Russia,
including the expulsion of its banks from SWIFT system.
5. Local exporters and importers are struggling with bills payment, falling
exports coupled with higher import bills.
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6. Bank and business sources say businessmen are facing problems in opening
Letter of Credit (LC) after Russian banks were excluded from the SWIFT
system, while exports to Russia have faced a severe setback.
7. Global fuel price has surpassed $100 per barrel, which will have a direct
impact on the country’s all types of export and import.
8. At the end of January of FY2021-22, the current account deficit reached
USD 10 billion as there was an increase in import payments and reduction in
remittances.

Conclusion: Considering all these, it is easy to see that the Ukraine-Russia war
is not just a war between two countries but a kind of economic warfare that
impacts the whole world. Due to the global impact, the war will have a
considerable impact on Bangladesh as well. Not only in Bangladesh or other
countries but so many multinational companies are also affected by this war, like
Pizza hut.

List of References:

 Hossan, S. (2022) Russia vs Ukraine War: Impact on Bangladesh's Economy -

Business Inspection BD, Business Inspection BD. Available at:
https://businessinspection.com.bd/ukraine-vs-russia-impact-on-bangladesh/
(Accessed: 1 December 2022).
 What the Russia-Ukraine war means for Bangladesh's economy (2022). Available
at: https://www.thedailystar.net/opinion/macro-mirror/news/what-the-ukraine-
war-means-our-economy-2986941 (Accessed: 3 December 2022).
 What the Russia-Ukraine war means for Bangladesh's economy (2022). Available
at: https://www.thedailystar.net/opinion/macro-mirror/news/what-the-ukraine-
war-means-our-economy-2986941 (Accessed: 5 December 2022).
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 ICAB Publication (2022). Available at:

https://www.icab.org.bd/publication/news/5/490/Russia-Ukraine-War-Impact-on-
Bangladesh%E2%80%99s- (Accessed: 25 November 2022).
 Pizza Hut - Wikipedia (2015). Available at: https://en.wikipedia.org/wiki/Pizza_Hut
(Accessed: 2 December 2022).
 Pizza Hut | Buy 1 Family Pizza And Get 1 Free  (2022). Available at:
https://www.pizzahutbd.com/?
gclid=Cj0KCQiAyracBhDoARIsACGFcS5XTYOCJhkcvFI_a_YH_9110t0b8XYQ_aqBOC
alinUoxf2-YG0ypuQaAmxGEALw_wcB (Accessed: 1 December 2022).
 Russia-Ukraine war a wake-up call for Bangladesh’s agriculture sector (2022).
Available at:
https://www.thedailystar.net/business/global-economy/news/ukraine-war-could-
be-wake-call-bangladeshs-arable-sector-3025946 (Accessed: 6 December 2022).