BHUTAN BUS 685 final group assignment.pptx

Course on International Business

1. Heartiest Welcome to our Presentation 1

2. Founded by Sheikh Akijuddin , AKIJ GROUP is one of the largest, privately-owned company in Bangladesh, successful commercial enterprise since 1950, diversified conglomerate with 40+ businesses represents units, lots of prominent brands and agencies, employees about 25,000+ & already achieved 25 national awards. A branch of that legacy is set to evolve through the leadership of his son, Sheikh Bashir Uddin as AkijBashir Group . About AkijBashir Group 2

3. Akij Steel Mills Ltd. (ASML). Akij Biax Films Ltd. Akij Ceramics Ltd. Akij Table ware Ltd. Akij Bathware Ltd. Selections Akij Particle Board Mills Ltd. Akij Door Plant & Ply Board. Akij Polymer Industries Ltd. Janata Jute Mills Ltd. Sadat Jute Industries Ltd. Akij Carton Ltd. Akij Paint & Adhesives Ltd. Akij Sodium Silicate Robin Resources (Malaysia) Sdn.Bhd . Robina Flooring Sdn . Bhd. (Malaysia) Bahadurpur Tea Estate Ltd. Sona Rupa Tea Estate Ltd. Dhamai Tea Estate Ltd. Atiabagh Tea Estate Ltd. Akij Glass Industries Ltd. & upcoming more. Business Portfolio Of AkijBashir Group 3

4. COMPANY OVERVIEW AkijBashir Group is a rapidly expanding conglomerate engaged in diverse businesses. For supporting expansions, its in-house requirements of Steel buildings were 10,000-12,000 MT every year. 4

5. Pre-Engineered Steel Buildings Solutions Primary members, Secondary members, Accessories, Cladding systems & Mezzanine Klip lock Roofing System. Structural System & Crane Systems. Racking System/Storage solution PRODUCTS OVERVIEW 5

6. GLOBALIZATION OF MARKET 6 Wellness resort operator The Six Senses is finalizing an agreement with Akij Steel to provide 250 prefabricated suites across 82 locations in Bhutan. . Akij Steel is set to export prefabricated buildings to Bhutan.

7. Cultural Environment 7 Though they are both South Asian nations, Bangladesh and Bhutan have rather different cultures that are influenced by their own histories, topographies, and social mores. The following are some aspects of the two countries' distinct cultures: Religion Bhutan Predominantly Buddhist, with Vajrayana Buddhism Bangladesh Predominantly Muslim, with Islam being the state religion. Language: Bhutan's official language is Dzongkha, a Tibetan language, though English is widely spoken. In Bangladesh, Bengali (Bangla) is the official and most widely spoken language.

8. Cultural Environment 8 Bhutanese cuisine often includes dishes like Ema Datshi (chili and cheese stew) and Momos (dumplings). Bangladeshi cuisine features dishes like Biryani, Bhuna Khichuri, and various types of fish curries. Cuisine Bhutan celebrates traditional Buddhist festivals such as Tshechus , which involve masked dances and religious ceremonies. In Bangladesh, Islamic festivals like Eid-ul-Fitr and Eid-ul-Adha are widely celebrated, along with traditional Bengali festivals like Pohela Boishakh (Bengali New Year) and Durga Puja (celebrated mainly by the Hindu minority). Festivals

9. Cultural Environment 9 Bhutanese traditional attire for men includes the Gho , a knee-length robe tied at the waist, while women wear the Kira, a long, ankle-length dress. In Bangladesh, traditional attire varies among different ethnic groups, but the most commonly worn attire is the saree for women and the Panjabi or Kurta for men. Clothing Bhutanese architecture is characterized by traditional Bhutanese designs, including intricately designed temples, dzongs (fortresses), and traditional Bhutanese houses with colorful woodwork. In Bangladesh, architecture is influenced by a mix of Islamic, British colonial, and indigenous styles, seen in structures like mosques, forts, and rural cottages. Architecture

10. Cultural Environment 10 Bhutanese art often includes intricate Buddhist religious paintings known as Thangkas, wood carvings, and traditional Bhutanese crafts like weaving and pottery. Bangladeshi arts and crafts encompass a wide range, including Nakshi Kantha (embroidered quilts), Jamdani sarees (handwoven sarees with intricate designs), and traditional pottery. Arts and Crafts In Bhutan, traditional customs such as bowing as a form of greeting and the importance of respecting elders are prevalent. In Bangladesh, hospitality plays a significant role in social interactions, and gestures like offering guests sweets or tea are common. Social Customs

11. Political Environment 11 Political System Economic Policies Bhutan is a constitutional monarchy with a parliamentary democracy. The King of Bhutan is the head of state, and the Prime Minister is the head of government. Bangladesh is a unitary parliamentary democracy. The President is the head of state, but the Prime Minister holds the most executive power and is the head of government. Bhutan: Bhutan follows a unique economic model called Gross National Happiness (GNH), which prioritizes the happiness and well-being of its citizens over material wealth. The economy is largely based on agriculture, forestry, hydropower, and tourism. Bangladesh:Bangladesh has a mixed economy with agriculture, manufacturing, and services sectors. It is one of the world's largest exporters of textiles and garments.

12. Political Environment 12 Foreign Relations Cultural and Ethnic Diversity Bhutan follows a policy of maintaining friendly relations with its neighbors, particularly India. It has historically maintained a policy of neutrality and non-alignment in international affairs. Bangladesh has diplomatic relations with a wide range of countries and is a member of various international organizations such as the United Nations, SAARC (South Asian Association for Regional Cooperation), and the Commonwealth of Nations. Bhutan is known for its unique culture and traditions, including its distinctive dress . Bangladesh is a highly diverse country with a rich cultural heritage influenced by various ethnic groups, languages, and religions.

13. Legal Environment 13

14. Legal Environment 14

15.  Economic Environment 15 Economic System Subsistence Farming and Traditional Practices Hydropower Development Limited but growing Private Sector Foreign Aid and Investments Tourism Economic Structure Agriculture in Bhutan has a dominant role in the Bhutan's economy. In 2000, agriculture accounted for 35.9% of GDP of the nation. The share of the agricultural sector in GDP declined from approximately 55% in 1985 to 33% in 2003. Despite this, agriculture remains the primary source of livelihood for the majority of the population. Pastoralism and farming are naturally complementary modes of subsistence in Bhutan.

16.  Economic Environment 16 Stages of economic Develpoment Gross national income per capita in current prices in 2022, GNI per capita for Bhutan was 3512 US dollars. GNI per capita of Bhutan increased from 193 US dollars in 1973 to 3512 US dollars in 2022 growing at an average annual rate of 6.55%. Bhutan GNI per capita for 2021 was $3290, a 8.58%increase from 2020. Balance of Payments Current Account of the balance of payments was reported at (-852,582,915 USD). This records a decrease from the previous number of (-321,534,822 USD) for 2021. [Source: World Bank] The increased current account deficit in Bhutan signals that the country is spending more on foreign goods and services that it is earning from its exports.

17.  Economic Environment 17 Economic Freedom Index

18. Exports of Bhutan Exports Electricity Agricultural Product Minerals 18 Handicrafts & Textile   Key Export Commodities Main Export Destinations India Bangladesh Nepal Other countries

19. Imports of Bhutan Imports Fossil Fuel Construction Material Machinary & Equipments 19 Food & Beverage   Key Imports Commodities Main Import Sources India China Thailand Singapore

20. Balance of Trade 20 In the fourth quarter of 2023, Bhutan's trade deficit was 11,976.57 BTN million. Bhutan's balance of trade reached an all-time high of 7,121.91 BTN million in the third quarter of 2020 and a record low of -19,688.53 BTN million in the first quarter of 2023. From 1991 to 2023, the balance of trade averaged -6,107.03 BTN million. Bhutan often runs a trade deficit due to its high dependence on imports relative to its export revenues. However, the export of hydropower has significantly mitigated the deficit in recent years. The government is focusing on diversifying the export base and enhancing value-added sectors to improve the trade balance.

21. Trading Partners: 21 Import Ranking Order: Export Ranking Order: 1 INDIA 1 INDIA 2 CHINA 2 BANGLADESH 3 SINGAPORE 3 ITALY 4 THAILAND 4 NEPAL 5 HONG KONG 5 CHINA 6 BANGLADESH 6 SOUTH KOREA 7 SWEDEN 7 SPAIN 8 NEPAL 8 NETHERLANDS 9 GERMANY 9 FRANCE 10 SOUTH AFRICA 10 JAPAN

22. Global Institutional Organization Membership & Impact 22 United Nations, Joined in 1971 European Union, Joined in 1982 International Monetary Fund, Joined in 1982 World Bank, Joined in 1981 WHO, Joined in 1982 SAARC, Joined in 1985

23. Regional Economic Integration & Impact 23 2004 agreement that created a free-trade area of 1.6 billion people in Afghanistan, Bangladesh, Bhutan, India, the Maldives, Nepal, Pakistan and Sri Lanka with the vision of increasing economic cooperation and integration.. One of the major goals was to reduce customs duties of all traded goods to zero by 2016. Agreement date/year: 1971 , Bhutan became the first country in the world to recognize Bangladesh’s independence . The bilateral trade volume reached $49.65 million in the fiscal year 2018-19 out of which Bangladesh’s exports to Bhutan totaled $7.56 million against the imports of $42.09 million.

24. Porter’s Diamond Model 24 Demand conditions are just right as Bhutan government has been actively seeking FDIs. Majority of Bhutan’s factor endowments are not complementary to the production of steel structures There aren’t adequate related and supporting industries for a steel mill. ASML’s strategy should be a joint venture with one of Bhutan’s top 4 steel mills.

25. EPRG Orientation 25 Ethnocentric orientation is not suitable for ASML’s expansion to Bhutan. Polycentric orientation is the most optimal; costly in the short-run, profitable in the long-run. Regio centric orientation is not financially feasible for ASML. Geocentric orientation is recommended; more costly than Polycentric but greater internal and external gains.

26. Tariffs barriers in Bhutan 26 Tariffs barriers in Bhutan: Import Tariffs: Akij Steel will have to pay a specific tariff of 10% as customs duty. Environmental Focus: lower tariffs and tariffs exemption on eco-friendly goods. Non-Tariffs barriers in Bhutan: No Non-Tariffs barriers.

27. Government Policies for International Trade 27 Preferential Trade Agreements with Bangladesh. Sustainable Trade with Environmental Protection: Special economic zone for Bhutan in Kurigram to boost trade.

28. Strategy Of Company 28 To achieve their short-term goals, it would be ideal for them to consider the “International Strategy” in the early stages. Gradually evolve towards the Global Standardization Strategy when it is required.

29. Entry Mode of Company 29 In Bhutan, Akij Steel likely follows a similar export-oriented strategy, utilizing its existing manufacturing capabilities in Bangladesh to supply steel products to the Bhutanese market . Exporting Attractiveness: Economies of Scale: By manufacturing in a central location and exporting, Akij Steel can take advantage of economies of scale. Higher production volumes at a single site can reduce the per-unit cost, making their products more competitive In 2022, India imposed a 15% export tariff on certain steel products, which could impact the cost and flow of steel between the two countries whereas, Akij Steelhas has to pay a specific tariff of 10% as customs duty to the Bhutan government .

30. Future Plan 30 Expand business into international market Achieve comparative and competitive advantage Globalization allows companies to access markets with different consumer preferences, economic conditions, and regulatory environments May need to adapt its marketing strategies, product designs, and distribution channels to resonate with consumers in Bhutan . Figure : A steel fabricated house at the mountain valley of Bhutan, source: ASML prospectus