Professional Documents
Culture Documents
Development
Goal (SDG)
&
Relevant strategy
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Strategic Analysis on
Submitted by:
1.
2.
3.
4.
5.
Letter of Transmittal
Dear Sir,
Here is our report on Strategic Analysis onSustainable Development Goal for Berger Paints
Bangladesh Limited that you have assigned us during your module in ACBA program of
Institute of Business Administration, Universtiy of dhaka
This report contains a third sector based strategy for Berger Paints Bangladesh Limited. We
have tried our best to show how the strategy will conribute to the tripple bottom line and how
outcome can be reported using SDG. This report is based on primary data and further analysis
of those primary data.
We are formally acknowledgeing your contribution in our learning as without your guidance
this would never been possible. We are really thankful for the opportunity to work on this
assignment as it allowed us to get an interesting fact and a brief understanding of Strategic
Mangement. We will be very happy to address any further queries in this regard.
Thanking you,
.....
Subrata Paul
Faizul Piyas
Gopal Biswas
ACBA, IBA
University of Dhaka
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Executive Summary
The painting industry of Bangladesh is a Tk. 25000 million per year industry. Berger Paints
Bangladesh Limited is the market leader in the painting indurstry of Bangladesh with 58%
market share. The significance of this data can be better understood by the fact that the
closest competitor Asian Paints have only 15% market shre. However market is dealer
dependent and therefore dealers enjoy a lot power over industry. As a result the market is
very competitive.
Berger is very pofitable in the sharemarket with 1870 Tk per share for the face value of
TK.10 . However, profitability can no more be the only concern of a business. Business is
now all aobut serving people and planet while making profit. To make sure this tripple
bottom line every business has to create strategy that actually helps to achieve Sustainable
Development Goals.
Berger being a chemical manufacturer has adopt a strategy to become a socially committed
business. However to serve tripple bottom line it need a certain strategic reformation. The
strategy proposed here can be divided in to five phases. It includes becoming a pioneer in
emission control and waste management, launching media campaign for Lead free
Bangladesh, becoming a part of antipollution movement, launching intelligent CSR and
Implementing ISO 26000. Implementation of this strategy may start from 2016 and can be
continue until 2030. However the strategy has no core competency without the first mover
advantage. But if the strategy is imitated by competitor, the nature of the strategy may help
Berger get a stronger positioning.
Though the strategy will serve tripple bottom line, it can not touch all the goals of SDG. But
it will have some certain impact over goal 3, 8, 11 and 12. This will help Bangladesh to reach
its target by 2030.
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Table of Content
Section
Topic
Page number
1.1
1.2
Objective
1.3
Scope of study
1.4
Methodology
1.5
1. Introduction
2. Industry Analysis
2.1
2.2
Market Share
2.3
The company
3.2
3.3
Current scenario
4.2
4.3
4.4
10
4.5
12
4.6
13
4.7
Recommendations
14
4.8
Conclusion
14
Appendices
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List of Figures
Figure 1 Market Size and Growth Rate .................................................................................................. 2
Figure 2 Market Size and Contribution................................................................................................... 2
Figure 3 Market Share ............................................................................................................................ 3
Figure 4 Porter's 5 Forces ....................................................................................................................... 4
Figure 5 ROI Using Investment and NPAT .......................................................................................... 12
Figure 6 ROI Using Sales Revenue and Gross Profit ........................................................................... 13
List of Tables
Table 1 Market Size and Growth Rate .................................................................................................... 2
Table 2 Company Milestones .................................................................................................................. 5
Table 3 Timeline and Summary of the Strategy .................................................................................... 10
List of Abbreviation
Abbreviation
Elaboration
3BL
APEO
Alkylphenol Ethoxylates
ATL
BAEA
BASAB
BPBL
BTL
BYPAC
CSR
ETP
J&N
MDG
MT
Metric Ton
NPAT
R&D
ROI
Return on Investment
SDG
VOC
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1. INTRODUCTION
1.1 Back ground of the report:
The assignment is a requirement for ACBA to complete the Strategic planning and Leadership
module from Institute of Business Administration (IBA). Part of study students of 7th batch required
to submit group assignment on SDG and relevant strategy of the Organization where you have access
considering team member. Considering one of our teammate, we have considered Berger Paints
Bangladesh Limited and thus we have preceded this report considering the requirement of study. We
are assigned by our course instructor of this module Dr. Syed Ferhat Anwar Professor, IBA to
prepare this report; our honorable teacher has provided us necessary instructions about this report. We
have tried to collect relevant and useful data to prepare this report.
1.2 Objective:
The board objective of the report is to identify the potentiality of the organization through analyzing
the relevance of SDG impact on organization future. However, specific objective of this analysis is to
a. To be align with sustainable development goals
b. To be more acquainted with the people and planet
c. To be stronger in competitive scenario
1.3 Scope of study:
This report renders a close analytical look at the telecommunication sector of Bangladesh with a focus
on BPBL, in addition to its growth and development since inception. The report is written expected to
augment the market knowledge, economic situation analysis, and research & development
department.
1.4 Methodology:
Both primary and secondary data selected from basic research method conducted through discussion
with relevant members of BPBL. The analysis conducted based on my class room study on Strategic
Planning and Leadership module in ACBA.
1.5 Limitations:
The major limitation for this report was primarily the state of the Organization and relevant
confidentiality. And thus has forced mostly to be based on websites details as well as articles write up.
Furthermore, some information was withheld to retain confidentiality of the companies. Exact
verifications of some information could not be made owing to this.
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2. Industry Analysis
2.1 Market Growth Analysis
The current market size of the painting industry is above 12000 metric tons and the industry is
growing at an average rate of 5% to 7% each year.
Table 1 Market Size and Growth Rate
Year
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
Volume
in MT
67,656
71,975
76,569
80,599
86,666
92,691
98,607
104,346
111,600
120000
6%
6%
5%
7%
6.50%
6%
5.50%
6.50%
7%
Growth% 4%
Volume in MT
140,000
120,000
100,000
80,000
60,000
40,000
20,000
0
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
Figure 1 Market Size and Growth Rate
The market size of the industry is above TK. 3500 million. The market is divided in to 5 different
subsectors. Those are decorative, industrial, marine, powder coating and trading items. Though most
of the sales are coming from the decorative segment, in recent years industrial market for painting is
also increasing. However, decorative is leading the market with 87% the market share. Details are
given below:
Market Size in Million Taka
Value in
Million Taka
21250
2250
1250
250
Contribution
25000
100%
9%
5%
85%
9%
5%
1%
1%
Decorative
Industrial
Marine
85%
Power Coating
and Others
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Thinking from the growth cycle the industry is somewhere in its late growth stage waiting to become
mature. However, opening up of new market like rural market and industrial market may change the
size of the industry and status of the growth stage
Market
Share
BPBL
Asian
58%
15%
6.50%
6%
3.30%
3.30%
Roxy
Elite
Moonstar
RAK
Pailac
Others
Total
Market Share
3% 3% 5%
3%
6%
BPBL
Asian
Roxy
Elite
7%
58%
15%
3%
5%
Moonstar
RAK
Pailac
Others
100%
Figure 3 Market Share
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Rivalry
High
Threat of substitutes
Low
The above figure describes the Porters five forces competitive model. Each of the five factors is
explained below in details.
a) Threat of new entrants The threat of new entrants is extremely high, as Several global
giants in the paint industry are now coming to Bangladesh
b) Threat of rivalry Asian Paints is an aggressive competitor. It already has more than
1000 stores selling its products. Though Berger has more outlets associated with than
Asian, it is facing huge competition from other brands. Thus the threat of rivalry is high.
c) Threat of substitutes- It is low as very few products can replace paints.
d) Threat of supplier power- It is low as Berger Color Bank has their own Research
and Development unit but raw materials are flown in from abroad.
e)
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Year
Milestone
1950
1970
1980
Named as Berger Paints (BD) Ltd. from Jenson & Nicholson (J&N)
1991
1995
1999
2002
2004
2005
Listed in Dhaka & Chittagong Stock Exchanges and issued 5% shares to the public
Berger has heavily invested in technology and Research & Development (R&D) compared to any
other manufacturer in this market. Investment in technology and plant capacity is even more evident
from the establishment of Powder Coating and Emulsion plants at the Dhaka factory. The state-of-theart Dhaka factory is an addition to Berger's capacity, making it the paint giant in Bangladesh. It
sources raw materials from some of the best known names in the world. The superior quality of
Berger's products has been possible because of its advanced plants and strict quality controls that
match international standards.
With its strong distribution network, Berger has reached almost every corner of Bangladesh.
Nationwide Dealer Network, supported by 12 Sales Depots with an unmatched capability to answer to
paint needs at almost anywhere in Bangladesh with the 2 factory unit at Chitagong and Savar.
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So developing a Third Sector Based Strategy for BPBL will not require any major reformation of the
company or its strategy. While maintaining the objective for profit to survive as business the company
has to add some additional activities in to its view on society to become a profitable social enterprise.
4.2 SDG Target and Organizational Strategy
To achieve the 17 goals SDG there are predefined 169 targets which need to be completed. An
organization by its nature cannot create a strategy that will help to achieve all the 169 targets.
However a strategy can be created which can help to fulfill some or most of the targets.
To have a strategy that helps to fulfill the targets of SDG may require strategic reformation which
may not be possible all the time.
4.3 Organizational Strategy and Activity Planogram
As a good competitive business is always vision driven, some change in the vision statement is
recommended. The current vision statement is as follows:
However to incorporate the Third Sector Based strategy in to the current vision statement following
vision statement is recommended.
To be the leading socially committed brand in the industry ensuring consumer delight.
Current strategy of BPBL is to build longterm partnerships with the customers/consumers. With their
support, BPBL aim to maximize the potential of its business through a combination of enhanced
quality of product, service, creative marketing, competitive pricing and cost efficiency. The strategy is
good for a first sector business. However the strategy misses social elements to become Third Sector
based strategy.
The proposed strategy is to create a social revolution to use lead free paints and other products to
decrease air pollution and other forms of pollution while maintaining its current strategy.
This strategy will require increased CSR activities and additional promotion. It can be implemented
using 5 phases.
Phase 1
At the phase one BPBL has to get rid of all kind of pollutant from its production process. Special
attention required if there is any kind of emissions and waste management. This is because the
strategy will make BPBL one of the pioneers in pollution free business. It will not be possible to
become pioneer if there is any kind of contamination done by BPBL itself.
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Current situation: BPBL is already using state of the art ETP plant and incinerator for emission
control and waste management. So the implementation of phase 1 will not require any additional
capital investment. However, to be totally environment friendly in current advances of modern
science BPBL is required to produce APEO (Alkyl-phenol Ethoxylates) free and low VOC (Volatile
Organic Compound) paint. Current product facilities are capable of doing that. However using APEO
free and low VOC raw material is costly and that will increase the cost of production.
Employee health is to be checked regularly to ensure that no employees become ill form the chemical
exposure during the production process. A state of the art work place condition is to be maintained to
get everyone on board with the strategy.
Phase 2
At this phase of strategy BPBL will launch media campaign via social media and other BTL media
(like radio where presence of youth is relatively high). However, the main objectives of this media
campaign should create awareness about the harm caused by using lead in various products. To
become successful in the media campaign, it has to be pretested using relevant research. It is very
important that during his campaign BPBL can never ask customers to buy their lead free products
using this campaign. However use of media campaign has to be clever enough to so that the existing
and potential customers may associate BPBL with the lead free Bangladesh movement.
During this time if any new product is launched by BPBL which will require media campaign that
may also be continued simultaneously. However the media campaign for lead free Bangladesh must
be kept separate from any other campaigns.
Phase 3
At this phase BPBL will start to associate itself with any kind of antipollution movement. The
association may start with anti-air pollution movement and so on. The content made in phase 1 should
be reused in social media to remind customer about the BPBLs position about pollution.
Phase 4
Phase 4 will include intelligent use of CSR. For example BPBL could start to paint government
schools that require paint job but suffer from bureaucratic red tape. The choice of school could be
associated with the customers of BPBL. Customers could ask BPBL to paint schools that they think
require paint job. BPBL could asses if the customer chosen schools really require paint job and start
painting those schools that really require paint job.
Phase 5
BPBL should implement ISO 26000. All 7 core subjects are compatible with BPBL. This will
increase accountability and transparency. Implementing of ISO 26000 should be start as soon as Phase
1 is done.
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Phase
Strategy
Personnel
Year
Completion Evaluation
2016
2016
Responsible
1
Factory
After
success,
maintain
the
status
2
Become
part
of 2017
2020
Marketing
of
antipollution Head
movement
Marking
Intelligent CSR
Manager
Implement ISO26000
Head
continue
after 2020
of 2020
2025
May
continue
after 2025
2016
2025
CSR
5
May
May
continue
after 2025
of 2016
2018
Operations
After successful
completion
maintain
the
status
3. Human rights: Implementing ISO 26000 will increase the scope of accountability and
therefore develop the human rights condition.
4. Community Impact: Community impact will be the highest contribution of this strategy.
However it may not be possible to find exact size of impact from the strategy. However the
strategy will create mass awareness about Lead pollution.
5. Business ethics: BPBL is already an ethical company. However this strategy will strengthen
the ethics practice by implementing the ISO 26000.
Economic
1. Financial Performance: Historically the financial performance of BPBL is good. The
company is giving more than 100% cash dividend from 2006. Implementing the new strategy
may require some promotional budget, for which the net profit may decrease a little.
However, as the previous strategy will remain working to ensure profitability decrease in the
profit margin while ensuring the growth will not be a problem.
2. Corporate Governance: Implementing ISO 26000 will increase corporate transparency. This
in terms will increase the scope of corporate governance.
2. To make budget either historical or market survey data is needed. The budget made is more of
a logical one.
4.5 Return on Strategically SDG base Alignment (ROI)
Return on investment (ROI) is the benefit to the investor resulting from an investment of some
resource. A high ROI means the investment gains compare favorably to investment cost. However
there is no uniform rule to calculate ROI. And calculating ROI from a future cash flow stream is even
more subjective. Here following assumptions are made to calculate the ROI after incorporating the
strategy:
I.
II.
III.
100%
95%
77%
59%
66%
60%
51%
44%
65%
55%
48%
42%
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Using this formula ROI is showing a decreasing trend. This may be because the data is forecasted or
business is reaching its maturity.
ROI: Formula Two
Here ROI is calculated as the percentage of cost of goods sold that is converted in to gross profit. The
result found using this formula is as follows
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ROI
ROI
75%
70%
65%
69%
65% 66% 65% 64%
63% 62%
61%
60%
61%
60%
55%
51% 50%
50%
45%
40%
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
It can be seen that however ROI is calculated its always showing positive values. Current share price
of BPBL also reflect the findings.
4.6 Reporting Outcomes in SDG
I.
Target 3.8: By 2030, substantially reduce the number of deaths and illnesses from hazardous
chemicals and air, water and soil pollution and contamination. Outcomes may be reported by
the gradual decrease of diseases from Lead pollution and other forms of pollution.
II.
Target 8.8: Protect labor rights and promote safe and secure working environments for all
workers, including migrant workers, in particular women migrants, and those in precarious
employment. Outcomes may be reported by the safety measures taken for labors and staffs
and decreasing trend of accidents in BPBL.
III.
Target 11.3: By 2030, enhance inclusive and sustainable urbanization and capacity for
participatory, integrated and sustainable human settlement planning and management in all
countries. Outcomes may be reported as net decrease of Lead in the air.
IV.
Target 12.4: By 2020, achieve the environmentally sound management of chemicals and all
wastes throughout their life cycle, in accordance with agreed international frameworks, and
significantly reduce their release to air, water and soil in order to minimize their adverse
impacts on human health and the environment. Outcomes may be reported by the impact of
emission control and waste management.
All the targets could not be directly touched by the strategy. However, some other targets will be
touched by the strategy indirectly. For example, when the strategy will be successful, it will directly
impact on how competitors are looking at business. To achieve the point of parity they will try to have
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similar achievement. Thus other targets will be touched by those competitors because of BPBLs
strategy for a pollution free earth.
4.7 Conclusion
Becoming a social business that has the ultimate goal of serving people, planet and profit is the
demand of time from all business. This strategy is developed for transforming BPBL into such a
business. Due to the character of the business, it cannot be transformed into a social business that can
touch all the goals of SDG. However a strategy to serve the need for a pollution free environment can
be created. The main concept is to create a social revolution to make the environment free of Lead.
The strategy touches at least 4 goals of SDG.
4.8 Recommendation
Following are the recommendation for future actions
1. To use this strategy, further research is needed.
2. The current model of business involves dealers as middleman. Promotional campaign should
be undertaken to convert the B2B business into B2C business.
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Appendices
A) Data for calculating ROI (amount in Million TK)
Particulars
Turnover (Net of VAT &
SD)
COGS
Gross Profit
Profit Before Tax
Profit After Tax
Shareholders Equity
Total Assets
Total Current Assets
Total Current Liabilities
ROI (Formula 1)
ROI (Formula 2)
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
4595
5483
6321
7611
8796
10881
12572
14835
17506
20657
24375
28763
2714
1881
779
579
1327
2428
1592
1014
100%
69%
3396
2087
905
704
1684
3055
2011
1271
95%
61%
4192
2129
894
721
1988
3424
2264
1333
77%
51%
5087
2524
1022
752
2323
3568
2291
1146
66%
50%
5482
3314
1228
860
2767
4282
2828
1382
59%
60%
6586
4295
1488
1097
3354
5346
3534
1851
65%
65%
7560
5012
1681
1223
4000
6148
4064
2018
60%
66%
8986
5849
1900
1364
4000
7070
4674
2199
55%
65%
10680
6826
2147
1521
4000
8131
5375
2397
51%
64%
12691
7966
2426
1696
4000
9350
6181
2613
48%
63%
15079
9296
2742
1891
4000
10753
7108
2848
44%
62%
17914
10849
3098
2108
4000
12366
8174
3104
42%
61%
II.
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