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city. So, it is the right time to pay attention to this sector for the investor/ business people because not only the public sectors but also the private sectors can play the same responsibility for the development of the country. Development of the transportation sector would give us not only a better solution of the existing traffic jam and transportation problems but also will provide safety & welfare of the people.
What exactly is
CNG?
Key Features of Compressed Natural Gas (CNG) buses:>Seats up to 40 passengers and even more. >Quieter, both interior and exterior noise levels. >Lower floor allows for easier access while boarding and de-boarding the vehicle. >Larger destination signs. >Bigger windows for greater visibility. >Overall increased comfort level. >Best of all - CLEANER AIR!
market. Looking to the future, the company plans to establish a state level scientific research center that will offer an annual production capacity of 6,000 common buses and an annual sales income of about US$230, 000,000 by 2005. Zhong Tong Bus (Holding) Co. believes that these efforts will increase its market share and expand the Zhong Tong brand presence in the global economy.
Zhong Tong Bus (Holding) Co. at a Glance:Company Name: Zhong Tong Bus Holding Co., Ltd. Year Started: 1994 Company Registered Address: NO.10, Jianshe East Road, Liaocheng, 252000,
Shandong, China.
Products/Services offered: Large, middle and light size buses and coaches, auto
Chassis, trailers and vehicle parts.
Primary Business Type: Bus Manufacturer Estimated Annual Sales: US$50 Million - US$100 Million Number of Employees: Above 1000 People Factory Location: 10 Jianshe East Road, Liaocheng City, Shandong Province. China Focus Markets: South America, Eastern Asia, South-East Asia, Middle East, Africa &
Oceania.
Features of Zhongtong-Bova Luxury CNG bus1) Dimensions: ( L x W x H): 8,380 x 2,400 x 3,020mm 2) Wheel base: 3,800 mm 3) Max. Coach weight: 8,500kg 4) Approaching angle: 10.4 5) Departure angle: 9 6) Front overhang: 2,115mm 7) Rear overhang: 2,465mm 8) Max. Speed: 88km/h 9) Number of seats: 40 10) Max. Power: 74kW/1,800rpm 11) Chassis model: HFC6782KY 12) Engine type: WT615.00CNG (Euro 2 emission) 13) Fuel type: CNG
The buses of Zhong Tong is much more Cost effective in comparison with
other buses. As China is country where the manpower is a very much effective asset and the manufacturing cost is always lower for their products and finishing is better. With the advancement of modern technology in China recently, the buses are very much in modern stylish and standared.
The spear part are assured to be mostly available rather than any other companies. The longevity of life of these buses is pretty much longer. The appearance of the buses are really very much impressive to attract the people for ride. This feature is not applicable for any TATA Indian buses though price is less.
As all these buses of Zhong Tong are CNG gas driven, the are less cost expensive than any other diesel fueled buses like ISUZU, VOLVO etc. The import cost should be less and easier as China is as Asian country rather than importing from any European country or U.S. As the buses are very much impressive and high quality of service in this country and the fair is relatively lower; people should be more motivated to take their ride on these buses. Thus the quick return on investment must take place. The resell values of these buses are higher. As a more technologically advanced country, the buses are well designed as the sign of the latest technology has been seen in their products. A special warranty of 3 years is given for every bus by Zhong Tong. The Company is going to provide a free supply of the important spear parts of the buses for 2 years which is really profitable. 10
Quality transportation is an integral part of a successful community. Road Runner Transcom aims to provide a vital link for many in our community a link to jobs, to shopping, to medical services and to family and friends. We hope that our new bus service will be welcome by many with a sigh of relief in place of the relatively high density of diesel buses which emit ambient amounts of dangerous Sulfur dioxide (SO2) and suspended particulate matter (SPM) which are a dominant source of air and dust pollution in the city. After the withdrawal of two-stroke three-wheelers from the city, the main contributors to air pollution are particulate matters emitted by diesel engines. CNG bus exhausts only emit water vapor, CO and CO2. So in order provide people quality transportation at the same time not harming the environment we decided to start a CNG bus service.
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Type of employees
Managing Director Director Supervisor Cashier Driver Ticket Collector Peon Security
Number
1 3 1 1 12 5 1 2
Total
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Location:Office: Banani Ticket counter and bus stops: One in Mohammadpur: One in Mohakhali One in Banani One in Gulshan-2
Driver
Peon
Ticket Collector
Security
= Tk. 11,000,000
Road Runner Transom Mission Statement:We are committed to a consistently high level of customer satisfaction by providing a safe and efficient public transportation system that encompasses the highest standards of reliability, courtesy, and affordability.
Road Runner Transom Vision:Safe Transport our customers in properly maintained equipment. Provide professionally trained operators and support personnel. Efficient Respond to changing situations and making sound decisions. Strive to meet our customer's needs. Reliable Courteous Affordable Provide a dependable transit system that inspires public confidence. Project a positive, friendly, and polite image to the public. Maintain the lowest possible fare while continuing to stay within the constraints of our environment.
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We will maintain an agency that is valued by its customers; recognizes the contributions of its employees; and is respected by the community for its accomplishments.
Road Runner Transom Objective: In order to help the Government being accompanied as a private sector to solve the present transportation and communication problem in Dhaka. To work for the well-fare of the people in this town. To reduce the problem of traffic jam and pollution. To increase the work efficiency of the people. To provide the people a nice and comfortable journey rather than local buses.
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concerned and at formulating and recommendations for action by governments and others relevant authorities. These indicators focus on three important areas: market size, market intensity, and market growth. Market size is the relative size of each market as a percentage of the total market. While assessing the demand for CNG buses in Bangladesh, it is essential to analysis the market size means to analyze the users. In estimating the overall market demand, it is important to critically look into the existing scenario of transportation system in Bangladesh. In 2002, when Bangladesh government banned the two stroke auto-rickshaw the demand for CNG vehicles sharply increased. Now a days most of the roads are restricted for rickshaw, as a result the people prefer buses for their transportation. Another reason for preferring CNG buses rather then diesel buses is: It is excellent Low emission and noise No shoot.
So, we hope our CNG buses will be able to capture the largest percentage of the market size. Market intensity is the richness of the market or the degree of the purchasing power in our country, compared to others. Since the price of the ticket will be lower then the competitors; so a large number of upper to lower middle class people will afford to buy it. As a result, market intensity will be high. Market growth is the annual increase in sales. To determine the market growth we have to workout the savings on CNG buses:
B. Fuel Consumption (kms/litre) C. Fuel Consumption per year (litre) D. Cost of Petrol (TK/litre) E. Cost of CNG (TK/litre of petrol equiv.) F. Saving per litre of petrol equiv. (TK) G. Net Savings on CNG (TK/year) H. Cost of CNG conversion (TK) I. Payback period
10 2,000 23.00 7.45 15.55 22,100 16,500 .75 years i.e. 9 months
From the above analysis, we can easily interpret that though the cost of Petrol is much higher than the cost of the CNG, people will quickly convert their vehicles form diesel to CNG. At the same time net savings on CNG is higher than the petrol. So, we can simply say that the market growth of CNG vehicles will be raised.
(a)
certain rules and regulations as laid down in the Imports and Exports (Control) Act 1950. Parts, accessories or component, import of which is otherwise banned or restricted, shall however, be importable along with machinery item is permissible for import.
(b) Manufacturing age of the used reconditioned vehicles must not be more than three years at the time of shipment. In case of determining the date/age of the concerned 19
vehicles, the age of the vehicles shall start counting from the first day of the next year of manufacturing.
(c) Commercial import of second hands/reconditioned engines and gearboxes of bus, truck, mini bus and macro bus will be permissible. But such engine and gearboxes shall not be permissible for import if they are more than five years old.
In political aspects, the stability of the government is an important factor is starting a successful operation; however, it is often difficult to predict.
There are some problems that the importers face to import any components in Bangladesh:
1. Importers of auto parts and components face various problems as explained by different importers. Main problems and obstacles that the local importers have been facing are lying with the port and custom authority and the operating procedures and practices.
2. Another problem that hinders smooth import of parts and components is the higher amount of L/C margin required by the bank sometimes i. e. 50%. Earlier this margin was only 25%. Due to higher margin the importer suffered financial loses. 3. Finally, the importers do not have access to important data and information on automobile import and consumption. There is a severe lacking in organized data on use, consumption, production and import of auto parts, due to which the demand and supply sometimes do not match that result in price distortion in the local market.
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However, an individual importer or an overseas supplier of parts and components should undertake a detailed study and analyze the market before setting a business target.
Final Selection:
Before making the final selection from which country we will import the CNG buses, we will have to collect information by visiting on site and talking to trade representatives of that country. Such field trips can do a great deal of supplement currently available information. Based on the outcome of the screening and the supplemental data, we have decided to import CNG buses from China to Bangladesh.
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1. Factor Conditions 2. Demand Conditions 3. Related and Supporting industries 4. Firm strategy, Structure and Rivalry. and
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Demand Condition
1. Factor Conditions:
Factor condition deals with a nations position in factor of production. It may include things like Land, Skilled labour, Natural resources, Capital Infrastructure necessary to compete in a given industry. According to the standard economic theory, these factors of the production will determine the flow of trade. For our Road Runner CNG Bus Service factor conditions are very much ideal. In terms of our bus service business, our main objective is to provide the better quality service at a cheaper rate. So, when analyzing the factors of production of Bangladesh, we found that cheap labour and cheap land are in abundance. But the infrastructure for running a bus service company at present isnt up to the mark. Currently theres a lack of sufficient CNG filling stations in Dhaka. The positive sign over here is the Government along with the private sectors is taking necessary initiatives to increase the number of filling stations to meet the higher demand. Also the condition of Roads in Dhaka is not that good. Often people are stuck in long
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traffic jams. But as the construction of the Mahakhali Fly over is almost completed the flow of traffic will get smoother. This will make out project more cost effective.
2. Demand Conditions:
Demand conditions refer to the home market demand in a country for a firms products or services. In Bangladesh People are becoming more and more conscious about health and the environment all around them. The diesel fueled buses are very much responsible for the damage of the environment and the black smock does a lot of harm to the people. So now a days people are preferring the Environment friendly CNG vehicles as these are preferable in every aspect. In this connection, the Road Runner Transcom is providing the CNG bus services and getting the primary preference of the people. This will help us a lot to sustain clearly in the market. Home demand is conducive to international competitiveness when such demand gives internationally competing, local companies a clearer picture of emerging buyer needs, and where demand pressures companies toward innovation and to become more sophisticated than foreign rivals. Demand conditions are very much in favor our Road Runner CNG Bus Service.
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companies that will proved the benefits of information flow and technical interchange speed of the innovation rate and upgrading.
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SWOT Analysis
S = Strength, W = Weakness, O = Opportunity, T = Threat Strengths: Top managers are visionary. New generation buses with latest CNG technology and spacious seating arrangement. Reliable and experienced drivers. Better maintenance support. Trained and smart conductor and ticket sellers. Better sales service. High rate of schedule keeping. A huge demand for more mass transit in Dhaka. An attractive customer base. High rate of serviceability state. Government incentives Bank willing to provide loans at attractive rates. Cheap labor Cheap energy (CNG is cheaper than petrol/diesel). CNG buses should have less operative costs than diesel buses. Diesel is sold at the pump Tk 20 a liter whereas CNG is sold at Tk 7.45, which is one third of the diesel price. If a bus runs 270 km per day with 324 operating days a year, a customer preference benefit would be Taka 548,937 for a bus in a year. Buses are efficient in their fuel consumption. All our buses are environment friendly. Longer life and less maintenance cost of the buses Improved Community image of the company 26
Weaknesses: No clear strategic directions. Limited number of buses. Lack of CNG filling stations in the city Operates in lesser routes in comparison to competitors. Price of CNG buses in much higher than other diesel buses No standard operating procedure for crisis management Limited capacity to carry passengers High price of ticket Absence of R & D Less scope for of marketing the product. Traffic jams may affect schedule keeping
Opportunities: Absence of sufficient competitors that provide similar services on that Expanding the services to other routes. Liberal government regulations toward CNG vehicles as they save foreign Possible emergence of better infrastructure for CNG vehicles in
selected route.
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Threats: Political unrest in the country. The drivers may be an ideal target of harassments by the law and order New competitors may emerge in the selected routes. One-sided governments regulation. Poor re-fueling facilities and procedure. Disrupted communication due to huge queues in CNG filling stations. Poor infrastructure and communication facilities (roads) of the country. Exporting the natural gases may cause the price of CNG gases to rise.
authorities
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PEST Analysis
P = Political, E = Economical, S = Social, T = Technological Political:After independence in 1971, the country had to follow the rules and regulations of the then Pakistan government. Even soon after 1971, the same rules and regulations were followed with slight modification. Before 1982, the government did not effectively control the sector to the extent now it is. However, the regulatory body needs reforms and restructuring to bring efficiency and dynamism in day-to-day work. Effective program to modernize and expansion the regulatory body has become indispensable to handle the expanded activities in the total transport sector. They are mainly concerned with the environmental impact, registrations of vehicles, road and route permits; licensing of vehicles; and vehicle fitness for plying on roads, etc. Domestic parts and components industries are not developed at all due to lack of adequate attention from the government, skilled manpower, absence of large amount of capital investment required, technology up-gradation, absence of suitable foreign collaborators and traditional small market size in the country, etc. Importers are facing problems while importing various types of parts for lack of transport security, unexpected and whimsical interference of customs department, etc. Parts and components are mainly being imported by road from India and by sea from other sources. Limited quantities are also imported by air on emergency basis.
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The use of various types of motor parts is being influenced by several groups of people involved in this sector and they are technicians in the workshop, retailers promoting their imported spares, automobile engineers/managers of large private and government corporate houses. The government under its development program is encouraging use of motor vehicles and buses in the major cities by imposing restrictions in the use of three wheeler human carriers which are considered hazardous to environmental pollution. The World Bank has extended support to float more than 10,000 commercial vehicle i.e. taxi cab/buses in the capital city.
Economical:There is a steady growth in the use of various types of vehicles in Bangladesh. Reasons are increased economic activities, high degree of mobility of people for different purposes, improved bridge and culverts, roads and highways, etc. Increased trade, commerce and export have also created additional demand for various types of automobile. Demand of construction vehicles and auto equipment used in construction works also increased to a great extent due to the increased number of on-going construction works both in private and public sector. On the top of that, the life style of the Bangladeshi people particularly the middle class in the urban areas have been changing very fast and improving, which has resulted in greater movements and greater use of vehicles in the country.
Social: Improved life style of the people now a days People are becoming more conscious for saving their time. People want more comport in their communication.
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Better for those people who dont have their own vehicles or have the opportunity to use them. People are becoming more health and environment conscious. Women are feeling more comfortable journey in this type of city service buses. A better new taste in communication that people always seek.
Technological: Bangladesh does not have any vehicles industry except a few private sector automotive assembling companies and one government owned assembling plant named Progati Industries Limited which has entered into a collaborative arrangement with Ashoke Leyland of India. All these local private assembling plants are established in collaboration with the foreign companies. The local assemblers are using mostly the imported parts and components except a very few local components like body, battery, plastic and rubber components, etc. Only the battery for various types of vehicles is being produced in Bangladesh and its is also being exported to other countries. Locally produced parts and components are not durable and they lack quality standard, and are not well designed compared to the imported brands available in the market. Most of the vehicles are being imported from countries like Japan, India, China, South Korea, Malaysia, Indonesia, Italy, UK, Germany, France, USA, etc. through their local agents in Bangladesh.
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Financing
We will obtain the finance for our CNG buses through a lease agreement with a
commercial bank/Lease financing company. Which means that will not be paying for the buses right away. But, the bank will buy the buses and rent it to use. We will be making lease payment over a period of time that will eventually cover the full cost of purchasing the rented buses. Initially while purchasing the buses, we will provide 50% of the total cost. While the Lease financing company will be paying the other 50%.
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1. Demand for it:Market demand for this bus service is high. This is mainly due to the fact that the route (Mohammadpur to Gulshan-2 via Mohakhali and Banani) we have chosen has a vast number of potential customers but very few number of bus services.
2. Target Group:Our target group consists of upper-lower class, and the whole middle class. Thus most of these customers will be students and job-holders.
3. Market Size:This is a niche market since the bus will be traveling in only one route i.e. Mohammadpur to Gulshan-2 via Mohakhali and Banani.
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Pricing Policy
The price of the bus tickets will depend on the cost of import of the buses from
its country of origin, VAT & various taxes to be paid, the price of CNG, and many other fixed overheads and variable costs. Moreover, it will also depend on our expected rate of return on investment i.e. the time scale for the business to break even and start generating profit. After analysis of the various costs we have decided to set the initial price of the ticket at Tk. 10.00 for Mohammadpur to Mohakhali and Tk. 15.00 for Mohammadpur to Banani & Gulshan-2. We have decided to import CNG buses from China. It is common belief that China usually produces low quality products; however, we have researched and gathered information on various CNG bus manufacturing companies in China. From our finding it is apparent that China has several good quality CNG bus manufacturers. Moreover, the price of the best quality buses produced in China are highly competitive compared to good quality CNG bus manufacturers in other countries.
Price Objectives:Setting price for it depends on the amount of ticket sold. If the sale of ticket is high we shall decrease the price of the ticket.
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Since there are very few bus services between Mohammadpur to Banani via Mohakhali this would be an excellent opportunity for us to fulfill the demands of customers who travel this route on a daily basis.
Distribution Policy:Our bus service will be managed by our own employees. No dealership will be given to others. Since the choice of route is limited to one it would be cost effective for us to handle the day to day management of the business.
Promotional Strategies:1. FrontPage Advertisements in major newspapers. 2. Advertisements in popular magazines. 3. Leaflets to be distributed on roadsides to create awareness. 4. Roadrunner Transcoms environmentally friendly image will helps a lot for selling our service. 5. The company is using the low price strategy to compete in the local market. Low production costs have given them the advantage to compete with our competitors.
Product Potential:In Bangladesh, the condition of the roads and highways are still not up to the mark in everywhere. Still there are some places in Dhaka that are so much weak and damaged. The vehicles that move frequently in those places, damage their vehicle and also reduce their life longevity. In comparison with the roads of European country and other developed countries, the condition of the roads of Dhaka is not that smooth and easy going for the car, buses and other vehicles. Beside the traffic rule is very much fragile and there are always chances for the buses to get dammed or scratched by others. So considering all these in mind, we are taking certain steps for the proper maintenance of our buses. With this point of view, a Chinese expertise for these buses is hired by us. He 35
is hired and kept in this country with a comfortable amount of salary and other benefits. Besides, for any kind of unavoidable circumstances, we are making ourselves prepared and taking necessary steps to face them. The important spears are always kept in front of our hand and every necessary tool is assured to be found in the right time. In this connection, the drivers that we are going to hire would be interviewed analyzing their driving skills, license, job responsibility and integrity properly.
Recommendation
In a developing country such as Bangladesh there are ample opportunities as
well as obstacles when starting a new business. Talking about the bus service, we are most likely to face the following problems: 1. Illegal Toll Collectors: The public transport industry in Bangladesh faces the
problem greatly of paying toll, from their profit margin, to illegal toll collectors on a daily basis. These toll collectors include political cadres, local hoodlums, and in many cases, the police. However, these collections can be minimized if a businessman has strong political connections with the government. Fortunately, we do have influential connections with the present government as well as opposition parties to handle such situations and sustain our business for the long term. 2. Hartal and Other Political Interruption: This is another major obstacle in running a public transport business. Although the hartals in the recent years are quite lax, it is still risky for a large vehicle such as a bus to be on service on a hartal day as they become target for angry mobs and hartal supporters. Besides, the political interruption does always hamper the free flow of the business. However, we understand that this is part of life in Bangladesh and our competitors as well as other business industries will be facing the same problem. The problems can be solved only by the way if the political leaders are kind enough to find out any alternative solution of Hartal.
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3. Traffic & Road Condition: The traffic jams and condition of the roads do pose a problem. Especially in recent years, the traffic jam and road conditions have been deteriorating quite consistently. This again is a part of life in Bangladesh and is faced by anybody and everybody living in the Dhaka metropolitan area. Thus in view of the above discussion, we think a new bus service covering the route of Mirpur to Gulshan-2 via Mohakhali & Banani is a very much feasible. After covering all the fixed and variable costs we could still maintain a healthy profit margin by serving this niche market. 4. Availability of CNG Gas: As our buses are all CNG natural gas driven, the availability of CNG gases must be making sure. But still in Dhaka, the availability of CNG natural gases is not up to the mark. Good sign over here is the government of Bangladesh is emphasizing on this matter and the CNG filling stations are growing on at a rapid speed in Dhaka as in both privately and publicly. So we can assume that we shouldnt have to face the problem vastly in our service business. 5. Lack of Skillful and knowledgeable Drivers: The problem that is very much seen in the Government as well as private fields is the huge lacking of Skillful and knowledgeable drivers for the vehicles. These drivers get their license in the illegal way and never have any kind of experience and knowledge about the proper rules of Traffic. They become responsible for the accident and damage for the vehicles almost every time and creates burden to their owners. For this, the recruitment and selection process of the drivers for our buses are very much strictly followed. We must evaluate and analyze the different skills, experience, perfect license, integrity of the drivers and thus give the final appointment letter.
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Future Plan
The Road Runner Transcom Bus service is not a business that would last for only a few months. We have started this business with a huge future plan. After starting successfully, we are sure to get a great response from the people about our bus service for its uniqueness and quality of service than the other competitors. We expect our profit margin will get higher and higher and achieve a smooth flow of business operation. Our future plans this regard is 1) Within 2 years, we are going to position ourselves as one of the top bus service companies in Dhaka through our business and service development and innovation. 2) Maintaining the highest maintenance of the buses, we will assure the more prolonged life of our buses. 3) With the increasing demand of the people, we have plans of increase the number of our buses within a few years from 10 to 30. 4) Introduction of new age of facilities and development of services are very much coming for our bus service Like- making the passengers journey more comfortable, system of entertainment like music and drinking water etc.
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5) With the expansion of business, we are planning to hire more successful and competitive employees in our organization.
Conclusion
We have learned many lessons while working on the CNG bus project. We
would like to retreat the following points, based on our experience. CNG buses are much cleaner than diesel- powered buses. However, environmental friendliness alone is not enough of a basis for large-scale implementation. Because bus manufacturers and operators are so accustomed to the convenience and low short-term cost of the current system, new buses requiring high initial investments are not financially attractive. Asking them to carry the financial burden of environmental protection alone is of no use. Governments intending to promote CNG will face similar problems. The problem is a matter of choosing between placing first priorities on the environment and seeking ways to incentives or shares the cost of protection--or keeping our environmentally unfriendly way of doing business. The status quo is less expensive in the short term, but perhaps is far more expensive in the long term if we add up the cumulative health costs associated with severe air pollution. We strongly believe that a project like this is very difficult to make significant progress on unless the proper government investment is made in the beginning. The governments position and will is based on the conviction that improving the environment requires--and contributes to establishing--common ground among bus manufactures, bus companies, fuel providers and the public.
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Bibliography
INTERNATIONAL BUSINESS [Competing in the Global Marketplace] Charles W. L. Hill Business Communication [Theory and Application] --- Raymond V. Lesikar and John D. Petit, Jr.. Bangladesh Statistical Year Book 2001. . . by BSS. Personnel/ Human Resource Management David A. Decenza & Stephen P. Robbins.
http:// www.cng buses.com http:// www.Google.com http:// www.isuzu.com http:// www.tata.com http:// www.hino.com http:// www.zhongtong.com
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