SWOT Analysis BSRM Steels Ltd Bangladesh

SWOT Analysis of BSRM

A scan of the internal and external environment is an important part of the strategic planningprocess.
Environmental factors internal to the firm usually can be classified as strengths (S)or weaknesses ( W ),
and those external to the firm can be classified as opportunities (O) or threats ( T ). Such an analysis of the strategic
environment is referred to as aSWOT analysis.The SWOT analysis provides information that is helpful in matching
the firm's resources andcapabilities to the competitive environment in which it operates. As such, it is
instrumental instrategy formulation and selection. The following diagram shows how a SWOT analysis
fitsinto an environmental scan:

How Do I Find Strength or Weakness:

Strengths and weaknesses are the factors of the firms internal environment. When looking for
strengths, ask what do you do better or have more valuable than your competitors have? In case
of the weaknesses, ask what could you improve and at least catch up with your competitors?

Where to look for them?

Some strengths or weaknesses can be recognized instantly without deeper studying of the
organization. But usually the process is harder and managers have to look into the firms:

Resources: land, equipment, knowledge, brand equity, intellectual property, etc.

Core competencies
Capabilities
Functional areas: management, operations, marketing, finances, human resources and R&D
Organizational culture
Value chain activities

Strength or a weakness?
Often, companys internal factors are seen as both, strengths and weaknesses, at the same time. It
is also hard to tell if a characteristic is strength (weakness) or not. For example, firms
organizational structure can be strength, a weakness or neither!

How Do I Find Opportunities or Threats?

Opportunities and threats are the external uncontrollable factors that usually appear or arise due
to the changes in the macro environment, industry or competitors actions. Opportunities

represent the external situations that bring a competitive advantage if seized upon. Threats may
damage your company so you would better avoid or defend against them.

Where to look for them?

PESTEL. PEST or PESTEL analysis represents all the major external forces (political,
economic, social, technological, environmental and legal) affecting the company so its the best
place to look for the existing or new opportunities and threats.
Competition. Competitors react to your moves and external changes. They also change their
existing strategies or introduce new ones. Therefore, the company must always follow the
actions of its competitors as new opportunities and threats may open at any time.
Market changes. The most visible opportunities and threats appear during the market changes.
Markets converge, starting to satisfy other market segment needs with the same product. New
geographical markets open up allowing the firm to increase its export volumes or start
operations in a new country. Often niche markets become profitable due to technological
changes. As a result, changes in the market create new opportunities and threats that must be
seized upon or dealt with if the company wants to gain and sustain competitive advantage.

Opportunity or threat?
Most external changes can represent both opportunities and threats. For example, exchange rates
may increase or reduce the profits gained from exports. This depends on the exchange rate,
which may rise (opportunity) or fall (threat) against the home country currency. The organization
can only guess the outcome of the change and count on analysts forecasts. In such cases, when
organization cannot identify if the external factor will affect it positively or negatively, it should
gather unbiased and reliable information from the external sources and make the best possible
judgment.

However As a Post graduate Student I found the following Strength, Weakness, Strength or Opportunities:

STRENGTH:
i.

Market leader:

BSRM is the market leader in the steel Market of Bangladesh. They occupy 12 % of the total steels market.

ii.

Great competitive skills:

It has been working consistently in steel production sector. So it has achieved great competitive skills. It has the ability to
face strong competition.

iii.

Reliability:

Be the preferred business partner of the customer and suppliers by offering quality products; providing
best and timely service before and after the business transaction.

iv.

Strong employee bonding and belongingness:

BSRM employees are one of themajor assets of the company. The employees of BSRM have a
strong sense of

commitment towards organization and also feel proud and a sense of belongingtowards BSRM.
The strong culture of BSRM is the main reason behind this strength.
v.
Strong Marketing Lineup:
BSRM has developed a sound and eff ect i ve mar keting policy to share knowledge about their
products with design engineers, thus creatingmore awareness in the minds of the customers.

vi.

Strong Products Distribution Lineup:

BSRM has appointed more than 300 dealersall over the country so that people can get BSRM products
within a reasonable time.Besi des thi s they have sever al sales and suppl y depots i n Dhaka,
Comi ll a, Bor ga, Shylet, and Khulna.

vii.

Modern Equipment & Technology:

The BSRM Xtr eme 500wproj ect has been conceptualized by the German consultants
Badische Stahl Engineering (BSE) andthe complete plant and machineries have been supplied by
Danieli Group, Italy oneof the three largest suppliers of equipments and plants in metal industry
worldwide. Soit has the latest and Modern equipment and Technology.

viii.

Backward-linkage industry:

T o s t r e n g t h e n t h e c o m p e t i t i v e a d v a n t a g e o f t h e company and to minimize the

dependency on obtaining raw materials, BSRM Grouphas taken initiative to establish the largest billet
making plant in Bangladesh under thename of BSRM Iron & Steel Co Ltd (BISCO).BSRM decided to take over the
ownershipof BISCO t hr ough acqui siti on of 95% of i ts enti re share hol di ngs fr om t heir
exi sti ngshareholders.

WEAKNESS

i.

High interest rates decline profit:

BSRM has a lar ge lone f rom var ious bank andfi nanci al i nst itutes of Bangladesh. So
t he i nterest rat es drop down t he profit s of t he company.

ii.

Power Crises:

In Bangladesh the power crisis is increasing day by day. As BSRM is a h e a v y i n d u s t r y i t n e e d s l o t s o f

p o w e r s u p p l y a n d g a s i n d a i l y p r o d u c t i o n . A s t h e government is failed to make
uninterruptable supply of power and gas the production isdecline.
OPPORTUNITIES

i.

Market Dominance

: As BSRM occupy 12% of the st eel mar ket of Bangl adesh and also they are the market
leader. So there is a good probability that they can dominate t he mar ket. Mor eover t hey ar e
i ncreasi ng t heir production f rom 375,000 M.Tons to 500,000. After the expansion they can occupy 20 % of
the local market.

ii.

International Scope:

As BSRM is i nternationall y renowned company so i ts have s trong possibility to export steels product
in near future.

iii.

Increased demand for the products:

BSRM has a greater opportunity of profit as the demand for the 500-grade rods increasing day by day in the local market.

iv.

Organizational Goal

: The goal of the Company is to make life of the people secured and saf e by pr ovidi ng quali t y
product s at a cheaper pri ce and t o be a par tner i n t he nation buil di ng act i viti es. As
BSRM is t he mar ket leader t hey have t o opport uni t y t o fulfill there organizational goal.

THREATS
i.
New competitors:
I n r e c e n t d a y s s o m e n e w c o m p a n i e s h a v e s t a r t e d t h e i r s t e e l production.
Among them AKS (Abul Khayer Steel) is one of them. They are targeting to produce 800,000 M.Tons of steel per
year. But now they are producing only 200,000M.Tons.

ii.

Economic crisis:

World recession and the socio- political situation that prevailed in2008 in Bangladesh stagnated all
development works in the country. Then the sales of steel decrease to half due to recession.

iii. Growing Competition:

All the bi g st eel pr oducers of Bangl adesh wi sh to increase their production capacity. If they
increase the production capacity then their production cost will decline. So competition will also increase in the steel
market.

iv.

Labor Unions:

Labor unions are one of the emerging threats of Bangladesh now-a-days.

v.

Power Crisis:

Power crisis is increasing day by day and thats why the production of steel in a decline position. For example Abul
Khayer only can produce one forth of their production capacity due to gas crisis.