Business

Environment









Technological Environment

Information Technology- Information Technology (IT) is a subject of widespread interest in
Bangladesh. World Bank report, 2009 says that 2.9% of our total population has personal
computer. Bureau of Statistics and a few nationalized banks are the leaders in using computer
related information system in government. The financial sector made remarkable progress in
adopting electronic forms of payments. A recent report posted on thedailystar.net, January
1, 2012 reveals that 38 banks were providing online banking facilities,18 banks internet
banking, 40 banks have now ATM services and 26 banks offer credit card facilities.

Information Infrastructure-The present condition of information infrastructure in
Bangladesh is far better than before. According to the report of World Bank, 2009-0.9%
people has telephone lines, 90% of the total population of Bangladesh is covered by mobile
cellular networks. BTRC says that the total number of active mobile phone subscribers has
reached 71.507 million by February 2011. Phone calls are way cheaper-less than tk. 1 a
minute. Introduction of 3G network by the end of 2012 will open a new door in the field of
telecommunication.
Internet Penetration-The internet penetration of Bangladesh is one of the lowest in Asia
Pacific. According to the report of World Bank, 2009 Bangladesh have 5.5016 millions of
internet users and 47 secure internet servers covering 3.7 percent of the total population. As
per BSCCL we will soon connect to another submarine cable which will increase internet
bandwidth of our country.The WiMax operators (QUBEE, Banglalion) and mobile operators
are doing their best to spread internet to the every corner of the country. Now any individual
can get a Banglalion WiMax internet connection spending only taka 999.
Government Support: Government support in IT and ICT sector in our country is quite
satisfactory. The government has placed top most priority to human resource development in
the IT field. VAT is not payable for import of capital computer machineries and spares.
Computer Studies has been introduced as an optional subject both in SSC and HSC
examinations. BSCCL says in the Daily Star on December 30, 2011 that Bangladesh will
connect to a second submarine cable by 2014. Software Copyright Protection Act has already
been drafted. More and more standard institutes are bringing high quality IT education in our
country.
Competitive Environment

Porters Five Forces: Porters five forces refer to five unique behaviors of a business in a
competitive market. However, a business should not only depends on this study but rather
analyze other economic studies to survive in a competitive market.
Power of Buyers: Buyers can be both people and organizations who create demand in the
market. The power of buyers is greater if there are few numbers of buyers but many sellers in
the market, if the products are abundant and if the competition among sellers is intense.
Again its an advantage for buyers if they get the opportunity to switch among many
suppliers at a low cost. Less presence of brand products in market gives the buyers more
chance to bargain. If their ability to put pressure on suppliers is strong they can easily control
the products price.
Power of Suppliers: Suppliers are businesses or people who supplies goods or services in the
market. The power of suppliers is high when there are many buyers but few sellers in the
market, when brand products are plentiful and when the switching cost among sellers is high.
Suppliers can charge more prices if their products have few or no substitutes in the market.
For example, if you are making breads and there is only one person who sells flour, you have
no alternative but to buy it from him. By controlling the supply they can easily make an
impact on the market
Threats of Entry: Threats of entry usually depends on the number of barriers, if the barriers
to entry into the market are many the threats become high. Profitable market always attracts
new firms but if the capital requirement is high, if the distribution channel of products is
restricted or if the market is abundant with brand products it is difficult to enter. New firms
can also enter easily if business policies of the government are not restricted. New entrants
can raise the competition and cause the businesses to bring standard products.
Threats of Substitutes: The threats of substitute products depend on number of factors. If
more substitute products become available in the market, the demands for any particular
product become less as buyers have more alternatives. Again, if the quality of substitutes is
high but the price is reasonable, switching cost among substitutes is less, the threats become
high. This substitution we are talking is not with the competitors similar products but
entirely different ones instead. For example, Coca-Cola is not considered as a substitute for
Pepsi but juice, lemonade, tea and coffee are.
Inter-company Rivalry: If inter-company rivalry in an industry is low, the industry is
considered to be stable. Rivalry increases when a large number of businesses compete for the
same customers and resources, when market growth is slow, when fixed costs among
businesses are high and almost same and when threat of substitute products is high. If a
customer can freely switch one product from another, businesses must fight to capture
customers. On the other hand, presence of brand products in the market tends to minimize
rivalry as they already achieved their unique identification.

Social Environment

Diversity-Diversity in social factors like customs, traditions, values, beliefs, poverty, literacy,
life expectancy rate etc affects business in a various ways. Increase in literacy rate indicates
more consciousness of consumers about the quality of products. Festive seasons cause an
increase for demand of various goods. High life expectancy rate of a community indicates
that such community can consume more products than other community. Different religions
have different principles. Pork industry will not grow in our country as majority of the people
is Muslim and they never eat pork for their religious restriction.

Demography- Understanding demographic factors are essential for a business as it affects on
the demands and supplies. Demography refers to size, density, and distribution and growth
rate of population of a particular community. For example, a country where population rate is
high and children constitute a large section of population then there is more demand for baby
products. Similarly the demand of the people of cities and towns are different than the people
of rural areas. High rise of population indicates the easy availability of labor. In our country,
detailed demographic information can be found at the Bangladesh Bureau of Statistics.

Family Changes- Family is the basic part of a society and individuals personal decision of
buying and selling products is affected from family. Change in family composition causes to
bring diversity in the demand of different types of household goods. Business should analyze
different family values and lifestyle. It may happen in a family that parents do not allow to
use a specific product, so the sale of such product will decrease. Again many family
occasions can increase the demand of goods like marriages, birthdays, graduation of family
members etc.


Economic & Legal Environment
Intellectual Property Act- Intellectual Property (IP) means human innovations and
creativity such as literary and artistic works, films & musical works etc and industrial
property such as patents, trademarks, symbols and designs etc which are capable of being
protected under Intellectual Property Act. The IP related laws prevailing in Bangladesh are:
The Patents and Designs Act -1911, The Trademarks Act 2009, The Copyrights Act 2000
(Amended in 2005). Ministry of Industries authorizes the protection of industrial property of
our country.
Taxes & Regulations- the National Board of Revenue (NBR) is the central authority for tax
administration and responsible for all tax policies and tax laws in Bangladesh. Most
Bangladeshi people do not pay income tax. According to the NBRs law for the tax year of
2010-2011, the standard rate of corporate tax is 27.5%, 15 percent VAT is applicable for all
business or industrial units and services, if a male individual earns less than 165000 tk. no
income tax will be imposed on him and the minimum gift-tax rate is 5% for first taka 5 lakh
of taxable gift.
Contract laws: These laws are of government's oral & written agreement associated with
exchange of goods & services, money & properties. Contract Act 1872 governs the law of
contracts in Bangladesh.
Tradable currency: The government can establish a currency that's tradable in world
market. That is anyone can buy & sell goods & services anywhere in the world using that
currency. Tradable currency varies from country to country.