Strategic Management Project On

Submitted To: Yurika Uematsu Bhuiyan (YUB)

(Lecturer, Department of Management)

Submitted By:

Team: Game Theorists

Section: 13

Members: ID:

Fahad Chowdhury 1130540030

A.K.M Imtyaz Hossain 1320153030

Shaheda Kabir Mitu 1220199030

Chowdhury MD Muntasir Alam 1311048630

Shahnewaz Rahman Mollick 1310587630

Anika Tabassum 1230537630

Tahsin Alam Chowdhury 1410397030

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Executive Summary

The report consists information about Pran Foods Ltd., one of the largest and yet one of the most

rapidly growing businesses in Bangladesh. The report analyzes the business culture, methods of

operation, frailties, strengths and where future opportunities and risks may lie. The report also

provides recommendations on how to take advantage of these to ensure sustained growth,

profitability and competitive advantage of the company over the future years.

The report is divided into 3 parts. The first part analyses the internal and external aspects of the

company including factors like financial performance, company and industry conditions, etc. The

second part provides recommendations, based on strengths while addressing the weaknesses, threats

and opportunities, that are feasible for the company. The third part discusses how these strategies are

adaptable to Pran Foods Ltd.

From the findings, it is evident that Pran has been expanding rapidly and needs to take advantage of

its strengths and weaknesses while addressing its weaknesses to avoid incoming threats to company.

Recommendations have been thoroughly provided on how Pran can sustain its competitive advantage

in this competitive market by altering and implementing some corporate, business and functional

level strategies. The report also focuses on Pran’s product quality and Research and Development

department.

Having pointed out some of the key factors for improvement, it is expected that Pran will benefit

with the stated recommendations for the next five years. Notable suggestions include probable

acquisition suggestions, both horizontally and vertically, with smaller companies like like Arson

food & beverage Ltd, Globe soft drinks Ltd, etc. to improve its current market share and lower costs

further to benefit in the FMCG market.

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Table of Content

Contents
History, development and growth of the company over time........................................................................ 4
Analysis of the company’s internal resources and internal capabilities ......................................................... 4
Identification and analysis of company’s external environment .................................................................... 5
Competitive forces analysis ............................................................................................................................. 6
Industry Lifecycle Stage ................................................................................................................................... 8
Macro Environment Situation Analysis of Pran............................................................................................... 8
Financial performance analysis ..................................................................................................................... 13
Long-Term Solvency or Financial Leverage Ratios ........................................................................................ 14
Profitability Ratio ........................................................................................................................................... 15
Competitive Advantage of Pran Food and Beverage .................................................................................... 15
Business Model Analysis of Pran ................................................................................................................... 16
Recommendations......................................................................................................................................... 17
Corporate Level Strategy ............................................................................................................................... 21
Business level strategies ................................................................................................................................ 23
Functional Level Strategies ............................................................................................................................ 25
Technological Strategy .................................................................................................................................. 26
Corporate Governance .................................................................................................................................. 27
Strategic Control System ............................................................................................................................... 30
Organizational Structure of Pran………………………………………………………………………………………………………………31
Recommended Strategies and Existing Company Culture of Pran ............................................................... 31
Global Strategies ........................................................................................................................................... 32
References…………………………………………………………………………………………………………………………………………….…35
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History, development and growth of the company over time

Pran stands for “Program for Rural Advancement Nationally” (IANS, 2015). Pran is currently one of

the most admired food & beverages brand among the millions of peoples of Bangladesh. In 1981, for

the first time Pran started their journey. At the very beginning of their business operation, they

started with fruit and vegetable processing. Amzad khan Chowdhury was the founder of and

Managing Director of Pran group. Pran foods, a sister concern of Pran-RFL group, produces a

number of agro products under the banner of Pran (Iqbal, 2016).

Pran is currently producing more than 400 food produces under 10 different categories i.e. juices,

Drinks, Mineral, water, Bakery, carbonated beverages, snacks, culinary, confectionary, biscuits &

Dairy (Pran foods, n.d). The company has adopted ISO 9001 as a guiding principle of its

management system.

The company is compliant to HACCP & certified with HALAL which ensures that only the best

quality products are reaches to the consumers table across the Globe (Pran foods, n.d). Pran want to

expand their business in Indian market as they already set up a production plant at Kolkata (IANS,

2016). Pran is not only successful in their business sector but also, they hugely contribute in

country`s overall socio-economic development.

Analysis of the company’s internal resources and internal capabilities

Intangible Resources: Pran has satisfying product and design quality to match customers demand.

They have effective customer service and organizational structure. The Intangible resources refers

the ability to access raw material, brand image, experiences and technical knowledge. Pran is the

market leader as far as food and beverage industry is concern. They have earned the best brand

image amongst competitors by providing quality products and after sale services. They view their

consumers as a king and they are customers lay people. Their statement for customer is “Our

consumers have given us such success for so long years. So, we care about our consumers.

Consumer care is the process by which we endorse consumers’ satisfaction and moreover, loyalty.
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Primarily, it grips managing communication with consumer particularly consumers’ questions and

complaints and resolving disputes amicably” (Pran foods, n.d). They are financially well established

as they have the most market share in the market. There are 84000 employees in Pran. They stated

“our employees are our best resources” (Pran foods,n.d).They have very good reputation in their

supplier`s eyes who provides them with quality seeds, fertilizers, insecticides, etc. and they also

provide financial support (Pran foods, n.d)

Tangible Resources: According their financial report of 2016, Pran has assets worth of above BDT

25 billion. Under tangible assets Pran has product manufacturing plants, equipment, machinery,

buildings. Pran has more than 20 offices all over the country. Pran, one of Bangladesh's leading

processed-food and beverage companies, is to build its first foreign factory in India, taking advantage

of the country's recent decision to lift its ban on Bangladeshi investment (Kowsher,2008). The

Tripura government has allotted land to Pran in Bodhjung Nagar to set up the unit, where already

500 people, mostly local residents and women, have been employed and more than 1,000 workers

would be engaged by 2017 after the expansion of the factory (IANS, 2015). According to Roy, the

company is setting up a processing factory at Kalyani in West Bengal's Nadia district at a cost of

Rs.5 crore. Also, it has planned to set up plants in Odisha and Siliguri in West Bengal (IANS, 2015).

Identification and analysis of company’s external environment

Pran has grown its business tremendously since its start. Pran’s products are continuously being

exported worldwide. Pran is producing more than 400 food products under 10 different categories.

Carbonated beverage entered our market in 1980. At that time of there were few companies in

Bangladesh. By the year 2000, more than 120 Beverage companies entered in Bangladesh. Beverage

industry is one of the major contributors of all economic growth. The Pran foods factory has

expanded over the years in all spheres of food processing for example, bottling, canning, pulping,

pickling, and concentrating as well as installation of Bangladeshis first Tetra Pak facility.
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At present there are various companies that are emerging in food and beverage sectors in

Bangladesh. The major competitors of Pran Food and Beverage Company is given below:

Ahmed Food Products (Pvt.) Ltd is among the most popular names for food products in

Bangladesh. They are exclusively known for their sauce. Customer choice of Ahmed food products

is 14 out of 20. Revenue of company is BDT. 60.6 billion, and market share of this product is 10%.

Akij Food & Beverage Ltd. has been established at a beautiful site in Krishnapura, Dhamrai of

Dhaka. It quickly became one of the best food & beverage companies in Bangladesh. There are

various types of drink, snacks and other products. The customer satisfaction level of this product is

16 and the revenue and the revenue of this company is BDT. 70.3 billion with market share of 15.5%

Statistics of Pran Foods Ltd. Are as follows:

The Pran foods factory has expanded substantially over the years in all spheres of food processing

e.g. bottling, canning, pulping, pickling, concentrating, dehydrating as well as installation of

Bangladeshis first Tetra Pak facility. Pran’s products are like by consumers the most. Customer

choice of Pran’s products are 18 out of 20. Revenue of Pran is 111.55 Billion and market Share of

this product 66%.

From the above data of different beverage companies, we can see that Pran Food and Beverage Ltd.

is the leading company among all other companies. It provides satisfaction level higher than the

other companies. Pran Company is leading in terms of revenue, customer satisfaction level and also

in terms of market share.

Competitive forces analysis

Porter’s five forces: For analyzing the competitive forces, Michael Porter's five forces model can be

best suited. These are the basic components by which a firm or a company can be affected most of

the time. Porter’s five forces model reflects the overall competition among the firms as well as with
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the new rivals but sometimes it gets difficult to analyses and predicts the exact situation in the

businesses as there are always chances of randomness.

 Bargaining power of suppliers: Suppliers can have a powerful impact on the increased and

reduction of prices where a company sometimes cannot put control over it. Pran has their

own suppliers from which they collect different types of raw materials for the production of

food and beverage. Under food and beverages sector, Pran has various product lines. As the

switching cost is low, the firm can easily switch to another supplier if the prices of raw

materials increase.

 Bargaining power of buyers: Buyer can have also affected the changes of prices. As Pran

does not sell their products directly to end user rather they sell these products through

different retail shops, the bargaining power of buyers is moderate as it is mostly depending on

the demand of the buyers. But Pran has to keep in mind that the price at they are selling

should be affordable to the buyers so that they can improve customer retention.

 The threat of substitutes: Pran has several competitors in the market, among them there are

Akij food and beverage, Partex food and beverage and ACI food and beverage Ltd where

they have almost the similar types of products compare to Pran. So, threat of substitutes for

Pran food is high as the customers have more alternatives or substitutes.

 The threat of new entrants: New entrants appear when there are low entry barriers. There

are several factors related to entry barriers and one of them can be considered as the

utilization of intangible and tangible resources by the companies. As it is the shakeout stage

in industry life cycle, it is easy for Pran as incumbents to gain proper utilization of the

resources as well as economies of scale, compare to the new entrant’s. Loyal customers of

Pran will always prefer Pran food & beverages over the competitors. So, the threat of new

entrants is moderate in the food and beverage industry.

 Industry rivalry: Pran food has several competitors as it is mentioned earlier. Akij food,

Partex food & ACI food & beverage Ltd can be considered as the major competitors of Pran
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foods as they all have a similar product line in terms of foods and beverages. So competition

is high among the rivalry.

Industry Lifecycle Stage

The food and beverage industry can be considered dynamic in nature in terms of market growth and

market share. Food and beverage have a high fluctuation of demands as there is high competition

among the rivals. In industry of Pran Foods Ltd., the life-cycle is at the shakeout stage. In this stage,

a firm stands in between the growth and the mature stage in which there are still new customers to

come. In food and beverage market, there are high opportunities and possibilities of new customers

to gain.

Macro Environment Situation Analysis of Pran

There are some major decisions that an Organization needs to take by considering the Macro

Environment. It is basically analysis about the factors which an organization cannot control. Macro

Environment analysis are done through PESTEL analysis.

PESTEL Analysis

Political: Pran is running their businesses from the early 80’s (1981) in Bangladesh. There are many

factories of Pran and many other sub-contracted factories. As Pran is one of the biggest companies of

Bangladesh they are susceptible to the country’s unstable political environment. As Bangladesh

political environment is as business friendly as it ought to be (Political stability key to improving

investment climate, 2014), an unstable political environment has a huge impact on the organization

sales and profit structure. Strikes are a common form of political demonstration in the country. If the

political stability continues, Pran may get more profit and face less political dilemma.

Economical: One of the most important parts of PESTEL analysis is the economical part. It

basically consists of interest rate, purchasing power of buyers, Currency exchange, Rate of Tax,

country growth rate (GDP), rate of inflation. These are some of the key economic activities that

affects the operation and profitability of an organization like Pran in a particular country. In
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Bangladesh the PPP of consumers and GDP are increasing (World Bank, 2017). As of 18th

September 2017, the GDP of Bangladesh stands at 1,358.78 USD. This means that the country is on

positive leap and there are huge chances of increase in demand of Pran products. As Pran is also

exporting a big portion of their production to many different countries like India, UAE, Malaysia and

North America so Pran may also get incentives from the government. A good and stable political

environment of Bangladesh may benefit Pran.

Social: In last 10 years, Bangladeshi organization has gone through major changes which involve the

new trend of social work. Pran uses Corporate Social Responsibility (CSR) to give benefits to the

society. As a part of CSR activity Pran does a lot of work with “Save the Children”, Pran also give

donations and foods to the NGO’s which are working for disabled and autistic children. In recent

times they have donated for the Rohingya Camp at Ramu and Cox’s Bazar. Pran is also working with

Bangladesh Red Crescent Society (BDRCS) Pran also donates blankets and jackets during winter

time. Pran also tries to give the fair rate of raw materials to the farmers from where they collect raw

materials, Pran as a giant always avoid the monopoly purchasing from the suppliers. (Reporter,

2017)

Technology: Pran uses technology from the collection of raw materials to finally delivery to the

retails. Technology is everywhere; without technology it will be very difficult for the organization to

achieve economies of scale. Technology also helps Pran to reduce carbon emission. Moreover, by

using the latest technologies for channel management, they are also receiving the orders from the

distributors and retailers. Also, the warehouse of Pran is filled up with latest machineries which

ensure the smooth movement of finished goods and it also reduces the production cost so that in the

future, Pran may gain more profit by using latest technologies in their production line.

Legal: When the Pran was first established in 1981, there were less consumer protection acts and

health related acts. The major permission was from BSTI, but nowadays Pran needs to go through

various tests and ask permission from various authorities. Pran basically follows the Act 1959 “The
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pure food ordinance”. This act basically protects the rights of consumers, which ensures the use of

proper raw materials which does not harm the consumer and if the companies do so then they will

face penalties. Another important law is Jatio Vokta Odhikar Ain Act 2009, which is also to protect

the consumers from over pricing and protect consumers from monopoly.

Environmental: As the Bangladesh government are becoming strict to protect the environment from

the exploitation of Organizations and MNCs. So as a giant Pran has to be careful. There are

numerous laws and protections from the government basically to save the Land, forest, water and

sound from the pollution. As Pran is also exporting their products they are also concerned about the

laws and acts. Being an environment friendly Organization will help Pran to gain more popularity

and practicing an ethical standard in an organization decision making process.

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SWOT Analysis

Strengths:

1. Eco friendly and well build factories and farming. (ISO Certification)

2. Large Market share in most of the consumable products and beverage.

3. Operates global operations in countries like- India and Nepal.

4. Many product-lines.

5. Strong distribution network

Weakness:

1. Pran’ product quality is not reassuring; they use preservatives and artificial colors/flavors.

2. Inefficient work force which are directly/indirectly related with Pran. E.g: Quality Team.

3. Reliance on raw materials collected from the fields. Impacts quality and business

responsiveness.

4. Short product life-cycle. Responsible for wastage and increased cost.

Opportunities:

1. Pran can introduce Health conscious products. Like: Sugar free mango Juice.

2. Demand for Pran products are increasing rapidly especially internationally. (Demand for

Bangladeshi agro products in int’l market increasing rapidly, 2009)

3. To introduce new product line via horizontal and vertical integration.

4. They can introduce master distributor system like PNG in other countries.

Threats:

1. Increased national Competition. (The Daily Star, 2016)

2. Similar target market to other big shots (poor, upper middle class and lower middle class.)

3. Frequent political unrest in Bangladesh.

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4. Change in consumer taste and fashion.

Defining Pran’s Business

Pran is among the largest businesses in Bangladesh

and serves its clients with a huge variety of food

product categories like juice and drink, bakery,

carbonated soft drink, snacks, culinary,

confectionary, biscuits and dairy. All of these

categories also have various sub-categories to satisfy

Pran’s consumer needs. Although there have been

questions regarding Pran’s practices in production, but its ever-growing market share in whichever

field it goes in only shows that Pran’s products are of high quality as it has achieved ISO 14001:2004

and BS OHSAS 18001:2007 certificates in 2013, ISO 9001:2008, ISO 22000:2005 Halal, HACCP

(Hazard analysis and critical control point) certificates and many more (Pran Receives IMS

Certificate as 1st Food Processing Company in Bangladesh, n.d.)

Pran is also known for conquering the market shares by storm. The credit does not only go to Pran’s

extensive market research and/or tasteful products. The strong distribution network of Pran

throughout the country has been instrumental in helping Pran achieve success. This distribution

channel helps Pran reach all its customers to satisfy their needs of buying good products at affordable

prices.

Distinctive Competencies Analysis

- Established brand name and logo

- Strong and loyal distribution channel management - responsible for maintaining such a huge

network of distribution channels nationally and internationally.

- Strong infrastructure - evident as it has the largest manufacturing plant in the nation located

in Olipur, Habiganj District, Sylhet.

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- Extremely skilled Human Resource Management team - evident as Pran directly employs

around 1 million people (Pran aims at poverty cut, employs over 10 lakh workers, 2016)

FINANCIAL PERFORMANCE ANALYSIS

Particulars 2016 2015 2014

(000 BDT) (000 BDT) (000 BDT)

Turnover 8,796,778 7,611,213 6,321,274

Gross Profit 3,317,127 2,524,361 2,129,242

Profit Before Tax 1,228,511 1,022,343 894,799

Profit After Tax 860,939 752,790 721,163

Growth rate of TO 15.6% 20.4% 15.3%

The table above indicates that changes occurred gradually during last three years in Turnover, Profit

before and after tax, Shareholders equity, Current assets and liabilities of Pran. Turnover has an

increasing trend but the growth percentage fluctuates from 2014 to 2016 and in 2016 the percentage

decreased by 4.8%.

Solvency or Liquidity Ratios

CURRENT RATIO QUICK RATIO

1.098

0.961
2.04

0.688
1.7
2

2016 2015 2014 2016 2015 2014

Current ratio increased in 2016 by 2% in comparison to 2014, as it stood at 2.04:1. The current

liabilities has increased from the previous year but as the current assets experienced a greater

increase as against the current liabilities, the impact on the current ratio was not that negative. Since

the current ratio remained above 1 throughout the three years, it can be assumed that Pran Foods Ltd
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did not face any problems meeting their short-term liabilities. And it was in 2015 that Pran reached

the ideal current ratio of 2:1, which is regarded as desirable for a healthy business.

The Quick ratio was 0.96:1 in 2015 and again it improved in 2016 by 14.26%. In 2015 and 2016

Pran had higher cash and bank balance in comparison to 2014. However, in 2015 Pran quick ratio

were almost close to the ideal quick ratio 1:1, which indicates Pran was not highly dependent on

paying their liabilities on inventory and they were efficient to manage their cash. But in 2016 the

ratio increased from the ideal point. This is because the company might have decided to keep huge

amount of cash on hand or had a problem in inventory management or accounts receivable

management.

Long-Term Solvency or Financial Leverage Ratios

DEBT TO EQUITY RATIO TOTA L DE BT TO A SSE T

0.72

RAT I O

0.42
0.55

0.54

0.35

0.35

2016 2015 2014 2016 2015 2014

Pran debt to equity ratio is decreasing which means their capacity of debt financing is being

increased. Nevertheless, it can be assumed that most of Pran debts consist of creditor’s and accruals

so Pran borrowing cost is insignificant as a consequence Pran is in good position.

The debt to asset ratio remained constant from 2015 to 2016.However, the debt to asset ratio is close

to the standard ratio which means most of their assets are backed by short and long-term debts.
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Profitability Ratio

The net profit margin of Pran was 13%, 9.89% and

NET PROFIT MARGIN
9.79% from 2014 to 2016. Yet, the ratio decreased in

13%
9.89%
9.79%
2015 and 2016. The reason of this fact either might

be high selling and administrating expenses, high tax

rates and other operating expenses or low income

from operations. Pran should concentrate on how to

2016 2015 2014
increase net profit margin in near future.

Competitive Advantage of Pran Food and Beverage

 Pran has been operating their business for more than three decades. All these years they

gather experience about smooth functioning of their business. As a result, they can cut their

production cost, unlike new entrants.

 For the first time in the history of Bangladesh, Pran food received IMS certificates. It is also

receiving ISO 9001:2008, ISO 22000:2005 Halal certificates for the standard they maintain to

make the food items (Pran foods, n.d.). All these achievements give them a competitive

advantage.

 The introduction of E-commerce system makes Pran food and beverage a better competitive

company. Unlike other company it helping Pran to overcome the geographic barrier,

overcome time. By E-commerce system, Pran can provide their service anywhere in the

world and give a boost to their business.

 Innovation is one of the vital aspects of competitive advantage. Pran has dedicated a team to

research about food market and consumer preference to gain a competitive advantage over

their competitors.
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Business Model Analysis of Pran

Key partners Key activities Value Customer Customer segment

Proposition Relationship

 Retailers  Product  Nutritional  Attracting new  Geographic

 Suppliers development foods and customers and Segment

 Globe soft  Product beverages retaining  Demographic

drinks proliferation  Providing existing Segment

 Media  Quality quality and customers by  User Status- All

 Farmers assurance halal food providing good

 Distributor  Producing for quality

s  Marketing customers. products

 Diversificatio  Reasonable  Customer

n price loyalty

 Eco-friendly program

packaging Healthy food

and beverage

provider

Key Resources Distribution

Channels

 Brand names  Retail Stores

 Customers  Convenience

 Research & Stores

Development  Advertising
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 Factories  Global Sales

 Employees

 High

Technology

system

Cost Structure Revenue Stream

 Designing of products  Large Customer Segments

 Ingredients and materials  Wholesaler

 Marketing tools

Recommendations

To develop a sustainable competitive advantage and gaining higher profitability, there are some

necessary strengths and opportunities that need to be taken advantage of and some weaknesses that

need immediate attention to prevent it from becoming a threat.

Listed below are some recommendations for Pran to be implemented in next 5 years:

Utilizing Strengths

 Pran should take advantages of its existing distinctive competencies. They are quite aware of

the challenges lying ahead and they have braced their selves to face them accordingly. Pran

should continue to aggressively purpose a strong marketing strategy to secure and maintain

significant growth not only in the domestic market but also in the international markets

through intensification of search for potential new geographic locations. Some of the

company’s core strengths lie in the fact that they have a strong distribution network which
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will enable them to distribute product with ease to support the demand created by marketing.

These distribution channels, combined with strong brand name for Pran will enable it to

integrate vertically and horizontally with ease when it comes to starting a new venture.

 Pricing strategy should be considered very carefully as most of the products of Pran are very

convenient to customers. Pran should follow the low-pricing policy to keep the firm running.

Pran sells consumer-based products. They must address their weakness of inefficient

management to keep the company’s costs in check in order to maintain a low-price strategy.

The same price should be fixed all through the county. To avoid falling into trouble about

price control. It should follow well-defined costing system. Most of the products of Pran are

FMCG products. Right now, the FMCG market in Bangladesh is very competitive. (Morsalin,

2015). Following this recommendation will ensure that the costs are never too high for the

company to reduce their profitability, neither so that the company is forced to increase their

pricing which may have a drastic downfall effect in the demand for their products.

Addressing Weaknesses

 Pran has to establish a proper evaluation system to calculate the effective rate of their

distribution network and focus on continuous improvement to increase their sales. (Johnston,

n.d.).

 For some years, Pran has been facing problem in controlling its product quality. Time to

time there has been some complains about its quality. Pran should take some actions in this

regard immediately. To really make lasting and meaningful change in manufacturing

processes, it will take a team-based approach. By involving multiple disciplines in the search

for improved quality, a variety of perspectives can be obtained. Rather than determining the

target quality by itself, Pran should use the customers’ perspective to define what the best-in-

class product would be and meet those requirements while minimizing cost.
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Pran is among the largest in the food industry of the country and quality is the most important

aspect to maintain for any business operating within the food industry due to its direct

relation with the health of the consumers. People are becoming health conscious day by day.

(Khandaker, 2015). Focusing the company’s strategy to improve quality of their products will

also help it boost its already strong image to drive away any competitor in the market.

 Motivational and training activities should be increased. For the new employees, they can

provide training on company overview, effective communication, computer training etc.

Time by time instructions and motivational speeches should be provided by directors.

Employees can be provided with motivation on regular basis; for instance, the employees

who are meeting the current goal they can be provided with remuneration or a gift box of

Pran products or a day off. Although Pran is a company full of experienced and dedicated

personnel, their management inefficiency cannot be neglected. Pran can empower those

experienced people to solve these lacking. (Page and Czuba, 1999). This can help them

utilize their set of experienced workforces, retain them while eliminating inefficiency in

work. This will lead to the company having the capability of producing more effective

strategies, be more efficient in operations, improve quality and hence be more profitable in

the long-run.

 Pran has a wide variety of products but unfortunately, some of their products do not have a

very long life-cycle. Pran should find out the reasons for declining. If required, they can also

find out some alternative use of those products to increase their life cycle. (Vernon, 1966).

Ensuring longer life-cycle of products would lower down market innovation costs and reuse

changes in manufacturing processes. This will eventually lead to higher profits.

Utilizing Strength to Take Advantage of Opportunities

 Due to globalization a lot of foreign brands are entering in Bangladeshi market are grabbing

premium consumers (Mookerji, 2013). Pran’s targeted groups of customers are not
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premium customers. With Pran’s own production facility and supply of raw materials, their

huge capacity can be utilized to produce more premium products to attract a larger group of

consumers. Premium juice, milk, etc. are among the product markets that Pran is currently

losing. It can utilize its brand image to provide premium products which may help

significantly improve its consumer base and hence profitability.

 Pran should focus more on its R&D department. Pran should treat R&D as an integrated

innovation system rather than as a functional silo. The investment in R&D should be

increased in order to bring innovation in Pran’s business. Through R&D department, Pran

can develop new products and services, improved processes and new ways to interact with

your customers, new marketing and distribution strategies.

With their existing market share, brand image and financial strength, producing new products

and entering new markets will be easier than most for Pran. These innovations can result in

greater revenues and also lower costs under circumstances where process innovations may

make production faster and/or efficient.

 Distribution is a key factor for an organization like Pran. They have already a very strong

distribution channel and this channel is one of the main reason behind the dominance of

Pran in the market. Pran should maintain this channel more wisely but they should also adapt

some more new distribution channels in order to block its competitors. Pran should make

partnership with online VARS (Value added Retailer) to sell their products online. They can

also promote their new products in these online platforms through free trials and offering

customized deals.

Demand for branded product in Bangladesh is increasing annually (Nurunnobi, Prasad, and

Arifuzzaman, 2016). Although Pran’s brand image is strong, it is not regarded as a luxury and

premium product manufacturing company. Pran can use this scope to build and promote a

new premium brand with its strong finances to help capture the premium market while

improving their distribution channel further through online selling. By selling products
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online, Pran can access a whole new market of consumers and also a new set of distribution

channels. This can give them valuable experience as technology is taking over the world.

Pran can use technology to gain experience using premium products which, in turn, will help

them in finding out ways of marketing existing products online as well.

 In recent years, Pran has been globally active; especially in some neighboring countries like

India and Nepal. They have made huge investment in order to capture these foreign markets

by exporting. But return on investment is not as high due to high distribution cost. Pran

should rethink its strategy on doing business in the foreign market. India is very popular for

supplying raw materials for products like Pran. Pran should be thinking of offshoring some of

its production plant to India. By doing this, Pran will be getting the advantages of availability

of raw materials in cheap price, and potentiality of capturing very large market of India,

especially West India/Bengal. Although Pran had plans to build a new factory in India, those

plans were never properly executed (Pran to build first foreign plant in India, 2008). A

production plant in India will significantly reduce its transportation and exporting costs

giving Pran the ability to charge lower prices and gain more market share in the process.

Corporate Level Strategy

Corporate strategic planning provides a specific guideline to the company and gives the complete

picture for the future operation.

Vision: Improving livelihood

Mission: To generate employment and earn dignity and self-respect for our compatriots through

profitable enterprise.

Vertical Integration: Pran can emphasize more on the vertical integration strategy where they can

have easier access to their suppliers and company owned subsidiaries by pursuing both backward

vertical and forward vertical integration strategies. Vertical integration strategy can help Pran to
22

utilize both of its functional resource and capabilities to compete within a given area. Purchase of

land for fruit production for their beverages sector can be a form of vertical integration.

Horizontal Integration: In horizontal integration strategy, Pran can acquire companies related to

food and beverage industries. For example, companies like Arson food & beverage Ltd, Globe soft

drinks Ltd, BD Thai food & beverage Ltd are striving to gain market shares, so Pran can gain control

over these small companies and buy these companies to gain a healthy amount of market shares.

Concentration Plan: Main purpose of concentration strategy is to gain market share. Pran will focus

on the area where demand for their product is high and low competition. For example, in Dhaka city,

there are lots of competitive food and beverage companies are fighting for capturing the market

share. Unlike others, Pran should concentrate on a rural area and big cities located outside Dhaka.

Concentration strategy allows Pran to invest in a single product. As we are saying Pran should invest

more in rural areas, it will help them to invest more resources in production and marketing of that

area. Moreover, in a ruralarea, it will be easy to establish loyalty among customers by providing

quality service. Other than these strategies Pran will distribute and market their products on more

countries to achieve economies of scale. Currently, they are providing services to 134 countries.

Unrelated Diversification: Unrelated diversification strategy is a part of the corporate level strategy

in which businesses produce or add an unrelated product line with the existing one. For example,

though Pran has a competitive advantage in food and beverage sector, it can extend its product line to

a transportation business or it can extend to electronic markets where they can manufacture gadgets

and smart technologies as well.

The Corporate Strategic Planning is not fixed. If the top management officials think it should be

changed then they can redesign the process. During the planning, Pran should keep in mind that risk

can hamper their plan. They should have backup plan to face the tuff times.
23

Business level strategies

Business level strategies are strategies through which some core competencies are developed to

satisfy customer’s need in order to gain above average returns. Business level strategies are detailed

arrangements by which customer value is provide to gain competitive advantage by exploiting core

competencies in specific, individual products or service market, relative to competitors and to the

five forces of competition.

There are four common approaches that are recycled to help organizations inaugurate a business

level strategy. Pran Company can follow these four-business level strategies for the future five years:

Generic Business Level Strategy

Business level strategy is the detail movements occupied to deliver value to consumers and achieve a

competitive advantage by manipulating core competencies.

 Pran can create unique products to build good brand image.

 Pran’s food products should be available for all class of people in the market.

 Pran can focus on serving products all over the country.

 Pran can try to operate in various diversified sectors in which other competitors haven’t

invested in.

Broad Low-cost Strategy

Cost leadership is a strategy which is used to escalate product activities and decrease manufacturing

costs below the industry average of their closest competitor. Pran must have cost leadership strategy.

The cost leadership strategies are given below:

Pran Foods can provide reasonable products with reasonable price.

Pran’s product features should be acceptable to all.

Relatively standardized products be made.

Monitoring cost and customer choice can be made.

24

As a market leader Pran Foods can bring out always some defensive pricing strategy.

Pran Company should enhancement of market segmentation strategies.

Focus Low-cost strategy

Pran can implement the focus low-cost strategy by digging into different lower category niche

markets. Entering markets like the niche soap market dominated by Tibbet 570

from Kohinoor Chemicals can be a recommendation. With Pran’s brand image

and ability to produce in mass quantity, achieving lower-cost and better quality is

possible. Pran can do well in this market.

Focus Differentiation Strategy

Pran Food can implement focus differentiation strategy by targeting a niche market like

the health food drink market. For example, Robust is a kind of healthy food drink and it

is for age group 6-15 years old. Pran foods should increase target differentiated

segments and bring on new products in market. A small market will not have much of an overall

impact on the low-cost strategies that are recommended to be adopted Pran.

Recommendation and its Defense

Pran’s business level strategy will support horizontal integration where value will be created for the

customers by merging/acquiring with similar brands. All the strategies afore-mentioned can support

vertical integration strategy where they can minimize the cost and can create differentiated products

for a niche market. They also can create a concentration plan.

25

Functional Level Strategies

It is common knowledge that Pran is one of the leading conglomerates company of Bangladesh its

strength lies in doing well in the food and beverage Industry. To have a stronghold on the Food and

Beverage Industry the company like Pran should target superior efficiency, exquisite innovation,

excellent quality and brilliant customer responsiveness. Pran should concentrate more on these

functional levels strategic process for next 5 years to Pran to grow more effectively:

Total Quality Management: As Pran is more focused on the Production and sales goals. TQM is

known to be the significantly centering process. Pran should also set a standard to the product’s

quality through TQM. This standard will reflect the company’s clear picture and execution of quality

products and customer services. Better quality of Pran products will boost company value on the

overall food and beverage industry.

Human Resource Strategy: As creating employment is one of the mission of Pran’s, their HR

should be more concerned and sensitive about the creating employment, as it’s also a goal of Pran

alongside making profit. Pran can make more employments on rural parts of Bangladesh, as they

collect raw materials and semi-finished raw materials from the rural part of Bangladesh like- Natore,

Sirajgonj, Khagrachori. So, they can reach more rural areas of Bangladesh and can create

employments both directly and indirectly. Besides that, Pran has huge number of employees on the

urban Areas of Bangladesh. Pran HR should be more efficient in the business and they should

employ more on the Logistic Supervisors/officers, Operational Managers and Quality Control

Managers (essential).

Pran’s Logistic and supply chain is one of the powerful in the industry and to some extent it is way

more effective than other MNC’s supply chain. So, to maintain a good and big supply chain it’s very

important to have good Logistics personnel. Furthermore, it will help the Pran to be more effective

and to go further in the Logistics side and become stronger in their business field. As Pran’s quality

is not always up to mark all the time so it is important for a company like Pran to concentrate more
26

on the Quality Control Management. It will help the company to create a benchmark on the quality in

the food and beverage industry. The operational manager will help the Pran to be more effective on

getting the highest efficiency. This will help the Pran to target an efficiency rate of 85-90% in the

next 5 years.

Materials/service strategy: The logistics/distribution channel related employees should be trained

well so that they are specialized in customer responsiveness. It will help the Pran to review the

problems of both customers and retailers and come up with more customer friendly products in the

future.

Research and Development strategy: Pran’s Research and Development is at an average level

when compared to their competitors. However, Pran can introduce some high-tech environment and

worker friendly machines and resources. Pran has their creative footprints on almost every food and

beverage items in Bangladesh. Pran’s R&D should not be limited up to research in just Bangladesh.

They can increase their research on the other popular food and beverage products of other countries.

Technological Strategy

Technological development or adoption is become so crucial for a company in this competitive

business world. In the present time, technology can play the most vital role for a company to be

successful. Companies must choose to change now or advance after some time, yet there is no choice

to sit still (Tamara J. Erickson, John F.Magee, Philip A. Roussel and Kamal N.Saad,1990)..The main

focus of the technology is to make the clients satisfy and get an edge over the competitors and also

gain the higher market share. Pran foods Ltd can take such technological strategies for the future

like,

 Nowadays online shops are booming in Bangladesh. This can be a good platform for Pran.

Pran can come up with an online store. Where Pran can provide their product to their

customer. The positive side of opening an online store is that it ought to be easy accessible

for the customers and furthermore it also a smart approach for the customers. The home
27

delivery approach ought to add more value for the customer. Online store can make Pran a

global product for the worldwide customer.

 This app can introduce “Sign in” feature. For that people need to register here and they will

get a personal unique ID. For this “sign in” feature. Pran can gather data about the customers

especially to location of the customer. They can also measure the demand of each product in

the market. On the basis of the demand they can judge each product and quality.

 In the supply Chain management department, Pran can use a software that will notify

suppliers when the raw materials needed. By using this software, supplier will get the

notification about when and how much they need to supply in their next slot. This will

improve efficiency by reducing lead time. A software like this will not only help Pran but

also the suppliers

 Inventory process can be implemented by RFID technology. This is a sensor typed

technology that will automatically calculate the inventories of the organization.

 Pran can bring other new successful technologies that are adopted by world`s big

organizations. That will easily give Pran the competitive edge over its competitors, e.g. Web

2.0 to Web 3.0 or more. Pran can move its production process from traditional to

technological for the betterment of the brand. That can also help them to reduce the number

of employees for the production and also save the cost.

Corporate Governance

Pran is one of the most successful and largest companies in Bangladesh. The corporate directory of

Pran is consists of board members and senior management. Mr. Ahsan Khan Chowdhury is the

current chairman of Pran leading the board members. The policy of Pran is to market products of

consistent quality at home and abroad as per world standard produced hygienically in accordance

with good manufacturing practices in state of art plants and processes. Pran has the vision to remain

committed to these objectives. Management is committed to providing the resources and creating the
28

environment in which each employee can contribute his/her skill, talent and ideas in a never-ending

process of innovation and improvements in all aspects of business. Here are some changes to

corporate governance that Pran needs to bring in order to facilitate the recommendations by us:

￭ Establish a clear and documented segregation between the roles and responsibilities of

shareholders, the Board of Directors (Board) and management

￭ The governance structure and principal should identify the distribution of rights and

responsibilities among different participants of corporation (such as the board of directors,

managers, shareholders, creditors, auditors, regulators and other stakeholders)

￭ Being one of the leading business enterprises, appropriate corporate governance is very

essential for Pran. The board reviewing company’s operation ensures that the highest

standard of corporate governances is applied to respect the law of the country

￭ The board should subscribe to internal guidelines on corporate Disclosure policies and

procedures based on the best practices recommended by Bangladesh Securities and exchange

commission to provide the company with appropriate guidance in discharging

￭ Companies should establish a policy concerning diversity and disclose the policy or a

summary of that policy. The policy should include requirements for the board to establish

measurable objectives for achieving gender diversity and for the board to assess annually

both the objectives and progress in achieving them

￭ Companies should establish policies for the oversight and management of material business

risks and disclose a summary of those policies. The board should require management to

design and implement the risk management and internal control system to manage the

company's material business risks and report to it on whether those risks are being managed

effectively. The board should disclose that management has reported to it as to the

effectiveness of the company's management of its material business risks

￭ Companies should ensure that the level and composition of remuneration is sufficient and

reasonable and that its relationship to performance is clear

29

￭ Companies should have a structure to independently verify and safeguard the integrity of

their financial reporting

30

Strategic Control System

In order for Pran to keep hold of and increase its existing market share to be more profitable, the

company must focus more on the establishment of a control system. Serving the FMCG industry,

Pran must foster a workplace that promotes high efficiency. In order to be more efficient in the

management and productivity, the control system must positively render employee productivity by

influencing them to perform better.

1. Personal Control: Personal communication can have a very positive impact over employee

attitude towards work (Importance of Communication & Interpersonal Skills at Organization

level, September 7, 2015). Having personal interaction with employees can act as an

excellent motivator for them. Managers can improve interpersonal communication within the

organization which will encourage them to share ideas and discuss problems within the firm.

The employees must be aware of the ethical issues. Managers must also treat employees with

grace and in a dignified manner when they make mistakes.

2. Reward System: A general rule of thumb suggests that a company’s reward system is its

most effective motivator of employees followed by workplace environment and the rest.

Reward is always a pleasurable element to every successful individual. Better reward systems

can better motivate employees to perform efficiently. The pay-for-performance reward

system can be implemented to boost employee and worker productivity. Rewarding sincere,

loyal and long-serving employees will also help boost overall employee morale, efficiency,

productivity while also help in improving employee retention.

3. Proper Monitoring and Evaluation: A proper Evaluation and control mechanism should be

implemented to inform the management about every stage of the strategic management

process (Moore, n.d). To reduce corruption and immoral acts within this huge company, Pran

can introduce an investigation team to ensure proper monitoring of work by reducing the risk

fraudulent activities. Retail managers can prepare the operational plan for the whole month

and make it understandable to the functional level employees who are required to strictly
31

abide by the set standards of operation. Reporting managers will ensure unmitigated

collection of day to day operational reports and deliver it to the retail managers for

evaluation.

Recommended Strategies and Existing Company Culture of Pran

The vision statement of Pran indicates that it has a strong company culture. The vision of Pran

“Improving Livelihood” is guidance for all the activities within the company. Pran wants to secure

the necessities of life of their stakeholders by generating employment and providing good quality

products. As far as our recommendation is concerned, we want Pran puts nutrition; health and

wellness as the core of its business. Talking about the company culture, Pran gives values to its

employee’s creativity and innovation. We recommended Pran to develop green products and pursue

green marketing. This strategy fits companies existing culture. Pran is one amongst the few who has

a culture of profit sharing management in Bangladesh which reflects that the company believes in

performance. The performance orientation and collectivism attitude encourage the employees to

work harder. With the expertise of Pran’s research and development department, it can design their

products in such way that reduces production cost. As the company culture of Pran is very strong and

its employees are focused, it can successfully do vertical integration to pursue cost leadership

strategy as we recommended. To pursue our recommended strategy, Pran should have flat

organization structure. It will reduce additional layers of managements and let the employees be

responsible and involved in decision-making process. It is important for food processing company to

get input from the employees in terms of market and product development strategy.
32

ORGANIZATIONAL STRUCTURE OF PRAN

(Kabir, 2014)

Mr. Ahsan Khan Chowdhury is performing his role as Chief Executive Officer of PRAN-RFL Group

since 1992. The founder of Pran food and beverage is also the founder of PRAN-RFL Group and

founder is known as Managing Director. The management staff of the company consists of six layers,

starting from junior managers (who are local managers) to managers grade 5. Apart from this the

company also hires many non-management staff as well as operatives to work in the factories.

PRAN-RFL Bangladesh Limited has fife departments to carry out all the organizational functions. (Authority,
2017)
33

Global Strategies

Global Standardization Strategy:

As Pran is one of the biggest food and Beverage Company in Bangladesh. The company is also

known for its different lines of products in different markets. Over the last few years they are

innovating and creating new product lines in the food and beverage market of Bangladesh (e.g:

Mithai, All time and Tangoo) as well as fulfilling the demands of targeted consumers. After

succeeding the Bangladesh food and beverage market Pran has expanded their operations to many

other countries. Pran is now exporting their products to 83 countries including UAE, European union

countries and 23 African Countries. Pran so far have invested $15 billion in India and also have a

production branch in India. (circle, 2008). Pran has been offering relatively standardized products in

all their operating countries with very few items for differentiation. This shows low pressure for

localization. Pran’s focus is mostly on the FMCG and plastic industry where the pressure for cost

reduction is high almost anywhere around the globe. Pran has been functioning on the Global

Standardization Strategy.

Global Strategic Alliance: Entering into a Global Strategic Alliance will help Pran to be more

competitive and effective when launching a product in abroad. This strategy will allow Pran to get

better Research and Development (RND) outputs and share the cost of RND with other alliance. In

this way Pran can use better technology in their production line and can setup productive, efficient

and ecofriendly food processing unit. Recently Pran came to an agreement of 2-million-dollar export

agreement with Netherland. (Tribune Business Desk, 2017)

Global Strategies that will support our recommended strategies

 Global Standardization Strategy can support horizontal integration and concentration plan

and help in cost further reduction. Taking this step will make Pran to become stronger in

international market.
34

 Global Strategic alliance strategy will make Pran to go for a joint venture or merging

procedure with the local company.

 Global Strategic alliance strategy will provide Pran new ideas and resource advantages that

will help Pran to gain large market share and make more profit.

Business Ethics is referred to behavior or actions that scrutinizes ethical values and morality or

ethical difficulties that comes in a business environment. It is speeded over to all features of

organizational deportment and is significant to the behavior of persons and entire company.

An “Ethical Value Proposition” statement for the company employees that Pran should use is given

below.

There are few recommendations for Pran Company that the company should grow in corporate level.

A brief “Ethical Value Proposition” statement for the company employees

 Pran should have proper ethical guideline for the employees.

 Pran should pay better benefits in Agro sector.

 Pran should increase communication advantages for farmers who are the suppliers of

Basmati Rice and Fruits for the manufacturing purpose of the company’s Product.

 Pran should provide medicine support and emergency health support for the employees of

the company.

 Factories that are located outside of the Dhaka does not have much scopes and facilities

for washing. They should make a plant for washing in the factory.

 They don’t have any room for children. They should create facilities for women who has

children so that they can bring their children in the factory.

 They also should increase the maternity facilities inside the organization.
35

 Pran should provide fresh food and use less preservative and make their food more

hygienic for their consumers.

 Pran should focus more on customer demand rather than using push strategy to sell their

new products.

 Pran should use their logo clear in every product they use.

 Pran should open a department for customer feedback and they really should focus on

complaints that the customers make.

36

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