Introduction

Bangladesh, a country of South Asia where the population is considered to be

one of the largest in the world. Moreover the number of people especially in the capital

Dhaka is increasing day by day. For the huge population, different kinds of problems are

rising up and increasing at a high rate every time like accommodation problem,

educational problem, service problem, Transportation problem etc. For the transportation,

people of Dhaka usually use Buses, Mini-buses, Tempo, Taxi, CNG three wheeler,

Rickshaws etc. For the last couple of years, the Government of Bangladesh is giving

priority and attention for the development of the communication and transportation sector

of the country. With this point of view, they have taken certain aggressive steps in this

regard like building fly-over, planning for highways and underground train system,

recently banning all the human hauler of over 20 years old in Dhaka city. The reason

behind banning because of air pollution caused by huge production of black smoke and

the risk that may occur because of lack of fitness of those vehicles. Although this is good

for our environment and this may also be able to reduce traffic jam but on the other hand,

it caused a great problem for the people who used to travel on those buses regularly. The

number of buses, minibuses, tempo, and other vehicles of over 20 year’s old age are not

seen now a day in Dhaka city. One can easily observe the rush and gathering of a lot of

people waiting for buses or for some other vehicles too. People are pushing each other to

catch the buses is a regular scenario in this city. Sometimes they have to apply muscle

power to catch the buses and hold on to it. Caring a huge number of people in the buses

sometimes occur accidents inside and outside of the Dhaka city. Big lines of people

waiting for long time to catch the bus are seen in the Premium, Nirapad, and BRTC bus

stoppages. Besides, there are also some routes in the city where there’s no proper bus

service for communication. People are suffering much or lack of sufficient transport

services.

So, it can be said that the transport service of Dhaka city was not appropriate even

before banning the old vehicles considering the increasing number of people in Dhaka

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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.

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What exactly is CNG?

Natural gas is a naturally occurring fossil fuel often found in underground

reservoirs in conjunction with oil. It is produced from wells drilled at the surface but does

not require extensive refining. Because it is a cleaner resource, it requires only minimal

processing to remove contaminants before it is ready for use as a fuel Compressed

Natural Gas has inherently lower carbon dioxide emissions than diesel buses and will

result in no visible tailpipe emission. And because CNG buses are virtually toxic- free,

they can make a significant contribution to reducing the health problems associated with

diesel exhaust.

What are CNG Buses?

CNG Buses aren't just any regular transit buses; they are compressed natural gas

(CNG) buses, clean burning and great for the environment. CNG buses result in 70 - 85

percent fewer overall air toxic emissions, thus equaling no black soot or visible tailpipe

emission. Cleaner air means a cleaner environment, a cleaner city.

Compressed Natural Gas is the most widely used alternative fuel in the transit industry.

Statistic show the number of CNG buses on the road all over the world has grown by

more than 29% since 2000.

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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!

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From whom are we going to Import?

ZHONG TONG Bus Holding Co.,

Ltd.

(CHINA)

Zhong Tong Bus (Holding) Co., Ltd. is a public company listed on the

Shenzhen Stock Exchange. They are a key Chinese manufacturer and exporter of light,

middle and large size standard CNG buses, city buses and coaches as well as auto

chassis, trailers and vehicle parts.

Currently, Zhong Tong Bus Co. holds assets of nearly US$100, 000,000 and employs

1,700 staff. Its manufacturing facilities occupy roughly 110,000 square meters of space

and house over 300 sets of manufacturing equipment. With the introduction of

internationally advanced technology and equipment, they utilize a first-class production

line with an annual capacity of 4,000 buses.

Correspondingly, the company has a powerful capacity for product development. Zhong

Tong Bus (Holding) Co. is capable of producing more than 40 different types of buses,

including light, middle and large CNG buses as well as standard, medium and high-grade

buses. Moreover, they have established a provincial level scientific research center, and

have been honored as one of the model enterprises for "Demonstration, Applying

863/CIMS" by Chinese authorities. Furthermore, in 1998 Zhong Tong Bus (Holding)

Co. was awarded ISO9001 quality system certification. As a result, the company’s

products are well sold both domestically and internationally.

In 1999, Zhong Tong Bus (Holding) Co. reached an agreement with the Netherlands’s

Bova Company on the transfer of high-grade bus technology. With this alliance, they

have been able to introduce the Zhongtong-Bova luxury CNG Bus into the domestic

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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.

Key Clients: Various passenger transportation, travel service and import/export

companies.

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Some buses of Zhong Tong

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The product we are going to Import

Zhongtong-Bova Luxury CNG Bus

Features of Zhongtong-Bova Luxury CNG bus-

1) 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

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Reasons for choosing Zhong Tong buses of China

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.

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Why provide Bus service?

The city of Dhaka is home to over 10 million people. As a major metropolitan

area, the city continues to grow and the need for quality transportation continues to

increase. Mass transit is an essential part of an array of features that adds charisma to our

ever-growing community. We hope to help make our Dhaka City a better place to live by

providing residents with the opportunity to make a difference by choosing mass transit as

their transportation alternative. Initially we will start out operations by importing 10 new

CNG buses from China. At first we well begin our bus services in a route which has great

deal of demand for bus services and also at the same time where there is much less

competition. We have initially focused our attention the Mohammadpur-Banani route.

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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Overview of Road Runner Transom

Road Runner Transom is an extensive metropolitan CNG bus service. This

fully integrated seamless transportation system will operate on flag stop service for ease

of boarding. Initially we will provide service at one route that serves the

Mohammadpur- Mohakhali-Banani-Gulshan-2 Circle route seven days a week.

But as our company grows and we gain more experience we will provide services in

other routes. We are a bus service that plans to address the changing needs of our

community and offer transportation alternatives to improve air quality reduce traffic

congestion and conserve energy.

Road Runner Transom tries to portray its philosophy of “being perfect all the

way” in its every activity starting from its customer dealing to its own people handling.

We believe in profit maximization through customer satisfaction and that is achieved

through its own people’s satisfaction. We plan to offer metropolitan bus service seven

days a week. Initial we will have 10 CNG (Compressed Natural Gas) buses in our fleet.

We are a company that is committed to improving the quality of life in Dhaka City. We

aim to replace the old diesel buses, which the dominant source of air pollution with the

new CNG buses as the primary mode of mass transit.

Road Runner Transom promises to provide its passenger the utmost satisfaction

from the point of purchasing a ticket to the point of checkout at the bus stop. Unlike other

bus service companies Road Runner Transom aims to maximize its profit but without

compromising quality of service. We aim to keeps an eye on the development in the mass

transit industry and hope to achieve a tremendous rate of growth within our first few

years of operation. Road Runner Transom promises to portray it self as customer-oriented

company. All its activity is driven by the philosophy of first class service to the customer.

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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

Employees:-

Type of employees Number

Managing Director 1

Director 3

Supervisor 1

Cashier 1

Driver 12

Ticket Collector 5

Peon 1

Security 2

Total 26

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Managing Director

Director Marketing & Sales

Director Finance & Accounts

Director Corporate Affairs& HR

Supervisor Cashier

Driver Peon Ticket Collector

Security

* Total Capital: Tk. 2,0000,000

* Investments: Tk. 11,000,000

Buying Investment of Bus 50% of the total= 1, 0500,000

Office Rent = 100,000

Decoration = 50,000

Initial Salary & other expense = 200,000

Bus decoration Expense = 50,000

Maintenance Expense = 100,000

Total = 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 ■ Provide a dependable transit system that inspires public confidence.

Courteous ■ Project a positive, friendly, and polite image to the public.

Affordable ■ 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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Market assessment of CNG Bus service in Bangladesh

We have decided to import Compressed Natural Gas (CNG) bus based on the

assessment of Bangladeshi Market. This assessment typically involves a series of analysis

aimed at pinpointing specific offerings and geographic targets. The first step in this

process is called the Initial screening.

Initial Screening: Basic Need and Potential

Initial screening is the process of determining the basic need potential of our

company’s CNG bus service in Bangladesh market. The major reason behind importing

CNG buses is everybody wants a clean transportation for a livable world and CNG is an

Environment friendly fuel for vehicles. For that reason we are importing CNG buses.

Another reason is most of the buses and trucks in Bangladesh are run by diesel engine.

Diesel engine is a Compression Ignition Engine (CIE). The diesel buses which emit

ambient amounts of dangerous sulfur dioxide (SO2) and suspended particulate matter

(SPM) which is a dominant source of air and dust pollution in the city. Even the

government's decision to install Catalytic Converters (CC) and Diesel Particulate Filters

(DPF) in these vehicles can not help contain air pollution. Also the technology to convert

from diesel buses to CNG buses is not available. So, we have decided to import CNG

buses to our country.

Second Screening: Financial and Economic Conditions

Second screening is used to reduce the list of Bangladesh market prospects by

eliminating those that fail to meet financial and economic considerations. Financial

considerations include inflations rates, interest rates, and expected returns on investment

(ROI), the buying habits of customers and the availability of credit. These factors are

important in determining whether markets that passed the initial, general screening are

also financial feasible or not.

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Table-1: Financial considerations on importing CNG buses

In Bangladesh market perspectives, importing CNG buses to Bangladesh will be financial

feasible because the interest rate of any private and public banks for importing CNG

buses is low. On

the other

hand, the

expected return on investment is high. So, there is no additional financial burden to

import CNG buses.

Economic considerations relate to a variety of market demand influences, including

market indicators. Market indicators are used for measuring the relative market strength

of various geographic areas. In this project, our geographic area will be Dhaka city. To

determine the market strength; the demand survey will give us comprehensive

information on the market for the selected products in Bangladesh, with a view to

assisting potential suppliers of these products in taking advantage of existing trade

opportunities.

The demand surveys will, in particular, aim at:

Describing the characteristics and structure of the market, including details

concerning individual importer end-users;

Assessing the potential for increasing demand and / or changing to new sources

of supply;

Identifying impediments affecting imports of parts and components;

Determining areas wherein specific measures are required, with reference to

customs procedures, payment arrangements, licensing and other rules and

regulations.

Subsidy Tax deduction Financial Aid

From central

and local

government

($ 22,500/bus).

Exempt vat and

Acquisition Tax

($ 3,000/bus)

Loan

($0.7 million).

Low interest.

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In addition to describing market characteristics for the benefit of potential importers in

Bangladesh, the survey also aims at analyzing the existing constraints in the import sector

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 day’s 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:

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Workout The Savings On CNG

A. Distance traveled per year (Kms) 20,000

B. Fuel Consumption (kms/litre) 10

C. Fuel Consumption per year (litre) 2,000

D. Cost of Petrol (TK/litre) 23.00

E. Cost of CNG (TK/litre of petrol equiv.) 7.45

F. Saving per litre of petrol equiv. (TK) 15.55

G. Net Savings on CNG (TK/year) 22,100

H. Cost of CNG conversion (TK) 16,500

I. Payback period .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.

Third Screening: Political and Legal Forces

The third level of screening involves looking at political and legal forces. One of the

primary considerations is entry barriers in the form of import restrictions on CNG

vehicles. In the interest of export promotion and investment in the country, Bangladesh

has long term, stable, facilitative and liberal Import Policy.

The rules and regulations of Imports are:

(a) Import of any goods or machinery in Bangladesh will be done according to

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.

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(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

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.

Fourth screening: Socio-cultural Forces

The fourth level of screening typically involves consideration of socio-cultural forces

such as language, work habits, customs, religion, and values. In terms of cultural

perspectives, Importing CNG bus will be helpful because now a days Bangladeshi

people are very much care to protect their environment. That is why they prefer

environment friendly product. So, socio-cultural forces also play an important role to

make a decision about importing CNG bus to Bangladesh.

Fifth Screening: Competitive Environment

The fifth level of screening is typically focused on competitive forces. For our route

selection, we prefer the degree of competition that exists in each locale. Based on the

competitive environment we have decided to launch our bus form Mohammadpur-

Mohakhali-Banani. We have a long term planning about this project. Initially we will

start from this route then later we have a plan to increase the number buses as well as the

routes in order to gain more market share than the rivals.

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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Dimensions of National Competitive Advantage

A nation’s competitiveness depends on the capacity of its industry to innovate

and upgrade. Once a firm achieves competitive advantage through innovation, it needs to

sustain it by relentless improvement. Competitors will eventually overtake any company

that stops innovating and improving. Hence, holds the theory, the only way to sustain a

competitive advantage is to constantly upgrade it, moving toward more sophisticated

approaches. In order to maintain competitive advantage our company (Road Runner

CNG Bus Service) must adopt a global approach to strategy, and often must endeavor to

make its own existing advantage obsolete- before someone else does.

The theory advances four interrelated attributes of a nation, cited as determinants of

national competitive edge through innovation and improvement. The theory is also called

Porter Diamond Model. The determinants of the Porter diamond model are started as

follows:

1. Factor Conditions

2. Demand Conditions

3. Related and Supporting industries and

4. Firm strategy, Structure and Rivalry.

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Determinants of National Competitive Advantage

1.Factor Conditions:

Factor condition deals with a nation’s 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 isn’t up to

the mark. Currently there’s 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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Firm Strategy, Structure, and

Rivalry

Demand Condition

Factor Condition

Related and

Supporting Industries

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 firm’s

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.

3. Related and Supporting Industries:

The third broad determinant of national advantage is the presence in the nation of

related and supporting industries that are internationally competitive. In the year 2000,

the Bangladesh Government put restrictions on two stroke three wheelers and vehicles

that are 20 years old. Since a lot of workshops of converting diesel vehicles to CNG &

and conduct repairs and maintenance have been established in the city. For example:

Sino-Dipon CNG Transport Services Ltd of Mega City. These companies will act as our

suppliers. Such competitive home based will create advantages for us in several ways.

The suppliers will deliver us the most cost effective inputs in an efficient early rapid and

preferable way. Also we will try to develop a good working relationship with these

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companies that will proved the benefits of information flow and technical interchange

speed of the innovation rate and upgrading.

4. Firm strategy, Structure and Rivalry:

Every industry has its own business strategy farm structure and own competitors.

National circumstances and context creates strong tendency in how companies are

created, organized and managed. It also determines the extent of domestic rivalry in

Bangladesh most successful private are small and medium size. Our company road

runner Transom’s has its own strategy, slogan, process and competitors. Firm strategy,

structure and rivalry mean those conditions in a country that govern or influence how

companies are created, organized and managed, as well as how domestic rivalry is

conducted.

In Bangladesh we have some strong local rivals such as Nirapad, Metro, Road star, Sino-

Dipon etc. These strong rivals will pressurize us to lower cost, improve quality & service

and create new ways of doing things better.

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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

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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

selected route.

Expanding the services to other routes.

Liberal government regulations toward CNG vehicles as they save foreign

currency drained out for petrol, octane and diesel.

Possible emergence of better infrastructure for CNG vehicles in

Bangladesh.

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Threats:-

Political unrest in the country.

The drivers may be an ideal target of harassments by the law and order

authorities

New competitors may emerge in the selected routes.

One-sided government’s 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.

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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.

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

29

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.

Better for those people who don’t have their own vehicles or have the opportunity

to use them.

People are becoming more health and environment conscious.

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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%.

Why we will be using Lease financing?

Rather than having our capital tied in one purchase, leasing will allows us to utilize

our capital elsewhere to general higher profits; it also reduces our cash outflow.

No need to raise new capital Raising new equity or debt for capital expenditure has

many constraints; this can be avoided if we opt for leasing.

Avoiding budgetary constraints. As we are a new company our budget does not allow

us to buy all the buses we need. So leasing can make all the acquisitions possible.

Since rental payments are decided in advance, budgeting becomes easier.

For exploiting Tax benefits. Lease rentals are treated as revenue expenditure and are

entirely deductible for tax purposes. This provides a greater tax benefit for our

company in comparison to borrowing (taking bank loans).

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Estimated Market Potential

For our Bus service to be successful, we must meet the needs of our

customers. We feel that we can meet those needs with the route we shall be covering.

However, it is important to know who our potential customers are. The majority of our

customers will be the students and young professionals.

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.

Estimating Sales Potential:-

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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 Transcom’s 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

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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 shouldn’t 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 government’s

position and will is based on the conviction that improving the environment requires--and

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contributes to establishing--common ground among bus manufactures, bus companies,

fuel providers and the public.

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

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http:// www.zhongtong.com

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