Market Structure of Akij Foods Bebarage Ltd.-Libre

Market Structure
of
Akij Food & Beverage Ltd.
Group 9
Department of Finance,
Jagannath University,
Dhaka
6/29/2014
Market Structure of Akij Foods &Beverage Ltd
Microeconomics
Report
On
Akij Food & Beverage Ltd.
Submitted to
Roushanara Islam
Lecturer
Department of Finance
Jagannath University.
Submitted by
Group-9
SL NO.
01
NAME
MD. MONOAR HOSSAIN
ID NO.
B-120203005
02
03
SABIHA JHUMUR
MD. SAIDUL ISLAM
B-120203010
B-120203060
04
SUNJIDA PARVEN
B-120203069
05
MD. SHAKHAWAT HOSSAIN
B-120203080
06
07
08
09
10
MD. RAJU AHAMED

EMDAD MUNSHI
AYASHA SIDDIQUA MOUE
MALEKA AKTER
MILON SAHA
B-120203091
B-120203092
B-120203099
B-120203106
B-120203108
Date of Submission: 25 June, 2014

Jagannath University
2|Page
Declaration
We hereby proclaim that, this report contains no objects which has
been approved for the prize of any other degree or diploma at any
university or correspondent institutions and that to the best of our
understanding and belief, this report contains no bits and pieces
previously available or written by another person, except where due
reference is made in the content of the report.
Group- 9
3|Page
Letter of Transmittal
25 June, 2014
Roushanara Islam
Lecturer
Jagannath University.
Sub: Submission of the Report.
Dear Madam,
With due respect, we would like to inform you that, we are the student
of Department of Finance. It is our great pleasure to inform you that we
have got a ha e to su it a epo t o
Market Structure in
manufacturing companies of Bangladesh- A tud o Akij Food &
Beverage Ltd. as a requirement for course named Microeconomics,
course no: 2104.
We therefore pray and hope that you would be kind enough to accept
this report and bless us heartily.
Sincerely yours
Group-9
B.B.A. 7th Batch
2nd Year 1stSemesters
Jagannath University, Dhaka.
4|Page
Acknowledgement
All praises are due to Almighty Allah, the ultimate authority of this
universe who has enabled us to submit the report in time for the course
named Microeconomics.
We express our pleasant sense of appreciation, thanks, true gratitude
and intense regards to our honorable supervisor Roushanara Islam,
Lecturer, Department of Finance, Jagannath University, Dhaka for his
scholastic way, pleasant support, regular encouragement, valuable
guidance, overall management and continuous importance throughout
the thesis work.
Its a great delight to us to express reflective gratitude and warm
admiration to our dearly loved parents, well wishers and friends for
their ever ending wish, affections, support, sacrifice, inspiration,
encouragement and continuous endorse in the long process of creating
our academic career which can never be repaid.
Group-9
5|Page
Executive Summary
Beverages and soft drinks sector is one of the fast growing sectors in
Bangladesh. Akij Food & Beverage Ltd is one of the local
manufacturers of soft drinks in FMCG sectors. In the age of
globalization and free trade, it is very tough to compete in this
beverage and the competition style of this sector changing very
frequently. The Akij Food & Beverage Ltd continuously managing
itself with changing environment of competition.
Our research report initially provides a nominal idea of the beverage
industry in our country. Then the overview of market structure of
manufacturing company in Bangladesh and also The Akij Food &
Beverage, which is a unit of Akij Group, is presented. After the
company profile, its product and competitor are described. Then
SWOT Analysis, Marketing Mix and Financial Analysis are also given
in this report.
6|Page
Table of Content
Part - I
Part - II
Name of Content
Acknowledgement
Executive Summary
1.1 Introduction
1.2 Scope of the study
1.3 Background of the study
1.4 Objective of the report
1.5 Methodology of the study
1.6 Limitation of the study
2.1 Market Structure
2.2 Types of Market
2.3 Perfectly Competitive Market
2.4 Imperfectly Competitive Market
2.4.1 Monopolistic Competitive Market

2.4.2 Oligopoly Competitive Market
2.5 Perfect vs. Imperfect Competition
2.6 Oligopoly vs. Monopolistic Competitive Market
3.1 Company Profile
3.2Literature review
3.3 AFBL In Perfectly Competitive Market
3.4 Main Product of Akij Food and Beverage Ltd.
Part -III 3.5 Competitor of Akij Food and Beverage ltd
3.6 SWOT Analysis of AFBL
3.7 Marketing Mix of AFBL
3.8 The Current Situation of AFBL
3.9 Financial Analysis
Conclusion
Part-IV
Bibliography
Page No.
5
6
8
8
9
9
9
10
10
11
11
11
11
12
12
12
13
14
16
16
17
18
20
24
25
26
27
7|Page
PART - I
1.1 Introduction
Market structure is defined by economists as the characteristics of the
market. It can be organizational characteristics or competitive
characteristics or any other features that can best describe a goods and
services market. The major characteristics that economist have focused
on in describing the market structures are the nature of competition
and the mode of pricing in that market. Market structures can also be
described as the number of firms in the market that produce identical
goods and services.
The different types of market structure are; the monopolistic
competition also referred to as the competitive market. The oligopoly
market (called a duopoly when only two firms exist in the market), a
monopsony (there exist only one buyer), the monopoly structure and
the perfect competitive market. The types of market structures can be
grouped into the perfectly competitive structure and the imperfectly
competitive market structure. The imperfectly competitive market
structures are the oligopoly, duopoly, monopoly and the monopolistic
competition.
In Bangladesh, manufacturing sector
1.2 Scope of the Study

There were huge scopes to work in the arena of the case. Considering
the dead line, the scope and exposure of the paper has been widea gi g. The stud ehi d Ma ket t u tu e in Manufacturing Sector
of Bangladesh - A tud o Akij Food &Beverage Ltd has covered
8|Page
overall analysis by Which we can know about the Marketing Condition

followed
Akij Food &Beverage Ltd .
1.3 Background of the Study

The following report was assigned by the course teacher of
Microeconomics, Roushanara Islam, as an academic requirement.
This course is approved by University Governing Council (UGC),
authorized and organized by Jagannath University, Dhaka-1100, and
Faculty of Business Administration (B.B.A).
1.4 Objective of the Study

This epo t is a out Ma keti g t u tu e of Ma ufa tu i g e to i
Ba gladesh . The pu pose of the stud is to help us to u de sta d
market condition, market policy and market strategy of a
manufacturing company which helps the to su vive i toda s
competitive market. It s also e a li g us to gain knowledge about real
world market structure and its operation.
1.5 Methodology of the Study

Microeconomics (4th Edition) by Dominick Salvatore
Principles of Marketing (13th Edition) by Philip Kotler& Gary
Armstrong
Sources of Data
Web sites
Books
Different Business Publication & Notes
9|Page
1.6 Limitations of the Study

We collected our information through secondary sources, so we
have not been able to collect more information which could
give us more clear knowledge about the signaling theory. While
conducting the report on Market Structure in Manufacturing
Sector of Bangladesh- a Study on Akij Food &Beverage Ltd .
Some limitations were yet present there:
Lack of time shortage many related part cannot be paying
attention in depth.
Current data and information on different activities was
unavailable.
As a report analysis, it has been prepared shortly
PART- II
2.1 Marketing Structure
Market structure is defined by economists as the characteristics of the
market. It can be organizational characteristics or competitive
characteristics or any other features that can best describe a goods and
services market. The major characteristics that economist have focused
on in describing the market structures are the nature of competition
and the mode of pricing in that market. Market structures can also be
described as the number of firms in the market that produce identical
goods and services.
10 | P a g e
2.2 Types of Market
2.3PerfectlyCompetitive Market
Perfect competition describes a market structure where competition is
at its greatest possible level. To make it more clear, a market which
exhibits the following characteristics in its structure is said to show
perfect competition
2.4 Imperfectly Competitive Market

Imperfect competition is a competitive market situation where there
are many sellers, but they are selling heterogeneous (dissimilar) goods
as opposed to the perfect competitive market scenario. As the name
suggests, competitive markets that are imperfect in nature.
2.4.1 Monopolistic Competitive Market

A situation in which a single company owns all or nearly all of the
market for a given type of product or service. This would happen in the
11 | P a g e
case that there is a barrier to entry into the industry that allows the
single company to operate without competition (for example, vast
economies of scale, barriers to entry, or governmental regulation). In
such an industry structure, the producer will often produce a volume
that is less than the amount which would maximize social welfare.
2.4.2 Oligopoly Competitive Market

A situation in which a particular market is controlled by a small group of
firms.
An oligopoly is much like a monopoly, in which only one company
exerts control over most of a market. In an oligopoly, there are at least
two firms controlling the market.
2.5 Perfect vs. Imperfect Competition

Perfect and Imperfectly competitive markets are very different to one
another in terms of the different market conditions that need to be
satisfied. The main difference is that, in a perfectly competitive market
place, the competitive conditions are much less intense, than any other
form of imperfect competition. Furthermore, a perfectly competitive
market structure is healthier as buyers have enough options to select
f o a d a e t, the efo e, p essu ed to pu hase o e / few products
and sellers are able to enter/exit as they please, which is opposite to
most market conditions within an imperfectly competitive market
place.
2.6 Oligopoly vs. Monopolistic Competitive Market:
12 | P a g e
Both Oligopoly and Monopolistic Competition have imperfect

competition. This means that firms in both market structures can
charge their own prices, without losing their consumers.
However, there are many differences in Oligopoly and monopolistic
Competition Market structures.
Oligopoly contains a small number of large firms while Monopolistic
Competition has a large number of small firms.
Oligopoly:
Small number of Large Firms
Have significant entry barriers of other firms.
Location-wise Smaller towns
Monopolistic Competition:
Large number of small firms
Free entry and exit
Location-wise Large cities
PART - III
3.1 Company Profile
Akij Food and Beverage Ltd, a concern of Akij Group. Akij Food &
Beverage Ltd. has been established at a beautiful site Krishnapura,
Dhamrai of Dhaka. It has come with the best food & beverage in
Bangladesh.
There are various types of drink. Mojo is the brand name of cola, Lemu
is the brand name of Lemon and Speed is the brand name of energy
drink. Immediately after the introduction of the brand it became very
13 | P a g e
popular among its consumer because of the high quality and intensive
distribution in every nook and corner of the country.
Checky Monkey is the brand name of banana chips produced from this
factory. It also is becoming popular chips in Bangladesh.
Most of our Raw materials come from various foreign countries. The
quality is very strictly controlled. At every stage, non standard products
are rejected.
Head Office
73, Dilkusha, Commercial Area,
Dhaka-1000, Bangladesh.
Phone
: (+880-2)9563008-9, 7169017-8
Fax
: (+880-2)9564519
E-mail
: info@akij.net
3.2Literature review
Vision
Any company s vision is actually the dream to which the company
always strives to
Reach where it may become possible or not. Here it is also not apart
for Akij Group. Expanding the business in the abroad fully and
becoming one of the market leaders internationally- this company
thinks in this way as a part of their vision.
Mission
The mission of Akij Group is to be the market leader by 2009
through their best effort, suitable and competitive marketing
14 | P a g e
strategy and the consumers support. Now they are in the position of
challenger and their vision focuses on those missions, goals and
objectives which will make them able to be the leader from the
challenger to the leader in the market.
Goal
The company s goal is to maximizing the market share in their every
categorized business including Akij Food & Beverage Ltd, Akij Cement
Company Ltd, Dhaka Industries, Akij and Akij Particle Board Mills Ltd.
Objective
The ai o je tive of the o pa
in related diversified
is to i
ease the
a ket sha e
Products in Bangladesh and to assure the potential customers of the

ualit a d du a ilit of the p odu ts.
Strategy
The company always believes in pull strategy rather than push
strategy. They first of all find out the customers demand about how,
when, where, and what type of product ad services they want. Then
according to that they provide their services at the right place and in
the right time.
The Organization Structure

AKIJ FOOD & BEVERAGE LTD. maintains a flat organization structure.
The company has many separate divisions for the smooth operations
15 | P a g e
in Bangladesh. Among them some divisions are related with business

and some are supporting divisions.
3.3 Akij Food and Beverage Ltd in Perfectly Competitive

Market
AFBL operate their business in perfectly competitive market. Because

its market has following characteristics:
AFBL market consists of buyers and sellers who are price takers.
Each firm in the market produces undifferentiated and
homogenous products.
Buyers and sellers have perfect information about the price
prevailing in the mark! About the availability of commodities at
any given point of time.
Any firms can enter or exit the market liberally.
3.4Main Product of Akij Food and Beverage Ltd
Mojo
Clemon
Frutika
Speed Energy Drink
Farm Fresh Milk
Cheese Puffs
Spam Mineral Water
16 | P a g e
3.5Competitor of Akij Food and Beverage ltd

Brand Name: MOJO
International Giants
Coca-Cola
Pepsi
Local Brands
Royal Crown Cola(Partex Beverage)
Pran Cola(Pran Foods)
Brand Name: Spa Mineral Water

International Brand
Aquafina
Local Brand
Jibon
Mum
Fresh
Brand Name: Clemon

Local Brand
RC Lemon
Pran Up
International Brand
Sprite
7 Up
17 | P a g e
Brand Name: Frutika

International Brand
Slice
Local Brand
Pran Fruto
Shezan Mango Juice
Brand Name: Speed Enrage Drinks

Competitor Name
Dark Horse
Shark
Tiger
3.6SWOT Analysis of AFBL

A scan of the internal & external environment is an important part of
the strategic planning process. Environment factors internal to the firm
usually can be classified as strengths(s) or weaknesses (w) & these
external to the firm can be classified as opportunities (o) or threats (t)
such as analysis of these strategies environment is referred to as a
SWOT analysis.
The SWOT analysis provides information that is helpful in matching the
firs resources & capabilities to the competitive environment in which it
operates. As such it is instrument in strategy formulation & selection.
The following diagram shows how a SWOT analysis fits into an
environment scan.
18 | P a g e
STRENGTH
A fi s strength is its resources and capabilities that can be used as a
basis for developing a competitive advantage.
Patents
Strong brand name
Good reputation among customer
Cost advantage from proprietary know how
Exclusive access to high grade natural resources
Favorable access to distribution networks
WEAKNESSES
The absence of creation strength may be viewed as a weakness. For
example each of the following may be considered weaknesses
Lack of patent protection

A weak band name
Poor reputation among customer
High cost structure
.lack of access to the best natural resource
Lack of access to key distribution channel
Opportunities
The external environment analysis may reveal certain new
opportunities for profit & growth some examples of such opportunities
include
An unfulfilled customer need

Arrival of new technology
Loosening of regulation
Removal of international trade barriers.
19 | P a g e
Threats
Changes in the external environment also may present threats to the
firm. Some examples of such threats include
Shifts in customer tastes away from the firm products.

Emergence of substitute products.
New regulations.
Increased trade barriers
3.7 Marketing Mix 4Ps of AFBL

The Marketing Mix model can be used by marketers as a tool to assist
in defining the marketing strategy. Marketing managers use this
method to attempt to generate the optimal response in the target
market by blending 4 variables in an optimal way.
All produ ts 4ps a al sis is diffi ult to showi g so we

showering an example of one product Akij Food and Beverage
Ltd. introduced lemon flavored carbonated beverage clear
dri k Cle o i its e isti g produ t li e o O to er 2007.
Analysis of 4P
Product
Lemon flavored CSD.

Clemon
Clear Lemon Drink in existing product line of AFBL.
t i tl ai tai s p odu t s high quality.
Underwater world scenario is used. Bottle and cap color Green &
White (respectively)
Can printed (150ml and 250 ml); Shrink Label (except- 2000ml).
20 | P a g e
150ml can; 250ml pet bottle and can; 500ml, 1000ml, 2000ml pet
bottle.
Deale s get da age returns warranty from the company.
Promotion
Advertisement: Television, billboards, posters, Print media.

Sales Promotion: Different promotional activities has been
performed, e.g. a seminar in BUET introducing SCM from
Department of IPE. The official drink of the event was Cle o .
Public Relations: Clemon Beach Carnival yearly. Sponsors ClemonActivate Bangladesh Sports Development Pilot Project under
Active Bangladesh Foundation (ABF).
Direct Marketing: All the promotional activities for customer as
direct marketing and greetings are given to the traders.
Place
Channel:
Manufacturer
Dealer
Retailer
Customer
Coverage: Around 90% of Bangladesh

Location: Metros, Semi-urban & Rural areas.
21 | P a g e
Inventory: Currently no specific amount of inventory is

maintained for backup.
Transport: The transportation is upon the choice of the
distributors. They may use their own transport or else the
company has arrangement for transporting the goods.
Price
List Price:
Decided as competitive price. The prices of various sizes are:
250ml
500ml
1000ml
2000ml
= Tk.16;
= Tk.30;
= Tk.55;
= Tk.85
Allowances:
Dealers enjoy allowances depending on their total purchase.
The crate sizes of Clemon delivered to the dealers are:
250ml (can & pet)

500ml(pet)
1000ml.(pet)
2000ml.(pet)
= 24pcs./crate
= 20pcs./crate
= 12pcs./crate
= 6pcs./crate
Credit terms:
With all the dealers dealing is done in credit. Only the dealers of high
business volume enjoys credit term allowance for clearing due
payments at an early date.
22 | P a g e
Analysis of 4C
Customer Solution
As a product Clemon has been designed to provide customers a
clear lemon carbonated beverage as per demanded sizes for self
and family/group consumption at a close similar quality
comparing to similar products in the market.
Customer Cost
The o po e t P i e of the a keti g i dete i ed
keeping an eye on usto e s willingness to spend for a beverage
product comparing to similar products of other brands. The other
pricing factors regarding allowances and credit terms are also
justified according to reasonability.
Conveniences
Clemon is available at local grocery stores, fast food shops and
super markets to ensure customers convenience
Communications
Clemon is being advertised using almost all the Medias which
communicate better with the targeted group.
Within the target group the media which communicates with
them the most is Television Advertisements and radio and
billboards communicate in a smaller scale.
The company of Akij Food and Beverage has a product line of
al ost all the t pes of d i k a d s a ks. Cle o fulfilled the li e
of carbonated beverage by adding the lemon flavored carbonated
beverage.
23 | P a g e
3.8 The Current Situation of AFBL
Porters 5 forces model

Criteria
Bargaining power
of Suppliers
High
Moderate
Bargaining power
of customers
Treat
of
entrants
new
Treat
substitutes
of
Competitive
Rivalry Between
existing players
Low
Reason
There
are
enough
competitors
in the
market for bargaining
There
are
some
established company in
the market
There are so many local
company
and
big
company in the market
The price of the product
is more or less same
Quality of the product
and the price are almost
same
Identifying the problem
Low quality product

Low variety of products
Poor band image
Poor marketing strategy and
Service according to their service segment are very poor though
having a strong distribution channel
24 | P a g e
Explaining what success it will bring
Increase products quality

Diversified products
Strong brand image
Strong Marketing state
3.9 Financial Analysis

2009
5.62
Liquidity Analysis
2010
2011
2012
4.47
4.30
4.23
2013
5.48
Liquidity Analysis
6
5
4
3
Liquidity Analysis
2
1
0
2009
2009
4.99
2010
2011
2012
2013
Acid Test Ratio

2010
2011
2012
3.91
3.97
4.10
2013
4.45
Acid Test Ratio

6
5
4
3
Acid Test Ratio
2
1
0
2009
2010
2011
2012
2013
25 | P a g e
Profitability Performance
Net Profit Margin
2010
2011
2012
2.23
2.56
2.21
2009
1.15
2013
3.17
Net Profit Margin

3.5
3
2.5
2
Net Profit Margin
1.5
1
0.5
0
2009
2010
2011
2012
201
Cash Efficiency
2009
34days
2010
39 days
Cash cycle
2011
31 days
2012
45 days
2013
41 days
PART - IV
Conclusion
As the Akij Food and Beverage Ltd of Akij Group is a well known
company in Bangladesh. But there are some foods and beverage of Akij
Group Which consumer did not know about them. Lack of awareness
and proper advertisement make the process is complex. So they have
26 | P a g e
to consider on improving Akij foods and beverages weakness and try to

capture its opportunity and utilize its market through proper operation.
Bibliography
BOOKS
Microeconomics (4th Edition) by Dominick Salvatore

Principles of Marketing (13th Edition) by Philip Kotler& Gary
Armstrong
Website
http://www.preservearticles.com/201104115243/what-are-thecharacteristics-of-a-perfectly-competitive-market.html
http://www.whatiseconomics.org/microeconomics/marketstructures
http://economictimes.indiatimes.com/definition/perfectcompetition
http://economictimes.indiatimes.com/definition/imperfectcompetition
http://www.investopedia.com/terms/m/monopoly.asp
http://www.investopedia.com/terms/o/oligopoly.asp
http://www.differencebetween.com/difference-between-perfectand-vs-imperfect-competition/
www.akijgroup.com/akij-food-beverage-ltd/
27 | P a g e
http://www.assignmentpoint.com/business/entrepreneurshipdevelopment-business/portfolio-of-akij-food-and-beveragelimited.html
http://en.wikipedia.org/wiki/Akij
28 | P a g e

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Market Structure

Market Structure of Akij Foods &Beverage Ltd

MD. SHAKHAWAT HOSSAIN

MD. RAJU AHAMED

Date of Submission: 25 June, 2014

Market Structure of Akij Foods &Beverage Ltd

Market Structure of Akij Foods &Beverage Ltd

Market Structure of Akij Foods &Beverage Ltd

Market Structure of Akij Foods &Beverage Ltd

Market Structure of Akij Foods &Beverage Ltd

2.4.1 Monopolistic Competitive Market

Market Structure of Akij Foods &Beverage Ltd

1.2 Scope of the Study

Market Structure of Akij Foods &Beverage Ltd

overall analysis by Which we can know about the Marketing Condition

1.3 Background of the Study

1.4 Objective of the Study

1.5 Methodology of the Study

Market Structure of Akij Foods &Beverage Ltd

1.6 Limitations of the Study

Market Structure of Akij Foods &Beverage Ltd

2.2 Types of Market

2.4 Imperfectly Competitive Market

2.4.1 Monopolistic Competitive Market

Market Structure of Akij Foods &Beverage Ltd

2.4.2 Oligopoly Competitive Market

2.5 Perfect vs. Imperfect Competition

2.6 Oligopoly vs. Monopolistic Competitive Market:

Market Structure of Akij Foods &Beverage Ltd

Both Oligopoly and Monopolistic Competition have imperfect

Market Structure of Akij Foods &Beverage Ltd

Market Structure of Akij Foods &Beverage Ltd

Products in Bangladesh and to assure the potential customers of the

The Organization Structure

Market Structure of Akij Foods &Beverage Ltd

in Bangladesh. Among them some divisions are related with business

3.3 Akij Food and Beverage Ltd in Perfectly Competitive

AFBL operate their business in perfectly competitive market. Because

3.4Main Product of Akij Food and Beverage Ltd

Market Structure of Akij Foods &Beverage Ltd

3.5Competitor of Akij Food and Beverage ltd

Brand Name: Spa Mineral Water

Brand Name: Clemon

Market Structure of Akij Foods &Beverage Ltd

Brand Name: Frutika

Brand Name: Speed Enrage Drinks

3.6SWOT Analysis of AFBL

Market Structure of Akij Foods &Beverage Ltd

Lack of patent protection

An unfulfilled customer need

Market Structure of Akij Foods &Beverage Ltd

Shifts in customer tastes away from the firm products.

3.7 Marketing Mix 4Ps of AFBL

All produ ts 4ps a al sis is diffi ult to showi g so we

Lemon flavored CSD.

Market Structure of Akij Foods &Beverage Ltd

Advertisement: Television, billboards, posters, Print media.

Coverage: Around 90% of Bangladesh

Market Structure of Akij Foods &Beverage Ltd

Inventory: Currently no specific amount of inventory is

250ml (can & pet)

Market Structure of Akij Foods &Beverage Ltd

Market Structure of Akij Foods &Beverage Ltd