Board of Investment (BOI), the government's investment promotion agency, is at the forefront of the country's efforts to attract and facilitate investment. As a result of reformed policy measures undertaken by the government, private investments especially foreign investments in the country have increased manifold. It would be beneficial for our hotel business.
2.1.3 Political stability:
Though, the meaning of politics in our country is usually full of aggression. The politicians always think about their own interest before they think about us. But the situation is entirely changed now. At present caretaker government is in power in our country and military force declared emergency all over the country. Current government is more cautious about the development of country’s economy. That’s why they are trying their best to remove the corruption from different level of government organizations. As a result political condition is totally stable and it is suitable for foreign investment.
2.2. Economic Analysis
2.2.1 Economic Indicators:
GDP growth: According to the Asian Development Bank (ADB) Bangladesh’ GDP will likely grow by 6.5% in 2006. Growth averaged 5.4% per year over the FY01-05 period, which has been the highest 5-year average since the country’s independence
If we see closely here, we see that our countries economy is increasing 1999 to 2001, after 2001 it is decreasing because of 9/11 but still we can sustain a moderate growth. This is really good news from our country’s point of view. But in 2004 because of political unrest we cannot sustain our growth but again in 2006 its go to 6.5 which is really good for our economy. . This is encouraging news, because in last few couple of years specifically after the liberation war our country’s economical condition was very poor. The encouraging economic sign brings hope of increased foreign investment and more business from international customer
FDI inflow and outflow:
Because of political unrest we see that FDI inflow is gradually decreasing. This is really alarming for our economy. If we want to shift our country’s economical status from LDC to developed country, we have to give more emphasize on raising the inflow of FDI. If we look on other countries like China, India, South Korea etc. all of them able to boost their economy because of more and more FDI inflow into their country.
Position of country in world’s competitiveness ranking
Bangladesh has got the 120th position among the124 countries around the world. This ranking is based on the Travel & Tourism Competitiveness Index on the World Economic Forum's (WEF) maiden Travel and Tourism Competitiveness Report 2007.
Bangladesh lags behind neighbors India (65th), Sri Lanka (79th), Pakistan (103rd) and Nepal (106th) in the tourism sector. Based on this report Bangladesh is in poor position compare to other neighbor country.
2.2.2 Purchasing parity:
This is the overall purchasing parity in our country. If we see this graph we can understand that though is not very good growth rate but its moderate as well as it increasing which is also a good sign because ours people capability of purchasing is increased gradually.
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Bangladesh one of the poorest countries with per capita income of $250. Since per capita income is low people doesn’t have enough money to bear the high expenditure of traveling cost.
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Living cost in our country is relatively low compare to other neighbor country.
It’s understandable because if we see our per capita income; GDP growth then we see that they are not capable of maintaining high living standard.
2.2.3 Human Development
Employment Rate
Here we see that our Unemployment rate is stable for last few years and its stable in 40%. It indicates that our government can’t create enough job opportunity to cope up with the emerging job seekers. Though it’s high percentage but government can still manage it to sustain this percentage. Here government has to manage two things; one is their existing unemployment percentage and year by year emerging unemployment rate.
Life expectancy rate at birth
By analyzing that graph we can say that the growth rate is very low in fact it s not increasing at all. This is not good sign because it indicates countries poor health infrastructure as well as low willingness to survive in this wonderful world. This also indicates our poor economic condition of the people.
Death rate:
In 2005 statistics, death rate is 8.4death/1000 people. We can analyze it from two points of view first of all its good in the sense that it’s not a very high rate but problem is it indicate that our population is increasing which is now a burden in our country. So it has a duel effect.
2.3. Social/ culture Analysis
2.3.1 Language
Bengali is the national language of our county but to deal with our international visitors we need good command of English language because foreigner doesn’t know Bengali. Our country’s people don’t know English very well. In our country most of the Guides, Waiters, and Taxi drivers do not have any idea about English language. So they can not provide proper service to the tourists. To some extent, guides need knowledge about tribal language, to make the foreigners understand the custom, culture and lifestyle of the regional people. But it is difficult for the outside guide to understand local language as well. So this is the problem we can face in language.
2.3.2 Religion
Bangladesh is a non-communal and religiously unbiased country. The majority of Bangladeshis (about 88%) are , with small number of Hindus, Buddhists and Christians.. People of different religions perform there religious rituals with festivity in Bangladesh.for this most often visitors don’t face any problem for their foodstuff, religious activities etc. Since Bangladesh is a Muslim country, there are some restrictions like- drinking Alcohol in public places, wearing unusual cloths, smoking by females etc. In some situation, they face some problems with their food habits because all types of foods are not available in everywhere.
2.3.3 Education
Most of the people of our country have very little idea about hotel business because of lack of proper education. To recruit qualified peoples at first we need to train them through expertise in some field. The rates of literacy of our country have major impact on recruiting proper person, because our literacy rate is very low. For hotel business, minimum qualification is intermediate pass but it is hard to find out a person who has qualities like –smartness, good looking, and general knowledge etc.
2.3.4 Social strata
Social strata are very important for any business because it helps to determine your target customer. Generally our country has three different classes. This is upper, middle and low level class. This class is depending on income based. Usually our countries upper class prefers go to abroad. But they also go to our local tourist spot seasonally. Here our main focus customer is upper middle class.
2.4. Infrastructure of Bangladesh
Any country’s infrastructure plays a great in developing its economy. Tourism sector is no exception to that. For attracting more tourists the country has to have a sophisticated infrastructure. Because except this tourist will not be able to travel different location of the country. Bangladesh is a developing country. So our infrastructure is not that well developed. But the government is expending a huge amount of money every year to develop our country’s infrastructure so that the tourist will be interested to visit this country. Our transportation system basically consists of three basic components.
1) Land Transportation system
2) Water transportation system.
3) Air transportation system.
2.4.1 Land transportation system: Our land transportation system is also consisting of two basic parts. They are:
A) Railway transportation system: Bangladesh has a wide railway network to reach the different location of the country. It is one of popular medium for the domestic traveler because rail transportation cost is comparatively cheap than road transportation cost. But its service is bad and inside environment is dirty as well. Tourists also face hassle in collecting the ticket of train. But there is also little exception like “Subarno” express. But if we can provide a good train service lot of tourist will be attracted and government can make more revenue from railway sector.
B) Road transportation system: This is the widest network of the country’s transportation system. Because of development now we can go almost everywhere of the country throw vehicles. Since the different company are providing highly luxurious bus service this medium has become already popular to both domestic and foreign tourist. And the facility of this medium is that buses are available at different time toward different destination. People also does not home face any hassle in collecting ticket at normal time.
2.4.2 Water transportation system: Bangladesh is a land of river. But this medium is not enough suitable for the tourist. There are several reasons behind that. We don’t have good water vehicle in maximum route. This medium is also time-consuming. For example; on average it takes 6-8 hours to reach Khulna from Dhaka by bus. But in steamer it takes more than 24 hours. But in spite of that tourist want to travel through steamer because they can observe the natural beauty of the country which is laid on the both sides of the river.
2.4.3 Air transportation system: The air transportation system is very weak in our country. There are only two airlines are operating their flights. One is Biman Bangladesh Airline and the other is GMG Airline. Biman Bangladesh Airline is operating their flight to only seven destinations which are Dhaka, Chittagong, Rajshahi, Jessor, Saidpur,Sylhet & Cox’s bazaar.On the other hand GMG Airline is operating their flight to three destinations which are Chittagong, Jessor & Sylhet. So the air transportation system of our country is not at all suitable for the tourists. If any one want to go to Sundarban there is no any direct flight to near Sundarban since there is no any Airport in Khulna. Firstly people have to go to jessor by flight and from there they can reach Khulna by road.This is also a irradiating and time consuming.
3. Analysis of national competitiveness using Porter’s model
3.1 Factors Endowment
Land is a very important factor if anyone wants to build hotel in tourism area especially in Cox’s bazaar .We divided it into three categories. First category is near the seashore from where tourist can see the Bay of Bengal by standing in the balcony of the hotel. Second category is on the side of main road. From here tourist will not be able to see the Bay of Bengal directly by standing in the hotel balcony but the distance is not so much that’s why people can reach the beach by walking. Third category is Cox’s bazar city. It is far away from the beach. Since we want to build a three star standard hotel our focus is on first category. Compare to this three category first category is little bit expensive but all reputed hotels like Seagull, Paradise, Soibal, Probal are located here.
Figure: Division of land
Labor: We have divided the labor in three categories. They are top level, middle level and lower level staffs. Middle level and lower level worker are available in our country. But it is difficult to find top level managers whose are graduate in hotel management and have vast experience. That’s why we want to import higher level employee from abroad. In middle and lower level we will prefer Bangladeshi worker because they are very cheap compare to other countries.
Figure: Division of Labor
Power: Bangladesh has not achieved self sufficiency in the power sector like electricity, IT sector etc. But Cox’s bazar is the major tourist zone so they have got some advantages. For example though Bangladesh can produce 3500 MW against demand of 5000 MW but usually in Cox’s Bazar load shedding is not more then one hour. If it occurs more then one hour then electricity supplies authority informs the tourist hotel before it happen. Again our all the leading telecom company’s are covering this area with their full network. Recently sub marine cable came into Bangladesh through Cox’s bazar area. This will also help to facilitate the tourist to use the internet. But in Cent Martins there is no electricity facility so this can create little bit problem because they use generator which is expensive.
Dhaka Cox’s Bazar, Dhaka Teknaf high way is very good. All the lading bus services like Sohag, Green line, Silk line etc. conduct their bus service in this area. Most expensive is Sohag exclusive whose ticket price is 675tk; recently Silk Line and Green Line introduce new bus name “Scania” which ticket price is more then others. Cox’s Bazar also has one Airport. One important problem is regarding Dhaka-Cox’s bazar route is flight scheduling. Though huge number of tourist move towards Cox’s bazaar every day from different locations of our country but Biman Bangladesh Airline is operating only two flight in a week from Dhaka to Cox’s bazaar via Chittagong Which is very trifling in compare to tourist demand, same situation to GMG Airline also. In Cent Martins two ship Keary Sindbad and Eagle conduct their ship only in tourist season. Because this time Bay of Bengal is relatively quite.
3.2 Demand Condition
Market size: If we look our economy then it will indicate that market size is small. But things are different here. In the tourist season tourist doesn’t get any room if he/ she don’t book room earlier. On the other hand in off season tourist rate are moderate. For example our main competitor Seagull has 400 rooms and lowest room cost is 2700tk, if we multiply it by 400 then we get approximately 10, 80,000tk. Then we again multiply it by 30 days from which we get 324, 00,000tk, if we multiply it by 4 month then the result will be 129600000tk, Which is a huge no. here few things are noticeable First of all not all room cost are 2700tk, Segull also provide food, we excluded off season etc. this example give us some idea about the profit we can get from this investment.
Sophisticacy of Consumers:
It’s true that our domestic tourists are not so much sophisticate compare to international tourists, but they are quite willing to pass their vacation into the attractive tourist places. We have found two main reasons behind this situation. First rich is become rich in our country. They have so much money that they can afford to bear any cost, another thing is that though our people’s per capita income is low but when they decide to go somewhere for recreation they start to save money so they can afford it. We think this two influencing factor really create the difference here. Because foreign tourist is so much sophisticated so their demand is high For example wine is very important component for their recreation if they don’t get it then it causes a huge problem for them but for our local customer it doesn’t create any difference.
3.3. Related and supporting industries:
Suppliers bargaining power
Bangladesh tourist industry is not very well structured. People usually go to the tourist place by depending on themselves not any traveling organization. Here traveling organizations are not very well established. Though they arrange some package tour but its percentage is so low. Hotels are mainly dominated here. They have more bargaining power over the traveling agents. Another interesting think is local Rickshaw puller has some bargaining power also. It’s not appropriate for three star standard hotels like Segull, but it is an interesting thing because if Rickshaw puller can influence the tourist when they arrive and can bring to their selective hotels then they get some percentage from the hotel
3.4 Firm Strategy, structure and rivalry:
Our competitor mainly implement differentiate strategy. They try to build an image here. There intention is convince the tourist so that they can understand reason behind there high price with providing some kind of esteem feeling. For example, Seagull has own beach with a 24 hour security. This really helps the seagull customer to feel some kind of satisfaction. Most of the main hotel here follows the bureaucratic culture. Top management al- in-all here. Reason behind is most of this hotel are own by individual and they usually got higher position here. So they don’t care about employee’s suggestion. Our main competitor is seagull, paradise, ocean-blue and some porjotan hotel like soibal, probal etc. Among them seagull is the three star standard hotel. They are our main competitor.
4 SWOT analyses:
5. Decision:
We prefer wholly own enterprise in Cox’s bazar and joint venture in cent martin. Several reasons are behind this decision. We can gain location curve economics because here labor cost, raw material etc are cheap. So we can exploit this advantage. Secondly we can gain some first mover advantage as well. Because here no foreign investment is exist. Though Seagull exists but it is not foreign investment. Thirdly if we can establish wholly won enterprise then we have full control over our company. As a result we can gain some strategic advantage as well. Then we prefer joint venture in Cent martin because it’s a seasonal business as a result its cost is high so we think it’s not appropriate for us to establish wholly own company there.
6. Recommendation
1. Try to attract the foreign tourist.
2. Political situation should be closely observed.
3. Should have clear idea about country’s culture.
4. Should provide some training among the local employees.
5. Should implement aggressive strategy.
7. Conclusion
Our main goal is to give our investor a complete idea so that they can take a correct decision in their investment. Here whatever we did is based on pure research. For doing this research we have to go some of our project related office like porjotan office, seagull office in Santinagar etc. Not only this we also relate our personnel experience here. Our intention is not to provide fake information but provide the investor actual scenario based on our findings. We believe we can make this project in such a way that our investor can rely on us and if they follow our suggestion then they can exploit this wonderful business opportunity. That’s why we think our decision regarding this topic is worthwhile.
Bibliography
WEB Site
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http:///
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- Transportation
Book
1. C. W. L. Hill, International business, 5th Ed, New Delhi, Tata McGraw Hill publishing Company, 2007
Personal contract
- Mr Shuvo Rahaman
Front Desk officer, Segull Hotel
White House Hotel, Shantinagor Dhaka
Article:
1. World Economic Forum's (WEF), Monday, March 05, 2007
