Population

 Limitations of this Study

Overview of the cosmetics & toiletries industries in Bangladesh:

Bangladesh is making an effort to keep up with the rest of the world. Our slowly changing society is learning how to walk the walk and talk the talk. Little things like, broadband, catering, fashion schools, talent hunt, laptops, camcorders, convertible BMWs, pen drives, brand ware, cosmetic surgery things we saw on TV and dreamed about are now a reality in Bangladesh.

In the old days, when people went abroad, they were given shopping lists that contained a whole range of toiletries: soaps, shampoos, conditioners, face washes, creams, etc. In those days the local toiletries market was not advanced enough to meet all the demands of the people. But in the last decade things have changed drastically for the toiletries industry in Bangladesh.

Now people no longer have to rely on others traveling abroad to get what they want. The basic necessities of everyone are now available through our own industry. Shampoo, conditioner, face wash, face scrub, cream, lotion, toothpaste, Vaseline, powder, shaving cream, etc, goes, all that are now locally produced and readily available.

Five minutes of channel surfing between NTV, Channel-I, ATN and BTV will give you a glimpse into our local range of such products. In keeping up with the times, manufacturers have wised up too.. And nothing is more aggressively advertised as toiletries. Whether it’s on paper, billboards, radio or television, advertising is the best way to simply let people know, above other things, that such a product exists. Now to make people actually buy it, it is always a good idea to use celebrities to promote the product.

Local toiletries bring two names to mind instantaneously. The first is Square Toiletries, which started its journey in 1988 and were (at that time) a separate division of Square Pharmaceuticals. They started out with one product. In 1994 Square Toiletries Limited became a Private Limited Company. Today with over 50 products, Square Toiletries Limited is one of the largest companies in the local industry. They cover a wide range of personal, health, home, and fabric care products. They hired motivated employees, used the latest technology and created attractive, quality products. Currently, Square Toiletries Limited is one of the country’s leading cosmetics and toiletries manufacturer.

The second name that comes to mind in this sector is Unilever Bangladesh ltd. While it can be argued that Unilever Bangladesh ltd is a subsidiary of Unilever, a multinational company spread over half of the globe, and most certainly not local,it has worked locally to produce items that fit in with our society and our people. In keeping with the condition of our society, unlike Unilever’s concerns abroad which are, let’s say more advanced, in Bangladesh it thrives to provide our people with the basic toiletries.

Because of Unilever Bangladesh ltd, Bangladeshi people can avail international brands at affordable prices. Leading the market in most of the categories it operates, its’ portfolio of brands of toiletries include Lux, Lifebuoy, Fair & Lovely, Ponds’, Close Up, Sunsilk, Clinic, Rexona, and Pepsodent. Although many of its brands are big international names, Unilever locally develops their product mix. One of Unilevers’ goals is to improve health and hygiene practices and thus illustrate its commitment to the society. Through their diverse range of toiletries they give Bangladeshi people the privilege of choice – a privilege founded on the simple universal reality that different individuals have different needs.

It isn’t that Unilever Bangladesh Ltd and Square Toiletries Limited are the only two notable brands in Bangladesh. There are numerous others such as Keya, Cosco, Tibet, Aromatic, to name a few. All of these brands have worked really hard to build consumer trust through producing good quality products.

One of the commendable things about all these brands is that they have reached out and made themselves accessible to people in the remotest and least accessible parts of Bangladesh. The consumer bases of most of these brands live in rural Bangladesh. While urban city dwellers have a choice between what products they choose to buy, without these local companies rural consumers have no products at all, forget choosing between local and foreign products.

There is very little possibility that foreign products will make their way into villages. More importantly local brands are affordable, which is the biggest motivation behind consumer behavior.

In these ever-changing times, it is remarkable to see that our local makers of toiletries are keeping pace with what consumers want. They have truly come a long way from the days when we shunned local products and handed lists to people going abroad.

Overview of the ACI Limited

 Background:    

ACI was established as the subsidiary of Imperial Chemical Industries (ICI) in the East Pakistan in 1968. After independence the company has been incorporated in Bangladesh on the 24^th of January, 1973 as ICI Bangladesh Manufactures Limited and also as Public Limited Company. This Company also obtained listing with Dhaka Stock Exchange on 28.12.1976 and its first trading of share took place on 09.03.1994. Later on May 05, 1992, ICI Plc divested 70% of its shareholders to local management. Subsequently the company was registered in the name of Advanced Chemical Industries Limited. Listing with Chittagong Stock Exchange was making on 22 October, 1995.

Advanced Chemicals Industries (ACI) Limited is one of the leading conglomerates in Bangladesh, with a multinational image. ACI is a Public Limited Company with a total number of 19,653 shareholders. Among these, there are three foreign and fifty local institutional shareholders. The company has diversified into five major businesses. Beside these, the company has a large list of international associates and partners with various trade and business agreements.

 Company Profile

  Company Name                    : ADVANCED CHEMICAL INDUSTRIES

• Address                                  : ACI Centre, 245, Tejgaon Industrial Area,

  Dhaka-1208.

  Phone                               : +88-02-9885694

 Fax                                    : +00-02-9886029

• E-mail                               : [email protected]

• Web Page                         : WWW. ACI-BD. COM

• Company Logo                :                                                                      

      Strategic Business Units:

• Pharmaceuticals
• Consumer Brands
• Agribusiness-

a)      Crop Care and Public Health

b)     Animal Health

Subsidiaries:

• ACI Trading Limited
• ACI Formulation Limited
• Apex Leather crafts Limited
• ACI Salt Limited
• Fly ban Insecticides limited

Executive Management:

 Mr. M Anis-Us-Dowla                                  Chairman

• Dr. Arif-Dowla                                              Managing Director
• Mr. M Mohibuz Zaman                                 Chief Operating

Officer,                                                                                                   ( Pharmaceuticals)    .

• Dr. F H Ansarey                                            Executive Director,                                                                            Agribusiness.
• Mr. Azmal Hossain                                      Executive Director,                                                                          Trade.
• Mr. Syed Alamgir                                          Executive Director,                                                                            (Consumer Brands).
• Mr. Muallem A Choudhury                           Executive Director,                                                                            (Finance & Planning.)
• Mr. Towfiqur Rahman                                   General Manager,                                                                               (Operation.)
• Mr. Priyatosh Datta                                       General Manager,                                                                               (Quality Assurance.)
• Ms. Sheema Abed Rahman                           General Manager,                                                                               (Corporate Service.)
• Mr. Pradip Kar. Chowdhury                         Financial Controller

Company Mission:

ACI’s mission is to enrich the quality of life of people through responsible application of knowledge, skills and technology. ACI is committed to the pursuit of excellence through world-class products, innovative processes and empowered employees to provide the highest level of satisfaction to its customers.

Company Vision:

To realize the mission ACI will:

• Endeavor to attain a position of leadership in each category of it businesses.
• Attain a high level of productivity in all its operations through effective and efficient use of resources, adoption of appropriate technology and alignment with our core competencies.
• Develop its employees by encouraging empowerment and rewarding innovation.
• Promote an environment for learning and personal growth of its employees.
• Provide products and services of high and consistent quality, ensuring value for money to its customers.
• Encourage and assist in the qualitative improvement of the services of its suppliers and distributors.
• Establish harmonious relationship with the community and promote greater environmental responsibility within its sphere of influence.

Values:

• Quality
• Customer Focus
• Fairness
• Transparency
• Continuous Improvement

Distribution Network:

The company maintains strategically located sales centers in 198 different locations across the country. It has developed an advanced distribution system through its more than 300 skilled and trained manpower and a large fleet over 80 vehicles. The distribution system is capable of handling continuing volume of diverse range of products from the various businesses.

The company’s distribution centers are highly streamlined, computerized and automated. We are capable of maintaining a cold chain for some specialized range of products such as vaccines and insulin. The combination of this advanced function and multi dimensional capabilities make it possible to handle hundreds of products efficiently.

Business Units:

`ACI Pharmaceuticals:

ACI Pharmaceuticals ranked 11^th in the Bangladesh pharmaceuticals industry. It provides  the market with a wide selection of drugs across all major therapeutic classes, and also offers some specially medicines. ACI Pharmaceutical represents AstraZeneca, Eli Lily and UCB in Bangladesh.

Business Performance and Growth Scenario of ACI Limited:

Financials (Year Ending December 2005):

• Authorized Capital:                                            Taka 500 Million.
• Paid-Up Capital:                                                  Taka 161.70 Million.
• Sales:                                                                     Taka 3088 Million.
• Numbers of Employees:                                    2161 (Two Thousand One

                                                                                           Hundred Sixty One). 

 STRATEGIC ANALYSIS:

Corporate Level Strategy

ACI’s corporate level strategy is acquisition and strategic alliance with successful and lucrative companies of the country. The main idea behind acquisition and merger is to make an investment and usually involves more than mere case. When two separate legal entities every organization aspect of both companies are expected to change be it internal and external. Such management decision is taken for a variety of reasons but the ultimate aims are to add up shareholders wealth.

 Business Level Strategy

ACI follows Differentiation Strategy….

ACI give high concentration to product differentiation. They believe in satisfying     the largest number of market variability.

]ACI Needs To Concentrate On Cost Focus Strategy Along With Differentiation Strategy

Analysts point out that ACI should also concentrate on reducing the high cost that it charges customers for the provision of products and services. Although it has a high customer base due to offering various products to various customers, but it should realize the threat from local and other foreign companies that others are offering at lower prices.Thus to sustain the competitive advantage and to hold on to the market ACI should focus on cost reduction too.

Functional Level Strategy

Product Strategy

ACI give high concentration to product differentiation. They believe in satisfying     the largest number of market variability.

Pricing Strategy

Aiming at meeting the needs of various classes of consumers ACI is offering a large number of high quality products of daily necessity at an affordable price. ACI has achieved deep market penetration by their low price products and also maintain quality.

Promotional Strategy

Image and Brand Building

ACI has already established itself as a reliable and customer focused Company in the corporate world through delivery of superior products and service according to the needs of the customer. The company is nowadays taking a proactive role in addressing the important issues such as practicing the 9 principles of GC, in the areas of human rights, labor standards and environment. Recently 10^th principle on anti corruption has been added to the existing principles. Such image and brand building will certainly increase the image of the product and will receive a competitive advantage in the mind of brand value seekers.

Publicity and Other Promotions

ACI is currently advertising in the popular daily newspapers expressing its expansion plan in Bangladesh. The formal product launching can be announced through an advertisement in the newspaper. ACI can also publicize the product launching through a seminar focusing on needs of the executives and how ACI is offering the solution

Distribution Strategy:

• Total 151 distributors across the country.
• Emphasis on rural converge.
• 15 service depots throughout the country.
• Own fleet of 65 vehicles plying round the clock.

 Pharmaceuticals and some Consumer Brands production facilities at Narayangonj.

• Other Consumer Brands production facilities at Rajabari.
• Leased experimental fields for Agro Seeds progeny trials.
• Contract manufacturing used for production of soaps.

 The major locations where the Distribution network of ACI are situated are shown on the map (indicated by ACI logo):

HR Practice

Below is the representation of how one work team operate at every ACI Branch.

According to corporate training calendar training on finance for non finance people and HRM training was organized by training department.

The training activities can be divided on

• Regular Activities (Refreshers Training, leadership training, training on telephone skill, computer training on MS Excel, update product information list.)
• Basic Training (10 days short course for Parma field force, training for marketing and sales executive, training for sales representatives.)
• Foreign Training ( participation of training program in several countries in the sponsorship of ACI)

SWOT Analysis of ACI LIMITED

STRENGHT:

Strong corporate Identity

ACI Ltd.  is a leading public Ltd conglomerates in Bangladesh. With its strong corporate image and identity it can better position in the minds of customers. This image has helped ACI Trading grab the Chemical sector of Bangladesh very rapidly.

Wide range of Product Offerings

ACI serves both Consumer and Wholesale customers. ACI Pharmaceuticals produces and markets more than 250 quality pharmaceuticals formulation which can meet the demand of all groups of patients Consumer brand has attained leadership position in four categories such as ACI Aerosol Insect Spray, Savlon Antiseptic  Mosquito Coil and ACI Salt within a very short period of time.

Deep Local Knowledge with Global Capability

Advanced Chemical Industries Ltd. is well established in growth markets and aims to be the right partner for its customers. The company combines deep local knowledge with global capability. ACI wants to lead by example in building a multi-talented, diverse and representative workforce and leadership. The simple logic behind ACI’s commitment to diversity and inclusion is to attract and retain the best talent and harness the differences individuals bring, enabling them to realize their full potential. ACI sees individual differences as strengths, allowing them to deliver higher performance and true competitive advantage.

Distinct Operating Procedures

ACI is known for its distinct operating procedure. The company’s Managing for Value strategy better satisfy customers needs and also keeps the firm profitable.

Distinct Schedule

Everyone in ACI from the appraiser to the top management has to work to the same schedule toward a different aspect of the same goal, interfacing simultaneously at all level over quite a long period of time.

Strong employee bonding and belongingness

ACI employees are one of the major assets of the company. The employees of ACI have a strong sense of commitment towards organization and also feel proud and a sense of belonging towards ACI. The strong culture of ACI is the main reason behind this strength.

 Efficient Performance

ACI provides hassle free customer service to its client base comparing to the other financial institutions of Bangladesh. Personalized approach to the needs of customers is its motto.

Young Enthusiastic Workforce

The selection & recruitment of ACI emphasizes on having the skilled graduates & postgraduates who have little or no previous work experience. The logic behind is that ACI wants to avoid the problem of ‘garbage in & garbage out’. & This type young & fresh workforce stimulates the whole working environment of ACI.

Empowered Work force

The human resource of ACI is extremely well thought & perfectly managed. As from the very first, the top management believed in empowered employees, where they refused to put their finger in every part of the pie. This empowered environment makes ACI a better place for the employees. The employees are not suffocated with authority but are able to grow as the organization matures.

Companionable Environment

All office walls in ACI are only shoulder high partitions & there is no executive dining room. Any of the executives is likely to plop down at a table in its cafeteria & join in a lunch chat with whoever is there.

Equalization

At ACI workshops are conducted periodically. On the workshops, all people participate as equals, with new members free to openly challenge top managers.

MBO

ACI also has Management by Objectives (MBO) everywhere. Each person has multiple objectives. All the employees must have to get the approval of their bosses on what they are going to do. Later they review as how well they have performed their job with their management as well as the peer group.

“One-To-One” Meeting

The MBO makes the review a communication device among various groups. The key to the system is a “one-to-one” meeting between a supervisor & a subordinate. In the meeting, the problems in dealing with customers are put forward first & every one dug it to solve them.

Modern Equipment & Technology

Since the inception, ACI has assiduously built, acquired and refined the expertise and technology for the development and manufacture of sustained released and delayed released pellets. ACI has invested immense care and expert attention in installing and upgrading their production infrastructure and R&D facilities in order to ensure optimum quality product.

Visually Appealing Facilities

ACI has some of the best visually appealing office premises in Dhaka that highly attracts customers’ attentions and customers also feel the international environment while dealing with ACI.

Wide Operating Span

ACI has a many branches in Bangladesh and mention ably many at Dhaka. Due to the convenient branch location and presence of neighborhood branches, people are currently obtaining the many-faced services of ACI.

Strong Branding Activities

ACI were one of the first companies in Bangladesh to endorse the UN Global Compact in 2003. ACI has been involved in many community and social activities, either independently or in collaboration with its foreign venture partners. Education scholarships for employee children and spouses, donation to developmental organizations and a host f children education and awareness programs are run by ACI as part of its contribution efforts to social development.

Achievement of High Customer Confidence

As ACI is operating successfully for more than one decade in the chemical, health care, consumer brand and agro industry of Bangladesh, customers throughout the country has put high level of confidence in ACI and judge the company as an ‘Expert’ at what it serves.

Countrywide Network

The ultimate goal of ACI is to expand its operations to whole Bangladesh. Nurturing this type of vision & mission & to act as required, will not only increase ACI’s profitability but also will secure its existence in the log run. ACI has its own distribution network with 19 depot located at various strategic locations and delivers products even to the remotest customer of the country.

More Experienced & Managerial Know-How

The top management team of ACI is expert in their activities. The operating policies established by them are unique & unified. All the members of the team carry out their management roles exhaustively. They equally contributed to ACI’s superior leadership, by carrying out their unique roles. They worked well together, respecting each other’s abilities, & arguing openly & without any rancor when they disagree.

Weaknesses

Low Remuneration Package for Entry Level Officers

The remuneration package for the entry-level officers is considerable low. Since other foreign and local banks offer a more lucrative salary package, it will be difficult for ACI to attract MBA’s in future with its current salary package.

Concentration on Varied Products

In the eyes of Industry Analysts, ACI is pursuing an aggressive differentiation with respect to its Products as a means of expanding its current line of business. The management is now considering the option of congratulating new parents of a new born baby so that since its birth the baby can run account with ACI. Instead of providing so many varied to the customers ACI should concentrate on what it does best .

No Transparency Regarding the Decisions Taken By Upper Management

The communication flow is always downward at ACI. The problems, queries, suggestions and comments by employees at entry-level re seldom or never considered.  Upper level bosses take a decision, which may mean to lower level employees that decisions are tailored towards meeting the self-interest of upper level employees. This is at times true creating a situation of no transparency regarding the decisions taken by the upper management.

 Loss of Valuable Market Information due to Top-Down Communication Method

Lower level employees interact with customers the most. They know best what customers want, when do they want, how do they want. They are the first ones to become aware of the market changes. As ACI do not take lower level employees in decision-making process, they lose valuable market information that can be achieved without heavy expenses on market research due to Top-Down Communication Method.

OPPORTUNITIES:

Rules and Regulations Becoming Easy and Relaxed

This comes as a big and lucrative opportunity for all the foreign banks operating in Bangladesh. To encourage and facilitate more FDI, the State of Bangladesh has relaxed many stringent banking laws. More are under the process of reformation.

Growing Awareness among People toward Quality of Service and Technology

People of Bangladesh are becoming more learned through imposition of higher investment of Human Capital. They now need the services of a state-of-the-art more than ever. Also as, many Bangladeshi people are living abroad more than in any time of history they can use most use of ACI.

THREATS

Upcoming Competitors

The upcoming private local & multinational companies posses a serious threat to the existing business network of ACI. It is expected that in the next few years more companies will emerge. If that happens the intensity of competition will rise further and the company will have to develop strategies to compete against and win the battle.

Low Foreign Exchange Reserves in The Country With Falling Exports

Alarmingly, the country’s export rate is falling. This poses threat to ACI, as less transaction will be covered by tem leading to lower profitability in future.

Stricter Regulations of Government

Although many rules are eased out, the State is still very cautious about the activities of chemical companies. The government rather possesses a bossy attitude towards them.

1. Standardized Product Offerings from The New Local Private Banks

The emerging companies with increasing investment are becoming strong and utilizing state of the art technology. This poses serious competitive threat to ACI.

Slowdown In Global Economy

Not just Bangladesh, but the whole global economy has slowed down due to the war and unmerciful events taking place, posing serious threat to economic and financial institutions of the world. ACI is not different.

Problem Analysis

At ACI, following are the main problems that I have noticed that are hampering the in greater corporate achievements.  As seen in the SWOT Analysis, ACI has indeed more strengths than weaknesses. But the company lacks serious attention to the HR growth and development, which is of utmost necessity if a company, needs to succeed.

 The problems identified are:

• As per our interview with a couple of employees at lower and mid level management, we came to the conclusion that the pay at these levels is not of proper ratio as to what is paid to the top management. This creates further distance between the upper and lower level of managers. As a result, workers get de-motivated and their morale goes down. The overall effect is in lower productivity.

 More training is required at the entry level for employees at ACI. The employees at upper level management is sent o be given training both on-the-job as well as off-the-job. At its extreme, off-the-job training involves employees bring taken to countries outside Bangladesh. It is important, to send upper level employees for training as they are involved with making important strategic decisions and it is equally important to send lower and mid level employees to training as they are involved in the implementation of those important strategic decisions. Without them such decisions will never see reality.

• Communication at ACI is downward. They believe in top-down change. Here the top management team analyses how to alter strategy and structure and thereby recommend a course of action and the move quickly to restructure and implement changes in the firm. This drastic nature of change results in poor adaptation by all the employees at the lower hierarchical levels. This leads to poor productivity.

• Promotion is indeed a difficult aspect to obtain at ACI. Employees are given generous pay increases but very seldom are they given promotions compared to other companies in town. This poses problem, as workers who are looking forward to self-actualization rather than have pay increases are demoralized.

• Conflict arises at ACI just like at any other company. This is the struggle that arises when the goal directed behavior of one organization group blocks the goal directed behavior of another. Different functions and departments at ACI have different orientations, so if decisions favor one group over another then organizational conflict is very likely to arise.

Recommendations

A contingency plan is required as our recommended solution as the introduction of Organizational Politics may not be implemented due to the following unexpected events. But all of them have the possibilities to occur in future which will make our strategy not work for the achievement of organizational goals.

Corporate Obstacles

Politics is an unwelcoming factor at Advanced Chemical Industries. It is of serious crime to unionize among workers. If anyone is found involved in direct or indirect politics, it is not invited with a nice manner.

Divisional Obstacles

Similar factors operate at this level. Politics may not be facilitated as mangers fear ni losing jobs. They also fear that if a follower becomes powerful enough to deny the influences the manager, then it will be to the disadvantage of the manager. Poltics affect different divisions at different ways. As it may serve the purposes of one group at the expense of the favor of the other.

Functional Obstacles

The similar obstacle is present at functional level. Different divisions have different strategic orientations at ACI. Lower level employees have short term, target directed efficiency orientation. On the contrary, upper level management is oriented toward long term technical goals and satisfying shareholders’ expectations. Thus, politics at this instance may fail to bring about necessary cohesion and instead may lead to further conflict. This will make our recommended strategy for ACI null and void.

Individual Obstacles

At the individual level too, people may resist politics because they are either comfortable with their current pay and status or they fear that involvement in politics will make them less acceptable to the top management of the company.

As I see due to above reasons politics may not be facilitated to combat conflict at work place. In this regard I recommend changes in yet another HR aspect and that is changes in incentives, bonus, and introduction of training programs at the low and mid level. Details are as follows:

 Basic Salary: this is to be increased at entry level to reduce the possibilities of latent conflict with upper level management.

• Incentive: annual financial incentives and oral appreciations by colleagues and superiors can also help reduce conflict.

• Benefits: including house rent, holiday expenses can be provided based on the performance of entry level employees. Having a good time outside work place for sometime increases productivity and give way for a happy and satisfied workforce. This, in turn, reduces the chances for conflict.

• Orientation: regular orientation can be held so that employees feel that they are a indispensable and integral part of the company.

• Counseling: trained counselors can be hired to convey the messages of root level to the top level if the former is not very open with the latter. This very gap creates conflict. And need to be reduced with the help of professional counselors.

• Placement: job rotations to different branches and placement in a different area of operation can help reduce conflict. New acquaintance and adaptation accommodates more time of employee and leave him/her with less time for conflict.

 Off-the-job Training to outside Countries: like their superiors, lower and mid level employees should be given the chance for a Off-the-job Training to outside countries. This will reduce both potential and felt conflicts that have already existed.

• Introduction of Bottom-up Management: involving low and mid level managers in decision making will make them feel part of the company and not just subordinates who are hired to follow orders. This reduction of gap reduces chances for conflict.

ACI Trading Limited

ACI Trading Ltd is one of the leading Trading Houses in Bangladesh. Originally it was ICI Pakistan Ltd established as the subsidiary of Imperial Chemical Industries (ICI) in the then East Pakistan. After independence of Bangladesh the operation continued as ICI Bangladesh Ltd. In July 1994 ACI Ltd another divested part of ICI PLC UK for Pharmaceuticals and Agrochemicals operation purchased ICI Bangladesh Ltd from ICI PLC and renamed it to ACI Trading Ltd.

ACI Trading Ltd has been accredited with ISO 9002 certification since June 1997 for its Quality System on indenting business. The Company is mainly involved in marketing and sales of various Industrial Chemicals, Petrochemicals, Plastics, Pharmaceuticals, Leather and Shoe finishes. Textile Dyes and Auxiliaries through Indent sales. It has four business divisions such as Chemicals, Textile, Leather and Water Pumps. To render technical service ACI Trading has two separate technical application laboratories for textile and leather businesses.

 We represent ‘World Class Products’ in Bangladesh from ICI and some other multi-nationals like ExxonMobile, Solvay Interox, Enichem, Huntsman Tioxide, Magadi Soda Co., Stahl UK Ltd, Onga Australia Pte Ltd etc. We also represent some reputed Principals form Asian countries mostly from India, Singapore and Malaysia.

This is a 60% owned subsidiary. ICI, Zeneca, Exxon, Stahl are leaders in their respective fields and ACI have excellent market share of their products in Bangladesh.

The major responsibilities of ACI Trading are:

– Representing various international companies

– Procuring raw materials
 Organogram – Business Management

Organogram – ACI Trading

SWOT Analysis of ACI Trading:

Description of major chemicals used in Cosmetics and Toiletries Industries:

Sodium dodecyl sulfate

Sodium dodecyl sulfate (or sulphate) (SDS or NaDS) (C₁₂H₂₅NaO₄S), also known as sodium lauryl sulfate (SLS), is an ionic surfactant that is used in household products such as toothpastes, shampoos, shaving foams and bubble baths for its thickening effect and its ability to create a lather. The molecule has a tail of 12 carbon atoms, attached to a sulfate group, giving the molecule the amphiphilic properties required of a detergent.

It is prepared by sulfonation of dodecanol (lauryl alcohol, C₁₂H₂₅OH) followed by neutralisation with sodium carbonate. It is used in both industrially produced and home-made cosmetics.

Like all detergent surfactants (including soaps), it removes oils from the skin, and can cause skin irritation. It is also irritating to the eyes.

SDS can be converted by ethoxylation to sodium laureth sulfate (also called sodium lauryl ether sulfate; SLES), which is less harsh on the skin, probably because it is not as much of a protein denaturant as is the unethoxylated substance.

It is probably the most researched anionic surfactant compound.

Paraffin

Paraffin is a common name for a group of alkane hydrocarbons with the general formula C_nH_2n+2

Paraffin Wax:

The solid forms of paraffin are called paraffin wax. Paraffin is also a technical name for an alkane in general, but in most cases it refers specifically to a linear, or normal alkane — whereas branched, or isoalkanes are also called isoparaffins. The name is derived from the Latin parum (= barely) + affinis with the meaning here of “lacking affinity“, or “lacking reactivity“).

Liquid paraffin

Liquid paraffin has a number of names, including nujol, mineral spirits, adepsine oil, alboline, glymol, liquid paraffin, medicinal paraffin, saxol, or USP mineral oil. It is often used in infrared spectroscopy, as it has a relatively uncomplicated IR spectrum. When the sample to be tested is made into a mull (a very thick solution), liquid paraffin is added so it can be spread on the disks to be tested. Liquid paraffin is also excellent for helping bowel movement in persons suffering chronic constipation.

Uses

• Candle making
• Coatings for waxed paper or cloth.
• Food-grade paraffin wax
  • is used in some candies to make them look shiny. Although edible, it is nondigestible; it passes right through the body without being broken down.
  • Non-food grade paraffin wax can contain oils and other impurities which may be toxic or harmful.
  • Magic Shell
  • Coating for many kinds of hard cheese, like Edam cheese.
  • Sealing jars, cans, and bottles.
• A key component in wax used for investment casting.
• As anti-caking, moisture repellent, and dustbinding coatings for fertilizers.
• Preparing specimens for histology.
• Solid propellant for hybrid rocket motors.
• In dermatology, as an emollient (moisturiser).
• Surfing, for grip on surfboards as a component of surfwax.
• The primary component of glide wax, used on skis and snowboards.
• For use on handrails and cement ledges to dramatically reduce friction for rolling, otherwise known as aggressive in-line skating.
• Microwax[2] as a food additive, a glazing agent with E number E905.
• A fire performance fuel.

Blends of paraffin and micro waxes in rubber compounds as anti-ozonant agent, to prevent cracking of the rubber

Sodium hydroxide

Sodium hydroxide (NaOH), also known as lye or caustic soda, is a caustic metallic base. Forming a strongly alkaline solution when dissolved in a solvent such as water, caustic soda is widely used in many industries, mostly as a strong chemical base in the manufacture of pulp and paper, textiles, drinking water, soaps and detergents. Worldwide production in 1998 was around 45 million tonnes. Sodium hydroxide is also the most common base used in chemical laboratories, and it also widely used as a drain cleaner.

UsesSoap making: Soap making via saponification is the most traditional chemical process using sodium hydroxide. The Arabs began producing soap in this way in the 7th century, and the same basic process is still used today.

Food preparation: Food uses of lye include washing or chemical peeling of fruits and vegetables, chocolate and cocoa processing, caramel color production, poultry scalding, soft drink processing, and thickening ice cream. Olives are often soaked in lye to soften them, while pretzels and German lye rolls are glazed with a lye solution before baking to make them crisp.

Domestic uses: Sodium hydroxide is used in the home as an agent for unblocking drains, provided as a dry crystal (e.g. “Drāno“) or as a thick liquid gel. The chemical mechanism employed is the conversion of grease to a form of soap, and so forming a water soluble form to be dissolved by flushing; also decomposing complex molecules such as the protein of hair. Such drain cleaners (and their acidic versions) are highly caustic and should be handled with care.

Calcium carbonate

Calcium carbonate is a chemical compound, with chemical formula CaCO₃. It is commonly used medicinally as a calcium supplement or as an antacid. Calcium carbonate is the active ingredient in agricultural lime. It is a common substance found as rock in all parts of the world and is the main component of seashells and the shell of snails. It is usually the principal cause of hard water.

Uses

The main use of calcium carbonate is in the construction industry, either as a building material in its own right (e.g. marble) or limestone aggregate for roadbuilding or as an ingredient of cement or as the starting material for the preparation of builder’s lime by burning in a kiln . A common contaminate is magnesium carbonate. Calcium carbonate is widely used as an extender in paints, in particular matte emulsion paint where typically 30% by weight of the paint is either chalk or marble.

Calcium carbonate is also widely used as a filler in plastics. Some typical examples include around 15 to 20% loading of chalk in uPVC drain pipe, 5 to 15% loading of stearate coated chalk or marble in uPVC window profile. Fine ground calcium carbonate is an essential ingredient in the microporous film used in babies’ diapers.

Calcium carbonate is widely used medicinally as an inexpensive dietary calcium supplement, antacid, and/or phosphate binder. It is also used in the pharmaceutical industry as a base material for tablets of other pharmaceuticals.It is commonly called chalk as it has been a major component of blackboard chalk..

As a food additive, it is used in some soy milk products as a source of dietary calcium.

Borax

Borax, also called sodium borate, or sodium tetraborate, or disodium tetraborate, is an important boron compound, a mineral, and a salt of boric acid. It is usually a white powder consisting of soft colorless crystals that dissolve easily in water.

Borax has a wide variety of uses. It is a component of many detergents, cosmetics, and enamel glazes. It is also used to make buffer solutions in biochemistry, as a fire retardant, as an anti-fungal compound for fibreglass, as an insecticide, as a flux in metallurgy, and as a precursor for other boron compounds.

The term borax is used for a number of closely related minerals or chemical compounds that differ in their crystal water content, but usually refers to the decahydrate. Commercially sold borax is usually partially dehydrated.

Uses

Food additive

Borax is used as a food additive in some countries with the E number E285, but is banned in the United States. Its use is similar to salt, and it appears in French and Iranian caviar.

Other uses

• component of detergents
• component of cosmetics
• ingredient in enamel glazes
• component of glass, pottery, and ceramics
• fire retardant
• anti-fungal compound for fibreglass and cellulose insulation
• component of Slime
• insecticide to kill ants and fleas
• precursor for sodium perborate monohydrate that is used in detergents, as well as for boric acid and other borates
• treatment for thrush in horse‘s hoofs

Toxicity

Boric acid, sodium borate, and sodium perborate are estimated to have a fatal dosefrom 0.1 to 0.5g/kg.^[3] These substances are toxic to all cells, and have a slowexcretion rate through the kidneys. Kidney toxicity is the greatest, with liver fatty degeneration, cerebral edema, and gastroenteritis. Boric acid solutions used as an eye wash or on abraded skin are known to be especially toxic to infants, especially after repeated use due to its slow elimination rate.

Glycerol

Glycerol, also well known as glycerin and glycerine, is a colorless, odorless, hygroscopic, and sweet-tasting viscous liquid. Glycerol is a sugar alcohol and has three hydrophilic alcoholic hydroxyl groups (OH^–) that are responsible for its solubility in water..

ApplicationsDrugs

Cough syrups, elixirs and expectorants. Used as a substitute for alcohol, as a solvent that will create a therapeutic herbal extraction.

Personal care

• Serves as an emollient, humectant, solvent, and lubricant in personal care products.
• Competes with sorbitol although glycerol has better taste and higher solubility.
• Toothpaste, mouthwashes, skin care products, shaving cream, hair care products and soaps
• Glycerol is a component of glycerol soap. This kind of soap is used by people with sensitive, easily irritated skin because it prevents skin dryness with its moisturizing properties. It is possible to make glycerol soap at home.

Foods and beverages

• Serves as humectant, solvent and sweetener, may help preserve foods.
• Solvent for flavors (such as vanilla) and food coloring.
• Humectant and softening agent in candy, cakes and casings for meats and cheeses.
• Used as filler in low-fat food products (i.e., cookies).

Feed

Glycerol is increasingly used in feeding animals

 Volume of major chemicals used in Cosmetics and Toiletries Industries:

 In cosmetics and Toiletries industries not all chemicals are used in huge volume. Some of the chemical has lot of uses, the others has much less uses. The exact amount of those chemicals is hard to find by, as there are lot of confidentiality. After the market survey and talk to the major persons of this industries I got to know that there are some chemicals which are used in huge volume in our country not only in cosmetics industries but also in other industries. From a confidential source I have found that the fast moving chemicals in cosmetics and toiletries industries are:

Cost & Freight price of major chemical:

 Price determination in chemical industry is very difficult. It changes within a blink of eyes. Generally we know that price depend on demand and supply but in this industry it depends on several factors. Price of chemical varies according to quality. In cosmetics & toiletries the price of chemical from china and India is low but price is very high for chemicals from Europe. Besides in international business price change is regular issue. It can vary with the price of petroleum. Besides wars and other political vulnerability can also cause change in price.

Moreover price can also vary with different ports. In local market the price can also difficult to understand as price vary not because of demand and supply but because of relationship between users and indenters and traders.

 The approximate price of few chemical is given below after surveying the local market:   

Major Suppliers of Cosmetics & Toiletries Chemicals in Bangladesh

Approximate Amount of Chemicals Consumed By the Local Companies:

Source:

Commercial Departments of the Above Companies.

Competition

From the inception of Bangladesh the cosmetics and toiletries industries have established. At that time the Mousumi industries was established under the brand name of Cute. After that many company have entered to this industries, as there are lot of opportunities presents. Even the foreign companies have also find the prospect in this country. And the foreign companies are now ruling this industry.

At present, there are huge competitions faced by the companies in this sector as the entry barrier is low and there is economic growth present in the country. Now more than 5 established companies are competing for the share of wallet of customers. Besides there are many unknown companies doing business in the rural area and give tuff competition to the established companies.

In Bangladesh the cosmetics and toiletries Market is around 4000 corers B.D.T. and the Unilever Bangladesh captures almost 50% of it. The local companies also give it good run for money. The major players of local markets are Square toiletries ltd., Kohinoor chemicals ltd, Keya cosmetics limited, Mousumi industries limited, and Aromatic cosmetics limited etc. for overall Unilever capture more than 40% of the market share. Square, Kohinoor, and Keya have 18%, 20%, 13% of share respectably. But the situation has changed during the winter season as then Square becomes the market leader with 40% of the market share. Kohinoor and Keya also enjoy high sales as their market share at that time rose up to 25 to 30 percent.

The cosmetics and toiletries industries depend on import chemical for manufacturing process. Besides some local company also provide some chemicals for this purpose. Basically 90% of the chemicals are imported chemicals and these chemicals are generally come from India and China for their low price and low distribution cost. Besides some companies who has positioned themselves as quality service provider import chemical from Germany, France, Malaysia, Indonesia, Italy UK and USA. Each year Bangladesh have import chemical for cosmetics and toiletries purpose are amounted 350 corers B.D.T.

Fig:5 Strategic Group Map of Competitors in the COSMETICS & TOILETRIES Industry for ACI

 COMPETITORS

In the cosmetics and toiletries oligopolistic competition is present. A small number of large firms produce product that range from highly differentiated to standardized. So if we have to succeed in this industry we have to give offer that differentiated from others. If competitors match on services the only way to gain competitive advantage is through lower costs.

Once the CUTE Company was the market leader and control most of the macro environmental factors. But now the company is loosing its market share to competitors so quickly that in a decade or so the company lost it’s control to several macro environmental factors. The forces that pose threats to this market are:

Things to consider before entering to the market:

v  Increase the no. of competitors

 v  The attacking strategy of the competitors

 v  The presence of foreign competitors because of globalization.

 v  The improve quality of competitors product.

 v  Consumer’s perception of tasting new product.

 v  Better positioning of the competing brands.

 v  Improper strategy and tactics by the company.

In the market of intense competition there are the presence of many competitors not only local but also the foreign competitors. But as we came to a world of look alike product the competition is heating up. The competition came mainly from foreign companies. Local companies also have moderate market share.

In Bangladesh the cosmetics and toiletries Market is around 3500 corers B.D.T. and the Unilever Bangladesh captures almost 50% of it. The local companies also give it good run for money. The major players of local markets are Square toiletries ltd., Kohinoor chemicals ltd, Keya cosmetics limited, Mousumi industries limited, and Aromatic cosmetics limited etc. for overall Unilever capture more than 40% of the market share. Square, Kohinoor, and Keya have 18%, 20%, 13% of share respectably.

Fig: 7 :  Overall market share of Cosmetics & toiletries companies.

But the situation has changed during the winter season as then Square becomes the market leader with 40% of the market share. Kohinoor and Keya also enjoy high sales as their market share at rhat time rose up to 25 to 30 percent.

Fig 8:  market share of Cosmetics & toiletries companies in winter season

 A company needs to gather info on each competitor’s strength and weaknesses before entering the new marketplace. After surveying the market and discussing with the competitors we can position our main competitors according to Arthur D. Little consulting firm

Reaction Pattern:

Each competitor has certain philosophy of doing business, a certain internal culture, and certain guiding beliefs. Most of our competitors fall into one of four categories:

Key Success Factors

Though I have surveyed extensively in the market, I have found raw data from various sources.  By dealing with different types of people I gather a deep knowledge on Cosmetics & toiletries Chemical market. Therefore, I think the following factors are the key to success in the market.

1)          Setting Competitive price (as much as possible):

2)          Risk bearing ability:

3)          Proper Keeping good relation with major Traders & Small importers

4)          Satisfying End Users by providing related chemicals:

5)          market intelligence on:

Major Findings

The reasons for difficulties for ACI Trading to operate in current and divested business:

 There are several competitive aspects in chemical trading:

 Competition in chemical trading is very intense. For the last decades a large number of traders have entered into this business.

 Entry barrier in trading business is low. Anyone having some capital and business know-how can come to this business.

1. There is no significant exit barrier from trading. It is easy to left the business.

1. It is getting harder for small traders to survive in this business for extreme rivalry.

1. The trading market has become more suitable for large traders with large capital, market know-how, communication, contact and coordination with different parties.

1. The margin of profit has become lower due to intense competition.

1. Customers have become smarter, more demanding, and want to take all type of advantage from the traders.

1. The Bargaining power of customers has also increased.

1. They usually require product sample before making an order.

1. Customers are making the traders to supply on credit.

1. Traders frequently strive to take away customers from other trader at any means, fair or unfair.

1. Sometimes they offer unfair and unethical gift and bribe to production manager and others to gat an order.

1. It is very crucial to establish and maintain favorable relationship with various political people and Govt. officials.

SOME IMPORTANT FINDINGS:     END USER

1. The consumption of chemical varies in terms of quality and quantity.

1. Different end-user emphasizes on different chemical in consumption for customization of their finished products.

1. Some Cosmetics and toiletries companies have their own plant

1. They usually import the required chemicals directly from foreign suppliers.

1. Sometimes they form syndicate with other manufacturer or importer to achieve Economies-of-Scale.

1. They also pass through indenters if it is economically viable.

1. There is a prevailing tendency of exchanging raw materials among some manufacturers based on the relationship and situation.

1. Manufacturers try to maintain favorable and stable relationship with foreign and local suppliers for quality supply at a reasonable price.

1. Some production managers or purchase personnel’s devote quality by receiving unfair facilities from suppliers.

1. Before making an order they usually require samples for testing usually in the first transaction.

1. They usually want to get the supply on credit.

1. In certain situations the manufacturers purchase chemicals from local suppliers.

• When the chemical plays a little role in the production process.

• Ø When they face sudden and uncertain shortage.

• Ø When it becomes economically viable to procure chemicals from local source then import.

• Ø LC requires a lower limit of import quantity. In case of low demanding chemical, they choose local source.

• Ø When demand for a particular chemical rises unexpectedly.

• Ø When they want to avoid the lengthy formalities and hassles of import

 SOME IMPORTANT FINDINGS:  IMPORTERS

1. Most of the importers are traders. About 90% of the importers are doing trade now. For the last few years, importers are entering into trading of their imported chemicals in order to get economic advantage.
2. Importers extensively follow the market trend and demand of the customers and place import order.
3. They usually prefer to import from some selected sources to avoid uncertain situation.
4. Before placing an order they want to examine sample of products.
5. Long-term relationship between importer and supplier is very important.
6. Mutual understanding and negotiation plays a vital role in building long term relationship.
7. Personal and informal relation with the suppliers gives an extra advantage to the importer.
8. There are several problems faced by the importers:

a)      Import duty on some of the identified chemicals is high.

b)      The price of chemicals is going high due to increase in price of oil and other raw materials.

c)      The importers sometimes face financial damage due to price fluctuation.

d)     Sometimes importers face dollar crisis.

e)      In some cases shipments do not match the sample on which the order was made.

f)       It is very common that shipments do not reach in time.

g)      All the procedures in the port and customs are very lengthy and inefficient.

h)      Nothing is possible there in time without bribe and unfair facilities given to the authority.

i)        Chemical importers frequently confront unnecessary and lengthy inspection and examination of the imported items.

j)       Container jam is very common in Chittagong port.

SOME IMPORTANT FINDINGS: TRADERS

1. Most of the time they have to supply on credit basis.

1. There are a large number of traders in the market dealing with the identified chemicals.

1. About 30% of the traders are engaged in import of chemicals.

1. Most of the traders are specialized in some chemicals. No one deals with full range of chemicals.

1. Traders extensively search for customers from various sources.

1. They emphasize on supplying large customers.

1. Personal relationship and contact is very important to acquire new account and serve existing customers.

1. In some cases they offer unfair payment and facilities to procurement personnel of various industries to get order.

1. They want to establish long-term relationship with customers through mutual understanding and negotiation.

1. Traders frequently send sample to potential customers for testing.

1. Sometimes they supply inferior quality of chemicals to meet lower price requirement of the customer.

1. Before supplying to a customer they emphasize on the past record, transaction history and reputation of the customer.

Recommendation:

Cosmetics & toiletries Chemical market is very competitive. there is  huge demand in our local market. Only few importers and traders control the whole market. Though we want to enter this market, we have to careful with several key success factors which is mentioned above..

After conducting the research I have identified several chemical that has huge demand and heavily used by the local producer of cosmetics and toiletries. Although I have identified several chemicals but I think not all chemicals are good for ACI to import and make profit.

ACI should import or buy from local suppliers only those chemicals that have high market potential. I suggest ACI Trading to seriously consider importing Sorbitol, Calcium Carbonate, Paraffin Wax, Caustic Soda 96% flakes, Glycerin etc. the reasons for selecting these chemicals are

• These are fast moving chemicals.
• These chemicals have high market demand
• These chemicals are used for many purpose like pharmaceuticals, textile, plastics, food & beverage other than Cosmetics & toiletries.

After conducting the research I able to know that the demanded quality of chemical is not up to standard. As most are low quality and they are buy from China & India at low price. But the perception of people is changing. They are now more conscious and demand for good quality products. That’s why they are now going towards foreign cosmetics & toiletries. As ACI follows International standard on Quality Management system so this is good chance for ACI to capture market and increase the market share where there are several unknown companies doing profitable business but without satisfying consumer demands.

ACI may deal with these chemicals before but I suggest importing these chemicals quickly to capture the highly competitive market.

Appendix:

• BD Chemical Industry Corporation (9559392)
• BD Chemical & Perfumery Association (Bhandary Bhaban 56-57 Mitford) (Tel:7314388)
• Bangladesh Shilpa Rin Sangstha (Nurul Islam 5^th floor)  (Tel:9133477)
• Bangladesh Indenting Agent (9667417 ) (28 Dilkusha)
• Bangladesh Cosmetics & toiletries Association
  (48 Mohakhali) (Tel:8817729, 8827729)
• BD Chemical Importer & merchant Association
• Bangladesh Chemical Society               10/11 Eastern Plaza Hatirpool   Fax: +880 2 864250
• Bangladesh Bank Library
• Public Library
• Bangladesh Statistical Bureau
• Commercial Dept. of several companies
• Internet

Bibliography

• ACI Annual Report
• ACI Brochure
• Strategic Management Book
• www.aci-bd.com
• Interview with Mr. Zulfikar Hossain (Manager, Chemicals, Main branch)
• Periodicals and Booklet about ACI Background History
• Brochures of ACI