Term Paper

On

“Aisier- Home Appliances”

Course Name: Strategic Management

Course Code: (MGT 8503)

Submitted To:
Major General ( Retired )Prof. Alauddin M A Wadud, Bir Protik
Faculty of Business Studies (FBS)
Bangladesh University of Professionals

Submitted By: Group-05

Serial No Name Roll
1. Naier Sultana 19020009
2. Md. Solayman Hossain 19020011
3. Nabil Mazumder Mukhar 19020025
4. Zubayer Ahmmed 19020055
5. Md.Abdullah Al Mamun 19020063
6. Firoj Ahmed 19020077

Date of Submission: 19-08-2020

BANGLADESH UNIVERSITY OF PROFESSIONALS

1
 LETTER OF TRANSMITTAL

7th August, 2020

Major General (Retired) Prof. Alauddin M A Wadud, Bir Protik
Faculty of Business Studies (FBS)
Bangladesh University of Professionals
Section # 12, Road # 2, Mirpur Cantonment,
Dhaka-1216

Subject: Submission of the group term paper on “Home appliances”

Sir,
It gives us immense pleasure in presenting this term paper, which focuses on the “Home
appliances”. This assignment gave us the opportunity to have an insight how the business model
is done

We have tried our best to fulfill the requirement of the term paper. The term paper is worth to us
as it helped us to gain experience and it also gave us the chance to know the business model of
home appliances of Bangladesh. We must here extremely grateful to you for your valuable
guidance, tireless effort, and constant attention. We apologize in advance if there is any
unintentional mistake made in this assignment.

We, fervently hope that you will find this plan worth reading. Please feel free for any query or
clarification that you would like us to explain. Thanking you for your cooperation.

Sincerely-
Group-5
Section-A

2
Batch- 20
MBA (Professional)

DECLARATION
This term paper “Home appliances” has been only prepared for the fulfillment of the course
Strategic Management (MGT-8503), as partial fulfillment of MBA (Professionals). The term
paper is based on our personal research and findings with the help of internet, web pages,
journals, and from our sheer observation. However, we would like to declare that we are
responsible for any major or minor mistakes if we have committed here. We seek your kind
generosity in this regard.

__________________________

Group-5
MBA (Professionals)

Batch-20

Section-A

3
 ACKNOWLEDGEMENT

First and foremost, we would like to convey our deepest gratitude to the Almighty Allah for
giving us this opportunity to complete our group assignment on time.

A very special gratitude goes to our academic supervisor Major General (Retired) Prof. Alauddin
M A Wadud, Bir Protik Sir, for his kind support and timely feedback regarding the guidelines
and deadlines of the group assignment completion. Without his supervision and constant support,
we wouldn’t have been able to deliver this assignment.

We wish to express our sincere appreciation to every individual who have offered support,
inspiration, and encouragement. Finally, it is a pleasure to express our gratitude to our parents for
their physical presence, constant support and prayers when we were preparing our assignment. It
was a great opportunity to do an assignment on such a powerful topic that is playing a great part
of reshaping our knowledge. The information that we have gathered will be a significant helpful
tool for the present and the future generation.

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 Table of Contents

Particulars Page Number

Chapter 01: Introduction 4
Chapter 02: Aisier – company profile 5-10

Chapter 03: Theoretical Business Model- “Aisier” 11-24

Chapter 04: SWOT analysis 25-26

Chapter 05: Recommendation and conclusion 27-29

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 Chapter 1
Introduction
A company that wants to enter into a new market must understand the target market business
environment such as the target market technology, competitors’ information, and how to create
and retain customers by providing better value than the competition.
As the environment changes, businesses must adapt in order to maintain a strategic fit between
their capabilities and the marketplace. Defined the business mission should be the first step due
to some influences: the first influence on a business mission can define the scope and activities
of the company to answer the questions such as “What business do we want to be in?” and
“What do we want to do for this business?” etc.
The second influence on a business mission is environmental change. Change provides
opportunities and threats that influence mission definition. The final determinants of the business
mission are the background of the company and the personalities of its senior management. This
last factor emphasizes the judgmental nature of the business definition. There is no right or
wrong business mission in the abstract. The mission should be based on the vision that top
management and its subordinates have of the future of the business. This vision is coherent and a
powerful statement of what the business should aim to become.
The marketing planning is a highly detailed, heavily researched written report that many inside
and possibly outside the organization will evaluate. Marketing planning is needed for a
specialized strategy to introduce something new, such as new product planning, entering new
markets, or trying a new strategy to fix an existing problem.

The post-industrial 21 century is characterized by instability and turbulence in a business

environment. Companies change not only their products, but also culture, ways of selling,
relationships with customers or internal structure. They are trying to stay on the market,
differentiate from their competitors and create value added, which gives them an advantage for a
long time. New technologies, better education, globalization, new communication tools and
sophisticated distribution networks create new opportunities for business development. The main
aim of this business models analysis is to identify business systems, new trends and changes.

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 Chapter-2

Company Profile- “Aisier”

Company Profile:

Company Name Aisier

Type Limited Company

Conglomerate Founded: Start-up-Part of a Mirpur Innovative Inc.

Headquarters Mirpur-12, Bangladesh

Area served: Home Appliances

Products Home Appliances

Number of employees 300

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Background of the Organization:

“Aisier” is a part of Mirpur Innovative Inc. and it’s a startup company plan to produce Home
appliance. “Aisier” Home Appliances works to keep kitchens and washrooms productive. The
company makes and distributes a variety of high-end home appliances, such as dishwashers,
ovens, cooktops, ranges, washing machines, Freeze and dryers. Bangladesh is experiencing a
steady economic growth which has fueled a huge demand for various household products. The
Bangladeshi economy is significantly helped household sector, which contributes more than 13%
of the country's trade. Bangladesh has experienced a growth rate of 5% since 1990. Added to this
Bangladesh has a young population with ever increasing income levels who are trendy and
demands premium services to cater to their needs. The young populations of the country are
highly globalized in terms of thoughts, needs, and choices. Taking this study, “Aisier” has started
trade in home appliance sector initially with assembling freeze in Bangladesh. Freeze /
refrigerators have become basic essential need of almost every family and individual bachelor.
Traditionally, all rich and upper middle-class families use number of units in every family.
Middle-class and lower middle-class families use freeze at least one in each family. Present
demand for refrigerators is growing at 30% annually and there will be a demand of about 1.5
million in 2016. Within 10 years the demand will reach about 3.0 million units.

Company Logo:

Make life easier and comfortable

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Company’s Objectives:

The prime objective of the company is to increase the market share by providing products in all
dealers in home appliance market. They assure their potential customers regarding quality and
reliability of their products.

Mission:

To provide quality and affordable home appliances through global manufacturing standards,
efficient distribution channels and prompt after-sales service. "We aim to be the leading
manufacturer and distributor of high-quality appliances in Bangladesh and in the world — our
products will be a part of people's everyday life."

Vision:

 We will achieve the highest standard of customer satisfaction through Customer Relationship
Management.
 We will strive in providing high-quality products and services through continuous business
process improvements.
 We will create a rewarding corporate climate in which employees are highly motivated and
results-driven.
 We will become one of the most admired companies in Bangladesh.

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Our Commitment:

“Aisier” is committed to the promotion of:

 Product and Service Quality

 Customer satisfaction
 Employee development
 Maximum productivity, minimum wastage, and
 Community upliftment

Values:

Our company values its good name and integrity. All of its people have been screened and
chosen for their diligence, dedication to service, honesty, exemplary character, conduct and
knowledge of duties and responsibilities.
Our core values serve as the cornerstones of our company:
• Reliability: Promote reliability in everything we do in the field of Household Appliances.
• Integrity: Operating ethically is the paramount to our company philosophy.
• Innovation: Continuously explore, develop, create and implement new technology.

In this Business Model, we explore each of Porter’s Five Forces. We look at how they can help
you to analyze the strengths and weaknesses of your position, and how they can impact your
long-term profitability and sustainability in Home Appliances Market especially in easy tech
market.

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 Chapter -3

Theoretical Business Model- “Aisier”

The term business model refers to a company's plan for making a profit. It identifies the products
or services the business plans to sell, its identified target market, and any anticipated expenses.
Business models are important for both new and established businesses. They help new,
developing companies attract investment, recruit talent, and motivate management and staff.
Established businesses should regularly update their business plans or they'll fail to anticipate
trends and challenges ahead. Business plans help investors evaluate companies that interest them.

A new enterprise's business model should also cover projected startup costs and financing
sources, the target customer base for the business, marketing strategy, a review of the
competition, and projections of revenues and expenses. The plan may also define opportunities
in which the business can partner with other established companies.

“Aisier” Business model

The startup business for home appliences “Aisier” will look to avoid customer dissatisfaction or
dissonance and funding problems. It will also incorporate plans and methods to achieve and
maintain market leadership. The business model of “Aisier” is as follows:

Product in the market

It is important to focus on the product value in the market to be established in early stage. The
products details information is also to be known to customers.

Home appliances are electrical/mechanical machines which achieve some family unit capacities,
for example, cooking, cleaning, or nourishment safeguarding.

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Home appliances can be partitioned into three groupings, which include:

1. Major appliances, or white goods

2. Small appliances,

3. Consumer electronics, or brown goods

Major Appliances :Major appliances may be roughly divided as follows: Refrigeration

equipment, Freezer, Refrigerator, Water cooler, Cooking Cooker, also known as range, stove,
oven, cooking plate, or cooktop, Microwave oven,, Washing and drying equipment, Washing
machine, Clothes dryer Drying cabinet, Dishwasher, Heating and cooling Air conditioner, Water
heater.

Small appliances: Small appliances are typically small household electrical machines, also very
useful and easily carried and installed. Yet another category is used in the kitchen, including:
juicers, electric mixers, meat grinders, coffee grinders, deep fryers, herb grinders, food
processors, electric kettles, waffle irons, coffee makers, blenders and dough blenders, rice
cookers, toasters and exhaust hoods. Entertainment and information appliances such as: home
electronics, TV sets, CD, VCRs and DVD players, camcorders, still cameras, clocks, alarm
clocks, computers, video game consoles, HiFi and home cinema, telephones and answering
machines are classified as "brown goods". Some such appliances were traditionally finished with
genuine or imitation wood. This has become rare but the name has stuck, even for goods that are
unlikely ever to have had a wooden case (e.g. camcorders).

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 Market Analysis

Geo-strategically positioned between India and China, Bangladesh consists of the world’s 8th
largest population, where consumer spending is around USD 130 billion+ growing at 6%
annually. Bangladesh has been the focal point in this part of South Asia providing expansion
opportunities for several sectors over the last decade. The rising Middle and Affluent Class
(MAC) consumers have been playing a pivotal role in this extraordinary growth story of the
consumer industry. According to a recent study by BCG (2015) (LightCastle was the local
partner), the Middle and Affluent class (monthly household income of around $400 or greater,
known as MAC) is expected to quadruple in size to 34 million within 2025.

Factors that are affecting consumption patterns are demographic dividend – a younger population
depicts there is strong demand for goods like fast food, coffee and other beverages and consumer
durable item; increasing urban population and the nuclear families – 19% of total population
living in urban areas in 1990s has increased to 30%+ in 2016; Rising literacy rate, growing
middle class and white collar culture, and globalization – thanks to the advent of information
technology/social media. Due to growing economic prosperity across the board, MAC
population residing in smaller cities increasingly have spare capital to invest in consumer
durables.

This MAC population tend to have higher demand for different items including consumer
durables. Urban areas have seen a rise in the number of nuclear family structure and many
working couples, which has influenced demand for refrigerators and other home appliances.
Alongside, growing electrification rate has spearhead demand in the rural markets.  Although
many local brands are entering the electronics market, majority of consumers still prefer
international brands over local ones, due to perceived quality parameters. However, consumers
in the low-income households, in general, are more price sensitive, and are willing to purchase
local brands at affordable pricing, in lieu of longer warranty period and reliable after-sales
services.

13
With rising income, demand for consumer durables will be increasing and the current industry
growth of 15% is projected to increase further. Alongside, with ease of making hire purchase and
new electricity connections across the country, demand for consumer durables are expected to
increase in the near future.
Market Projection

Current Categories

The market for Consumer Electronics consists of a number of segments, each of which has a
significant share in the total market size. In order to get a comprehensive understanding of the
market, the consumer durables market has been classified into 4 major categories.

 Television

 Refrigerators

 Air Conditioner

 Home Appliances (includes Washing Machines, Microwaves and Kitchen Appliances)

Market Size: The continually growing market is currently stands at USD 1.38 Billion as of
2017.

 Television: USD 414.22 Million

 Refrigerators: USD 549.11 Million

 Air Conditioner: USD 164.57 Million

 Home Appliances: USD 251.41 Million

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 Sales
18.2
30.2
11.9

39.8

TV Refrizeratror Aircondition H Applience

Trends

Growing MAC coupled with declining cost of durables and purchase friendly terms is driving
demand.

 The Rise of Nuclear Families and Working Women: Due to the increase in number of
working women and nuclear families in today’s urban culture, the demand for automation
in household chores has increased and as a result, there is a sharp increase in the demand for
consumer electronics.
 Growing Demand in Peri Urban and Rural Markets: With the increase in household
income and large-scale electrification, demand for consumer electronics has increased in the
peri urban and rural areas that cover 70% of the country’s households.
 Credit Facility: The consumer electronics products that were once considered as ‘high-
end luxury products’ are now considered as regular household necessities. This has become
possible since the companies provide the consumers with offers like EMI (Equal Monthly
Installment) and banks provide credit card schemes with 0% interest loans.

Growth Forecast: All of the product categories are experiencing rapid growth and continue to
exhibit greater market size in the coming years. The market standing for refrigerators and
televisions look the most promising in terms of growth.

15
 Industry Drivers

 Increasing Number of Women in the Workforce: Country’s current women labor

force participation is 36 percent, which is higher than the South Asian average in this
regard. The increasing number of working women will give rise to demand for more
products that make day-to-day lives easier.
 Competitive Market and Accessible Financing Opportunities: The competitive force
of the market will lead the companies to offer different financing opportunities (e.g. EMI)
to attract more consumers and the involvement of financing institutions with credit card
schemes will likely to gives rise to more market demand.
 Increasing Number of Organized Retail: In order to meet the increasing demand, the
number of organized retail stores throughout the country (both in urban area and its
outskirts) is expected to rise. This has the possibility to generate more demand and attract
new customers.
 Innovation and Greater Number of Consumption Options: Technology dispersion is
usually faster in the developing countries and due to that, the market is full of new
products with new features and different advantages. This ‘in-product innovation’ is
coming into picture because of consumer’s necessity and has the potential to give rise to
new demand as well.

16
 Competitor's analysis

Companies that focus on competitors’ actions have been found to achieve better business
performance than those who pay less attention to their competitors. It is important that
companies know where they stand or their position related to competitors. The competitor
analysis can learn about the competitors’ strengths and weaknesses in order to be the better
choice to match consumer satisfaction and to be able to create greater value than the competition.

Industry pressure and standing

This MAC (Medium and Affluent Class) population tend to have higher demand for different
items including consumer durables. Urban areas have seen a rise in the number of nuclear family
structure and many working couples, which has influenced demand for refrigerators and other
home appliances. Alongside, growing electrification rate has spearhead demand in the rural

17
markets.  Although many local brands are entering the electronics market, majority of consumers
still prefer international brands over local ones, due to perceived quality parameters.

Competitive Landscape
 Major Brands in the Market
 Consumer Electronics is a competitive market with a wide-ranging product from both
international and local players. Due to the brand image and credibility, the international
brands have strong top of mind association. However, the local players are dominating the
market in terms of sales volume, mainly due to competitive pricing.

Market Share Intra Category (Television)

Walton, the local brand is in the leading position in the Television market with a market share of
27 percent. However, most of the market share is covered by different local, international and
Chinese brands which makes the television market somewhat saturated.

Refrigerators: In the market for Refrigerators, famous local brand Walton is in the leading
position with 54% market sharing, taking over more than half of the market share. The second
position is held by international brand, Singer.

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Market Share Intra Category (Air Conditioner)
The Air Conditioner market used to be dominated by foreign brands like LG, General and Gree.
In recent years, local brands like Walton have started manufacturing/assembling air conditioners
at affordable pricing, with majority of price sensitive customers choosing inexpensive ACs
Walton even has launched an Air Condition model with Ionizer technology in the local market
back in last July (2017). A device named ionizer attached to an air conditioner filters dusts,
smoke, bacteria and odor from room air making it pure and healthy.

19
 Cost Structure

Although the cost structure of a business is to some extent fixed by the nature of the business and
the type of industry in which it operates, decisions can be taken to directly influence the split
between fixed and variable costs. It is important to understand that a business can have the same
sales, total costs and therefore profit, but a completely different costs structure, as seen in the
diagrams below.

Both businesses have the same sales, total costs, and profit, however, the first business has a high
fixed cost structure compared to the low fixed cost structure of the second business.

Business Plan Cost Structure and Break Even

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Being a new company “Aiser- the home appliances” will follow the low fixed cost structure. It
plans to have the manufacture and distribution outsourced to a third party, its needs smaller
premises and less investment in machinery and equipment and therefore has lower fixed costs
but correspondingly higher variable costs, as payments need to be made to the third parties for
manufacture and distribution.

Item Low Fixed cost ($)

Product details
Selling price 12.00
Variable cost 9.60
Gross margin 2.40
Gross margin % 20%
Units sold 6,000
Income Statement
Revenue 72,000
Variable costs 57,600
Gross margin 14,400
Fixed costs 7,400
Profit 7,000
Total cost summary
Variable cost 57,600
Fixed cost 7,400
Total cost 65,000

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Effect of Cost Structure on Break Even Calculations

In each case, the number of units sold (6,000), selling price (12,00), total costs (65,000), and
profits (7,000) are identical. Using this information and the break even formula, the break even
point can be calculated for each of the start up businesses.

The break even formula is:

Break even sales = Fixed costs / Gross margin %

and the break even units are given by the formula:

Break even units = Break even sales / Selling price

The results of the calculations using the formulas are summarized in the table below.

Item High Fixed Low Fixed

Break even sales 60,333 37,000
Break even units 5,028 3,083
Cost Structure and Break Even

We can see that even though everything else is the same, the financial structure of the business
has resulted in a completely different break even position.

For the low fixed cost structure business, only 3,083 units need to be sold at 12.00 to reach break
even as shown in the diagram below.

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 Distribution Strategies

In generally there are different types of marketing distribution system. Consumers are able to
buy the products from different market place. All these distribution strategies are consists of
producer, wholesaler, retailer, and finally to the consumer. There are mainly four types of
marketing distribution channel:

1. Conventional Marketing channel

2. Vertical marketing channel

3. Horizontal Marketing channel

4. Hybrid Marketing channel

We select the conventional marketing channel to distribute our product. Our products have been
distributed by our POS which will be selected by the company. The selected POS supply the
product to the customer and also to the retailer and the consumer will collect the product from
the retailers. There are three types of distribution strategies:

23
1. Selective distribution

2. Intensive distribution

3. Exclusive distribution

We choose the intensive distribution for our product. We will supply our product all over the
country on the basis of our product demand so that the consumer can get the product easily. After
analyzing all of this we select Market-oriented pricing that is setting a price based upon analysis
and research compiled from the targeted market and also with the cost.

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 Chapter 4

SWOT Analysis
SWOT stands for Strengths, Weaknesses, Opportunities, and Threats, and so a SWOT Analysis
is a technique for assessing these four aspects of your business. A SWOT analysis organizes your
top strengths, weaknesses, opportunities, and threats into an organized list
Strengths and weaknesses are internal to your company things that you have some control over
and can change. Examples include who is on your team, your patents and intellectual property,
and your location.
Opportunities and threats are external things that are going on outside your company, in the
larger market. You can take advantage of opportunities and protect against threats, but you can’t
change them. Examples include competitors, prices of raw materials, and customer shopping
trends.
Strengths
Here are some of the most important strengths that our company boasts:
High quality products
High Quality service
Strong capacity in innovation and development
Large variety of products
Efficient management 

Weaknesses
Like every big company, it’s hard to operate without a few flaws. These are some of their
weaknesses:
Expensive
Lack of strong brand recognition
Lack of experience

Opportunities
Our Company has a few different opportunities stemming out from their high quality, good
brand and diversity:

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 Emerging markets
New products
R&D
Services
E-commerce sales

Threats
Acting in such a competitive market, it’s clear to have some threats. In their simplest form, these
are:
Heavy competition
Volatile market

In conclusion, while our company has a reputation for their innovation skills, premium quality
and eclectic product line, they are competing in one of the country’s toughest markets. We
definitely have some opportunity in supplying their household appliances to various emerging
markets across the Country, but they still have to be careful that they don’t get washed away in
the technology sector’s volatile markets.

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 Chapter 5

Recommendation

Aisier Home Appliances Limited., need to follow the recommendation for a smooth run in the
business and for early establishment

1. Build a strong distribution channel for Dhaka region and have to recruit experienced sales
representatives.

2. Training and counseling hours for the sales representative.

3. Exclusive compensation plan to motivate the employees.

4. Advertising of the products in different way.

6. Create activities on social media.

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 Conclusion

Starting a new company which has demand in the market has the opportunity to establish and
sustain. “Aisier – the home appliences”, being new in the market will attract the customer with
it’s lucrative design ,features, quality, longevity and obviously with a reasonable price. Although
there will be so many challenges, but the strong and efficient management of “Aisier” will
overcome the barrier and take “Aisier” to the top among all the brand existing in the market.
Aisier will be known in the country as well as in the Indian sub-continent for its quality, service
and innovation.

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References

Stefan (2014), Analysis of Business Models

https://www.patriotsoftware.com/blog/accounting/how-to-conduct-a-market-analysis/#

https://databd.co/profiles/industries/profile-consumer-electronics

http://citeseerx.ist.psu.edu/viewdoc/download?doi=10.1.1.196.1216&rep=rep1&type=pdf

https://strategyzer.uservoice.com/knowledgebase/articles/1194382-how-do-i-use-the-cost-
structure-building-block-of

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