CASE STUDY

Topic

Pran’s Internationalization and Expansion into the Indonesian Market

Course
Global Marketing (ALD 3103)

Submitted to
Mohammad Osman Gani
Assistant Professor
Department of Marketing, Faculty of Business Studies
Bangladesh University of Professionals (BUP)

Submitted by

Shafkat Tanjeem Ahmad ID 19251002 Section B

Kazi Rifat Mahumd ID 19251008 Section B
Rafiur Rahman Unnata ID 19251096 Section B

Date of Submission
25 June 2021
1. Introduction
Mr. Alamgir Chowdhury, a middle-aged Bangladeshi expat in Malaysia has been working
as the General Manager of Pran Foods Malaysia Berhad for quite some time now. He has
successfully negotiated with top retailer associations and superstores to introduce Pran
products in the Malaysian market, making Pran one of the top foreign brands in Foods &
Beverages sector of Malaysia. Under his leadership, Pran has introduced over 30 categories
of food & beverage products in the Malaysian market, even in conservative states like
Sabah & Sarawak of East Malaysia.

Currently, Pran Malaysia is a registered Business Unit of Pran Foods Limited under Pran-
RFL Group of Bangladesh, with their own offices, distribution centers, vehicles, and
marketing team. Before entering the Malaysian market with their wholly owned subsidiary,
Pran had a very different export approach. They used to participate in various Trade Fairs
with help from Ministry of Foreign Affairs and local Chamber of Commerce of those
countries and took bulk orders from supermarkets & distributors. But this approach slowly
changed after Pran found success after deploying their own team of sales and distribution
in the United Arab Emirates (UAE). Upon their success in UAE, they took the same
approach in Indian & Saudi Arabian market and found success there as well. (Pran Foods
Limited, n.d.)

With such success, Pran-RFL Group became one of the first local MNC of Bangladesh and
started Pran Exports Limited to handle their foreign business units in 2016 (Hong, 2016).
In the same year, Pran introduced their Business Unit in Malaysia as well with Mr. Alamgir
Chowdhury leading their Malaysian operation.

Currently, Mr., Alamgir is thinking beyond borders, spreading the brand in the whole
ASEAN region. The immense success of Pran’s products, especially beverages among the
non-Bangladeshi & local communities has given him enough confidence to look out for a
new neighboring market. Considering all products made by Pran are Halal Certified and
contains certification from regulatory agencies of India, Saudi Arabia, Malaysia & UAE,

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 Mr. Alamgir was particularly looking for a Muslim-majority nation that can embrace ran
products like Malaysians did. Upon much consideration, he proposed to introduce a
Business Unit with Beverages, Confectionary and Spices in the Indonesian market. Pran
has already been exporting in Indonesia from Bangladesh through alternate channels like
white-label products, bulk orders, and fixed consignments. But now, Mr. Alamgir wants to
replicate what they have done in the Malaysian market, a fully fledged business unit under
Pran Exports Limited with own distribution, sales, and marketing channels in the
Indonesian market.

2. Background
The Pran-RFL Group began its journey in 1981, under the leadership of retired military
officer Amzad Khan. He created Rangpur Foundry Limited, which produced steel and iron
products, from the ground up. With time, it grew and in 1985, it established a sibling firm,
Pran, specializing in agricultural marketing. Pran started by collecting vegetables from
villages and selling them in Dhaka's Karwan Bazar. However, they were not making the
desired profit. As a result, Amzad Khan planned to market processed pineapple juice and
obtained a small factory with the help of a BSB loan. Pran Foods grew in popularity over
time and became one of Bangladesh's most well-known beverage brands. (Emon, 2021)

They built a robust supply chain network from the start to reach even the most remote parts
of the country. They have always placed a premium on producing high-quality goods. They
did this by providing farmers with incentives to grow high-quality crops. After the crops
grew, those were purchased at a fair price, and the farmers were not required to deliver the
fruits to the farmhouse or storage area, as Pran collected the products from the field
directly. The process of selecting products to ensure product quality did not end here.
Following field selection, the products are filtered using multi-step processes to ensure that
only the best fruits are selected, stored, and packaged per international quality standards.
(Prothom Alo English, 2019)

Pran is one of the most diverse foods and beverage companies, with about 200 different
items under its belt evolving into a local MNC with its manufacturing facility in Assam,

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 India. Their Assam plant produces Pran branded confectionary & beverages & distributes
throughout Northeastern India. Pran exports its products to about 110 countries, including
strongholds in India, Malaysia, Nepal, Bhutan, and the Democratic Republic of the Congo,
among others.

3. Internationalization of Pran
Pran-RFL Group, the market leader in processed food and plastics, has now set its sights
on making a name for itself in international markets. For more than two decades, Pran-RFL
Group has been exporting its products to different countries.

Currently, Pran's distribution network has served over 400 million consumers in 140
countries, covering five geographic regions around the world, with their 200 brands in ten
different categories. Along with 16 factories in Bangladesh, Pran has a manufacturing unit
in India with plans to open in Nepal and the United Arab Emirates. It has full-fledged
offices, warehouses, distribution channels, and a sales force with a dedicated support team
in India, Malaysia, the United Arab Emirates, Saudi Arabia, Oman, Qatar, Ghana, the
United States of America, Canada, Spain, Italy, and Singapore. (Pran Foods Limited, n.d.)

Pran is aggressively aggressive to penetrate the foreign market, with a dedicated team of
1500 employees for global sales, and carries the name to represent the company as the
flagship food brand of Bangladesh. Over 150% of growth in exporting proves Pran’s
demand in the global market. Especially for their packaged agro-foods and beverages, as
well as confectionery and snack items. Pran aims to increase their exports by at least 30-
40% every year. Their exports, which began with puffed rice and Chanachur a few years
ago, totaled $184 million (equivalent to Tk 1,443 crore) in the 2019-20 fiscal year. ("Pran
the Largest Agro Food Processor in Bangladesh", 2020)

However, among all of Pran's international markets, India remains the most important. Pran
began its journey in 1981 under the direction of Amjad Khan Chowdhury. Pran-RFL Group
now has a revenue of around $2 billion per year. Pran's first shipment to Tripura, consisting
of ‘Chanachur’, a conventional snack, entered the market in 1997. However, the company
now exports its goods throughout the neighboring country. Nearly a third of the company's

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 total exports come from India. Pran claims that it exports its products through 20 Indian
importers who market them through 2,000 sales agents across the country. One of the
Indian importers set up factories in the country to produce Pran's food products locally.
(Islam, 2019)
The largest agro-processor of the country also has a similar agreement with a Nepali
importer to manufacture its products there. Pran has also recently entered Bolivia and Fiji
in South America. Pran also operates a distribution channel in the UAE. Pran-RFL Group
also entered Malaysia in 2012 with their food chain. Pran’s beverages are widely popular
in Malaysia. In Malaysia, Pran's mango juice is their best-selling product. Following its
success in neighboring Malaysia with its juice and other foodstuffs, Pran is looking to
replicate its success in Indonesia, a predominantly Muslim country with 250 million people
in comparison with Malaysia's 30 million.

4. Pran’s Export Achievements

Pran, traded as Agricultural Marketing Company Limited is Bangladesh's largest
agricultural multinational corporation. For the years 2004-05, 2003-04, and 2002-03, it was
awarded the Best National Export Trophy (Gold). Earlier in the years of 1999-2000, 2000-
01, and 2001-02, Pran-RFL won the most prestigious export trophy as well. Pran-RFL
Group has received this award for export promotion for the past six years. This is
Bangladesh's highest award in the export sector.

5. The Indonesian Beverage Market

Indonesia's economy is basically driven through developing own circle of relative
consumption, and one organization that flourishes on this like no other is that of food and
beverages. Sales increase is fueled through developing personal incomes and extended
spending on food and drink, specially from the growing number of middle-class
consumers. Consequently, this is moreover an organization in which close by organizations
have been particularly ambitious – and numerous of them have superior right into a
fulfillment of global exporters. At the same time, the internationalization of close by

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cuisine represents an excessive opportunity in remote places for organizations to sell their
products to Indonesian consumers, who are more open towards the consumption of new
food and flavors. Lifestyle adjustments of Indonesia's metropolis centers in massive
component study shows us the dispositions of hooked up markets, with administrative
center of human beings having less time for cooking, or less interest in doing so, however
un-healthy health-boosting food. Importantly, clients are getting access to a mile’s wider
sort of products to the country's developing retail infrastructure, with hypermarkets and
mini markets progressing deeper into the regions. Improving logistics to facilitate the
distribution of perishable goods, which incorporates frozen food, for the duration of the
archipelago.

A Growing Market for Local and Foreign Brands

In 2013, domestic food and beverage sales totaled 900 trillion IDR, up slightly from
previous years. The Indonesian Food and Beverage Producers Association (GAPMMI)
estimates that the market would grow by at least 11% in 2014, to 1000 trillion IDR. The
stock market has outperformed overall economic growth in recent years, and economists
expect this trend to continue. Food consumption in Indonesia is anticipated to rise 9.1% in
2014, with a compound annual growth rate (CAGR) of +7.6% from 2014 to 2018. (BMI).
Soft drink sales are forecast to grow by 11.7 percent in 2014 and by 9.0 percent CAGR
from 2014 to 2018, while alcoholic beverage sales are expected to grow by 13.9 percent in
2014. Food and beverage production is one of Indonesia's most developed industries, with
a significant number of companies fighting for customers. The vast majority of businesses
are small or micro-sized, but a small number of large corporations dominate the market,
including Indofood Sukses Makmur, the world's largest instant noodle manufacturer, with
sales of 57.73 trillion IDR in 2013, Wings Group, Mayora Indah, and Garuda Food, a
Tudung Group subsidiary. Companies like Mayora's have devised ways to entice customers
not only by price, but also by inventing to create customised, value-added items that cater
to the Indonesian consumer's preference. Large businesses are better equipped to deal with
cost increases or sudden policy changes, and they are in a better position to take advantage
of an increasingly open Southeast Asian export market, so Indonesia's food and beverage
industry is expected to consolidate significantly in the coming years. Nestle, Kraft Foods,

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and Unilever are just a few of the international brands that have a strong presence in the
market. Traditional western dishes, such as those based on milk or wheat, will increasingly
fit the local palate as Indonesian cuisine becomes more cosmopolitan.

Rising Trade

The food and beverage industry is important to Indonesian exports, and the government
aggressively promotes its enterprises abroad, as seen by an Indonesian business
delegation's visit to the United States and Canada in March and April 2014. The trade
mission, led by Deputy Trade Minister Bayu Krisnamurthi, aimed to find new ways for
Indonesian products to be sold in the North American market. Snacks, specialty beverages,
sauces, condiments, pickles, processed fruits and vegetables, and shellfish in the form of
crab meat or shrimp paste are all popular exports. According to the Indonesian Statistics
Agency, processed food and beverage commodities worth $4.83 billion USD were
exported in 2013, and GAPMMI expects export growth of roughly 11% in 2014. (Similar
to 2013). With a value of $602 million USD, the United States was the biggest export
destination for Indonesian food and beverage items in 2013. Despite the fact that exports
of processed and semi-processed food and beverage items grew faster than imports in 2013,
a trade deficit of over $1.6 billion USD persisted in 2013. There is still popular and political
pressure to stop what is frequently referred to as a flood of imports, either by providing
more support to local producers or by enacting barriers to imports. Nonetheless, Indonesia
continues to welcome imports. Foreign exporters could connect with local partners to make
the import procedure and distribution of their products easier, especially if the partner has
a well-established sales network throughout the country.

Foreign Investment Still Dominates the Market

According to GAPMMI forecasts, food and beverage industry investment could reach a
new high of 50 trillion IDR in 2014, up from 35 trillion IDR in 2013. While foreign direct
investment (FDI) accounted for 60% of total investment in 2013, domestic direct
investment is expected to expand faster than FDI in the future years. Coca-Cola Amatil and
Danone Group, for example, have recently announced investment plans, while 20 Japanese
businesses were evaluating investment potential as of June 2014. According to GAPMMI

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 Chairman Adhi S. Lukman, most Japanese corporations want to enter the market in 2015
through cooperating with local businesses.

Apart from its enormous population and quick economic development, Indonesia's food
and beverage business is attracted by the domestic availability of a variety of agricultural
commodities such as coffee, cocoa, and palm oil. Farmers, on the other hand, have in many
cases become the weak link in the national food supply chain, to the point where even
cocoa is being imported from overseas to meet processing industry demand.

6. Marketing Mix of Pran Export Limited

Product

In terms of building profitable customer relationship, quality and packaging is a must. This
is what Pran utilizes in foreign markets, including Indonesia. Because of the good quality
fruits, Pran is able to maintain the quality in terms of taste as well as flavor. They also did
market research and found out that many markets lack quality assurance in fruit juice so,
Pran grabbed the opportunity and introduced a variety of fruit juice in the market with
International Standard Quality Assurance. Pran Mango Drink is their flagship product, and
it is among the highest sold fruit juice in Bangladesh, Nepal & Northeastern India. At the
same time, lucrative packaging and outlook also grabbed the attention of customers across
the world.

Price

Pran tries to keep the price as per the other competitive companies selling their products in
the market and targets the economic capabilities of both upper-middle-class and lower-
middle-class households. Their flagship product prices always tend to range under BDT
100 and upon necessity, they even introduce smaller packs of the products like 100 ml
packs for BDT 10. They maintain two price settings, one for the wholesale market and the
other for retail. For export products, they always ship bulk quantity products to lower the
transportation costs, and usually takes benefit of Bangladesh's Trade Agreements and

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World Trade Organization (WTO)'s policies for reducing export tariffs & surcharges.
(Mohammad & Shezan, n.d.)

Place

Pran always tries to distribute and place its product in the semi-urban & rural region with
help from their extensive distributor network and creates high visibility in makeshift &
grocery stores. This helps them to increase brand visibility as a company that is available
all over the country. Pran promoted and supplied its products in Malaysia through top
retailers such as Tesco, Mydin, Hero Market, and e-commerce platforms such as Lazada.

Promotion

Pran advertises utilizing the same strategy they have used from the beginning of their
company: catchy & entertaining advertisements. They emphasize more the commercial
advertisements on Television & FM Radios to reach their targeted audience. Their
advertisements usually feature younger people with catchy jingles to cater to the younger
audience. In recent days, they have also started to promote their products extensively
through social media and alternate media. Internationally, Pran encourages their
distributors to promote their products through store placements and social media
promotions. In markets like India & Malaysia, they've also produced TVCs in the local
language with a local cast to promote their product. They even ran into trouble with the
Ministry of Information of Bangladesh as they were promoting Pran's products that were
only available in Bangladesh on the Indian TV channels as many Bangladeshi households
are watching the channel more than local channels.

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7. The Challenge
Mr. Alamgir has been the forerunner of Pran’s operation and expansion in the Malaysian
market, and his vision and goals for Pran to be a truly global brand is what matches with
Pran-RFL Group’s vision as well. His proposal of opening a business unit of Pran in
Indonesia catering to the growing beverage market might be lucrative but comes with
challenges as well. Upon research, Mr. Alamgir found out that Bangladesh does not have
any existing trade deals with Indonesia, and most trade deals are done via sea-route, which
is not at all preferable for perishable goods like juices and agro-products. But Bangladesh
doesn’t even have a direct air connectivity with Indonesia, making it more costly for cargo
products to ship. On the other hand, Indonesian market is concentrated with local brands
as well as international brands like PepsiCo, Nestle, Coca-Cola marketing and selling their
beverages across the island nation. There is also a chance of people rejecting the taste of
Bangladeshi snacks like Chanachur & Puffed Rice – Pran’s highest selling products in the
international market due to cultural differences.

So, Mr. Alamgir has met with three unique challenges – tariff barriers, connectivity issue
and the cultural clash.

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 Teaching Note for “Pran’s Internationalization and Expansion in the
Indonesian Market”

Case Summary
This case unveils the history and global footprints of one of the top conglomerates of Bangladesh,
Pran-RFL Group. Starting as a mere supplier of fresh fruits and vegetables to the kitchen markets
of Dhaka, its founder, Major General (Retd.) Amjad Khan quickly realized the prospectus of the
food processing industry in the newly liberalizing country in the 90s. Pran’s humble journey began
as a sister concern of the Rangpur Foundry Limited, or commonly known as RFL. Within a short
period, Pran became synonymous with the term ‘Mango Juice’ in the country, and the management
wanted to spread the goodness of Pran to the world. They first began exporting by supplying white-
label products and bulk orders to EU nations by taking part in Trade Fairs. Slowly, Pran realized
that their products can be marketed in the foreign market directly and sent the first shipment of
processed pineapple to France in 1997. Since then, Pran has expanded their global outlook and
currently exports to over 140 nations worldwide. Currently Pran operates their own operation in
India, Nepal, UAE & Malaysia. In this case, Pran is looking forward to expanding their business
with their own distribution & sales team in Indonesia after they found success in Malaysia. This
case discusses how Pran can expand into a new market utilizing the topics discussed in the Global
Marketing course, like Market Selection, Market Expansion, and Export/Import. The cases also
provide an outlook on the challenges faced by a Bangladeshi company while expanding into
foreign countries, Marketing Strategies & Marketing Mixes for global market as well as the
benefits of FDI and Franchisee operations.

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Case Objectives
After reading this case, students will be able to understand:

• Globalization and expansion of a domestic giant brand like Pran-RFL Group.

• The expansion and marketing strategy applied by Pran-RFL Group to serve more than 100
nations with their food and beverage.
• The exporting and distribution network of agro-processed food in different country,
especially in Southeastern Asia.
• The challenges a brand faced while penetrating in a new global market especially in Asian
market.
• The importance of setting up a full-fledged team under an international management body
to managing and establishing the brand in global market.

Target Audience
This case study is perfectly applicable for the students of undergrads whose are doing the course
of Global Marketing or International Marketing. This case is also suitable for the courses of
International Business, Global Branding, and Global Strategies.

While students have a good knowledge about some specific topics of global marketing like
exporting, distribution network, new market penetration then this case would be a perfect study
material for them. Students will get an in-depth knowledge of creating a new market for a brand
in international level and the consequences.

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Suggested Teaching Strategy
Theoretical Model
The case discusses one of the most important topics of Global Marketing or International Business
course, The Global Market Entry Strategies. The Global Marketing Strategy is a strategy that
covers nations from several different regions of the world and aims at coordinating a company’s
marketing activities in these countries. It also shows a comparison between direct investment, joint
partnership and licensing in the new markets, and discusses which strategy will be beneficial for a
company depending on financials, capability and brand value among other traits.

Recommended Approach to Teaching the Case

The case is suitable for a 90-minute class session with students giving a presentation or bringing
in an assignment in the next class. It is worth mentioning that during the presentation and study of
this case, students are expected to use internationalization theories and international marketing
concepts. So, it is important for the instructor to go through these theories in the class before
heading into the case. Here, the goal is to assess students' analytical abilities in utilizing theoretical
elements to understand a company's real-world situation in international marketing. This case will
assist students in comprehending and explaining the internationalization process, tactics, and
mechanisms of brand growth. Students are also expected to know and understand basic principles
of marketing like 4Ps, SWOT, Buying Process, BCG Matrix etc. to help them better analyze the
case and use the techniques in order to present with a plausible solution.

Before getting on with the case, the instructor might ask for student’s input regarding their
knowledge about the following:

- Domestic MNCs of Bangladesh

- Beverage Industry in the country
- Some of the most well recognized Bangladeshi brands
- Bangladeshi products that can be found abroad.

After the instructor has taken the input, he/she can introduce the students to the case, and help the
students understand the challenges and prospectus of the company. While addressing the
Discussion Questions, the instructor should keep in mind about the following:

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- For Discussion Question 1, the instructor will have to give a clear idea about the Indonesian
market and Pran’s export portfolio to the students. These materials can be found in the case
as well as the ‘Further Readings’ section. Students are not expected to fully understand the
Indonesian market by just reading the case, rather students are expected to understand if
they are aware of the issues that might turn into a challenge for Pran-RFL Group.
- For Discussion Question 2, it is important that the students are aware about the New Market
Expansion Strategies discussed in the course and compare the two given options based on
the course material as well as the case study.
- For Discussion Question 3, the students are to analyze the current export process of Pran
and figure if it will be applicable for the Indonesian market as well. The question can also
be solved better if the students are familiar with basic knowledge on Export-Import, as
discussed in the course.
- For Discussion Question 4, the students have to think outside the box and utilize the reading
materials extensively to find a probable solution. The answer to the question might be
creative but very much feasible. The students will have to research some bit on their own
as well as utilize their understanding of export-import topics of the course in order to
answer the given question.

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Relevant Readings

Hong, T. (2016). Bangladesh’s Pran to open door into Indonesia, new products for Malaysia.
Retrieved 21 June 2021, from https://www.minimeinsights.com/2016/11/22/bangladeshs-
pran-to-open-door-into-indonesia-new-products-for-malaysia/

Pran Foods Limited, n.d. History Overseas | Pran Foods Limited. [online] Available at:
<http://www.pranfoods.net/global-reach/history-overseas> [Accessed 21 June 2021].

Pran the Largest Agro Food Processor in Bangladesh. Essaygraph.com. (2020). Retrieved 25
June 2021, from https://essaygraph.com/essay/pran-the-largest-agro-food-processor-in-
bangladesh-essay-14975

Islam, S. (2019). Factors behind Pran. Academia.edu. Retrieved 25 June 2021, from
https://www.academia.edu/8850978/Factors_behind_Pran

Emon, K. (2021). Pran-RFL GROUP LTD.. Academia.edu. Retrieved 25 June 2021, from
https://www.academia.edu/38383842/Pran_RFL_GROUP_LTD

Mohammad, M., & Shezan, A. Pricing Policy and Strategy of Pran. Scribd.com. Retrieved 25
June 2021, from https://www.scribd.com/document/238326442/Pricing-Policy-and-Strategy-
of-Pran

Prothom Alo English. (2019). Pran gets $5.2m export orders from Germany fair. Retrieved 25
June 2021, from https://en.prothomalo.com/corporate/Pran-gets-5.2m-export-orders-from-
Germany-fair

Pran-RFL sets sights on global domination. (2021). Retrieved 24 June 2021, from
https://www.thedailystar.net/business/pran-rfl-sets-sights-global-domination-1315798

The Daily Star. (2021). Six more foreign airlines express interest in operating flights to Dhaka.
Retrieved 26 June 2021, from https://www.thedailystar.net/travel/news/six-more-foreign-
airlines-express-interest-operating-flights-dhaka-2027837

Dhaka Tribune. (2020). Indonesia keen to finalize preferential trade agreement with
Bangladesh. Retrieved 26 June 2021, from
https://www.dhakatribune.com/business/2020/10/07/indonesia-keen-to-finalize-free-trade-
agreement-with-bangladesh
Green, M., & Keegan, W. (2020). Global Marketing (10th ed., pp. 266-294). Pearson
Education Limited.

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Discussion Questions
i. What challenges does Pran encounters in the planned expansion in the Indonesian
market?
Going overseas usually presents challenges because culture, society, and way of life differ
from one country to the next, especially if one is attempting to develop a brand with a high
perceived value. As a result, launching a product in an international market will be fraught
with difficulties, as these factors have the greatest impact on people's purchasing decisions.
Only thorough investigation and analysis will be able to fix these problems. As a result,
Pran might face the following challenges in the Indonesian market:
➢ Indonesian infrastructure especially the service networks is not developed or
maintained in comparison with the booming consumer-led economy, resulting in
increased transaction costs as well as inefficiencies that will be hampering Pran as
an exporter of products.
➢ Non-tariff barriers as well as the conflicting laws of exporting products can also be
a big issue.
➢ Imbalanced political environment and high rate of corruption among the high-
ranking govt. official might lead to several difficulties while negotiating deals.
➢ Supply of food cannot be outsourced from Indonesian farmers because of in
sufficient existing land. So, Pran either have to export which might increase cost or
negotiate deals with multiple farmers which will be challenging.
➢ Global climate change impacts the land productivity massively in Indonesia
resulting in issues regarding producing fruits in the expected rate.
➢ Low productivity and scarcity of transportation will put an impact in supply chain
department as well as costing.
➢ The value of good relationship with the customers in Indonesian market is essential
to survive. Thus, any activity that can create negative image will be an issue.
➢ As the company does not have any existing strong distribution system in the country
so working with local distributors from different cultures will bring difficulties and
challenging situations.
➢ Understanding of cultural norms will be a big issue in terms of advertisements. So,
this fact must be kept in mind to not to hamper their cultural norms.

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ii. What would be the best possible market entry strategy for Pran in the Indonesian
market? Appointing a franchisee or setting up their own team?

Pran is best known for producing Pran Mango Juice, a popular juice brand in our country.
In Natore, the company established its own mango pulp factory. Later, the company
specialized in the production of pineapple, lemon, guava, and litchi juice. Then they
gradually grew their company and began producing other food and beverage items. Pran
has taken a step forward with a global venture after meeting huge domestic demand. Pran–
RFL Company gradually expanded and began to do international business in order to
increase profits.

Pran-RFL Group mainly follows two types of entry mode strategy for marketing Drinks,
Bakery and confectionary items:

a) Exporting
b) Investment
The following strategies are defined below:

Export Process of Pran’s Drinks, Bakery, and Confectionary items:

Pran-RFL Group typically uses direct exporting procedures to enter the overseas market
with its beverages, bakery, and confectionary products. As a result, Pran Export Limited is
involved in two types of exporting. They primarily employ the following methods to
accomplish this:

a. Foreign distribution channel:

Pran, Bangladesh's largest exporter of processed food, saw a huge demand for
agro-based products produced by local farmers around the world. Pran began
exporting its products to France in 1996, with drinks, bakery, and confectionary
items being among the first. Since then, they have expanded their export
business all over the world. They now distribute their goods in more than 118
countries around the world.
Pran Export Limited was established with the goal of joining global business
and establishing a strong presence for Bangladesh on the global economic map.

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 Pran Export Limited has divided their export market into six units at the
moment. India, Asia, the Middle East, Africa, Europe, America, and other
countries are among them.
Pran has established a strong presence in the Indian market, which is one of the
largest export markets in the world. North-East India, South-India, and Greater
West Bengal are the three segments that make up the Indian market.
The Asian market of Pran’s Drinks, Bakery and confectionary items includes
Sri Lanka Nepal, Bhutan, Maldives, Afghanistan, and Myanmar, Malaysia,
China, Singapore, Hong Kong, Korea, Cambodia and others.
As there are so many Bangladeshi immigrants and workers in the Middle East,
it is a huge export market for Bangladeshi products. Dubai, Bahrain, Kuwait,
Qatar, Jordan, Oman, Iraq, Iran, Lebanon, and the United Arab Emirates are
among the Middle Eastern markets for Pran’s Drinks, Bakery and confectionary
items.
Africa is the most unsettled part of the global market. In the year 2001, Pran
began distributing their drinks, bakery, and confectionary items in Africa.
Benin was the first country to import. Pran currently exports its products to 38
West and East African countries, including Angola, Liberia, Benin, Ethiopia,
Congo, Senegal, Ghana, Somalia, South Africa, and others.

b. Foreign branch/ subsidiary channel:

Many countries, including the United States (NY), Australia, the United Arab
Emirates (UAE), Saudi Arabia (Qatar), Oman, Malaysia, Singapore, and
Somalia Pran-RFL has its own foreign branch or subsidiary channel for
beverages, bakery, and confectionary items, complete with a fully functional
office, warehouse, distribution vehicles, sales force, and other sophisticated
support. Pran-RFL Company strives to be the market leader in every category
in which it participates.

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 Market entry strategy for Pran in Indonesia:

As we already know Pran follows two strategies to enters in a new global market. One is
by foreign distribution channel or franchise and another one is by opening a new branch.
Both could be the market entry strategy for Pran in Indonesia. But if we have to chose one
than it could be setting up own team in Indonesia. Here are two reasons behind choosing
this strategy:

• Opening a new subsidiary or branch is more preferable cause if we look into other
global markets where Pran is already doing their business such as India, Nepal,
Malaysia, and UAE, we can understand the growth and sales Pran have in those
countries are far better than other countries where they are doing their business by
using franchising. So, setting up a full-fledged workforce and manufacturing unit
in Indonesia would be preferable.
• Another reason behind choosing foreign branch or subsidiary is Pran’s Malaysian
and Singapore market. In 2016, Pran enters in Malaysian market with their
processed food and beverage items. There Pran has its own foreign branch or
subsidiary channel for beverages, bakery, and confectionary items, complete with
a fully functional office, warehouse, distribution vehicles, sales force, and other
sophisticated support. So, if we take Malaysian market as an example for success
of Pran in global market then opening a new branch is always the preference. Also,
Indonesia is in the same demographic region of Malaysia and Singapore. So, setting
up a new branch will be easier for Pran as they already did the same in Malaysia
and Singapore.

Though franchise is also an option if Pran-RFL group thinks that they do not have their
potential target market in Indonesia or if they want to reduce their cost. But opening Pran-RFL
group’s new branch in Indonesia is more preferable.

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iii. Discuss the mechanism of exports and distribution of Pran’s products in the
Indonesian market.

Generally, buyers contact Pran through the Chamber of Commerce for export purposes.
Pran also exhibits at various trade shows around the world, attracting more potential
buyers. Our country's foreign ministry assists international trade on occasion. Participating
in trade shows, according to the Export Development Team, makes exporting easier and
more efficient.

As Pran wants to enter in Malaysian market they are waiting for buyers’ feedback from
Indonesia. After receiving feedback from potential buyers, the company sends samples to
the buyer of Indonesia based on his needs and preferences. The company is well aware of
the importance of sending samples. When sending to Indonesian market, the organization
does not hesitate to place orders based on the demands of the buyer. Because the
organization believes that any hesitation at this stage could stymie the overall process.

The buyer can frequently visit the factory to inspect the product quality and the
environment. In general, the organization always welcomes buyers and this method of
approach because it allows the organization to read the potential importer and increases the
buyer's involvement.

If the buyer is happy with all the production facilities and products of his choice, the
organization will begin negotiating with him on price and the total value chain.

After the buyer and the organization have agreed on the pricing and value chain, both the
buyer and the organization must agree on the terms FOB (Freight on Board) or CNF
(Container on Board) (Cost and Freight). For FOB, our responsibility ends with the
movement of the consignment to the preferred port. For the CNF, we are solely responsible
for delivering the consignment to the buyers' warehouse.

The company must prepare a sale contract after deciding on the consignment mode. The
sales contract is an agreement between the buyer and the seller that details the procedure
and other formalities. The buyer establishes the payment mode and procedure after
receiving the sales contract.

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There are four ways in transferring fund in Indonesia Pran can follow.

Cash in Advance: The buyers pay for the entire consignment or a portion of it in
advance. The buyer may pay a portion of the purchase price in advance, such as
30% to 40%, along with the buyer's document.

Telegraphic Transfer/Electronic Transfer: - In this procedure, the buyer pays

the value of the consignment via TT or ET.

LC: The export is done using a Letter of Credit in this procedure.

Full Party Payment: After receiving the goods, the buyer makes a full payment to
the seller. This type of transaction is usually done with long-term buyers.

After deciding on a payment method, the organization obtains XP from the bank, FITO
paper from the Ministry of Agriculture, and other types of authorization papers from the
Ministry of Agriculture.

The company had to fix the vessel from their side after completing the necessary
documentation and paperwork end. The shipping line is chosen based on the cost and
duration of the trip.

The Head Office sends the buyer a copy of the Bill of Lading, Sales Contract, Commercial
Invoice, BL copy with stamp, Health Certificates, and other necessary documents after the
shipment is completed.

After arrival of the shipment in Indonesian port the CNF clear the container and forward it
to the buyer’s depot, and thus completes the exporting methodology of Pran for Indonesia.

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iv. Since Bangladesh & Indonesia does not have any direct connectivity, product
shipment might be quite a challenge for Pran. How would you address this issue?
As Bangladesh and Indonesia do not have any direct air connectivity and the distance
between these two countries are more than 4300 miles so it is a big challenge for Pran-RFL
Group to export their products to Indonesia. Also, most of the export products to Indonesia
by Pran-RFL Group are juice and food products which are easily perishable and is not
favorable to export through ships. Ship can take up to 15 days to export products from
Bangladesh to Indonesia with multiple stops in Thailand, Malaysia & Singapore whereas
direct flight takes only 4.5 hours.

Bangladeshi products already have a good reputation in Indonesia due to recent

pharmaceutical and apparel export worth over $1.5 billion, so the prospectus of Pran’s
success in the Indonesian market, especially in the Halal sector is tremendous. Besides, the
direct flight barrier is also coming to an end as Garuda Indonesia Airlines asked permission
for commercial flights to Dhaka from Jakarta in January 2021 and still waiting for approval
from Civil Aviation Authority of Bangladesh (CAAB). So, if the agreement of commercial
flights is signed once then the exporting will be hassle free through direct flights.

Till than Pran-RFL group can utilize their Malaysian exporting procedure. As Pran-RFL
group is exporting products to Malaysia since 2016, it is a great opportunity for them to
use this route to export products in Indonesia too. Dhaka to Malaysia have sufficient
commercial flights daily and also operates cargo-only flights on a regular basis. Pran-RFL
group already ships their products to Malaysia by using those commercial flights and air
cargos. But the point is shipping Pran’s products from Bangladesh to Malaysia and then
Malaysia to Indonesia will be more expensive. Though Malaysia and Indonesia are
neighbor countries, and it is easy to ship anything from one country to another, but the
expense is still a headache for Pran because of tax.

Both Malaysia and Indonesia are the part of the ASEAN or Association of Southeast Asian
Nations. There is an agreement between ASEAN countries which is “ASEAN Free Trade
Agreement” for tariff free shipment in ASEAN free trade area. Utilizing this agreement,
Pran can lower the customs and excise duty while transiting in Malaysia and lower their
costs significantly.

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On the other hand, Bangladesh & Indonesia are in the third phase of negotiating a trade
deal that will entitle tariff free export-import alongside visa-free travel, which is already in
place.

So, finally, we can say that despite of not having any direct connectivity between
Bangladesh and Indonesia, Pran can still export their products to Indonesia utilizing their
Malaysian operations. But when the countries hace established direct air connectivity and
signed a Preferential Trade Agreement, the products can be exported much more efficiently
and seamlessly. It is very much important to note that Indonesia is a huge market for Pran
as the consumer demands are on the rise and people are preferring Halal certified products
over others. Thus, taking the challenge of indirect export waiting for the diplomatic success
can be totally worth it for Pran in future.

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