Analysis of Emerging Furniture Industry

of Bangladesh

1
 INTERNSHIP REPORT ON
Analysis of Emerging Furniture Industry of Bangladesh

Prepared for:
Mr. Showvonick Datta
Lecturer
BRAC Business School
BRAC University

Prepared By:
Moyed Hasib Khan
11104122

Date of Submission:
07 September, 2016

2
 Letter of Transmittal
Date: 07 September, 2016

Mr. Showvonick Datta

Lecturer,
BRAC Business School
BRAC University
Mohakhali, Dhaka.

Subject: Submission of Internship Report.

Mr. Showvonick Datta,

It is my great pleasure to submit my internship report to your approval.

My internship report is prepared on the topic Analysis of Emerging Furniture Industry of

Bangladesh. I have found this topic very interesting and insightful. I have tried to put my
best effort to deliver an in-depth analysis on this subject. The internship program has been a
great learning experience for me. I have tried to put all my gathered knowledge learnt through
the Bachelor of Business Program to prepare this internship report. I have tried to fulfill the
entire requirement for the internship report. I hope that you would consider my limitations
and mistakes.

I would be obliged to fulfill any query of yours regarding the report. I hope that you will
justify my internship report considering my limitations

Sincerely,

Moyed Hasib Khan

ID: 11104122
BRAC Business School
BRAC University

3
 Acknowledgement
First I would like to thank almighty to provide me enough strength, patient and ability to
work on this report titled Analysis of Emerging Furniture Industry of Bangladesh.
Next I would like to pay my hurtful gratitude to my honorable Internship Supervisor, Mr.
Showvonick Datta, lecturer, BRAC Business School, BRAC University. Mr. Showvonick
Datta has been a great supporting figure throughout the internship program. Mr. Showvonick
Datta has maintained constant supervision and provided me with necessary guideline to
prepare the internship report. I am very much thankful to Mr. Showvonick Datta for his
constant mentoring throughout the internship period.

Again, I would like to greatly thank my field supervisor Mr. Meher Manjur Razib, Assistant
Manager, Accounting and Finance, Nadia Furniture Limited to give me the chance to carry
out my internship program and provide me with essential information to prepare my report. I
have been a great learning experience and am greatly indebted to you.

Lastly I would like pay my gratitude to Mr. Syed Shahjahn lafit, Deputy Chief Accountant,
Nadia Furniture Limited; Tahmina Akter Sonia, Senior Executive, Nadia Furniture Limited to
help me to make the internship process a great learning experience

4
 Table of content

List of Figure ............................................................................................................................................ 8

List of Table ............................................................................................................................................. 9
Executive summary ............................................................................................................................... 10
Introduction .......................................................................................................................................... 11
CHAPTER 1 ............................................................................................................................................ 12
1.1 Company Overview ............................................................................................................... 13
1.2 USP (Unique Selling Proposition) ................................................................................................ 13
1.3Vision............................................................................................................................................ 13
1.4Mission: ........................................................................................................................................ 14
1.5Philosophy:................................................................................................................................... 14
1.6 Shareholdings and Position of the Sponsors: ............................................................................. 14
1.7Organizational Hierarchy ............................................................................................................. 15
1.8Manufacturing and Design:.......................................................................................................... 15
1.9Product and Service ..................................................................................................................... 16
1.9.1 Office Furniture: ................................................................................................................... 17
1.9.2 Children Furniture: ............................................................................................................... 17
1.9.3 Bedroom Furniture: ............................................................................................................. 17
1.9.4 Living Room Furniture: ......................................................................................................... 18
1.9.5 Dining Room Furniture:........................................................................................................ 18
1.9.6 Doors: ................................................................................................................................... 18
1.9.7 Lifestyle Furniture: ............................................................................................................... 19
1.10Office and Sales Outlets: ............................................................................................................ 20
1.10.1 Sales Outlets: ..................................................................................................................... 20
1.10.2 Office .................................................................................................................................. 21
1.11Compliance Issues: ..................................................................................................................... 21
1.12Achievements: ........................................................................................................................... 21
1.13 Responsibility: ........................................................................................................................... 22
1.13.1 Updating TAX Ledger from franchise Showroom Ledger .................................................. 22
1.13.2Preparing sells journal ........................................................................................................ 22
1.13.3 Sorting and stratifying purchase bills and cherub or cash voucher according to thesellers
...................................................................................................................................................... 22

5
 1.13.4 Recording cash purchase in cash book .............................................................................. 23
1.13.5 Writing report of UN labor Development Program ......................................................... 23
1.13.6 Typing business letters....................................................................................................... 23
1.13.7 Helping with external office work ...................................................................................... 23
1.13.8 Other office activities ......................................................................................................... 24
1.16Learning ..................................................................................................................................... 24
CHAPTER 2 ............................................................................................................................................ 25
2.1 Introduction ................................................................................................................................ 26
2.2 Problem statement ..................................................................................................................... 27
2.3Purpose of the Study.................................................................................................................... 27
2.4Objective of the Study ................................................................................................................. 28
2.4 Timeline....................................................................................................................................... 28
2.5 Limitations: ................................................................................................................................. 28
2.6 Methodology:.............................................................................................................................. 29
2.6.1 Types of Data: ...................................................................................................................... 29
2.6.2 Source of the Data: .............................................................................................................. 29
2.7PESTEL Analysis ............................................................................................................................ 30
2.7.1 Economical ........................................................................................................................... 31
2.7.2 Technological ....................................................................................................................... 34
2.7.3 Environmental: ..................................................................................................................... 34
2.8 SWOT Analysis............................................................................................................................. 35
2.8.1 SWOT Analysis...................................................................................................................... 36
2.9 Factors Regarding the growth of the Furniture Industry of Bangladesh .................................... 37
2.9.1 Boost in imports of furniture: .............................................................................................. 37
2.9.2 Market in Transition: ........................................................................................................... 38
2.9.3 Consumer Oriented Approach: ............................................................................................ 38
2.9.4 Availability and Low Budget of Labor .................................................................................. 39
2.9.5 Increasing Demand .............................................................................................................. 40
2.9.6 Existing Raw Material ........................................................................................................... 40
2.9.7 Financial services ................................................................................................................. 41
2.10 Growth of Nadia Furniture Limited ........................................................................................... 41
Chapter 3............................................................................................................................................... 42
3.1 Findings ....................................................................................................................................... 43
3.2 Conclusion: .................................................................................................................................. 43

6
 3.3 Recommendations .................................................................................................................. 44
Bibliography .......................................................................................................................................... 45

7
 List of Figure
Figure 1: Organizational Hierarchy..13

Figure 2: PESTEL analysis.28

Figure 3: GDP growth of Bangladesh....29

Figure 4: Exchange Rate of Bangladesh30

Figure 5: Bangladesh Disposable Personal.30

Figure 6: Bangladesh: Household consumptions..31

Figure 7: Tread of Bangladesh Furniture Export.37

Source 8: Lanka Bangla Securities Limited (LSBL) research estimate....38

Figure 9: Disposable Personal Income of Bangladesh39

8
List of Table
Table 1: Position and Shareholding of the sponsors ..14

Table 2: Office Division and Address.20

Table 3: Furniture Industry of Bangladesh at a glance...25

Table 4: Local Market Share at Sales Price.34

Table 5: Comparison between Market and Nadia Furniture Limited...42

9
 Executive summary
Furniture industry is a potential industry of Bangladesh. Furniture industry of Bangladesh has
evolved from cottage industry and turned into huge industry with great potential. The growth
of the industry is rather impressive. Among this industry Nadia Furniture Ltd. has proved
itself as one of the major names. It has been in the business since 1991. Due to the
development of socio-economy consumers are demanding more quality, durability and
convenience. Nadia Furniture Limited utilized those entire elements and delivered them to
the customers. This is the very reason for their rapid success.

Being one of the fastest growing sectors of Bangladesh, the furniture industry could well be
the next economy booster. This report primarily puts light on this vast industry by analyzing
the contributing factors that affects the industry directly and indirectly. This factor would be
analyzed with PASTEL analysis and Porter's five forces model. Using this assumption it
should be tested whether these factors affect the growth rate of Nadia furniture limited.

10
Introduction
Bangladesh furniture is constantly flourishing in last two decades. The industry is turning
over a great deal of revenue. The industry has created huge market space. As the market
grows it creates a healthy competitive market and the demand for modern furniture is
constantly rising. As a result many companies came into life among the Nadia Furniture out
shined its small scale peers and came to the big light along with the other market leaders. Day
by day Nadia Furniture Limited is climbing up the ladder with their innovation and services.

11
CHAPTER 1
Company Overview

12
1.1 Company Overview

Nadia Furniture Limited opened its door in 1991. From the very beginning the company is
determined to create customer value through quality product and best quality service. The
very determination pushed the company to move the forward in the big competition and
sustain. Piece by piece the company earned its reputation with quality products and services.
This very reputation gave them the strength to push forward to become a promising name in
the arena of furniture manufacturing industry of Bangladesh.

Nadia Furniture Limited believes in reinventing and maintaining the product quality along
with reevaluating and upgrading the service. To ensure that Nadia Furniture Limited have
employed experienced and skilled engineers, designer and technicians in their manufacturing
facility. These dedicated and hardworking employees maintain the best quality from raw
material processing to end products.

Nadia Furniture Limited aims at offering unique and variety of designs tagged with
competitive price and after sales service for our valued customers trust and faith enabling
them to enjoy life thoroughly through our products

1.2 USP (Unique Selling Proposition)

Symbol of Status

1.3 Vision

To be the leading furniture manufacturer in Bangladesh by creating value through top quality
products, affordable price and consistent customer service.

13
1.4 Mission

Nadia Furnitures mission is to design and build top quality furniture for its clients at the
same time providing harmonious environment for its employees and surrounding community.

Based on solid values and state of the art modern engineering, the company operates with a
participative management style and sustainable development practices in order to foster
economic growth and encourage its employees personal development.

1.5 Philosophy

Committed to offer innovative, cost-effective and reliable products which fully

accommodate the purpose intended to our clients.

Focused on upstream management for compliance with quality and timeline.

To create a healthy working environment which enables the employees to grow and
give in their best effort.

1.6 Shareholdings and Position of the Sponsors

Currently Nadia Furniture Limited has issued four lac shares. The sponsors holding the shares
and their position in the organization are:

Name of Sponsor Position Number of Shares Taken

A. Karim Mojumdar Managing Director 3,20,000 Shares(80%)

Mrs. Shelly Mojumdar Chairman 40,000 Shares(10%)

Sadia Afrin Director 40,000 Shares(10%)

Total Number of Shares 400,000 (Four Lac) Shares

Table 1: Position and Shareholding of the sponsors.

A. Karim Mojumdar Is founder and managing director of Nadia Furniture Limited.

14
1.7 Organizational Hierarchy

Figure 1: Organizational Hierarchy

1.8 Manufacturing and Design

Nadia Furniture Limited designs, develops and produces furniture in its adequately equipped
factory using state-of-the-art machinery from leading brands. With a fully standardized
production line, products rolling out are made to last and quality is ensured at every step of
production by its quality control team.

Working together, Nadia Furniture Limited is able to manufacture every product with
extreme precision resulting in perfectly assembled and consistently identical furniture.

Nadia Furniture Limited has set extremely high standards and consequently, the quality of its
products exceeds industry norms.

All our products are designed differently and go through strict quality control after
production. We use selected raw materials such as 100% seasoned and treated natural wood,
the best quality MDF Boards, Hardware, Accessories and world famous lacquer items.

To meet the growing demand of product Nadia Furniture has increased its production area at
the previous factory located at Merul Badda. But it needs more production to meet the
demand. Now to meet the current demand of product and future growth the management

15
shifted the factory at Singair, Manikganj from October2015 and going to expand more. It will
adopt some advanced technology to increase production demand and also increase the
production line. The major improvement options are:

Introduction of Knock-down furniture in bulk volume

Introduction of CNC (Computer Numeric Controlled) machines

Introduction of own seasoning (kiln-dry) facility with saw dust

Hi-tech UV set up for lacquer finishing

Large warehouse facility

Trolley saw mill

Office Furniture production line

Door production line

The new factory with all the above facilities will boost up the business and Nadia Furniture
will expand the business all over the country.

1.9Product and Service

Nadia Furniture Limited is increasing their product line with new product every season. To
this day Nadia Furniture Limited has created a vast collection of products. They manufacture
different products from office furniture to home furniture. The products of Nadia Furniture
Limited are segmented in 6 different categories. They are:

Office

Children

Bedroom

Living room

Dining Room

Doors

Lifestyle

16
1.9.1 Office Furniture:
Available furniture Sample
Office Table
Revolving Chair
Computer table

1.9.2 Children Furniture:

Available furniture Sample
Bunk Bed
Child Bed
Children Bookshelf
Computer Table
Reading Table
Toy Rack

1.9.3 Bedroom Furniture:

Available furniture Sample
Almirah
Bed
Bed Side Table
Cabinet
Chest of drawer
Coat Hanger
Dressing Sitter
Dressing table
Rocking Chair

17
1.9.4 Living Room Furniture:
Available furniture Sample
Bookshelf
Center Table
Divan
Magazine Trolley
Sofa
TV Trolley

1.9.5 Dining Room Furniture:

Available furniture Sample
Dinning Set
Dining Table
Oven Box
Showcase
Side Board

1.9.6 Doors:
Available furniture Sample
Doors

18
1.9.7 Lifestyle Furniture:
Available furniture Sample
Antique Collection
Carpet
Clock
Coffee Sitter and Table
Corner Stand/Rack
Flower/Flower Vase
Glass Frame
Iron Stand
Lamp
Paintings
Photo Frame
Showpiece
Statue
Tea Set
Trolley
Wall Shelf
Miscellaneous

19
1.10 Office and Sales Outlets

1.10.1 Sales Outlets

Nadia Furniture Limited mostly facilitates their retails through franchise. The company has
spread their operation through these franchise showrooms. The goal is to overcome the
geographical barrier and reach all levels of customers. Currently Nadia Furniture Limited has
cooperating 14 showrooms in the whole country.

Division Address
Dhaka Hazipara
Uttara
Mirpur
Gulshan Link Road
Banasree
Mohammadpur
Jamuna Future Park
Feni S S K Road
Comilla Race Course, Chasongacha
Bogra Shahid Abdul Jobbar Road,
Jolesswari Tola
Khulna Daalmil Moar
Munshigonj Sadar Hospital Road, Manikpur
Brahmanbaria East Paikpara
Mymenshingh Dhupakhola
Sylhet Meera Bazar
Table 2: Office Division and Address

20
1.10.2 Office
Nadia Furniture Limited conducts business through 1 corporate office located in Hazipara
Dhaka. The headquarters includes the senior management of the company and all sales and
Administrative functions including Marketing, Research and Development, Finance and
Accounting and Customer Service. The primary purpose of the corporate office is to facilitate
commercial and banking activity. The corporate office also facilitates franchises, create
marketing policies. The corporates office sources raw material from domestic suppliers or
through import.
Nadia Furniture Limited maintains their inventory of finished goods in separate location. The
inventory is maintained by a different office located in Badda, Dhaka.

1.11 Compliance Issues

NADIA Furniture has compliance as ISO 9001:2008 from 11th December 2014. Its
certification no is AJA11/15439.

1.12 Achievements:
NADIA Furniture Ltd. achieve Special prize after successful participation at Dhaka
International Trade Fair2013 and 2014, and Appreciation Award for stall for Beautification
in 9th National Furniture Fair.
It contain membership of Bangladesh Furniture Industries Owners Association, Bangladesh
Furniture Exporters Association (BFEA) and others

21
1.13 Responsibility

1.13.1 Updating TAX Ledger from franchise Showroom Ledger

My primary responsibility was updating Tax ledger. Although the organization maintains
their accounting activity with Tally Accounting Software, the Tax ledger is being maintained
in ledge books. Initially I was instructed to observe my secondary field super visor to learn
how to record the ledger and resolving necessary queries for the process. After learning the
recording process I have been with the work. They provided me the ledger of different
showrooms. These ledgers contained sells to the showrooms (inventory credited to the
franchise showroom from warehouse) and cash deposited to the bank (cash paid by the
franchise showroom). In order first I had to crosscheck the transactions with the separate sells
journals, if the transaction exists in the journal I had to write down the sells transactions in
tax ledger from the franchise showroom ledger.

1.13.2 Preparing sells journal

Preparing sells journal was another of my primary duties. This journal is also kept in
traditional books. I was instructed to write down the remaining journal entries of the fiscal
year. I was provided with the sells transaction information. My supervisor crossed out the
unwanted transactions from the information. I was instructed to write them down accordingly

1.13.3 Sorting and stratifying purchase bills and cherub or cash voucher
according to the sellers
Another job responsibility of mine was sorting and storing purchase bills and cheque or cash
vouchers in files designated to sellers. The office collected the bills and vouchers from the
seller and stores them in unorganized stack. My task was to sort and organize the individual
bills and their designated vouchers. Than I had to store them to their designated files
according to the sellers.

22
1.13.4 Recording cash purchase in cash book
Two weeks since my joining, I was assigned to update the cash book on weekly basis. As
explained before i had to sort and file the purchase bills and vouchers. The organization daily
pays a number of suppliers. For the process the organization collects the money receipt and
the supplier had to sign on a cash voucher to collect the cheque or cash. My responsibility
was to update the cash book at the end of each week according to the bills and vouchers.

1.13.5 Writing report of UN labor Development Program

Nadia furniture limited has been granted fund by United Nation Labor Development
program to undertake labor training programs. This funding aims to develop the labors
situation by providing adequate training. The training mostly consists of proper method of
production/handcraft, work space safety and training for hazardous situations (i.e. fire,
earthquake and other natural or manmade hazards). I was instructed by my field supervisor to
write a part of the report. I had to describe how the training program is being conducted. I had
to describe each of the crafting training and how the instructor delivers them to the trainees
and how the instructor evaluates the trainees. Lastly how the instructor organizes safety drills
for hazardous situations.

1.13.6 Typing business letters

Another responsibility of mine was to write business letters. The organization daily needed to
conduct several official formalities through business letters. My responsibility was to type
business letters as instructed. Then I had to draft the letter to be proofed by the field
supervisor. After proofing I needed to retype to resolve the mistakes or changes. Then it had
to be printed in company logo printed paper and deliver it to the supervisor.

1.13.7 Helping with external office work

Occasionally I was sent to conduct some bank work or to other offices and showrooms to
deliver paper works. I was mostly sent to banks to deliver LC (letter of Credit) paper work or
to withdraw cash. I also had to visit other offices to deliver official paperworks.

23
1.13.8 Other office activities

Lastly I also had to conduct small office activities. Like, photocopying, printing, preparing
cash or cheque voucher for payment, sampling documents, proof reading letters and contracts

1.14 Learning

Working in a corporate office has been a great source of experience and enlightenment.
During the internship program I was mentored properly which resulted into my learning
about the accounts department. Due to the interaction with other employees I was able to
better understanding of the office environment and culture. I also acquired the practical
knowledge about job duty and responsibility and how to make sure that the responsibilities
and requirements are fulfilled properly.

24
 CHAPTER 2
Analysis of Emerging Furniture
Industry of Bangladesh

25
2.1 Introduction

Furniture Industry in Bangladesh is showing great potential. The industry is growing every
year by creating value through quality and convenience. The industry has flourished form its
cottage industries days and has transformed into a major industry. The growth of the industry
is increasing with each passing years. The industry has an estimated worth of BDT 67 billion.
Bangladesh has over 80,000 enterprises are currently involved with the furniture industry and
an estimated 41,000 of them are furniture manufactures (source: Bangladesh Furniture
Association). Almost 7,000 of them are registered as furniture related organization. Although
99% percent of the non-brand enterprises have not yet established themselves as brands or
well-known brands. But due to the impressive growth rate more and more entrepreneurs are
being motivated to enter into the furniture business. Again the existing enterprises are
gradually getting hold of the brand building trend. That is an indicator for a successful
industry.

The industry is providing the growing consumer demand with manufacturing domestically or
by importing. Previously the industry was heavily relied on imported furniture from
Malaysia, India, and Thailand. The domestic manufacturers took their time but finally they
were able to take the major shares of the market by providing quality end products. The
industry is currently employing over 2.2 million workers with the capacity of 3 million
(source: The Financial express, 12 August 2012)

Again furniture industry in Bangladesh is also putting their marks on exports. Currently the
industry has an average exporting mark of USD 38.9 million (source: Bangladesh Export
Promotion Burro (EPB). By 2020 the scale are estimated to reach USD 100 million (source:
The Daily Star, 24 March 2010).

Other than diverse use of products such as natural and processed wood, MDF, laminated
board, particle board, rattan/ bamboo and wrought iron which dominate the current backed by
good number of forward and backward linkages. These include a large number of national
and international suppliers of different raw materials. Furthermore, with a wage rate which
starts from $0.06 and goes up to a maximum of $0.40. Bangladesh serves as the ideal place
where one can gain multiple competitive edges which includes skilled workers and low
production costs.

26
Number of Registered Enterprises 7,000
Freelance Carpenters and
74,926
Carpenters Households
Employment App. 274095
Market Size App. BDT 80,000 million
Otobi, HATIL, Navana,
Major Players
Partex, Akhter
(Furniture makers net in $27m in FY12 , 2012)

Table 3: Furniture Industry of Bangladesh at a glance

The industry is a prosperous and ever growing. It is fulfilling the demand of every stage of
the society.

2.2 Problem statement

Furniture industry of Bangladesh has become a huge part of the economy. The industry has
existed in Bangladesh since several decades but the new wave of organized business
approach has changed the image of the study. Very little initiatives have been taken to
research why the industry is transitioning towards this organized business approach. This
internship report is dedicated to contribute to the information gap.

2.3 Purpose of the Study

This internship report is a brief analysis on Emerging Furniture Industry of Bangladesh.

The study focuses on the elements playing role in the growth of the furniture industry in
Bangladesh. This study will focus on the factors affecting the growth rate of the industry
positively or negatively. The study also will put light on how these factors are effecting the
growth of Nadia Furniture Limited.

27
2.4 Objective of the Study

This internship report is an analysis of factors contributing in the growth of furniture industry
of Bangladesh and their effect regarding Nadia Furniture Limited. The specific objectives of
the study are:

To give a brief picture of furniture industry of Bangladesh

To identify the factors that affect the industry from small to big level enterprises

To analyses how these factors affect Nadia Furniture Limited to achieve their stated
objective.

2.4 Timeline

The internship report covers the 10 year time period from 2007 to 2016. It is suitable to work
with this long period. As the industry has a vast size, many of the variables affects the
industry in long-term.

2.5 Limitations

Furniture industry of Bangladesh is a vast subject to study. The industry is affected by many
identifiable and non-identifiable variables. The internship period was only for 12 months.
Therefore the report had to prepare the report in this small time window. Again there were
some other limitations. All the limitations are given below given below:

Limited time to study a big industry

Inability to collect required primary data due to the privacy policy of the
organization

Insufficient source of secondary data

Insufficient real life experience of the furniture industry

28
2.6 Methodology

This internship report is a descriptive type of research. It gives an overview of the

Bangladesh furniture industry. The report has been prepared with both primary and secondary
data.

2.6.1 Types of Data

There are two types of data:

Primary Data: Prima data are those which researcher gathers directly from the source
or by experiencing or observing the subject. For example, data collected through a
survey is considered as primary data.

Secondary Data: Secondary data are those which have been collected from indirect
sources. For example, data from a previous research or newspaper are considered
secondary data.

2.6.2 Source of the Data

Primary sources

Internal data from Nadia Furniture Limited

Inquiry through direct conversation

Secondary Data:

Financial reports of Nadia Furniture Limited

Annual reports

Articles from newspaper

Articles procured from the internet

Reports published by financial organizations

29
2.7PESTEL Analysis

PESTEL analysis is used to analyses the key factors that affect an organization. These effects
can prove both negative and positive for an organization in terms of creating opportunity.
This is a simple but powerful tool to effectively analyse an organizations survival chances.

PESTEL analysis thoroughly analyses Political, Economic, Social, and Technological,

Environmental and legal forces of a business or organizational environment, to identify their
potential. The goals of doing PESTEL analysis are:

Identify the external factors

After identifying provide assumption for different factors

Analyze the overall threat or opportunity of the organization

Figure 2: PESTEL analysis

The PESTEL analysis of furniture industry of Bangladesh are given below:

30
2.7.1 Economical

2.7.1.1 GDP growth

In recent years the growth of Bangladesh GDP has become rather impressive. This is
effecting the business environments to grow.

Figure 3: GDP growth of Bangladesh

Bangladesh currently has GDP close to USD 1950.08 billion . This is a major contributor, in
the development of the industry. The healthy economy is giving the industry the space to
divert to an organized approach.

2.7.1.3 Exchange Rate

Recently BTD has declined against USD. It has been a favorable for the furniture export. But
due to the depreciation of USD.

Figure 4: Exchange Rate of Bangladesh

Import duty has been increased to regulate the market.

31
2.7.1.4 Disposable Personal Income
The trend of the disposable income of the consumer has been rising since 2012. This is a
good indicator for the furniture industry. Because people have now more money to spare. The
furniture industry can grab this opportunity improve the sales.

Figure 5: Bangladesh Disposable Personal

Currently the average personal disposable income is BDT 52321. With this amount of
disposable income people are spending more on household products, which includes
furniture.

2.7.1.6 Consumption Level

In recent years the growth of consumption has increase. As a result people are spending more
on consumer goods

Figure 6: Bangladesh: Household consumptions

32
The huge change in disposables income has affected volume of consumption. The increase in
consumption of furniture will facilitate more furniture production volume.

2.7.1.6 Spending on Furniture

According to a report published by Canadian International Development Agency the
domestic consumption growth rate of furniture in 20% (Katalyst)

Firm Size Micro and Small Medium Total

Local Market share at sales price (Billion BDT) 42.20 24.45 66.65
Source: (EU INSPIRED, 2013)

Table 4: Local Market Share at Sales Price

This growth rate reflects on average annual sales and profit of the furniture industry

2.7.1.7 Labor Cost

Bangladesh has availability to low wage labor. In comparison with its other Asian
counterparts pay average USD 120. Where Bangladesh pays average of USD 24 to 120 per
month. With a wage rate which starts from $0.06 and goes up to a maximum of $0.40.
Bangladesh serves as the ideal place where one can gain multiple competitive edges which
includes skilled workers and low production costs.

Although the Bangladeshi economy has its ups and downs but mostly the economic factors
are favorable to the furniture industry.

33
2.7.2 Technological

Bangladesh furniture industry developed from the cottage industry. At the time the crafting
were done mostly by hand and the raw material was also tradition. But from 90s the industry
started to change its face. A new industry sprung up with the increasing demand of the
customers. The solution to meet this kind of huge demand is to incorporate technology. The
organizations quickly grabbed the opportunity. And the adaptation changed the whole
scenario of industry.

This days manufacturers are using cutting edge technology to increase the volume of the
production. Again availability of new kind of raw materials like laminated board,
particleboard, and rattan/bamboo has made the business more versatile and profitable. Raw
material that generally is being used in the industry is

Wood

Melamine laminated chip board

MDF

Cane and metal

Rattan or bamboo

Plywood

Metal Tube

2.7.3 Environmental

With the emergence of globalization people and the government are more aware about the
nature preservation. The impending threat of global warming has made people more concern
and the result is, more and more people have forest conservation mentality. For this reason
people are getting more oriented towards metal and plastic furniture. This has given the
underdog of the industry to create new extension market. The result is a market with diverse
product line. All thanks to the environmental concern.

34
2.8 SWOT Analysis

SWOT analysis is an essential tool to a business environment. The analysis puts light on the
strength, weakness, opportunity and threats of a business environment. The goal of the
SWOT analysis is to thoroughly analyses the internal and external factor and assess the
potential of the environment.

The purpose of SWOT analyzing the furniture industry is to identify the internal and external
factors that influence industry positively and negatively. And valuate the position of Nadia
Furniture Limited with the assessment.

Factors incorporating SWOT analysis are:

Strength

Weakness

Opportunity

Threat

35
2.8.1 SWOT Analysis
Strength Weakness

Cheap labor cost Unavailable Raw Material

Available work force High Import Duty on Raw Material
Experienced workforce Lack of raw material processing
Flexible work Force services
Positive economic growth rate Lack of qualified designer
Export potential High Capital Cost
Existing Raw Material Unavailable Capital for small scale
producers

Opportunity Threat

Domestic Economic Growth Political instability

Increasing Global Demand High Import Duty
Exemption on Import Duty Disruption in Electricity supply
Experienced Work Force Threat to traditional carpentry
Ship Building Industry

The PESTEL and SWOT analysis suggest that the furniture industry is constantly facing
many barriers. Political barrier seems to be the biggest barrier and there are some minor
economic and structural problems. Besides these most of the contributing factors are
favorable to the growth of the furniture industry. It makes the furniture industry an industry
with potential of greater progress.

Again as a rising name in furniture industry Nadia Furniture Limited is expected to affected
similarly by the factors contributing the industry and follow the same growth trend as the
industry.

36
2.9 Factors Regarding the growth of the Furniture Industry of Bangladesh

2.9.1 Boost in imports of furniture

Bangladesh furniture industry is noticeably climbing u in the export market. In recent years
Asia as captured the lion shares of world export market. With the direction of wind
Bangladesh furniture industry is also progressing. The industrial approach has given the
furniture industry the ability to produce products in different shapes and requirement. Again
the sourcing of raw materials from different countries is a key factor for the quality of the
product. These traits are attracting foreign buyers. These aspects are providing the furniture
industry a great boost in import. The CAGR (Compound Annual Growth Rate) of furniture
has arrived on 104% in recent years (EPB-Export Promotion Burro).

Source: Export Promotion Burro

Figure 7: Tread of Bangladesh Furniture Export

Although the in 2015 the export of furniture in Bangladesh fall by USD 3 million but it is still
quite impressive in contrast with the past years. The local importers have captured the
markets of US, Europe and East-Asia. This expansion in export is big aspect for the increased
growth of Bangladesh furniture industry.

37
2.9.2 Market in Transition

With the wave of industrialization the furniture industry has also moved its production styles.
Owners are leaning over to more and more structured production. The characteristics are
giving the market an image with the supplied product quality and image. This trend is making
the business owners to move to more organized approach. Akhtar, HATIL, Otobi are the
outcome of this transition. These companies are expanding by putting their network in in
every possible cities and suburbs through the country. This approach of the industry is
creating a new image for the furniture manufacturer. Along with it the manufactures are also
putting emphasis on quality of the end product. This is a major contributing factor in the
expansion of furniture industry.

2.9.3 Consumer Oriented Approach

The companies are directing their seals methods towards more consumers oriented. Due to
the industrial wave the consumers are becoming are demanding more diversified product line.
Again with the increased amount of urbanization the life style of people is constantly
changing. This transition has been identified by the corporations. To implement this situation
the organization are approaching with more consumer oriented.

These organizations are attracting the consumers by providing wide-ranging furniture and by
visualizing them with the consumers lifestyle. The companies are shaping the demand by
through various marketing approach. Like they are creating the interior of the outlets like
modern households. The interior does not only use e the furniture products but other
supporting objects like books, show pieces, kitchen utensils etc. In this environment the
buyers can easily visualize the product in their home. Again these organizations are providing
the customers with many services like home deliveries, after sells maintenances. Consumers
are getting more sophisticated. By keeping their lifestyle in mind the organizations are
providingmodern products.

38
 Source 8: Lanka Bangla Securities Limited (LSBL) research estimate

Figure: Market share distribution of organized furniture manufacturers of Bangladesh

The customer oriented sells method has proved as a great success for the organizations. The
customers are more attracted to this convenient facility which creates new demand for the
industry. This gives a big boost on sells. And this is an indicator for the industrys prosperity.

2.9.4 Availability and Low Budget of Labor

Bangladesh is one of the most convenient countries on terms of low expenses labor and their
availability. Wage rate ranging from 24-120 USD (EU INSPIRED, 2013)is really attractive in
terms of labor cost. Manufacturers are able to produce the product and cut the cost of
production lower at a same time. Again the labor iscomparatively easy to collect. In
comparison to other Asian country where the average wage rate is 120 USD (EU INSPIRED,
2013). Bangladesh possesses a great advantage to get edgein the competition.

Again, Bangladesh has a huge number of unemployed workforces. This is a positive situation
for the manufacturers to easily assemble required work force. This kind of criteria is a huge
advantage for the industry growth.

39
2.9.5 Increasing Demand

Bangladesh is enjoying remarkableeconomic growth in recent years. This growth has been
reflected on middle class and upper middle class. The middle class is population is growing
with each passing year. The again the growth of national economy has increased their
income. Leading to more disposable income.

Figure 9:Disposable Personal Income of Bangladesh.

As seen on the graph Bangladesh disposable income has doubled since 2012. In 2015 the
personal disposable income was BDT 5232 (EU INSPIRED, 2013). This new wave of
personal income is changing the lifestyle of the middle class. This is resulting into the raise of
demand in household equipments, which include Furniture

2.9.6 Existing Raw Material

The furniture industry partially relies on domestic raw materials. The domestic source supply
more than 40% (EU INSPIRED, 2013) of the industry demand. This raw material is mostly
comes from the forest of Chittagong division. As these raw materialsdo nothave have high
tax therefore it helps the manufacturers to lower the manufacturing cost to sustain in the
competition.

40
2.9.7 Financial services

With growing economy banks are providing the public with many financial services. Like
facilitating the credit card system makes it easier for customers to buy products easily again
bank now provide various consumer loans. This evolution is influencing the escalation of
furniture sells.

2.10 Growth of Nadia Furniture Limited

Compared to market leaders like Akhtar Furniture, Hatil, Otobi Nadia Furniture limited is
fairly new enterprise. The company was incorporated in 2012. Although the company started
its journey in 1991. This gives them the experience to come forward in organized business
with the target to create and enrich a brand. As a new entrant the company has a low capital
in comparison to the market leader but the real goal is to identify weather the company is
growing with the market trend.

(In thousand)

Year 2013 2014 2015

Organized Furniture Sector Market Value

18,506,400 21,745,000 25,332,900
(BDT)

Organized Furniture Sector Market Growth

18.50% 17.50% 16.50%
Rate

Nadia Furniture Limited Market Value 119,625 139,814 200,509

Nadia Furniture Market Growth Rate 36.24% 43.41%

Source Nadia Furniture Financial report and (EU INSPIRED, 2013)

Table 5: Comparison between Market and Nadia Furniture Limited

As given on the table Nadia Furniture limited still is a small scale company in comparison
with the big leaders. But their growth rate is quite impressive. Its growth is more than double
of the market rate. This is the indicator that the company is being influenced by the factors
that influences the industry.

41
 Chapter 3
Findings, Recommendations and
Conclusion

42
3.1 Findings

Import duty for the furniture industry is very high. This results into higher
manufacturing cost.

The furniture industry of Bangladesh is an essential source of export earnings.

Furniture industry is being greatly developed by the economic progress of

Bangladesh.

Consumes are getting more urbanized, due to this the demand of quality and
convenient product is increasing.

Political instability has proved to be a major setback for the furniture industry.

Out dated legislation is preventing the industry as efficient as is can be.

Due to the unavailability of major raw materials the industry reliesheavily on

imported raw materials.

The availability of work force is high.

3.2 Conclusion:

Bangladesh furniture industry history reflects its history of diverse cultures and their
progress. Furniture industry is a major industry in Bangladesh. It has proved its worth in
recent year by showing great development and growth. For decades the industry is delivering
quality product and service to customers convenience. The recent phenomenal of organized
business has given the industry a new identity. The industry is not confined in small
enterprises any more. It has flourished into a progressive industry and gradually moving
forward. The industry is heavily being influenced by many external factors. Among them
many factors are proving unfavorable. Although most of the factors affecting the industry are
encouraging towards the industry. These factors have made the industry a progressive
industry. In return the industry is favoring the nation by creating employment and
contributing in the economy.

43
Among the industry Nadia Furniture Limited is proving itself as a prosperous name.
Furniture has always been an integral part of us, keeping this in mind, the goal of Nadia
Furniture Limited is to mark itself as a highly reputed home and office furniture manufacturer
in the National and Global market ensuring that all furniture rolling out of its factory
maintains standard and quality. Nadia Furniture Limited has been inspired from its customers
and their choices to make complete authentic furniture by believing in Quality, high standard
and Customer Satisfaction first.

Success of the furniture is largely depends on effective resources and nursing of human
resource into real resource and utilization of proper resources along with the right use of
business environment will determine the growth of the furniture industry in Bangladesh.

3.3 Recommendations

As the industry is heavily competitive enterprises should focus more on promotional

activities to increase the sells.

Mechanized production system is needed to increase the efficiency. As most of the

small scale enterprises relies on handcrafting mechanized approach would make the
production more efficient.

More training facilities needed to train more efficient and skilled work force

Production of timber should be encouraged to minimize the reliance on imported raw

materials.

44
Bibliography
Furniture Industry of Bangladesh. (2010, January 25). The Financial Express.

Furniture makers net in $27m in FY12 . (2012, August 12). The Financial Express.

EU INSPIRED. (2013). Technical Assistance to Stimulate Applications for the SME Competitiveness
Grant Scheme. The European Unions INSPIRED Program for Bangladesh.

ISLAM, M. (2 0 1 2). Feasibility Analysis of. Dhaka: BRAC Business School.

Rahman, I. (2016, January 31). Market Insight: Bangladesh Furniture Industry. Retrieved 2016, from
lightcastlebd: http://www.lightcastlebd.com/blog/2016/01/market-insight-bangladesh-
furniture-industry

Reza, A. A., Rahman, A., and Alam, F. (2014). A Case Study and Analysis of Brothers Furniture Ltd.
Dhaka: Institute of Business Administration.

Khan, K. (2010, March 24). EPB to team up with Katalyst on furniture export. The Daily Star.

Nadia Furniture Ltd. (2015). COMPANY PROFILE 2015. Dhaka: Nadia Furniture Ltd.

Nadia Furniture Ltd. (2015). Extended Factory Complex at Fordnagar, Singair, Manikganj. Dhaka:
Nadia Furniture Ltd.

45