Executive summary: The last century has been the era of technological advancements but at the cost ofMother Nature. Now is the time to re-think and re-define this century for ensuring abeautiful sustainable green world for us and our future generations. We, GREENNAFCompany Pvt Ltd want to redefine this century as the age of ‘e’ where ‘e’ delineatesgreen sustainable solutions. In our country synthetic plastic bags and sacks have beenbanned since 2002 but in actuality, these synthetics are thriving in the marketplace. Ourtarget is to replace synthetic plastic derivative sacks and bags with light weight ‘Green’Kenaf bio-sacks and bags as eco-friendly alternatives. GREENNAF Company Pvt Ltd is the first low-cost, eco-friendly, biodegradable,recyclable and reusable household and industrial bio-sack and bag and wood-chipsubstitute producer from Kenaf in Bangladesh. It is a multistage company that willcultivate Kenaf and process its fibers in a plant to produce bio-sacks and bags i.e. e-bagsand e-sacks. To meet the deficit demand of 11,350 metric tons of raw materials forchip-board industries, GREENNAF will supply the Kenaf stem chips and hence alsoreduce deforestation. Due to high competition and favorable costs, the current allied fiber sackmarket is being downtrodden by synthetic plastic derivative sacks. GREENNAF’shigh yield state-of-the-art manufacturing plant will be able to significantly lower cost ofproduction and hence bring down the overall price of e-sacks and e-bags to give it acompetitive edge with synthetic sacks. Our aim is not to alienate the current allied fibersack industry but to act as a complementary industry alongside it. About 15000 sacks areneeded a day in eight northern districts but the five mills can hardly supply two-thirds ofthe demand. (Dr ABM Abdullah, Executive Director, JDPC).
Importance of our Project: Kenaf e-sacks and bags are environment friendly products and a naturalalternative with inherent advantages. They are completely biodegradable, whereas thetoxic effects of synthetics are so serious that several western countries have banned it foruse in food products. Production of synthetic bags and sacks deplete non-renewablenatural resources (Petroleum), is harmful to both human beings and the environment, andadds tons of carbon emissions into the air annually. GREENNAF’s e-sacks can be used for packing a wide range of industrial andagricultural goods such as grains, oil seeds, salt, sugar etc. Even then, there exists a hugesupply deficit in the existing market of the country as demand is greatly exceeding supplyof allied fiber bags. GREENNAF aims at meeting the deficit supply. GREENNAF willalso supply the Kenaf stem chips and hence also reduce deforestation.The e-sacks andbags are light-weight, have higher tensile strength than poly-sacks and are much moredurable than synthetics.Related project in the Bangladesh or in the world: Although this type of business firms are not available in Bangladesh but it hasvarious application in some other countries of the world. “Indian allied fiber company”is a big competitor in this sector. Recently this company has entered into the Brazilianmarket and capture 70 % market share. USA, China, Pakistan are also the big threats in this sector because they are thebiggest exporters of fiber sakes and bags in the world.Project proposal: In a nut shell, this is a eco friendly business firm which willproduce e-bag, sacks and wood chips that will reduce deforestation.
Organizational structure: Every organization follow a structure to operate their business effectively andefficiently. It represents a chain of command for every personnel in the organization. Our organizational structure would be as follows --------
Feasibility Analysis: (A) Technology analysis: GREENNAF will cultivate Kenaf in 6 hectares of land in Northern part of Bangladesh and use its fibers to make its products. The envisaged plant will produce 2,400,000 pieces of e-bags and e-sacks in 2011. The plant will operate two shifts, 8 hours each shift and for 300 days a year. Inputs required for the plant include electricity and water. Total power requirement is 40 kW (or about 200,000 kWh) and annual water consumption is estimated to be 2500 m3.(B)Financial analysis: The estimated project cost is BDT 21,104,100. It is an all equity business. The NPV of the project from 5-year financial projection is BDT 21,753,218. The payback period of our total initial investment is 1.80 years and 2.02 years in case of discounted payback period. Our IRR is 43%. The stress testing shows positive NPV in all the three cases- base (BDT 18,032,005.08), best (BDT 39,061,278.84) and worst (BDT 2,720,752.74). The social cost-benefit analysis also reveals positive social NPV of BDT 24674533.70 at 19.18 % discount rate and the social IRR of the project is 67%. (C) Environmental analysis: GREENNAF’s e-sacks are hydrocarbon-free and treated with non-toxic vegetableoils which do not produce off flavors and tastes when in contact with edible materials andare totally safe for storing edibles. The e-sacks and bags are light-weight, have highertensile strength than poly-sacks and are much more durable than synthetics. The lowextensibility of Kenaf results in the retention of the shape and size of the bags and sacks.The fiber absorbs water and hence minimizes the problems of drying of packedcommodities.
Cost benefits analysis:(A) Production and Co st details: Production can reach 16 to 20 tons/hectare of fibers in 160 days of growth and up to 25 tons/hectare under favorable conditions. 400,000 plants can be planted per hectare. GREENNAF plans to acquire 6 hectares of land around North Bengal area.Next, the process of manufacture of e-bags essentially involves the followingoperations: Weaving of the sack from the fiber, (b) Cutting of the sack into required sizes by heavy duty cutter, (c) Stitching by electrically operated stitching machines, (d) Testing, (e) Pressing and (f) Packing and forwarding.
Social benefit from the project: 1) Employment benefit 2) Kenaf bale storage benefit 3) Carbon absorption 4) Reduction of synthetic uses 5) Oxygenation by kenaf 6) Reduce deforestation 7) Recyclable and reusable in house hold.Environmental effect: Our proposed products e bag and e sack are very eco friendly. Their willbe no negative impact on the environment because our product is completely biodegradable , hydrocarbon free and treated with non toxics vegetables oils whichdo not produce off flavors and tastes when in contract with addible matireals andare totally save for storing edibles.Value engineering: Value engineering (VE) is a systematic method to improve the "value" ofgoods or products and services by using an examination of function. Value, asdefined, is the ratio of function to cost. Value can therefore be increased by eitherimproving the function or reducing the cost. It is a primary tenet of valueengineering that basic functions be preserved and not be reduced as a consequenceof pursuing value improvements. Value engineering uses rational logic (a unique"how" - "why" questioning technique) and the analysis of function to identifyrelationships that increase value.
Marketing management application of the project: Product: Kenaf Is The Fiber That Can Change The World! We will grow two varieties of Kenaf: Tainung and Everglades 41. Because Kenaf grows so fast, its unique characteristic is that it stores an abundance of carbon in the cells, which makes Kenaf the best in sequestering carbon dioxide and saving the environment (Source: Dr. Toru Aoi, Japan).Price: The firm will use market-penetration pricing by setting a low price in order topenetrate the market quickly which will result in high sales revenue and subsequent cost cuttingfurther. Our prices will be lower than the price of synthetics to give us a competitive edge.Product price list:
Place:We have a very effective channel of distribution .For various target market we are applyingvarious coverage procedure. Our procedures are as follows-------Promotion: We will follow the following promotional tools ----------------S.W.O.T ANALYSIS:Strength• Kenaf is a labor intensive industry. There is a good supply of relatively low cost laborin the country• GREENNAF has lot of potential of providing employment especially in thenorthern region of Bangladesh• Kenaf is an eco-friendly and biodegradable product. With the pressure fromgreen movement, it is expected to sustain through consumers preference.
• GREENNAF is a big player entering the market. Kenaf e-sacks and bags are anew concept. We can get the first mover advantage.• We shall cultivate Kenaf and use their fibers to make the e-sacks and this willgreatly reduce cost of production and give us a competitive edge as raw materialsare not being purchased from outside at a higher market price• GREENNAF has strong management team.Weakness:• Continuation and enforcement of existing laws regarding synthetic product banis needed to optimize new entry barriers• Changing the attitude and perception toward green and innovative products mayrequire more time than anticipated• Availability of labor at a lower and competitive wage rate to attaineconomies of team production• Foreign trade relation needs to be developed and improved to expand the targetmarket beyond its existing market horizon• To sustain the economies of scale, stable growth rate of demand is needed untilmaturity stage of produce life cycle• Skilled labor force is needed to carry out the production process.Opportunity: • G R E E N N A F ’ s business can lead to diversified value added products. • N o r t h Africa and Middle East is one of the major importers of sacks, and new markets inThailand and Malaysia are emerging. • G R E E N N A F aims to accomplish Total Quality Management so as to build quality in the products. • B a n g l a d e s h government has raised cash subsidy from 7.5% to 10 % on all items of allied-fiber products without any covenant. • I n the past imports of allied fiber bags from Bangladesh to India were subject to an Indian import duty of 6 % which has been abolished. • E x p o r t s provide a sound market. Demand is steadily climbing.• E c o -concerns have accelerated the demand for biodegradable sacks and bagson the global market in recent times, giving rise to the exports of allied fiber sacksand bags from Bangladesh. Threats:• One of the major threats faced by GREENNAF is from Indian allied fiberindustry, which has already penetrated Brazilian marketIndia enjoys the benefit of lower container freight rates as compared with• Bangladesh for shipments to several important markets• Indian export subsidies amount to 20 % for sackings while in Bangladesh it is only10%.
• Low awareness of people about the harmful impacts of synthetic products on theenvironment.• The government can set the minimum price level for the GREENNAF’s productsand this may hamper with our cost leadership strategy• High dependency on labor.STP(segmenting, Targeting and Positioning): Market Segmentation and Targeting: The local market of e-sack has been segmented depending on demographics(type of industry, location) and the international market depending on geographic,political and legal factors. The firm has segmented the market of consumer e-bag using geographic, demographic and psychographic variables.Market positioning: The firm has chosen functional positioning as its product solvesproblems, like - scarcity of natural fiber sacks in high demand market andreduce different types of pollution by reducing use of synthetics. Moreover,in the long run it will reduce the use of paper bag which will checkdeforestation. Thus, this business is environment friendly in several of ways.So, our positioning strategy on consumers’ mind will be: “Save Nature…Save Money”.
Competitor Analysis:Porter’s Generic Strategy:GREENNAF aims to create substantial cost advantage over the synthetics producers Also,the product’s distinctive features and inherent advantages will cause customer to prefer thee-sack and bags over synthetics.Cost Leadership Strategy:: Cost Cutting: The firm will: 1.Use low wage labor.2.Perform its manufacturing process efficiently by using state-of-the art machineryand technology.a Cost Elimination : The firm will:1.Cultivate its raw materials in its own firm2. Employ efficient and low cost distribution channelDifferentiation:The firm’s drivers of differentiations are-T Economic: It will improve its product’s economic performance by cutting buyer’soverall cost of using product o Psychological: 1. Product variety (40, 50 and 80 kg sack; consumer level bags) 2. Product appearance (First e- sack and bag in market with our distinct logo).