Agora Report Final

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18 May, 2013 The Faculty, Md.Anwar Hossain Assistant professor Department of Marketing, Faculty of Business Studies, University of Dhaka Dhaka-1000 Subject: Submission of Report. Sir, We forward herewith the report and document about Supply chain strategy of Agora: with price addition at each stage for our course no: 413 named “Business Logistics”. We look forward to receiving any comments that you may have in relation to the above. Thank you for your attention. Yours sincerely, Group name: 1971 Batch no: 16 th 1 | Page

description

its a project report on Agora superstore.

Transcript of Agora Report Final

18 May, 2013

The Faculty,Md.Anwar Hossain

Assistant professorDepartment of Marketing,Faculty of Business Studies,University of DhakaDhaka-1000

Subject: Submission of Report.

Sir,

We forward herewith the report and document about “Supply chain strategy of Agora: with price addition at each stage” for our course no: 413 named “Business Logistics”.

We look forward to receiving any comments that you may have in relation to the above.

Thank you for your attention.

Yours sincerely,

Group name:1971Batch no: 16th Sec: ADepartment of MarketingUniversity of Dhaka

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ACKNOWLEDGEMENTS

We take immense pleasure in thanking our faculty, Md.Anwar Hossain Assistant professor, Department of Marketing for having permitted us to submit the report.

Finally, yet importantly, we would like to express our heartfelt thanks to our

beloved parents for their blessings, our friends and classmates for their help and

wishes for the successful completion of this report.

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Business Logistics

A report on

“Supply chain strategy of Agora: with price addition at each stage”

By

1971

UNIVERSITY OF DHAKAFACULTY OF BUSINESS STUDIES

DEPARTMENT OF MARKETING

Batch 16th

Section: A

18 May 2013

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Submitted to,

Md.Anwar Hossain

Assistant professorDepartment of MarketingFaculty of Business StudyUniversity of Dhaka

Submitted by,

Group name: 1971 Sec: A16th batchB.B.A Program Department of MarketingFaculty of Business StudyUniversity of Dhaka

Group Detail…

Historical background of Agora:

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Name of Members Roll no.Mahabub Elahi 13Sahed Mahmud 31Loren Ashraf 71Sayela Nazneen 117Md.Ariful Islam 123Md.Toriqul Islam 261

Rahim Afrooz is one of the leading business groups in Bangladesh. It is doing business in the country for more than 50 years with fame and reputation. The main strength of the group is its reputation of doing ethical business practice. Throughout its business during last 50 years, it has mainly operated in the automotive industry. Recently it has extended its business in energy and retailing business. It operates in an SBU model. The SBUs of Rahim Afrooz are: (www.agorabd.com)

1. RahimAfrooz Batteries Limited2. RahimAfrooz Distributions Limited3.RahimAfrooz Superstore Limited4.RahimAfrooz Energy Services Limited5.Excel Retreads Limited6.Super Abrasives Limited7.Greyfab Limited8.Arzed Limited9.RahimAfrooz CNG limited10.Metronet limited

This report is made for RahimAfrooz Superstore Limited. The brand name for this SBU is Agora. It is the leading superstore in the Dhaka & Chittagong city. It has revolutionized the retailing industry of Bangladesh. It is established to provide quality shopping experience for its customers. With twelve large outlets in Dhanmondi, Gulshan, Mirpur, Uttara, Maghbazar and Sobhanbagh, it is also the largest retailer in the country. It is offering more than 20,000 items under one roof. These items are divided into 11 categories. The categories are: Household, Grocery, Meat, Fish, Vegetable, Fruits, Fast food, Dairy, Bakery, Pharmacy, and Cosmetics. (www.rahimafroz.com)

The name of Agora is entwined with the glory of-the Agora’s marketing policy “to create a better environment for consumers”. A man gifted with an inherent entrepreneurial sense, Late A. C. Abdur Rahim, the founder of Rahim-Afrooz started a trading house in 1973, which continued to expand in scope and nature as time went along. In 2000, Agora was introduced to the world. The

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success was immediate as there was a demand for such business in the local market. Agora's state-of-the-art technology and creative strategy gave it an edge ocher its competitors at local market. (www.agorabd.com)Agora is a Dhaka-based supermarket chain. It is the largest retailer, both by local sales and by domestic market share, and the largest retailer in Dhaka leaving behind PQS, Meena Bazar, Nandan Mega Shop, Pacific, Pick and Pay, Etc, Shop & Save and others. (www.agorabd.com)

Originally specializing in food, it has moved into areas such as clothes, consumer electronics, and consumer financial services, selling and renting DVDs, compact discs and consumer telecom accessories. (www.agorabd.com)

Agora Ltd. is an enterprise that combines industry and trade, mainly engages in retailing the quality products at the most lowest price in the market. The management of Agora was an enthusiastic advocate of trading stamps as an inducement for shoppers to patronize their stores: They signed up with all types of quality products manufacturer, and became one of the company’s largest clients. But the management was a fan of pile it high and sell it cheap, and in the mid-2000 Agora faced many cost problems associated with not properly integrating its purchased chains of stores. When the firm overstretched itself opening few more outlets throughout the city, management consultants were called in to sort out the mess. In 2001 Agora launched Operation Checkout, an across the board price cutting campaign aimed at countering the threat from the new breed of discounters such as Kick Save. (www.agorabd.com)

Facing the world and looking beyond, Agora will always maintain the pure-hearted, enterprising, quality and struggling spirit make efforts to scrupulously abide by our goodwill, create splendid future together with you in management vision of joint development, joint prosperity and mutual benefits! (www.agorabd.com)

Types of items Agora typically sells:

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Agora typically sells many different types of items, such as:

• Beverages products (juices, energy drink, etc)

• Baby foods and products

• Bakery

• Books, newspapers, and magazines, including supermarket tabloids

• Car care products

• CDs, DVDs

• Confectionery

• Cosmetics

• Clothing and footwear

• Dairy products

• Diet foods

• Electrical items

• Feminine hygiene products

• Frozen foods

• Fruits and vegetables

• Housecleaning products

• Meat

• Medicines and first aid items

• Personal hygiene and grooming products

• Snacks(Agora outlet, Uttara)

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Marketing strategy of agora:Agora's growth over the last 6 years has involved a transformation of its strategy and image. Its initial success was based on the "Pile it high, sell it cheap" approach of the founder management of Rahim Afrooz. The disadvantage of this was that the stores had a poor image with middle-class customers. In the year 2001 Agora's brand image was so negative that consultants advised the company to change the name of its stores. It did not accept this advice, yet by early 2003 it was the largest retailer in Dhaka, with a 29.0% share of the grocery market according to retail analysts TNS Super panel, compared to the 16.8% share of ASDA and 15.6% share of third-placed NANDAN, which had been the leading competitor until it was beaten by Agora in 2004. Key reasons for this success include: (www.agorabd.com)

• An "inclusive offer". This phrase is used by Agora to describe its aspiration to appeal to upper, medium and low income customers in the same stores. According to Citigroup retail analyst David McCarthy, "They've pulled off a trick that I'm not aware of any other retailer achieving. That is to appeal to all segments of the market”. By contrast ASDA's marketing strategy is focused heavily on value for money, which can undermine its appeal to up market customers even though it actually sells a wide range of up market products. During its long term dominance of the supermarket sector Nandan’s retained an image as a high-priced middle class supermarket which considered it to have such a wide lead on quality that it did not need to compete on price, and was indifferent to attracting lower-income customers into its stores. This strategy has been abandoned since losing the number 1 spot to Agora and particularly since the adaption of new management in 2004 that has established a new customer-focused strategy closer to that of Agora. (www.agorabd.com)

• One plank of this inclusivity has been Agora's use of its own-brand products, including the up market "Finest" and low-price "Value". The company has taken the lead in overcoming customer

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reluctance to purchasing own brands, which are generally considered to be more profitable for a supermarket as it retains a higher portion of the overall profit than it does for branded products.(www.agorabd.com)

• The management in the mid 2000 has taken the bold step of trying not to focus on the usual corporate mantra of "maximizing shareholder value". The company's mission statement reads, "Our core purpose is, 'To create value for customers to earn their lifetime loyalty'. We deliver this through our values, 'No-one tries harder for customers', and 'Treat people how we like to be treated'". The underlying aim is of course to make higher profits, but there is a clear focus on customer service at the top level of the company. (www.agorabd.com)

• Diversification: The company has a four-pronged strategy:

O "Core Dhaka business" - That is, grocery retailing in its home market. It has been innovative and energetic in finding ways to expand, such as making a large-scale move into the convenience-store sector, which the major supermarket chains have traditionally shunned.

O "Non-food business" - Many supermarket chains have attempted to diversify into other areas, but Agora has been exceptionally successful. By late 2004 it was widely regarded as a major competitive threat to traditional high street chains in many sectors, from clothing to consumer electronics to health and beauty to media products. Agora sells an expanding range of own-brand and as well as local and international non-food products, including non-food Value and Finest ranges. It also has done quite well in non-food sales in Ireland. CDs are one of the best examples, with Agora Gulshan promising to sell all chart CDs (except compilations) for Tk.50.00 compared with local Music Stores selling the same for around Tk. 70.00. (www.agorabd.com)

O "Retailing services" - Agora has taken the lead in its sector in expanding into areas like dairy and utilities. It usually enters into joint ventures with major players in these sectors, contributing its customer base and brand strength to the partnership. Other supermarkets in Dhaka have done some of the same things, but Agora has generally implemented them more effectively, and thus made most profit. (www.agorabd.com)

Supply chain strategy of AgoraAs Agora is highly sensitive to its quality, they do not compromise with its desired quality at any of its outlets. To ensure proper quality of their products specially the agricultural one they demand CHILLAR VAN from their suppliers. This type of van is used to protect the agricultural products from being rotten and to ensure the desired quality. Basically, the suppliers of Agora supply their products on a regular basis to the different outlets and direct supply of products is ensured. One basic thing which should be focused on is that the suppliers supply directly to the outlets to ensure the timely supply of products and not to the warehouse or main outlet or the head offices which others follow. They have set up 12 outlets at the major areas of the Dhaka city to reach their customers more efficiently. Another plus point of Agora is that they take orders and supply products to the customers directly to their house in an emergency situation. (Mahmudul Hasan, Floor manager, Uttara putlet, Agora)

NO INTERMEDIARIES are involved in their supply chain system. Al the transportation costs are carried by the suppliers. If there is any defect in any products, Agora sends it back to its

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suppliers. More than 3-4 suppliers are involved in each type of products to ensure quick supply to meet emergency demand of products. Although Agora rejected to tell us the actual source or the actual addresses of their suppliers, they agreed that most of their suppliers of agricultural products are from the nearby cities, sub-cities and villages of Dhaka city such as Savar, Narayanganj, Gazipur, Narshingdi, Manikganj and so on.

(Mahmudul Hasan, floor manager, Uttara outlet, Agora).

If we show the supply chain of Agora briefly in a diagram, it will look like the following:

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Supplier

Supplier

Supplier

Supplier

Agora outlets

Customer

Customer

Customer

Customer

Value addition at each stage:Since Agora sets different prices for its products in different areas, they claimed that they charge 15%-17% profit over the cost of purchasing their products from suppliers in relatively low purchasing power areas in Dhaka city such as Mirpur, Shantinagar, Moghbazaar etc. but they demand 22%-25% profit from comparatively higher purchasing power areas of Dhaka city such as Gulshan (2 outlets), Dhanmondi (2 outlets) and Uttara (1outlet). Rest of the outlets are followed the middle positioned pricing method to keep the customers in their hand and to sustain in the market. It means that Agora basically follows the COST-BASED PRICING APPROACH as the pricing strategy of doing their business and most of their products’ pricing is customized based (different prices of same products at different outlets, based on the people’s purchasing power of those particular areas). A point should be noted that the cost of producing or purchasing products from the suppliers is all the same for all outlets.

(Sudhamay Chandra Das, store manager, former floor manager, Uttara outlet, Agora)

A list of value addition at each stage is given below:Product name Probable supplier cost Price at Uttara outlet Probable Price at

Mirpur outlet Potato(small size) 18-19 TK per kg 22Tk per kg 20Tk per kgPotato(large size) 20-21 Tk per kg 24Tk per kg 22 Tk per kgCarrot 20-21 Tk per kg 24 Tk per kg 22 Tk per kgBrinjal(both large &small)

35-40 Tk per kg 50 Tk per kg 45 Tk per kg

Rice(minikat) 32-35 Tk per kg 41 Tk per kg 39 Tk per kgRice(chinigura) 85-90 Tk per kg 105 Tk per kg 100 Tk per kgEgg(chicken) 30-32 Tk per Hali 35 Tk per hali 35 Tk per haliEgg(duck) 35-36 Tk per hali 40 Tk per hali 40 Tk per haliBeef(with bone) 340-345 Tk per kg 362 Tk per kg 355 Tk per kgBeef(boneless) 340-345 Tk per kg 480 Tk per kg 460 Tk per kgElish 700-900 Tk per kg 1400-2000 based on

grade 1400-2000 based on grade

Telapia fish 100-105 Tk per kg 129(discount 16tk) 129(discount16tk)Chicken(normal) 230-240 Tk per kg 250 Tk per kg 250 Tk per kgChicken(thigh) 280-300 Tk per kg 320 Tk per kg 310 Tk per kgShrimp(golda) 550-600 Tk per kg 720 Tk per kg 700 Tk per kg

Source: Uttara outlet, Agora.

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Survey 1:

The total number of respondents was 15 and the survey was taken place in Agora outlet, Uttara.The results were as follows:

Age: 15-25=4, 26-35=5, 36-45=3, 46-55=2, 56-65=1, 65 and above=0Education: doctorate=0, post graduation=8, under graduation=5, HSC=2, SSC=0, below SSC=0Occupation: student=2, service holder= 4, business person=7, home maker=2Approximate monthly income: below 20000=1, 20000-35000=3, 35000-50000=4, 50000-70000= 5, 70000+=2Marital status: single=3, married=12I’m a customer of Agora for: less than 1year=3, 1-2years=4, 2-3years=6, 3-4years=2

1 2 3 4 51.1 Swiftness in delivering the ordered products 0 0 3 7 51.2 Quality of the products 0 0 3 4 81.3 Skills of the employees 1 3 3 4 41.4 Quality of the services provided 0 0 2 6 71.5 Easiness to find out the right product 0 0 3 10 21.6 The use of automated billing system 0 0 0 7 81.7 Responding to your needs 2 3 4 6 01.8 Quality of cooperation with our staff 0 1 2 5 71.9 Customer support service provided 3 3 4 3 2

1.10 Behavior of the sales staff 0 1 3 6 5 Poor superior

Please mark whether one the following have incurred during your purchases from _ _ _ _ _ _ _ _

YES NO Number of Occurrences

2.1 Delay in deliverables?

2.2 Have not found high priority items? 2

2.3 Look like a junk store?

2.4 Delayed response to your call? 3

2.5 Improper behavior by one of our employees?

2.6 Communication difficulties with the staff in charge?

2

2.7 Lack of required information? 10

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2.8 Other? (Please Specify)

Please put tick mark for each statement in appropriate box where 1-strongly disagree, 2- Disagree, 3- Neutral, 4 –Agree, 5- Strongly Agree

1 2 3 4 5

VariablesStrongly Disagree Disagree

Neutral Agree

Strongly Agree

1 Purchase from _ _ _ _ _ _Agora _ _ _ _ _ improve the customer status

0 0 3 8 4

2 When this store promises to do something by a certain time, it does so

0 1 7 5 2

3 When a customer has a problem, this store shows a sincere interest in solving it.

0 0 0 5 10

4 Store hours are convenient for my shopping needs.

0 0 5 5 5

5 Store atmosphere and decoration are appealing

0 0 3 4 8

6 A good selection of products was present 0 1 5 8 27 (Store) has the lowest prices in the area. 0 0 6 4 58 Merchandise sold is of the highest quality 0 2 5 4 4

9 The merchandise sold is a good value for the money.

0 0 0 7 8

10 Merchandise displays are attractive 3 2 5 4 1

11 Advertised merchandise was in stock. 0 1 3 7 4

12the quality of their products is up to the standard 0 1 6 7 1

13 The price that they charge is reasonable 0 0 5 4 6

14 Purchase from other super shop will incur high switching cost

4 6 3 2 0

15 Lowest lead time after online order placement

8 7 0 0 0

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16 The range of the products of _ _ _ _ _ _ _ _ _ _ _ is diversified

0 1 3 7 4

17 Employees in this store give prompt service to customers

0 0 4 8 3

18 Employees in this store are never too busy to respond to customer's requests

2 5 1 4 4

19Employees of this store are able to handle customer complaints directly and immediately

1 2 4 5 4

20This store gives customers individual attention 3 4 1 5 3

21 Employees in this store are consistently courteous with customers

2 2 4 5 2

22 This store willingly handles returns and exchanges

10 5 0 0 0

23 The physical facilities at this store are visually appealing.

0 0 2 7 6

24Materials associated with this store's service (such as shopping bags, catalogs, or statements) are visually appealing

1 3 4 4 3

25 The employees appear neat0

0 0 7 8

26 Customers feel safe in their transactions with this store

0 0 0 13 2

27 This store insists on error-free sales transactions and records.

0 0 0 5 10

28 Customers have no risk to deceived 2 1 1 6 5

29 All the workers in _ _ _ _ _ _ _ _ _ _ _ properly trained

6 5 0 3 1

30 anti-adulteration campaign performed by _ _ _ _ _ _ _ _ _ _ _ will build up trust

3 2 0 5 5

31 Stores are conveniently located 0 4 4 5 2

32 _ _ _ _ _ _ _ _ _ _ _ operates long hour a day

2 3 3 5 2

10. I’m satisfied with the overall service provided by AgoraStrongly agree=4, agree=7, neutral=2, disagree=2, strongly disagree=011. Agora’s perishable products are always found freshStrongly agree=5, agree=7, neutral=2, disagree=1, strongly disagree=0

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Survey 2:Total number of respondents was 10, done in our neighborhood

Personal Questions:Age

15-25= 3 26-35=6 36-45=1

46-55 56-65 65 and above

Education:Doctorate=1 Postgraduate=4 undergraduate=3 H.S.C =2 S.S.C Below S.S.C.

Occupation

Student=2 Service holder=4 Business person=4 Home maker

Approximate monthly household income [in BDT]

Below 20000 20000- below35000=3 35000- below 50000=4 50000- below 70000 Above 700000=3

Marital Status

Single=3 Married=7

QUESTIONNAIRE ON SUPERSHOP SURVEY:

Super Markets=6 Local Markets=2

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Q1 - How or where do you shop for groceries the most frequently? (Please pick one answer only)

On-line High-street=2 Convenience stores Other

Q2 - Which of the following supermarkets do you use the most? (Please pick one answer only) Meena Bazar=1 Swapno=1 Agora=4 Nandon Prince Bazar

Q3 - Why do you shop at your supermarket of choice? (Please tick all the answers that apply)

Competitive prices Choice of products=1 Favorite brands=2 Location / convenience Quality of products=3 others

Q4 - Would you consider yourself loyal to the supermarket you use the most ( if question 2 is answered)? Loyal=3 Not Loyal=1 Moderately Loyal=2

Q5 - On average, if you are now loyal to your current supermarket but used to shop at a different supermarket please indicate which ones below.

Meena Bazar=2 Swapno=2 Agora=2 Nandon SsMart Prince Bazar Others

Q6 - On average how often do you shop?

I shop more than once a week=3 I shop once a week=2 I shop once every 2 weeks=1 I shop once a month or less

Q7 - Do you agree or disagree with the sentence: 'The following supermarkets are competitive on price'? (Please answer for each supermarket)

Strongly agree Agree Neither agree nor disagree Disagree Strongly disagree

Meena Bazar 4 2

Swapno 0 2 1 2 1

Agora 3 2 1 0 0

Nandon 2 1 1 2 0

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SMart 2 2 2 0 0

Prince Bazar 3 1 0 1 1

Others

Q8 - Do you agree or disagree with the sentence: 'The following supermarket offers quality products'? (Please answer for each supermarket) Strongly agree Agree Neither agree nor disagree Disagree Strongly disagree

Meena Bazar 3 1 1 1 0

Swapno 2 2 2 0 0

Agora 4 1 1 0 0

Nandon 1 1 1 1 2

SMart 1 1 2 2 0

Prince Bazar 1 1 0 3 1

Others

Q9 - Do you agree or disagree with the sentence: 'The following supermarket offers a wide product range (e.g. food, clothing, electrical, etc.)? (Please answer for each supermarket) Strongly agree Agree Neither agree nor disagree Disagree Strongly disagree

Meena Bazar 2 2 1 1 0

Swapno 2 1 1 1 1

Agora 4 2

Nandon 0 0 3 2 1

SMart 1 1 2 1 1

Prince Bazar 1 2 0 3 0

Others

Q10 - Do you agree or disagree with the sentence: 'The following supermarket offers a large choice of items within each product range (e.g. for food - fruit & veg, chilled, frozen etc.?) (Please answer for each supermarket)

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Strongly agree Agree Neither agree nor disagree Disagree Strongly disagree

Meena Bazar 4 2

Swapno 3 1 2

Agora 4 1 1

Nandon 1 2 3

SMart 1 3 2

Prince Bazar 0 2 2 2

Others

Q11 - Do you agree or disagree with the sentence: 'The following supermarket offers value for money'? (Please answer for each supermarket)

Strongly agree Agree Neither agree nor disagree Disagree Strongly disagree

Meena Bazar 1 3 2

Swapno 2 2 2

Agora 4 2

Nandon 1 2 3

SMart 1 2 3

Prince Bazar 1 2 3

Others

Q12 - Do you agree or disagree with the sentence: 'The following supermarket has a high level of presence in the market'(store locations, advertising etc.)? (Please answer for each supermarket)

Strongly agree Agree Neither agree nor disagree Disagree Strongly disagree

Meena Bazar 4 2

Swapno 2 2 2

Agora 5 1

Nandon 1 2 2 1

SMart 0 0 1 3 2

Prince Bazar 0 0 0 4 2

Others

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Q13 - Amongst the following supermarkets, which one offers the best value for money? (rank 1=best value for money, 6=worst)

Swapno   2 G MART   5 Nandon 3 Ssmart 4

Meena Bazar  1 Others

Q14 - Amongst the following supermarkets, which one offers offers a wide product range (e.g. food, clothing, electrical, etc.)? (rank 1=best choice of products, rank 6=worst)

Swapno  2 G MART 5  Nandon 3 Ssmart 4

Meena Bazar  1 Others

Q15 - Amongst the following supermarkets, which one offers a large choice of items within each product range (e.g. for food - fruit & veg, chilled, frozen etc.)? (rank 1=best choice of products, rank 6=worst)

Swapno   G MART   Nandon Ssmart 

Meena Bazar  Others

Q16 - Amongst the following supermarkets, which one is the most customer-friendly? (rank 1=most customer-friendly, rank 6=least)

Swapno   G MART   Nandon Ssmart 

Meena Bazar  Others

Q17 - Amongst the following supermarkets, which one do you think respects the local community the most? (rank 1=most respectful, rank 6=least)

Swapno   G MART   Nandon Ssmart 

Meena Bazar  Others

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Q18 - Amongst the following supermarkets, which one do you think is the most visible in terms of market presence? (rank 1=most visible, rank 6=least)

Swapno   G MART   Nandon Ssmart 

Meena Bazar  Others

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Table of contents:Topic pageHistorical background of Agora: 5-6 Types of products Agora typically sells 7-8 Marketing strategies of Agora 8- 9 Supply chain strategies of Agora 9-10Value addition at each stage 11Survey 1 12-14 Survey 2 15-20References 21

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References:1.Sudhamay Chandra DasStore manager (former floor manager)RAHIMAFROOZ SUPERSTORES LIMITED (AGORA)Plot#02, Road#04, Sector#04 Uttara, Dhaka-1230Tele phone: +880 2 8920308, 8921416Mobile: +880 1832 154 585E-mail: [email protected]

2. Md.Mahmudul HasanFloor managerRAHIMAFROOZ SUPERSTORES LIMITED (AGORA)Plot#02, Road#04, Sector#04 Uttara, Dhaka-1230

3. www.rahimafrooz.com

4. www.agorabd.com

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