Chevrolet's Market Entry: Strategy, SWOT & Bangladesh Exploration

This report explores Chevrolet's potential market entry into Bangladesh, driven by the desire for increased market share and profitability. It examines Bangladesh's growing economy, including GDP growth, per capita income, and foreign direct investment trends. A SWOT analysis identifies strengths, weaknesses, opportunities, and threats, including economic growth, poverty reduction, and challenges like infrastructure and corruption. The report suggests a merger or acquisition strategy with a local car manufacturer, such as Walton Hi-Tech Industries, to navigate legal compliances and leverage local expertise. While this approach offers benefits like market penetration and access to resources, challenges include inadequate infrastructure, corruption, and political unrest. The report concludes by highlighting the importance of cultural integration and communication for successful market entry. Desklib provides past papers and solved assignments for students.

MANAGEMENT

Contents
Introduction of Chevrolet................................................................................................................4
Reasons or the need to expand.........................................................................................................4
Market exploration of Bangladesh...................................................................................................5
The growing economy or economic growth of Bangladesh............................................................5
Bangladesh - SWOT analysis..........................................................................................................9
The strategy to enter the market....................................................................................................10
Merger or acquisition with a local car manufacturer.....................................................................10
Benefits and challenges.................................................................................................................11
References......................................................................................................................................12

Introduction of Chevrolet
Chevrolet is a division of GM (General Motors) company introduced in 1911. The company is an
American automobile company founded by William Durant that was further undertaken by Louis
Chevrolet. The company sells its vehicles in majority of world. Moreover, in North American
market, the company manufactures a huge range of automobiles ranging from subcompact cars
to medium-duty trucks. The company has been continuously awarded for its ability for the last
few years 2015, 2016 and 2017, 2018 and 2019. In 2019, the company was awarded for most
dependable small car, large heavy duty pickup and compact SUVs (General Motors, 2017). The
market share of the company for last three years was nearly 17% as General Motors is among the
leading companies of manufacturing in the world (General Motors, 2017). While seeing the
profitability of the company-
Year Net Profit (% of total revenue)
2015 12.06%
2016 13.08%
2017 13.92%
2018 9.31%
Reasons or the need to expand
The main reason behind expanding is to access larger market share and increase profitability.
Even though the company has a well-minded customer base, there always lies an opportunity to
add new customers especially when the company expands. Chevrolet can be benefited from
economies of scale when business grows, the possibility of discounts and offering in regards to

incentive system for suppliers and vendors increases. Moreover, expansion gives the company an
opportunity to offer huge range of products and diversifying the revenue streams that signifies
that you do not exclusively rely on selling core products. Chevrolet may think to expand to
diversify the assets, its actions which ultimately protect the company`s bottom line to protect the
uncertain events. For example- if the company operates in more countries, it reduces the risk of
offset negative growth in the market as its other establishments help them in maintaining their
revenue and market share.
Market exploration of Bangladesh
With increasing population in last few years, Bangladesh`s labor force has been growing as there
is a large proportion of young people born in 1960s and 1970s. As per EIU country profile, labor
force of Bangladesh has doubled in last two decades. In regarding to facts viable for Chevrolet, it
is seen that Bangladesh is progressing in each sector which will contribute political and
economic growth that includes manufacturing of steel, glass, and world class electronics.
Although, the country is working to improve automobile industry but it is very slow as this
industry still produces locally designed Mishuk and three-wheeler motor vehicle (Centre for Policy
Dialogue (CPD), 2018). Mishuk utilizes the engine of Honda. For the last two years, the use of
vehicles have been increasing with the increase in population, improved standard of living,
increased mobility of people, and enhanced infrastructure. While seeing the manufacturers of
automobiles, it is seen that there is a lack of manufacturers of local cars, a state run enterprise
“Pragoti industries” that produces vehicles for Japan-based company “Mitsubishi” at low cost.
The growing economy or economic growth of Bangladesh
All the sectors of the country has been experiencing significant growth which was far below than
the speed of business sectors. The government pays special attention in order to improve

education at each level, it aims to increase labor-intensive for both manufacturing and service
sector. In order to examine the economic conditions of the country, several factors has to be
evaluated such as gross national income, gross domestic product, poverty trends, employment
and unemployment.
(Source: https://www.imf.org/en/News/Articles/2018/06/06/NA060818-Bangladesh-Building-A-
Strong-Inclusive-Economy)
From the above graphical representation, it can be seen that in the initial years, the GDP per
capita is very consistent from 1991 to 2005. After 2009, the country has paced up its growth and
reached almost 7% in 2017. On the other hand, GDP growth is fluctuating in earlier years but by
the time it strived to lie between 6 to 7%.

(Source: https://www.dhakatribune.com/bangladesh/2017/04/23/muhith-per-capita-income-likely-
cross-1600-next-fiscal/)
From the above graph, it can be seen that the country has been growing as the trend for per capita
and gross national income has been increasing. As seen in the figure, almost a decade is
considered to evaluate the economic growth, as in 2011-2012, GNP was 880 and per capita
national income was 955. It is seen that the growth is quite consistent and proportionate as per
capita income was 1465 in 2016, 1598 in 2017. This signifies that chevrolet has the chance to
enter the market and start its operations there. Bangladesh will be soon the third-fastest growing
economy of the world due to increasing GDP in 2019. It can be said that the economic growth is
supported by investment demand, private consumption, inflation fluctuation, and tightened
monetary policy.

(Source: http://www.newagebd.net/article/35271/fdi-drops-to-202b-in-2017)
The above graph depicts that country promotes FDI that can help the bagladesh to grow and
capture the market. The country government has liberlised policies for FDI and encourages the
investments. During 2011, 2012, 2013, and 2014, the FDI was in the range of $1100 to $1500
millions whereas it increased largely in year 2015 marked as $2235 million, $2332 million in
2016 (Newage business, 2018).

(Source: http://www.today.thefinancialexpress.com.bd/print/building-on-mdg-success-to-face-
sdg-challenges-1510645906)
From the above graphical representation, it can be seen that the poverty trend in Bangladesh has
been decreasing which is a good sign of a growing economy where there are less number of
people who do not have their food of nutritional value and a considerable standard of living.
From the above graph, it can be seen that the poor population in the urban areas has been
considerably decreasing which may happen due to increasing employment. In the decade, it is
seen that the rural population of poor people is still around 34 and 23.5 in 2015 and 2016.
(Source: https://www.ceicdata.com/en/indicator/bangladesh/unemployment-rate)
From the above graph, it can be said that the country`s unemployment rate has increased to 4.3%
in December, 2017 as compared to 2016 where it is reported as 4.35%. According to the

population statistics, the population has reached to 163.65 million in 2018 where labor force
participation rate that have increased to 56.5% in December, 2017.
Discussing only the employment growth rate cannot reflect the areas that can be improved the
company after establishing. It is important to know unemployment rate as establishment of
Chevrolet can reduce rate of unemployment. As per the above graphs, it can be seen that in 2010,
the unemployed people were 1891320, in 2012 to 2014, the unemployed people were 2689457
and finally it reached to 2575000 in 2016.
Bangladesh - SWOT analysis
Strengths weaknesses
UNs report claims that the bangldesh`s
economy will grow till 7.2% by 2020.
Bangladesh is recognized as third fastest
growing economy in terms of high GDP in
The revenue generation from the public of the
country is only 9% of total GDP and this is
because the country does not have sufficient
BOP.

2019 (Ahasan, 2019).
UN report has published that the country`s
economy continues to expand at faster pace
nearly 7% each year.
The economic growth of the country is
supported by private consumption, strong
investment.
Bangladesh have considerable progress in
industrial and power sector
The country suffers from serious population
where birth rate exceeds the death rate. It also
creates lack of resources.
The Banking industry of Bangladesh has been
suffering from increase in non-performing
loans
Economic weaknesses include undeveloped
and undercapitalized financial sector that has
created the public sector inefficient and loss
making
Opportunities Threats
The country has diversified from agricultural
to more manufacturing oriented economy that
can support manufacturing of sub parts of
Chevrolet.
The banking sector of the country has huge
room for improvement especially in state-
owned commercial banks.
Increased use of technology and financial
services can improve the economic inclusion
of the country
The country can pace up the growth by
lending credit to SMEs and women
Rohingya refugee crisis influenced the
economy of Bangladesh.
The country faces the risk of severe floods
and landslides and the country has to sponsor
the refugee’s camps as soon as the monsoon
approaches.
The country still depends on foreign
assistance and loons that directly affects the
position of balance of payment

entrepreneurs (Export.gov, 2018).
The strategy to enter the market
There are several types of market entry strategies such as direct exporting and importing,
licensing, franchising, partnering, joint ventures, buying the whole company, and piggybacking.
Acquisition is a process where one company purchases all the shares of another company`s share
so that it can control the operations. Acquisition can happen only when the purchasing company
buys 50 % of the ownership of the target organization. The acquiring company often purchases
the stock of Target Company and the other assets that allow the acquiring organization to take
decision in regards to the new acquisition of assets without the approval of shareholders of
Target Company. Mergers are often done to get the maximum market share, expand the business
into the new territories, increase the revenue, and finally increase the profits.
Merger or acquisition with a local car manufacturer
Mergers and acquisition has been chosen as a strategy to expand and bring Chevrolet in
Bangladesh. There are two options with the Chevrolet to enter the market, one is acquire a local
small scaled car manufacturer that will help Chevrolet to comply with the necessary rules and
legal compliances of Bangladesh as it is compulsory to fulfil them. To collaborate, Chevrolet has
to identify potential in the local manufacturer of Bangladesh. Chevrolet can collaborate with
Walton Hi-Tech industries who manufactures electronics and automobile industries (Export.gov,
2018). Walton always focus on superior quality to order to attain maximum customer
satisfaction. The products of the company has grabbed the local market and also started
exporting globally. By utilizing the core competencies of Walton, Chevrolet can grab the market

share of Bangladesh (Alam, 2017). Another way of entering into the Bangladesh market is
merger where the two existing companies merge in one company. Mergers work more strongly
when both the companies share in the new forming company whereas, acquisition can have more
stack on another company as it has purchased more shares.
Benefits and challenges
A merger and acquisition works as a growth strategy. Some of the benefits of merger and
acquisition are-
The country has established well bilateral business relations with the key partners. The partners
are the network of suppliers to the industry by acquiring the resources. The policymakers focuses
on several factors that can enable and drive the ease to do business as the country is trying to
attract both national as well as international investment (Daily star, 2019).
Penetrating the new market- Chevrolet can grab the opportunity of working at a very low cost
due to increasing population of Bangladesh. In this way, the organization can build its own
market share which can be benefited only if the organization enters in mergers and acquisition
(The guide, 2018).
Flexibility of growth projections of continuous GDP growth of approximately 6.7% helps the
country to overcome the insecurities (DhakaTribune, 2018).
Challenges
In adequate infrastructure, energy security and lack of skilled resources are some of the biggest
challenges that hinders the economic growth