Final Report Swan Foam Group 4n4c58

North South University School of Business and Economics BBA Program, Course: MGT489.4 Group: 7 Date: April 7, 2016

Report on

“Swan Foam”

Prepared For:

Prepared By:

Dr. JashimUddin Ahmed

TamannaBashar Chowdhury-1210712030

Professor

IfthakerAhmed - 1210539030

School of Business

Shah Mohammad Tanjil–1111017030 Md. Kamruzzaman-1220178030

North South University ChowdhuryHussain Afzal-1120712030

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Acknowledgement We would like to thank Allah for giving us the ability and determination to complete this report without much difficulties. We have taken great efforts in this project. However, it would not have been possible without the kind and cooperation of many individuals. Therefore, we would like to extend our sincere thanks to all of them. We would like to thank Dr. Jashim Uddin Ahmed, our course instructor, who has provided us endless throughout the semester for completing this report. His guidance has helped us through each step of the work, thus making our project work simple. We would like to thank Mr. Ismail Tareen Khan– Director, Mr. Ali Hasan – Deputy General Manager– Senior Executive at Swan Industries Ltd. for taking the time out of their busy schedules to allow us to conduct the interviews and for granting us the access into confidential company information. Last but not least, we would thank all the other individuals who have willingly helped us out of their best abilities, including the printing and the spiraling of the report.

Table of Content 1.

Industry Overview ..................................................................................................... 1 1.1

The Home Textile Industry in Bangladesh .........................................................1

1.2

Major Competitors in the Industry ..............................................................................2

2. Company Background …………………………………………………………………………………………………..……3 2.1

Mission and Vision .......................................................................................................4

2.2

Core Values of Swan Foam ..........................................................................................5

3.

Principal Product Offering of Swan Foam..................................................................... ..5

4.

Value Chain .................................................................................................................6

5.

Strategies ................................................................................................................. 10 5.1

Marketing Strategies ...................................................................................... 10

5.2

istrative and HR Strategies ................................................................ 11

5.3

Strategy of Sustaining in the Competition .................................................... 11

6.

Opportunities Ahead ................................................................................................ 11

7.

Challenges ............................................................................................................................12

8.

7.1

Material based challenges ........................................................................................12

7.2

Market based challenges ..........................................................................................13

7.3

Other challenges .......................................................................................................13

Setbacks ...............................................................................................................................14

1. Industry Overview 1.1 The Home Textile Industry in Bangladesh Bangladesh is one of the leading countries in the in exporting readymade garments and textiles. This sector creates about 4.2 million employment opportunities and contributes significantly to the GDP of this small country of south Asia (Kiron, 2015) . In line with the textile and readymade garments industry, the home textile industry of Bangladesh is flourishing in recent days. Few years back, the international home textile market was dependent on china, Pakistan India and Turkistan. But in recent days the international customers are being shifted from these old markets towards Bangladesh. And using the prior foundation and experience of Knit, garments or textile industry Bangladesh’s home textile industry is also growing at a rate of 20% on yearly basis (Akter, 2012). The home textile industry mainly serves with the products that furnish the home. At the same way a number of Bangladeshi home textile industries are offering a wide range of home textile products like bedspreads, curtains, cushion covers, table covers, kitchen accessories and other home textile products. Home textiles are now considered as the highest priority export product by the Bangladeshi government. Because it enjoys some additional facilities comparing to the other textile export products like, Bank loan with less interest, waiver in income tax and lessened air freight. And the result of these facilities is proved in the word of Susanne Bergstand. Susanne Bergstand, Operational Manager- TASA, Ikea, world’s largest home textile sourcing company says, “We buy home textiles from Bangladesh, China and India, while sometimes Bangladesh is more price-competitive.” (Akter, 2012) BEXIMCO, Ha-Meem Group, Altex Indusatries and Zaber & Zubair Fabrics Ltd are the leading country in this industry. Polyurethane Foam (PU Foam) is a very important ingredient for these home textile products. But interestingly, the history of PU Foam industry in Bangladesh is way older than this home textile industry. Though we only know a few companies’ name in this industry a number of companies are producing and exporting foam. Karmo Foam, Swan Foam, Apex Foam and Foamex group are the leading companies in this sector. Almost all of these companies have

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expanded their business toward the home textile sector as they are very close to this sector. Possibly Karmo Foam was the first mover in this sector as they started their journey in 1965. But with the help of effective marketing strategy and superior product quality, Swan Foam has been able to earn more popularity than Karmo foam and still dominating the market. However a number of new companies like Akhter furnishers, Bengal group and Home n Decor are entering into this market which lessens the dominance of the existing old companies by creating competition in the market. These new companies are bringing versatility in the product quality and design. And accordingly the age old traditional companies which only used to make traditional and same type of foam are reforming their strategy according to the market demand in order to sustain in the market.

1.2 Major Competitors in the Industry 

Karmo Foam:

Established in 1965, they are first company in Bangladesh to have started the production of polyurethane products. As they have started the foam business first in Bangladesh, they have gained the first movers advantage. They have built strong customer relationship. They produce a huge variety of products such as Rebonded foam, Pu roll foam sheet, Karmo ash, Karmo exclusive etc. 50 years experience in business is playing an important role to make them an established player in the market. In of customer Satisfaction and Quality they have never been doubted. Karmo Foam has the largest raw materials stock in Bangladesh. They import raw materials from the largest and renowned Multinational Chemical Companies (Karmo, n.d.). 

Apex Foam:

Apex Foam was established in 1982 by Mr. Mosharraf Husain. It is one of the largest and oldest Foam manufacturers in Bangladesh. They usually produce PU (polyurethane foam), Cushion, Contour pillow and Contour mattress. After the production of PU, Apex became very famous among customers. Apex Foam has different series of products like as Gold Series, series, Acoustic Foam, Peeling Roll Foam etc. Apex Foam uses the modern technology for the production. Employees are very effective and efficient. All of these together make Apex Foam one of the leaders in market (Apex Husain, n.d.).

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

Foamex Foam:

Mr. Nazmul Hasan Pinto along with other few directors started the business in 1987. To avoid quality complains Foamex Foam use quality raw materials. These hi-quality raw materials bring their competitive advantage. The strategy of the company is to ensure quality at least profit margin. All of their products are sold with guarantee. They believes s satisfaction is their capital ( & Conditions, n.d). 

Akhtar Foam:

Akhtar Foam Industries Ltd. was established in 2008. They have almost 750 dealers in the whole country. They have gotten the 20% of P.U. foam market because of quality foams. They use advanced technology to continue their mission and dominance. With the strategic goal and efficient team, Akhtar Foam is crossing the borders of the country. Their products are Akhtar HD, Akhtar Deluxe, Akhtar Royale, Akhtar Super and Akhtar . They ensure after sales service and that brings the competitive advantage for them. They give the guarantee that that will repair or replace the foam (AKHTAR foam, n.d.).

2. Company Background “Swan Foam” is one of the most competitive and reputed companies in Bangladesh home textile industry. Swan Foam is a company of "Swan Group", which encomes business of foam, home textile, properties and chemicals. The company was established in 1984 offering their superior quality products in the market. The major areas of Swan group are Swan Industries, Swan Chemicals and Swan Properties. Swan Industries produce Swan foam, mattresses and home textile products. Swan Chemical produces Swan branded synthetic rubber based adhesive and polyurethane adhesive. Being a part of Swan Group, Swan Foam has been one of the most prominent companies producing foam, mattresses and home textiles in Bangladesh. Although they were not the first to enter the home textile industry, they have been operating in Bangladesh for a long period of time which gives them a competitive edge over other companies. The company produces Swan branded polyurethane foam, and peeled (roll) manufactured with computerized foreign machine.

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Their products are used in the field of seating and bedding, transportation seats, furniture, toys and also in sports shoes garments (Islam, 2015).

2.1 Mission and Vision Vision To establish and sustain Swan Foam as the provider of leading quality products in the foam and mattress market.

Mission To provide Variety, Quality and Economical foam, mattress and home-textile products while satisfying customer’s expectations, earning sustainable profit and continuing to be a caring employer (Islam,2015).

Competitive Advantage The competitive advantage of Swan Foam is superior quality. It has earned this reputation in the local market. . The company is one of the best in Bangladesh Home Textile sector and it is very particular ing best raw materials of / USA. Doing continuous R & D, adopting latest formulation followed by European and American manufacturers to ensure best quality of their products. Simple ethics & principles of the company are to keep best quality of products together with customer services & transparency.

With quality they also consider their organization culture of trust and open communication to be their another competitive abilities. The founding directors had a firm belief that the only way to move forward was to combine sincere dedication, develop a culture of innovation and striving to honor commitments. Over the years this has been tremendously beneficial for the Group, which has become synonymous with the word ‘trust’. Their unique understanding of economic and industrial priorities and r dedication towards excellent client service has helped them to branch out in a number of commercial ventures.

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2.2 Core Values of Swan Foam 

Providing quality goods and services

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Maintaining quality assurance

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Constant improvement

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Ensuring and exceeding consumer satisfaction

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Developing the company’s human resource

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Protecting employee welfare

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Managing long term profitable relationship with value chain partners

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Being competitive in the local market

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Practicing ethical way of conducting business

3. Principal Product Offerings of SWAN Foam Swan Foam is very popular in the foam and mattress market and very particular ing best raw materials to make the fines quality products for the consumer. Since last 33 years the company is producing & marketing “SWAN” brand polyurethane Foam with reputation. They believe in customer satisfaction thus careful about quality consistency, timely delivery and customer service. The Company is also producing peeled (Roll) foam with computerized Foreign Machine, which is being used in Cades/ Sportswear / Hats / Bags etc. for export purpose. Thus in the field of foam production and marketing Swan Foam and Home Textile Ltd has made a revolutionary change, keeping the price within customers reach and providing constant quality, acceptable to valued s.

 Swan Spring Mattress It is produced out of mostly nature origin raw materials such as : Steel Springs; Coir Sheets; Cotton Felts, steel Edge Guards etc. It again ensures air circulation and entire body weight (heavy or light) is being distributed thoroughly on the Mattress (SWAN GROUP, n.d.).

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 Swan Re-Bonded Mattress It is produced and reprocessed by special technology. It is stick & hard. Those who feel pain in Back/Backbone or Doctor advise to sleep on hard bedding or those who are interested to use Hard Mattress Swan Re-Bonded Mattress is the only solution for them (SWAN GROUP, n.d.).

 Swan Coir Mattress It is produced with thick Coir Sheets & Quilted Clothes. All over the world, Cotton Mattresses have become obsolete due to the unscientific body posture it creates when one sleeps on it for 8 hours, this results into irreparable orthopedic problems; alternatively people needs uninterrupted sound sleep to be 100% relaxed to start next day activities with full energy. Thus in the field of foam production and marketing Swan Foam and Home Textile Ltd has made a revolutionary change, keeping the price within customers reach and providing constant quality, acceptable to valued s (SWAN GROUP, n.d.).

4. Value Chain The value chain of Swan Foam consists of both primary and secondary activities.

4.1Primary Activities: The primary activities of Swan Foam encomes all the core activities starting from its internal and external logistical arrangements, operations, production, marketing, selling of goods and also the service provided to consumers. 

Inbound logistics:

Swan Foam sources all of their raw materials from abroad. Their major raw materials are Polyurethane Adhesive, Lamination Adhesive, Synthetic Rubber Adhesive and Unsaturated Polyester Resin. They mainly source the raw materials from China, India, USA, Singapore, Malaysia, South Korea and Thailand. After collecting the raw materials they store it in their own warehouse in Tejgoan which is separated from their production plant. As the warehouse is a bit

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far from the production plant, they use their own transport to bring the raw materials to the production plant. 

Operations:

Before production the raw materials are being brought to the production plant and stored in an air conditioned storage at very low temperature for 10-12 hours. This is a prerequisite for the production procedure. There are dices of different shapes according to the type of the foam. After cooling down the raw materials, according the formulation raw materials are poured into the dice and from there blocks of foams are produced. For all types of foam the principal raw materials are polyol and TDI, they use the ratio 2:1 in their formulation. Figure-1: Swan Foam’s Operation Process

Sourcing Supplies

Distribution

Polyol

Company Showroom (B2C)

TDI/Chemicals

Swan Foam

Dealers

(Manufacturing)

 

Other raw materials

Pre-order from other companies (e.g. furnishing) (B2B)

Outbound Logistics:

The finished goods are being stored in the warehouse inside the production plant. As they mostly produce goods after getting order from their clients, the finished good don’t required to be stored in the warehouse for longer time. The company uses both own and rented transport to deliver the finished goods to the whole seller, retailer and their own Show rooms. For delivering inside Dhaka, they mainly use their own logistics and for outside Dhaka they used hired transportation service.

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

Marketing and Sales:

Swan Foam focuses on developing new customer group and retaining the existing customer group. Their main competitors are Karmo Foam, Apex Foam and Foamex group. In order to cope up with the competition the company comes up with different sort of promotional campaign from time to time. At the same time, they have developed a strong sales network throughout the whole country. Swan Foam directly sells their products to the customers through their 12 showrooms across Bangladesh. 8 of the showrooms are inside Dhaka and the remaining 4 are situated in Chittagong, Khulna, Bogra and Sylhet. At the same time they sell the products through their dealers across the whole country. They also sell their products to the furniture producers. In case of the corporate buyers Swan Foam usually takes the order first and then produces the goods. 

Service:

Swan Foam aims to provide excellent customer service to its customers in order to attain ultimate customer satisfaction. That is why swan foam tries to provide superior after sales service. If the supplied goods are not according to the order provided by customer, they take back the full consignment and deliver the right order again. Sometimes if the customer is unwilling to take the modified order, they even give the money back. Though Swan Foam follow the mass production strategy, in case of special customer demand they produce customized products.

4.2 Activities The activities of Swan foam encomes activities like sourcing the raw materials, managing the human resource, technological and infrastructural concerns. 

Procurement:

For the procurement of raw materials Swan Foam has a department named as Foreign Procure Department. The employees also call it Commercial Department. This department basically looks for the foreign vendors or raw material supplier. They find out the cheapest vendor and s with them. They negotiate for the lowest price and fix the deal. At the end the

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department imports raw materials through specific procedure. In case of urgent need of raw materials they source the raw materials from local market. Production with the local raw materials enables them to minimize the production cost but in this case they have to compromise with the product quality. Normally they don’t use local raw materials. 

Human Resource Management:

Currently Swan Foam is running the company with 300 employees which includes 20 Executives, 80 Non-Executives and 200 production workers. In case of hiring employees they focus on young talented manpower. In case of recruiting executives they depend on the external source. They recruit through proper screening. But in case of recruiting the production workers, they use internal source. Swan Foam doesn’t have any training programs for training their employees. The employees are trained on the Job. But every employee is given the training of fire safety. The company ensures the proper health and safety of the workers according to the Bangladesh Labor Law of 2006. They have attractive remuneration system for the employees. The company gives promotion to the employees depending on the employee performance. 

Technology:

For producing the foam Swan Foam fully depends on foreign technology. The machines used are basically from , Japan and China. They have one Mixing Machine, one Horizontal Cutting Machine, one Vertical Machine, one Packing Machine and two Sealing Machines. Till today, they are dependent on the old technologies for production which they brought at the beginning of the company. However the company is planning to bring new technology to sustain in the competition. They use a software Called Tally Software for ing Division. This software helps them to measure their Cost of production, profit-loss and so on. 

Infrastructure:

Through years of operation Swan Foam has developed a very strong infrastructure. Other than the production division the company has 6 more departments which are s division, Commercial Division, Marketing Division, HR & Division, Vat Division and Audit Division. These departments help Swan Foam to Operate Smoothly. The s division deals with the financial issues. The Commercial Division helps to procure the raw materials at a

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cheaper price. The Marketing Division helps to increase the sale. HR & Division manage the employees and take necessary decisions. The Vat Division assists the ing division. And Audit Division conducts periodic audit for preventing the discrepancies. In addition to that they have a legal division which is consist of a company lawyer. He resolves the legal issues on behalf of Swan Foam.

5. Strategies After going through the activities of Swan Foam, we have tried to specify the important strategies Swan Foam.

5.1 Marketing Strategies 

Product: The core products of Swan Foam are Foam and Mattress. They produce 3 types Mattress which are Spring Mattress, Re-Bonded Mattress and Coir Mattress. However they are currently planning to enter the Home Textile market.

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Price: In case of pricing Swan Foam follows competitive pricing strategy. But at the same time they try to maintain the quality and brand value. They have to set the price a bit higher than the average price. However this doesn’t make Swan Foam less competition because they have a very good brand image for ensuring the quality.

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Place: Swan Foam has developed a strong supply chain throughout the whole country. They have 12 Show Rooms of their own through which they directly sell to the ultimate customer. At the same time they sell to the Whole Seller and Retailer across the country.

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Promotion: It is sad but true that there no internal promotional department of Swan Foam. They do publicity through printed media and electronic media. But in this case they depend on outsider advertising firms to make the promotional tool. Sometimes they sponsor different events in order to do publicity. They also do sales promotion in order to boost sales. But Sale Commission to the dealer is the mostly used promotional activity of Swan Foam.

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5.2 istrative & HR Strategies The istrative Division and HR Division combined together in Swan Foam and named as istrative & HR Division. The basic strategy of HR Division is to recruit the best manpower for the organization. In case of recruiting the executive level employees they depend on the external source. Through proper screening process they recruit the top level employees. But in case of recruiting the labor or lower level employees they sometimes recruit form internal sources. They always ensure proper health safety of the workers and employees. In case of istrative strategy, the top level management takes all the decision. The lower level employees are to perform their tasks according to the instructions of top management. The organization has a traditional hierarchy system.

5.3 Strategy of Sustaining in the Competition Swan Foam is considered to be the most successful company in the Foam Industry of Bangladesh. When we wanted to know that what the story behind, they replied that superior quality is their main strength. They always try to ensure that the product quality is better than their competitors. They never compromise with the quality. That is why even in the competitive market they are being successful even after charging higher than the competitors.

6. Opportunities Ahead Currently Swan Foam is operating their business only within the boundary of Bangladesh. But they are procuring raw materials from China, India, USA, Singapore, Malaysia, South Korea and Thailand. Through their raw material supplier they might gather the information of prospective consumer of Foam in those countries and the current condition of foam industry on those countries. If they find the markets potential they might expand their operations on those countries with the help of those suppliers. Swan Foam might also expand their business to the neighboring countries of Bangladesh or the South Asian countries if there is a potential market. In case of expanding operation in foreign countries at initial stage they might go for exporting. Later on after gaining experience they go for Foreign Direct Investment or Venture.

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7. Challenges Although Over the years Swan Foam has established itself as one of the most competitive companies of the home textile industry in Bangladesh, It still face some problems conducting the business which is very much obvious for any business. The challenges can be encomes problems regarding sourcing materials, market based challenges and other related problems.

7.1Material based challenges As Swan Foam believes in ultimate quality of its products, it collects all the raw materials from foreign countries which at times creates problem for them in of easy access to raw materials, availability of TDI and other chemicals etc. 

Access to quality raw materials:

Although Swan Foam imports high quality raw materials from abroad, sourcing the raw materials becomes time consuming process at times. Especially in case of emergency large orders, they face issues accessing quality raw materials. Thus they have to collect raw materials from local supplier which is not good in of quality. This in turn leads to poor quality production. 

Availability of chemicals:

The chemicals Swan Foam imports from abroad have shorter life. Within one to two months the chemicals expires. So they can’t purchase bulk amount together and they have to order chemicals in every two months. So the shipment cost becomes higher and this leads to higher cost of production. Insufficient resources: Market based challenges: Well established competitors: There are few well established competitors already in the market like Karmo Foam, Apex Foam etc. and new companies are entering into the market. So it becomes tough for Swan Foam to retain its customers because now customers have many options in their hand and they can shift to another company easily.

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7.2Market based challenges Since consumers’ needs are constantly changing and the home textile industry is an emerging market in Bangladesh, Swan Foam faces certain market related challenges as well which include customers growing needs, increasing price of raw materials and weak promotional efforts. 

Customers changing needs:

Swan Foam doesn’t offer a large variety. They only produce four types of foams. Now-a-days customers need has been changing and they want variety in of design, size, shape, color. That is why Swan Foam is facing challenges in order to cope up with growing customer needs. Keeping customers satisfied with their low variety in today’s changing market becomes really hard for Swan Foam. 

Increasing Price of Raw Materials:

Swan Foam purchases raw materials from abroad and the price of those raw materials fluctuate in international market. So they have to negotiate with the foreign importers frequently. The negotiation is a lengthy process and the increasing price of raw materials makes the production cost higher for swan foam. It results lowering the profit. 

Weak Advertising and Promotional Program:

For advertising, Swan Foam relies on external AD agencies and the advertising quality is not that good to attract customers. The promotional program is very weak and they don’t pay attention to strengthen their advertising and promotion program. The budget of Swan Foam for marketing strategy is very low which results in poor promotion program and advertising.

7.3 Other challenges: Swan Foam also faces certain challenge which are not in control of the company but have serious effect on the smooth operation. These mainly include political and regulatory problems of Bangladesh.

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

Political Instability:

The political situation of Bangladesh is not stable in recent years. Due to political turmoil, the businesses here are facing many difficulties. During blockade, Swan Foam doesn’t get the shipment from foreign importers on time. So the production becomes delayed and the distribution to whole country remains off during political turmoil. So the total operation becomes stagnant. 

Rigid Safety Regulations:

The companies which use chemicals as their raw materials, Labor Law 2006 imposed strong safety rules and regulation for them. The investigation team investigates the company every 6 months and if they find any violation of law they fine a huge amount of money. As Swan Foam uses chemicals in their operation, they have to maintain the strict safety rules and regulation. They have to check very frequently whether the rules are maintaining or not. It is time consuming as well as costly too.

8. Setbacks: Although Swan Foam is a well reputed and profitable company in Bangladesh home textile industry, there are certain setbacks which is pulling the company back and restricting from being the market leader. 

Swan Foam is operating for 33 years. In this long journey of their business, a trusty relationship with their customers has built up. As the relation with its customers becomes old and trustworthy, sometimes they sell their products to their customer on credit. At times it results in long delayed payment quickly and the company should wait for a long time for the payment from customers. This is not good for the growth of any business.

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Delaying in shipment is also a concerning issue for Swan Foam. They have to wait for foreign shipment of raw materials. It’s a time consuming process. After that the production needs much time. So in of emergency order, the shipment of final products sometime becomes delay.

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

Very frequently Swan Foam gets the product back after the final selling. The reason behind this is not fulfilling the customers’ order. The design, size, shape, quality of the ordered product don’t match sometimes and the customers return back the product. This requires additional costs for Swan Foam as they have to change the product. This also creates a bad impression towards Swan Foam.

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Miscommunication is another problem for Swan Foam. Sometimes they mismanage their orders. They take order from someone and make shipment to another one. This result in extra shipment cost because they get the order back and make shipment again.

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The logistics system of Swan Foam is normally good. Usually they supply products to their outlets inside Dhaka with their own transport system. But when they make shipment outside the capital, they normally take help from the third party transport system like as courier service. In most cases the third parties are unprofessional and careless. As a result, the products become defect while on their custody. So they get their product back from the outside outlets which incurs additional cost of both remaking the product and reshipment.

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References 1. AKHTAR foam. (n.d.). Retrieved March 18, 2016, from http://akhtarfoam.com/ 2. Apex Husain. (n.d.). Retrieved March 18, 2016, from http://www.apexhusain.com/about_apexhusain.php 3. Akter, M. K. (2012, July). Bangaldesh Textile Today. Retrieved January 9, 2016, from textiletoday.com: http://www.textiletoday.com.bd/home-textiles-prospects/ 4. Islam, N. (2015). Company Overview. An Analysis of HR Activities of Swan Group, 7-8. Retrieved March 15, 2016, from http://123.49.46.157/bitstream/handle/10361/4355/Cover Page.pdf?sequence=1. 5. Kiron, M. I. (2015, September 6). Merchandising Online library . Retrieved January 9, 2016, from Merchandising Online library : http://www.garmentsmerchandising.com/readymade-garments-industry-of-bangladesh/ 6. Karmo. (n.d.). Retrieved March 18, 2016, from http://www.karmogroup.com/demo3/ 7. SWAN GROUP. (n.d.). Retrieved April 05, 2016, from http://www.swan-family.com/ 8. & Conditions. (n.d.). Retrieved March 18, 2016, from http://www.foamexgroup.com/aboutus.php

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