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Essay: Analytical report assessing prospect of new product launch

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  • Subject area(s): Business essays
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  • Published: August 12, 2017*
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  • Number of pages: 2
  • Words: 2877
  • Analytical report assessing prospect of new product launch
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Being hired by Pran Foods Limited as a business analyst, the task is to submit an analytical report assessing the prospect of their new product launching decision – Japanese ramen noodles. It is a Japanese style noodle-soup dish which is served in meat or fish based broth that is often flavored with soy sauce or miso. The dish is served with toppings such as nori, pork, dried seaweed, menma and green onions. The noodles are made from wheat flour, palm oil, salt, citric acid, dried leek flake, garlic powder, powdered chicken, rendered chicken fat, soybean, spices, sugar, and a various range of different edible chemicals.

However, in order to make it compatible with the social setting of Bangladesh since the majority of people in the country are Muslims, which makes up 86.6% of the total population. PFL needs to omit an ingredient before they produce the noodles, and the ingredient is pork. PFL will not only be able to make the noodles with pork even if they wanted to, but will also not be able to introduce it to the market as the consumers will not purchase it due to pork being ‘haram’ to Muslims. Moreover, followers of other religions, where consuming pork is not forbidden, may not be willing to purchase it because of cultural norms.

This new product is to be manufactured from the agro department of the company and it will consist of real flavours from the authentic Japanese ramen noodle flavours.

Pran Foods Limited will require a range of resources for the production and distribution of the noodles and without these resources the company will not be able to produce any kind of tangible products, let alone distribution. The resources for production and distribution include –

Natural resources

Capital resources

Labour resources

Natural resources refer to the resources that are provided by nature in scarce amounts and thus such resources need proper utilisation or else they will be wasted.

Examples of such resources include gas, water, oil, wood, iron, coal etc. Pran Foods Limited will require all of these resources in order to produce its new product. Water and oil are two of the key ingredients in the production of noodles, also natural gas, iron and coal are some of the key components for operating the production line of the entire process, which helps to run all the machineries in the factory.

PFL will have to take permission from the government in order to use certain natural resources such as water, electricity (which includes hydropower, coal, natural gas and iron). To use these resources for the production of their new product, PFL must take permission from the Energy and Resources Division – Government of the People’s Republic of Bangladesh.

Capital resources refer to the resources which are produced for the purpose of making other goods and services.

Examples of such resources include raw materials, money, factory building, machineries etc. Raw materials, factory building and machineries are some of the most essential capital resources that are needed for the production of the Japanese ramen noodles. Raw materials such as flour, sugar, various spices and flavourings are required for making the noodles in a factory building that consist of machineries where the actual “cooking process” will take place and since PFL already has a factory to carry out all of their production processes, they do not have to build or purchase a new one for the production of the noodles.

Labour resources are the talents, skills and competence of a human being that are available in a nation.

Such resources refer to the employees of Pran Foods Limited who will run the company and play an important role in production. The human resources also make major decisions for the company in order to achieve organisational targets and become successful in its field.

Before going into production, Pran Foods Limited will need to allocate all of its resources, which is the process of choosing the methods through which resources will be used to meet a society’s needs and wants. It also involves the process of distribution of the product to its consumers. PFL can use its current distribution system, which is the indirect distribution system. This process works by PFL distributing their produced goods to wholesalers, who in turn sell it to retailers who finally sell them to the consumers for a profit. There are two methods through which Pran Foods Limited can allocate its required resources – markets and central planning.

Pran Foods Limited need to consider the economic system they are working in before producing any product. As described by, economic systems are the means by which countries and governments distribute resources and trade goods and services. Along with controlling distribution of goods and services throughout the country, these systems are the accepted way of organising production, establishing rights and freedom of ownership by using productive resources and governing business transactions in a society. Economic systems control the five factors of production – labor, capital, entrepreneurs, physical resources and information resources.

There are four types of economic systems in the world –

Planned/Command Economy

Pure Capitalism Economy

Free Market Economy

Mixed Economy

Planned/Command Economy refers to the economic system that is based on public ownership and central planning. In short, this is the economic system which is fully under the control of the government, starting from resource allocation to deciding what to produce and how much to produce. The government also sets the prices for the goods and services. As a result, there is little or no competition between firms operating in such an economic system. However, the employment rates are much higher in a planned or command economy and there is less social differences between the rich and poor since income distribution is more or less equal.

Countries which follow planned or command economy include Russia, North Korea, Cuba, Iran and other communist countries.

Pure Capitalism Economy refers to the economic system where the private sector is in charge of production, hence they can produce almost anything and there will be little or no governmental interference. Such economic systems have no existence in the real world since it is not possible to run an entire economy without any governmental influence.

Free Market Economy refers to the economic system that is based on private ownership of all the economic resources in an economy and the use of markets in making economic decisions – the production and pricing of goods and services – are regulated by the laws of demand and supply. The government is in charge of performing only political factors of upholding the legal system and maintaining public security, not interfering unnecessarily in the production of goods and services and its pricing scheme. In such economic systems, the main objective of firms are to maximise profits and firms only produce goods and services which the consumers are willing to buy. Producers sell their goods and services at the highest possible price that consumers are willing and able to pay for. Competition levels are always optimum in a free market economy since there is a large number of producers for each sector which motivates innovation within production, offering consumers with substitutes that are one level better than the others.

Examples of countries who follow such economic systems include Hong Kong, Singapore, Australia, USA etc.

Mixed economy refers to the economy system that is a mix between the aspects of a market economy and a command economy. In this economy system production decisions are resource allocation decisions and how
they should be utilised are are made with cooperation between the public and private sectors. Mixed economy attempts to overcome the disadvantages of a market economic system by using government intervention to control or regulate different markets and since competition levels are very high, only the companies which are fittest to compete will survive in the economy. Moreover, due to high competition consumers get value for money products and more innovative substitutes.

Countries operating in mixed economy include Bangladesh, Japan, Indonesia etc.

The fact that Bangladesh operates in a mixed economy has been already established. Therefore, Pran Foods Limited need to consider the methods and strategies to be used while serving the market with their new product Japanese Style Ramen Noodles. Since such noodles item is a new addition to the noodles scenario of Bangladesh, this might cause an impact on the social acceptance factor. Despite the fact that noodles are now one of the most widely available and consumed products in the country, consumers may display a different opinion of these noodles since they are authentic japanese style ramen noodles which do not have any signs of the Bangladeshi flavours people are used to. However, the impact can also take a positive turn since consumers are usually very accepting of a new product, specially when it is a food product.

As it has been already stated that only the firms fit enough to satisfy its consumers will remain in the economy for the long run, Pran Foods Limited must ensure they are equipped to serve all of the demands of its consumer bases, otherwise they will be driven out of the market quickly by other competitors. Pran Foods Limited must provide the best value product for the best price. Overcharging the consumers for a pack of noodles will not do them any good, rather they will fail to capture even a small percentage of the total market. Since in a mixed economy private sector firms have the freedom to choose its target market, Pran Foods Limited will be benefitted as they will get to target their preferred consumer base for the new kind of noodle type, i.e. children to fully grown adults (ages 10 to 40+).

The government of any country must follow a stabilisation policy in order to jurisdicate the amounts of ups and downs in a business cycle and also to influence the amounts spent and outputs produced in an economy. Stabilisation policies helps to ensure the economy is kept as close as it is possible to its potential output levels. These policies are of two categories – expansionary and contractionary policies.

Expansionary policy seeks to reduce the unemployment levels and stimulate output whereas contractionary policy seeks to stabilise price and reduce output.

The government of Bangladesh can control spending and output levels of the economy through two sets of instruments-

Fiscal Policy

Monetary Policy

Fiscal policy, according to, involves around the decisions taken to collect revenues in the form of taxations and how to spend the collected revenues effectively. Just like the stabilisation policy can be categorised into two sectors, fiscal policy can also be categorised into expansionary and contractionary policies.

Expansionary fiscal policy refers to an increment in governmental spending, a reduction in taxation, or both. This method will introduce an immediate effect since the government is increasing expenditure, which will in turn increase aggregate demand and employment levels. Also, tax cuts will have a less immediate effect since households and firms will spend more, hence consumption and investment levels will increase. This will also increase aggregate demand and employment levels.

However, with contrast to expansionary fiscal policy, contractionary fiscal policy aims to reduce government spending, increase taxation, or both. Contractionary fiscal policy will introduce an immediate effect if the government decreases expenditure, which will lead to a fall in the total demand for goods and services. This will decrease aggregate demand and bring forth a decline in the employment levels. On the other hand, if the government increases taxation along with decreasing expenditure, there will be a less immediate effect since households and firms will spend less and consumption levels will drop along with investment levels. This will bring about a decline in aggregate demand, hence employment levels will shrink.

Monetary policy refers to the government’s usage of interest rates and money supply as its tools for ensuring stabilisation in the economy. Here, the central bank – Bank of bangladesh – sets interest rates and determines the level of money supply in the country. Expansionary monetary policy seeks to decrease interest rates which makes borrowing cheaper and as a result businesses respond by investing more and households purchase more which increases spending and consumption. Since investment levels increase, more doors to employment are opened. Counter to expansionary monetary policy, contractionary monetary policy seeks to increase interest rates which will make borrowing expensive and as a result investment levels will decline and households will consume and spend less but save more. This method of monetary policy is usually put in effect when the government is attempting to control inflation.

Luckily for Pran Foods Limited, the government of Bangladesh is currently operating under the instruments of expansionary fiscal and monetary policies, which can be found in the Bangladesh Economic Brief by The World Bank. This is an advantage for Pran Foods Limited since loans are easily available right now which allows them to charter more loans and invest more. During this time sales of Japanese style ramen noodles will be on maximum since expansionary policies discourage savings and encourage expenditure. As a result, consumers will purchase more and this will yield Pran Foods Limited more profits, also Pran Foods Limited will need to pay lesser amounts of tax to the government which will further retain their profits. However, since tax rates are low, the government will earn less revenues which may force them to face difficulties while preparing the annual budget for Bangladesh.

Competition policy can be defined as the balance between achieving competitiveness while making progress and being efficient for the economy as a whole and ensuring healthy competition in the segments concerned. It also preserves consumer welfare in a society. Such policies are designed to encourage firms to produce high quality products and services for the economy and become more efficient.

Competition policy will encourage Pran Foods Limited to produce quality and value for money products for its consumers at a lower price. Along with ensuring consumers’ welfare this policy also acts as a guide to prevent Pran Foods Limited from using dumping methods for their new product while launching. This also increases healthy competition between firms, which is important to keep the economy stabilised.

Regulatory mechanisms are the policies and guidelines to drive an organisation toward its objectives while simultaneously satisfying its stakeholders’ needs. Every business organisation has a set of inceptive targets, goals and objectives which can be achieved by such policies together with gaining the feasibility to satisfy its stakeholders’ requirements – always working towards achieving optimal satisfaction from the society by striving to keep the environment less polluted.

In order to operate ethically in the economy, Pran Foods Limited must abide by certain competition policies regarding doing business and the competition which comes along –

Company Act

Labour Act

Child Labour Law

Contract Law

Competition Act 2010

Consumer Protection Act

Intellectual Property Act

Competition policies are designed to protect consumers as well as producers and ensure safeguarding of public interest.

Company Act is one of the competition policies which establishes rules about who can set up business, the steps and paperwork involved in the business, how to run the business, how to report on accounts information etc. In terms of Bangladesh, this act makes sure Pran Foods Limited produce their new product with accordance to the requirements from BSTI. This act also makes sure Pran Foods Limited maintain ethical business practices.

Labour Act states the employment and dismissal procedure, age limit, wage rate, working hour, legal and financial rights, dispute solving methods, ensuring work environment safety etc. Pran Foods Limited must operate in accordance to the conditions of this act, which is to ensure the employees receive their salaries in time, have a proper workplace to work in, are paid overtime and bonuses, provide other facilities etc.

Child Labour Law states Pran Foods Limited cannot hire labourers who are under the age of 16. This is constituted in the Factory Act, 1965.

Contract Law states Pran Foods Limited cannot dismiss an employee before the contracted number of years that was reached upon mutual agreement, i.e. five years, has been over. The law is also applicable for Pran Foods Limited’s shareholders.

Competition Act 2012 has been designed to prevent, control and eradicate conspiracy, monopoly and oligopoly, abuse of dominant position in the market and anti-competitive business environment to promote economic development of Bangladesh. This act ensures there is healthy competition between Pran Foods Limited and its competitors. This is the new amendment of the law.

Consumer Protection Act states Pran Foods Limited must provide genuine information regarding their products to its consumers. For instance, Pran Foods Limited should state all the nutritional information regarding their noodles and its date of expiration along with the date of manufacture.

Intellectual Property Act protects an individual or company’s creativities, ideas, patents, copyrights etc. against being unethically used by third parties who do not legally have permission to use such materials for their own wellbeing.

By following all the above mentioned acts and laws, Pran Foods Limited will be able to operate ethically in the economy without having to face any unwanted legal actions.

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