2012

Prepared For

Prof. Dr. A.K. Enamul Haque

Course Instructor, International Business (Bus-

606) MBA Program, School of Business

United International University

Prepared By

Sharmin Zeenat ID: 112103052

Section- A

12/29/2012

Changing Global Business on Transportation Sector (Bus) and New Business Project- “Green Tire”

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Globalization

Globalization is the process of international integration by which the experience of everyday life,

marked by the diffusion of commodities and ideas and other aspects of culture, is becoming

standardized around the world.

Factors that have contributed to globalization include increasingly sophisticated

communications and transportation technologies and services, mass migration and the movement

of peoples, a level of economic activity that has outgrown national markets through industrial

combinations and commercial groupings that cross national frontiers and international

agreements that reduce the cost of doing business in foreign countries.

Our life is struck within a second without a mobile phone More or less we love to eat pizza on

Pizza Hut is the experience of Globalization. Every day we are passing hundred of

Changes in the Global Business:

Today’s business has change with the change of global needs. At past we did business to

meet the demand of a country but now the time is change and businesses have to consider

the whole world, because business has changes with the change of currency, human

needs, culture, and region and so on.

Businesses are entering in to the globalization and economic culture changes rapidly

because of the economic integration.

Transportation- Bus

World most popular public transport ‘Bus’ the short form of Latin word Omnibus earn thousand

billion of dollar over the manufacturing and servicing all over of the world.

History

Today, anything which is used to carry passengers and is self engineered is termed as a bus. It is

normally used for fixed distances and routes. Any vehicle that carries more than 10 people is

called a bus.

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In the early 1830's Sir Goldworthy Gruney from the UK had designed some kind of a Hugh stagecoach, which was powered by steam engine. This was probably the first kind of bus developed by mankind.

In parallel to the development of the bus was the invention of the electric trolleybus.

By the 1915, bus service had started throughout the world. And slowly the Horse-Drawn

Carriage and the Electric-Trolley cars were replaced by Buses.

An American Firm the Yellow Coach Manufacturing in 1922, for the first time had

developed a chassis especially for bus service.

Soon after that, the gasoline electric buses were introduced and a few years later the

diesel powered Buses came into being. Later in the 1950's air suspension was first

implemented in the passenger Buses.

World top 10 bus production country

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Business Product

My Business product is environmental friendly “Green-Tire” and my Factory Location is India.

Before establish my factory in India I consider some factor. Those are

Culture Business environment In India Business Relationship between Bangladesh and India Why I Chosen India instant of Bangladesh

Culture Both Bangladesh and the India are part of the Indian subcontinent and have had a long common

cultural, economic and political history. The cultures of the two countries are similar. The two

Indian states of West Bengal and Tripura speak the language that is also spoken in Bangladesh,

Bengali.

But there are also some differences

Religions

India is the birthplace of Hinduism, Buddhism, Jainism and Sikhism, collectively known as

Indian religions. 80% of the people are Hinduism. 13% are Islam. 7% are Buddhism, Jainism and

Sikhism.

On the other side the majority of Bangladeshis (about 90%) are Muslim, and a small number of

Hindus, Christians and Buddhists are also living in the country.

Language

Indian mother tongue is Hindi and official language is English.

But Bangladeshi mother tongue is Bengali.

Per Capital income

Bangladesh per capital income is $700.59 and in India per capital income is $1388.

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Currency

Bangladesh-Taka (BDT). India -Indian rupee (INR). In 2012 on 9th December,2012 the exchange

rate in India and Bangladesh are

1 INR= 1.49 BDT

1 BDT= 0.67 INR

Business Relationship between Bangladesh and India

- Over 15% of Bangladeshi imports come from India.

- Bangladesh has a large trade deficit with India; this is offset by surpluses with other countries.

- Bangladeshi exports to India receive tariff concessions (under SAFTA).

- They account for less than 1% of total India’s imports.

- Illegal trade between the two countries amounts to 3/4 of regular trade.

Business Environment in India

The government of India welcomes FDI in all sectors where it is permitted, especially for the

development of infrastructure, the technological upgrade of Indian industry through ‘Greenfield’

investments, and for projects that create employment opportunities on a large scale. Investments

for setting up Special Economic Zones (SEZs) and establishing manufacturing units are also

welcomed.

Why I Chosen India instant of Bangladesh

In Indian tire industry during the last few decades has been significant. Because of

Government approvals of collaborations with MNCs in this sector.

The emphasis given by Indian tire companies to applied research

The setting up of well-equipped in house R&D centre's by large tire companies

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Manned by experts and experienced professionals have also helped in technology up

gradation

Green tires have been emulated by economies like South Korea, Japan, US and even China.

India, with its transport sector being the second largest contributor to carbon dioxide (CO2)

emissions, cannot be silent spectator to these international developments. There is huge scope for

growth in India’s transport sector. And by aligning development with climate agenda for a more

sustainable transport sector, the results can be further amplified. India’s National Action Plan on

Climate Change (NAPCC) that was formulated in 2008 also recognizes the fact that Green

House Gases (GHG) emissions from transport can be reduced by adopting a sustainability

approach. The NAPCC envisaged this approach through a combination of measures like

increased use of public transport, higher penetration of bio fuels, enhanced energy efficiency of

transport vehicles, etc.

The main martial of Green Tire is natural rubber. About 48% of the global demand for natural

rubber comes from China, India and Malaysia which are three major natural rubber consuming

countries within the ANRPC (Association of Natural Rubber Producing Countries).

To build up a tire factory in Bangladesh have several problem.

In Bangladesh there is only two tires Manufacture Company one is Rupsha and another is

Hossain tire industry.

There is no big market in tire industry

The country's sole tire manufacturing plant has failed to cash in on the booming

automotive industry due to energy shortage and under-invoicing by a section of

importers.

Type of Investment

A citizen of Bangladesh or an entity incorporated in Bangladesh can invest only under the

Government route.

There are two routes for FDI approvals:

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1. The Automatic route via Reserve Bank of India (RBI)

2. Foreign Investment Promotion Board route (FIPB route)

Foreign Investment Promotion Board (FIPB) route - Government Approval

Applications for such cases are to be submitted in FC/IL form or on plain paper to Foreign

Investment Promotion Board (FIPB) in Department of Economic Affairs, Ministry of Finance,

Government of India.

Plain paper applications carrying all relevant details are also accepted. No fee is payable. The

guidelines for consideration of FDI proposals by the FIPB are at Annexure-III of the Manual for

FDI.

Green Tire

When driving, each vehicle is subject to forces that slow its progression: mechanical friction,

aerodynamic friction, vehicle inertia, gravity and rolling resistance. It is on this latter point that

the green tire has a role to play in terms of optimizing rolling resistance. The tire alone can be

responsible for almost 20% of a vehicle’s fuel consumption. At each rotation, the materials

making up the tire heat, deform and release part of the energy transmitted by the vehicle: this

phenomenon is called rolling resistance and can represent up to one fuel fill in five.

The green tire was invented by the Michelin Group who launched the Energy tyre 17 years ago.

Since then, major manufacturers have joined the race for energy savings and have presented

several “green” tire models in their ranges. Michelin managed to replace 95% of the carbon

black, which gives the tire its color, by silica which consumes far less energy and thus requires

much less fuel. This technique gave rise to the Energy Saver tyre, with 20% less rolling

resistance and energy savings of 4 g of CO2 / km. This tyre makes up ¾ of Michelin’s sales in

Europe.

Energy Efficient:

Reduce fuel consumption and CO2 emissions.

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Clean Air

Made from eco-compatible material those minimize environmental impact, both at the

production stage and throughout the life of the tire.

High Mileage

Longer lasting tire that maintains high levels of performance and safety.

Low Noise

Already complies with the 2012 EU Regulation on the reduction of noise, resulting in improved

driving comfort.

Raw Material of Green Tire

Natural Rubber

Modified grades of solution styrene-butadiene rubber (SSBR)

Refined grades of neodymium-polybutadiene rubber (Nd-PBR)

Silane-treated silica instead of the traditional carbon black

Crude oil

Mesoporous silica instead of the traditional silica

Steel cords

Other tire chemicals

Key feature of Indian Tire Industry

At present there are 40 listed companies in the tire sector in India.

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Major players are MRF, JK Tires, and Apollo Tires & CEAT, which account for

63 per cent of the organized tire market. The other key players include Modi

Rubber, Kesoram Industries and Goodyear India, with 11 per cent, 7 per cent

and 6 per cent share respectively. Dunlop,Falcon, Tyre Corporation of India

Limited (TCIL), TVS-Srichakra, Metro Tires and Balkrishna Tires are some of

the other significant players in the industry.

Industry is a major consumer of the domestic rubber market. Natural rubber

constitutes 80% while synthetic rubber constitutes only 20% of the material

content in Indian tires. Interestingly, world-wide, the proportion of natural to

synthetic rubber in tires is 30:70

The sector is raw-material intensive, with raw material accounting for 70% of

the total costs of production

Current level of radicalization includes 95% for all passenger car tyres, 12% for

light commercial vehicles and 3% for heavy vehicles (truck and bus)

Restrictions were placed on import of used /retreaded tyres since April 2006

Import of new tires & tubes is freely allowed, except for radial tyres in the

truck/bus segment which has been placed in the restricted list since November

2008

Total value of tire exports from India is approximately Rs 4000 corer (2010-11)

The major factors affecting the demand for tires include the level of industrial

activity, availability and cost of credit, transportation volumes and network of

roads, execution of vehicle loading rules, radicalization, retreading and exports.

New Policy Initiatives

The tire industry in India has had to grapple with raw material price volatility, rupee

appreciation and cheap Chinese imports. In this connection, some of the recent

initiatives by the government to facilitate the growth of the sector include:

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No WTO bound rates for Tires and Tubes.

No restrictions on the import of all raw materials required for tyre manufacture

except carbon black, which has been placed in the restricted list

Increasing thrust on development of road infrastructure

Tire Standard policies of India

The following Indian standards address the basic fit, form and functional requirement of tyres

and tubes as per the service conditions prevailing in India.

1) Specification IS 15627: Automotive vehicles – Pneumatic tyres for two and three-

wheeled motor vehicles.

2) Specification IS 15633: Automotive vehicles – Pneumatic tyres for passenger car

vehicles, diagonal and radial ply.

3) Specification IS 15636: Automotive vehicles – Pneumatic tyres for commercial

vehicles, diagonal and radial ply.

4) Specification IS 13098: Automotive vehicles – Tubes for pneumatic tyres

WTO

The World Trade Organization (WTO) is the only global international organization

dealing with the rules of trade between nations. At its heart are the WTO agreements,

negotiated and signed by the bulk of the world’s trading nations and ratified in their

parliaments. The goal is to help producers of goods and services, exporters, and

importers conduct their business.

Rule of Origin

Rules of Origin is the mechanism in identifying the origin of products under the

regional/bilateral preferential trading arrangements namely PTA (Preferential Trading

Agreement) and FTA (Free Trade Agreement) commonly known as Regional Trading

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Arrangements (RTAs). In order to harness the potentials of the Agreement and to achieve

substantial trade liberalization commitments under the Sao Paulo Round, as envisaged in the Sao

Paulo Declaration, we are required to look at the existing Rules of Origin in the context of the

evolution of Rules of Origin in the regional and bilateral trade agreements entered into/being

negotiated by the member countries of GSTP.

Preferential Rules of Origin: Indian context

In recent times there has been an intensification of India’s economic engagements with other

countries. These are manifested in negotiations on preferential trading agreements (PTAs), free

trade agreements (FTAs) and Comprehensive Economic Cooperation Agreements (CECA) with

various countries and regions. These include ASEAN, Thailand, Singapore, MERCOSUR,

SAFTA, BIMSTEC, etc. India is already engaged with Bhutan, Nepal and Sri Lanka under

bilateral trading arrangements. There are some economic partnership arrangements between

India and other countries that are also in the offing. India has adopted a comprehensive approach

thus far, in terms of laying down originating criteria for its preferential imports.

Whilst it is difficult to derive specific recommendations with regard to the best practice approach

to the design of rules of origin, in India’s view the GSTP Rules of Origin should have the

following elements:

a) The rules of origin should be simple but precise, transparent and, to the extent possible,

predictable and stable.

b) They should be designed to have the least trade distorting impact and should not become a

disguised non-tariff barrier to trade.

c) As far as possible the rules should be consistent across products. The greater the derogations

from general criteria, the greater the complexity of the system of rules of origin both for

companies and for officials administering the Agreement.

d) There should be some mechanism to institutionalize cooperation between the exporting

country’s agencies issuing preferential certificate of origin and importing country’s Customs

authorities, so that the clearance of preferential goods can be facilitated.

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Conclusion

The Green Tire purchase price is hardly higher than a traditional tire, but the real question lies in

the use this type of tire can provide. Green tires can be adapted to any type of car and bus.

This technology shared by all major manufacturers is available to the consumer, easy to use,

effective on performance economical.

Although a green tire will always be black, its composition and characteristics make it a truly

innovative product in terms of energy efficiency and environmental protection.