Potentiality of LPG market and suitable entry mode for a foreign company to enter into such market of Bangladesh

Abstract

Demand of Liquefied Petroleum Gas (LPG) has been increasing rapidly from industrial to domestic purpose due to unavailability of natural gas, shortage of biomass fuel, high price of petroleum oil and other sources of energy. This project has focused on LPG market mainly for domestic purpose. In this project, present situation of the energy sector, possible alternatives, source, supply chain, present demand and projected demand of LPG has been analyzed. This project has found that availability of LPG is about 0.1 million tons per year and supplied by only 7 companies against a demand of about 0.5 million tons per year. This shortage of 0.4 million tons of LPG reveals a good potentiality and projected future demand of 1 million tons of LPG has made this market more potential. The main purpose of this project is to find out suitable entry mode for a foreign company to enter into LPG market of Bangladesh. This project has given a thorough picture of the competitiveness characteristics of the LPG market and country condition for LPG business in Bangladesh. Market research has been conducted by following Philip Kotler’s (2009) market research system. Competiveness in the existing market and home country (Bangladesh) situations have been analyzed by Michael Porter’s (1998) Five Forces and National Diamond Model respectively, various entry modes have been taken from Charles WL Hill (2007) . A suitable entry mode for a foreign company has been suggested by analyzing internal, external factors for entry mode of Franklin Root (1998). At end the suitable entry modes have been found considering all internal and external factors those are influential for entry mode decision in Bangladesh. Finally this project suggests that investment entry modes such as joint venture, wholly-own subsidiary are the suitable entry modes for foreign LPG Company. Joint venture entry mode is the best entry mode for Bangladesh.