Project Report

On

Informal Marketing

East West University

Informal Marketing:
A study on informal entrepreneur in Dhaka city

Project Report
Course code: BUS-498

Submitted to: M. Sayeed Alam Assistant professor, Department of Business Administration, East West University

Submitted by: Humaiun Kobir Id: 2008-3-10-008 Department of Business Administration

Date of submission: April 20, 2013

Letter of Transmittal

April 20, 2013 M. Sayeed Alam Assistant Professor, Department of Business Administration, East West University

Dear Sir: I am the students of in your section. You gave me a project to submit a report on Informal Marketing. I am very much happy to say you that I have made it for you. During the preparation of this assignment I have learned something extra in practical. I would once again like to express my sense of gratitude towards you for giving us this opportunity, and sincerely hope that this report would give you immense satisfaction. I will always be available to respond to any queries that you may have in this regard.

Sincerely yours, Humaiun Kobir

Acknowledgements
I want to express my heartfelt gratitude to my most honorable teacher, my direct supervisor, M. sayeed Alam, Department of Business Administration, East West University for his mastermind direction, dexterous management, adept analysis, keen interest, optimistic counseling and incessant. It is also a great pleasure for me to offer my deepest gratitude to all of our friends of the class for helping us. I would also like to thank all of respondents for their help and assistance, friendly behavior and earnest co-operation, which enabled us to work in a very congenial and comfortable atmosphere.

Table of content Chapter 1 1.1 1.2 1.3 1.4 1.5 1.6 2 3 4 4.1 4.2 Description Introduction Origin of the report Objectives of the report Research methodology Informal enterprise History Limitation of the study Findings and Analysis Conclusion and recommendation Appendix Reference Questionnaire Page no. 6-9 07 07 07 08 08 09 10-24 25-26 27-28 28

Chapter One

Introduction

1.1 Origin of the report:

I have prepared this report as a course requirement of Bus-498 (project work). I am preparing this report under my supervisor Mr. M Sayeed Alam, Assistant professor, Department of Business Administration. The report was prepared about the non-tax paying/unregistered enterprise in Dhaka city. I have started the work after fulfilling all the required surveys and works associated with the market research.

1.2 Objectives of the report

The present study was done among the single person operations of the informal sector. This study was undertaken among the street vendors of Dhaka (Merul badda) area. The food and nonfood related business, operated on the street were only considered for the study. Swedish International Development Cooperation Agency (SIDA) identified the definition of the informal economy in its partner countries in Asia. The definitions adapted in Bangladesh and India, though are similar in many respects have a few point of differences

1.3 Research Methodology

The population of the study included single person enterprise (street vendors) in Dhaka city (Merul Badda). Data were collected over a period of almost one month. A total number of 20 samples were collected. The study was conducted only from the market and while preparing this report I have used mainly the primary sources of data. As stated elsewhere only single person operated informal business was considered for the study. Data were collected by using a structured questionnaire.

1.4 Informal enterprise:

The informal sector or informal enterprise is that part of an economy that is not taxed, monitored by any form of government, or included in any gross national product (GNP), unlike the formal economy. Other terms used to refer to the informal sector can include the black market, the shadow economy, and the underground economy. The original use of the term informal sector is attributed to the economic development model put forward by W. Arthur Lewis, used to describe employment or livelihood generation primarily within the developing world. It was used to describe a type of employment that was viewed as falling outside of the modern industrial sector. An alternative definition uses job security as the measure of formality, defining participants in the informal economy as those 'who do not have employment security, work security and social security. While both of these definitions imply a lack of choice or agency in involvement with the informal economy, participation may also be driven by a wish to avoid regulation or taxation. This may manifest as unreported employment, hidden from the state for tax, social security or labor law purposes, but legal in all other aspects. The term is also useful in describing and accounting for forms of shelter or living arrangements that are similarly unlawful, unregulated, or not afforded protection of the state. Informal economy is increasingly replacing informal sector as the preferred descriptor for this activity.

1.5 History:
Informal sector was first discovered in the early 1970s. In the literature, the informal sector is referred as black market, shadow economy, illegal economy, corruption, not registered economy.

As this optimism proved to be unfounded, scholars turned to study more closely what was then called the traditional sector. They found that the sector had not only persisted, but in fact expanded to encompass new developments. In accepting that these forms of productions were there to stay, scholars began using the term
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informal sector, which is credited to the British anthropologist Keith Hart in a study on Ghana in 1973 but also alluded to by the International Labor Organization in a widely read study on Kenya in 1972.

1.6 Limitation of the study:

During conducting the survey I have faced some problems. Especially main problem is that the respondent thinks that I have come from the tax corporation and the wanted to avoid me. Without this there are some other problems they are as follows: Respondent were not responsive in providing information. Mobile vendors are moving from one place to another place, if I go to one vendor one day, it will move to another place next day. There are limited people to conduct the survey. Limited Secondary data are not available.

Chapter Two

Findings and Analysis

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Data is collected on the basis of some questionnaire and those questions were asked to each of the respondents and based on the answer of the question I am describing the findings from the survey.

Type of business:
My first inquire was what types of business is performed by the entrepreneur; this information is statistically described below:
Frequency 15 3 2 20 Percent 75.0 15.0 10.0 100.0 Valid Percent 75.0 15.0 10.0 100.0 Cumulative Percent 75.0 90.0 100.0

Valid

1.00 2.00 3.00 Total

Type of Business

Trading Service Manufacturing

Manufacturing 10.0%

Service 15.0%

Trading 75.0%

Here I have found that from the entire respondent 75% were trading enterprise, 15% were service enterprise and another 10% are manufacturing enterprise. But most of them were processed food vendors and raw food vendors.
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 Physical Structure:
Frequency 8 2 1 9 20 Percent 40.0 10.0 5.0 45.0 100.0 Valid Percent 40.0 10.0 5.0 45.0 100.0 Cumulative Percent 40.0 50.0 55.0 100.0

Valid

1.00 2.00 3.00 4.00 Total

Structure

Road side shade Road side open Rented Mobile

Mobile 45.0%

Road side shade 40.0%

Rented 5.0%

Road side open 10.0%

In case of physical structure of the business I have found that most of them using mobile vendors van that mean 45% mobile vendors, 40% road side shade, 10% road side open space and another 5% were rented space.

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 Enterprise (inherited/ not inherited)

Frequency Valid 1.00 2.00 Total 6 14 20 Percent 30.0 70.0 100.0 Valid Percent 30.0 70.0 100.0 Cumulative Percent 30.0 100.0

Enterprise

Inherited Not inherited

Inherited 30.0%

Not inherited 70.0%

Here in case of inherited or not inherited I have found that majority of them have not inherited enterprise. 70% of them are not inherited and other 30% are inherited. That means most of them have started their business by themselves.

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 Age
Frequency 9 3 6 2 20 Percent 45.0 15.0 30.0 10.0 100.0 Valid Percent 45.0 15.0 30.0 10.0 100.0 Cumulative Percent 45.0 60.0 90.0 100.0

Valid

1.00 2.00 3.00 4.00 Total

Age

50

40

Y Axis

30
45.0%

20

30.0%

15.0%

10 1.00 2.00 3.00

10.0%

4.00

Age

When I asked about the age of respondents when they start business I have got different response from them. 45% were age 20-29, 15% were age 30-39, 30% were age of 40-49 and other 10% were age of above 50 years old.

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 Level of Education
Frequency Valid 1.00 2.00 Total 15 5 20 Percent 75.0 25.0 100.0 Valid Percent 75.0 25.0 100.0 Cumulative Percent 75.0 100.0

Education

School SSC

25.0% SSC

75.0% School

In the response of question level of education I have got only two answers those are School and SSC, among them 75% were School and other 25% were SSC level. One thing to be pointed that some respondent said that they didnt go to school in their life.
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 Number of Dependent family members

Frequency 7 6 4 3 20 Percent 35.0 30.0 20.0 15.0 100.0 Valid Percent 35.0 30.0 20.0 15.0 100.0 Cumulative Percent 35.0 65.0 85.0 100.0

Valid

1.00 2.00 3.00 4.00 Total

Dep.members

One Two Three Four

Four 15.0%

One 35.0%

Three 20.0%

Two 30.0%

When I have asked about their number of dependent family members on them they said different number of members are dependent on them, 35% have 1 dependent member, 30% have 2 dependent members, 20% have 3 dependent members, and rest 15% have 4 dependent family members who stay under them.
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 Motivation to start business

Frequency 3 2 7 8 20 Percent 15.0 10.0 35.0 40.0 100.0 Valid Percent 15.0 10.0 35.0 40.0 100.0 Cumulative Percent 15.0 25.0 60.0 100.0

Valid

1.00 2.00 3.00 4.00 Total

Motivation

more profit known business less capital best alternative

more profit 15.0%

best alternative 40.0%

known business 10.0%

less capital 35.0%

In case of motivation to start business, 15% said this business is more profitable , for this reason they have started this business, 10% said it is known business, 35% said less capital is required, and rest 40% said that it is the best alternative of all business.

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 Source of capital
Frequency 3 11 3 3 20 Percent 15.0 55.0 15.0 15.0 100.0 Valid Percent 15.0 55.0 15.0 15.0 100.0 Cumulative Percent 15.0 70.0 85.0 100.0

Valid

1.00 2.00 3.00 5.00 Total

Cap.source

parents own savings non inst. loan Other

Other 15.0% parents 15.0%

non inst. loan 15.0%

own savings 55.0%

When I asked about their source of capital 15% said parents, 55% from own savings, 15% from non-institutional loan and other 15% collected their fund from other sources such as brother, sister, friends etc.

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 Startup Capital
Frequency 5 2 5 8 20 Percent 25.0 10.0 25.0 40.0 100.0 Valid Percent 25.0 10.0 25.0 40.0 100.0 Cumulative Percent 25.0 35.0 60.0 100.0

Valid

1.00 2.00 3.00 4.00 Total

Capital

40

35

30

Y Axis

25

8000+ 40.0%

20
1000-3000 25.0% 6001-8000 25.0%

15

10 1000-3000

3001-6000 10.0%

3001-6000

6001-8000

8000+

Capital

From this survey I have collected some information about startup capital of informal enterprises, among these 20 respondents 25% capital were tk. 1000-3000, 10% tk. 3001-6000, 25% were tk.6001-8000, and rest 40% were above 8000. Some of them started their business with tk. 15000+ capital.

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 No. of People working

Frequency Valid 1.00 2.00 Total 15 5 20 Percent 75.0 25.0 100.0 Valid Percent 75.0 25.0 100.0 Cumulative Percent 75.0 100.0

People

one two

two 25.0%

one 75.0%

No of people working in an enterprise does not varies so much because most of the enterprise has one or two person, majority are single owner managed. Among them 75% were selfmanaged and other 25% were two people working in the business.

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 Selection of business Location

Frequency 8 8 3 1 20 Percent 40.0 40.0 15.0 5.0 100.0 Valid Percent 40.0 40.0 15.0 5.0 100.0 Cumulative Percent 40.0 80.0 95.0 100.0

Valid

1.00 2.00 3.00 4.00 Total

Location

Random Familiarity Suggested

Only available 5.0% Suggested 15.0%

Only available

Random 40.0%

Familiarity 40.0%

While selecting their business location randomly selected 40%, for familiarity with this place were 40%, suggested by the expert were 15% and rest 5% were only place available to them for this business.
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 Overall Performance of present business

Frequency 6 7 6 1 20 Percent 30.0 35.0 30.0 5.0 100.0 Valid Percent 30.0 35.0 30.0 5.0 100.0 Cumulative Percent 30.0 65.0 95.0 100.0

Valid

2.00 3.00 4.00 5.00 Total

Performance

poor Average good

very good 5.0%

very good

poor 30.0% good 30.0%

Average 35.0%

In the response of question overall performance of business different respondent have said different things, among them 30% said poor profit, 35% said average income, 30% said good and rest 5% said very good profit from their business.

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 Plan for business registration

Frequency Valid 3.00 4.00 Total 17 3 20 Percent 85.0 15.0 100.0 Valid Percent 85.0 15.0 100.0 Cumulative Percent 85.0 100.0

Plan

No plan Others

15.0% Others

85.0% No plan

This report is basically about the enterprise that does not pay tax or unregistered enterprises. When I asked about their future plan about registration 85% people said that they have no plan for registration and other 15% said other that means they were registered under other business and they will convert their registration to present business.
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 Types of Barriers
Frequency 10 5 5 20 Percent 50.0 25.0 25.0 100.0 Valid Percent 50.0 25.0 25.0 100.0 Cumulative Percent 50.0 75.0 100.0

Valid

1.00 2.00 3.00 Total

Barriers

Infrastructure Instututional Economic issue

Economic issue 25.0%

Infrastructure 50.0%

Instututional 25.0%

Every business have some barriers and like other business informal enterprise also have some barriers, among them 50%have infrastructure problem, 25% have institutional issue related problems and rest 25% have economic problems.
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Chapter Three

Conclusion and Recommendation

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Conclusion and Recommendation

The sample that was considered for the study was not capable of creating any wealth, but it had the positive aspect of creating employment and a source of income to the respective individuals. In general it provides a survival activity in the informal sector. It is significant to note that they are able to maintain their families by their own earnings. They do not have any requirement to depend on others to maintain their family. Another advantage is that these entrepreneurs cater to the needs of the poor consumers as they provide low priced goods to the economy. Thus this unorganized and unregulated sector, outside the formal economy has many positive impacts on the society. It also absorbs the surplus labor and meets the demand for low cost goods by the people with less income. Indirectly, it also leads to capital formation, as the entrepreneurs on their own efforts arrange for the capital (though the quantum is very low) without any burden on the formal economy. Another positive aspect is that only a fourth of the persons surveyed had a pessimistic view about the business, and opined that they do not have any future and will be out of business in the next five years.

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Chapter Four

Appendix

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References
http://en.wikipedia.org/wiki/Informal_sector Department for Infrastructure and Economic Cooperation. Retrieved November 20, 2011. Lewis, William (1955). The Theory of Economic Growth. London: Allen and Unwin. Report on conditions of work and promotion of livelihoods in the unorganized sector. New Delhi: National Commission for Enterprises in the Unorganised Sector. 2007. Williams, Colin C. (2005). A Commodified World? Mapping the limits of capitalism. London: Zed Books. pp. 73, 74. Department for Infrastructure and Economic Cooperation. Retrieved 20 November 2011. Jonathan Habib Engqvist and Maria Lantz, ed. (2009). Dharavi: documenting informalities. Delhi: Academic Foundation. Wilson, David (9 February 2012). "Jobs Giant: How Matt Barrie Build a Global Empire". The Age. Retrieved 20 March 2012. Alejandro Portes and William Haller (2005). "The Informal Economy". In N. Smelser and R. Svedberg (eds.). Handbook of Economic Sociology, 2nd edition. Russell Sage Foundation. Hernando de Soto (1986). El Otro Sendero. Sudamericana. ISBN 950-07-0441-2. Retrieved 2006-12-18.

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Thank you

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