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1.0 INTRODUCTION


1.1 BACKGROUND
Dholaikhal is situated on the bank of the river Buriganga in the old part of Dhaka city. Bounded
by sites such as Lalbagh Fort, Ahsan Manjil, etc, the area is of much significance historically. The
place was named after a canal (khal in Bengali) that was excavated at around 1610 A.D. by
the first Mughal Subedar of Dhaka, Islam Khan. Many aristocratic families of the Nawabs and
rich merchants used to live in these parts back in those days (Bhattacharja, 2009).
In the more recent times, however, the name Dholaikhal rings a different sort of bell. It is
considered as a mini motor industrial zone with as much as 4,000 to 5,000 shops situated
here, providing the livelihood of almost 40,000 people. It is widely believed to be the main
service centre for worn out vehicles and the best place to buy old motor parts. From nuts and
bolts to heavy engines, from chassis to bearings, wheel drums, springs any small or big parts of
motor vehicles are available at Dholaikhal (Alam, 2013). A map of Dholaikhal is provided in the
appendix section of the report (Appendix 1).
This market for second hand car parts was first established in the 1960s, that too never
formally. The industry that grew up in there was based on the need and skills of the traders and
workers. In most countries across the world, the type of work that the workers at Dholaikhal do
would require a minimum diploma certificate in Mechanical Engineering. But most of the
engineers here do not know any alphabets other than the numbers written on a slide caliper
or a screw gauge. They know how things work, a craftsmanship handed down from their
forefathers (Gazi, 2014).

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1.2 OBJECTIVES OF THE REPORT
The objectives of the report are as follows:
To portray the existing scenario of individual businesses of the local merchants in
Dholaikhal (a business at the base of the pyramid): their strengths, weaknesses,
opportunities, threats, challenges, etc.

To give an idea about the mini-motor industry as a whole, using the individual
entrepreneurs as samples with the help of different theoretical frameworks (SMEC
framework, Triple Triangle framework and GIM framework).

To share some observations that were noted which would shed more light on the
behavior of the industry as a whole.

To deduce the opportunities as a potential investor and as a potential entrepreneur
interested to get involved in the existing business or in some business development
service related to the mini motor industry of Dholaikhal.
1.3 SCOPES AND LIMITATIONS
The scope of the report is limited to the following points:
A majority of the entrepreneurs of the motor shops in Dholaikhal were uncooperative
in the interviewing process. They were secretive regarding some of the business
practices that they follow.

Shortage of time and a limitation on the number of team-members disallowed us from
interviewing more entrepreneurs.

The scope of the report is limited to only the mini motor industry of Dholaikhal. All the
other businesses in that area have not been taken into account.
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1.4 METHODOLOGY OF DATA COLLECTION
1. Primary sources of data: Interviews were carried out with entrepreneurs from
Dholaikhal area from the mini motor industry. Each member of the group administered
three interviews. The questionnaire of the interview was supplied by our course
instructor. Alongside this, the observations made by the team members while carrying
out the interview have been used as valid primary sources of data.

2. Secondary sources of data: Different articles and websites have been cited in the
report, which were used to pick relevant information. Secondary sources were widely
used in the process of etching out the Background and Industry Overview sections
of the report.

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2.0 INDUSTRY OVERVIEW


2.1 DIVERSITY OF INDUSTRY
As specified in the preceding section of the report, the entire mini motor industry of
Dholaikhal comprises of approximately 4,000 to 5,000 shops which provide employment to
around 40,000 people (Alam, 2013). Most of these people are educated only with technical
skills and many of them do not have any idea about reading and writing save signing their
names. This being said, these technical workers in Dholaikhal are mostly self-taught or taught
by mentors. These mentors are usually owners of the firm in which the workers work. They help
the workers improve their skills from an early age and guide them towards the goal of opening
a new shop in the area and becoming entrepreneurs themselves.
The broad cluster of mini motor industry is subdivided into smaller clusters, each addressing a
specific ancillary service related to motor cars. For an instance, there are specialized areas
where only bearings (a circular metallic part that restrains relative motion and reduces friction
between moving parts of a car) are sold (known locally as the Bearing Market), areas where
only engine deconstruction parts are sold, areas where car body parts and chassis are sold,
areas where the electrical parts are sold, etc. These are examples of different segments that are
targeted by the existing enterprises. It goes without mentioning that there exist many bigger
entrepreneurs who target multiple segments of these types.
Beside shops selling different motor parts, Dholaikhal contains huge warehouses. Most of these
warehouses are located as one goes away from the main road, where different parts are stored
and made.
In the sector of competition, the local entrepreneurs of Dholaikhal have their own set of
competitors. To begin with, every other entrepreneur in that area acts as competitor in terms
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of customers, suppliers and skilled employees. Moreover, the existing entrepreneurs tag
foreign countries from which auto parts are imported as a generic competitor. A vast majority
of the existing motor parts are imported from countries such as China, Japan, Taiwan, India, etc,
which affect the potential market of the business (South-South Trade Promotion Programme,
2002).
2.2 GENERIC SUPPLY CHAIN
For the mini motor industry as a whole, the business occurs in a few general steps, as confirmed
during our interview:











Foreign companies supplying
worn out vehicles and its parts
Local suppliers of
worn out motor
vehicles
Local importers of
worn out vehicles and
its parts
Entrepreneurs of Dholaikhal to
disassemble parts and vehicles
to smaller parts
Usable parts sold to
different customers
Non-usable parts scrapped
as metals to be reassembled
into new parts
Customers: Servicing centers,
wholesaling entrepreneurs and end
users of motor parts

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2.3 INDUSTRIAL SWOT ANALYSIS
The cumulative strengths, weaknesses, opportunities and threats posed and faced by the
entrepreneurs at Dholaikhal are etched out below.

The cost of operation is comparatively lower, mainly due to availability of
cheap labour.

The whole "mini motor industry" in Dholaikhal is the only industry in Dhaka
engaged in such practices. It does not have any competitive industry in the
surrounding areas, other than the one in Nobabpur.

The cheap labour that is available is very skilled in the technical field.

Localization of the industry has turned into a strength for the business.
S
Very insignificant availability of technology when compared globally.

No centre for vocational training in the nearby areas. All the workers are
trained by the individual entrepreneurs.

There is no united association or chamber present.

Finance to start the business is not readily available.

Negative perception held by many towards the industry as a whole.
W
Huge potential if import barriers are placed to reduce foreign competition.

Huge potential if new technology are introduced to the industry through
government or private ventures.
O
Threat of cheap imports of motor parts from abroad (especially China and
Japan).

Threat of economic and political uncertainty .

Threat of increasing competitiors within the industry.
T
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3.0 SAMPLE FINDINGS


3.1 SMEC FRAMEWORK

Owners: Most of the owners themselves feel that the profit they gain from doing the business
is definitely important because they do the business for the money, but it is not something they
stress on. They care about profit but do not strive for a very high profit margin, partly because
the business they are in doesnt allow for a high profit margin with a huge chunk going to the
suppliers and less return from the customers. The other reason is because there is not much
room for development that will bring in a higher profit margin. So the average rate of this factor
at 3, i.e. it is important but not crucial.
Customers: They seem to be the controlling facet of the industry. Most of the entrepreneurs
feel that in an environment that holds about 5000 different shops, attracting and retaining the
customers is the only way of sustainable profit. As mentioned above, the goal of the
entrepreneurs at Dholaikhal is not a high profit margin but a sustainable profit margin, and
customers are the way to do that. So the average rating of the importance of customers is 4
i.e. very important.
Owners
Value chain
actors
Society
Customers
Employees
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Employees: An overwhelming number of people cited this to be the most important factor for
their business. There are 2 main reasons behind this:
1. Many people have their son or other close relatives as employees, so when the family is
involved in the business they inherently become a crucial and very important part of the
business.
2. There are approximately 5000 shops selling motor parts in Dholaikhal and there is no actual
training place where workers are trained, there is no vocational training institute from which
one might learn to work. There is only one way someone can learn the engineering skills
required to be an employee at any of these shops, and that one way is- experience. So when on
shop owner trains his employee, the employee becomes a prized possession and becomes
crucial to the running of the business, since it is by that employees hand that all the work will
be done. Moreover, the customers dont remember the owners; they remember the person
who did their work for them- the employees. So the employees become the contact point each
point has with their customer. Since even the customers are dependent on the employees, the
average rating for the employees is at 5- crucial to the business.
Suppliers: The average rating for the importance of suppliers in Dholaikhal was as low as 1.
There are 2 main reasons behind this: 1. There are many suppliers in the area so there isnt
much competition for that. 2. The suppliers only care about money so there is nothing that has
to be done to keep them at hand. These 2 reasons combined is the issue behind why suppliers
are not important to the Dholaikhal motor industry.
Environment and Society: Even though most of the businesses in Dholaikhal dont really care
about the environment issues, they do however feel a strong sense of society. They feel that by
employing young men, they are reducing unemployment and giving them skills with which they
can earn a living. This is something they pride themselves on, because in about 5000 shops,
about 40,000 people have found work. So the average rating for environment and society was
actually a 3, showing that most owners consider this to be as important as profit itself.
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3.2 TRIPLE TRIANGLE FRAMEWORK

The Triple Triangle Framework has been used to explain the components, which need to be
focused upon in order to attain sustainable competitiveness in the second hand parts industry
in Dholaikhal. The components are divided into 3 tiers namely, Firm Level, Industry Level and
Macro Level based on which the competitiveness in this industry would be analyzed.
1. Enterprise Level Factors:
Culture: The work culture will deal with the work practices in the industry. Most shops do not
hire many workers due to the cost incurred in paying the workers. In the shops that can afford
to hire workers, the workers are put to work in hot and humid conditions in the pavements and
adjacent roads. As for payment, the workers get around BDT 3,000 a month. Due to poor sales
in the past few years, these workers barely get any festival or annual bonuses. They also have
fixed work hours since most of the shops open up at 10 a.m. and have to close down by 9 p.m.
because of the government regulations on shop hours.
Capacity: The major problem for the shops in Dholaikhal that can afford workers is that they
dont get skilled manpower trained. In most countries across the world, the work people at
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Dholaikhal do would require a minimum diploma certificate. But here, some workers cannot
even read but recognize the numbers written on a screw gauge. They know how things work, a
craftsmanship handed down from seniors. There is no planned education to get these workers
employed in something of a larger scale where their craftsmanship can be nurtured.
Capital: Generalizing the access to finance in this sector has proved to be difficult. Most
entrepreneurs want to receive microcredit facilities, which do not exist at present. However,
majority of the entrepreneurs complain that access to finance is very limited and bank loans are
hard to obtain. Since most of these people are worker-turned-owners and lack credit
worthiness, the risk of giving a loan and the interest rate charged by banks is too high.
Entrepreneurs often seek informal sources of finance like lending from known persons because
they perceive the banking process as too complicated.
2. Industry Level Factors:
Competitors: Since most of the stores are regionally concentrated within Dholaikhal and they
have almost exactly the same products, competition is quite high. In fact, according to most
entrepreneurs, the competition in this industry is highly unfair and unethical, because of the
plummeting sales in the recent years. Many entrepreneurs complained that their counterparts
are predatory with each others customers. If one shop offers parts at BDT 1000, an adjacent
shop will offer BDT 900 and lure the customer away. Also the problems with these small
enterprises are that they lack customer service quality and sales people with good
communication skills for which they lag behind in repeat purchase. Other than these, Chinese
products act as a very big generic competitor to the whole industry.
Customers: Most of the customers of the business live around different parts of Old Dhaka.
According to the entrepreneurs, the demand dynamics of the customers vary according to
seasons and political conditions of the country as a whole. For example, during rainy seasons,
the customers generally visit the shops less than other times. The customers include both
retailers and wholesellers and also direct consumers of the motor parts.
Collaborators: The collaborators mainly include the suppliers and distributors of the industrial
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and motor parts. For the motor parts cluster, the supply chain starts at foreign companies
supplying worn out vehicles or local suppliers for worn out vehicles. The local importers buy the
vehicles from foreign companies and sell them at Dholaikhal. Entrepreneurs at Dholaikhal buy
both local and foreign cars and disassemble and clean the parts for sale. For the bearing parts
cluster, the supply chain starts at the shipyards in Chittagong. Many of the entrepreneurs have
moved backwards in the supply chain, investing shops in Chittagong, which supply these parts.
3. Wider Environmental Factors:
Globalization and International Forces: Globalization helps create dialogues between people in
different countries, companies and governments. Drilling down to more specifics, there are
numerous upsides and downsides of globalization for suppliers. Perhaps the most obvious is the
access globalization affords suppliers and retailers in terms of sourcing options. For example,
globalization allowed suppliers to import parts from Japan, which is one of the main reasons
why the industrial and motor parts industry in Dholaikhal evolved. However, globalization is
one of the instrumental reasons for the downturn of the industry in Dholaikhal. An adjacent
industry in Nobabpur has flourished due to cheap imports from China, which has taken a large
toll on the shops in Dholaikhal.
Technology: Enterprises in Dholaikhal does not have good access to technology all over. Some
of the works such as day to day trading does not require much technological helps. However,
other jobs such as manufacture and repairing of parts can be done more efficiently if the
technological aspects are improved. Moreover, if the workers are trained using technologies
that countries such as Japan and China use (through government financed training programs),
their level of skill will improve drastically.
State and Society: There are no regulatory bodies to govern the activities of Dholaikhal. Most
of the small and medium firms do not want to get involved in these associations since they
believe that this would not make their position any better. Rather they believe these bodies will
create obstacles in their business activities. As for externalities generated, most of the shops do
not have adequate spaces inside and have picked up the pavements road to work on.
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3.3 GIM FRAMEWORK

Policy Advocacy: There is no existing policy advocacy for the Dholaikhal motor industry; this is
mainly because there is no united association of the industry that can advocate the policy. Also
since most of the participants in the industry are uneducated they cant take it upon
themselves to advocate either. Thus, an absence of the united front is why policy advocacy is
absent.
Knowledge: There is also literally no initiative for knowledge creation or scientific research and
this is why even after having a large labor force this industry is lagging behind, because there is
literally no development of this factor of production. This can be mitigated by policy advocacy
and vocational skill training initiative from the government or private sectors.
Networking and Collaboration: There is definitely networking that people in this business do,
they collaborate with the suppliers of the spare parts, the importers of the foreign parts and
even the big company customers. So collaboration is a big part of the business; however the
collaboration is done at an individual firm level, rather than a collective industry level, again
due to a lack of an association.
Policy
Advocacy
Knowledge
Business
development
services
Networking
and
collaboration
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Business Development Services: As of now, there are no BDS for this industry, mainly because
there is no order in the industry, and also because the people running the industry the
entrepreneurs do not want any external help because of a very low level of trust. And for this
low level of trust the firms place on external sources, any future prospect of a BDS seems dark,
moreover with no association of the firms it will be very hard for any BDS to have a differential
effect on the industry as a whole. This is because it will be impossible to cause a change by
changing one firm out of 5000 and reaching out to all 5000 at a time is quite impossible with
the absence of an association.
















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4.0 MAJOR DISCOVERIES

This section includes the major discoveries that were made by our group as a whole and have
appealed us to a great extent. Some of the discoveries have already been included in the
preceding sections, but their significance forces us to mention them in a different section as
take-aways.
4.1 SOUR RELATIONSHIP WITH THE GOVERNMENT
Some of the entrepreneurs that were interviewed in the research process came up with the
point that the government hinders their activities more than they provide help.
A lot of the entrepreneurs have voiced in that they want a training centre where their workers
will be trained so that they do not have to individually train them, which undoubtedly is the
reason for a major part of their expenses. If such a training centre were established, that would
mean that they would have a steady flow of trained workers, which seems to be hard to get
these days. Moreover, they want the government to facilitate them by putting up some trade
barriers that would discourage Chinese imported automobile parts that act as competitors to
this industry.
Instead of this fruitful relationship with the government, the entrepreneurs feel that the
government is hindering their business. The entrepreneurs, as observed by our team mates, live
in fear of government officials. Some of the owner even sent us away from their shop thinking
that we have come on behalf of the government with some redundant paperwork for them
that might take away their day. Some of the government rules and regulations were tagged as
unnecessary bureaucratic burdens aimed towards getting briberies.
Having said this, it does not mean that the intervention from the government is without any
basis. A very negative perception is associated with this area when it comes to tax-evasion and
fraudulent activities.
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4.2 MENTORING COMMUNITY
The whole community of Dholaikhal is based on the principle of mentoring. As mentioned
countless times above, there are no existing training institutes to provide the workers with the
skill necessary to do these kinds of work. This means that all the work that a worker learns to
do is learnt from the owners of the enterprise where s/he works.
One notable thing worth mentioning here is that most of the workers (as well as many
entrepreneurs) who work here did not even pass the 8
th
grade. Yet, they are successful in the
field of business that they have taken up. A reason for this is the good level of mentoring that
was provided to them by the neighboring enterprises. Some of the businesses were inherited
from the entrepreneurs families for which their skills and involvement in this field is beyond
comparison. One of the entrepreneurs specifically mentioned, during our interview, that a lot
of the owners train the employees in a selfless manner so that when these employees grow
older and more skilled, they can look after the whole industry by opening a business of their
own. This will expand the whole industry and all these would be done without any sort of
external assistance.
A consequence of this mentoring community is seen in the work culture of the industry. All the
entrepreneurs and workers are very cooperative with each other in this respect, which give
them a comparative advantage.
4.3 HIGH SELF EFFICACY OF THE ENTREPRENEURS
Most of the owners in the area have a very high self efficacy. An experience of a team member
of ours verifies this fact to some extent. As reported by him, one of the entrepreneurs claimed
that had the technological situation in Bangladesh been as good as that in Japan or China, the
level of skill owned by the workers in this locality would make them (the enterprises in
Dholaikhal) much more skilled and efficient than those in the countries mentioned previously.
Furthermore, he claimed that they would be able to capture the global market as much as our
RMG sector has succeeded in doing in the global apparel sector.
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The extent of reliability of this factor is not the main reason why this point was included in the
Major Discovery section of the report. It was incorporated because this high self efficacy of
the entrepreneurs shows a fighting spirit whereby the locales are challenging the global
powerhouses. For every other Bangladeshi to have faith in them, they must have faith in
themselves first.
4.4 INCREASED COMPETITION IN RECENT YEARS
In the modern days, the competition present in the motor parts industry has significantly
increased. One of the main aspects that almost every interviewee mentioned was the
availability of Chinese automobile parts that are widespread in the market. This has been
tagged as the main competitor of the whole cluster in general.
From the perspective of the entrepreneurs, the competition in this particular case is
unparalleled since the Chinese are way ahead in the field of technology. They desperately want
the government to intervene by setting up trade barriers to reduce the flow of goods from
China.
Other recent competitors include different localized clusters of automobile parts at different
parts of Dhaka like Bangla Motor, Tejgaon, Paltan, Nobabpur, etc.
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5.0 RECOMMENDATIONS

During our visit to the Dholaikhal automobile parts industry, we didnt see businesses being run
in orthodox business fashion. But what we saw was that it worked for the businesses there.
Based on what was observed during our visit to the Dholaikhal automobile parts industry and
the key findings, we would like to make the following recommendations:
Proper training for the mechanics working on the engines of automobiles. This will
enable these entrepreneurs to be more efficient in selling the parts and also avail the
parts in better condition.

More engagement with the associations which are present within the industry. This will
cause a cumulative rise in their bargaining power and will aid the whole industry in
making united decisions.

Better working conditions for all the workers there. This means proper disposal for all
the hazardous material that cannot be used. They can ask help from the government in
this regard.

Proper advertisement can lead to more customers. This will help the dip in business that
they are experiencing currently.

Cheap imports from China should be carefully maintained as it is causing problems for
the local industry


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So What?
We have learned about different business models during our course but this visit and its many
findings have opened our eyes to the difference between theory and real life business.
Something that struck many of us during the completion of the questionnaires and also during
the visit is that something that we were already informed of. It is the fact that the best role the
government can play in businesses is no role. All the owners of businesses informed that the
government was making life very hard for them by making sanctions that were hindrances to
the business. An example of this could be the fact that the government is not providing visas to
Dubai where many entrepreneurs go to see and buy different body parts and finally import
them. So this fact has made a real impact on everyone about real businesses.
This trip to Dholaikhal has also opened our eyes as to how a cluster of shops selling almost
identical parts can work in perfect competition and keep a good working environment amongst
its employees. Also, this was a great opportunity for us to visit the much talked about
Dholaikhal and find out how it works.
All of the findings, observations, answers will also change the way we look at businesses. This
visit has given us a unique perspective, insight and knowledge about this industry which will
definitely help us if we ourselves are to become entrepreneurs in this industry.
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6.0 CONCLUSION
The Dholaikhal motor parts industry is facing crucial problems at present owing to both internal
and external factors. There was a time when this place was the leader of this industry in Dhaka.
But the scenario has changed a lot over the years.
The whole business was analyzed from 3 major frameworks. These frameworks revealed
different insights to this report. SMEC framework has helped gather knowledge about the
perceptions of the business owners on the different entities that build up the whole business.
According to them, after profit-making, satisfying the customers is the most important thing
that they look forward to.
The Triple Triangle framework has enabled us to understand the whole condition of Dholaikhal
from three different angles. From the enterprise level analysis it can be said that the business is
lacking capital and skilled manpower. The industry analysis revealed that competition is fierce
at present and the customer base is not increasing that much. So business owners are even
considering unethical practices to make more profit. Environment analysis showed that Chinese
products have made the lives of the Dholaikhal entrepreneurs very difficult. Also there is no
suitable government policy that is helping their cause.
GIM framework has helped us understand the need for a strong regulatory association for this
place. Collaboration among the entrepreneurs is not that great because of the absence of a
chamber/association. Also it is difficult to maintain business development services in such an
industry.
Aside from these analyses, we have observed some important aspects of Dholaikhal motor
parts industry. These are mainly the bitter relationship with the government and their policies.
This condition needs to be improved. It can be concluded that the government should step up
to help these 4000 entrepreneurs because a major portion of the lower class people of Dhaka
city depends on the success of Dholaikhal.
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APPENDIX






Appendix 1: The location of Dholaikhal in the map of Dhaka city is marked by a black circle
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REFERENCES

Alam, S. (2013, November 21). Dholaikhal industrial zone in Bangladesh. Retrieved from
Demotix: http://www.demotix.com/news/3295097/dholaikhal-industrial-zone-
bangladesh#media-3294666
Bhattacharja, H. (2009). Dholaikhal. Retrieved from Banglapedia:
http://www.bpedia.org/D_0199.php
Gazi, R. (2014, January 17). Dholai Khal "engineers". The Daily Star.
South-South Trade Promotion Programme. (2002). Supply and demand survey on automotive
components. International Trade Centre.