1.

0 Introduction
1.1 Definition
Readymade garments industries mainly are the makers and sellers of fashionable clothing,
apparel industry, fashion business, fashion industry.

2.0 Major player of RMG sector in Bangladesh

2.1 Mohammadi Group
Established in 1986, Mohammadi Group is one of the leading garments manufacturers in
Bangladesh. Mohammadi Group is manufacturing woven shirts and blouses in woven units
and this company is one of the top sweaters manufacturers in Bangladesh. Mohammadi
Group is currently working with every major retailer and brands in Europe.

2.2 Trendz Group

One of the leading trendy apparel manufacturer & buying agent located in Bangladesh.
Products :Kintted Items (Ladies items, Mens items, Kids items), Woven Items (Ladies items,
Mens items, Kids items), Sweater
2.3 Givensee Group of Industries Ltd
Givensee Group is one of the leading 100% export oriented group of companies pertaining to
textile and garments sector. Started readymade garments export business through
establishment of a 100% export oriented knit garments industry in 1984.

2.4 Desh Garments Limited.

Products are Men's and Lady's Shirts, Boy's, Girl's and Children's Appeals, Pyjama Suits,
Shorts and Pants, Nightwear Suits etc.

2.5 Asian Apparels Ltd.

Established in 1992, Asian Apparels Ltd is one of the leading garments manufacturers of
Bangladesh. Factories are compliant with all applicable social, ethical, environment and
quality system. Factory units are Chittagong Asian Apparels Ltd, Mohara Asian Apparels
Ltd, Panmark Apparels Ltd, Mark Fashion Wear (PVT) Ltd. Unit -2, Fortune Apparels Ltd,
Asian Apparels Ltd, Wash Line Ltd, Priyam Garments Ltd, Zakmars Fashion Ltd, Miles
Fabric Ltd, Kron Sweater Ltd, Yusuf Apparel Ltd and YB Garments Lt

3.0 History
The readymade garments industry acts as the backbone of our economy and as a catalyst for
the development of our country. We take pride in the sector that has been fetching billions of
dollars as export earnings and creating jobs for millions of people in the country.
The Made in Bangladesh tag has also brought glory for Bangladesh, making it a prestigious
brand across the globe. Bangladesh, which was once termed by cynics a bottomless basket
has now become a basket full of wonders. The country with its limited resources has been
maintaining 6% annual average GDP growth rate and has brought about remarkable social
and human development.
It is really a matter of great interest to many how the economy of Bangladesh continues to
grow at a steady pace, sometimes even when rowing against the tide. Now we envision
Bangladesh achieving the middle-income country status by 2021. We firmly believe that our
dream will come true within the stipulated time and the RMG industry will certainly play a
crucial role in materializing the dream.
After the independence in 1971, Bangladesh was one of poorest countries in the world. No
major industries were developed in Bangladesh, when it was known as East Pakistan, due to
discriminatory attitude and policies of the government of the then West Pakistan. So,
rebuilding the war-ravaged country with limited resources appeared to be the biggest
challenge for us.
The industry that has been making crucial contribution to rebuilding the country and its
economy is none other than the readymade garment (RMG) industry which is now the single
biggest export earner for Bangladesh. The sector accounts for 81% of total export earnings of
the country.
When our lone export earner the jute industry started losing its golden days, it is the RMG
sector that replaced it, and then, to overtake it.
The apparel industry of Bangladesh started its journey in the 1980s and has come to the
position it is in today. The late Nurool Quader Khan was the pioneer of the readymade
garment industry in Bangladesh. He had a vision of how to transform the country. In 1978, he
sent 130 trainees to South Korea where they learned how to produce readymade garments.
With those trainees, he set up the first factory Desh Garments to produce garments for
export. At the same time, the late Akhter Mohammad Musa of Bond Garments, the late
Mohammad Reazuddin of Reaz Garments, Md Humayun of Paris Garments, Engineer
Mohammad Fazlul Azim of Azim Group, Major (Retd) Abdul Mannan of Sunman Group, M
Shamsur Rahman of Stylecraft Limited, the first President of BGMEA, AM Subid Ali of

Aristocrat Limited also came forward and established some of the first garment factories in
Bangladesh.
Following their footsteps, other prudent and hard-working entrepreneurs started RMG
factories in the country. Since then, Bangladeshi garment industry did not need to look
behind. Despite many difficulties faced by the sector over the past few years, it has carved a
niche in world market and kept continuing to show robust performance.
Since the early days, different sources of impetus have contributed to the development and
maturity of the industry at various stages. We learned about child-labor in 1994, and
successfully made the industry free from child labor in 1995.
The MFA-quota was a blessing to our industry to take root, gradually develop and mature.
While the quota was approaching to an end in 2004, it was predicted by many that the phaseout would incur a massive upset in our export.
However, the post-MFA era is another story of success. Proving all the predictions wrong, we
conquered the post-MFA challenges. Now the apparel industry is Bangladeshs biggest
export earner with value of over $24.49bn of exports in the last financial year (from July
2013 to June 2014

4.0 External Analysis

The External analysis is a useful tool for understanding market growth or decline, and as such
the position, potential and direction for a business. An External analysis is a business
measurement tool, which are used to assess the market for a business or organizational unit.
A companys external environment includes all relevant factors and influences outside the
companys boundaries; by relevant, means important enough to have a bearing on the
decision the company ultimately makes about its direction, objectives, and strategy and
business model.

4.1 Macro Environment:

Economic Segment
The recent economical trend of Bangladesh is rather satisfying. In 2007-08 while US was
facing turnover in economic growth, subsequently in 2010-11 quite a few countries of Europe
were in the same state, Bangladesh was having comparatively steady and stable situation.
According to BBS (Bangladesh Bureau of Statistics) In 2010-11 the rate of economic growth
was 6.7% , in 2011-12 was 6.3% and in 2012-13 it was be 6.03%.
The recent digester of Rana Plaza boosted the garment worker's anger and frustration and
creating negative impact on Garment Industry. China is also stepping back From RMG

sector. Meanwhile, India is been in the process of capturing the market. China and
Bangladesh is the biggest competitor in the clothing business for India. Regarding to
overcome this challenge India is taking initiatives and long term planning. For example:
According to Indias apparel export promotion council 12 apparel parks are planned to
establish by the Government of India. 4 of them are almost completed. They are planning to
earn over 6 billion USD within the year 2017.
Bangladesh Corporate Tax Rates:
The standard rate of corporate tax in Bangladesh is 27.5% in 2008 - 2009 tax years. This is
the standard corporate tax rate applicable to publicly traded companies in Bangladesh, a list
including tax rates for other corporations are as follows:
 Publicly Traded Company 27.5%
 Non-publicly Traded Company 37.5%
 Bank, Insurance & Financial Company 45%
 Mobile Phone Operator Company 45%
If any publicly traded company declares more than 20% dividend, 10% rebate on total tax is
allowed.

Political/ Legal Forces
In spite of having favorable business environment for RMG sector with having low labor cost
,duty-free export facilities to 27 European Union countries and 10 developed countries, this
sector is facing negative impact in business operations due to unstable political state .Among
various features of our political situation, most noticeable and important conditions may be
identified as follows:







Absence of democratic political culture

Absence of the rule of laws
Absence of strong civil society
Absence of strong political leadership
Confrontational politics
Corruption and terrorism

Moreover, owing to some industrial accidents and deserters in recent years like April 2005 64 garment workers killed in building collapse in Savar ,more than 400 garment workers
killed in at least 213 factory fires between 2006 and 2009, according to Bangladesh fire
department November 2012 - at least 117 workers killed in fire at Tazreen Fashions in
Ashulia, and the most recent ,the eight-storey Rana Plaza building came crashing down on 24
April demonstrating the ugly politics of Bangladesh, The US duty-free trade privileges order
suspends Bangladesh's under the terms of a trade program called the Generalized System of
Preferences (GSP), designed to promote economic growth in developing countries suspecting

Bangladesh was not taking steps to afford internationally recognized rights to its workers.
While the foreign ministry in Dhaka described the move as harsh, saying the government had
taken clear measures to improve safety at clothing factories.

Socio-cultural
Society and culture is an important factor that must be given emphasis by any business,
specifically those who are operating in the global arena. It is important that any industry must
operate in compliance with the social systems in order to gain good reputation and effective
public image. On the other hand, cultural aspects is equally essential, in order to understand
the various needs of different individuals that belongs to different cultures. - Population
growth rate - Age distribution - Career attitudes - Consumer behavior - Religion and culture
itself. Although Consumer Rights Movement, enforcement of government regulations and a
structured view regarding the economic importance of Social responsibility are not yet so
widespread in the corporate world in Bangladesh. , business organizations can thereby have
an inclusive financial, commercial and social approach, leading to a long term strategy
minimizing risks linked to uncertainty. This is an investment, not a cost, much like quality
management.

Technological Segment
The manufacturing technology of garment production has been changing from labor-intensive
to more sophisticated and capital-intensive production. This change creates dissatisfaction for
the lower skilled workers because of their inability to adapt to the new manufacturing
process. Work dissatisfaction reduces the performance of workers and, in turn, company
performance is negatively affected. On the other hand, the positive relationships to
technological change include improvement of task significance, salary increase, improvement
of the quality of supervision, improved co-workers relations and increase benefits, in
addition, if skilled technicians are available to instruct, prearranged garment is an
option because labor and energy cost are inexpensive here.
After the Macro environment analysis of the Readymade Garments industry of Bangladesh,
we must confess that the Competitive strategic factor for Bangladesh, the human capital or
cheap labor, is itself the competitive advantage of the RMG industry. So, the labor cost and
human resource is the main part of formulating the business and competitive analysis RMG
industry of Bangladesh. In recommendation, we must say that some effective initiative should
be implemented as follows:







fair pay
rewards for work
attention to the subordinates' feelings
work redesign
communicating company goals to workers
sharing information, increasing benefits

 increasing promotions
 providing more skill training to women garment workers
 Bank Interest Rates should be lower.
The success of the export-oriented clothing industry can be attributed to four key factors:
(a) Quality
(b) Price
(c) Lead-time and
(d) Reliability

4.2 Porters Five Forces Analysis for RMG Industry

Bargaining Power of Suppliers
Bangladesh has always been enjoying the upper hand in ordering its inputs from its suppliers.
Bangladesh has very few input or raw materials of its own. Most of them are imported.
Although this leads to a problem in reducing the opportunity to initiate backward linkage, and
thus increasing the supplier power, Bangladesh still manages to acquire the inputs at world
price from its suppliers.
But the most importing aspect of Bangladeshs export industry would always be the
enthusiasm and the prospect of growth it provides to the stakeholders in terms of success and
prosperity. Bangladeshs domestic suppliers power is increasing in a slow but steady manner
as more and more local companies are stepping up to the task. They are creating an integrated
system of supply channel management by which the manufacturers work load is reduced.
Companies are more prone to order through local suppliers who themselves apply to the task
of importing raw materials and components necessary for the production process. And the
favorable attitude of the government is also helping this growth. The back to back LC process
was approved by the government to facilitate the growth of the industry.
Bangladesh has a good reputation in terms of timely payment to the suppliers. This reputation
is helping create a longer term relationship with the suppliers (foreign) and is also giving the
local firms initiative to step into the supply chain. Bangladesh gives the suppliers a large
scale advantage as the industry is quite concentrated in area basis. A good global reputation is
helping Bangladesh match the price with international quoting with the suppliers both foreign
and local ones. Suppliers although having a sort of upper hand over Bangladesh, also regard
Bangladesh as a reliable source of repayment. This reputation has been helping Bangladesh to
ensure prompt supply of raw goods.


Bargaining Power of Customers

Bangladeshi manufactures realize that the buyer posses more power than themselves. Chinas
lead and Indias march to the top keep the Bangladeshi manufacturers/ suppliers on their toes.
Bangladesh is providing a large space of choice to the provider in terms of quality and cost. It
is offering the lowest possible production price and also work that is best in quality. Due to
high switching opportunities for the customers, Bangladesh has to perform or allow the
customers to win in many cases. Bangladesh plans to use cost-effectiveness to present itself
as the best option to the buyers.
The important factor here is that many of the companies in Bangladesh are either franchises
or subsidiaries. Along with them the local companies are giving Bangladesh a look of the best
outsourcing place of the lot. Many of the reputed companies, brands are out sourcing their
products in Bangladesh as they get the most quality in the cheapest price possible. Buyers are
also interested in the growth aspect of the Bangladeshi suppliers. Bangladesh is growing as a
major player in the textile and apparel industry globally and due to the quota system it is
quite an important player in the field. Bangladesh still has its quota left in the EU market
where countries like China dont have the entry. So, many countries are planning to use
Bangladesh as a hub and buy the service to export under its label. That gives Bangladesh a
comparative advantage against the buyers of its services. And due to immense quality
assurance, Bangladesh is continuing to be the best choice for many buyers in the industry.

Threat of New Entrants
Bangladesh has yet to reach economies of scale in terms of production. Thus it allows
potential entrants to pose a threat to its growth. But again, if we just analyze the growth
of textile and RMG sector, this threat might seem negligible. Textile in Bangladesh is in a
growing stage. Its growing in a rapid pace and is posing itself as an entrant to the more
established players. Thus the threat of new entrants is quite minimal to its concern.
Moreover, new entrants would have to gain an advantage against Bangladesh whose growth
ratio is almost 20% per year even after the MFA. A newer entrant would thus cause fewer
troubles to Bangladesh. The greatest advantage that Bangladesh has right now is its cheap
labor. Cheap labor would continue to be available until the living standards go up. Till that
happens, labors will have low rates in terms wages and keep Bangladesh safe from any sort
of new entrants. One factor has to be kept in mind that, due to the unstable political scenario
in recent years, investors and foreign firms are reluctant in investing in Bangladesh. Using
this opportunity, countries like Sri Lanka and other small Latin American countries can steal
away potential buyers from Bangladesh.


Threat of Substitutes
Bangladesh, in terms of substitutes, plays both the roles of an affected and an opportunist.
China and India are growing their customer base at a higher pace than Bangladesh. This is
due to poor country branding, and less power to influence customers. Due to these reasons,
customers sometimes prefer China or India to Bangladesh. More to add, Bangladeshi
products are being substituted due to lack of supplier power and governments reputation.
Many firms, buyers, investors are now hesitating to invest in Bangladesh due to unstable
political scenario. Thus the opportunity for Bangladesh is being substituted to either China or
India. Also, the substitute cost is not that high for buyers to switch to a Chinese producer or
even to a Sri Lankan producer. On the other hand, due to the lower production cost,
Bangladesh plays a major role in substituting the Chinese and Indian manufacturers. This
opportunity has to be nurtured by the Bangladeshi industry to ensure its growth and
profitability. Bangladesh posses the ultimate weapon of cheap labor and thus at times, it has
to use it to substitute opportunities from its competitors.

Competitive Rivalry between Existing Players

Bangladesh is the 6th largest apparel and textile supplier in the US & EU market. It is
shaping itself as a potential market player by providing the most quality with the cheapest
price possible. Whilst the market is controlled by the bigger players like China and India, the
role of Bangladesh is still important. Among the very few suppliers, Bangladesh imports
most of its raw materials, but utilizes other factors of production to produce in a cheaper
manner. It offers investment friendly atmosphere for the brand names to outsource their
production process in Bangladesh.
Bangladesh is putting up a show against other competitors like China and India, by providing
available cheap labor. It has been facing tremendous growth even after the alleviation of the
quota from the US market. This is due close customer relationship and quality production.
Bangladesh has this advantage against its rivals.
Bangladesh is one of those countries who cannot fulfill its quota provided by the larger
markets. As a result of that, many foreign companies are merging in to use Bangladesh as a
hub to prepare their product by outsourcing in Bangladesh and then gaining entrance to
markets which were previously unavailable to them. Bangladesh is taking advantage of this
and inviting investors, and foreign companies to place orders to attain this facility. It should
focus on placing more orders instead of making its export rates efficient and strong.

5.0 Internal Analysis

Internal Environment Analysis of managers strategic decision about resources, capabilities
and core competencies are non-routine and have ethical and competitive implications.

5.1 Core Competencies

A core competence is a basis for competitive advantage because it represents specialized
expertise that rivals do not have and cant readily match. There are three tests to identify core
competencies of a business. First, a core competence provides potential access to a wide
variety of markets, second, a core competence should have a significant contribution to the
perceived customer benefits of the end product; and finally, a core competence should be
difficult for competitors to imitate. Successful business strategies usually aim at building the
companys competence in one or more core activities crucial to strategic success and then
using core competence as a basis for winning a competitive edge over rivals.
Bangladesh, one of the Least Developed Countries (LDCs), had only a handful of garment
factories about fifteen year ago. Till the end of 1983, there were only forty seven garment
manufacturing units. In that early 1980s, international buyers from South Korea and
Hongkong were looking for a new potential supply source like Bangladesh due to quota
restrictions on traditional suppliers. Since then it has been growing on an average rate of
66.50% over the last 15 years. The RMG industries of Bangladesh are characterized by small
and medium sized enterprises in terms of their capital requirements, machine space required,
man hour utilized etc. Low levels of value addition in the RMGs industries create problems
and opportunities. But virtually the RMGs of Bangladesh business has no core competence,
which can neither help the business to increase customer perceive value nor help to have an
access to a wide variety of market. It is realized that the phenomenal growth was possible due
to the quota privilege under the Multi Fiber Arrangement (MFA) into the North- American
Market, which will be phased out in the year 2005, and the Generalized Systems of
Preference (GSP) for the EU market. So, after the phasing out of MFA, Bangladesh will have
to look for sustained competitive advantage with which can outperform it.

Table: Principal Component Analysis-Varimax Rotation Indicators of Competencies

Competencies
h2

Name of the competencies

Risk taking

Demand
for Opportunity
work contract
seeking

Risk taking

.893

0.675

Information seeking

.888

0.789

Persistence

.887

0.657

Systematic planning

.858

0.758

Commitment to work contract

.811

0.654

Persuasion and networking

.786

0.748

Self confidence

.757

0.642

Goal setting

.674

0.853
.956

Demand for work contract

0.945
.936

Opportunity seeking
Eigen Value

6.843

1.489

1.201

Proportion of Variance

48.881

10.638

9.577

Cumulative Variance Explained

48.881

59.519

69.096

Source: Survey data of BBS

10

0.745

5.2 Extraction Method: Principal Component Analysis

 Competency 1: Risk taking
This competency was represented by eight competencies with factor loadings ranging from
.893 to .674. They were risk taking; information seeking; persistence; systematic planning;
commitment to work contract; persuasion; self confidence and goal setting. This competency
accounted for 48.881% of the rated variance.
 Competency 2: Demand for work contract
One competency with .956 belonged to demand for work contract. This competency
explained 10.638% of the rated variance.
 Competency 3: Opportunity Seeking
Only one competency with .936, it consisted opportunity seeking. A variance of 9.577% was
explained by this competency.
Core competencies are particular strengths relative to other organizations in the industry
which provide the fundamental basis for the provision of added value. Core competencies are
the collective learning in organizations, and involve how to coordinate diverse production
skills and integrate multiple streams of technologies. It provides potential access to a wide
variety of markets, perceived customer benefits of the end product. Competence is shown in
action in a situation in a context that might be different the next time you have to act. In
emergency contexts, competent people will react to the situation following behaviors they
have previously found to succeed, hopefully to good effect. To be competent we need to be
able to interpret the situation in the context and to have a repertoire of possible actions to take
and have trained in the possible actions in the repertoire, if this is relevant. Regardless of
training, competence grows through experience and the extent of an individual to learn and
adapt. Through an empirical investigation, this study has identified three core competencies,
which are determined in RMGs manufacturers. The dominant competencies are demand for
work contract; opportunity seeking and risk taking.

11

6.0 SWOT Analysis

The new environment represents a serious threat to Bangladesh. On the one hand, it is
opening a vast market with unlimited export potentials; on the other hand, it signals fierce
competition from textile giants like China, India and, from efficient producers like Thailand,
Sri Lanka and Vietnam. Competition may also come from Sub Saharan Africa and the
Caribbean countries due to preferential treatment from USA through TDA 2000. Different
regional agreements like NAFTA also appear to be unfavorable for the RMG sector of
Bangladesh.
Given the changed scenario described above, the following sections focus on SWOT
(strengths & weaknesses and opportunities & threats) analysis of the RMG industry of
Bangladesh.

6.1 Strengths
One of the strengths behind the success of RMG of Bangladesh is the availability of low cost
labor compared to other countries in the region. The labor rates in textile industry (compiled
by Warner International) show that the average hourly wage rates for Bangladesh, India,
Pakistan and Sri Lanka were respectively US$ 0.23, $0.56, $0.49 and $0.39 (Bhattacharya
1999a). Being in the manufacturing of RMG for two decades, Bangladesh now possesses a
large pool of skilled & semiskilled manpower. Moreover, there are many unemployed young
men and women who can easily be converted into a skilled workforce if needed.
Given the fairly long learning curve in this industry, extensive experience in dealing with
foreign buyers, offshore bankers, shippers, and Clearing and Forwarding (C&F) agents is a
valuable asset for the exporters of Bangladesh.

6.2 Weaknesses
Dependence on others for raw materials, low productivity, limited knowledge in international
marketing information, poor infrastructure, political instability, disruptive trade unionism,
inefficiency in port management, and excessive dependence on RMG sub-sector are the
major weaknesses of the industry.
The industry is heavily dependent on others for outsourcing of raw materials such as clothing
and accessories. Bangladesh is currently importing raw materials (gray fabrics) for its RMG
factories from countries like India, China and Thailand under back-to-back L/Cs. In a quota
free environment, these countries will obviously try to export finished apparels to North
American markets rather than sell fabrics to countries like Bangladesh .With equal access to
the world market, these direct competitors will either stop selling materials to their
competitors like Bangladesh (a strategic move) or charge higher prices for their materials

(because of increased internal demand). In either case, Bangladesh will face difficulty in
procuring the required raw materials at reasonable prices.
Another major shortcoming of the apparel sector is the low productivity of its workers. The
laborer productivity of Bangladesh is much lower than that of Sri Lanka, South Korea and
Hong Kong. Low productivity might erode the advantage of low cost of labor of Bangladesh.
Exporters of Bangladesh also have limited access to current market intelligence and
international trade information because, so far, foreign buying houses have been dominating
the marketing part of the business. In a post MFA era, if these buying houses shift their bases
to other countries, Bangladeshi exporters may face serious problems in finding their ultimate
buyers.
Besides numerous procedural, physical and/or infrastructure related bottlenecks; some
sociopolitical consequences have added fuel to the chronic go-slow and congestion problem
at the port. Some of these problems are:
 Frequent work stoppage by different service providers, dock laborers, transport
workers etc.
 Excessive dock labor unionism (there are about 30 different agencies/groups
including 22 workers unions).
 Politicization of Collective Bargaining Agents (CBA).
 Direct involvement of powerful local politicians, elite and musclemen
 Illegal gratification practices (it has been a common phenomenon since long).

6.3 Opportunities
The greatest opportunities lie on the unlimited market outside Bangladesh. In a quota free
world, the United Nations Commission for Trade and Development estimated that removal of
the MFA and tariffs by developed countries will expand exports of clothing by 135 percent
and textile by 78 percent. Trela and Whalley using a global general equilibrium model,
estimated that the change will be much larger: the value of imports of textiles and clothing
will rise by 305 percent in the US, 200 percent in Canada, and 190 percent in EU. This
indicates that phasing out of quota will expand the market tremendously. Asia by far is the
largest player in the world textile and clothing market and, industry experts are confident that,
overall, Asia still will dominate.
Although Bangladesh lags behind in the textile sub-sector, it is very likely that the sector will
get a boost through forward integration with RMG.
In the knitting sector, Bangladesh gained substantial competitive advantage over her
competitors. According to the Bangladesh Knitwear Management and Exporters Association
(BKMEA) the cost of yarn production per kg. In the private sector of Bangladesh is only
US$1.48, whereas in India it is $1.78, in Pakistan $1.60, in Japan $2.38, in Korea $1.73 and

13

in Thailand $2.78 (IFC 1998 cited in Bhattacharya 1999). Therefore, knit-RMG has a good
prospect for Bangladesh in post MFA period.
The apparel sector of Bangladesh mainly exports low-cost products to the international
market. But she can move into high value added products through diversification. This is not
impossible given her two decades of experience, good relationship with buyers, worldwide
reputation, and presence in quality-conscious United States and EU markets. Recently it has
already penetrated the difficult but lucrative quality-conscious Japanese market.

6.4 Threats
India & Pakistan biggest threat for Bangladeshi RMG & textile export. The threat also will be
the fierce competition from efficient producers like Hong Kong, China, Thailand, and Sri
Lanka, Vietnam and many SSA and Caribbean countries. Threats might come not only from
marketing but also from outsourcing. As mentioned earlier, more than 95 percent fabrics are
imported from direct competitors. The potential danger after 2005 is that these countries
might either stop selling their raw materials to Bangladesh or increase the price of their
materials tremendously. Whatever may be the case, Bangladesh will lose some competitive
edge in the world market.
Environmental issues, labor standard, Trade Related Aspects of Intellectual Property Rights
(TRIPs) etc. might also appear as a deadly threat to developing countries like Bangladesh. In
the words of Reza.
Although developing countries are not being singled out for environmental issues, being
poorer, they cannot obviously maintain rigorous environmental standards. Moreover, the fact
that their competitive advantage often lies in natural resources and pollution-intensive
industries implies that they are vulnerable to being pressured to enforce stricter standards or
face less market access for their exports to developed countries.
Other issues like child labor have already proved as a sensitive issue in the western market.
Compliance to the Rules of Origin4 (ROO) may threaten the future market access and
performance of RMG sector of Bangladesh. In the case of woven-RMG, a two-stage, and in
the case of knit-RMG, a three-stage transformation (cotton to yarn, yarn to fabrics, and
fabrics to RMG) process is required for imported yarn from India. Bangladesh exporters also
had to pay back exempted duties amounting to about US$60 million (as per an agreement in
October 1997) to EU on the grounds of ROO violation and circumvention (Bhattacharya
1999).
Regionalism is another threat to the industry. The World Bank country study (1995)
expresses its concerns that Over the medium term it is also possible that NAFTA may lead
to a displacement of East Asian RMG imports into the U.S. and Canada. To the extent these
exports by the more efficient East Asian producers are then diverted to the European

14

Community, they may tend to displace Bangladeshs RMG exports into Europe. In the US
market another challenge will come from Mexican apparel industry where it has zero tariff
access because of NAFTA. Mexicos share in US clothing imports increased by over 200% in
the period 1993-98. Extension of NAFTA membership to the other Latin American and
Caribbean countries may aggravate the situation further.

7.0 Corporate Strategy

Bangladesh is the second largest ready-made garments (RMG) exporting country in the world
next to China. The apparels account for almost 80 per cent of Bangladesh's total merchandise
export. A review of the garment industry shows that availability of lower cost and standard
quality products in Bangladesh and the increase in production cost elsewhere in the world are
the main reasons for the country's headway in this field.

7.1 Major components for being competitive

The recent rise in wage rates will affect the competitiveness of the clothing industry of
Bangladesh. This has become a matter of concern from the perspective of business strategy
and export policy. A comparative competitiveness analysis with clothing industry of China,
the global market leader, and Vietnam, close competitor of Bangladesh, can provide some
insights.Competitiveness of an industry can best be assessed by focusing on factor
conditions, demand, related and supporting industries and business context. It depends on
interaction of these four conditions.Factor conditions refer to inputs used as factors of
production such as labor, land, natural resources, capital and infrastructure.

7.2 Wage rate & GDP

Bangladesh RMG sector dominates in terms of setting the lowest possible cost of
productions. If we take close competitors of our country China and Vietnam - wages,
expenditures and export growth rates can be considered. Factor conditions of the RMG
include wages of workers per month (2012) of China, Vietnam and Bangladesh at $300, $92
and $65 respectively. Research expenditure as percentage of the GDP (gross domestic
product) in the three countries is only 1.48, 0.19 and 0.01 respectively. Increase in rates of
export of clothing (WTO 2012) in the three countries is 18 per cent, 26 per cent and 27 per
cent. Growth competitiveness index (WB, 2012) in the three countries is 4.28, 3.47 and 2.84
respectively.

7.3 Cost of production

In terms of manufacturing costs, Bangladesh still has a clear cost advantage over China and
Vietnam.Transforming the above data into an index taking China as bench mark shows that
the competitiveness index of China, Bangladesh and Vietnam is 1, 1.4 and 1.72 respectively.
Bangladesh is competitive in terms of factor conditions compared to China Vietnam.
However, if the 2011 wage rate of $25 per month is taken into consideration, then
competitiveness of Bangladesh is 1.88. This shows a decrease in competitiveness in terms of
factor conditions.Demand conditions include factors that affect both domestic and
international demands. Domestic factors such as populations of China, Vietnam, and
Bangladesh are (million people) 1357, 89 and 155 respectively; GDP per capita (current) US
dollar 6,091, 1,755 and 752 respectively; and international factor such as export of clothing
(value in billion dollar) 154, 13 and 20 respectively.

7.4 Country context

Apparently, China is much bigger in terms of domestic clothing sales when compared to
Bangladesh and Vietnam. In 2012, China produced eight times as many apparels as
Bangladesh did or even more than that of Vietnam. It suggests that Chinese firms may have
scale advantages that may not be available to Bangladesh and Vietnam clothing
manufacturers. Scale advantages lead to higher bargaining power and might also give more
choice of national and international manufacturing partners, closer relationships with
component suppliers and preferential treatment.

7.5 International presence & compliance

In case of international market, Bangladesh has a good position after China. The presence of
supporting and related domestic industries that are internationally competitive can provide
benefits such as innovation, up gradation, information flow, and shared technology
development which create advantages in downstream or upstream industries. Therefore, an
industry is particularly likely to succeed if the country has a competitive advantage in a
number of related or supporting industries.

7.6 Countrys infrastructure

In case of factors such as energy generation, energy consumption, domestic raw materials,
port facility, cost of doing business and in all other factors relating to supporting industries,
Bangladesh is very much behind other countries.The national business context, often
referred to also as firm strategy, structure and rivalry, heavily influences how companies
operate within their macro- and micro-economic environment. It is relevant to both their
domestic and international competitiveness. Export-to-import ratio shows the strategy of a
country through supply and external demand. The export-import ratio of China, Vietnam and
Bangladesh is 3.84, 2.44 and 9.52 respectively. So the clothing industry of Bangladesh is
much more export-dependent. The comparative competitiveness analysis reveals the
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following: The clothing industry is highly dependent on export and is concentrated in a few
countries. Moreover, balance of trade of Bangladesh is highly sensitive to this export. So, the
government is providing all kinds of support to this sector regardless of comparative
importance.

7.7 Living standards of workers

The main source of competitiveness is cheap worker. Bangladesh focusing on wage rates to
keep the production cost low; moreover the country is focusing now the competitiveness of
related and supporting industries and infrastructure development rather than providing direct
facilities to the business people. The government can facilitate these firms through imposing
entry barrier or providing other benefits to be more competitive in the international market.
This may lead to an increase in living standard of the workers by means of increased wages
and facilities. Even this may help decrease the cost of living of the workers. This will
preserve the value of wages and make the increase in wage unnecessary.

8.0 Implementation Strategy

Readymade garments company in Bangladesh in the vital player for earning the good
percentage of GDP. This is the best industry area of Bangladesh.
One reason for its huge success is good implementation of their strategy. How they have
implemented it lets discuss below:
8.1 Matching Forces during the action:
There are same vital element and forces in every business. In garments industry these vital
forces are 1. Land 2. Labor 3.employees 4.worker 5. machinery 6. Raw material
With good Corporate governance and among great system the rady made garments of our
country match those forces and well implemented their actions.
8.2 Focuses on efficiency :
This is a very important fact having a very successful RMG industry. They always tried to do
their jel in a very efficient maners. Wrokers of this industry are mostly female and they are
trained so their hand work wit middle is also very efficient.
8.3 Good Operational Process:
A good operational process with good quality machinery and skilled worker at a cheap rate is
also a big reason for the prosperous readymade garments in Bangladesh. You can yet cheap
but skillful labor in Bangladesh which help to have good operational Process.

8.4 Good Leadership:

Leaders are very important to transform a business from what they are to what the leader
have want them become. Leader of garments industry implement. The strategies is a very
which helps them to have a sure success.
8.5 Co-Ordination among many person:
Readymade garments industry need co-ordination of many person from employee to owners
and then manager. A good leadership managed those relationship so Wally thats why
readymade garments are very successful industry.
Above by the way the good implementation of some important elements made the industry as
a successful industry.

9.0 CSR Policy

RMG sector cannot move forward leaving our society backward. BGMEA hold this
philosophy and make us realize that we have some responsibilities towards society beyond
legal obligations. Out of this sense of responsibility towards the community and environment
in which we live and operate, BGMEA has been actively involved in various corporate social
responsibility activities for the larger good of society. Despite being a non-profit
organization, BGMEA has been making significant contribution to the community with true
heart and warm actions.
As part of its CSR activities, BGMEA runs 12 Health Centers that provides healthcare
facilities and medicines to more than 60,000 garment workers per year at free of cost. The
annual expenditure of these centers is around USD 3,00,000 which is funded by BGMEAs
own resources. The centers also provide awareness program on HIV/ AIDS, tuberculosis,
reproductive health and use of contraceptives.
 Besides, for RMG workers, a full-fledged hospital is operational in Chittagong, and a
100-bed hospital in Dhaka is under construction. The hospital will provide all kinds of
outdoor and indoor healthcare facilities to garment workers at free of cost or at
heavily subsidized charges.
 BGMEA runs twelve schools for workers children and provides books, study
materials and stipends to the meritorious students.
 With the Govt. of Bangladesh, BGMEA provides aid to lactating mothers working in
garment factories. In last 3 years a total amount of Tk 115 million was disbursed.

 A dormitory for 3000 workers in Chittagong is being set up jointly by the Chittagong
Development Authority (CDA) and BGMEA. One more dormitory is going to be set
up in Ashulia.
 BGMEA ensures mandatory group insurance scheme for the garment workers and
staff.
 BGMEA runs skill development programs for garment workers through several
training centers spread around the country.
 BGMEA organizes Workers Fair annually. It also organized a voice talent hunt
program for garment workers titled Gorbo (pride).

10.0 Recommendation
Here are some recommendations which readymade garments factory must follow to have a
successful future worldwide.

10.1 Environment
 Suggested Initiatives for Companies Operating in the RMG Sector.
 Publicly report environmental impacts in line with GRI standards.
 Join the Bangladesh UN Global Compact and produce a Communication on Progress.
 Commit to zero discharge of hazardous chemicals. Every six months, check and
report waste emissions and have these reports externally verified
 Investigate secondary uses for solid waste. Consider recycling solid waste as concrete
or converting it to fuel.
 Develop and report processes to manage sludge emissions.
 Send sludge and other emissions to internationally accredited labs for testing.
 Work with other companies to disseminate best practices.
 Follow all environmental laws, even those in draft form.
 Include noise assessments in environmental assessment procedures.
 Develop workplace recycling programs.
 Build awareness of company environmental impacts within the company, and
commission suggestions from employees and managers on improving environmental
impacts.
 Set specific environmental benchmarks for suppliers, and assist in building capacity to
reach them.

10.2 Human Rights Priority Issue: Trade Unions

 Suggested Initiatives for All Stakeholders Seeking to Improve the Human Rights
Practices of Companies Operating in the RMG Sector
 Build relationships between unions, workers and employers through training on legal
rights and conflict resolution.
 Suggested Initiatives for Companies Operating in the RMG Sector
 Engage in collective dialogue and training around trade unions
 Engage suppliers in dialogue about how to establish effective unions,
 Begin a dialogue with international buyers related to trade union rights and
responsibilities in Bangladesh.
 Raise awareness among workers on trade union right.
 Suggested Initiatives for the Government to Improve the Human Rights Practices of
Companies Operating in the RMG Sector
 Strengthen the capacity of ministries to engage in dialogue and promote trade unions
 Build links with ILO, NGOs, buyers and development partners to provide training to
workers and trade unions on collective representation.
 Labour laws should enforce non-political affiliation.

10.3 Working Conditions

 Suggested Initiatives for All Stakeholders Seeking to Improve the Human Rights
Practices of Companies Operating in the RMG Sector.
 Engage middle managers in all projects to improve working conditions. Ensure that
messages are translated for the needs of middle managers, and that managers
performance is assessed on social criteria as well as financial.
 Engage participation committees at every level.
 Suggested Initiatives for Companies Operating in the RMG Sector.
 Monitor the performance of workers after training on working conditions has been
carried out.
 Design floor layoutsso that workers are allowed to look at each other.
 Translate human rights practices into specific tasks for mid-level managers (for
example coordination of vacation time and rest breaks).

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 Suggested Initiatives for the Government to Improve the Human Rights Practices of
Companies Operating in the RMG Sector.
 Monitor all initiatives taken by companies to improve working conditions..
 Provide incentives to workers and identify improvement of working conditions as a
policy priority.

10.4 Occupational Health and Safety

 Suggested Initiatives for All Stakeholders Seeking to Improve the Human Rights
Practices of Companies Operating in the RMG Sector
 Provide training for trainers.
 Be transparent in all actions taken to improve occupational health and safety
conditions.
 Engage in open dialogue to identify occupational health and safety risks and take
action.
 Establish common platforms to share best practices on occupational health and safety.
 Suggested Initiatives for Companies Operating in the RMG Sector.
 Ensure occupational health and safety monitoring and evaluation systems.
 Raise awareness among workers regarding personal insurance for accidents and
negative health .
 Provide insurance to protect workers when workplace accidents occur.
 Provide periodic health clinics to workers so they can confidentially report health
problems and receive treatment.
 Suggested Initiatives for the Government to Improve the Human Rights Practices of
Companies Operating in the RMG Sector.
 Increase manpower to ensure strict monitoring of the implementation of occupational
health and safety regulations.

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11.0 Future Challenges

RMG industry is a very successful industry in Context of Bangladesh. But these are also
some problem occurred in text few years which can the prospect of this industry. They have
to fight with some future challenges to remain successful in this industry.
They are given below:

11.1 Challenge from the workers and employees:

As workers are not getting paid well and not having safe workplace they are trying to harm
their own organization. So the management must pay close attention and try to solve the
problem by having a discuss with the union and employees.

11.2 Challenge from foreign customer:

After the accident like Tazrin fashion and Rana plaza foreign customers denied to take
Bangladesh garment product. So management have to be more careful about this sensitive
issue

11.3 Challenge of unstable political environment:

This is another by challenge for the reason of strikes and hartal garment industry here to
learn a huge loss for the late of shipment. It also can diminish our good will in worldwide
market.

11.4 Challenge of maintaining good quality:

The garments industry of Bangladesh is well known for their quality products. So they have
to maintain this quality in future to get contract from big brand like wal-mart and others.
So above are some of the challenges which may crime and hamper the profitability of this
industry. So management should be always Careful.

References
1. http://www.thefinancialexpress-bd.com/2008/04/16/30828.html
2. http://en.wikipedia.org/wiki/Bangladesh_textile_industry
3. http://www.mightystudents.com/search?q=A+SWOT+Analysis+on+Readymade+Gar
ment+Industry+in+Bangladesh
4. http://www.businesswire.com/news/home/20110511006349/en/Research-MarketsBangladesh-Apparel-Industry-Analysis
5. http://www.just-style.com/analysis/bangladesh-garment-industry-aims-for-fastgrowth_id109958.aspx
6. http://moshiur008.blogspot.com/2011/08/swot-analysiss-of-bangladesh-economy.html
7. http://e.unescap.org/tid/publication/aptir2456_haider.pdf