elate fashion limited
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Management perspectiveTRANSCRIPT
Introduction of Garments Industry inBangladesh
Since independence, the economy of Bangladesh is
dependent on agriculture as most of the people live in
rural areas. The goal of the government policy is to
reduce poverty by receiving the maximum output from
agriculture and attains self-sufficiency in food
production. Beside agriculture, the development of export
sector is under greater consideration. Exports from
Bangladesh have both grown and changed substantially
as time goes on. After the birth of Bangladesh, jute and
tea were the most export-oriented sectors. But with the
constant threat of flooding, declining jute fiber prices and
a significant decrease in world demand, the contribution
of the jute sector to the country‘s economy has
deteriorated (spinanger, 1986). After that attention has
turned to the role of manufacturing sector, especially in
Garment Industry.
The garment industry of Bangladesh has been the key
export division and a main source of foreign exchange for
the last 25 years. At present, the country generates about
$5 billion worth of products each year by exporting
garment. The industry provides employment to about 3
million workers of whom 90% are women. Two non-
market elements have performed a vital function in
confirming the garment industry's continual success;
these elements are (a) quotas under Multi- Fiber
Arrangement (MFA) in the North American market and
(b) special market entry to European markets.
Development of Garments Industry in
Bangladesh
In the field of industrialization, role of textile industry is
found very prominent in both developed and developing
Bangladesh RMG:
RMG earning 74% of countries foreign currency through export.
USA & Europe are main export region.
Using Multi-Fiber arrangement (MFA) restriction.
Entered into USA, Canada and EU market
Withdrawn MFA restriction by 2005.
Depend on INDIA for import fabrics.
Textile categories: Public, Handloom
Private
Elate Fashion Ltd.:
Established in 1998
Private company
Directed by A.T.M. RezaurRahman
Export oriented company.
Main buyers; USA Main product focused on
woven wears 350 Male workers
700 female workers
countries. Economic history of Britain reveals that in the 18th Century the cotton mills of
Lancashire in Britain ushered in the first industrial revolution of the world. Moreover, during the
last 200 years or more many countries of the world have used textile and clothing industry as an
engine for growth and a basis for attaining economic development (Ahmed, 1991). Over the past
few years garment industry is found to have played such an important role in the process of
industrialization and economic growth. This industry is infect trying to put the wheel of her
declining economic back to the track by giving essential life blood to it (Chowdhury, 1991). The
growth of garment industry in Bangladesh is a comparatively recent one. In the British period
there was no garment industry in this part of the Indo-Pak-Sub-Continent. In 1960 the first
garment industry in Bangladesh (Then East Pakistan) was established at Dhaka and till 1971 the
number rose to give (Islam, 1984). But these garments were of different type intended to serve
home market only. From 1976 and 1977 some entrepreneurs came forward to setup 100% export
oriented garment industry. Both domestic and international environment favored the rapid
growth of this industry in Bangladesh. By mid-seventies the established developed suppliers of
garments in the world markets i.e. Hong Kong, South Korea, Singapore, Taiwan, Thailand,
Malaysia, Indonesia, Srilanka and India were severely constrained by the quota restrictions
imposed by their major buyers like USA, Canada and European Union. To maintain their
business and competitive edge in the world markets, they followed a strategy of relocation of
garment factories in those countries, which were free from quota restrictions and at least same
time had enough trainable cheap labor. They found Bangladesh as one of the most suitable
countries. Available records show that the first consignment of garments was exported from the
country in 1977 by Reaz and Jewel Garment. Desh Garment was the first biggest factory that
started functioning at Chittagong in 1977. In fact that was the humble beginning of new joint
venture garment factory in Bangladesh. Thereafter many entrepreneurs became interested and
started to setup garment factories following the Desh garment and realizing the future prospects
globally as well. Available records also show that one of the reasons of the growth of garment
industry in Bangladesh is the collaboration of a local private garment industry, Desh garment
with a Korean company, Daewoo. As part of its global strategies, the Daewoo Corporation of
South Korea became interested in Bangladesh when the Chairman, Kim Woo-Choong, proposed
an ambitions joint venture to the Government of Bangladesh which involved the development
and operation of tire, leather goods, cement and garment factories (Rock, 2001). South Korean
Company, Daewoo, a major exporter of garments, was looking for opportunities in countries for
using their quotas subsequent to the signing of MFA in 1974. Because of the quota limitation for
Korea after MFA, the export of Daewoo became restricted. Bangladesh as a LDC got the
opportunity to export without any restriction and for this reason Daewoo interested to use
Bangladesh for their market. The reason behind this desire was that Bangladesh will depend on
Daewoo for importing raw materials and at the same time Daewoo will get the market in
Bangladesh. For this desire Daewoo signed a five years collaboration agreement with Desh
Garment. It included collaboration in the areas of technical training, purchase of machinery and
fabric, plant setup and marketing in return for a specific marketing commission on all exports by
Desh (Rock, 2001). The outcome of the collaboration of Desh-Daewoo was significant. In the
first six years of its operation, Desh export value grew at an annual average rate of 90 percent
reaching more than $ 5 million in 1986-87 (Mahmood, 2002). Rahman (2004) argued that the
Desh-Daewoo collaboration is an important factor to the expansion and success of Bangladesh‘s
entire garments export sector. In such a context, following Table-01 shows the trend of growth
and development of garment industry in Bangladesh.
Table 1.1: Growth of Garments factories in Bangladesh
Year No. of Factory Compound Growth Rate
in %
1971
1977
1981
1983
1984-85
1989-90
1994-95
1999-00
2004-05
2005-06
5
7
78
141
384
759
2182
3200
4107
4250
-
5.77
82.70
34.45
65.03
14.60
23.52
7.96
5.12
3.48
Source: Various articles and Annual Report of BGMEA
The Table-01 shows that the growth was very slow till 1977 and got momentum from 1977 to
2005-06 in terms of number of industry. But the compound growth rate was highest till 1981 and
the rate was very good during 1989-90 to 1994-95 and thereafter i.e. 1994-95 to 2004-05, the
industrial growth has been declined though the numbers of industries have been increased. The
capacity as well as number of equipments is very good indicator to examine the actual position
of the garment industry as well as size of the industry. In such a context, the following Table
deals in this regard.
Table 1.2: Garments Industries with number of Machine
Year Garment Industry having No of Machine Total
Upto 100 101 – 200 201 and
over
3510
(100)
3668
(100)
2004 2005 2253 (64)
2275 (62)
726 (21)
773 (21)
531 (15)
620 (17)
Source: Annual Report of BGMEA. Figures in parentheses indicate percentage
From the Table 02 it is found that more than half of the total garment industries in Bangladesh
have the number of machines upto 100 or less than 100 and very few industries have the machine
more than 200. It indicates that the small scale industries have been dominated in the garment
sector.
Contribution of Garments Industry to the Economy
Garments Industry occupies a unique position in the Bangladesh economy. It is the largest
exporting industry in Bangladesh, which experienced phenomenal growth during last two
decades. By taking advantage of an insulated market under the provision of Multi Fiber
Agreement (MFA) of GATT, it attained a high profile
in terms of foreign exchange earnings, exports,
industrialization and contribution to GDP within a short
span of time. The industry plays a key role in
employment generation and in the provision of income
to the poor. Nearly two million workers one directly and
more than ten million inhabitants are indirectly
associated with the industry (Ahmed and Hossain, 2006).
The sector has also played a significant role in the socio-
economic development of the country. In such a context,
the trend and growth of garments export and its contribution to total exports and GDP has been
examined the following table shows the position.
Table 1.3: Growth and Trend of Garments Exports, and contribution to GDP (Amounts in Million USD)
Year Garment
Export (Min
USD)
Total Export
(Min USD)
Share to Total
Export in %
Share to
GDP in %
1984-85
1989-90
1994-95
1999-00
2004-05
2005-06
116
624 (40)
2228 (29)
4349 (14)
6418 (8)
7901 (23)
934
1924 (16)
3473 (13)
5752 (11)
8655 (9)
10526 (22)
12.42
32.43 (21)
64.15 (15)
75.61 (3)
74.15 (-1)
75.06 (1)
-
-
5.87
9.23 (9)
10.63 (3)
12.64 (2)
Source: Economic Review of Bangladesh, BGMEA and Computation made by author. Figures in
parentheses indicate compound growth rates (CGR) for the respective periods.
It is revealed from the Table 03 that the value of garment exports, share of garments export to
total exports and contribution to GDP have been increased significantly during the period from
1984-85 to 2005-06. The total garments export in 2005-06 is more than 68 times compared to
garments exports in 1984-85 whereas total country‘s export for the same period has increased by
11 times. In terms of GDP, contribution of garments export is significant; it reaches 12.64
percent of GDP in 2005-06 which was only 5.87 percent in 1989-90. It is a clear indication of the
contribution to the overall economy. It also plays a pivotal role to promote the development of
linkage small scale industries. For instance, manufacturing of intermediate product such as
dyeing, printing, zippers, labels has began to take a foothold on limited scale and is expected to
grow significantly. Moreover it has helped the business of basing, insurance, shipping, hotel,
tourism and transportation. The sector also has created jobs for about two million people of
which 70 percent are women who mostly come from rural areas. The sector opened up
employment opportunities for many more individuals through direct and indirect economic
activities, which eventually helps the country‘s social development, woman empowerment and
poverty alleviation. In such a way the economy of Bangladesh is getting favorably contribution
from this industry.
Garments Product Portfolio and its Diversification
The specific character of products and level o f industrial development indeed determines its
variance of product diversification. In such a context, the product mix, product line as well as
product diversification are very important strategies for any industry to develop its market by
meeting the present market requirements. For the garments industry it is also very important
because product diversification will call for developing capability for product development and
product design specially in response to fast changes in fashion. The growth pattern of garments
export can be categorized into two distinct phases. During the initial phase it was the woven
category. Second phase is the emergence of knitwear products. On the other hand, an analysis of
the product mix of the garments industry revealed that so far Bangladesh has been able to export
very limited categories of products. In such a context, an attempt has been made to examine the
growth and trend of product portfolio or categories of products exported from Bangladesh. The
following Tables deal with the value and quantity of different garment products export including
their growth pattern from 1992-93 to 2005-06.
Table 1.4: Pattern of Woven and Knitwear Garments Export (Figures in Million)
Year Export in Million USD Export in Million Dozen
Woven Knit Total Woven Knit Total
1992-93
1994-95
1999-00
2004-05
2005-06
CGR (%)
1240 (86)
1835 (82)
3081 (71)
3598 (56)
4084 (52)
9.60
205 (14)
393 (18)
1268 (29)
2820 (44)
3817 (48)
25.22
1445
2228
4349
6418
7901
13.96
36 (77)
47 (75)
67 (60)
92 (43)
109 (40)
8.90
11 (23)
16 (25)
45 (40)
120 (57)
165 (60)
23.16
47
63
112
212
274
14.52
Source: Garments Export Data, BGMEA and Export Promotion Bureau-EPB. Figures in
parentheses indicate the share in percentage. CGR stands for compound Growth Rate.
From the Table 04 it is evident that the compound growth rate of knit garment export is more
than woven garment export both in terms of value and quantity for the period of 1992-93 to
2005-06. The share of knit garments in total export has been increased significantly both in
terms of value and quantity. The share of woven garment in total garments export has been
decreased from 86 percent in 1992-93 to 52 percent in 2005-06. It is observed that the demand
for knit garment is increasing in the export market. It is also observed that the export quantity of
knit garments has been exceeded the export quantity of woven garments in 2005-06. The
position can be better explained if we look into the more details of the product mix in the above
categories of garments. The garment sector has been able to diversify the product base ranging
from ordinary shirts, T-shirts, trousers, shorts, pajama, ladies and children‘s wear to
sophisticated high value items like quality shirts, branded jeans, jackets, sweater, embroidered
wear etc. In such a context, an attempt has been made to classify the garments export into
different products in order to understand product diversification strategy and its relative
importance and performance as well. The following Table shows the picture in this regard.
Table 1.5: Pattern of Export Performance of Different Garments Products
(Amount in Million USD)
Year Shirts Trousers Jackets T-Shirts Sweaters Others
1994-95 791 (36) 101 (5) 147 (7) 232 (10) N/A N/A
1999-00 1021
(23)
484 (11) 440 (10) 564 (13) 325 (8) 1515 (35)
2004-05 1053
(16)
1668
(26)
430 (7) 1350 (21) 893 (14) 1024 (16)
2005-06 1057
(13)
2165
(27)
390 (5) 1782 (23) 1044
(13)
1463 (19)
CGR(%) 2.67 32.13 9.28 20.36 21.47 -
Source: Garments Export Data, BGMEA and Export Promotion Bureau-EPB. Figures in
parentheses indicate the share in percentage. CGR stands for compound Growth Rate.
From the Table 05, it is evident that the highest compound growth rate has been found in
Trousers 32.13 percent, followed by T-shirts 20.36 percent, Jackets 9.28 percent, and T-Shirt
2.67 percent respectively during the period of 1994-95 to 2005-06. The rate of Sweater is also
significant during the period of 1999-2000 to 2005-06. It is observed that the share of Trousers
and T-Shirt in the total garment export is increasing. On the other hand, the share of shirts and
Jackets is declining trend. The Figures indicate that Bangladesh has concentrated in the
production and export of Trousers, T-Shirts and Sweater. This mean‘s that there is a scope and
actually need for structural change in product mix.
Garments Market Diversification
The international textile and garment industry has undergone several shifts in production and
marketing since the 1950s. The first shift occurred in the 1950x and early 1960s when production
moved from North America and Western Europe to Japan. The second supply shift was from
Japan to the Asian newly industrialized economics (NIEs)-Hong Kong, Taiwan, South Korea and
Singapore- and this permitted the latter group to dominate global textile and garment exports in
the 1970s and 1980s. Over the past 10 to 15 years, there has been a third shift as production
within Asia has moved from the NIEs to China and South East and South Asian exporters and as
exports from non-Asian countries, in particular control America, the Caribbean, Eastern Europe
and North Africa, have increased substantially. These production shifts have been influenced by
a range of factors, including the distortions to international trade arising from MFA quota system
and labour cost differentials. In this scenario, Bangladesh garment industry is well placed to
withstand the increase in competition in its export markets. Our export market for garments
products is spread over a vast space of more than 20 countries with USA, UK, France, Canada,
Germany, Belgium and Middle Eastern countries being the major and notable ones. Initially,
Bangladesh has concentrated only in a few markets. It has concentrated in USA, Canada and
Europe. The competitors of Bangladesh, for example, India has continued to expand its trade,
diversify its markets and change product mix of its exports. As the recent performances indicate,
the production and marketing capabilities of Bangladesh have increased substantially. But still it
lacks the core competence necessary to stay in a highly competitive market which one can
anticipate in present post MFA period. If it wants to increase its world market share and
competitive edge, it needs to diversity its products and markets. In this context, it is imperative to
analyse the major export market for Bangladeshi garments product. The following Table shows
the major share of export market in USA, EU and other countries in this regard.
Table 1.6: Selected Region-wise share of Garment Export in percentage
Year USA European
Countries
USA &
EU
Other
Countries
2001-2002
2002-2003
2003-2004
2004-2005
2005-2006
42.67
38.02
28.64
30.64
33.67
55.43
57.12
65.42
64.24
49.77
98.10
95.14
94.06
94.88
83.43
1.90
4.86
5.94
5.12
16.57
Source: Bangladesh Bank Quarterly; Publication of Bangladesh Bank
From the Table 06 it is observed that Bangladesh garment export market has concentrated in
USA and EU till 2004-05 which indicates Bangladesh has successfully established a remarkable
presence in the world markets, particularly in the US and EU markets. In the year 2005-06 a
successful turnaround was observed in exports to third countries which is about 16.57 percent of
total export market and it was only 1.90 percent in 2001-2002. It is expected that the trend of
market diversification will continue and this will help to maintain growth momentum of export
earnings.
Post MFA Scenario in Bangladesh
The textile and apparel industries have led industrialization n at the early stage of development in
many countries of the world. Most developed countries which have lost competitiveness have
imposed quantitative restrictions on the trade in textiles and clothing since the 1950s, although
there has been progress in trade liberalization as a whole. Over the last thirty years, international
trade and investment in the global textile and garment
(T&G) sectors has been influenced by Multi-Fiber
Agreement (MFA) quantitative restrictions (quotas)
applied by the major developed country importers (the
United States, the European Union, Canada and Norway) on
T&G exports from (predominantly) developing countries. MFA
quotas were negotiated bilaterally and applied on a
discriminatory basis to some exporting countries but not to
others, thus differing from country to country in both
product coverage and the degree of restrictiveness. In such
a context, the Multi-Fiber Arrangement governed the trade
in textiles and clothing from 1974 to 1994. This
arrangement was superseded in 1995 by the Agreement on Textiles and Clothing (ATC) under
the administration of the World Trade Organization (WTO). From 1 January 2005 all such
quantitative restrictions on the trade in textiles and clothing were phased out, and finally
abolished. Historically speaking that as per requirement of The ATC, all MFA quotas on T&G
products be removed over a ten-year transition period split into three phases and ending on 1
January 2005, thus finally incorporating international T&G trade into general GATT rules that
prohibit discriminatory measures and call for the reduction and elimination of quantitative
restrictions. The quota system under the MFA has distorted international T&G trade and has
resulted in global welfare losses since quota limits on the exports of selective producers have
prevented an allocation of resources to the most efficient T&G producers and prevented prices in
quota protected developed country markets from falling. Competitive exporting countries with
comparative advantages in T&G production have been restrained from expanding under the
MFA quota system, while relatively uncompetitive producers have enjoyed guaranteed market
access (up to the quota limit) to developed country markets (Spinanger, 1999). In such a context,
there was serious concern that low income countries, such as Bangladesh, Cambodia and the
like, which relied heavily on the garment industry, would suffer from the keen competition
expected to be triggered by the complete liberalization of trade in textiles and clothing from the
beginning of 2005. From the many corners it was predicted that China would expand its exports
and India would follow, and that the other relatively small exporters would suffered seriously
from the competition of these two giants. However, it turned out that some garment-exporting
Least Developed Countries (LDCs), such as Bangladesh, Cambodia and Haiti, faired very well
throughout the year 2005. In this context, an attempt has been made to examine the export data
of selected countries during MFA and post MFA to US and EU markets in order to assess the
indicative impact of post MFA scenario in Bangladesh as well as other largest garments
exporters. The following Tables show the picture in this regard.
Table 1.7: Exports of Knit and Woven Garments to the United States
Rank Origin Amount (Million US$) Rate of Change
(%)
2003 2004 2005 2003-04 2004-05 1 China 8,690
7,098
3,732
2,056
2,155
1,759
1,229
10,723
6,845
3,878
2,277
2,402
1,872
1,418
16,808
6,230
3,523
3,058
2,882
2,268
1,702
23.39
-3.56
3.93
10.74
11.47
6.45
15.42
56.75
-8.98
-9.16
34.29
19.99
21.15
20.06
2 Mexico
3 Hong Kong
4 India
5 Indonesia
6 Bangladesh
13 Cambodia
Source: U.S. Department of Commerce, Bureau of Census cited in Yamagata, 2006
Table 1.8: Exports of Knit and Woven Garments to the EU
Rank Origin Amount (Million US$) Rate of Change
(%)
2003 2004 2005 2003-04 2004-05 All Countries 56,918
10,913
8,112
3,471
4,124
2,599
475
65,552
13,714
9,348
4,578
4,572
3,020
643
69,642
20,334
9,790
4,346
4,285
3,988
587
15.17
25.66
15.24
31.90
10.87
16.23
35.27
6.24
48.27
4.72
-5.08
-6.28
32.02
-8.77
1 China
2 Turkey
3 Bangladesh
4 Romania
5 India
19 Cambodia
Source: Eurostat cited in Yamagata, 2006.
Tables 7 and 8 show the trends in garment exports to t heUnited States and EU from the five
largest garment exporters and the two leading exporters among the LDCs, Bangladesh and
Cambodia. It was revealed that China and India expanded garment exports to the US and EU, the
world‘s two largest markets. Along with China and India, Bangladesh and Cambodia have also
increased their exports to the United States during 2005 by more than 20 percent. Though their
garment exports to the EU declined between 2004 and 2005, the drops were not significant; and
the growth in the same figures by more than 30 percent between 2003 and 2004 surpassed the
decline in 2005 (Table 8). As a whole, the sum of garment exports to the two largest markets
grew by 2.54 percent for Bangladesh and by 11.06 percent for Cambodia in 2005. Since the US
and EU are going to be imposing new restrictions on textile and garment imports from China for
at least a couple of years, exports from that country will slow down, making room for the
remaining garment exporters to increase growth. Thus, the prospects for Bangladesh to continue
expanding its garment exports are encouraging.
Displacement of Production in the Garment Industry
The global economy is now controlled by the transfer of production where firms of developed
countries swing their attention to developing countries. The new representation is centre on a
core-periphery system of production, with a comparatively small centre of permanent employees
dealing with finance, research and development, technological institution and modernization and
a periphery containing dependent elements of production procedure. Reducing costs and
increasing output are the main causes for this disposition. They have discovered that the simplest
way to undercharge is to move production to a country where labor charge and production costs
are lower. Since developing nations provide areas that do not impose costs like environmental
degeneration, this practice protects the developed countries against the issues of environment and
law. The transfer of production to Third World has helped the expansion of economy of these
nations and also speeds up the economy of the developed nations.
Garment industry is controlled by the transfer of production. The globalization of garment
production started earlier and has expanded more than that of any other factory. The companies
have transferred their blue-collar production activities from high-wage areas to low-cost
manufacturing regions in industrializing countries. The enhancement of communication system
and networking has played a key role in this development. Export-oriented manufacturing has
brought some good returns to the industrializing nations of Asia and Latin America since the
1960s. The first relocation of garment manufacturing took place from North America and
Western Europe to Japan in the 1950s and the early 1960s. But during 1965 and 1983, Japan
changed its attention to more lucrative products like
cars, stereos and computers and therefore,
400,000 workers were dismissed by Japanese
textile and clothing industry. In impact, the
second stock transfer of garment manufacturing was
from Japan to the Asian Tigers - South Korea,
Taiwan, Hong Kong and Singapore in 1970s. But the
tendency of transfer of manufacturing did not
remain there. The rise in labor charge and
activeness of trade unions were in proportion to the
enhancement in economies of the Asian Tigers. The industry witnessed a third transfer of
manufacturing from 1980s to 1990s; from the Asian Tigers to other developing countries -
Philippines, Malaysia, Thailand, Indonesia and China in particular. The 1990s have been led by
the final group of exporters including Bangladesh, Srilanka, Pakistan and Vietnam. But China
was leader in the current of the relocation as in less than ten years (after 1980s) China emerged
from nowhere to become the world's major manufacturer and exporter of clothing.
Bangladesh Garment Sector and Global Chain
The cause of this transfer can be clarified by the salary structure in the garment industry, all over
the world. Apparel labor charge per hour (wages and fringe benefits, US$) in USA is 10.12 but it
is only 0.30 in Bangladesh. This difference accelerated the world apparel exports from $3 billion
in 1965, with developing nations making up just 14 percent of the total, to $119 billion in 1991,
with developing nations contributing 59 percent. In 1991 the number of workers in the ready-
made garment industry of Bangladesh was 582,000 and it grew up to 1,404,000 in 1998. In USA,
however, 1991-figure showed 1,106.0 thousand workers in the apparel sector and in 1998 it
turned down to 765.8 thousand.
The presented information reveals that the tendency of low labor charges is the key reason for
the transfer of garment manufacturing in Bangladesh. The practice initiated in late 1970s when
the Asian Tiger nations were in quest of tactics to avoid the
export quotas of Western countries. The garment units of
Bangladesh are mainly relying on the 'tiger' nations for raw
materials. Mediators in Asian Tiger nations build an
intermediary between the textile units in their home
countries, where the spinning and weaving go on, and the
Bangladeshi units where the cloth is cut, sewn, ironed and
packed into cartons for export. The same representatives of
tiger nations discover the market for Bangladesh in
several nations of the North. Large retail trading
companies placed in the United States and Western Europe give most orders for Bangladeshi
garment products. Companies like Marks and Spencers (UK) and C&A (the Netherlands) control
capital funds, in proportion to which the capital of Bangladeshi owners is patience. Shirts
manufactured in Bangladesh are sold in developed nations for five to ten times their imported
price.
Collaboration of a native private garment industry, Desh Company, with a Korean company,
Daewoo is an important instance of international garment chain that works as one of the grounds
of the expansion of garment industry in Bangladesh. Daewoo Corporation of South Korea, as
part of its global policies, took interest in Bangladesh when the Chairman, Kim Woo-Choong,
offered an aspiring joint venture to the Government of Bangladesh, which included the growth
and process of tyre, leather goods, and cement and garment factories. The Desh-Daewoo alliance
was decisive in terms of getting into the global apparel markets at significant juncture, when
import reforming was going on in this market following the signing of MFA in 1974. Daewoo, a
South Korean leading exporter of garments, was in search of opportunities in nations, which had
hardly used their quotas. Due to the quota restriction for Korea after MFA, the export of Daewoo
became limited. Bangladesh as an LDC got the chance to export without any constraint and for
this cause Daewoo was concerned with the use of Bangladesh for their market. The purpose
behind this need was that Bangladesh would rely on Daewoo for importing raw materials and at
the same time Daewoo would get the market in Bangladesh. When the Chairman of Daewoo
displayed interest in Bangladesh, the country's President put him in touch with chairman of Desh
Company, an ex-civil servant who was seeking more entrepreneurial pursuits.To fulfill this wish,
Daewoo signed a collaboration contract with Desh Garment for five years. The contract also
incorporated the fields of technical training, purchase of machinery and fabric, plant
establishment and marketing in return for a specific marketing commission on all exports by
Desh during the contract phase. Daewoo also imparted an exhaustive practical training of Desh
employees in the working atmosphere of a multinational company. Daewoo keenly helped Desh
in buying machinery and fabrics. Some technicians of Daewoo arrived Bangladesh to establish
the plant for Desh. The end result of the association of Desh-Daewoo was important. In the first
six years of its business, i.e. 1980/81-86/87, Desh export value increased at an annual average
rate of 90%, reaching more than $5 million in 1986/87.
It is claimed that the Desh-Daewoo alliance is a significant element for the growth and
achievement of Bangladesh's entire garment export industry. After
getting linked with Daewoo's brand names and marketing
network, overseas buyers went on with buying garments from the
corporation heedless of their origin. Out of the opening
trainees most left Desh Company at several times to erect their
own competing garment companies, worked as a way of
moving knowledge all through the whole garment sector.It is
essential to identify the outcomes of the process of moving production from high pay to low pay
nations for both developing and developed nations. It is a bare fact that most of the Third World
nations are now on the way to industrialization. In this procedure, workers are working under
unfavorable working environment - minimal wages, unhealthy place of work, lack of security, no
job guarantee, forced labor etc.
The route of globalization is full of ups and downs for the developing nations. Relocations of
comparatively mobile, blue-collar production from industrialized to developing nations, in some
circumstances, can have troublesome effects on social life if - in the absence of efficient planning
and talks between international organizations and the government and/or organizations of the
host nation - the transferred action encourages urban-bound relocation and its span of stay is
short. Another negative result is that the rise in employment and/or income is not expected to be
satisfactorily large and extensive to lessen inequality. In connection with the negative results of
relocation of manufacturing on employment in developed countries, we realize that in
comparatively blue-collar industries, the growing imports from developing nations lead to
unavoidable losses in employment. It is held that development of trade with the South was a
significant reason of the deindustrialization of employment in the North over past few decades.
After all employees who are constantly working under unfavorable circumstances have to bear
the brunt. Work is under-control across the Bangladesh garment sector. Appalling working
atmosphere has been brought to light in the Bangladesh garment industry. A research reveals that
90 percent of the garment employees went through illness or disease during the month before the
interviews. Headache, anemia, fever, chest, stomach, eye and ear pain, cough and cold, diarrhea,
dysentery, urinary tract infection and reproductive health problems were more common diseases.
The garment factories gave bonus of different diseases to the employees for working. With a
view to finding out a link between these diseases and industrial threats, health status of
employees has been examined before and after coming in the garment work. At the end of
examination, it was come out that about 75 percent of the garment workforce had sound health
before they entered the garment factory.
The garment sector is disreputable for fires, which are said to have claimed over 200 lives in the
past two years, though exact figures are tough to find. A shocking instance of absence of
workplace safety was the fire in November 2000, in which almost 50 workers lost their lives in
Narsingdi as exist doors were closed. From the above analysis of working atmosphere of
garment sector, we can state that the working environment of most of the Third World nations,
particularly Bangladesh remind us of earlier development of garment industries in the First
World nations. The state of employment in many (not necessarily) textiles and clothing units in
the developing nations take us back to those set up in the nineteenth century in Europe and North
America. In a way, the Western companies are guilty of pitiable working atmosphere in the
garment sector. The developed nations want to make more profit and therefore, force the
developing nations to cut down the manufacturing cost. In order to survive in the competition,
most of the developing nations select immoral practices. By introducing inflexible terms and
conditions in the business, the global economy has left few alternatives for the developing
nations.
Labor Unrest in Garments Sector
Labor is an important input in industrial
production. This is truer in garment industry of
Bangladesh. Mechanization and automation have not
diminished the role of human element in industrial
establishments. In fact the role of the workforce has become highly critical in garment industry.
Nor have the economic reforms belittled the significance of labor. Liberalization of economy has
brought labor to centre stage. Human resource is taken to be an important factor to increase
productivity, improve quality and reduce costs all necessary to survive in the competitive world.
There are several issue related to labor. They are trade union movement, wage policy and
industrial relation. Industrial labor in the garment sector has undergone important changes over
the two decades. Most important changes are commitment to industry, protective legislation,
status of the worker, employment pattern, growth of trade unionism, industrial disputes, and
political interference and in some cases unfair labor practices. Despite the prevailing positive
labor management relationship, the spiraling labor unrest in the Bangladesh RMG industry
started on May 2005 after a knitwear factory owner rejected an 11-point charter of demands. The
factory was completely gutted in the blaze. Protesting workers forced their way into an exclusive
industrial zone for foreign investors and damaged machinery. These workers demanding unpaid
wages and a weekly holiday smashed scores of vehicles and burn down factories in Savar, an
industrial town near Dhaka. Among the 250 damaged units, at least 30 were owned by foreign
investors in the Savar Export Processing Zone. According to Bangladesh Garment Manufacturers
and Exporters‘ Association (BGMEA) nearly 300 factories, including 21 factories in the Savar
Export Processing Zone (EPZ), were damaged during the three-day crisis. The total loss of the
garment industry is around four billion taka (nearly $70 million). Many vehicles were also set on
fire during the unrest, which left three workers dead and hundreds others wounded. This is
reportedly the worst industrial rioting in Bangladesh in the ready-made garment industry which
is the country‘s biggest export earner. The violence also dealt a serious blow to the industry‘s
image apart from causing huge losses. Some trade union leaders blamed the outbreak on
accumulated anger of workers, who even do not have any weekend. They alleged that some
garment owners do not pay the worker their salaries in time and overtime regularly. The violent
outburst of the workers crippled the industry for many days. Several quarters seen it interruption
behind this development. On the other hand, another quarters seen it is an explosion of anger that
remains unresolved for long. Protests over low wages and other exploitative conditions
continued in the month of June 2005 too. The garment workers continued to hold rallies and
clashed with law enforcers, leaving many people injured and few dead. Defying a ‗red alert‘
imposed by law enforcers at the Dhaka Export Processing Zone (DEPZ) and its adjoining
industrial areas, workers were involved in clashes in the Savar, Ashulia and Gazipur areas. The
deepening unrest in the garment industry forced the foreign investors to announce on June 2005
that they have shut their units as fresh violence flared up in the Export Processing Zone (EPZ).
Investors of 92 units in the EPZ said that they will not reopen the units until the government
gives guarantee of law and order in the area. They also requested the EPZ authority to declare the
EPZ closed indefinitely to cool off the situation. Leaders of the garment factory owners‘ also
urged the government to form an industrial police force to ensure a secure working environment
for the apparel industry. They felt that the overall security situations in different industrial hubs
were not risk free despite the government‘s deployment of huge security forces. It was true that
in the year 2005 the political instability has been made worse by the simultaneous labor unrest in
the economic lifeline of Bangladesh that is its garment industry. Initially the government and the
industry leaders underestimated the magnitude of the problem and tried to brush it aside by
floating various conspiracy theories.
The garment industry in Bangladesh has been subject to several tests of resilience in recent
years—global recession, energy
shortage, input price increases, and labor
unrest. Of late, the labor unrest has
escalated apparently triggered by
disagreement over re-fixation of
minimum wage. The workers, for quite
some time now, have been pressing for
adjustment in minimum wage that was last
increased in 2006, after 12 years, from Tk.
930* (about $60 in PPP) per month to Tk.
1,662 (about $108 in PPP) per month. The
government in April 2010 committed that a
new pay-scale for the RMG workers will be
announced before Ramadan, and
formed a Wage Board for making the wage
recommendations. For reasons not yet fully
understood, the labor unrest was
reignited recently without waiting to hear
what the Wage Board‘s
recommendations are. However, it is
abundantly clear that dissatisfaction with the nominal level of the minimum wage is at the center
of the discord between garment owners and workers.When viewed from the poverty perspective,
the upper poverty line measured in 2005 for Dhaka urban areas was Tk. 890 per capita per
month. Considering a household size of 2.2 as assumed by the employers, the minimum wage
(per month) should have been Tk. 1958 in 2005, Tk. 2249 in 2006 and Tk. 2809 in 2010 after
adjusting for inflation. In addition, workers also should be allowed to share in the industry‘s
economic prosperity along with the owners. Taking this into consideration, the reported
government recommendation of Tk 3000 as minimum entry level wage appears reasonable.
Owners worry about loss of competitiveness as production cost is likely to increase with increase
in wages. But this is not the only effect. Higher wages may allow workers to eat better to avoid
illness and to be able to work harder and more productively. This is known as the efficiency
wage theory which may be operative at such low level of wages. Owners must also be aware that
agitation to press demand for higher wages in garments is now a regional phenomena. As
competing countries concede to these demands, the loss of our competitiveness due to wage
increase will be far less than may appear on the surface.
Elate Fashion Limited
Elate Fashion Ltd is a 100% export oriented garment industry with woven production facilities of
ready-made garments, such as Jog Sets, Padded Jackets, Shorts, Vests, Ski Dresses etc. The
management of the company is well experienced in this sector. They have been in this trade for
more than 19 years. Considering the experience, customer base and for the sake of business
expansion, the management has set up this factory with modern equipment and facilities. The
EFL Management is also keen to expand its production capacity with bigger floor for minimizing
its per unit production cost, improvement of products quality as well as to face competitive
international market along with the existing customers with a view to offer a lucrative and
moderate price to grab orders from the international customers. The factory has been equipped
with most modern and sophisticated machineries of renowned international brand to be imported
from abroad at competitive price which has run by highly trained and skilled manpower. The
factory is self-sufficient, production is continuous and of trouble-free operation ensuring timely
delivery and shipment. This factory has rented industrial building in khilgoan which is
approximately 33,000 SFT in 9 Floor.
History of Elate Fashion Ltd
Mr. A T M RezaurRahman Managing director of the company, having 26 years of business
experience in trading and garments industry. He is directly involved with garments industry since
1991 as one of the directors of Excel Industries Limited (EIL). Later, together his partner formed
another industry namely Elate Fashion Ltd (EFL) in 1998.Established in 1998, by Mr. A T M
RezaurRahman, the Managing Director of the company –
Elate Fashion Limited started with 450 employees. The
initial investment was almost 2 crore taka.Mr.
RezaurRahman and A K M MahbubulAlam chose the
location Khilgoa in center of Dhaka city and as it had the
advantages of being placed between the Dhaka-Chittagong Highway (the place from where the
raw materials come) and the Dhaka Road (the market). A rented industrial building in khilgoan is
approximately 33,000 SFT in 9 Floor. In which Cutting department consist of 6,400 SFT, sewing
department consist of 12,400 SFT, finishing department consist of 6,200 SFT, store is consist of
6,000 SFT and main office is 2,000 SFT. By 2010, EFL is planning to open up a new factory
under BMRE concept at Peyarabagan, Vogra, Gazipur. The Proposed Project will be set in a four-
storied building having 54,000 Sft. in initial phase.This is a private limited company with two
partners. While the managing director Mr. A T M RezaurRahman owns 60% of the share and
controls most of the administrative works, and the General Manager Mrs. TaifunNahar who is a
salaried employee controls all the production activities.To mention about the other partners, the
chairman of the company Mr. MahbubulAlam with rest of 40% of the share.
Capacity
The Factory runs 300 days in a year on a single shift 8 hour basis and in addition require overtime
as per legal Law of the Country. Approximately 80,000 Sets Jog Suits per Month.
Products
The major products of Elate Fashion Limited are focused mostly on Woven wears. At this point
it must be referred that earlier it was discussed that woven wears bring about the most export
earnings in the RMG and Textile industry.
Therefore, it must also be mentioned that
competition in the woven wear section is the
highest and is almost twice as much as
knitwear or others. Nevertheless, the
products that Elate Fashion concentrates on
are:Pant (Short & Long), Trousers, Shorts, Jog
Suits, Heavy Jacket, Light Weight Jacket, Fleece
Jacket, all sorts of outerwear etc.All of these
products have their own variations in terms
of sizes, colors, patterns and design.
Separate product lines for different sexes are
also maintained within each of the products. This therefore indicates that jackets, jogging suits or
other products have male, female and children divisions with separate design pattern, color, sizes
and patterns.
Background of the Managing Director
The Managing Director Mr. A T M RezaurRahman the founder of Elate Fashion Ltd is
completely a self-made man. He was born in 15th September 1954. Mr. A T M RezaurRahman
finished his M.com in management from Dhaka University in 1977. He has 26 year of business
experience, out of which 19 years in Garments trade. He decided to become independent and to
open his own garments factory. It is his own dedication and effort that made him initiate and be
successful in his ventures and thereby become the successful owner of a competitive and
growing garments factory.
Background of the Chairmen
The chairmen of Elate Fashion Ltd Mr. A K M MahbubulAlam born in 1st January in 1955. He
issocial science graduate (Sociology) from Dhaka University. During in 1990s both of them Mr.
RezaurRahman and Mr. MahbubulAlam have extensively visited the buyers and maintained the
quality of the products which ultimately helped to cope with recent recession round the world.
Account Relationship with AB Bank Limited
Mr. RezaurRahman, Managing Director and Mr. A K M
MahbubulAlam, Chairman has been maintaining
banking relationship with AB Bank Limited,
Motijheel Branch since 1991 as director of Excel
Industries Limited. Initially, EIL had stated
banking with Motijheel Branch, AB Bank Limited since
1991. During these times the company dealt with some
renowned customers like Rousso Apparels Group, Inc.,
USA, Outerstuff Ltd., USA, Athco Inc., USA, Castlewood Apparel Corp., USA, Paramount
Apparel Group, USA. Based on the experience of EIL, the management has decided open
another factory and it started its operation in 1997 in the name of Elate Fashions Limited (EFL).
EFL also established relationship AB Bank Motijheel Branch.
A brief of the relations with AB Bank Limited are detailed below:
Amount in BDT. Lac
Sl. No.
Particulars Excel Industries
Limited (EIL)
Elate Fashions Limited (EFL)
a. Commencement of Business
: 1991 1997
b. Product : Jacket, Jogging suit
Jacket, Jogging suite
c. Account Relationship with AB
Bank Motijheel
: 1991 1997
Branch Since
d. Present Credit Line and
Outstanding (As of June 08, 2010)
: - Facility Limit Outstanding
Back to Back LC 800.00 492.73
OD 100.00 111.89
Rev. TL 217.00 217.00
Auto Loan 6.90 6.59
Total 1123.90 828.21
e. Business Performance
: Year US$ in Lac
Year US$ in Lac
2003-04
921.26 2003-04 1983.32
2004-05
134.81 2004-05 1944.74
2005-06
370.75 2005-06 1891.56
2006-07
3.90 2006-07 2426.28
2007-08
- 2007-08 2116.58
2008-09
- 2008-09 2799.76
f. Main Importer : - I. Rousso Apparels Group, Inc., USA
II. Outerstuff Ltd., USA
III. Athco Inc., USA
IV. Castlewood Apparel Corp., USA
V. Paramount Apparel Group, USA
Machineries
All machines are Electro-mechanical latest model from world famous brand giving below
description:
SL# NAME OF MACHINE QUANTITY REMARKS
01 PLAIN MACHINE 143
02 VERTICAL MACHINE 20
03 2/NEEDLE MACHINE 24
04 2/NEEDLE CHAIN STITCH MACHINE 02
05 OVER LOCK MACHINE 26
06 KANSAI (PMD) 05
0
500
1000
1500
2000
2500
3000
2003-04 2004-05 2005-06 2006-07 2007-08 2008-09
Performance of EFL
07 BUTTON HOLE MACHINE 02
08 BUTTON STITCH MACHINE 02
09 BARTACK MACHINE 08
10 SNAP BUTTON MACHINE 08
11 FEED OF THE ARM 02
12 THREAD SUCKING MACHINE 01
13 CUTTING MACHINE 03
14 PADDING CUTTING MACHINE 01
15 LABEL CUTTING MACHINE 02
16 THREAD RECONNING MACHINE 01
17 GAS BOILER MACHINE 01
18 GENERATOR 01
19 NEEDLE DETECTOR MACHINE 01
20 BUTTON TEST MACHINE 01
Employment Provided by EFL:
Elate Fashion Limited started with only 450 employees in 1998, it quickly expanded and had 650
employees by 2002. The plant expanded with the employees and took all of the Nine-storied
building, which it leased previously. There were around 315 machineries in total for the 650
workers to run. As of 2007, Elate fashion Ltd has 1295
employees among 1050 are labor class workers and
operates with 555 machineries. In Elate Fashion LTD it
has mentioned that almost 95% of the labors are female
workers. Among 1050 workers, 300 are male and 750 are
female workers and there is no child labor or forced
labor in this garments factory.It is for this reason that no
concepts of unionization are present. Securities for the
employees are at its maximum level within the factory as
these are prerequisites that must be met for
international exportation.
The working environment of EFL is under hygienic condition. To mention about the
compensation strategies undertaken by the company, it must be mentioned that monthly
incentives are given for regular attendance of the employees. They are adding two days salary
along with the monthly salary of the employees when employees are attending all of the working
day in a month. This is called attendance bonus of employees or labors.As EFL‘s turnover rate is
high, they are providing less training towards the industrial workers, supervisors and the
managers. Besides, giving training to these employees would be both expensive and inefficient
in terms of times. During overtimes, foods and lunches are also provided to the employees as a
mean of compensation.
Man Power
This company hires best quality staff and worker with attractive remuneration packages. Please
find below the staff structure (administrative and technical) and the remuneration packages:
A. Administrative Staff:
BDT. Lac
Name of the
post
No.
of
Post
Per
persons
Salary
per Month
Yearly
Salary
Per Month Salary Expenditure
General Manager 1 80,000.00 9.60 0.80
Merchandising
Manager
6 65,000.00 46.80 3.90
Asstt.
Merchandiser
4 35,000.00 16.80 1.40
Commercial
Manager
1 50,000.00 6.00 0.50
Commercial
Executives
3 20,000.00 7.20 0.60
Doctor 1 30,000.00 3.60 0.30
Nurse 2 15,000.00 3.60 0.30
Accountants
Manager
1 40,000.00 4.80 0.40
Accounts
Executives
3 20,000.00 7.20 0.60
Sales / purchase
officer
2 15,000.00 3.60 0.30
Store In charge 1 20,000.00 2.40 0.20
Store Keeper 5 8,000.00 4.80 0.40
Computer
Operator
2 10,000.00 2.40 0.20
Driver 4 7,000.00 3.36 0.28
Guard 8 3,500.00 3.36 0.28
Sweeper 6 3,000.00 2.16 0.18
Peon 2 3,000.00 0.72 0.06
Total 52 128.40 10.70
B. Technical Staff:
BDT. Lac
Staff No.
of
post
Monthly
salary per
person
Yearly Salary
Per Month Salary Expenditure
Production
Manager
1 70,000.00 8.40 0.70
Technical Manager 1 50,000.00 6.00 0.50
Line Chief 6 25,000.00 18.00 1.50
Supervisors 18 20,000.00 43.20 3.60
Quality Manager 1 50,000.00 6.00 0.50
Quality Controller 8 25,000.00 24.00 2.00
Quality Inspector 50 12,000.00 72.00 6.00
Cutting In-charge 1 30,000.00 3.60 0.30
Cutting Supervisor 3 20,000.00 7.20 0.60
Cutting Assistant 50 7,500.00 45.00 3.75
Finishing In charge 1 30,000.00 3.60 0.30
Finishing
Supervisor
3 20,000.00 7.20 0.60
Finishing Assistant 50 7,500.00 45.00 3.75
Skilled labour 550 6,500.00 346.32 28.86
Semi-skilled
labour
500 4,500.00 239.76 19.98
Total 1243 875.28 72.94
Grand Total (A+B) 1295 1003.68 83.64
Major Buyers
Elate Fashion Ltd is an export-oriented company and has a turnover of about US$.55, 00,000.00
(Approximately) per year.It has a main client from the United States called Rousso Apparel
Group, Outer staff company, Athco Import Inc and Castlewood Apparel Corporation that acts as
a middle man between Elate Fashion LTD and others with major RMG buyers like Sears, Jessie
Penny, Wal-Mart, Bob‘s, Army, Burlington etc.The management of this industry has a quite
long-term order handling experience with some of the leading Buyers/Customers like as under
with their satisfaction. Year of 2009 manufacturing breakdown as follows:
Rousso Apparel Group, (USA) 50%
Outerstuff Ltd. (USA) 27%
Athco Import Inc. (USA) 20%
Castlewood Apparel Corp. (USA) 03%
Raw-material source
Elate Fashion LTD imported their raw materials from different countries. They import their fabrics
which has used in producing their products are mainly from Taiwan, Korea, China and Hong Kong.
They also purchased Local Bangladeshi Fabrics which meets customer requirements.In their
production level accessories are needed. So they import this Accessories are from Hong Kong,
China & Taiwan. Elate fashion LTD import all kinds of accessories but expect those items which
can be arranged from local market‘s as per their customer‘s approval.
Company in & out :
Employee Safety and Environment
According to the law of protecting the employees of the garment factories, all apparel industry
has to follow some safety rules in the factory plants. From the very beginning, there is always a
risk of short circuit in any garment factory. The environment always stays dry and there are fine
particles of fabrics in the air of any garment and fabric related company. So fire can spread very
easily in that favorable environment. This garment factory has enough fire extinguishers and
spare emergency exit rout in the backside of the factory as the factory is nine stored building.
Though it is the requirement of the related law, this company maintains these protections very
carefully. Moreover employees get some kind of benefits if they are injured while working in the
company, though there is no such written contract in the job description or in job agreement.
This company also provides the clean and hygienic working arrangement, as it is strongly
required by the main buyer of the company. There are separate clean toilets in every floor and
department, and there are places where employees can have their own lunch (taken with them in
the morning) in the factory ground.
Women based workforce
As most of the workers in the manufacturing and the factories are
women in Bangladesh, Elate Fashion Limited also has more female
employees than male. Almost 95% workforces are female in Elate
Fashion Ltd. They think that women are more responsible towards
their work and for taking care of the family in this country. So, like other garment factories, this
company has to consider thousands of the family problems each months and every day. As
earlier days government has been decided that women should get seven months of maternal
leave. That‘s why Elate Fashion also have decided to give seven months of maternal leave to
each of female workers as it was only three months for female workers.
No Child Labor or forced labor
In Bangladesh one of the major problems is corruption and enforcement of the weak law. The
corruption and the crime undermine domestic security and discourage foreign investment. There
are several laws to protect the child labor use in any kind of industries.
Still there are some garment manufacturer companies in the sub urban
areas where the child labor is common.
In Elate Fashion Ltd there are no child labor is used and no
forced labor is used as well. But very often there are some
female employees who seek works that are married and have
children of their own. Though by the age requirements of the
related law, they are considered as child, they are getting the job as
they can hide their age by showing their children and others. That is
why it is difficult to know the real age of the applicant, and
sometimes mistakenly child labor is hired in this company. Otherwise there is no child in the
labor force of Elate Fashion Limited.
No Unionization
In Elate Fashion Ltd they have no union. This has been the strongest side of Elate Fashion Ltd
till now. As the employees never felt to have a trade union in Elate Fashion Ltd that‘s why EFL
does not have to face any problem regarding this unionization. In other hand most of the
employees in the Elate Fashion Ltd are female who are illiterate and do not aware of their rights.
Unauthorized leave
Elate Fashion Ltd faces the problem regarding the unauthorized leave of the workers. Sometimes
workers or labors do not come to their work for 3 or 4 days without informing the management.
This affects the productively level of the factory.
High Turnover Rate & low profit margin
The wage rate is not set nationally or by the national pay scale of Bangladesh. That is why the
minimum rate cannot be determined in this industry and workers depend on the desire of the
employers of the garment companies. Sometimes they feel that if they switch the job in different
company, thought the workload is same, they will get more money. So the turnover rate is very
high in any garment factory in Bangladesh as well as in Elate Fashion Limited.
Elate Fashion also shares their profit with the employees which force them to maintain low profit
margin in a year. As the turnover rate is high in Elate Fashion they are facing some financial
problem in recent days.
Lack of marketing tactics
Elate Fashion Ltd has a marketing department which is not that much affective. They are lacking
to build a strong marketing procedure.
Training and development
Elate Fashion Ltd does not apply standardized training, development opportunities rather
generalize training, and development processes to their employees. Moreover, the training
processes for both the managers and workers are same.In terms of manager‘s means managerial
posts including supervisor also, the training process is not uniformed. If any manager is newly
recruited, then he/she will be placed in his/her require job along with another manager who is
experienced. The task of experienced manager is to provide guideline and adequate information
of this job and the companies, make him/her familiar with this job, and identify the problem
he/she would face. There is time period of this total task and that is three months which is termed
as probation period.In term of newly recruited workers, the basic processes are same, as he/she
will be placed in his/her job along with another experienced workers whose job is to provide
adequate information concerning the job and the company. More importantly, there is a time that
is three months for the workers also.
Workers protecting and clashing to establish their rights are common scenery in Bangladeshi
garments industries. But EFL has not faced violent strikes by its labors because of motivating
compensation package & caring approach. Unauthorized leave by labors, hidden tension,
increase of production cost need to be taken care of. Management is proud of its
experienced management entity, satisfied labors, international branded buyers, quality products.
EFL needs to rectify the small mistakes and has to take initiatives to counter the challenge
presented before the whole RMG as well as EFL because of the wage fixation problem and labor
disputes.
What strategies should Elate Fashion Limited undertake to ensure strong and competitive
human resource aspects besides other factors of productions and thereby sustain after the
ongoing disputes regarding minimum wage fixation in the struggling RMG industry of
Bangladesh and also remain competitive in the global market?
SWOT analysis is a strategic balance sheet of an organization; that is the strengths and
weaknesses of the organization, the opportunities and the threatsfacing the organization. It is one
of the cornerstone analytical tools to help an organization develop a preferred future. Evaluation
of internal and external factors helps to analysis Strengths, Weakness, Opportunities, and
Threats. The benefits of a SWOT analysis are that it provides learning and knowledge vital to the
organization‘s survival and prosperity. Good performances in business occur because of the
people directing the affairs of the business, and their interaction with the environment in
emphasizing on the company‘s strengths and eliminating any underlying weaknesses. In other
words, in order to operate successfully in a continuously changing environment, the business
firms should plan its future goals and strategies around its strengths and also try to overcome the
weaknesses. Thus, the assessment of strengths, weakness, as well as opportunities, and threats
become an essential task for management.
Strengths: A company should be aware of its core capabilities and sources of competitive
advantages. Core capabilities are the critical skills and processes that an organization executes so
well that its reputation builds around it.Strengthsrefer to the competitive advantages and other
distinctive competencies that a company can exert in the market place.
Weaknesses:In addition to knowing its strengths, an organization must recognize its limitations.
Whether limited by a poorly equipped production facility or a sales force that merely quotes
prices and delivery dates, a business that acknowledge its weaknesses forces mangers to assess
their processes and systems.Weaknesses are constraints that hinder movements in certain
directions.
Opportunities: External and internal environments present both driving and restraining forces.
Opportunities may occur suddenly. With the past pace of globalization and technology changes,
what may initially present itself as an opportunity may become a threat if organizational
responsiveness is too slow or not well planned.Opportunities primarily arise from the external
environment, and refer to the chances of gaining competitive advantages.
Threats:Threats are negative external environmental factors which influences an organization‘s
decision. External factors are not controlled by the organization and to survive every
organization needs to be very alert about its threats and how they can overcome this problem.
Organizations should be proactive rather than reactive and should be aware of what are the
competitors‘ moves and should take necessary action in advance to face those moves.
Established structured HRM division
Elate fashion ltd. has structured HRM (Human Resource Department) division. Their HR
department consists of 6 people. Among them the Head of the department has studied from a
STRENGTH
reputed university and he has experience from his previous jobs so he is maintaining the factory
so well that employees are so happy and they are productive as well. Other people of this
department is also handling the compensation and decision making process so well there is no
conflict among other departments and no conflict among the workers.
Management with 19 years of experience
The management of Elate Fashion Ltd. is a very organized and capable one. They established
this company in 1992 and since then they are operating in very handsome way. The management
has strict monitoring system and they maintain the rules and regulation strictly. Elate has
efficient mangers who are doing their job efficiently and the supervisors are taking good care of
the workers so the management is performing a good job and that‘s why Elate is having
advantage for this.
Experience with some of the leading buyers
Bangladesh has made a spectacular achievement in export of readymade garments during the last
two decades. It ranks fifth in the buyers‘‘ list. Buyers from US and Europe prefer the quality of
fabrics for apparels coming from Bangladesh. Elate Fashion Ltd, supplies products to mainly
USA and they had a good reputation of giving the supply on time.
No unionization
Practicing no union in the Elate fashion ltd. premise is a positive side because their employees
never felt of having any union. Elate provides its workers flexible time and workers gets their
pay in due time. Elate does not have a union as it thrives to establish itself as a company of
international standard not being in two teams but in one unique team. Thus it doesn‘t have the
system of unionization in the organization as it is already fulfilling the needs of the workers and
employees altogether efficiently.
No child labor or forced labor
In Elate fashions ltd there is no child labor. However sometimes there are some female
employees who seek works that are married and have children of their own. It is difficult to
know the real age of the applicant, and sometimes mistakenly child labor is hired. Otherwise
there is no child in the labor force of Elate fashions Limited. As Elate is planning to have proper
recruitment process they can overcome this problem very soon. As there is no child labor there is
no question of forcing the labors to work. Elate fashions don‘t believe in this type of policy.
Electro-mechanical latest model
machines from world famous brand
Elate Fashion ltd. uses electro-mechanical
machines in their production process. All the
machines are well- handled by the workers and machines are from famous brand like Siemens
co. They are using these machines and as well giving the workers chance to learn the operation
of these machines.
Reasonable price
Bangladesh is a developing country of the south Asia which is densely populated. Most of the
people of this population is illiterate and has no technical knowledge. They are just burden for
the country but they have an important asset which is their unused labor. This labor can be used
in many productive ways like; as our RMG industry is booming and we need more cheap labors.
Bangladesh has the competitive advantage that they have very cheap labors which their
competitors lack. So they can use this cheap labor and do more business. For this cheap labor
Elate fashion has the advantage against the competitors and Elate is using this advantage and
giving products to the buyers at a reasonable price.
Quality assured and on time delivery
The way RMG brought its success it became the backbone of the
economy and 74% of country‘s foreign currency earnings comes
from this sector. The quality of Bangladesh‘s RMG products is
very good and the buyers are really happy with the quality of
product. Elate Fashion Ltd. also provides quality product to their
buyers and they always gives on time delivery which works as an
advantage for them. As our RMG products are always in need so we should maintain this quality
and on time delivery reputation.
Hygienic Working environment
As per law of protecting the employees of the garment factories, all apparel industry has to
follow some safety rules in the factory. From the very beginning, there is always a risk of short
circuit in any garment factory. The environment always
stays dry and there are fine particles of fabrics in the air
of any garment industry. So fire can spread very easily
in that favorable environment. Elate fashion ltd. has
enough fire extinguishers and spare emergency exit
rout in the backside of the company. Though it is the
requirement of law, this company maintains these
protections very carefully.
Location: Dhaka-Chittagong Highway Access
Elate fashion is situated in the khilgaon area of Dhaka. The place is just beside the Dhaka-
Chittagong highway so the Elate fashion can have the easy access of the road while they supply
their products. They can avoid the traffic jam of Dhaka city and can deliver their goods on time.
So they had the location advantage for their factory.
International demand
Bangladesh‘s RMG products are highly demanded by the developed countries due to the cheap
labor benefits. Demand of RMG (Ready Made Garments) product is high in the Europe and US
market for maintaining the standard of quality required by them. This is a positive signal for
keeping the existing labor in workforce rather than lay off.
Lack of backward linkages
Backward linkage means garment industry need to have fabrics to make the finished products.
Due to inadequate backward linkage facilities, Bangladesh is still heavily dependent on imported
fabrics to meet the demand for domestic as well as export-oriented RMG industry. ―The present
demand-gap of fabric for domestic and export through Ready-made Garments is 2,000 million
meter.
Lack of product development and design Bangladesh makes readymade garments and they are only specialized on limited products which
are creating problems to sustain in competitive edge. To sustain in this global competitive market
Bangladesh garment industry need to develop new product & design.
Loss of global market share: No quota after phase out of MFA
As the quota system is going out Bangladesh is going to lose its market share of readymade
garments in the global market due to the competition. The benefits they are enjoying due to the
system of quota they are not going to avail it anymore. Other countries like China, Thailandand
India will take the market share.
Lack of marketing tactics
WEAKNESS
Very limited educated work force is coming in the RMG industry of Bangladesh. Most of the
garment factories are run by the employees with a normal degree. These work forces are cheap to
hire and easy to control, employers prefer them. These workers also monitor the lower class
workers, which are mainly the uneducated segment of the country. Companies are lacking proper
technical knowledge by hiring strategies like these. As a result, there are so many losses due to
not properly handled issues of exports. As there is no qualified people the marketing side of this
is also affected. We don‘t know how to brand our products that‘s why we face problems in doing
business. If we improve our marketing tactics we can achieve more growth in this RMG sector.
A small number of manufacturing methods
Since Elate Fashions Ltd. maintains a system of individual work process at the production level
it lacks team effort as well. The sense of being part of the total process is absent and thus the
workers are less aware of what responsibilities are there beyond their defined ones. The
knowledge of the total process of production is thus not established or conveyed due to the
absence of the team effort. As they practice this type of working process the manufacturing
process is simple and they don‘t go for team based work
Sluggish backward or forward blending procedure
In Bangladesh RMG industry faces problems in the backward linkage and they also falls in the
forward procedure as well. We face backward linkage which is not new but now the forward
blending is also creating problem due to the loss of power supply, lack of gas and most probably
for the political and garments unrest.
Dependency on selected markets: USA
Bangladesh readymade garments industry in solely dependent to the markets of USA & EU.
Most of the orders come from these two countries and if they lose little bit of market this will
have an impact on the overall economy. Bangladesh‘s dependency to these two markets is
making the sector to much vulnerable. Elate Fashions Ltd. is only dependent on USA which is
hampering its growth. Elate should go for other ventures because they can get more orders which
will be good for the business.
Lack of training organizations for industrial workers, supervisors and managers
Very limited educated work force is coming in the RMG industry of Bangladesh. Most of the
garment factories are run by the employees with a normal degree. These work forces are cheap to
hire and easy to control, employers prefer them. These workers also monitor the lower class
workers, which are mainly the uneducated segment of the country. Companies are lacking proper
technical knowledge by hiring strategies like these. As a result, there are so many losses due to
not properly handled issues of exports.
Time-consuming custom clearance
In Bangladesh there is always problem with the government works. As the RMG products need
to have the custom clearance the custom department always woks so slow that the products leads
to slow process. Thus the product gets late in to the factory, then the production process also
becomes slow which creates the situation of late delivery. As the products are delivered late the
buyers get disturbed which is a negative aspect for the industry.
Absence of easily on-hand middle management
Although Elate Fashion ltd. provides training for all its employees and workers but they do not
have specified training and development program designed with respect to positions and
responsibilities of the employees and workers. The system is very much the same where the
newly recruited ones have to be under someone already with experience and then they learn the
job at the work place. With an aim of earning international reputation this process of training can
turn out to be a big setback.In case of promotions and increments of the employees Elate Fashion
Limited puts more emphasis on performance irrespective of how long that employee has worked
in the organization. So in a word the company is not putting the seniors or experienced workers
under preference when it comes to promotions and increment. These are the factors which create
conflict among the employees and the employees are busy with their stuff so if situat ion arise to
control the management doesn‘t play its role fully.
EFL’s owned land near Gazipur to set up additional units
EFL is earning a handsome amount of profit and they have enough investment for which they are
opening up a new business unit in Gazipur with more space. They are trying to recruit more
people and in this way they are also focusing on the improvement of country‘s economy through
employment. They are also trying to prove themselves as a aware business people of the country.
Assurance from Government as supportive role During this current wage fixation time the government of Bangladesh assured that they will
ensure supportive role to the garments industry. They will help in decreasing the interest rate on
the garments loans and they will also help in other financial issues if it is required.
OPPORTUNITY
Large pool of cheap labor to be utilized
Our country has a huge number of potential manpower who is unemployed and they need to
work for meeting their livelihoods. Since the economic condition of our country is deplorable so
it makes the poorer class of our society to work for the garments sector. Moreover, they are not
educated enough to claim for higher wages and they are not skilled as well. So, the management
can explore the labor market and select the suitable workers required for the factories.
Large and growing potential foreign market
Initially, we, the garments sector of Bangladesh were focusing mainly on the USA and European
market. But, after MFA is abolished other foreign investors are also expanding their business and
they are trying to explore in this segment. So, we can say that we have the opportunity to work
with other foreign investors besides the USA and Europe and they can also help us to maintain a
win- win situation in the long run.
Safe guards against China
Previously China had advantage as because they had cheaper labor market. But now a days, their
living standard is increasing and they are demanding more for the orders from the buyers. For
increasing this labor rate, we will get the benefit to grab more orders from the prospective
foreign companies.
The growth in the RMG units in Bangladesh
The business people of Bangladesh are investing at a large number in the garments sector and
this also a positive thing for this industry. They are not only contributing in the country‘s
economy but also introducing the quality product in the humongous market. So the investors are
being aware of this country and they also feel confidence to invest here.
Elate Fashion Ltd.’s well reputation
EFL got recognition from by the international community. They try to follow the lead time for
product delivery and they ensures proper safety measures in the work premise for their
employees. So, their employee oriented management style is a plus point for them.
Labor unrest in Bangladesh due to minimum wage fixation mightinfluence EFL
labors
The employees of EFL are very obliged with the rules of
their management. But the current labor unrest in
Bangladesh labor market for minimum wage fixation may
influence them to become a part of the rebel. It will not only
hamper the production level of the company but also hurt
THREAT
EFL‘s well reputation as a good employer. It might also cause huge damage to the property of
the owner as well.
International pressure group to compel the local producers and the government to
implement social acquiescence
There is always a pressure from the international body to accept the local consent of the labors. It
will increase the bargaining power of both the employee and the buyer. They will force the
management to practice labor union at their organization and at the same time they will demand
cheap labor. Then the management will be in a dilemma to control whom and how.
The US GSP may be cancelled
There was a contract with USA that they will take more garment products from our country
under the US GSP contract. But this may be cancelled and then we will have to compete in the
global market for receiving more orders and the business practice will get changed significantly
and we will have to fight with both the local and global competitor.
Purchasing from US may decrease significantly
Since the US GSP may get cancelled so we will lose the US market to a lot extent. We will need
to look for other purchaser to buy our products. All the foreign buyers will look for a cheap
market and it will be very hard for us to maintain both quality product and service at a lower
price as well as maintaining the agitating work force.
High charges for utility and port services
We have to face higher charges for utility and port services. We have to spend a huge amount
due to the unethical practices and unwanted demands of the government officers. This does not
only hamper our time and money but also makes our dealing process lengthy. Due to this type of
legislation problem we sometimes fail our potential customers.
Higher bank interest rates
The local banks in our country charges higher interest rates for
establishing a garments factory or to run it( in some cases). This may
discourage many potential business people who are willingly to come
in to this industry and also those, who are already involved in it and
they just shut off their business due to the lack of proper financial
support from the financial institutions.
Maintaining little profit margin
After bearing all the operational expenses of the garments, increasing labor demand and constant
pressure from the buyers to provide some discounts to them, it becomes really very difficult for a
garment to sustain the competition. They can hardly maintain a little profit margin. Without
ensuring a handsome amount of profit a garment cannot run and they eventually close down their
business.
Political instability of the country
The political environment of this country remains very shaky very frequently. That is why
foreign investors get scared to invest here and here is also some legislative problem for which we
get hung in the middle of the road of our economic development.
Phase out of MFA (Multi Fiber Agreement)
The MFA was introduced in 1974 to work as a short-term protection measure
for the textile and clothing industries in developed countries against the
competitions and trade imbalances created by the low-priced apparel
manufactured in developing countries. But since it has phased out, now we
are in a highly competitive market and we can neither compromise with our
quality and service nor, can expect reasonable price from the buyers.
Strong competitors in local & global market
Since all the quota system and trade deal have expired now we are facing strong competition
sustain in this business. Not only the global market is our competitor but also the local market.
We have to ensure better service, on time product delivery and good communication with the
customers to get orders from them.
EFL might face financial crisis
Currently EFL can save less amount of money as they are opening up a new unit in Gazipur.
This is a risky venture for them as the current labor market in Bangladesh is very aggressive and
they need better pay scale. Though EFL is not facing any labor dispute at present but they might
get influenced with the current situation of the industry and they may cause harm to the
management by demanding new benefits and facilities. This will turn the management of EFL in
a very hard time to ensure productivity and skilled labor force.
RMG sector is the backbone of the nation’s economy
Readymade garments is the backbone of the economy. It has significantly boosted up the
country‘s economy and provided ample employment opportunity for the people of this country. .
It has generated employment for about 1.8 million woman workers, who mostly came from the
rural areas. Above 90 per cent of the total workers in this industry are women. The phenomenal
growth in RMG was experienced in the last decade. With about 2,600 factories and a workforce
of 1.4 million, RMG jointly with knitwear accounted for more than 70% of total investments in
the manufacturing sector during the first half of the 1990's. The growing trend in textile sector
presents itself particularly appealing to the foreign investors.
Practicing no union, which consequences in a probability of less conflict
Practicing no union in the Elate Fashion‘s premise is a positive side that the garment workers
cannot unite to make protest against any management decision. But if we look deep into this
garments than we can see that this garments have a very caring attitude for its employee and this
type of feeling has never made the workers ever felt to come up with a union in the last 18 years.
Both the management and workers work together for mutual benefit and that is why they are
more productive and they are always being motivated with some sort of small incentives for
doing over works and on special days, by organizing programs for the workers which is
participated by them.
Availability of a bargaining team, results into an easier problem solution tool
Elate Fashion has a bargaining team which works basically individually to resolve the problem
which arises among employee and employer. This team works neutrally. Both the party can
present their opinion to them and they can negotiate on the basis of this. It helps them to come to
a decision promptly without going for any fight and damaging the resources.
Ensuring proper employee safety measures and healthy environment in the
workplace
Elate Fashion Ltd. provides wonderful work environment to its employees and this is why, their
workers are very happy to be a part of this organization. They are aware about their health issues
and they do know that the employer themselves are alert regarding this sensitive issue. As
because they have ensured protection for the workers, so they have many people who are willing
to work there.
Female employment, a competitive advantage for Elate Fashion Ltd
Among the 1050 employees 700 of them are female. Female are less prone to get join in clash
with the employer and they have the tendency to remain happy with their existing work
conditions and pay structure. That is why the management feels interested to employ more
female and also to encourage women in the work force.
Attendance bonus, to keep the employees regular at work place
EFL provides attendance bonus to the work force to encourage them to be regular on their job.
The employees who remain present at their work for the whole month, they get extra two days
wage with their monthly wage. In this way, the employer and employee relation remain strong
and healthy and they can rely on each other for mutual benefit.
Caring attitude of the management makes the employees satisfied
The management of EFL is very much concern about their employees. Their concern resembles
in the way that they employ more female workers and they are also aware about the leave which
is required by their workers ( i.e. maternal leave, paternal leave). They also ensures on time
disbursement of the monthly wage of the workers.
Standardized wage structure than other competitors
When the garments industry is also facing problem with the wage fixation issue EFL is in a free
zone from that problem. They are already providing standardized wage to their workers and this
is the reason both the management and the employees are in good terms to keep each other‘s
promise.
Expanding the business unit in Gazipur
EFL is earning a handsome amount of profit and they have enough investment for which they are
opening up a new business unit in Gazipur with more space. They are trying to recruit more
people and in this way they are also focusing on the improvement of country‘s economy through
employment. They are also trying to prove themselves as an aware business people of the
country.
PROBLEM 01:
In spite of being directly affected due to the violent strike by labors in the country as
minimum wage fixation has not been implemented yet, there is tension among management
& labors in EFL.
RECOMMENDATION 01:
EFL needs to maintain good relationship with labors. Ensure harmony & solve problems
by collective bargaining, arbitration and negotiation. HR managers must work to increase
strategic thinking process to take necessary steps in order to avoid violence.
Justification:
Bangladesh earns the largest portion of its export income from readymade garments and
knitwear. At first, Bangladesh exported the readymade cloths and knitwear worth $1 million to
the USA through Riaz Garments in 1978. After that, the garments industry took over the position
of a leading industry for our export income by whipping the traditional jute industry.But, it is
frightening news for our country that this leading industry is now passing through crucial
moments. Recent continuing unrest situation in different garment factories creates the threats to
it existence. Since one year, the workers of RMG in different industries have been creating
violence in the form of processions, vandalism, blockading the road to hike their minimum wage,
attendance bonus and to ensure other facilities. These are the common scenario of the garments
factories of Savar, Mirpur, Rupganj, Joydebpur, Gazipur, Kaspur, Ashulia, Nishchintapur,
Norashinghpur, Zamgara and in other garment factories.
In the last year, about 140 garments factories were closed due to unrest accompanied by the
crisis of power and gas, price hike of yarn, poor infrastructure, and low price offers from
international buyers amid increased production cost. These are the main reasons for the shudown
in the production of a factory.The minimum salary at the entry level has been fixed at Tk 3,000:
Tk 2,000 in basic pay, Tk 800 in house rent and Tk 200 in medical allowance. The apprentice
level wage is fixed at Tk 2,500, up from Tk 1,200 now.The new wage structure will come to
effect from November 1, 2010.
PROBLEM 02:
Elate Fashion Limited has to face problems due to unauthorized leave by labors.
RECOMMENDATION 02:
Elate Fashion Limited has to undertake strict actions for the alleged labors and reinforces,
motivates the regular labors through monetary and non-monetary rewards.
Justification:
Bangladesh earns the largest portion of its export income from readymade garments and
knitwear. At first, Bangladesh exported the readymade cloths and knitwear worth $1 million to
the USA through Riaz Garments in 1978. After that, the garments industry took over the position
of a leading industry for our export income by whipping the traditional jute industry. In garment
industries it is a common problem for all the garment industries to face unauthorized leave by
labors. It is often seen that after getting the monthly payment labors usually do not show up for
work for the next 2/3 days. That hampers the production for the factories. Unauthorized leave by
labors make it very difficult for the factories to meet the required production level as the
production process needs manual effort from the labors.
Elate Fashion Limited (EFL) also is going through this problem. Mr. RezaurRahman, Managing
Director EFL complained that labors make it difficult for EFL to reach its required production as
unauthorized leave by labors are common scenario for EFL.
To cope up with this problem one way is to undertake strict actions for the alleged labors and
reinforces, motivates the regular labors through monetary and non-monetary rewards. Whenever
there is punishment for offence and reward for performance that eventually makes employees
motivated and concerned about their job responsibilities. So, EFL needs to focus on this issue
carefully in order to meet production requirement.
PROBLEM 03:
Elate Fashion Limited lacks backward linkage to ensure the availability of its raw
materials.
RECOMMENDATION 03:
Elate Fashion Limited needs to establish backward linkage to ensure availability and
adequate supply of inputs, and consequently lower production cost through strong supply
chain management.
Backward linkage means garment industry
need to have fabrics to make the finished
products. Due to inadequate backward
linkage facilities, Bangladesh is still heavily
dependent on imported fabrics to meet the
demand for domestic as well as export-
oriented RMG industry. ―The present
demand-gap of fabric for domestic and
export through Ready-made Garments is 2,000 million meter.Company should establish
backward linkage because it is necessary for the sustainable growth of the company. The major
problem of Bangladesh garments is lack of backward linkages, and this creates problems like
unavailability and inadequate supply of inputs, and consequently higher production cost. A 1996
Ministry of Textiles study feared that after 2005, there might be shortages of fabrics, as
countries, which currently export fabrics will instead use their fabrics to produce and export
clothing to North America and Europe.
EFL needs to establish a strong backward linkage with foreign suppliers for raw materials. 50% of
its raw materials are mainly imported. Fabrics sources are from mainly Taiwan, Korea, China,
Hong Kong, local Bangladeshi Fabrics, which meets customer requirements, are also purchased.
Accessories are imported from Hong Kong, China & Taiwan except those items which can be
arranged from local makers as per customer‘s approval. So Elate Fashion Limited should try to
keep in good touch with the raw materials suppliers always because EFL has to depend on them for
raw materials for production. EFL also needs to emphasis on increasing the number of suppliers in
Bangladesh quality raw material producer. That will help Bangladeshi suppliers as well as it would
be a good option for EFL to collect raw materials when there is urgent need of materials.
PROBLEM 04:
Elate Fashion Limited has less productivity compared to other factories with the same
number of similar sort of machineries and labors.
RECOMMENDATION 04:
Elate Fashion Limited has to increase the productivity through TQM.
Justification:
The global economy is now controlled by the transfer of production where firms of developed
countries swing their attention to developing countries. The new representation is centered on a
core-periphery system of production, with a comparatively small center of permanent employees
dealing with finance, research and development, technological institution and modernization and
a periphery containing dependent elements of production procedure. Reducing costs and
increasing output are the main causes for this disposition. They have discovered that the simplest
way to undercharge is to move production to a country where labor charge and production costs
are lower. Since developing nations provide areas that do not impose costs like environmental
degeneration, this practice protects the developed countries against the issues of environment and
law. The transfer of production to Third World has helped the expansion of economy of these
nations and also speed up the economy of the developed nations.
Elate fashion Limited has less productivity compared to other garments industries with the same
number of similar sort of machineries and labors. One of the reasons behind is the labors are not
provided with proper processing. For example, if one labor delays in delivering the shirt to the
next one, the next labor can not finish the processing of button placing. That is how the
production process talks more time than it should have been, Total quality management would
the perfect way to cope up with such problem. Workers will be specialized in what they do
regularly. That will reduce the time and as they will be skilled workers products are supposed to
have high quality with minimum defect.
PROBLEM 05:
International pressure groups try to compel the local producers and the government to
implement social acquiescence.
RECOMMENDATION 05:
Maintaining good relationship with govt. and rather than always reducing or keeping the
wage low they need to re-negotiate higher product price from the international
buyers/brands.
Justification:
The garment industry in Bangladesh has been subject to several tests of resilience in recent
years—global recession, energy shortage, input price increases, and labor unrest. Of late, the
labor unrest has escalated apparently triggered by disagreement over re-fixation of minimum
wage. The workers, for quite some time now, have been pressing for adjustment in minimum
wage.
Bangladeshi garment industries face international pressure. Local producers and the government
also try to implement social acquiescence. International pressure groups often ask for discounts
like Walmart demanded 5% rebate on Bangladeshi garment products. At the end the ultimate
effect is the poor labors mainly suffer due to poor price of quality products. Large retail trading
companies placed in the United States and Western Europe give most orders for Bangladeshi
garment products. Companies like Marks and Spencer (UK) and C&A (the Netherlands) control
capital funds, in proportion to which the capital of Bangladeshi owners is patience. Shirts
manufactured in Bangladesh are sold in developed nations for five to ten times their imported
price.
Despite continuing unrest on the streets of Dhaka by garment workers unhappy with the new pay
deal agreed last week, it seems the compromise wage hike will go some way towards placating
calls by retailers in Europe and North America for better pay in the country's clothing
industry.Many apparel buyers from retailers including Wal-Mart, Tesco, H&M, Zara, Carrefour,
Gap, Metro, JCPenney, Marks & Spencer, Kohl's, Levi Strauss and Tommy Hilfiger, agreed in
principle to support the wage hike. So EFL as well as other garment industries have to maintain
good relationship with govt. and rather than always reducing or keeping the wage low they need
to re-negotiate higher product price from the international buyers/brands.
PROBLEM 06:
EFL faces major problems due to late arrival of orders from buyers.
RECOMMENDATION 06:
EFL must practice time management technique and always be ready to deliver order in
short notice. Human resource department & third parties must ensure effective
communication with buyers to receive order on time.
Justification:
Bangladesh garment industries face a common problem which is late order placement by foreign
buyers. It becomes very difficult for the garment products manufacturer to meet the date line if
the order is not received by them on time. Many a times
garment industries have to bear the burden of bad stock
as the orders are not taken timely. Late orders also put
factories in trouble. That is the time management has no
other option rather than engaging its workers for long
working hours. Because of rush there might not be proper
control for quality which eventually might
demotivate the buyers to go for those particular
garment industries.
The Western companies are guilty of pitiable
working atmosphere in the garment sector. The developed nations want to make more profit and
therefore, force the developing nations to cut down the manufacturing cost. In order to survive in
the competition, most of the developing nations select immoral practices. By introducing
inflexible terms and conditions in the business, the global economy has left few alternatives for
the developing nations
EFL needs to practice time management technique and always be ready to deliver order in short
notice. Human resource department & third parties must ensure effective communication with
buyers to receive order on time. There will have to continuous communication with foreign
potential buyers regarding orders. There is big role for third parties to play. Many a times just
because of not having good link with the buyers the garments industries from Bangladesh do not
get the orders. Third parties would play a role as hyphen between EFL and foreign buyers. Thus
time management can be practiced effectively.
PROBLEM 07:
Elate Fashion Limited only exports to US buyers.
RECOMMENDATION 07:
Elate Fashion Limited needs to establish new markets for the manufactured products in
other countries such as Canada & EU markets.
Justification:
The garment industry of Bangladesh has been the key export division and a main source of
foreign exchange for the last 25 years. At present, the country generates about $5 billion worth of
products each year by exporting garment. The industry provides employment to about 3 million
workers of whom 90% are women.Despite continuing unrest on the streets of Dhaka by garment
workers unhappy with the new pay deal agreed last week, it seems the compromise wage hike
will go some way towards placating calls by retailers in Europe and North America for better pay
in the country's clothing industry.
The global economy is now controlled by the transfer of production where firms of developed
countries swing their attention to developing countries. The new representation is centered on a
core-periphery system of production, with a comparatively small center of permanent employees
dealing with finance, research and development, technological institution and modernization and
a periphery containing dependent elements of production procedure. Reducing costs and
increasing output are the main causes for this disposition.
Elate fashion limited needs to find more markets like Canada and European Union (EU). As
Bangladesh has partnership with EU, EFL can exploit the markets in global markets.
Dependency on US market might cause problems. US generalized system of preference (GSP)
has been cancelled. As a result the purchase from US might decrease significantly. So EFL needs
to find out more potential markets for cannibalization.
PROBLEM 01:
In spite of being directly affected due to the violent strike by labors in the country as
minimum wage fixation has not been implemented yet, there is tension among management
& labors in EFL.
RECOMMENDATION 01:
EFL needs to maintain good relationship with labors. Ensure harmony & solve problems
by collective bargaining, arbitration and negotiation. HR managers must work to increase
strategic thinking process to take necessary steps in order to avoid violence.
IMPLEMNETATION 01:
EFL needs to maintain good relationship with labors. Ensure harmony & solve problems
by collective bargaining, arbitration and negotiation. HR managers must work to increase
strategic thinking process to take necessary steps in order to avoid violence.
Recent continuing unrest situation in different garment factories creates the threats to it
existence. Since one year, the workers in different industries have been creating violence in the
form of processions, vandalism, blockading the road to hike their minimum wage, attendance
bonus and to ensure other facilities. These are the common scenario of the garments factories of
Savar, Mirpur, Rupganj, Joydebpur, Gazipur, Kaspur, Ashulia, Nishchintapur, Norashinghpur,
Zamgara and in other garment factories. Though EFL has not face any direct protest from its
labors, but there is a hidden tension between workers and management.
Who will implement it?
The RMG authority: It will be really impossible for the individual companies to
increase the wage salary dramatically. So, the authoritative bodies of the RMG sector
must unite to find the best ways to implement the salary increase and also to what extent
it can be and should be increased. The body must also decide that whether the employees
should be involved in the process and which other parties shall be, can be and should be
involved. They should also find a common source of funds for all the companies when
the need may arise. Thus the labor unrest in garment industries can be resolved.
Top management:The management will decide to resolve such problems in the factory.
They will have to adopt workers friendly decision which will not indulge any dispute
among workers. Otherwise external influence might make the scene worse in EFL also.
HR experts:As the process of paying the right level of salary is very vital, it must be
planned and designed by HR experts, so, that the payment process encompasses all the
aspects of how a person should be paid based on job type and position. Also, the HR
experts will be able to tell the kind of employees who will be eager or interested to stay
with the company for a long period of time.
Collective bargain agents:At EFL there are two
collective bargaining teams both from labors and
management. They will have to play a crucial role in order
to solve any disputes at initial stage so that it does not
hamper production process to EFL at all.
Arbitrator: Many a times on the agreement of both
parties‘ arbitrators are there to help in reaching a decision. So arbitrator can play an
important role in making things easier for EFL management. So arbitrator has to make
him/herself trustworthy for both parties. Thus there will be reduction of sense of lack of
trust.
Employees:As the process is intended towards the workers and employees, so, their
voluntary participation is a matter of absolute necessity, because any process is
successful if the participants participate whole heatedly.
How it will be implemented?
Negotiation and Collective bargaining: Negotiation and collective bargaining are very
effective tools to solve problems. EFL also should use this tool. There will be negotiation
and Collective bargaining teams from both management & labors about working terms
and condition. Thus there is minimum chance of conflict between labors and
management as they reach to decision after discussing together. Both parties have to have
the mentality to make the organization benefitted at the end of the day.
Arbitration: Arbitration can be used when there is need of such action. But arbitrator has
to be accepted by both of the parties. Both of the parties also have to give consent that the
decision taken by arbitrators will be accepted by the parties. Arbitration reduces the
sense of lack of trust.
Effective communication: There has to be effective communication from the side of
management to labors. Because sometimes based on a very small issue, labors might end
into being demotivated and dissatisfied. So it is better to communicate with the frequently
to know what they expect, what are their problems, how they can be more productive,
what are the actions that need to be taken in order to increase productivity. Management
has to listen to them. Then it is a question to what extent they will implement it.
Labor relationship officer (LRO): EFL can assign an employee as ―Labor Relationship
Officer‖ (LRO) whose primary job would be to keep in good touch with labors. He /she
will try to motivate the labors. LRO can let management know about the labors‘ thoughts
which would help management to be pro-active.
Where to implement it?
The process should be implemented in the whole organization. The good relationship among
labors and management would not only help the organization but also make all the employees of
organization feel the taste of a family which is very essential. The sense of belonging under one
roof actually brings unity which is the pre-requisite for success.
When will it be implemented?
The process has started implementation from the very beginning of the company. So
harmonization among employees should go on and on. Bargaining should be attempted
according to the changing environment. Arbitration may be practiced when needed. HR needs to
play active role in communicating with workers time to time to know the then situation.
PROBLEM 02:
Elate Fashion Limited has to face problems due to unauthorized leave by labors.
RECOMMENDATION 02:
Elate Fashion Limited has to undertake strict actions for the alleged labors and reinforces,
motivates the regular labors through monetary and non-monetary rewards.
IMPLEMNETATION 02:
Elate Fashion Limited has to undertake strict actions for the alleged labors and reinforces,
motivates the regular labors through monetary and non-monetary rewards.
Mr. RezaurRahman, Managing Director EFL complained that labors make it difficult for EFL to
reach its required production as unauthorized leave by labors are common scenario for EFL. To
cope up with this problem one way is to undertake strict actions for the alleged labors and
reinforces, motivates the regular labors through monetary and non-monetary rewards.
Who will implement it?
Top management:Top management has to be strict in setting the examples of giving
punishment and giving rewards for performance. Top management has be make the
labors understand that their performance would be evaluated properly and good
performance would surely bring fortune for them.
HRM department:HRM department has to play the vital role in maintaining schedule
process. They will have to monitor strictly on the labors as well as the supervisor, floor
manager whether they are performing their duties properly.
Floor managers:Floor manager needs to communicate with the labors to make them
regular on the floor. Floor manager needs to deliver the message from top to bottom to
labors what actions are going to be taken for what performances. Thus labors would get
to know and they will try to focus more on job.
Supervisors:Supervisors can play a big role here. Supervisors are the ones who directly
deals with the labors most of the time while working on floor. Supervisor should
identify the problematic labors and report to higher authority for taking necessary
actions.
How it will be implemented?
Wage penalty for late / absence: There will be penalty for the labors who would be late
for three (03) days in a month. Any unauthorized leave will end in to penalty for one
whole day of eight (08) hours.
Attendance bonus for regular labors:There will be attendance bonus for the labors who
will attend all the working days of month. They will be given two (02) days extra
payment that calculating eight working hours a day.
Evaluating past performance while considering promotion to upper grade:The
schedule sheets will be preserved for the performance evaluation while considering to
giving promotion to upper grades. The labors who will have good performance appraisal
would get promotion without any hassle.
“PoshakShilpi” award:EFL would give ―PoshakShilpi‖ award to its top three (03)
performers of the month. It will be evaluated based on attendance, productivity,
discipline. They will be awarded two thousand taka (BDT 2000). They will be given
preference for promotion.
Where to implement it?
The introduction of the process must be implemented at the working places of the workers. That
means the workers must be paid at their respective factories. The wages if possible should be
handed over to the employees by the employers in the factory premise.
When will it be implemented?
The process should implementation as soon as possible. PoshakShilpi award will be given at the
beginning of the next month of getting the reward. Thus the labors would be waiting for the day
to come and they will be motivated to give their best for the rest of the months.
PROBLEM 03:
Elate Fashion Limited lacks backward linkage to ensure the availability of its raw
materials.
RECOMMENDATION 03:
Elate Fashion Limited needs to establish backward linkage to ensure availability and
adequate supply of inputs, and consequently lower production cost through strong supply
chain management.
IMPLEMNETATION 03:
Elate Fashion Limited needs to establish backward linkage to ensure availability and
adequate supply of inputs, and consequently lower production cost through strong supply
chain management.
Instead of depending on random suppliers it is wise for Elate Fashion Limited Garments to
establish their own supply department which will collect raw materials directly from market
national as well as international markets like Taiwan, Hong Kong, India, Pakistan, and China.
The raw material supply department of EFL will receive a list of raw materials and services
required by the production department to complete the customer‘s orders. Then the department
will collect information in order to select most cost-efficient sources for collecting raw materials
and collect leather and finally deliver the necessary raw materials to the manufacturing site on
the required date.
Who will implement it?
Top management: Top management of EFL has to make sure it is keeping good
relationship with its existing local and foreign suppliers. They should be careful about
payment and other procedure so that there is no chance of dispute among suppliers. As
EFL has to depend on suppliers for raw materials they have be conscious.
Resource supply department: Resource supply management should have necessary
information regarding stock of raw materials. They have to inform and monitor about raw
materials. Resource supply department needs to deliver the raw materials timely for the
production. Uninterrupted supply from them would ensure smooth production.
Strategic partners: Strategic partners would also take part in implementation of this
process. They will work to help in communicating with suppliers for raw materials at
reasonable price and at the right time.
Operations managers: Operation manager would be responsible for allocating necessary
amount of raw materials for production. Operations manager would deal with labors and
supervisors to ensure adequate supply of raw materials.
Supervisors: Supervisors have to make sure that no raw material is wasted due to the
inefficient work process by labors. Supervisors have to monitor the production process.
He also has to make sure raw materials are converted into quality products.
How it will be implemented?
Collaborating well with the foreign suppliers: Elate Fashion Limited will have to
collaborate with foreign suppliers like Taiwan, Korea, China, Hong Kong. As 50% of its
raw materials are imported EFL has to maintain good relationship with them.
Supply chain management:Instead of depending on random suppliers it is wise for Elate
Fashion Limited Garments to establish their own supply department which will collect
raw materials directly from market national as well as international markets like Taiwan,
Hong Kong. The raw material supply department of EFL will receive a list of raw
materials and services required by the production department to complete the customer‘s
orders. Then the department will collect information in order to select most cost-efficient
sources for collecting raw materials and collect leather and finally deliver the necessary
raw materials to the manufacturing site on the required date.
Stock of raw materials for unwanted situations: EFL has to be proactive in stocking
raw materials in order to avoid any unwanted situation which might happen due to
problems like transportation problem, strike, political crisis etc.
Ensuring proper utilization: EFL must ensure proper utilization of raw materials. There
should not be any wastage of raw materials. Labors should be monitored and supervisors,
floor manager need to ensure it.
For EFL to ensure that the supply chain is operating as efficient as possible and generating the
highest level of customer satisfaction at the lowest cost, companies have adopted well designed
Supply Chain Management processes and associated technology. In general Supply Chain
Management has three levels of activities strategic; tactical; and operational and for EFL it is
must to focus on all of them.
Where to implement it?
The introduction of the process must be implemented within short span of time. Though channels
EFL needs to establish and maintain good relationship not only with local suppliers from
Bangladesh but also with those from foreign markets like Taiwan, China, Hong Kong etc. It
should be done whenever the opportunity arises. The stock house keeper should maintain stock
summary up to date. Production floor also has to implement it successfully.
When will it be implemented?
This step should be implemented at the earliest possible time. But, the decision of implementing
the process must be taken at an earlier date to facilitate the availability of the money when it will
be needed to stock raw materials. If the company is suffering from financial crisis than during
that time only the most important raw materials should be considered for priority. Supply chain
management is necessary for every sort of production oriented firms. For Sicily garments to
ensure that the supply chain is operating as efficient as possible and generating the highest level
of customer satisfaction at the lowest cost, companies have adopted well designed Supply Chain
Management processes and associated technology.
PROBLEM 04:
Elate Fashion Limited has less productivity compared to other factories with the same
number of similar sort of machineries and labors.
RECOMMENDATION 04:
Elate Fashion Limited has to increase the productivity through TQM.
IMPLEMNETATION 04:
Elate Fashion Limited needs to establish Total Quality Management process and EFL also
needs to increase the productivity of the workers through training and high end technology
machines.
Only effectiveness of EFLgarment‘s employees may ensure to produce large quantity of product
at a lower cost. It would give power to the company to compete with other manufacturers as they
easily implement the economics of scale concept in production floor. Moreover, TQM or Total
Quality Management itself has to work as a part of the organizational culture to be effective.
Who will implement it?
Trainers: There must be both foreign and local trainers. The foreign trainers will teach
the employees about the levels of expectations and standards of international customers.
On the other hand, the local trainers will teach the employees how to produce the
products in the local ways which will suit the workers better. It will be best if the
trainers can work together to give employees the training to better and more efficient
production by influencing them to work for global standard while being a local worker.
HR experts: As the training process is very vital, it must be planned and designed by
HR experts, so, that the training process encompasses all the aspects of how a person
should be trained based on job type and position.
Employees: As the training process is intended towards the workers and employees, so,
their voluntary participation is a matter of absolute necessity, because any training
process is successful if the participants participate whole heatedly.
How it will be implemented?
Careful selection of employees: The authority should choose employees very carefully
because the more experienced the employees will be the better and more efficient they
will be. That will increase the output of the organization. The company will be produce
more with less number of workers if they are skilled enough. Thus the profit margin will
increase and employees will be paid more.
High tech production facilities: To reduce the number of employees, thus enabling the
top management to provide the remaining employees higher salary, the production
facility must be of better technology based, it will lessen the dependence on human labor.
Also, the quality of product will also rise.
Train the employees: As, the employees need to be motivated, first they must be showed
a clear way and objectives of working procedure. They must be well aware about the kind
of product they are going to produce and their possible needs. So, the employees must go
through a proper training procedure to make them feel capable of handling the jobs which
will be given to them. The employees must be trained
through a precisely planned training process and should be
given right kind of training. It is especially true for lower
level of employees, because they lack education. The
training process should include the ways and standards
of international customers, so that the employees can serve
international orders the way they expect.
Finding the weaknesses of the employees: All the employees may not need the same
type and level of training .It is extremely crucial to find the exact needs of the employees
and their weak points.
Where to implement it?
TQM is a kind of culture in which the total organization is included. So, TQM culture has to be
implemented in total organizational context in order to get maximum befit out of it. As
mentioned earlier implementing TQM is impossible without collaboration with employees.
Moreover, TQM it must be accomplished step by step such as starting from production level and
then slowly.
When will it be implemented?
It is true, that cultures do not develop overnight. Especially as TQM implementation calls for a
total alter in existing context so it will require time. So, the company should make a long term
plan and implement it slowly.
PROBLEM 05:
International pressure groups try to compel the local producers and the government to
implement social acquiescence.
RECOMMENDATION 05:
Maintaining good relationship with govt. and rather than always reducing or keeping the
wage low they need to re-negotiate higher product price from the international
buyers/brands.
IMPLEMNETATION 05:
Maintaining good relationship with govt. and rather than always reducing or keeping the
wage low they need to re-negotiate higher product price from the international
buyers/brands.
Bangladeshi garment industries face international pressure. Local producers and the government
also try to implement social acquiescence. International pressure groups often ask for discounts
like Walmart demanded 5% rebate on Bangladeshi garment products. At the end the ultimate
effect is the poor labors mainly suffer due to poor price of quality products. Large retail trading
companies placed in the United States and Western Europe give most orders for Bangladeshi
garment products. Companies like Marks and Spencer (UK) and C&A (the Netherlands) control
capital funds, in proportion to which the capital of Bangladeshi owners is patience. Shirts
manufactured in Bangladesh are sold in developed nations for five to ten times their imported
price.
Who will implement it?
The RMG authority: The Respective authorities will have to take imitative to
communicate and negotiate with govt. and foreign buyers regarding price increment.
BGMEA, BKMEA and other such organizations can big role to implement this process.
The Government: The government needs to give support to the Bangladeshi garment
industries. Govt. must ensure all the necessary doors open for the industries so that
Bangladeshi garment manufacturers can think of serving the nation through earning
foreign remittance.
Top management: Top management has to keep liaison with govt., political parties,
other garment manufacturing industries and the foreign buyers. Top management has to
make sure that the labor right is not hampered at any stage because of the demand from
international pressure groups.
HRM department: HRM department needs to focus on building good relationship and
maintaining it. HR experts will play the role in communicating and try to reflect the good
image of the company.
Marketing department: Marketing department needs to understand that is there is brand
image for Bangladeshi garments products, manufacturers can earn more revenue. The
quality products deserve price increase. For this marketing is essential. Trade expo,
fashion show in Bangladesh and foreign countries can be a good way of making it
familiar in front of the world.
Product design & development teams: Designers will come up with innovative,
attractive design which will attract the foreign customers. As fashionable products change
over time, they will have to work continuously to design new products.
How it will be implemented?
Negotiation with Govt. and international buyers: EFL will have to negotiate with
govt. and international buyers effectively. EFL has to have a negotiation team who would
be able to get the things done properly.
Creating brand image: EFL needs to understand the value of creating brand image.
Companies like Marks and Spencers (UK) and C&A (the Netherlands) control capital
funds, in proportion to which the capital of Bangladeshi owners is patience. Shirts
manufactured in Bangladesh are sold in developed nations for five to ten times their
imported price.
Effective marketing tactics:The quality products deserve price increase. For this
marketing is essential. Trade expo, fashion show in Bangladesh and foreign countries can
be a good way of making it familiar in front of the world. Discounted offers can attract
international buyers.
Improved quality, attractive offers, innovative design, and customer care: EFL has
to have improved quality, attractive offers, and innovative design to make international
buyers interested. Customer care is another important part that needs to be ensured.
Where to implement it?
This process should be implemented at top level mainly with the support from the marketing and
product development side. Workers at production floor also should participate in producing
quality products which will ensure company good image to the other buyers.
When will it be implemented?
As global competition has started because of the phase out of multi fiber agreement (MFA) EFL
needs to implement the process without making any delay. International & local trade fairs can
be good time to do marketing & promotional activities. After ensuring improved quality,
flexibility, innovation and customer care EFL needs to make a strong stand.
PROBLEM 06:
EFL faces major problems due to late arrival of orders from buyers.
RECOMMENDATION 06:
EFL must practice time management technique and always be ready to deliver order in
short notice. Human resource department & third parties must ensure effective
communication with buyers to receive order on time.
IMPLEMNETATION 06:
EFL must practice time management technique and always be ready to deliver order in
short notice. Human resource department & third parties must ensure effective
communication with buyers to receive order on time.
EFL needs to practice time management technique and always be ready to deliver order in short
notice. Human resource department & third parties must ensure effective communication with
buyers to receive order on time. There will have to continuous communication with foreign
potential buyers regarding orders. There is big role for third parties to play. Many a times just
because of not having good link with the buyers the garments industries from Bangladesh do not
get the orders.
Who will implement it?
Top management: Top management has to keep the way clear for good communication
with potential buyers and orders. They will have to adapt to decision that would help to
get benefit for EFL.
HRM department:Human resource department & third parties must ensure effective
communication with buyers to receive order on time. There will have to continuous
communication with foreign potential buyers regarding orders. There is big role for third
parties to play. Many a times just because of not having good link with the buyers the
garments industries from Bangladesh do not get the orders.
Existing buyers:EFL needs to influence the existing buyers to get new orders. Word of
mouth is very important for any business. If existing buyers are satisfied they might bring
new customers also for EFL.
Third parties:There is big role for third parties to play. Many a times just because of not
having good link with the buyers the garments industries from Bangladesh do not get the
orders.
How it will be implemented?
Time management systems:Time management is the most cost- effective solution that
EFL may use to ensure timely delivery of product in short term notice. Time management
starts with the commitment to change as well as creating a time-frame for each and every
single activity. Time management also demands for training employees properly to
comply with these.
Effective communication with potential buyers:EFL needs to communicate with
buyers who can a good scope for EFL to do business with. EFL has to have a negotiation
team who would be able to get the things done properly. EFL will send product portfolio,
price quotation to them to show their interest, capacity and capability.
Consult with on-hand third parties:Human resource department & third parties must
ensure effective communication with buyers to receive order on time. There will have to
continuous communication with foreign potential buyers regarding orders. There is big
role for third parties to play. Many a times just because of not having good link with the
buyers the garments industries from Bangladesh do not get the orders.
Use existing buyers to obtain new buyers:EFL needs to influence the existing buyers to
get new orders. Word of mouth is very important for any business. If existing buyers are
satisfied they might bring new customers also for EFL.
Creating good reputation:There is no other option rather than having a good reputation
among buyers in markets. Because reputation not only brings respect but also brings
respected buyers.
Where to implement it?
This process should be implemented at top level mainly with the support from the marketing and
product development side. Workers at production floor also should participate in producing
quality products which will ensure company good image to the other buyers.
When will it be implemented?
Taking order is a on-going process. When EFL increases productivity in existing factories and
setting up new units later EFL should go for new markets. As global competition has started
because of the phase out of multi fiber agreement (MFA) EFL needs to implement the process
without making any delay. International & local trade fairs can be good time to do marketing &
promotional activities. After ensuring improved quality, flexibility, innovation and customer care
EFL needs to make a strong stand.
P
ROB
LEM
07:
Elate Fashion Limited only exports to US buyers.
RECOMMENDATION 07:
Elate Fashion Limited needs to establish new markets for the manufactured products in
other countries such as Canada & EU markets.
IMPLEMNETATION 07:
Elate Fashion Limited needs to establish new markets for the manufactured products in
other countries such as Canada & EU markets.
Elate fashion limited needs to find more markets like Canada and European Union (EU). As
Bangladesh has partnership with EU, EFL can exploit the markets in global markets.
Dependency on US market might cause problems. US generalized system of preference (GSP)
has been cancelled. As a result the purchase from US might decrease significantly. So EFL needs
to find out more potential markets for cannibalization.
Who will implement it?
Top management: Top management has to keep the way clear for good communication
with potential buyers and orders. They will have to adapt to decision that would help to
get benefit for EFL.
HRM department:Human resource department & third parties must ensure effective
communication with buyers to receive order on time. There will have to continuous
communication with foreign potential buyers regarding orders. There is big role for third
parties to play. Many a times just because of not having good link with the buyers the
garments industries from Bangladesh do not get the orders.
Market analysis teams:Market analysis teams will conduct market research about the
demand of EFL products. They will try to select the attractive markets in EU and Canada.
How it will be implemented?
To implement this process EFL needs to conduct international potentials market research by its
market analysis teams. EFL also needs to do feasibility test & cost effectiveness to see the
prospect in those markets. Then EFL needs to select and send representatives to do result
oriented negotiation with the international buyers from EU and Canadian markets. EFL must
ensure smooth trade between countries after their agreement. EFL has to go for cannibalization
with full potential with the international players in international players. So the below chart
would make it a simplified form:
Where to implement it?
This process should be implemented at top level mainly with the support from the marketing and
product development side. Workers at production floor also should participate in producing
quality products which will ensure company good image to the other buyers.
When will it be implemented?
Whenever other global markets are attractive enough to enter, EFL would take the opportunity to
exploit the markets. EFL will have to reach full potential to serve the markets. That would be the
suitable time to go for more markets.