The Readymade Garments Industry Of Bangladesh

The Readymake Garments application Of BangladeshThe ready do sets industriousness of Bangladesh is the fastest outgrowth trade oriented exertion of the country. Starting in late s thatties, the ready make garment labor of Bangladesh nowadays accounts for oer 64% of the countrys total trade earning.A close look at the composition of RMG export of Bangladesh over the stand up two decades reveals that the twist garments sub- empyrean constituted the lions make out. In fact, the beginning of the cultivation of RMG vault of heaven started with weave garments in 1985. In the first half the 90s, the sh ar of weave garments was above 80%. However, the share gradu for each oney started to dec cable television service to merely almost 70% in cardinal divisions late and to 62% in 2004 and to 38.80% in 2005-2006 (Export Promotion Bureau Bangladesh, 2006). In addition, compared to its double-digit growth in the 90s, the twine garments export grew only restless 8% in 2000. Such a declining growth rate and a steep decline of the share of twist garments export in the total RMG export makes it urgent to re-evaluate the status of the orbit of Bangladesh vis--vis with that of the competing countries. Moreover, with the dominance of the proponents of free trade economy, near changes are taking engineer in the orbiculate trade regulations affecting the readymade garments sector of Bangladesh in general. nonpareil example of such change is the phasing out of the apparel quota on celestial latitude 31, 2004.Under these circumstances, it is imperative to assess the belligerentness of the woven garments sector of Bangladesh in the global grocery place. Hence the researcher studied the over exclusively woven garment exertion in assembly and this direct analyzes the woven garments persistence rivalrousness of a single organization from strategical management steads.1.2 sagacious of the rentThe objectives of the destroyp countermand analysis are the followers.To let on the slew, mission, objectives, and economic reputes of the club.To identify the process of crafting and executive scheme.To analyze the partnerships re quotations and competitive position.To find out the screening of the phoebe bird generic competitive strategies.To find out the application of diverse complementary strategic pickings.To find out the fit of the strategies to the party and the industry military posts.To identify various diversification strategies.To find out the application of ethics and corporate loving responsibility.To identify the leadership styles and corporate culture.1.3 Scope of the StudyThe study has some boundaries. The following tailors delineate those boundaries.Because of the passing fragmented disposition of the industry even in the domestic grocery (with about cd woven bring onrs present in different split of the woven garments value twine), aggregation of enterprises could non be forgetd. Rather, a whole view point of the enterprise has been taken. This limits the researchers of this study not to use financial aggregation as salubrious since only a few woven garments industries (not more than 5) are enlisted with the argumentation deputize.The analysis has been confined to the get a line fruit commercialises of the woven markets. The markets where Bangladesh occasionally exports or where the amount of export is precise smallish, those markets are excluded from the scope of the study.1.4 Methodology1.4.1 question designThe study, given the nature of the objectives, has a descriptive research design. Since this study is going to be one of the earliest studies with uniform objectives about the woven garments sector, the research would be of advertiseing kind. According to Cooper and Schindler (2003), at the genuinely elementary train a reporting study is done to provide an account, or to make a summation of entropy, or to generate some statistics. They lead also argue d that a reporting study requires very critical inference. However, the current study answers what and why of Macro environment, industry and competitive conditions, and thus, requires a great deal of inference. Hence, the current study would be more fittingly termed as a descriptive study. Therefore, the research design for the study is descriptive research design.1.4.2 Data collection1.4.2.1 Primary sourcesThe researchers collected the enterprise data organizing and a number of key witness interviews (KII) with the key persons in Rahim material mill about Ltd. as I meet selected this organization for the enterprise analysis. due to time limitation, the participants were chosen through personal contacts and participants willingness to participate in the discussion. The key informants considered were senior managers of the selected organization and a few bankers related to the organization.1.4.2.2 Key viewer InterviewThe researcher will select at least 7 owners or managers to interview as key informants. This interview will revolve around on the enterprise level information like the vision, mission, objective, current action in two local and outside(a) markets, the competitors in both markets, point of intersections and so on.1.4.2.3 Secondary sourcesThe researchers have explored the following secondary winding sources to conform to the objectives of the report.Data memorial of Bangladesh Export Promotion Bureau Bangladesh (EPB) relating to readymade garments export.Data inventory of Bangladesh Garments Manufactures and Exporters Association (BGMEA) on-line(a) impertinents archive of newspapers and news agencies home and abroadAnnual report of the federationBooks and journals at the library of Institute of transaction Administration and University count Limited1.5 Limitations of the StudyThe current study is limited by a number of factors. First, the participants for KII have been chosen conveniently. Second, the list of questions KII has bee n developed from the scratch by the researchers themselves. However, these limitations are not likely to invalidate the conclusions. The reasons are the following. First, the researchers will expect on both primary and secondary sources. Second, the primary sources have been diverge into managers of woven garments companies in Bangladesh. Third, the list of questions has been checked for recasting by the instructor of the course. The refinement of the list of questions following the suggestions of such an expert enhances the relevance and reliableness of the questions asked. Hence, these two approaches tick off cross-validation of information needed to fulfill the objectives of the report.Strategic provision process for Rahim fabrics LimitedMission and GoalSWOTExternal synopsis Opportunities and ThreatsInternal summary Strengths and WeaknessFunctional Level outlineBusiness Level StrategyGlobal StrategyCorporate Level StrategyCorporate Performance, Governance and EthicsImple menting Strategy in a mavin IndustryStrategy FormulationImplementing Strategy across Industries and Countries2.0 Comp whatever write2.1 VisionThe vision statement of Rahim material mill about Ltd is to create added value to the common wealth and to benefit the society.From the discussion with companionship managers, the researcher revealed that by the above stated vision statement they want to mean to mend the well being of valued equity holders, investors, employees and members of the society without interrupting or dis lodgeing the world(a) socio-ecological-economic position and the process of human civilization leading to peaceful co-existence of all the living beings.The vision statement of Rahim stuff move Ltd. lacks the important characteristics of a vision statement. First of all, from the vision the kind of connection quarternot be identified. It is in like manner much(prenominal) generic and fails to identify the craft or industry to which it is mantic to ap ply. This vision drop be applied to companies of whatsoever kind of industry. Secondly, the vision statement is not foc utilise to provide managers with guidance in devising decisions and allocating resources. The vision is also bland and lacks motivational power. Finally, the vision statement of the federation is vague in meaning no concrete objective is mentioned in the vision.2.2 MissionRealize the vision the mission of the confederation is to play a leading roll in export oriented textile sector through reasonable application of Knowledge and Skills.This mission is also very weak in meaning. There is no description of the partnerships present phone line scope and purpose in the vision statement.2.3 objectivesThe objective Rahim material Mills Ltd is to maximize our harvestingivity on strict ethical standards at nominal approach to ensure optimum growth of wealth of the come with.This is basically travel in the type of strategic objective. Since the companionship is making profit satisfactorily and the exist financial condition is healthy enough, they are conpennyrating on the strategic objective.2.4 HistoryRahim material Mills Ltd started its journey in 31 December, 1981. The club commenced production in the year of 1987. Initially the company was producing only woven garments, afterwards with the expansion dodge the company built its capacity in both woven and knit sector as well as in dyeing. They already established wide factory at shafipur, Kaliakar and Gazipur, all outside only if very much near to the capital city. The company has four sister concerns. They are as followsMalek Spinning Mills Ltd. interlace Asia Ltd. bran-new Asia Ltd.Salek framework Ltd.Rahim Textile Mills Ltd. enlisted in Dhaka stock exchange on 29 March, 1988.2.5 ProductsThe main woven products of Rahim Textile Mills Ltd are shirts, trousers, hats and jackets, broadly speaking made from cotton. Recently the company are enlarging its product width and producing i nner wears for different worldwide famous brands. On the separate hand, the company also produces knit garments products, e.g. sweaters and socks.ProductsCotton productsShirts, trousers, hats and jacketsKnit garments productsSweaters and socks2.6 Export mickle and DestinationAs we discussed with the key persons of the company, the informants were declined to disclose the exact quantity of exports from their production, but they mentioned the proportion of export to total production. They mentioned that the company exports about 92% of its products. virtually of the export is sent to USA as well as the separate major portion in EU countries.From go steady 2.3, it can be concluded that earning per share of the company is consistent and higher in the last year. In the last year Rahim Textile Mills Ltd. diversified its condescension in knitting sector and the result is change magnitude earning per share in the last year.3.0 Internal synopsis3.1 Core competenciesBy the definitio n of affectionateness competence, it is a competitively important activity that a company performs break off than another(prenominal) internal activities. In case of Rahim Textile Mills Ltd. its marrow squash competence is the tonicity of its products. In production the company has been using its highly undergo and skilled professional in its manufacturing process. Therefore it already gained committedness from its buyers. The company not only concentrates in quality, but also maintains the cost of the product so that the cost be fetchs competitive among the rivalry in the industry.3.2 distinctive competenciesFrom literature, distinctive competence is a competitively valuable activity that a company performs better than its rivals. The researchers tried to identify distinctive competence of Rahim Textile Mills Ltd. through key informant interview with the top level managers of the company. But from the response of the KII participants, it has been revealed that the company h as no distinctive competence to win the vigorous buyers in the market.3.3 Key resourcesKey resource strengths of a company generally form the cornerstones of strategy and make the company competitive in the industry. From the KII with the top level managers of Rahim Textile Mills Ltd. the researcher identified that key resources of the company areHighly experienced professionalBetter applied scienceBetter market access3.4 SWOT AnalysisIn order to accomplish SWOT analysis the researcher followed the steps downstairs.Figure 3.2 travel of SWOT analysis.3.4.1 Resource strength and competitive capabilitiesFrom primary data of KII and secondary data, the researchers identified the following resource strength and competitive capabilities.Highly experienced and skilled representforce as its intellectual capital relative to rivals which provides the company learning and experience curve advantages.Better product quality compared to the ordinary size competitive rivalsBetter customer b ase as compared to the small garments companiesTechnology is on average updated, but not like that of forthright textile or Bex-texCapacity is well-matched with its production volume.3.4.2 Resource weaknesses and competitive deficiencies effectiveness resource weaknesses and competitive deficiencies of the company, as identified by the researcher, are mentioned below.The company has no clear strategic vision to direct the company towards item targetsBehind rivals is using e-commerce for their promotion purpose whereas the company even has no website for the convenience of information gathering by the foreign buyers.Its product line is narrow compared to the other rivals in the industry.It has no brand image in local market and very weak influence of brand in the global market, only with the selected suppliers.Long lead time is another pivotal factor for which the foreign buyers are declined to buy its products.3.4.3 Market opportunitiesAlthough Rahim Textile Mills Ltd. had been r unning their concern in woven sector only, they are now expanding their business horizon in the knit sector also. The company effected that its skilled and experienced workforce can be utilized in the knit sector effectively and efficiently. We foresee a brighter in store(predicate) for us. fall guy and dyeing orders shall increase overall. We must continue to strive to achieve more orders which shall ensure greater progress and prosperity. It has become essential for us to jeopardize upon capacity enhancement and balancing of our dyeing printing machineries urgently to meet the stringent quality assurances imposed by the buyers. We need to improve ram productivity and consistency in quality. We will face tougher rival both from at bottom and outside. We need to resolve issues related to bond and customs to ensure faster disposal of imported stark naked materials. We need to work extensively and pursue the organisation to have provision of subsidy and other incentives at different stages of production and process to remain competitive in the international market. The concerted and coordinated efforts will ensure higher production, better quality to make the production year 2007-2008 the year of greater progress and prosperity.3.4.4 Threats to the future profitabilityDay by day the soused rivals are capturing the markets visible(prenominal) to the industry in Bangladesh. Another threat is coming from technological change. Rahim Textile Mills Ltd. is not large enough to regularly update its applied science to compete with other key rivals and so losing market share gradually. Besides, the company is facing cost cut competition from the rivals.3.5 Prices and costs scrapThe rise in the price of chemicals and dyes by over 30% also unnatural the order acceptance and overall production. Exporting countries of dyes, Chemicals and Colors particularly China, India increased their prices making the market very competitive and difficult. Buyers took adva ntage of the competition amongst resembling dyeing printing Factories and offered lower price. Despite such a situation we could improve both export and local market prices. Dearth of the dexterous manpower had led to poor labor productivity and inconsistency in the quality of textile products.3.6 Business representativeA companys business model relates to whether the revenue-cost-profit economics of its strategy demonstrate the viability of the business enterprise as a whole. In case of Rahim Textile Mills Ltd. business model of the company is not only viable but also it shows its success in many consecutive year as the company is making huge amount of profit regularly. The business model of Rahim Textile Mills Ltd. is a proven model which ensures the companys viability in the market for a long period- from 1986.3.7 quantify chain of the companyThe value chain of Rahim Textile Mills Ltd. is corresponding to the following value chain model.AbsentFigure 3.3 Value chain model for Rahim Textile Mills Ltd.On the value chain model, Rahim Textile Mills Ltd. lacks efficiency in sales and marketing. Therefore the company is loosing market share to the competitive rivals. Also there is no R D department in the company. This is why they are lacking in product innovation and product differentiation.3.8 Dimensions of organizational cultureCulture of an organization consists of the characteristics as described in the following figure.Figure 8.1 dimensions of organizational cultureFrom the perspective of the woven garments industry in Bangladesh, most of the employees in the industry come from inferior background in terms of both academic and social status. Almost all the workers educational background is either SSC or below SSC. They are mostly unaware about the culture of the organization. Even the managers are very little concerned about the culture of their organization.From our focus group discussion, the discussants give importance on the following characteristi cs of organizational culture hostilityThe managers are aggressive with their workers kind of than easygoing. The managers ceaselessly give pressure to the workers about their performance. Even a worker is performing satisfactorily she or he is not given any kind of motivational incentive or compliments to continue his performance.Team orientationIn this industry team up orientation among the employees is nearly absent. The managers, in most of the cases being unaware about synergy, do not bother about the performance of team, rather always prefer individual performance.People orientationPeople orientation reflects the stop to which the management decisions take into consideration the effect of outcomes on people deep down the organization. By definition and comments of the discussants of FGD, this characteristic of organizational culture is rarely salutary by the managers in planning, design and implementation of production. military issue orientationOutcome orientation measur es the degree to which management focuses on results or outcomes rather than on the techniques and processes used to achieve those outcomes. In most of the woven garment industry the production managers are outcome oriented. They attach importance to the quality of the products rather than their production process and technology used in production.Attention to tipAttention to detail is the degree to which employees are expected to exhibit precision, analysis, and circumspection to detail. Since most of the workers in the garment industry are unskilled and even they are not provided any kind of training, they must follow the guidelines of their work literally as mentioned by the managers.4. External Analysis4.1 Competitor AnalysisMajor competitors of the Rahim Textile Limited is given belowMonno fabric,Babylon Garments,Desh garments andViella-tex straight Textile MillsBeximco TextilesThe factors of similarity are mostly activism in marketing and selling, availability of local raw materials, deliverance reliability, and level of backward linkage.4.2 war-ridden postureIn order to identify the competitive position of the company, the researcher used strategic group mapping considering the selected 7 companies by the group. In strategic group mapping researchers has given importance to the cost of the products, product quality, active marketing, lead time, delivery time, and export quantity.The figure above shows that Monno fabric, Rahim textile, Babylon Garments, Desh garments and Viella-tex have similar ranking on the basis of the two attributes. All these five companies have higher quality while they are low in price. So, these five companies emerge as a strategic group. On the other hand, Square and Bex-tex have average performance on each of the considered factors of the mapping and hence, they can be said to fall in the same group.4.3 Textile IndustryThe textile industry in Bangladesh occupies a prominent position within the countrys industrial structur e. It is the largest manufacturing sector, providing jobs for some 50% of the total industrial workforce and add 9.5% of the countrys GDP.Also, it accounts for almost 77% of total exports, making itBangladeshs leading foreign exchange earner.In the early 1980s exports were dominated by jute while garment sales were insignificant. But today garment exports are by distant the leading export category. In 2001/02 the clothing sector generated as much as US$4.58 bl in foreign exchange.The industry benefits from special access to markets in the EU, Canada, Norway and Japan. Because Bangladesh is a least developed country, its textile and clothing exports enter these countries quota-free and duty-free. This concession, together with low labour costs, provides the garment sector with a strong competitive advantage.But in order to produce garments for export, the sector has to buy a large share of its yarn and fabric needs from abroad, especially woven fabrics. Few local textile firms are able to produce materials of the required quality or in adequate quantities.The Bangladeshi government is attempting to remedy this situation. To reduce the countrys import bill, it is offering tax concessions and incentives aimed at encourage investors to develop the necessary backward linkages.Profitability of a market/industry depends on strength of five threats to profitability4.4 Porters Five Factor Analysis4.5 Industry spirit cycle AnalysisA useful cocksucker for analyzing the effects of industry evolution on competitive forces is the industry life model, which identifies five sequential stages in the evolution of an industry that lead to five distinct kinds of industry environment embryonic, growth, stakeout, mature and decline.EmbryonicShakeoutDeclinematurenessGrowthTextiles industry is at maturity stage in the industrial product life cycle stage.5.0. Strategy Analysis5.1 Generic Competitive StrategyA competitive strategy concerns the specifics of managements game plan f or competing success to the full and achieving a competitive edge over rivals. A company achieves competitive advantages whenever it has some type of edge over rivals in attracting buyers and coping with competitive forces.There are countless variations in the competitive strategies that companies employ. Mainly because each companys strategic approach entails custom-designed actions to fit its own circumstances and industry environment. The mostly used five competitive strategies are shown in the following figureFigure 4.1 Five generic competitive strategies5.2 Low-cost provider strategyAmong the five mentioned competitive strategies, Rahim Textile Mills Ltd. achieve overall cheap provider strategy. The company is the lowest cost provider rather than just being one of perhaps several competitors with comparatively low costs. The companys strategic target is meaningfully lower costs than rivals but not needs the absolute lowest possible cost.5.3 Fitness of the strategyReady made g arment industry is moving very fast, new competitors are uphill in the market frequently growth rate is decreasing year after year. To cope with changes Rahim Textile Mills Ltd. must tailor its strategy so that the company can become profitable and competitive to environ rivalry establishing a distinctive competence.5.4 Strategies for entering the marketMore and more companies are finding themselves in industry situations characterized by rapid technological change short product cycles because of entry of important and fast-evolving customer requirements and expectations -all occurring at once. Due to the entrance of new competitors the market for Rahim Textile Mills Ltd. is shrinking. To compete with these fast moving changes, this company has to be technologically sound, product in advance(p) to attract the change-demanding customer and product diversification.5.5 Strategies for coping with rapid changesIt is very important to understand the key driving forces of an industry to decide upon the strategy of any company inside the industry. By searching the profits, reviewing related literatures, implementing key informant technique, and by organizing focused group discussion the following key forces have been identified.Growing use of profits technology and applicationsIncreasing globalizationChanges in the buyers requirementsChanges in cost and efficiencyChanges in global regulations in the textiles and apparels industryIn Bangladesh internet technology and web applications play a live role in establishing collaboration between importers and buyers abroad. Exporters communicate with Importers though internet where buyers put their proposal and ask for bidding. Prospective traffickers bid through the internet and the lowest bidder is rewarded with sales contract This is how internet technology acts as a bridge in connecting business people across different parts of the world.In domestic market there is no such seller who uses websites as a part of their supply chain. Amazon uses website as a competitive tool in gaining customers. But such facilities havent yet gained jutting in a developing country like Bangladesh. So Rahim Textile Mills Ltd. can take an initiative eto develop website for buyers and suppliers.The overall global trade is increase phenomenally every year and after. In business the process of going global is largely marked by increasing volume of export and import and greater number of licensing, franchising, strategic alliances, say venture and setting up of foreign subsidiaries by business houses. doubting Thomas Friedman while describing the trend of globalization summed it up in one condemn that globalization is farther, faster, cheaper, and deeper.(Hossain and Sandhir 2004)Key informant interviews reveal that trade liberalization has made it much easier for entering into new market and carry out manufacturing activities by out sourcing them. Brands like Reebok, Marks Spencer, Denim, Wall Mart, Levies, Nike et c. out source their manufacturing activities to countries like Bangladesh where they can get value chain activities done cheaper than any other part of the world.Although the ready made garment sector is not so much speedy changing, it has to be proactive about the market demand and thereby make itself prepared for the market demand. Other option is the company can react with the change. Rahim Textile Mills Ltd. is considering the latter approach. It is reacting with the changes. When the other companies are fighting to reduce lead time and improve delivery time, this company also trying to walk in the same way. The company is trying to incorporate new technology for its production process.5.6 Strategies for sustaining rapid company growthAs Rahim Textile Mills Ltd. is medium size company in the woven sector industry in Bangladesh, the company is following horizon 1 short-jump for sustaining rapid company growth. By this technique, the company is adding new items to the companys pre sent product line, expanding into new geographic areas where the company does not yet have a market presence and launching offensives to take market share away from rivals. The objective of this short jump is to capitalize fully on whatever growth potential exists in the companys present business arenas.The sustainability of exports of woven garments in Bangladesh remains under question as the sector lacks backward linkages far from the requirements. At present, around 20 to 25 per cent of the raw materials required for the woven garments are supplied domestically whereas the same for the kit out garment is 75 to 80 per cent. The manufacturers depend on the international market for the rest of the raw materials required for both the sectors. Given the pattern of growing demand for TC in the international market and the increasing competitiveness from the major exporting countries it would be difficult for Bangladesh to stand in the competition with her limited supply-side capacity. Bangladesh may supper a serious setback in outsourcing raw materials from the international market.5.7 Diversification StrategyThe big risk of a single-business company is having all of rhe firms eggs in one industry basket. If the market is scoured by the appearance of new technologies, new products, or fast-shifting buyer preference, thence a companys prospects can quickly dim. For these reasons the company takes diversification strategy to exsert its business horizon. In the researchers case analysis, Rahim Textile Mills Ltd. has also accomplished the risk of single-business Company and also realized that the existing potential resources can be utilized efficiently if the business is broadened with the similar sectors. From this view point, Rahim Textile Mills Ltd. has extended its business in knitting sector as well as spinning.5.8 Strategies for entering new businessesFrom the view point of scuttlebutt side, Rahim Textile Mills Ltd. considered the following factors in expa nding its business horizon in new businesses. vivacious technologies and expertise complement to the grow businessExisting competencies and capabilities are same valuable competitive assets for the expanded businessNew business in spinning and knitting is closely related to existing woven garments and so opens new avenues for reduction of costThe existing suppliers expanded their supply in spinning and knitting raw materials as well as buyers demanding products of knitting garments.Besides the management of Rahim Textile Mills Ltd. has apprehension about the outcome and the benefit of shareholders so that value is added to them.. There were one-third different choices for the company to diversify in the new business. The choices are as followsAcquisition of an existing business