Business Analysis of

Readymade Garments
industry in context of
Complex Strategic
environment of
Bangladesh

INTRODUCTION
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Bangladesh has been witnessing tremendous industrial

growth across its industrial sector, textile and apparel have
especially dragged the focus of government bodies and private
foreign investors. Vast availability of lowest manpower, one of
the most competitive energy costs and a proven track record in
apparel production and exports have positioned Bangladesh as a
regional apparel industry development hub in the Asian
continent. In context of fast increase in labor wages and raw
material prices in other major regional counterparts, such as
China, India, Thailand etc, Bangladesh is well controlled to
remain most preferred destination for international apparel
majors for sourcing world class fabric and finished clothes

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BANGLADESH'S READY-MADE GARMENTS

INDUSTRY
The Ready-Made Garments (RMG) industry contributes to the Bangladesh
economy in a distinctive manner. The last 20 years witnessed unparalleled growth in this
sector, which is also the largest exporting industry in Bangladesh. It has 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 significant role in terms of
employment generation. Nearly two million workers are directly and more than ten
million inhabitants are indirectly associated with the industry. In addition to its economic
contribution, the expansion of RMG industry has caused noticeable changes by bringing
more than 1.12 million women into the workforce. Hence it is quite apparent that this
sector has played a massive role in the economic development of the country.
One of the key advantages of the RMG industry is its cheap labor force,
which provides a competitive edge over its competitors. The sector has created
employment opportunities for about two million people of which 70 percent are women
who mostly come from rural areas. Thus the industry helps in the countrys social
development, women empowerment and poverty alleviation.

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OPERATING MODEL FRAMEWORK OF RMG

INDUSTRY OF BANGLADES

t customer with cheaper RMG products

ucing in cheaper cost using lower cost of labors and selling RMG products in a competiti

Mainly USA
Offering:
and EU
RMG
and
Reach:
Product
Asian
Bricks
countries
in cheaper
and mortar
Pricing
cost.
+
Strategy:
Bricks
Unique
and
Competitive
Clicks
Resource:
Pricing
Cheaper Human Capital

Unique return which places Bangladesh in a high

Competitive pricing is the unique revenue strategy

Unique competitive advantage on cost of labor

EPZ manufacturing and lower cost of energy

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Figure: Operational Business Model OF Bangladeshi

RMG manufacturers.

BANGLADESH GARMENT INDUSTRY AIMS

FOR FAST GROWTH
Despite recent, highly publicized wage protests, Bangladesh's apparel industry says it is
gearing up for high speed growth in the New Year, fuelled by new EU GSP rules, new export
markets and government support. According to the Bank, the country's financial sector regulator,
from July to September 2010, exports of woven garments increased by 30% in value terms,
while exports of knitwear increased by 31.91% in value terms, compared to the same period
2009. Exports in the last quarter of 2010 are also expected to show growth.

NEW MARKETS
While the bulk of exports are still shipped to the EU followed by the US, the made-inBangladesh label is also slowly going to new places.
During the recession in 2008, the government gave a bailout package on condition that the
industry develops new markets and new products. By now, the industry has started
exporting to new markets like Japan, Russia, Saudi Arabia and Australia. These exports are
still small but there is potential for growth, because our garment industry is very
competitive.
Talks are also on the cards with big neighbor India - to build on the current duty-free
quota of 8m pieces of garments annually, from Bangladesh into India. In 2009, this huge
industry, which provides livelihoods for around 4m people directly and indirectly,
accounted for 77% of total country exports at US$12.49bn. Meanwhile, in 2009, the World
Trade Organization listed Bangladesh as the fifth largest clothing exporter to the world,
behind China, the EU, Turkey and India.

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GROWING EU WARDS
While the clothing dependent, least developed country does not have preferential access
into the US, the EU is expected to be more accessible from 2011.
We do not get any duty-free access into the US for garments. In some cases they charge us
higher duties than what they charge developed countries like France. We are doing well in
the US because our garment industry is highly competitive. The industry is also expecting
growth in the EU with the new GSP rules.
Industry sources say that from 1 January 2011, under new EU GSP rules of origin, more
Bangladeshi apparel will qualify for duty-free entry into Europe.
"We have not tested the new system yet, but we are expecting exports to the EU to increase
with the new EU GSP rules," says Mr Annisul Huq, chairman of the Mohammadi Group of
companies, one of the largest apparel manufacturing groups in Bangladesh and a former
president of the Bangladesh Garment Manufacturers and Exporters Association (BGMEA).
Under these new GSP rules, the fabric can come from anywhere in the world, to qualify for
duty-free. Because we import a lot of fabric, this will make a lot more garments eligible for
duty-free status.

GOVERNMENT SUPPORT
Meanwhile, the Bangladeshi government has also started addressing back-end
bottlenecks to apparel industry growth.
For instance, work on gas transmission lines has started in order to increase the supply of
gas for electricity generation over the next few years. Electricity interruptions are an
immediate hold-up to industry growth.
Another speed bump, labour unrest, is also being targeted. The aim is industry stability and
gradual transition to higher value output. Because there is such a massive workforce in the
sector, labour unrest can interrupt growth. So the government is implementing many
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welfare schemes and participatory decision making mechanisms for garment workers, to
ensure labour stability in the sector,
The industry has already started shifting into little more high value, higher return areas.
There has been a lot of technology and skill upgrading happening. Government and
industry representatives say Bangladesh is aiming to become the leading manufacturing
destination for apparel over the next decade

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INDUSTRY ANALYSIS
The Readymade Garment (RMG) industry of Bangladesh marked the leadership of
private enterprise and the countrys successful transition to a major export-oriented economy.
The key products of this industry are Knit and Woven Shirts and Blouses, Trousers, Skirts,
Shorts, Jackets, Sweaters, Sportswear and many more casual and fashion apparels. RMG
industry has enjoyed an impressive rise from less than 50 factories in 1983 to over 3600 in 2006.
Garments sectors continual success can be attributed to the following:
Quotas under Multi-Fiber Arrangement (MFA) in the North American market
Preferential market access to European markets
The country has a small textile industry, but the volume and quality of its output are unable
to fully meet the demand of the garments industry. Most of Bangladeshs garments exports are
made from imported textiles. RMG exports have grown rapidly after extensive trade and other
economic reforms were undertaken in the early 1990s. Exports increased by 16.5 percent per
year during the past one and half decade.

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PEST ANALYSIS OF BANGLADESH BUSINESS

ENVIRONMENT
The PEST analysis is a useful tool for understanding market growth or decline, and as
such the position, potential and direction for a business. A PEST analysis is a business
measurement tool. PEST is an acronym for Political, Economic, Social and Technological
factors, which are used to assess the market for a business or organizational unit.
Here PEST Analysis is done for evaluating the business environment of Bangladesh
focusing complexities and potentiality-

Tech
nolo
gical

Socia
l

PEST
of BD Business
Environment

Economi
c

Politi
cal
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Figure: Pest analysis for Bangladesh Business Environment

POLITICAL ENVIRONMENT OF BANGLADESH:

The political system of Bangladesh is followed by representative democracy. Despite
being a democratic country the safeguards of democracy are not being exercised properly which
have negative impact on business operation. Political unrest is almost a daily occurrence in
Bangladesh which hinders the daily national and international trading system of the country.
Foreign firms are feared to come in Bangladesh with FDI. Bangladesh is a democratic country in
name but not in action.
The following biased democracy safeguards are some of the main hindrances of
international business in Bangladesh.
Individual right to freedom of expression, opinion and organization are restricted.
Media are more or less biased to the current government.
There is more or less regular election sometimes major parties avoid election.
There are often face to face clashes among the leading political parties.
Despite being the court system is independent most of the times its functions are directed
by current government.
Corrupted political state bureaucracy
Corrupted political police and armed force.
This situation does not support entrepreneurship thats why it cannot make a man innovative.
Thats why local business cannot be strong. To be competitive in international business such
political system and government is failing to make local business more efficient and more
effective. Thats why Bangladesh is lagging behind in international business competition.

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ECONOMICAL ENVIRONMENT OF BANGLADESH:

The economic system of Bangladesh is characterized by mixed economy in Bangladesh
certain sectors of the economy are left to private ownership and free market mechanism while
other sectors have significant state ownership and government planning. Once there was a large
state sector in Bangladesh but recent tend to privatization has reduced state ownership of various
businesses. Some of the recent privatized sectors are airlines, banking, customs etc. this tend to
privatization is creating a favorable atmosphere for international business. As foreign firms can
invest in the privatized sector there will be a positive impact on the economy of Bangladesh.

SOCIAL ENVIRONMENT OF BANGLADESH:

Social value consists of social custom, practice, religion and social moral standard. Social
value shows the moral standard of ours. Without social values we cannot grow up as a complete
social man. In the past social values were more conservative, rigid and strong. We all know that
Bangladesh is a conservative Muslim country. People used to live a more religious. The young
were more respectful to the old and superior. Smoking in front of the superior was forbidden.
People used to believe in joint families. But now people are getting more and more liberal. They
follow religion in a more relaxed way. Men and women now mix frequently. Our social values
are changing fast. There is a clear western influence on our culture and values. Many people now
accept western values. The causes of the present social values are satellite, television,
globalization, free exchanges among the nations and free trade. There are certain effects of our
social values. People now abide by religion in a more relaxed way. Women are now playing a
more important role in different parts of our society. As western music, culture, and modes of life
are getting more and more familiar with us, our social values are also getting westernized. People
now prefer living in a small family. There are frequent exchanges among different communities
in our society. Our social values reflect our moral standard, culture and tradition. We should be
more alert to maintain these values. If we lose our values, we will have no individual identity as
a nation. Our social values show our identity.

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TECHNOLOGICAL ENVIRONMENT OF BANGLADESH:

The need for faster technological development is increasingly felt in Bangladesh.
Development plans of Bangladesh have emphasized science and technological research to
develop technologies through adoption of imported technology as well as development of local
technologies. As the country is heavily dependent on imported technologies, proper planning is
required for its

effective

transfer through

acquisition, assimilation and adoption.

A National Science and Technology Policy has been formulated and adopted by the Government.
It has laid down the directions for S and T activities and research, institutional and manpower
development. Dissemination and documentation facilities. The National Council for Science and
Technology (NCST) determines S and T policies, reviews the activities of different institutions
and provides direction towards S and T research and activities.
Technology dimension plays an important role in enhancing the development activities
and growth of Bangladesh business environment potentiality. The application of new
technologies, particularly computers and software applications, has been a major factor driving
productivity growth in recent decades. It is observed that information and communication
technologies (ICT) development is running rapidly. Basically, at this moment the business people
are much more aware about technology because they know technology can enhance their
operation. ICT is seen as an umbrella term for a range of technological applications such as
computer hardware and software, digital broadcast technologies such as radio and television,
telecommunications technologies such as mobile phones, and electronic information resources
such as the world-wide web.

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PEST ANALYSIS FOR RMG INDUSTRY OF

BANGLADESH
A PEST Analysis can help us to know about the external environment situation of a
particular industry of a country. The below analysis is the PEST analysis for the RMG industry
of Bangladesh.

POLITICAL ANALYSIS:
Among various features of our political situation, most noticeable and important conditions may
be identified as follows

Absence of democratic political culture

Absence the rule of law
Absence of strong civil society
Absence of strong political leadership
Challenging politics
Corruption and terrorism
Negativity/Double standard despite of many drawbacks, our government has taken some
positive initiatives in favor of foreign investors. There are no distinctions between foreign
and domestic private investors regarding investment incentives or export and import
policies. Incentives for investors include - 100% ownership in most sectors, tax holidays,
reduced import duties on capital machinery and spares, 100% duty-free imports and tax

exemptions.
Government policies for Foreign Investments: The stated policy of the government of
Bangladesh (BDG) is to pursue foreign investment actively, and it has enacted a number of
policies to this end. There are no distinctions between foreign and domestic private investors
regarding investment incentives or export and import policies. Incentives for investors
include: 100% ownership in most sectors; tax holidays; reduced import duties on capital
machinery and spares; duty-free imports for 100% exporters; and tax exemptions.

ECONOMIC ANALYSIS:
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The economy of Bangladesh RMG environment constituted by that of a developing

country. Its per capita income in 2015 was est. US$1,600 (adjusted by purchasing power parity)
significantly lower than India and Pakistan, both which are also lower than the world average of
$10,497.According to the gradation by the International Monetary Fund, Bangladesh ranked as
the 46th largest economy in the world in 2014, with a gross domestic product of US$228.889
billion.

SOCIAL
Companies are facing the challenges of adapting effectively to the changing environment
in the context of globalization and in particular in the export sector in Bangladesh. Although
Consumer Rights Movement, enforcement of government regulations and a structured view
regarding the economic importance of Social responsibility are not yet so widespread in the
corporate world in Bangladesh, companies have gradually attaching more importance to Social
responsibility in the local market as well. They are increasingly aware that Social responsibility
can be of direct economic value. Companies can contribute to social and environmental
objectives, through integrating Social responsibility as a strategic investment into their core
business strategy, management instruments and operations. This is an investment, not a cost,
much like quality management. So, business organizations can thereby have an inclusive
financial, commercial and social approach, leading to a long term strategy minimizing risks
linked to uncertainty.

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TECHNOLOGICAL
The

need

for

faster

technological

development

is

increasingly

felt

in

Bangladesh. Development plans of Bangladesh have emphasized science and technological

research to develop technologies through adoption of imported technology as well as
development of local technologies. As the country is heavily dependent on imported
technologies, proper planning is required for its

effective

transfer through acquisition,

assimilation and adoption. A National Science and Technology Policy has been formulated and
adopted by the Government. It has laid down the directions for S and T activities and research,
institutional and manpower development. Dissemination and documentation facilities.
The National Council for Science and Technology (NCST) determines S and T policies,
reviews the activities of different institutions and provides direction towards S and T research
and activities.

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PORTERS FIVE FORCES ANALYSIS FOR

RMG INDUSTRY
A. COMPETITIVE RIVALRY BETWEEN EXISTING PLAYERS

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

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Threat of new
country with
low cost labor
coming into
RMG
production
bargainin
g power
of the Knit
and
cotton
supplier
countries
like china
and India

Competitiv
e rivallry
within the
industry for
getting the
large
buyer's
orders

Bargaining
Power of
the
customers
from the
countries
without
GSP or
qouta
facilities

Threat of the ris

eof synthetic
products, jute or
banana fiber
clothes

Figure: Porters Five forces analysis for Bangladeshs Ready Made Garments Industry

B. BARGAINING POWER OF SUPPLIERS

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

C. BARGAINING POWER OF CUSTOMERS

Bangladeshi manufactures realize that the buyer possess more power than themselves.
The important factor here is that many of the companies in Bangladesh are either franchises or
subsidiaries. Along with them the local companies are giving Bangladesh a look of the best
outsourcing place of the lot. Many of the reputed companies, brands are outsourcing their
products in Bangladesh as they get the most quality in the cheapest price possible.
Buyers are also interested in the growth aspect of the Bangladeshi suppliers. Bangladesh
is growing as a major player in the textile and apparel industry globally and due to the quota
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system it is quite an important player in the field. Bangladesh still has its quota left in the EU
market where countries like China dont have the entry. So, many countries are planning to use
Bangladesh as a hub and buy the service to export under its label. That gives Bangladesh a
comparative advantage against the buyers of its services. And due to immense quality assurance,
Bangladesh is continuing to be the best choice for many buyers in the industry.

D. THREAT OF NEW ENTRANTS

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

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

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THE NINE FORCES IN BRIEF

Political Stability,
Changes in
regulations.
Changes in
International
Regulation

bargaining
power of the
Knit and
cotton
supplier
countries
like china
and India

Engagement of
women in workforce,
Shift of the consumer
choice for clothes.
Consciousness about
CSR

Threat of
new country
with low cost
labor
coming into
RMG
production

Competitiv
e rivallry
within the
industry
for getting
the large
buyer's
orders

Threat of the
ris eof
synthetic
products, jute
or banana
fiber clothes

Innovation in
capital
machineries for
RMG
manufacturing
and import of

Bargaining
Power of
the
customers
from the
countries
without
GSP or
qouta
facilities

Global recession, Tax

rate changes, Increased
Purchasing power.
Changes in lending
facilities, Shifts in labor
cost structure

FIGURE: Nine forces for RMG Industry of Bangladesh

Political
Stability and
change of the
government.
Changes in Tax
structure and

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A SWOT ANALYSIS ON READYMADE

GARMENT INDUSTRY IN BANGLADESH
RMG is the leading industry in Bangladesh. It is basically a labor-intensive industry and
it needs limited financial investment and relatively simple technology compared to other high
technical industries.
The tremendous success of Readymade Garment (RMG) exports from Bangladesh over
last two decades has surpassed the most optimistic expectations. At present Bangladesh is the 6th
largest exporter to USA and in 1997 Bangladesh becomes 18th largest exporter in the world.
Now Bangladesh ranks first export of T-shirts to Europe (BGMEA, 1997-98)
The overall impact of the readymade garment export industry is certainly one of the most
significant social end economic developments in contemporary Bangladesh. The remarkable
achievement of RMG sector is now exposed to each and every country. Despite these impressive
achievements and the probable challenges in the near future, if properly managed, the prospects
for further expansion and growth for this sector remain bright. There are some major threats still
exits in this sector but Bangladesh has the ability to overcome these threats.
Readymade Garment (RMG) industry holds a key position in the economy of Bangladesh
in terms of foreign exchange earning, employment generation and poverty alleviation. Right now
RMG sector is the highest foreign currency earner in Bangladesh. Apart from contributing to
huge foreign exchange earnings, RMG industry has become the largest source of employment
generation. Around 2 million people are presently involved of whom 90% are distressed women
in the RMG industry of Bangladesh. In addition a rough estimate shows that the sector through
linkage effects is currently generating about US$ 2 billion worth of domestic economic activities
(Bhattacharya, 2000)
It is largest manufacturing sector contributing about 5% to the GDP. But this RMG sector
is now facing some challenges especially after 2009. Bangladesh is still at its infancy in terms of
quantity production in the readymade garments industry. We still have problems in our country
23 | P a g e

for the production of quality goods. Standard is also not satisfactory. The quality of the
readymade garments of Korea, Hong Kong, Taiwan and other countries is far superior to that of
ours.
In RMG sector, value-addition is 30% only because a RMG unit has to import 70% of the
total value of the product. The low value added represented that the backward linkage industries
such as fabrics and accessories, which directly feed into the garment sector, have not
satisfactorily developed. The weakest point of the Bangladeshi apparel industry is that it is still at
the mercy of the exterior suppliers of its main raw materials namely the fabrics. Right now
Bangladesh has a very limited capacity to produce fabrics required by the RMG factories.
This sector will remain in intense competition in the context; it is very necessary to find
out opportunities and challenges of RMG industry of Bangladesh in order to face firm
competition in the free market environment. Japan is one of the potential markets for exports
from Bangladesh. Quality and fashion conscious Japan is importing readymade garments from
Bangladesh at an increasing rate even though this increase is very negligible. An extremely large
program has to be taken to increase the exports. There exists supportive policy environment in
the RMG sector of Bangladesh. The package of textile sector incentive has been aimed at
primarily to boost up the exporters. Government has extended some major incentives and
facilities for the local and foreign investors to help increase investment in the country for all
industrial sectors including textiles and clothing
A lot of research works should be completed pleasantly how to face challenges of the
coming changes in the world business for the continued existence of this sector. From the above
discussion we have found some weaknesses and threats of RMG sector. Bangladesh can
overcome its weaknesses if it formulates and implements some strategies like cost reduction
strategy, product diversification strategy, market diversification strategy. The findings show that
the workers needed significantly shorter time to produce a shirt of a given specification than the
time presented in another study completed by Khan and Chowdhury in 1986.
This means that labor productivity in RMG factories has improved during the last 9
years. The experiences of Japan, Hong Kong, South Korea and other suppliers of RMG confirm
this type of relationship between productivity and wages. Unlike in the public sector of
Bangladesh, in RMG sub sector, wages have increased during the last 9 years but productivity
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has increased more than wages have. Quality and standard of RMG products can be improved by
practicing Total Quality Management, preparing and following a quality manual for the products,
training Quality Control and Quality assurance Personnel etc.
The growth and development of Bangladesh Ready Made Garment is highly satisfactory
as it is found in number of factories, share in total foreign exchange earnings and value added to
the economy. The major problems of RMG are low net exporting, low value addition, low
quality and standard, low productivity, elimination of quota and GSP, intense competition,
scarcity of backward linkage industries etc. to comply with the set standards by the importing
countries and global RMG marketers, Bangladesh need to improve its working condition.
Appropriate training to the workers focusing on awareness of safety and what is to be done
during the time of emergency will be effective in improving employee morale. Government of
Bangladesh, Ministry of commerce, Ministry of textile, Export Promotion Bureau, BGMEA,
Institute of Fashion Technology and other concerned authorities should work strengthening the
RMG industry of Bangladesh.

SWOT ANALYSIS OF RMG INDUSTRY IN

BRIEF:
STRENGTH
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Low labor cost.

Energy at comparatively lower price.
Easily accessible infrastructure like sea road, railroad, river and air communication.
Wide ranges port facilities.
Accessibility of fundamental infrastructure, which is about 3 decade old, mainly

established by the Korean, Taiwanese and Hong Kong Chinese industrialists.

FDI is legally permitted.
Moderately open Economy, particularly in the Export Promotion Zones.
Looking forward to Duty Free Excess to US, talks are on, and appear to be on
hopeful track.
Investment assured under Foreign Private Investment (Promotion and Protection)
Act, 1980 which secures all foreign investments in Bangladesh.
OPIC's (Overseas Private Investment Corporation, USA) insurance and finance
agendas operable.
Bangladesh is a member of Multilateral Investment Guarantee Agency(MIGA)
under which protection and safety measures are available.
Adjudication service of the International Center for the Settlement of Investment
Dispute (ICSID) offered.
Excellent Tele-communications network
Weakness of currency against dollar/euro and the condition will persist to help
exporters.
Bank interest@ 7% for financing exports.
Convenience of duty free custom bonded w/house.

WEAKNESS

Long lead-time
Lack of marketing tactics.
The country is deficient in creativity.
Absence of easily on-hand middle management.
A small number of manufacturing methods.
Low acquiescence: there is an international pressure group to compel the local
producers and the government to implement social acquiescence. The US GSP may
be cancelled and purchasing from US& EU may decrease significantly
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 The machinery required to assess add on a garment or increase competence are

missing in most industries.

Lack of training organizations for industrial workers, supervisors and managers.
Autocratic approach of nearly all the investors.
Fewer process units for textiles and garments.
Sluggish backward or forward blending procedure.
Incompetent ports, entry/exit complicated and loading/unloading takes much time.
Speed money culture.
Time-consuming custom clearance.
Unreliable dependability regarding Delivery/QA/Product knowledge.
Communication gap created by incomplete knowledge of English.
Subject to natural calamities.

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OPPORTUNITY
EU is willing to establish industry in a big way as an option to china particularly for
knits, including sweaters.
Bangladesh is included in the Least Developed Countries with which US is
committed to enhance export trade.
If skilled technicians are available to instruct, prearranged garment is an option
because labor and energy cost are inexpensive.
Foundation garments for Ladies for the FDI promise is significant because both, the
technicians and highly developed machinery are essential for better competence and
output
Japan to be observed, as conventionally they purchase handloom textiles, home
furniture and garments. This section can be encouraged and expanded with
continued progress in quality.
Chittagong port is going to be handed over to the foreign operator ,which will make
the ports service much faster, it will also reduce lead-time as well as total cost will
be decreased.77
Bangladesh is going to gain its political stability, which will make foreign trade
much smoother and will foreign buyers will be more convinced.

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THREATS
China is a most likely the biggest threat for Bangladesh as this country has relatively
high labor productivity and applies more capital-intensive modern technology and it
has less lead-time because of its relative advantages in getting locally available raw
materials like fabrics, various RMG accessories.
China has also relatively better infrastructural facilities like energy supply,
transportation and communication system.
Some African and Caribbean countries have enjoyed zero-tariff facility under AOA
act (Agreement On Agriculture) that helps them to be more competitive relative to
Bangladesh

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PORTERS DIAMOND MODEL ANALYSIS FOR

RMG INDUSTRY:
SUPPORTING INDUSTRIES

RIVALRY, STRATEGY, STRUCTURES

Accessories
Power plants
Packaging
Transportation
Shipping
Bank and financial institutions

Strong Rivalry among the Foreign manufacturers

Good Syndication among the main manufacturers
and sub-contract manufacturers.
Good syndication among the supporting industry
Good forward and Backward linkage as strategic
advantage

FACTOR CONDITIONS:

DEMAND CONDITION:

Competitive advantage in lower cost of labors

Good FDI inflow
Good condition in capital collection.
Availability of lands for establishment of industry
EPZ facility with tax benefits
Relaxed regulations for RMG organizations.

Strong demand for cost benefits

Strong Demands under GSP facilities
Positive demand condition in local market along
with the cross border market
Increasing demands for Bangladeshi RMG products
in new markets.

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CONCLUDING REMARKS AND

RECOMMENDATIONS:
In my concluding remarks I must say that the SWOT of Bangladesh itself works as a
complementary profile for the SWOT of the readymade garments industry of Bangladesh. After
the strategic, business and competitive analysis of the Readymade Garments industry of
Bangladesh, we must confess that the Competitive strategic factor for Bangladesh, the human
capital or cheap labor, is itself the competitive advantage of the RMG industry. So, the labor cost
and human resource is the main part of formulating the business and competitive analysis RMG
industry of Bangladesh.
In recommendation, we must say that

RMG manufacturers should look for other strategic factors other that the human capital

of lower cost.
Opportunities of RMG industry must be converted to strength with the support of the

government.
Manufacturers should look for other strategy like value chain competitiveness rather that
only price competitiveness.

Rather than trying to do everything equally all at once, it helps to have a sense of priority.
Putting the prioritized elements together in a mutually supportive and logical package creates a
strategy. The desirable outcome of a SWOT should be a strategic plan to address the challenges.
Thus, by identifying the key issues and establishing their relation with each other, a degree of
clarity is possible that helps to make one clear about priorities and the time a policy will take to
bring the outcomes.

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