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registered and unregistered, that produce garments catering to foreign buying houses. The export income from this industry alone is one of the top three sources of ec onomic growth in Bangladesh.
The rapid growth of the ready-made garments industry in Bangladesh has been facilitated by the following factors:
cheap labour lack of employment options for women simple technology small amount of capital required and economic changes and policies that encouraged the growth of this particular industry
The relatively cheap cost of labour in Bangladesh is the reason for its comparative advantage internationally since goods can be produced at a lower cost in Bangladesh than in many other countries. This cheap cost of labour is in turn a result of national policies, massive unemployment and the willingness of women to work for low wages Ready-made garment is a success story for Bangladesh. The industry started in the late 1970s, expanded heavily in the 1980s and boomed in the 1990s. The quick expansion of the industry was possible because of the following unique nature of the industry.
The technology is less complicated (easy to transfer), Machineries are cheap and easy to operate (sewing machines), A large female labor force that is easy to train is readily available.
the intensity of competition. the drivers of industry change.45 billion 76% 10% 2 . Although progress can be measured in many ways. Bangladesh is mainly export oriented country for this Industry. I) Size Currently there are around 4000 factories are available in the market. the keys of competitive success. This tool kit provides a way of thinking strategically about any indu stry’s overall situation and analysis that what they should do to make profit. Figure: Components of Macro Environment Industry Analysis Industry and competitive analysis uses a tool kit of concepts and techniques to get a clear idea about the industry traits. For this reason. the most definite way is to see the market growth rate.Situation Analysis There are two part of situation analysis: Industry Analysis Company Analysis Now we are taking about the situation analysis on industry. External or macro environment which is industry analysis based on situation analysis. Number OF factories Number of labor force Profitability Export earnings Contribution to GDP 4000 3. and the industries profit outlook. There are several factors which play a vital role in tea industry.5 million 12. They have been discussed as follows: a) Market Size and growth rate: Market size and growth rate shows the actual scenario of an industry and Garment industry is not an exception. competitive analysis aims at developing insightful answers to seven following questions: Question 1: What are the Industry’s Dominant Economic Traits? The factor which dominates or controls the industry is called industry dominant economic traits. the market positions and strategies of rival companies. The current scenario gives us the feeling that the market size is consist of a large portion of our economy. The market size of the RMG industry is huge.
As building a Garment industry have moderate complexity and moderate amount of capital is required. The growth rate of this industry is increasing day by day as the population of Bangladesh is increasing rapidly. For this industry both the entry and exit barrier is moderate. b) Scope of Competitive Rivalry: Scope of competitive rivalry is strong as competition in this industry is very strong. Export and import policy of the country also affects the Industry. ii) Moderate capital requirements and/or almost same resource requirements for every company. As capital is required moderate amount so entry barriers are not so high. 3 . Some of them are very large in size with good facilities and others the of moderate size. e) Entry/Exit Barriers: Entry and Exit barriers act as market strength point of the market.60% annually. The scenario has been changed in recent years because of open market economy.ii) Growth Rate The growth rate of RMG sector is 21. And this is being discussed as follows: Entry Barriers: i) Ability to gain access to specialized technology. so the chance of getting threat from a new competitor is very high. emergence of new entrants in the domestic market with low price and rapid increase of internal demand. If they want to establish backward integration they need to establish their facilities that provide them with values and also increase employment and productivity. So the number of competitors and their market size is large. they need to focus on their strength point. They can easily integrate with the distribution channel of garments and bring their product to the customers. Ready mate garments has been the major exportable items of Bangladesh since 1980s. Factories from outside posing threat to this sector are also of large size and providing an extra force in international market. But local consumption is increasing day by day. But the existing competitors are very strong (inside our country and outsides). So. We had a captive export market in some countries to export products. It can easily make the forward integration. c) No of competitors and their relative sizes: There are4000mills all over the Bangladesh. Tea industry is managed by BGMEA. The internal demand of ready mate garment is not that much. d) Prevalence of backward/forward integration: There is a moderate domestic market to supply if garment products can be produced profitably in Bangladesh.
An economy of scale is a long run concept and refers to reductions in unit cost as the size of a facility. Export earning was 8. h) Scale economies and experience curve effect:I) Scale economies: Economies of scale means when production increases per unit of cost decreases. Bangladesh is one of the largest exporters of the world. Therefore. There is no reason why Bangladesh should not be able to supply more of its Textile& RMG products in the international market.Exit Barriers:i) ii) Making frequent loss in capital investment Large amount of employees are employed All company has to invest a lot of money to build up the entire network inside and outside of the country. Different factories produce more or less same quality product. increases. so they cannot easily quit the industry. The customers of this industry are aware of the product quality and design. f) Nature and pace of technological change: In case of Garments industry of Bangladesh. In case of garment industry. there is an existence of economies of scale.10 billion taka from this industry. it refers that the exit barrier is high because an investor cannot liquid all its asset and go away to another industry. Bangladesh is one of the top 5 exporters in this sector. or scale. there is a huge increase in demand for Ready Mate Garment product in international market. However. technological changes are going on recent time. In Bangladesh RMG sector is operating in private so if there is any need for technological advancement companies can easily mobilize their resources to get them. so all the factories operating in the industry has an access to economies of scale than other country. Factories which can afford trying get better technology from outside and also making the existing labor force enable to make greater productivity. g) Product and customer characteristics: The product of Garment industry is generous all over the country. As Bangladesh has lowest labor cost. 4 .
In case of Bangladesh. Currently RMG earns the lion’s share of foreign exchange earnings. To measure both the concepts we need to deal with the unit costs of production where as importers do not manufacture the sets. Years 2006 2007 2008 2009 Conclusion: Export earnings In dollar 8. the mills are not fully utilizing the capacity due to local ineffective labor force and inadequate power supply.000. china.24 12. Other Ready Mate Garments producing countries like India.45 In taka 810.10 8.000.ii) Experience Curve Effect: An experience curve exists when a company’s unit costs decline as its cumulative production volume increases. emergence of new entrants in the world market with low priced product and rapid increase of internal demand.400. All the components of producing Garment products are favorable in Bangladesh. women empowerment and poverty alleviation.45 billion in next few years. and some other countries have relative advantages to supply textile products at a lower price that makes export market extremely competitive for Bangladesh.We can say that it is very much attractive industry in context of Bangladesh.000 887. Srilanka. The industry need to access new technology in case of using low producing technology and trained and skill labor to use the available capacity. Export earnings increased rapidly from 8.000. The sector has created employment opportunities for about two million people of which 70 percent are women who mostly come from rural areas. Indonesia. I) Capacity utilization and resource requirements RMG is the major exportable items of Bangladesh since 19780s. j) Profitability of RMG industry Garment industry is increasing its profit day by day but is still a large portion of its profit is not claimed by Bangladeshi companies.24 billion and 10. which provides a competitive edge over its competitors.87 billion to 10.000. Export of Bangladesh in the year 2006 was 8. Thus the industry helps in the country’s social development. They need to focus on economies of scale and trade barrier.000.87 10.000 One of the key advantages of the RMG industry is its cheap labor force.000 102.10 billion.000 124. So these two theories are not applicable for this industry.500. 5 . they import the sets from abroad.000.24 to 12. The scenario has been changed in recent years because of open market economy.
com/bangladesh/Bangladeshi_RMG_Sector http://bizcovering.wikipedia.References: www.unescap.com/business/the-top-10-things-you-need-to-know-about-the-strategicmoves-your-rivals-are-likely-to-make-next-an-analysis-of-how-to-stay-one-step-aheadof-the-competition/#ixzz1IZgbG5ni 6 .org/tid/publication/aptir2456_haider www.