You are on page 1of 9

SWOT

&
Bangladesh Ready Made Garment
(RMG) Sector
SWOT is a strategic planning method used to evaluate the S trengths, W
eaknesses, O pportunities, and T hreats involved in a project or in a
business venture. It involves specifying the objective of the business venture
or project and identifying the internal and external factors that are favorable
and unfavorable to achieving that objective. The technique is credited to
Albert Humphrey, who led a research project at Stanford University in the
1960s and 1970s using data from Fortune 500 companies.

Strategic and Creative Use of SWOT Analysis

Strategic Use: Orienting SWOTs to an Objective


If SWOT analysis does not start with defining a desired end state or
objective, it runs the risk of being useless. A SWOT analysis may be
incorporated into the strategic planning model. An example of a strategic
planning technique that incorporates an objective-driven SWOT analysis is
SCAN analysis. Strategic Planning, including SWOT and SCAN analysis,
has been the subject of much research.

* S trengths: attributes of the organization that is helpful to achieving


the objective.
* W eaknesses: attributes of the organization that is harmful to
achieving the objective.
* O pportunities: external conditions those are helpful to achieving
the objective.
* T hreats: external conditions which could do damage to the
business's performance.

Identification of SWOTs is essential because subsequent steps in the process


of planning for achievement of the selected objective may be derived from
the SWOTs.

First, the decision makers have to determine whether the objective is


attainable, given the SWOTs. If the objective is NOT attainable a different
objective must be selected and the process repeated.
Creative Use of SWOTs: Generating Strategies
If, on the other hand, the objective seems attainable, the SWOTs are used as
inputs to the creative generation of possible strategies, by asking and
answering each of the following four questions, many times:
 How can we Use each Strength?
 How can we improve each Weakness?
 How can we exploit each Opportunity?
 How can we mitigate each Threat?

Ideally a cross-functional team or a task force that represents a broad range


of perspectives should carry out the SWOT analysis. For example, a SWOT
team may include an accountant, a salesperson, an executive manager, an
engineer, and an ombudsman.

Evidence on the Use of SWOT


SWOT analysis may limit the strategies considered in the evaluation. "In
addition, people who use SWOT might conclude that they have done an
adequate job of planning and ignore such sensible things as defining the
firm's objectives or calculating ROI for alternate strategies." Findings from
Menon et al. (1999) and Hill and Westbrook (1997) have shown that SWOT
may harm performance. As an alternative to SWOT, J. Scott
Armstrong describes a 5-step approach alternative that leads to better
corporate performance.

These criticisms are addressed to an old version of SWOT analysis that


precedes the SWOT analysis described above under the heading "Strategic
and Creative Use of SWOT Analysis." This old version did not require that
SWOTs be derived from an agreed upon objective. Examples of SWOT
analyses that do not state an objective are provided below under "Human
Resources" and "Marketing."

Internal and external factors


The aim of any SWOT analysis is to identify the key internal and external
factors that are important to achieving the objective. These come from
within the company's unique value chain. SWOT analysis groups key pieces
of information into two main categories:
*Internal factors – The strengths and weaknesses internal to the
organization.
*External factors – The opportunities and threats presented by the
external environment to the organization.

The internal factors may be viewed as strengths or weaknesses depending


upon their impact on the organization's objectives. What may represent
strengths with respect to one objective may be weaknesses for another
objective. The factors may include all of the 4P's; as well as personnel,
finance, manufacturing capabilities, and so on. The external factors may
include macroeconomic matters, technological change, legislation, and
socio-cultural changes, as well as changes in the marketplace or competitive
position. The results are often presented in the form of a matrix.

SWOT analysis is just one method of categorization and has its own
weaknesses. For example, it may tend to persuade companies to compile
lists rather than think about what is actually important in achieving
objectives. It also presents the resulting lists uncritically and without clear
prioritization so that, for example, weak opportunities may appear to balance
strong threats.

It is prudent not to eliminate too quickly any candidate SWOT entry. The
importance of individual SWOTs will be revealed by the value of the
strategies it generates. A SWOT item that produces valuable strategies is
important. A SWOT item that generates no strategies is not important.

Use of SWOT Analysis


The usefulness of SWOT analysis is not limited to profit-seeking
organizations. SWOT analysis may be used in any decision-making situation
when a desired end-state (objective) has been defined. Examples include:
non-profit organizations, governmental units, and individuals. SWOT
analysis may also be used in pre-crisis planning and preventive crisis
management.
SWOT-landscape analysis
The SWOT-landscape grabs different managerial situations by visualizing
and foreseeing the dynamic performance of comparable objects according to
findings by Brendan Kitts, Leif Edvinsson and Tord Beding (2000).

Changes in relative performance are continuously identified. Projects (or


other units of measurements) that could be potential risk or opportunity
objects are highlighted.

SWOT-landscape also indicates which underlying strength/weakness factors


that have had or likely will have highest influence in the context of value in
use (for ex. capital value fluctuations).

Corporate planning
As part of the development of strategies and plans to enable the organization
to achieve its objectives, then that organization will use a
systematic/rigorous process known as corporate planning. SWOT alongside
PEST/ PESTLE can be used as a basis for the analysis of business and
environmental factors.
* Set objectives – defining what the organization is going to do
* Environmental scanning
** Internal appraisals of the organization's SWOT, this needs to
include an assessment of the present situation as well as a portfolio of
products/services and an analysis of the product/service life cycle
* Analysis of existing strategies, this should determine relevance
from the results of an internal/external appraisal. This may include
gap analysis which will look at environmental factors
* Strategic Issues defined – key factors in the development of a
corporate plan which needs to be addressed by the organization
* Develop new/revised strategies – revised analysis of strategic issues
may mean the objectives need to change
* Establish critical success factors– the achievement of objectives
and strategy implementation
* Preparation of operational, resource, projects plans for strategy
implementation
* Monitoring results – mapping against plans, taking corrective
action which may mean amending objectives/strategies.
Human resources
A SWOT carried out on a Human Resource Department may look like this:

Strengths Weaknesses Opportunities Threats


Developed Reactive rather New management HR contribution
techniques for than pro-active; team, wanting to not recognized by
dealing with major needs to be asked improve overall top management
areas of HR, job rather than organizational who by-pass it by
evaluation, developing effectiveness employing
psychometric unsolicited ideas through external
testing and basic organizational consultants
training development and
cultural
management
programmers

A SWOT carried out by an individual manager could look like this:

Strengths Weaknesses Opportunities Threats


Enthusiasm, Not good at More general De-centralization
energy, achieving results management having the effect
imagination, through undirected opportunities of removing
expertise in use of personal requiring departments where
subject area, energies, trouble at development of the individual is
excellent track expressing new managers employed and
record in themselves orally eliminating middle
specialized area and on paper – management
may have ideas layers to form
but these come flatter structure of
over as incoherent, organization
management
experience and
expertise limited

SWOT analysis may limit the strategies considered in the evaluation. J.


Scott Armstrong notes that "people who use SWOT might conclude that
they have done an adequate job of planning and ignore such sensible things
as defining the firm's objectives or calculating ROI for alternate strategies."
[2]
Findings from Menon et al. (1999) [3] and Hill and Westbrook (1997) [4]
have shown that SWOT may harm performance. As an alternative to SWOT,
Armstrong describes a 5-step approach alternative that leads to better
corporate performance.[5]

These criticisms are addressed to an old version of SWOT analysis that


precedes the SWOT analysis described above under the heading "Strategic
and Creative Use of SWOT Analysis." This old version did not require that
SWOTs be derived from an agreed upon objective. Examples of SWOT
analyses that do not state an objective can be "Human Resources" and
"Marketing."

SWOT

Analysis of Bangladesh Ready Made Garment (RMG) Sector:

The Bangladesh readymade Garment Industry has achieved great success


over a short time of period. The garments industry has become the main
source of export and major driver of the GDP of Bangladesh. However the
global market environment for textile and clothing industry is in transitional
stage and will change at the end of the phasing out quota. The change is
global trade will create new challenges for the Bangladesh RMG industry.
The quota free business environment will allow the competitors to take away
the global market share from Bangladesh.

Strength:

• Low labor cost.


• Energy at low price.
• Easily accessible infrastructure like sea road, river and air
communication.
• Accessibility of fundamental infrastructure.
• FDI is legally permitted.
• Moderately open economy, particularly in the export promotion
zones.
• GSP under EBA for latest developed applicable.
• Improved GSP advantages under Regional Cumulative.
• Looking forward to duty free access to US.
• Investment assured under Foreign Private Investment Act, 1980 which
secures all foreign investments in Bangladesh.
• OPIC’s insurance and finance agendas operable.
• Bangladesh is a member of Multilateral Investment Guarantee Agency
under which protection and safely measures are available.
• Adjudication service of the international centre for the settlement of
Investment Dispute offered.
• Excellent tale- communication network.
• English is spoken widely which make communication easy.
• Bank interest @7% for financing exports.
• Convenience of duty free custom bonded warehouse.

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.
• The machinery required to assess add on a garment or increase
competence are missing most industries.
• Fewer process units for textiles and garments.
• Sluggish backward or forward blending procedure.
• Incompetent’s ports, entry or exit complicated loading unloading
takes much time.
• Speed money culture.
• Time consuming custom clearance.
• Subject of natural calamities.

Opportunity:
• EU is willing to establish industry in big way as an option of china
particularly for knits, including sweaters.
• Bangladesh is included in the Last Developed Countries with which
US is committed to enhance export trade.
• If skill 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.
• Chittagong port is going to be handed over to the foreign operator,
which will make the port’s service much faster.
• Bangladesh is going to gain the political stability, which will make
foreign trade much more attractive.

Threat:
• China is the 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.
• Some African and Caribbean countries have enjoyed zero tariff
facility under AOA act that helps them to be more competitive
relative to Bangladesh.