 Introduction of Garments Industry inBangladesh

Since independence, the economy of Bangladesh is dependent on agriculture as most of the people live in rural areas. The goal of the government policy is to reduce poverty by receiving the maximum output from agriculture and attains self-sufficiency in food production. Beside agriculture, the development of export sector is under greater consideration. Exports from Bangladesh have both grown and changed substantially as time goes on. After the birth of Bangladesh, jute and tea were the most export-oriented sectors. But with the constant threat of flooding, declining jute fiber prices and a significant decrease in world demand, the contribution of the jute sector to the country‘s economy has deteriorated (spinanger, 1986). After that attention has turned to the role of manufacturing sector, especially in Garment Industry. The garment industry of Bangladesh has been the key export division and a main source of foreign exchange for the last 25 years. At present, the country generates about $5 billion worth of products each year by exporting garment. The industry provides employment to about 3 million workers of whom 90% are women. Two nonmarket elements have performed a vital function in confirming the garment industry's continual success; these elements are (a) quotas under Multi- Fiber Arrangement (MFA) in the North American market and (b) special market entry to European markets.

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Bangladesh RMG: RMG earning 74% of countries foreign currency through export. USA & Europe are main export region. Using Multi-Fiber arrangement (MFA) restriction. Entered into USA, Canada and EU market Withdrawn MFA restriction by 2005. Depend on INDIA for import fabrics. Textile categories:  Public,  Handloom  Private Elate Fashion Ltd.: Established in 1998 Private company Directed by A.T.M. RezaurRahman Export oriented company. Main buyers; USA Main product focused on woven wears 350 Male workers 700 female workers

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 Development Bangladesh

of

Garments

Industry

in

In the field of industrialization, role of textile industry is found very prominent in both developed and developing

countries. Economic history of Britain reveals that in the 18th Century the cotton mills of Lancashire in Britain ushered in the first industrial revolution of the world. Moreover, during the last 200 years or more many countries of the world have used textile and clothing industry as an engine for growth and a basis for attaining economic development (Ahmed, 1991). Over the past few years garment industry is found to have played such an important role in the process of industrialization and economic growth. This industry is infect trying to put the wheel of her declining economic back to the track by giving essential life blood to it (Chowdhury, 1991). The growth of garment industry in Bangladesh is a comparatively recent one. In the British period there was no garment industry in this part of the Indo-Pak-Sub-Continent. In 1960 the first garment industry in Bangladesh (Then East Pakistan) was established at Dhaka and till 1971 the number rose to give (Islam, 1984). But these garments were of different type intended to serve home market only. From 1976 and 1977 some entrepreneurs came forward to setup 100% export oriented garment industry. Both domestic and international environment favored the rapid growth of this industry in Bangladesh. By mid-seventies the established developed suppliers of garments in the world markets i.e. Hong Kong, South Korea, Singapore, Taiwan, Thailand, Malaysia, Indonesia, Srilanka and India were severely constrained by the quota restrictions imposed by their major buyers like USA, Canada and European Union. To maintain their business and competitive edge in the world markets, they followed a strategy of relocation of garment factories in those countries, which were free from quota restrictions and at least same time had enough trainable cheap labor. They found Bangladesh as one of the most suitable countries. Available records show that the first consignment of garments was exported from the country in 1977 by Reaz and Jewel Garment. Desh Garment was the first biggest factory that started functioning at Chittagong in 1977. In fact that was the humble beginning of new joint venture garment factory in Bangladesh. Thereafter many entrepreneurs became interested and started to setup garment factories following the Desh garment and realizing the future prospects globally as well. Available records also show that one of the reasons of the growth of garment industry in Bangladesh is the collaboration of a local private garment industry, Desh garment with a Korean company, Daewoo. As part of its global strategies, the Daewoo Corporation of South Korea became interested in Bangladesh when the Chairman, Kim Woo-Choong, proposed an ambitions joint venture to the Government of Bangladesh which involved the development and operation of tire, leather goods, cement and garment factories (Rock, 2001). South Korean Company, Daewoo, a major exporter of garments, was looking for opportunities in countries for using their quotas subsequent to the signing of MFA in 1974. Because of the quota limitation for Korea after MFA, the export of Daewoo became restricted. Bangladesh as a LDC got the opportunity to export without any restriction and for this reason Daewoo interested to use Bangladesh for their market. The reason behind this desire was that Bangladesh will depend on Daewoo for importing raw materials and at the same time Daewoo will get the market in Bangladesh. For this desire Daewoo signed a five years collaboration agreement with Desh Garment. It included collaboration in the areas of technical training, purchase of machinery and fabric, plant setup and marketing in return for a specific marketing commission on all exports by Desh (Rock, 2001). The outcome of the collaboration of Desh-Daewoo was significant. In the first six years of its operation, Desh export value grew at an annual average rate of 90 percent reaching more than $ 5 million in 1986-87 (Mahmood, 2002). Rahman (2004) argued that the Desh-Daewoo collaboration is an important factor to the expansion and success of Bangladesh‘s entire garments export sector. In such a context, following Table-01 shows the trend of growth and development of garment industry in Bangladesh.

Table 1.1: Growth of Garments factories in Bangladesh Year 1971 1977 1981 1983 1984-85 1989-90 1994-95 1999-00 2004-05 2005-06 No. of Factory 5 7 78 141 384 759 2182 3200 4107 4250 Compound Growth Rate in % 5.77 82.70 34.45 65.03 14.60 23.52 7.96 5.12 3.48

Source: Various articles and Annual Report of BGMEA The Table-01 shows that the growth was very slow till 1977 and got momentum from 1977 to 2005-06 in terms of number of industry. But the compound growth rate was highest till 1981 and the rate was very good during 1989-90 to 1994-95 and thereafter i.e. 1994-95 to 2004-05, the industrial growth has been declined though the numbers of industries have been increased. The capacity as well as number of equipments is very good indicator to examine the actual position of the garment industry as well as size of the industry. In such a context, the following Table deals in this regard.

Table 1.2: Garments Industries with number of Machine Year Garment Industry having No of Machine Upto 100 101 – 200 201 and over 2253 (64) 726 (21) 531 (15) 2275 (62) 773 (21) 620 (17) Total 3510 (100) 3668 (100)

2004 2005

Source: Annual Report of BGMEA. Figures in parentheses indicate percentage

From the Table 02 it is found that more than half of the total garment industries in Bangladesh have the number of machines upto 100 or less than 100 and very few industries have the machine more than 200. It indicates that the small scale industries have been dominated in the garment

sector.

 Contribution of Garments Industry to the Economy
Garments Industry occupies a unique position in the Bangladesh economy. It is the largest exporting industry in Bangladesh, which experienced phenomenal growth during last two decades. By taking advantage of an insulated market under the provision of Multi Fiber Agreement (MFA) of GATT, it attained a high profile in terms of foreign exchange earnings, exports, industrialization and contribution to GDP within a short span of time. The industry plays a key role in employment generation and in the provision of income to the poor. Nearly two million workers one directly and more than ten million inhabitants are indirectly associated with the industry (Ahmed and Hossain, 2006). The sector has also played a significant role in the socioeconomic development of the country. In such a context, the trend and growth of garments export and its contribution to total exports and GDP has been examined the following table shows the position.

Table 1.3: Growth and Trend of Garments Exports, and contribution to GDP (Amounts in Million USD)

Year

1984-85 1989-90 1994-95 1999-00 2004-05 2005-06

Garment Export (Min USD) 116 624 (40) 2228 (29) 4349 (14) 6418 (8) 7901 (23)

Total Export (Min USD) 934 1924 (16) 3473 (13) 5752 (11) 8655 (9) 10526 (22)

Share to Total Export in % 12.42 32.43 (21) 64.15 (15) 75.61 (3) 74.15 (-1) 75.06 (1)

Share to GDP in % 5.87 9.23 (9) 10.63 (3) 12.64 (2)

Source: Economic Review of Bangladesh, BGMEA and Computation made by author. Figures in parentheses indicate compound growth rates (CGR) for the respective periods.

It is revealed from the Table 03 that the value of garment exports, share of garments export to

total exports and contribution to GDP have been increased significantly during the period from 1984-85 to 2005-06. The total garments export in 2005-06 is more than 68 times compared to garments exports in 1984-85 whereas total country‘s export for the same period has increased by 11 times. In terms of GDP, contribution of garments export is significant; it reaches 12.64 percent of GDP in 2005-06 which was only 5.87 percent in 1989-90. It is a clear indication of the contribution to the overall economy. It also plays a pivotal role to promote the development of linkage small scale industries. For instance, manufacturing of intermediate product such as dyeing, printing, zippers, labels has began to take a foothold on limited scale and is expected to grow significantly. Moreover it has helped the business of basing, insurance, shipping, hotel, tourism and transportation. The sector also has created jobs for about two million people of which 70 percent are women who mostly come from rural areas. The sector opened up employment opportunities for many more individuals through direct and indirect economic activities, which eventually helps the country‘s social development, woman empowerment and poverty alleviation. In such a way the economy of Bangladesh is getting favorably contribution from this industry.

 Garments Product Portfolio and its Diversification
The specific character of products and level o f industrial development indeed determines its variance of product diversification. In such a context, the product mix, product line as well as product diversification are very important strategies for any industry to develop its market by meeting the present market requirements. For the garments industry it is also very important because product diversification will call for developing capability for product development and product design specially in response to fast changes in fashion. The growth pattern of garments export can be categorized into two distinct phases. During the initial phase it was the woven category. Second phase is the emergence of knitwear products. On the other hand, an analysis of the product mix of the garments industry revealed that so far Bangladesh has been able to export very limited categories of products. In such a context, an attempt has been made to examine the growth and trend of product portfolio or categories of products exported from Bangladesh. The following Tables deal with the value and quantity of different garment products export including their growth pattern from 1992-93 to 2005-06. Table 1.4: Pattern of Woven and Knitwear Garments Export (Figures in Million)

Year 1992-93 1994-95 1999-00 2004-05 2005-06 CGR (%)

Export in Million USD Woven Knit Total 1240 (86) 205 (14) 1445 1835 (82) 393 (18) 2228 3081 (71) 1268 (29) 4349 3598 (56) 2820 (44) 6418 4084 (52) 3817 (48) 7901 9.60 25.22 13.96

Export in Million Dozen Woven Knit Total 36 (77) 11 (23) 47 47 (75) 16 (25) 63 67 (60) 45 (40) 112 92 (43) 120 (57) 212 109 (40) 165 (60) 274 8.90 23.16 14.52

Source: Garments Export Data, BGMEA and Export Promotion Bureau-EPB. Figures in parentheses indicate the share in percentage. CGR stands for compound Growth Rate.

From the Table 04 it is evident that the compound growth rate of knit garment export is more than woven garment export both in terms of value and quantity for the period of 1992-93 to 2005-06. The share of knit garments in total export has been increased significantly both in terms of value and quantity. The share of woven garment in total garments export has been decreased from 86 percent in 1992-93 to 52 percent in 2005-06. It is observed that the demand for knit garment is increasing in the export market. It is also observed that the export quantity of knit garments has been exceeded the export quantity of woven garments in 2005-06. The position can be better explained if we look into the more details of the product mix in the above categories of garments. The garment sector has been able to diversify the product base ranging from ordinary shirts, T-shirts, trousers, shorts, pajama, ladies and children‘s wear to sophisticated high value items like quality shirts, branded jeans, jackets, sweater, embroidered wear etc. In such a context, an attempt has been made to classify the garments export into different products in order to understand product diversification strategy and its relative importance and performance as well. The following Table shows the picture in this regard.

Table 1.5: Pattern of Export Performance of Different Garments Products (Amount in Million USD) Year 1994-95 1999-00 2004-05 2005-06 CGR(%) Shirts 791 (36) 1021 (23) 1053 (16) 1057 (13) 2.67 Trousers Jackets 101 (5) 147 (7) 484 (11) 440 (10) 1668 (26) 2165 (27) 32.13 430 (7) 390 (5) 9.28 T-Shirts 232 (10) 564 (13) 1350 (21) 1782 (23) 20.36 Sweaters N/A 325 (8) 893 (14) 1044 (13) 21.47 Others N/A 1515 (35) 1024 (16) 1463 (19) -

Source: Garments Export Data, BGMEA and Export Promotion Bureau-EPB. Figures in parentheses indicate the share in percentage. CGR stands for compound Growth Rate.

From the Table 05, it is evident that the highest compound growth rate has been found in Trousers 32.13 percent, followed by T-shirts 20.36 percent, Jackets 9.28 percent, and T-Shirt 2.67 percent respectively during the period of 1994-95 to 2005-06. The rate of Sweater is also significant during the period of 1999-2000 to 2005-06. It is observed that the share of Trousers and T-Shirt in the total garment export is increasing. On the other hand, the share of shirts and

Jackets is declining trend. The Figures indicate that Bangladesh has concentrated in the production and export of Trousers, T-Shirts and Sweater. This mean‘s that there is a scope and actually need for structural change in product mix.

 Garments Market Diversification
The international textile and garment industry has undergone several shifts in production and marketing since the 1950s. The first shift occurred in the 1950x and early 1960s when production moved from North America and Western Europe to Japan. The second supply shift was from Japan to the Asian newly industrialized economics (NIEs)-Hong Kong, Taiwan, South Korea and Singapore- and this permitted the latter group to dominate global textile and garment exports in the 1970s and 1980s. Over the past 10 to 15 years, there has been a third shift as production within Asia has moved from the NIEs to China and South East and South Asian exporters and as exports from non-Asian countries, in particular control America, the Caribbean, Eastern Europe and North Africa, have increased substantially. These production shifts have been influenced by a range of factors, including the distortions to international trade arising from MFA quota system and labour cost differentials. In this scenario, Bangladesh garment industry is well placed to withstand the increase in competition in its export markets. Our export market for garments products is spread over a vast space of more than 20 countries with USA, UK, France, Canada, Germany, Belgium and Middle Eastern countries being the major and notable ones. Initially, Bangladesh has concentrated only in a few markets. It has concentrated in USA, Canada and Europe. The competitors of Bangladesh, for example, India has continued to expand its trade, diversify its markets and change product mix of its exports. As the recent performances indicate, the production and marketing capabilities of Bangladesh have increased substantially. But still it lacks the core competence necessary to stay in a highly competitive market which one can anticipate in present post MFA period. If it wants to increase its world market share and competitive edge, it needs to diversity its products and markets. In this context, it is imperative to analyse the major export market for Bangladeshi garments product. The following Table shows the major share of export market in USA, EU and other countries in this regard. Table 1.6: Selected Region-wise share of Garment Export in percentage European USA & Other Countries EU Countries 2001-2002 42.67 55.43 98.10 1.90 2002-2003 38.02 57.12 95.14 4.86 2003-2004 28.64 65.42 94.06 5.94 2004-2005 30.64 64.24 94.88 5.12 2005-2006 33.67 49.77 83.43 16.57 Source: Bangladesh Bank Quarterly; Publication of Bangladesh Bank From the Table 06 it is observed that Bangladesh garment export market has concentrated in USA and EU till 2004-05 which indicates Bangladesh has successfully established a remarkable presence in the world markets, particularly in the US and EU markets. In the year 2005-06 a Year USA

successful turnaround was observed in exports to third countries which is about 16.57 percent of total export market and it was only 1.90 percent in 2001-2002. It is expected that the trend of market diversification will continue and this will help to maintain growth momentum of export earnings.

 Post MFA Scenario in Bangladesh
The textile and apparel industries have led industrialization n at the early stage of development in many countries of the world. Most developed countries which have lost competitiveness have imposed quantitative restrictions on the trade in textiles and clothing since the 1950s, although there has been progress in trade liberalization as a whole. Over the last thirty years, international trade and investment in the global textile and garment (T&G) sectors has been influenced by Multi-Fiber Agreement (MFA) quantitative restrictions (quotas) applied by the major developed country importers (the United States, the European Union, Canada and Norway) on T&G exports from (predominantly) developing countries. MFA quotas were negotiated bilaterally and applied on a discriminatory basis to some exporting countries but not to others, thus differing from country to country in both product coverage and the degree of restrictiveness. In such a context, the Multi-Fiber Arrangement governed the trade in textiles and clothing from 1974 to 1994. This arrangement was superseded in 1995 by the Agreement on Textiles and Clothing (ATC) under the administration of the World Trade Organization (WTO). From 1 January 2005 all such quantitative restrictions on the trade in textiles and clothing were phased out, and finally abolished. Historically speaking that as per requirement of The ATC, all MFA quotas on T&G products be removed over a ten-year transition period split into three phases and ending on 1 January 2005, thus finally incorporating international T&G trade into general GATT rules that prohibit discriminatory measures and call for the reduction and elimination of quantitative restrictions. The quota system under the MFA has distorted international T&G trade and has resulted in global welfare losses since quota limits on the exports of selective producers have prevented an allocation of resources to the most efficient T&G producers and prevented prices in quota protected developed country markets from falling. Competitive exporting countries with comparative advantages in T&G production have been restrained from expanding under the MFA quota system, while relatively uncompetitive producers have enjoyed guaranteed market access (up to the quota limit) to developed country markets (Spinanger, 1999). In such a context, there was serious concern that low income countries, such as Bangladesh, Cambodia and the like, which relied heavily on the garment industry, would suffer from the keen competition expected to be triggered by the complete liberalization of trade in textiles and clothing from the beginning of 2005. From the many corners it was predicted that China would expand its exports and India would follow, and that the other relatively small exporters would suffered seriously from the competition of these two giants. However, it turned out that some garment-exporting Least Developed Countries (LDCs), such as Bangladesh, Cambodia and Haiti, faired very well throughout the year 2005. In this context, an attempt has been made to examine the export data

of selected countries during MFA and post MFA to US and EU markets in order to assess the indicative impact of post MFA scenario in Bangladesh as well as other largest garments exporters. The following Tables show the picture in this regard. Table 1.7: Exports of Knit and Woven Garments to the United States Rank Rate of Change (%) 2003 2004 2005 2003-04 2004-05 1 China 8,690 10,723 16,808 23.39 56.75 2 Mexico 7,098 6,845 6,230 -3.56 -8.98 3 Hong Kong 3,732 3,878 3,523 3.93 -9.16 4 India 2,056 2,277 3,058 10.74 34.29 5 Indonesia 2,155 2,402 2,882 11.47 19.99 6 Bangladesh 1,759 1,872 2,268 6.45 21.15 13 Cambodia 1,229 1,418 1,702 15.42 20.06 Source: U.S. Department of Commerce, Bureau of Census cited in Yamagata, 2006 Table 1.8: Exports of Knit and Woven Garments to the EU Rank Origin Amount (Million US$) 2003 56,918 10,913 8,112 3,471 4,124 2,599 475 2004 65,552 13,714 9,348 4,578 4,572 3,020 643 2005 69,642 20,334 9,790 4,346 4,285 3,988 587 Rate of Change (%) 2003-04 2004-05 15.17 6.24 25.66 48.27 15.24 4.72 31.90 -5.08 10.87 -6.28 16.23 32.02 35.27 -8.77 Origin Amount (Million US$)

1 2 3 4 5 19

All Countries China Turkey Bangladesh Romania India Cambodia

Source: Eurostat cited in Yamagata, 2006. Tables 7 and 8 show the trends in garment exports to t heUnited States and EU from the five largest garment exporters and the two leading exporters among the LDCs, Bangladesh and Cambodia. It was revealed that China and India expanded garment exports to the US and EU, the world‘s two largest markets. Along with China and India, Bangladesh and Cambodia have also increased their exports to the United States during 2005 by more than 20 percent. Though their garment exports to the EU declined between 2004 and 2005, the drops were not significant; and the growth in the same figures by more than 30 percent between 2003 and 2004 surpassed the decline in 2005 (Table 8). As a whole, the sum of garment exports to the two largest markets grew by 2.54 percent for Bangladesh and by 11.06 percent for Cambodia in 2005. Since the US and EU are going to be imposing new restrictions on textile and garment imports from China for

at least a couple of years, exports from that country will slow down, making room for the remaining garment exporters to increase growth. Thus, the prospects for Bangladesh to continue expanding its garment exports are encouraging.

 Displacement of Production in the Garment Industry
The global economy is now controlled by the transfer of production where firms of developed countries swing their attention to developing countries. The new representation is centre on a core-periphery system of production, with a comparatively small centre of permanent employees dealing with finance, research and development, technological institution and modernization and a periphery containing dependent elements of production procedure. Reducing costs and increasing output are the main causes for this disposition. They have discovered that the simplest way to undercharge is to move production to a country where labor charge and production costs are lower. Since developing nations provide areas that do not impose costs like environmental degeneration, this practice protects the developed countries against the issues of environment and law. The transfer of production to Third World has helped the expansion of economy of these nations and also speeds up the economy of the developed nations.

Garment industry is controlled by the transfer of production. The globalization of garment production started earlier and has expanded more than that of any other factory. The companies have transferred their blue-collar production activities from high-wage areas to low-cost manufacturing regions in industrializing countries. The enhancement of communication system and networking has played a key role in this development. Export-oriented manufacturing has brought some good returns to the industrializing nations of Asia and Latin America since the 1960s. The first relocation of garment manufacturing took place from North America and Western Europe to Japan in the 1950s and the early 1960s. But during 1965 and 1983, Japan changed its attention to more lucrative products like cars, stereos and computers and therefore, 400,000 workers were dismissed by Japanese textile and clothing industry. In impact, the second stock transfer of garment manufacturing was from Japan to the Asian Tigers - South Korea, Taiwan, Hong Kong and Singapore in 1970s. But the tendency of transfer of manufacturing did not remain there. The rise in labor charge and activeness of trade unions were in proportion to the enhancement in economies of the Asian Tigers. The industry witnessed a third transfer of manufacturing from 1980s to 1990s; from the Asian Tigers to other developing countries Philippines, Malaysia, Thailand, Indonesia and China in particular. The 1990s have been led by

the final group of exporters including Bangladesh, Srilanka, Pakistan and Vietnam. But China was leader in the current of the relocation as in less than ten years (after 1980s) China emerged from nowhere to become the world's major manufacturer and exporter of clothing.

 Bangladesh Garment Sector and Global Chain
The cause of this transfer can be clarified by the salary structure in the garment industry, all over the world. Apparel labor charge per hour (wages and fringe benefits, US$) in USA is 10.12 but it is only 0.30 in Bangladesh. This difference accelerated the world apparel exports from $3 billion in 1965, with developing nations making up just 14 percent of the total, to $119 billion in 1991, with developing nations contributing 59 percent. In 1991 the number of workers in the readymade garment industry of Bangladesh was 582,000 and it grew up to 1,404,000 in 1998. In USA, however, 1991-figure showed 1,106.0 thousand workers in the apparel sector and in 1998 it turned down to 765.8 thousand. The presented information reveals that the tendency of low labor charges is the key reason for the transfer of garment manufacturing in Bangladesh. The practice initiated in late 1970s when the Asian Tiger nations were in quest of tactics to avoid the export quotas of Western countries. The garment units of Bangladesh are mainly relying on the 'tiger' nations for raw materials. Mediators in Asian Tiger nations build an intermediary between the textile units in their home countries, where the spinning and weaving go on, and the Bangladeshi units where the cloth is cut, sewn, ironed and packed into cartons for export. The same representatives of tiger nations discover the market for Bangladesh in several nations of the North. Large retail trading companies placed in the United States and Western Europe give most orders for Bangladeshi garment products. Companies like Marks and Spencers (UK) and C&A (the Netherlands) control capital funds, in proportion to which the capital of Bangladeshi owners is patience. Shirts manufactured in Bangladesh are sold in developed nations for five to ten times their imported price. Collaboration of a native private garment industry, Desh Company, with a Korean company, Daewoo is an important instance of international garment chain that works as one of the grounds of the expansion of garment industry in Bangladesh. Daewoo Corporation of South Korea, as part of its global policies, took interest in Bangladesh when the Chairman, Kim Woo-Choong, offered an aspiring joint venture to the Government of Bangladesh, which included the growth and process of tyre, leather goods, and cement and garment factories. The Desh-Daewoo alliance was decisive in terms of getting into the global apparel markets at significant juncture, when import reforming was going on in this market following the signing of MFA in 1974. Daewoo, a South Korean leading exporter of garments, was in search of opportunities in nations, which had

hardly used their quotas. Due to the quota restriction for Korea after MFA, the export of Daewoo became limited. Bangladesh as an LDC got the chance to export without any constraint and for this cause Daewoo was concerned with the use of Bangladesh for their market. The purpose behind this need was that Bangladesh would rely on Daewoo for importing raw materials and at the same time Daewoo would get the market in Bangladesh. When the Chairman of Daewoo displayed interest in Bangladesh, the country's President put him in touch with chairman of Desh Company, an ex-civil servant who was seeking more entrepreneurial pursuits.To fulfill this wish, Daewoo signed a collaboration contract with Desh Garment for five years. The contract also incorporated the fields of technical training, purchase of machinery and fabric, plant establishment and marketing in return for a specific marketing commission on all exports by Desh during the contract phase. Daewoo also imparted an exhaustive practical training of Desh employees in the working atmosphere of a multinational company. Daewoo keenly helped Desh in buying machinery and fabrics. Some technicians of Daewoo arrived Bangladesh to establish the plant for Desh. The end result of the association of Desh-Daewoo was important. In the first six years of its business, i.e. 1980/81-86/87, Desh export value increased at an annual average rate of 90%, reaching more than $5 million in 1986/87.

It is claimed that the Desh-Daewoo alliance is a significant element for the growth and achievement of Bangladesh's entire garment export industry. After getting linked with Daewoo's brand names and marketing network, overseas buyers went on with buying garments from the corporation heedless of their origin. Out of the opening trainees most left Desh Company at several times to erect their own competing garment companies, worked as a way of moving knowledge all through the whole garment sector.It is essential to identify the outcomes of the process of moving production from high pay to low pay nations for both developing and developed nations. It is a bare fact that most of the Third World nations are now on the way to industrialization. In this procedure, workers are working under unfavorable working environment - minimal wages, unhealthy place of work, lack of security, no job guarantee, forced labor etc. The route of globalization is full of ups and downs for the developing nations. Relocations of comparatively mobile, blue-collar production from industrialized to developing nations, in some circumstances, can have troublesome effects on social life if - in the absence of efficient planning and talks between international organizations and the government and/or organizations of the host nation - the transferred action encourages urban-bound relocation and its span of stay is short. Another negative result is that the rise in employment and/or income is not expected to be satisfactorily large and extensive to lessen inequality. In connection with the negative results of relocation of manufacturing on employment in developed countries, we realize that in comparatively blue-collar industries, the growing imports from developing nations lead to

unavoidable losses in employment. It is held that development of trade with the South was a significant reason of the deindustrialization of employment in the North over past few decades.

After all employees who are constantly working under unfavorable circumstances have to bear the brunt. Work is under-control across the Bangladesh garment sector. Appalling working atmosphere has been brought to light in the Bangladesh garment industry. A research reveals that 90 percent of the garment employees went through illness or disease during the month before the interviews. Headache, anemia, fever, chest, stomach, eye and ear pain, cough and cold, diarrhea, dysentery, urinary tract infection and reproductive health problems were more common diseases. The garment factories gave bonus of different diseases to the employees for working. With a view to finding out a link between these diseases and industrial threats, health status of employees has been examined before and after coming in the garment work. At the end of examination, it was come out that about 75 percent of the garment workforce had sound health before they entered the garment factory.

The garment sector is disreputable for fires, which are said to have claimed over 200 lives in the past two years, though exact figures are tough to find. A shocking instance of absence of workplace safety was the fire in November 2000, in which almost 50 workers lost their lives in Narsingdi as exist doors were closed. From the above analysis of working atmosphere of garment sector, we can state that the working environment of most of the Third World nations, particularly Bangladesh remind us of earlier development of garment industries in the First World nations. The state of employment in many (not necessarily) textiles and clothing units in the developing nations take us back to those set up in the nineteenth century in Europe and North America. In a way, the Western companies are guilty of pitiable working atmosphere in the garment sector. The developed nations want to make more profit and therefore, force the developing nations to cut down the manufacturing cost. In order to survive in the competition, most of the developing nations select immoral practices. By introducing inflexible terms and conditions in the business, the global economy has left few alternatives for the developing nations.

 Labor Unrest in Garments Sector
Labor is an important input in industrial production. This is truer in garment industry of Bangladesh. Mechanization and automation have diminished the role of human element in industrial

not

establishments. In fact the role of the workforce has become highly critical in garment industry. Nor have the economic reforms belittled the significance of labor. Liberalization of economy has brought labor to centre stage. Human resource is taken to be an important factor to increase productivity, improve quality and reduce costs all necessary to survive in the competitive world. There are several issue related to labor. They are trade union movement, wage policy and industrial relation. Industrial labor in the garment sector has undergone important changes over the two decades. Most important changes are commitment to industry, protective legislation, status of the worker, employment pattern, growth of trade unionism, industrial disputes, and political interference and in some cases unfair labor practices. Despite the prevailing positive labor management relationship, the spiraling labor unrest in the Bangladesh RMG industry started on May 2005 after a knitwear factory owner rejected an 11-point charter of demands. The factory was completely gutted in the blaze. Protesting workers forced their way into an exclusive industrial zone for foreign investors and damaged machinery. These workers demanding unpaid wages and a weekly holiday smashed scores of vehicles and burn down factories in Savar, an industrial town near Dhaka. Among the 250 damaged units, at least 30 were owned by foreign investors in the Savar Export Processing Zone. According to Bangladesh Garment Manufacturers and Exporters‘ Association (BGMEA) nearly 300 factories, including 21 factories in the Savar Export Processing Zone (EPZ), were damaged during the three-day crisis. The total loss of the garment industry is around four billion taka (nearly $70 million). Many vehicles were also set on fire during the unrest, which left three workers dead and hundreds others wounded. This is reportedly the worst industrial rioting in Bangladesh in the ready-made garment industry which is the country‘s biggest export earner. The violence also dealt a serious blow to the industry‘s image apart from causing huge losses. Some trade union leaders blamed the outbreak on accumulated anger of workers, who even do not have any weekend. They alleged that some garment owners do not pay the worker their salaries in time and overtime regularly. The violent outburst of the workers crippled the industry for many days. Several quarters seen it interruption behind this development. On the other hand, another quarters seen it is an explosion of anger that remains unresolved for long. Protests over low wages and other exploitative conditions continued in the month of June 2005 too. The garment workers continued to hold rallies and clashed with law enforcers, leaving many people injured and few dead. Defying a ‗red alert‘ imposed by law enforcers at the Dhaka Export Processing Zone (DEPZ) and its adjoining industrial areas, workers were involved in clashes in the Savar, Ashulia and Gazipur areas. The deepening unrest in the garment industry forced the foreign investors to announce on June 2005 that they have shut their units as fresh violence flared up in the Export Processing Zone (EPZ). Investors of 92 units in the EPZ said that they will not reopen the units until the government gives guarantee of law and order in the area. They also requested the EPZ authority to declare the EPZ closed indefinitely to cool off the situation. Leaders of the garment factory owners‘ also urged the government to form an industrial police force to ensure a secure working environment for the apparel industry. They felt that the overall security situations in different industrial hubs were not risk free despite the government‘s deployment of huge security forces. It was true that in the year 2005 the political instability has been made worse by the simultaneous labor unrest in the economic lifeline of Bangladesh that is its garment industry. Initially the government and the

industry leaders underestimated the magnitude of the problem and tried to brush it aside by floating various conspiracy theories.

The garment industry in Bangladesh has been subject to several tests of resilience in recent years—global recession, energy shortage, input price increases, and labor unrest. Of late, the labor unrest has escalated apparently triggered by disagreement over re-fixation of minimum wage. The workers, for quite some time now, have been pressing for adjustment in minimum wage that was last increased in 2006, after 12 years, from Tk. 930* (about $60 in PPP) per month to Tk. 1,662 (about $108 in PPP) per month. The government in April 2010 committed that a new pay-scale for the RMG workers will be announced before Ramadan, and formed a Wage Board for making the wage recommendations. For reasons not yet fully understood, the labor unrest was reignited recently without waiting to hear what the Wage Board‘s recommendations are. However, it is abundantly clear that dissatisfaction with the nominal level of the minimum wage is at the center of the discord between garment owners and workers.When viewed from the poverty perspective, the upper poverty line measured in 2005 for Dhaka urban areas was Tk. 890 per capita per month. Considering a household size of 2.2 as assumed by the employers, the minimum wage (per month) should have been Tk. 1958 in 2005, Tk. 2249 in 2006 and Tk. 2809 in 2010 after adjusting for inflation. In addition, workers also should be allowed to share in the industry‘s economic prosperity along with the owners. Taking this into consideration, the reported government recommendation of Tk 3000 as minimum entry level wage appears reasonable.

Owners worry about loss of competitiveness as production cost is likely to increase with increase in wages. But this is not the only effect. Higher wages may allow workers to eat better to avoid illness and to be able to work harder and more productively. This is known as the efficiency wage theory which may be operative at such low level of wages. Owners must also be aware that agitation to press demand for higher wages in garments is now a regional phenomena. As competing countries concede to these demands, the loss of our competitiveness due to wage increase will be far less than may appear on the surface. Elate Fashion Limited

Elate Fashion Ltd is a 100% export oriented garment industry with woven production facilities of ready-made garments, such as Jog Sets, Padded Jackets, Shorts, Vests, Ski Dresses etc. The management of the company is well experienced in this sector. They have been in this trade for more than 19 years. Considering the experience, customer base and for the sake of business expansion, the management has set up this factory with modern equipment and facilities. The EFL Management is also keen to expand its production capacity with bigger floor for minimizing its per unit production cost, improvement of products quality as well as to face competitive international market along with the existing customers with a view to offer a lucrative and moderate price to grab orders from the international customers. The factory has been equipped with most modern and sophisticated machineries of renowned international brand to be imported from abroad at competitive price which has run by highly trained and skilled manpower. The factory is self-sufficient, production is continuous and of trouble-free operation ensuring timely delivery and shipment. This factory has rented industrial building in khilgoan which is approximately 33,000 SFT in 9 Floor.

 History of Elate Fashion Ltd
Mr. A T M RezaurRahman Managing director of the company, having 26 years of business experience in trading and garments industry. He is directly involved with garments industry since 1991 as one of the directors of Excel Industries Limited (EIL). Later, together his partner formed another industry namely Elate Fashion Ltd (EFL) in 1998.Established in 1998, by Mr. A T M RezaurRahman, the Managing Director of the company – Elate Fashion Limited started with 450 employees. The initial investment was almost 2 crore taka.Mr. RezaurRahman and A K M MahbubulAlam chose the location Khilgoa in center of Dhaka city and as it had the advantages of being placed between the Dhaka-Chittagong Highway (the place from where the raw materials come) and the Dhaka Road (the market). A rented industrial building in khilgoan is approximately 33,000 SFT in 9 Floor. In which Cutting department consist of 6,400 SFT, sewing department consist of 12,400 SFT, finishing department consist of 6,200 SFT, store is consist of 6,000 SFT and main office is 2,000 SFT. By 2010, EFL is planning to open up a new factory under BMRE concept at Peyarabagan, Vogra, Gazipur. The Proposed Project will be set in a fourstoried building having 54,000 Sft. in initial phase.This is a private limited company with two partners. While the managing director Mr. A T M RezaurRahman owns 60% of the share and controls most of the administrative works, and the General Manager Mrs. TaifunNahar who is a salaried employee controls all the production activities.To mention about the other partners, the chairman of the company Mr. MahbubulAlam with rest of 40% of the share.

 Capacity
The Factory runs 300 days in a year on a single shift 8 hour basis and in addition require overtime as per legal Law of the Country. Approximately 80,000 Sets Jog Suits per Month.

 Products
The major products of Elate Fashion Limited are focused mostly on Woven wears. At this point it must be referred that earlier it was discussed that woven wears bring about the most export earnings in the RMG and Textile industry. Therefore, it must also be mentioned that competition in the woven wear section is the highest and is almost twice as much as knitwear or others. Nevertheless, the products that Elate Fashion concentrates on are:Pant (Short & Long), Trousers, Shorts, Jog Suits, Heavy Jacket, Light Weight Jacket, Fleece Jacket, all sorts of outerwear etc.All of these products have their own variations in terms of sizes, colors, patterns and design. Separate product lines for different sexes are also maintained within each of the products. This therefore indicates that jackets, jogging suits or other products have male, female and children divisions with separate design pattern, color, sizes and patterns.

 Background of the Managing Director
The Managing Director Mr. A T M RezaurRahman the founder of Elate Fashion Ltd is completely a self-made man. He was born in 15th September 1954. Mr. A T M RezaurRahman finished his M.com in management from Dhaka University in 1977. He has 26 year of business experience, out of which 19 years in Garments trade. He decided to become independent and to open his own garments factory. It is his own dedication and effort that made him initiate and be successful in his ventures and thereby become the successful owner of a competitive and growing garments factory.

 Background of the Chairmen
The chairmen of Elate Fashion Ltd Mr. A K M MahbubulAlam born in 1 st January in 1955. He issocial science graduate (Sociology) from Dhaka University. During in 1990s both of them Mr.

RezaurRahman and Mr. MahbubulAlam have extensively visited the buyers and maintained the quality of the products which ultimately helped to cope with recent recession round the world.

 Account Relationship with AB Bank Limited
Mr. RezaurRahman, Managing Director and Mr. A KM MahbubulAlam, Chairman has been maintaining banking relationship with AB Bank Limited, Motijheel Branch since 1991 as director of Excel Industries Limited. Initially, EIL had stated banking with Motijheel Branch, AB Bank Limited since 1991. During these times the company dealt with some renowned customers like Rousso Apparels Group, Inc., USA, Outerstuff Ltd., USA, Athco Inc., USA, Castlewood Apparel Corp., USA, Paramount Apparel Group, USA. Based on the experience of EIL, the management has decided open another factory and it started its operation in 1997 in the name of Elate Fashions Limited (EFL). EFL also established relationship AB Bank Motijheel Branch.

A brief of the relations with AB Bank Limited are detailed below: Amount in BDT. Lac

Sl. No.

Particulars

Excel Industries Limited (EIL)

Elate Fashions Limited (EFL)

a. b. c.

Commencement Business Product Account Relationship AB Bank

of : : : with

1991 Jacket, Jogging suit 1991

1997 Jacket, Jogging suite 1997

Motijheel

Branch Since d. Present Credit Line : and Outstanding (As of June 08, 2010) Facility Back to Back LC OD Rev. TL Auto Loan Limit 800.00 100.00 217.00 6.90 Outstanding 492.73 111.89 217.00 6.59

Total

1123.90

828.21

e.

Business Performance

:

Year 200304 200405 200506 200607 200708 200809

US$ in Lac 921.26 134.81 370.75 3.90 -

Year 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09

US$ in Lac 1983.32 1944.74 1891.56 2426.28 2116.58 2799.76

Performance of EFL
3000 2500 2000 1500 1000 500 0 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09

f.

Main Importer

:

-

I. Rousso Apparels Group, Inc., USA II. Outerstuff Ltd., USA III. Athco Inc., USA IV. Castlewood Apparel Corp., USA V. Paramount Apparel Group, USA

 Machineries
All machines are Electro-mechanical latest model from world famous brand giving below description: SL# 01 02 03 04 05 06 NAME OF MACHINE PLAIN MACHINE VERTICAL MACHINE 2/NEEDLE MACHINE 2/NEEDLE CHAIN STITCH MACHINE OVER LOCK MACHINE KANSAI (PMD) QUANTITY 143 20 24 02 26 05 REMARKS

07 08 09 10 11 12 13 14 15 16 17 18 19 20

BUTTON HOLE MACHINE BUTTON STITCH MACHINE BARTACK MACHINE SNAP BUTTON MACHINE FEED OF THE ARM THREAD SUCKING MACHINE CUTTING MACHINE PADDING CUTTING MACHINE LABEL CUTTING MACHINE THREAD RECONNING MACHINE GAS BOILER MACHINE GENERATOR NEEDLE DETECTOR MACHINE BUTTON TEST MACHINE

02 02 08 08 02 01 03 01 02 01 01 01 01 01

 Employment Provided by EFL:
Elate Fashion Limited started with only 450 employees in 1998, it quickly expanded and had 650 employees by 2002. The plant expanded with the employees and took all of the Nine-storied building, which it leased previously. There were around 315 machineries in total for the 650 workers to run. As of 2007, Elate fashion Ltd has 1295 employees among 1050 are labor class workers and operates with 555 machineries. In Elate Fashion LTD it has mentioned that almost 95% of the labors are female workers. Among 1050 workers, 300 are male and 750 are female workers and there is no child labor or forced labor in this garments factory.It is for this reason that no concepts of unionization are present. Securities for the employees are at its maximum level within the factory as these are prerequisites that must be met for international exportation.

The working environment of EFL is under hygienic condition. To mention about the compensation strategies undertaken by the company, it must be mentioned that monthly incentives are given for regular attendance of the employees. They are adding two days salary along with the monthly salary of the employees when employees are attending all of the working day in a month. This is called attendance bonus of employees or labors.As EFL‘s turnover rate is high, they are providing less training towards the industrial workers, supervisors and the managers. Besides, giving training to these employees would be both expensive and inefficient in terms of times. During overtimes, foods and lunches are also provided to the employees as a mean of compensation.

 Man Power
This company hires best quality staff and worker with attractive remuneration packages. Please find below the staff structure (administrative and technical) and the remuneration packages:

A. Administrative Staff: BDT. Lac Name post of the No. of Post Per persons Salary per Month General Manager Merchandising Manager Asstt. Merchandiser Commercial Manager Commercial Executives Doctor 1 6 80,000.00 65,000.00 9.60 46.80 0.80 3.90 Yearly Salary Per Month Salary Expenditure

4

35,000.00

16.80

1.40

1

50,000.00

6.00

0.50

3

20,000.00

7.20

0.60

1

30,000.00

3.60

0.30

Nurse Accountants Manager Accounts Executives Sales / purchase officer Store In charge Store Keeper Computer Operator Driver Guard Sweeper Peon Total

2 1

15,000.00 40,000.00

3.60 4.80

0.30 0.40

3

20,000.00

7.20

0.60

2

15,000.00

3.60

0.30

1 5 2

20,000.00 8,000.00 10,000.00

2.40 4.80 2.40

0.20 0.40 0.20

4 8 6 2 52

7,000.00 3,500.00 3,000.00 3,000.00

3.36 3.36 2.16 0.72 128.40

0.28 0.28 0.18 0.06 10.70

B. Technical Staff: BDT. Lac

Staff

No. of post 1

Monthly salary per person 70,000.00

Yearly Salary

Per Month Salary Expenditure

Production Manager

8.40

0.70

Technical Manager Line Chief Supervisors Quality Manager Quality Controller Quality Inspector Cutting In-charge Cutting Supervisor Cutting Assistant Finishing In charge Finishing Supervisor Finishing Assistant Skilled labour Semi-skilled labour Total

1 6 18 1 8 50 1 3 50 1 3

50,000.00 25,000.00 20,000.00 50,000.00 25,000.00 12,000.00 30,000.00 20,000.00 7,500.00 30,000.00 20,000.00

6.00 18.00 43.20 6.00 24.00 72.00 3.60 7.20 45.00 3.60 7.20

0.50 1.50 3.60 0.50 2.00 6.00 0.30 0.60 3.75 0.30 0.60

50 550 500

7,500.00 6,500.00 4,500.00

45.00 346.32 239.76

3.75 28.86 19.98

1243

875.28

72.94

Grand Total (A+B)

1295

1003.68

83.64

 Major Buyers
Elate Fashion Ltd is an export-oriented company and has a turnover of about US$.55, 00,000.00 (Approximately) per year.It has a main client from the United States called Rousso Apparel Group, Outer staff company, Athco Import Inc and Castlewood Apparel Corporation that acts as a middle man between Elate Fashion LTD and others with major RMG buyers like Sears, Jessie Penny, Wal-Mart, Bob‘s, Army, Burlington etc.The management of this industry has a quite

long-term order handling experience with some of the leading Buyers/Customers like as under with their satisfaction. Year of 2009 manufacturing breakdown as follows: Rousso Apparel Group, (USA) Outerstuff Ltd. (USA) 27% Athco Import Inc. (USA) Castlewood Apparel Corp. (USA) 50% 20% 03%

 Raw-material source
Elate Fashion LTD imported their raw materials from different countries. They import their fabrics which has used in producing their products are mainly from Taiwan, Korea, China and Hong Kong. They also purchased Local Bangladeshi Fabrics which meets customer requirements.In their production level accessories are needed. So they import this Accessories are from Hong Kong, China & Taiwan. Elate fashion LTD import all kinds of accessories but expect those items which can be arranged from local market‘s as per their customer‘s approval.

 Company in & out :
 Employee Safety and Environment According to the law of protecting the employees of the garment factories, all apparel industry has to follow some safety rules in the factory plants. From the very beginning, there is always a risk of short circuit in any garment factory. The environment always stays dry and there are fine particles of fabrics in the air of any garment and fabric related company. So fire can spread very easily in that favorable environment. This garment factory has enough fire extinguishers and spare emergency exit rout in the backside of the factory as the factory is nine stored building. Though it is the requirement of the related law, this company maintains these protections very carefully. Moreover employees get some kind of benefits if they are injured while working in the company, though there is no such written contract in the job description or in job agreement. This company also provides the clean and hygienic working arrangement, as it is strongly required by the main buyer of the company. There are separate clean toilets in every floor and department, and there are places where employees can have their own lunch (taken with them in the morning) in the factory ground.

 Women based workforce As most of the workers in the manufacturing and the factories are women in Bangladesh, Elate Fashion Limited also has more female employees than male. Almost 95% workforces are female in Elate Fashion Ltd. They think that women are more responsible towards

their work and for taking care of the family in this country. So, like other garment factories, this company has to consider thousands of the family problems each months and every day. As earlier days government has been decided that women should get seven months of maternal leave. That‘s why Elate Fashion also have decided to give seven months of maternal leave to each of female workers as it was only three months for female workers.

 No Child Labor or forced labor In Bangladesh one of the major problems is corruption and enforcement of the weak law. The corruption and the crime undermine domestic security and discourage foreign investment. There are several laws to protect the child labor use in any kind of industries. Still there are some garment manufacturer companies in the sub urban areas where the child labor is common. In Elate Fashion Ltd there are no child labor is used and no forced labor is used as well. But very often there are some female employees who seek works that are married and have children of their own. Though by the age requirements of the related law, they are considered as child, they are getting the job as they can hide their age by showing their children and others. That is why it is difficult to know the real age of the applicant, and sometimes mistakenly child labor is hired in this company. Otherwise there is no child in the labor force of Elate Fashion Limited.

 No Unionization In Elate Fashion Ltd they have no union. This has been the strongest side of Elate Fashion Ltd till now. As the employees never felt to have a trade union in Elate Fashion Ltd that‘s why EFL does not have to face any problem regarding this unionization. In other hand most of the employees in the Elate Fashion Ltd are female who are illiterate and do not aware of their rights.

 Unauthorized leave Elate Fashion Ltd faces the problem regarding the unauthorized leave of the workers. Sometimes workers or labors do not come to their work for 3 or 4 days without informing the management. This affects the productively level of the factory.

 High Turnover Rate & low profit margin The wage rate is not set nationally or by the national pay scale of Bangladesh. That is why the minimum rate cannot be determined in this industry and workers depend on the desire of the employers of the garment companies. Sometimes they feel that if they switch the job in different

company, thought the workload is same, they will get more money. So the turnover rate is very high in any garment factory in Bangladesh as well as in Elate Fashion Limited. Elate Fashion also shares their profit with the employees which force them to maintain low profit margin in a year. As the turnover rate is high in Elate Fashion they are facing some financial problem in recent days.

 Lack of marketing tactics Elate Fashion Ltd has a marketing department which is not that much affective. They are lacking to build a strong marketing procedure.

 Training and development Elate Fashion Ltd does not apply standardized training, development opportunities rather generalize training, and development processes to their employees. Moreover, the training processes for both the managers and workers are same.In terms of manager‘s means managerial posts including supervisor also, the training process is not uniformed. If any manager is newly recruited, then he/she will be placed in his/her require job along with another manager who is experienced. The task of experienced manager is to provide guideline and adequate information of this job and the companies, make him/her familiar with this job, and identify the problem he/she would face. There is time period of this total task and that is three months which is termed as probation period.In term of newly recruited workers, the basic processes are same, as he/she will be placed in his/her job along with another experienced workers whose job is to provide adequate information concerning the job and the company. More importantly, there is a time that is three months for the workers also.

Workers protecting and clashing to establish their rights are common scenery in Bangladeshi garments industries. But EFL has not faced violent strikes by its labors because of motivating compensation package & caring approach. Unauthorized leave by labors, hidden tension, increase of production cost need to be taken care of. Management is proud of its experienced management entity, satisfied labors, international branded buyers, quality products. EFL needs to rectify the small mistakes and has to take initiatives to counter the challenge presented before the whole RMG as well as EFL because of the wage fixation problem and labor disputes.

What strategies should Elate Fashion Limited undertake to ensure strong and competitive human resource aspects besides other factors of productions and thereby sustain after the ongoing disputes regarding minimum wage fixation in the struggling RMG industry of Bangladesh and also remain competitive in the global market?

SWOT analysis is a strategic balance sheet of an organization; that is the strengths and weaknesses of the organization, the opportunities and the threatsfacing the organization. It is one of the cornerstone analytical tools to help an organization develop a preferred future. Evaluation of internal and external factors helps to analysis Strengths, Weakness, Opportunities, and Threats. The benefits of a SWOT analysis are that it provides learning and knowledge vital to the organization‘s survival and prosperity. Good performances in business occur because of the people directing the affairs of the business, and their interaction with the environment in emphasizing on the company‘s strengths and eliminating any underlying weaknesses. In other words, in order to operate successfully in a continuously changing environment, the business firms should plan its future goals and strategies around its strengths and also try to overcome the weaknesses. Thus, the assessment of strengths, weakness, as well as opportunities, and threats become an essential task for management. Strengths: A company should be aware of its core capabilities and sources of competitive advantages. Core capabilities are the critical skills and processes that an organization executes so well that its reputation builds around it.Strengthsrefer to the competitive advantages and other distinctive competencies that a company can exert in the market place. Weaknesses:In addition to knowing its strengths, an organization must recognize its limitations. Whether limited by a poorly equipped production facility or a sales force that merely quotes prices and delivery dates, a business that acknowledge its weaknesses forces mangers to assess their processes and systems.Weaknesses are constraints that hinder movements in certain directions. Opportunities: External and internal environments present both driving and restraining forces. Opportunities may occur suddenly. With the past pace of globalization and technology changes, what may initially present itself as an opportunity may become a threat if organizational responsiveness is too slow or not well planned.Opportunities primarily arise from the external environment, and refer to the chances of gaining competitive advantages. Threats:Threats are negative external environmental factors which influences an organization‘s decision. External factors are not controlled by the organization and to survive every organization needs to be very alert about its threats and how they can overcome this problem. Organizations should be proactive rather than reactive and should be aware of what are the competitors‘ moves and should take necessary action in advance to face those moves.

STRENGTH
Established structured HRM division Elate fashion ltd. has structured HRM (Human Resource Department) division. Their HR department consists of 6 people. Among them the Head of the department has studied from a

reputed university and he has experience from his previous jobs so he is maintaining the factory so well that employees are so happy and they are productive as well. Other people of this department is also handling the compensation and decision making process so well there is no conflict among other departments and no conflict among the workers.

Management with 19 years of experience The management of Elate Fashion Ltd. is a very organized and capable one. They established this company in 1992 and since then they are operating in very handsome way. The management has strict monitoring system and they maintain the rules and regulation strictly. Elate has efficient mangers who are doing their job efficiently and the supervisors are taking good care of the workers so the management is performing a good job and that‘s why Elate is having advantage for this.

Experience with some of the leading buyers Bangladesh has made a spectacular achievement in export of readymade garments during the last two decades. It ranks fifth in the buyers‘‘ list. Buyers from US and Europe prefer the quality of fabrics for apparels coming from Bangladesh. Elate Fashion Ltd, supplies products to mainly USA and they had a good reputation of giving the supply on time.

No unionization Practicing no union in the Elate fashion ltd. premise is a positive side because their employees never felt of having any union. Elate provides its workers flexible time and workers gets their pay in due time. Elate does not have a union as it thrives to establish itself as a company of international standard not being in two teams but in one unique team. Thus it doesn‘t have the system of unionization in the organization as it is already fulfilling the needs of the workers and employees altogether efficiently.

No child labor or forced labor In Elate fashions ltd there is no child labor. However sometimes there are some female employees who seek works that are married and have children of their own. It is difficult to know the real age of the applicant, and sometimes mistakenly child labor is hired. Otherwise there is no child in the labor force of Elate fashions Limited. As Elate is planning to have proper recruitment process they can overcome this problem very soon. As there is no child labor there is no question of forcing the labors to work. Elate fashions don‘t believe in this type of policy.

Electro-mechanical latest model machines from world famous brand Elate Fashion ltd. uses electro-mechanical machines in their production process. All the

machines are well- handled by the workers and machines are from famous brand like Siemens co. They are using these machines and as well giving the workers chance to learn the operation of these machines.

Reasonable price Bangladesh is a developing country of the south Asia which is densely populated. Most of the people of this population is illiterate and has no technical knowledge. They are just burden for the country but they have an important asset which is their unused labor. This labor can be used in many productive ways like; as our RMG industry is booming and we need more cheap labors. Bangladesh has the competitive advantage that they have very cheap labors which their competitors lack. So they can use this cheap labor and do more business. For this cheap labor Elate fashion has the advantage against the competitors and Elate is using this advantage and giving products to the buyers at a reasonable price.

Quality assured and on time delivery The way RMG brought its success it became the backbone of the economy and 74% of country‘s foreign currency earnings comes from this sector. The quality of Bangladesh‘s RMG products is very good and the buyers are really happy with the quality of product. Elate Fashion Ltd. also provides quality product to their buyers and they always gives on time delivery which works as an advantage for them. As our RMG products are always in need so we should maintain this quality and on time delivery reputation.

Hygienic Working environment As per law of protecting the employees of the garment factories, all apparel industry has to follow some safety rules in the factory. From the very beginning, there is always a risk of short circuit in any garment factory. The environment always stays dry and there are fine particles of fabrics in the air of any garment industry. So fire can spread very easily in that favorable environment. Elate fashion ltd. has enough fire extinguishers and spare emergency exit rout in the backside of the company. Though it is the requirement of law, this company maintains these protections very carefully.

Location: Dhaka-Chittagong Highway Access Elate fashion is situated in the khilgaon area of Dhaka. The place is just beside the DhakaChittagong highway so the Elate fashion can have the easy access of the road while they supply their products. They can avoid the traffic jam of Dhaka city and can deliver their goods on time. So they had the location advantage for their factory.

International demand Bangladesh‘s RMG products are highly demanded by the developed countries due to the cheap labor benefits. Demand of RMG (Ready Made Garments) product is high in the Europe and US market for maintaining the standard of quality required by them. This is a positive signal for keeping the existing labor in workforce rather than lay off.

WEAKNESS

Lack of backward linkages Backward linkage means garment industry need to have fabrics to make the finished products. Due to inadequate backward linkage facilities, Bangladesh is still heavily dependent on imported fabrics to meet the demand for domestic as well as export-oriented RMG industry. ―The present demand-gap of fabric for domestic and export through Ready-made Garments is 2,000 million meter.

Lack of product development and design Bangladesh makes readymade garments and they are only specialized on limited products which are creating problems to sustain in competitive edge. To sustain in this global competitive market Bangladesh garment industry need to develop new product & design.

Loss of global market share: No quota after phase out of MFA As the quota system is going out Bangladesh is going to lose its market share of readymade garments in the global market due to the competition. The benefits they are enjoying due to the system of quota they are not going to avail it anymore. Other countries like China, Thailandand India will take the market share.

Lack of marketing tactics

Very limited educated work force is coming in the RMG industry of Bangladesh. Most of the garment factories are run by the employees with a normal degree. These work forces are cheap to hire and easy to control, employers prefer them. These workers also monitor the lower class workers, which are mainly the uneducated segment of the country. Companies are lacking proper technical knowledge by hiring strategies like these. As a result, there are so many losses due to not properly handled issues of exports. As there is no qualified people the marketing side of this is also affected. We don‘t know how to brand our products that‘s why we face problems in doing business. If we improve our marketing tactics we can achieve more growth in this RMG sector.

A small number of manufacturing methods Since Elate Fashions Ltd. maintains a system of individual work process at the production level it lacks team effort as well. The sense of being part of the total process is absent and thus the workers are less aware of what responsibilities are there beyond their defined ones. The knowledge of the total process of production is thus not established or conveyed due to the absence of the team effort. As they practice this type of working process the manufacturing process is simple and they don‘t go for team based work

Sluggish backward or forward blending procedure In Bangladesh RMG industry faces problems in the backward linkage and they also falls in the forward procedure as well. We face backward linkage which is not new but now the forward blending is also creating problem due to the loss of power supply, lack of gas and most probably for the political and garments unrest.

Dependency on selected markets: USA Bangladesh readymade garments industry in solely dependent to the markets of USA & EU. Most of the orders come from these two countries and if they lose little bit of market this will have an impact on the overall economy. Bangladesh‘s dependency to these two markets is making the sector to much vulnerable. Elate Fashions Ltd. is only dependent on USA which is hampering its growth. Elate should go for other ventures because they can get more orders which will be good for the business.

Lack of training organizations for industrial workers, supervisors and managers Very limited educated work force is coming in the RMG industry of Bangladesh. Most of the garment factories are run by the employees with a normal degree. These work forces are cheap to hire and easy to control, employers prefer them. These workers also monitor the lower class workers, which are mainly the uneducated segment of the country. Companies are lacking proper technical knowledge by hiring strategies like these. As a result, there are so many losses due to not properly handled issues of exports.

Time-consuming custom clearance In Bangladesh there is always problem with the government works. As the RMG products need to have the custom clearance the custom department always woks so slow that the products leads to slow process. Thus the product gets late in to the factory, then the production process also becomes slow which creates the situation of late delivery. As the products are delivered late the buyers get disturbed which is a negative aspect for the industry.

Absence of easily on-hand middle management Although Elate Fashion ltd. provides training for all its employees and workers but they do not have specified training and development program designed with respect to positions and responsibilities of the employees and workers. The system is very much the same where the newly recruited ones have to be under someone already with experience and then they learn the job at the work place. With an aim of earning international reputation this process of training can turn out to be a big setback.In case of promotions and increments of the employees Elate Fashion Limited puts more emphasis on performance irrespective of how long that employee has worked in the organization. So in a word the company is not putting the seniors or experienced workers under preference when it comes to promotions and increment. These are the factors which create conflict among the employees and the employees are busy with their stuff so if situation arise to control the management doesn‘t play its role fully.

OPPORTUNITY

EFL’s owned land near Gazipur to set up additional units EFL is earning a handsome amount of profit and they have enough investment for which they are opening up a new business unit in Gazipur with more space. They are trying to recruit more people and in this way they are also focusing on the improvement of country‘s economy through employment. They are also trying to prove themselves as a aware business people of the country.

Assurance from Government as supportive role During this current wage fixation time the government of Bangladesh assured that they will ensure supportive role to the garments industry. They will help in decreasing the interest rate on the garments loans and they will also help in other financial issues if it is required.

Large pool of cheap labor to be utilized Our country has a huge number of potential manpower who is unemployed and they need to work for meeting their livelihoods. Since the economic condition of our country is deplorable so it makes the poorer class of our society to work for the garments sector. Moreover, they are not educated enough to claim for higher wages and they are not skilled as well. So, the management can explore the labor market and select the suitable workers required for the factories.

Large and growing potential foreign market Initially, we, the garments sector of Bangladesh were focusing mainly on the USA and European market. But, after MFA is abolished other foreign investors are also expanding their business and they are trying to explore in this segment. So, we can say that we have the opportunity to work with other foreign investors besides the USA and Europe and they can also help us to maintain a win- win situation in the long run.

Safe guards against China Previously China had advantage as because they had cheaper labor market. But now a days, their living standard is increasing and they are demanding more for the orders from the buyers. For increasing this labor rate, we will get the benefit to grab more orders from the prospective foreign companies. The growth in the RMG units in Bangladesh The business people of Bangladesh are investing at a large number in the garments sector and this also a positive thing for this industry. They are not only contributing in the country‘s economy but also introducing the quality product in the humongous market. So the investors are being aware of this country and they also feel confidence to invest here. Elate Fashion Ltd.’s well reputation EFL got recognition from by the international community. They try to follow the lead time for product delivery and they ensures proper safety measures in the work premise for their employees. So, their employee oriented management style is a plus point for them.

THREAT

Labor unrest in Bangladesh due to minimum wage fixation mightinfluence EFL labors The employees of EFL are very obliged with the rules of their management. But the current labor unrest in Bangladesh labor market for minimum wage fixation may influence them to become a part of the rebel. It will not only hamper the production level of the company but also hurt

EFL‘s well reputation as a good employer. It might also cause huge damage to the property of the owner as well.

International pressure group to compel the local producers and the government to implement social acquiescence There is always a pressure from the international body to accept the local consent of the labors. It will increase the bargaining power of both the employee and the buyer. They will force the management to practice labor union at their organization and at the same time they will demand cheap labor. Then the management will be in a dilemma to control whom and how.

The US GSP may be cancelled There was a contract with USA that they will take more garment products from our country under the US GSP contract. But this may be cancelled and then we will have to compete in the global market for receiving more orders and the business practice will get changed significantly and we will have to fight with both the local and global competitor.

Purchasing from US may decrease significantly Since the US GSP may get cancelled so we will lose the US market to a lot extent. We will need to look for other purchaser to buy our products. All the foreign buyers will look for a cheap market and it will be very hard for us to maintain both quality product and service at a lower price as well as maintaining the agitating work force.

High charges for utility and port services We have to face higher charges for utility and port services. We have to spend a huge amount due to the unethical practices and unwanted demands of the government officers. This does not only hamper our time and money but also makes our dealing process lengthy. Due to this type of legislation problem we sometimes fail our potential customers.

Higher bank interest rates The local banks in our country charges higher interest rates establishing a garments factory or to run it( in some cases). discourage many potential business people who are willingly in to this industry and also those, who are already involved in they just shut off their business due to the lack of proper support from the financial institutions.

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Maintaining little profit margin After bearing all the operational expenses of the garments, increasing labor demand and constant pressure from the buyers to provide some discounts to them, it becomes really very difficult for a garment to sustain the competition. They can hardly maintain a little profit margin. Without

ensuring a handsome amount of profit a garment cannot run and they eventually close down their business.

Political instability of the country The political environment of this country remains very shaky very frequently. That is why foreign investors get scared to invest here and here is also some legislative problem for which we get hung in the middle of the road of our economic development.

Phase out of MFA (Multi Fiber Agreement) The MFA was introduced in 1974 to work as a short-term protection measure for the textile and clothing industries in developed countries against the competitions and trade imbalances created by the low-priced apparel manufactured in developing countries. But since it has phased out, now we are in a highly competitive market and we can neither compromise with our quality and service nor, can expect reasonable price from the buyers.

Strong competitors in local & global market Since all the quota system and trade deal have expired now we are facing strong competition sustain in this business. Not only the global market is our competitor but also the local market. We have to ensure better service, on time product delivery and good communication with the customers to get orders from them.

EFL might face financial crisis Currently EFL can save less amount of money as they are opening up a new unit in Gazipur. This is a risky venture for them as the current labor market in Bangladesh is very aggressive and they need better pay scale. Though EFL is not facing any labor dispute at present but they might get influenced with the current situation of the industry and they may cause harm to the management by demanding new benefits and facilities. This will turn the management of EFL in a very hard time to ensure productivity and skilled labor force.

RMG sector is the backbone of the nation’s economy Readymade garments is the backbone of the economy. It has significantly boosted up the country‘s economy and provided ample employment opportunity for the people of this country. . It has generated employment for about 1.8 million woman workers, who mostly came from the rural areas. Above 90 per cent of the total workers in this industry are women. The phenomenal growth in RMG was experienced in the last decade. With about 2,600 factories and a workforce of 1.4 million, RMG jointly with knitwear accounted for more than 70% of total investments in the manufacturing sector during the first half of the 1990's. The growing trend in textile sector presents itself particularly appealing to the foreign investors.

Practicing no union, which consequences in a probability of less conflict Practicing no union in the Elate Fashion‘s premise is a positive side that the garment workers cannot unite to make protest against any management decision. But if we look deep into this garments than we can see that this garments have a very caring attitude for its employee and this type of feeling has never made the workers ever felt to come up with a union in the last 18 years. Both the management and workers work together for mutual benefit and that is why they are more productive and they are always being motivated with some sort of small incentives for doing over works and on special days, by organizing programs for the workers which is participated by them.

Availability of a bargaining team, results into an easier problem solution tool Elate Fashion has a bargaining team which works basically individually to resolve the problem which arises among employee and employer. This team works neutrally. Both the party can present their opinion to them and they can negotiate on the basis of this. It helps them to come to a decision promptly without going for any fight and damaging the resources.

Ensuring proper employee safety measures and healthy environment in the workplace Elate Fashion Ltd. provides wonderful work environment to its employees and this is why, their workers are very happy to be a part of this organization. They are aware about their health issues and they do know that the employer themselves are alert regarding this sensitive issue. As because they have ensured protection for the workers, so they have many people who are willing to work there. Female employment, a competitive advantage for Elate Fashion Ltd Among the 1050 employees 700 of them are female. Female are less prone to get join in clash with the employer and they have the tendency to remain happy with their existing work conditions and pay structure. That is why the management feels interested to employ more female and also to encourage women in the work force.

Attendance bonus, to keep the employees regular at work place EFL provides attendance bonus to the work force to encourage them to be regular on their job. The employees who remain present at their work for the whole month, they get extra two days wage with their monthly wage. In this way, the employer and employee relation remain strong and healthy and they can rely on each other for mutual benefit.

Caring attitude of the management makes the employees satisfied The management of EFL is very much concern about their employees. Their concern resembles in the way that they employ more female workers and they are also aware about the leave which is required by their workers ( i.e. maternal leave, paternal leave). They also ensures on time disbursement of the monthly wage of the workers.

Standardized wage structure than other competitors When the garments industry is also facing problem with the wage fixation issue EFL is in a free zone from that problem. They are already providing standardized wage to their workers and this is the reason both the management and the employees are in good terms to keep each other‘s promise.

Expanding the business unit in Gazipur EFL is earning a handsome amount of profit and they have enough investment for which they are opening up a new business unit in Gazipur with more space. They are trying to recruit more people and in this way they are also focusing on the improvement of country‘s economy through employment. They are also trying to prove themselves as an aware business people of the country.

PROBLEM 01: In spite of being directly affected due to the violent strike by labors in the country as minimum wage fixation has not been implemented yet, there is tension among management & labors in EFL.

RECOMMENDATION 01: EFL needs to maintain good relationship with labors. Ensure harmony & solve problems by collective bargaining, arbitration and negotiation. HR managers must work to increase strategic thinking process to take necessary steps in order to avoid violence.

Justification: Bangladesh earns the largest portion of its export income from readymade garments and knitwear. At first, Bangladesh exported the readymade cloths and knitwear worth $1 million to the USA through Riaz Garments in 1978. After that, the garments industry took over the position of a leading industry for our export income by whipping the traditional jute industry.But, it is frightening news for our country that this leading industry is now passing through crucial moments. Recent continuing unrest situation in different garment factories creates the threats to it existence. Since one year, the workers of RMG in different industries have been creating violence in the form of processions, vandalism, blockading the road to hike their minimum wage, attendance bonus and to ensure other facilities. These are the common scenario of the garments factories of Savar, Mirpur, Rupganj, Joydebpur, Gazipur, Kaspur, Ashulia, Nishchintapur, Norashinghpur, Zamgara and in other garment factories.

In the last year, about 140 garments factories were closed due to unrest accompanied by the crisis of power and gas, price hike of yarn, poor infrastructure, and low price offers from international buyers amid increased production cost. These are the main reasons for the shudown in the production of a factory.The minimum salary at the entry level has been fixed at Tk 3,000: Tk 2,000 in basic pay, Tk 800 in house rent and Tk 200 in medical allowance. The apprentice level wage is fixed at Tk 2,500, up from Tk 1,200 now.The new wage structure will come to effect from November 1, 2010.

PROBLEM 02: Elate Fashion Limited has to face problems due to unauthorized leave by labors.

RECOMMENDATION 02: Elate Fashion Limited has to undertake strict actions for the alleged labors and reinforces, motivates the regular labors through monetary and non-monetary rewards.

Justification: Bangladesh earns the largest portion of its export income from readymade garments and knitwear. At first, Bangladesh exported the readymade cloths and knitwear worth $1 million to the USA through Riaz Garments in 1978. After that, the garments industry took over the position of a leading industry for our export income by whipping the traditional jute industry. In garment industries it is a common problem for all the garment industries to face unauthorized leave by labors. It is often seen that after getting the monthly payment labors usually do not show up for work for the next 2/3 days. That hampers the production for the factories. Unauthorized leave by labors make it very difficult for the factories to meet the required production level as the production process needs manual effort from the labors. Elate Fashion Limited (EFL) also is going through this problem. Mr. RezaurRahman, Managing Director EFL complained that labors make it difficult for EFL to reach its required production as unauthorized leave by labors are common scenario for EFL. To cope up with this problem one way is to undertake strict actions for the alleged labors and reinforces, motivates the regular labors through monetary and non-monetary rewards. Whenever there is punishment for offence and reward for performance that eventually makes employees motivated and concerned about their job responsibilities. So, EFL needs to focus on this issue carefully in order to meet production requirement.

PROBLEM 03: Elate Fashion Limited lacks backward linkage to ensure the availability of its raw materials.

RECOMMENDATION 03: Elate Fashion Limited needs to establish backward linkage to ensure availability and adequate supply of inputs, and consequently lower production cost through strong supply chain management.

Backward linkage means garment industry need to have fabrics to make the finished products. Due to inadequate backward linkage facilities, Bangladesh is still heavily dependent on imported fabrics to meet the demand for domestic as well as exportoriented RMG industry. ―The present demand-gap of fabric for domestic and export through Ready-made Garments is 2,000 million meter.Company should establish backward linkage because it is necessary for the sustainable growth of the company. The major problem of Bangladesh garments is lack of backward linkages, and this creates problems like unavailability and inadequate supply of inputs, and consequently higher production cost. A 1996 Ministry of Textiles study feared that after 2005, there might be shortages of fabrics, as countries, which currently export fabrics will instead use their fabrics to produce and export clothing to North America and Europe. EFL needs to establish a strong backward linkage with foreign suppliers for raw materials. 50% of its raw materials are mainly imported. Fabrics sources are from mainly Taiwan, Korea, China, Hong Kong, local Bangladeshi Fabrics, which meets customer requirements, are also purchased. Accessories are imported from Hong Kong, China & Taiwan except those items which can be arranged from local makers as per customer‘s approval. So Elate Fashion Limited should try to keep in good touch with the raw materials suppliers always because EFL has to depend on them for raw materials for production. EFL also needs to emphasis on increasing the number of suppliers in Bangladesh quality raw material producer. That will help Bangladeshi suppliers as well as it would be a good option for EFL to collect raw materials when there is urgent need of materials. PROBLEM 04: Elate Fashion Limited has less productivity compared to other factories with the same number of similar sort of machineries and labors.

RECOMMENDATION 04: Elate Fashion Limited has to increase the productivity through TQM.

Justification: The global economy is now controlled by the transfer of production where firms of developed countries swing their attention to developing countries. The new representation is centered on a core-periphery system of production, with a comparatively small center of permanent employees dealing with finance, research and development, technological institution and modernization and

a periphery containing dependent elements of production procedure. Reducing costs and increasing output are the main causes for this disposition. They have discovered that the simplest way to undercharge is to move production to a country where labor charge and production costs are lower. Since developing nations provide areas that do not impose costs like environmental degeneration, this practice protects the developed countries against the issues of environment and law. The transfer of production to Third World has helped the expansion of economy of these nations and also speed up the economy of the developed nations. Elate fashion Limited has less productivity compared to other garments industries with the same number of similar sort of machineries and labors. One of the reasons behind is the labors are not provided with proper processing. For example, if one labor delays in delivering the shirt to the next one, the next labor can not finish the processing of button placing. That is how the production process talks more time than it should have been, Total quality management would the perfect way to cope up with such problem. Workers will be specialized in what they do regularly. That will reduce the time and as they will be skilled workers products are supposed to have high quality with minimum defect.

PROBLEM 05: International pressure groups try to compel the local producers and the government to implement social acquiescence.

RECOMMENDATION 05: Maintaining good relationship with govt. and rather than always reducing or keeping the wage low they need to re-negotiate higher product price from the international buyers/brands.

Justification: The garment industry in Bangladesh has been subject to several tests of resilience in recent years—global recession, energy shortage, input price increases, and labor unrest. Of late, the labor unrest has escalated apparently triggered by disagreement over re-fixation of minimum wage. The workers, for quite some time now, have been pressing for adjustment in minimum wage. Bangladeshi garment industries face international pressure. Local producers and the government also try to implement social acquiescence. International pressure groups often ask for discounts like Walmart demanded 5% rebate on Bangladeshi garment products. At the end the ultimate effect is the poor labors mainly suffer due to poor price of quality products. Large retail trading

companies placed in the United States and Western Europe give most orders for Bangladeshi garment products. Companies like Marks and Spencer (UK) and C&A (the Netherlands) control capital funds, in proportion to which the capital of Bangladeshi owners is patience. Shirts manufactured in Bangladesh are sold in developed nations for five to ten times their imported price. Despite continuing unrest on the streets of Dhaka by garment workers unhappy with the new pay deal agreed last week, it seems the compromise wage hike will go some way towards placating calls by retailers in Europe and North America for better pay in the country's clothing industry.Many apparel buyers from retailers including Wal-Mart, Tesco, H&M, Zara, Carrefour, Gap, Metro, JCPenney, Marks & Spencer, Kohl's, Levi Strauss and Tommy Hilfiger, agreed in principle to support the wage hike. So EFL as well as other garment industries have to maintain good relationship with govt. and rather than always reducing or keeping the wage low they need to re-negotiate higher product price from the international buyers/brands.

PROBLEM 06: EFL faces major problems due to late arrival of orders from buyers.

RECOMMENDATION 06: EFL must practice time management technique and always be ready to deliver order in short notice. Human resource department & third parties must ensure effective communication with buyers to receive order on time.

Justification: Bangladesh garment industries face a common problem which is late order placement by foreign buyers. It becomes very difficult for the garment products manufacturer to meet the date line if the order is not received by them on time. Many a times garment industries have to bear the burden of bad stock as the orders are not taken timely. Late orders also put factories in trouble. That is the time management has no other option rather than engaging its workers for long working hours. Because of rush there might not be proper control for quality which eventually might demotivate the buyers to go for those particular garment industries. The Western companies are guilty of pitiable working atmosphere in the garment sector. The developed nations want to make more profit and therefore, force the developing nations to cut down the manufacturing cost. In order to survive in

the competition, most of the developing nations select immoral practices. By introducing inflexible terms and conditions in the business, the global economy has left few alternatives for the developing nations EFL needs to practice time management technique and always be ready to deliver order in short notice. Human resource department & third parties must ensure effective communication with buyers to receive order on time. There will have to continuous communication with foreign potential buyers regarding orders. There is big role for third parties to play. Many a times just because of not having good link with the buyers the garments industries from Bangladesh do not get the orders. Third parties would play a role as hyphen between EFL and foreign buyers. Thus time management can be practiced effectively. PROBLEM 07: Elate Fashion Limited only exports to US buyers.

RECOMMENDATION 07: Elate Fashion Limited needs to establish new markets for the manufactured products in other countries such as Canada & EU markets.

Justification: The garment industry of Bangladesh has been the key export division and a main source of foreign exchange for the last 25 years. At present, the country generates about $5 billion worth of products each year by exporting garment. The industry provides employment to about 3 million workers of whom 90% are women.Despite continuing unrest on the streets of Dhaka by garment workers unhappy with the new pay deal agreed last week, it seems the compromise wage hike will go some way towards placating calls by retailers in Europe and North America for better pay in the country's clothing industry. The global economy is now controlled by the transfer of production where firms of developed countries swing their attention to developing countries. The new representation is centered on a core-periphery system of production, with a comparatively small center of permanent employees dealing with finance, research and development, technological institution and modernization and a periphery containing dependent elements of production procedure. Reducing costs and increasing output are the main causes for this disposition. Elate fashion limited needs to find more markets like Canada and European Union (EU). As Bangladesh has partnership with EU, EFL can exploit the markets in global markets. Dependency on US market might cause problems. US generalized system of preference (GSP) has been cancelled. As a result the purchase from US might decrease significantly. So EFL needs to find out more potential markets for cannibalization.

PROBLEM 01: In spite of being directly affected due to the violent strike by labors in the country as minimum wage fixation has not been implemented yet, there is tension among management & labors in EFL. RECOMMENDATION 01: EFL needs to maintain good relationship with labors. Ensure harmony & solve problems by collective bargaining, arbitration and negotiation. HR managers must work to increase strategic thinking process to take necessary steps in order to avoid violence.  IMPLEMNETATION 01: EFL needs to maintain good relationship with labors. Ensure harmony & solve problems by collective bargaining, arbitration and negotiation. HR managers must work to increase strategic thinking process to take necessary steps in order to avoid violence. Recent continuing unrest situation in different garment factories creates the threats to it existence. Since one year, the workers in different industries have been creating violence in the form of processions, vandalism, blockading the road to hike their minimum wage, attendance bonus and to ensure other facilities. These are the common scenario of the garments factories of Savar, Mirpur, Rupganj, Joydebpur, Gazipur, Kaspur, Ashulia, Nishchintapur, Norashinghpur, Zamgara and in other garment factories. Though EFL has not face any direct protest from its labors, but there is a hidden tension between workers and management.

Who will implement it? The RMG authority: It will be really impossible for the individual companies to increase the wage salary dramatically. So, the authoritative bodies of the RMG sector must unite to find the best ways to implement the salary increase and also to what extent it can be and should be increased. The body must also decide that whether the employees should be involved in the process and which other parties shall be, can be and should be involved. They should also find a common source of funds for all the companies when the need may arise. Thus the labor unrest in garment industries can be resolved. Top management:The management will decide to resolve such problems in the factory. They will have to adopt workers friendly decision which will not indulge any dispute among workers. Otherwise external influence might make the scene worse in EFL also.

HR experts:As the process of paying the right level of salary is very vital, it must be planned and designed by HR experts, so, that the payment process encompasses all the aspects of how a person should be paid based on job type and position. Also, the HR experts will be able to tell the kind of employees who will be eager or interested to stay with the company for a long period of time. Collective bargain agents:At EFL there are two collective bargaining teams both from labors and management. They will have to play a crucial role in to solve any disputes at initial stage so that it does not hamper production process to EFL at all.

order

Arbitrator: Many a times on the agreement of both parties‘ arbitrators are there to help in reaching a decision. So arbitrator can play an important role in making things easier for EFL management. So arbitrator has to make him/herself trustworthy for both parties. Thus there will be reduction of sense of lack of trust. Employees:As the process is intended towards the workers and employees, so, their voluntary participation is a matter of absolute necessity, because any process is successful if the participants participate whole heatedly.

How it will be implemented? Negotiation and Collective bargaining: Negotiation and collective bargaining are very effective tools to solve problems. EFL also should use this tool. There will be negotiation and Collective bargaining teams from both management & labors about working terms and condition. Thus there is minimum chance of conflict between labors and management as they reach to decision after discussing together. Both parties have to have the mentality to make the organization benefitted at the end of the day.

Arbitration: Arbitration can be used when there is need of such action. But arbitrator has to be accepted by both of the parties. Both of the parties also have to give consent that the decision taken by arbitrators will be accepted by the parties. Arbitration reduces the sense of lack of trust. Effective communication: There has to be effective communication from the side of management to labors. Because sometimes based on a very small issue, labors might end into being demotivated and dissatisfied. So it is better to communicate with the frequently to know what they expect, what are their problems, how they can be more productive, what are the actions that need to be taken in order to increase productivity. Management has to listen to them. Then it is a question to what extent they will implement it.

Labor relationship officer (LRO): EFL can assign an employee as ―Labor Relationship Officer‖ (LRO) whose primary job would be to keep in good touch with labors. He /she will try to motivate the labors. LRO can let management know about the labors‘ thoughts which would help management to be pro-active.

Where to implement it? The process should be implemented in the whole organization. The good relationship among labors and management would not only help the organization but also make all the employees of organization feel the taste of a family which is very essential. The sense of belonging under one roof actually brings unity which is the pre-requisite for success.

When will it be implemented? The process has started implementation from the very beginning of the company. So harmonization among employees should go on and on. Bargaining should be attempted according to the changing environment. Arbitration may be practiced when needed. HR needs to play active role in communicating with workers time to time to know the then situation.

PROBLEM 02: Elate Fashion Limited has to face problems due to unauthorized leave by labors. RECOMMENDATION 02: Elate Fashion Limited has to undertake strict actions for the alleged labors and reinforces, motivates the regular labors through monetary and non-monetary rewards.  IMPLEMNETATION 02: Elate Fashion Limited has to undertake strict actions for the alleged labors and reinforces, motivates the regular labors through monetary and non-monetary rewards.

Mr. RezaurRahman, Managing Director EFL complained that labors make it difficult for EFL to reach its required production as unauthorized leave by labors are common scenario for EFL. To cope up with this problem one way is to undertake strict actions for the alleged labors and reinforces, motivates the regular labors through monetary and non-monetary rewards.

Who will implement it?

Top management:Top management has to be strict in setting the examples of giving punishment and giving rewards for performance. Top management has be make the labors understand that their performance would be evaluated properly and good performance would surely bring fortune for them. HRM department:HRM department has to play the vital role in maintaining schedule process. They will have to monitor strictly on the labors as well as the supervisor, floor manager whether they are performing their duties properly.

Floor managers:Floor manager needs to communicate with the labors to make them regular on the floor. Floor manager needs to deliver the message from top to bottom to labors what actions are going to be taken for what performances. Thus labors would get to know and they will try to focus more on job. Supervisors:Supervisors can play a big role here. Supervisors are the ones who directly deals with the labors most of the time while working on floor. Supervisor should identify the problematic labors and report to higher authority for taking necessary actions.

How it will be implemented? Wage penalty for late / absence: There will be penalty for the labors who would be late for three (03) days in a month. Any unauthorized leave will end in to penalty for one whole day of eight (08) hours. Attendance bonus for regular labors:There will be attendance bonus for the labors who will attend all the working days of month. They will be given two (02) days extra payment that calculating eight working hours a day. Evaluating past performance while considering promotion to upper grade:The schedule sheets will be preserved for the performance evaluation while considering to giving promotion to upper grades. The labors who will have good performance appraisal would get promotion without any hassle. “PoshakShilpi” award:EFL would give ―PoshakShilpi‖ award to its top three (03) performers of the month. It will be evaluated based on attendance, productivity, discipline. They will be awarded two thousand taka (BDT 2000). They will be given preference for promotion.

Where to implement it?

The introduction of the process must be implemented at the working places of the workers. That means the workers must be paid at their respective factories. The wages if possible should be handed over to the employees by the employers in the factory premise. When will it be implemented? The process should implementation as soon as possible. PoshakShilpi award will be given at the beginning of the next month of getting the reward. Thus the labors would be waiting for the day to come and they will be motivated to give their best for the rest of the months. PROBLEM 03: Elate Fashion Limited lacks backward linkage to ensure the availability of its raw materials. RECOMMENDATION 03: Elate Fashion Limited needs to establish backward linkage to ensure availability and adequate supply of inputs, and consequently lower production cost through strong supply chain management.  IMPLEMNETATION 03: Elate Fashion Limited needs to establish backward linkage to ensure availability and adequate supply of inputs, and consequently lower production cost through strong supply chain management.

Instead of depending on random suppliers it is wise for Elate Fashion Limited Garments to establish their own supply department which will collect raw materials directly from market national as well as international markets like Taiwan, Hong Kong, India, Pakistan, and China. The raw material supply department of EFL will receive a list of raw materials and services required by the production department to complete the customer‘s orders. Then the department will collect information in order to select most cost-efficient sources for collecting raw materials and collect leather and finally deliver the necessary raw materials to the manufacturing site on the required date.

Who will implement it? Top management: Top management of EFL has to make sure it is keeping good relationship with its existing local and foreign suppliers. They should be careful about payment and other procedure so that there is no chance of dispute among suppliers. As EFL has to depend on suppliers for raw materials they have be conscious. Resource supply department: Resource supply management should have necessary information regarding stock of raw materials. They have to inform and monitor about raw materials. Resource supply department needs to deliver the raw materials timely for the production. Uninterrupted supply from them would ensure smooth production.

Strategic partners: Strategic partners would also take part in implementation of this process. They will work to help in communicating with suppliers for raw materials at reasonable price and at the right time.

Operations managers: Operation manager would be responsible for allocating necessary amount of raw materials for production. Operations manager would deal with labors and supervisors to ensure adequate supply of raw materials. Supervisors: Supervisors have to make sure that no raw material is wasted due to the inefficient work process by labors. Supervisors have to monitor the production process. He also has to make sure raw materials are converted into quality products.

How it will be implemented? Collaborating well with the foreign suppliers: Elate Fashion Limited will have to collaborate with foreign suppliers like Taiwan, Korea, China, Hong Kong. As 50% of its raw materials are imported EFL has to maintain good relationship with them. Supply chain management:Instead of depending on random suppliers it is wise for Elate Fashion Limited Garments to establish their own supply department which will collect raw materials directly from market national as well as international markets like Taiwan, Hong Kong. The raw material supply department of EFL will receive a list of raw materials and services required by the production department to complete the customer‘s orders. Then the department will collect information in order to select most cost-efficient sources for collecting raw materials and collect leather and finally deliver the necessary raw materials to the manufacturing site on the required date. Stock of raw materials for unwanted situations: EFL has to be proactive in stocking raw materials in order to avoid any unwanted situation which might happen due to problems like transportation problem, strike, political crisis etc. Ensuring proper utilization: EFL must ensure proper utilization of raw materials. There should not be any wastage of raw materials. Labors should be monitored and supervisors, floor manager need to ensure it.

For EFL to ensure that the supply chain is operating as efficient as possible and generating the highest level of customer satisfaction at the lowest cost, companies have adopted well designed Supply Chain Management processes and associated technology. In general Supply Chain Management has three levels of activities strategic; tactical; and operational and for EFL it is must to focus on all of them.

Where to implement it? The introduction of the process must be implemented within short span of time. Though channels EFL needs to establish and maintain good relationship not only with local suppliers from Bangladesh but also with those from foreign markets like Taiwan, China, Hong Kong etc. It should be done whenever the opportunity arises. The stock house keeper should maintain stock summary up to date. Production floor also has to implement it successfully. When will it be implemented? This step should be implemented at the earliest possible time. But, the decision of implementing the process must be taken at an earlier date to facilitate the availability of the money when it will be needed to stock raw materials. If the company is suffering from financial crisis than during that time only the most important raw materials should be considered for priority. Supply chain management is necessary for every sort of production oriented firms. For Sicily garments to ensure that the supply chain is operating as efficient as possible and generating the highest level of customer satisfaction at the lowest cost, companies have adopted well designed Supply Chain Management processes and associated technology. PROBLEM 04: Elate Fashion Limited has less productivity compared to other factories with the same number of similar sort of machineries and labors. RECOMMENDATION 04: Elate Fashion Limited has to increase the productivity through TQM.  IMPLEMNETATION 04:

Elate Fashion Limited needs to establish Total Quality Management process and EFL also needs to increase the productivity of the workers through training and high end technology machines. Only effectiveness of EFLgarment‘s employees may ensure to produce large quantity of product at a lower cost. It would give power to the company to compete with other manufacturers as they easily implement the economics of scale concept in production floor. Moreover, TQM or Total Quality Management itself has to work as a part of the organizational culture to be effective.

Who will implement it? Trainers: There must be both foreign and local trainers. The foreign trainers will teach the employees about the levels of expectations and standards of international customers. On the other hand, the local trainers will teach the employees how to produce the products in the local ways which will suit the workers better. It will be best if the trainers can work together to give employees the training to better and more efficient production by influencing them to work for global standard while being a local worker. HR experts: As the training process is very vital, it must be planned and designed by HR experts, so, that the training process encompasses all the aspects of how a person should be trained based on job type and position. Employees: As the training process is intended towards the workers and employees, so, their voluntary participation is a matter of absolute necessity, because any training process is successful if the participants participate whole heatedly.

How it will be implemented? Careful selection of employees: The authority should choose employees very carefully because the more experienced the employees will be the better and more efficient they will be. That will increase the output of the organization. The company will be produce more with less number of workers if they are skilled enough. Thus the profit margin will increase and employees will be paid more. High tech production facilities: To reduce the number of employees, thus enabling the top management to provide the remaining employees higher salary, the production facility must be of better technology based, it will lessen the dependence on human labor. Also, the quality of product will also rise.

Train the employees: As, the employees need to be motivated, first they must be showed a clear way and objectives of working procedure. They must be well aware about the kind of product they are going to produce and their possible needs. So, the employees must go through a proper training procedure to make them feel capable of handling the jobs which will be given to them. The employees must be trained through a precisely planned training process and should be given right kind of training. It is especially true for lower level of employees, because they lack education. The training process should include the ways and standards of international customers, so that the employees can serve international orders the way they expect. Finding the weaknesses of the employees: All the employees may not need the same type and level of training .It is extremely crucial to find the exact needs of the employees and their weak points.

Where to implement it? TQM is a kind of culture in which the total organization is included. So, TQM culture has to be implemented in total organizational context in order to get maximum befit out of it. As mentioned earlier implementing TQM is impossible without collaboration with employees. Moreover, TQM it must be accomplished step by step such as starting from production level and then slowly.

When will it be implemented? It is true, that cultures do not develop overnight. Especially as TQM implementation calls for a total alter in existing context so it will require time. So, the company should make a long term plan and implement it slowly.

PROBLEM 05:

International pressure groups try to compel the local producers and the government to implement social acquiescence. RECOMMENDATION 05: Maintaining good relationship with govt. and rather than always reducing or keeping the wage low they need to re-negotiate higher product price from the international buyers/brands.  IMPLEMNETATION 05: Maintaining good relationship with govt. and rather than always reducing or keeping the wage low they need to re-negotiate higher product price from the international buyers/brands. Bangladeshi garment industries face international pressure. Local producers and the government also try to implement social acquiescence. International pressure groups often ask for discounts like Walmart demanded 5% rebate on Bangladeshi garment products. At the end the ultimate effect is the poor labors mainly suffer due to poor price of quality products. Large retail trading companies placed in the United States and Western Europe give most orders for Bangladeshi garment products. Companies like Marks and Spencer (UK) and C&A (the Netherlands) control capital funds, in proportion to which the capital of Bangladeshi owners is patience. Shirts manufactured in Bangladesh are sold in developed nations for five to ten times their imported price.

Who will implement it? The RMG authority: The Respective authorities will have to take imitative to communicate and negotiate with govt. and foreign buyers regarding price increment. BGMEA, BKMEA and other such organizations can big role to implement this process.

The Government: The government needs to give support to the Bangladeshi garment industries. Govt. must ensure all the necessary doors open for the industries so that Bangladeshi garment manufacturers can think of serving the nation through earning foreign remittance.

Top management: Top management has to keep liaison with govt., political parties, other garment manufacturing industries and the foreign buyers. Top management has to make sure that the labor right is not hampered at any stage because of the demand from international pressure groups.

HRM department: HRM department needs to focus on building good relationship and maintaining it. HR experts will play the role in communicating and try to reflect the good image of the company. Marketing department: Marketing department needs to understand that is there is brand image for Bangladeshi garments products, manufacturers can earn more revenue. The quality products deserve price increase. For this marketing is essential. Trade expo, fashion show in Bangladesh and foreign countries can be a good way of making it familiar in front of the world. Product design & development teams: Designers will come up with innovative, attractive design which will attract the foreign customers. As fashionable products change over time, they will have to work continuously to design new products.

How it will be implemented? Negotiation with Govt. and international buyers: EFL will have to negotiate with govt. and international buyers effectively. EFL has to have a negotiation team who would be able to get the things done properly. Creating brand image: EFL needs to understand the value of creating brand image. Companies like Marks and Spencers (UK) and C&A (the Netherlands) control capital funds, in proportion to which the capital of Bangladeshi owners is patience. Shirts manufactured in Bangladesh are sold in developed nations for five to ten times their imported price. Effective marketing tactics:The quality products deserve price increase. For this marketing is essential. Trade expo, fashion show in Bangladesh and foreign countries can be a good way of making it familiar in front of the world. Discounted offers can attract international buyers.

Improved quality, attractive offers, innovative design, and customer care: EFL has to have improved quality, attractive offers, and innovative design to make international buyers interested. Customer care is another important part that needs to be ensured.

Where to implement it? This process should be implemented at top level mainly with the support from the marketing and product development side. Workers at production floor also should participate in producing quality products which will ensure company good image to the other buyers.

When will it be implemented? As global competition has started because of the phase out of multi fiber agreement (MFA) EFL needs to implement the process without making any delay. International & local trade fairs can be good time to do marketing & promotional activities. After ensuring improved quality, flexibility, innovation and customer care EFL needs to make a strong stand.

PROBLEM 06: EFL faces major problems due to late arrival of orders from buyers. RECOMMENDATION 06: EFL must practice time management technique and always be ready to deliver order in short notice. Human resource department & third parties must ensure effective communication with buyers to receive order on time.  IMPLEMNETATION 06:

EFL must practice time management technique and always be ready to deliver order in short notice. Human resource department & third parties must ensure effective communication with buyers to receive order on time. EFL needs to practice time management technique and always be ready to deliver order in short notice. Human resource department & third parties must ensure effective communication with buyers to receive order on time. There will have to continuous communication with foreign potential buyers regarding orders. There is big role for third parties to play. Many a times just because of not having good link with the buyers the garments industries from Bangladesh do not get the orders.

Who will implement it?

Top management: Top management has to keep the way clear for good communication with potential buyers and orders. They will have to adapt to decision that would help to get benefit for EFL. HRM department:Human resource department & third parties must ensure effective communication with buyers to receive order on time. There will have to continuous communication with foreign potential buyers regarding orders. There is big role for third parties to play. Many a times just because of not having good link with the buyers the garments industries from Bangladesh do not get the orders.

Existing buyers:EFL needs to influence the existing buyers to get new orders. Word of mouth is very important for any business. If existing buyers are satisfied they might bring new customers also for EFL.

Third parties:There is big role for third parties to play. Many a times just because of not having good link with the buyers the garments industries from Bangladesh do not get the orders.

How it will be implemented? Time management systems:Time management is the most cost- effective solution that EFL may use to ensure timely delivery of product in short term notice. Time management starts with the commitment to change as well as creating a time-frame for each and every single activity. Time management also demands for training employees properly to comply with these.

Effective communication with potential buyers:EFL needs to communicate with buyers who can a good scope for EFL to do business with. EFL has to have a negotiation team who would be able to get the things done properly. EFL will send product portfolio, price quotation to them to show their interest, capacity and capability. Consult with on-hand third parties:Human resource department & third parties must ensure effective communication with buyers to receive order on time. There will have to continuous communication with foreign potential buyers regarding orders. There is big role for third parties to play. Many a times just because of not having good link with the buyers the garments industries from Bangladesh do not get the orders.

Use existing buyers to obtain new buyers:EFL needs to influence the existing buyers to get new orders. Word of mouth is very important for any business. If existing buyers are satisfied they might bring new customers also for EFL. Creating good reputation:There is no other option rather than having a good reputation among buyers in markets. Because reputation not only brings respect but also brings respected buyers.

Where to implement it? This process should be implemented at top level mainly with the support from the marketing and product development side. Workers at production floor also should participate in producing quality products which will ensure company good image to the other buyers. When will it be implemented? Taking order is a on-going process. When EFL increases productivity in existing factories and setting up new units later EFL should go for new markets. As global competition has started because of the phase out of multi fiber agreement (MFA) EFL needs to implement the process without making any delay. International & local trade fairs can be good time to do marketing & promotional activities. After ensuring improved quality, flexibility, innovation and customer care EFL needs to make a strong stand.

P ROB LEM 07:

Elate Fashion Limited only exports to US buyers. RECOMMENDATION 07: Elate Fashion Limited needs to establish new markets for the manufactured products in other countries such as Canada & EU markets.  IMPLEMNETATION 07: Elate Fashion Limited needs to establish new markets for the manufactured products in other countries such as Canada & EU markets.

Elate fashion limited needs to find more markets like Canada and European Union (EU). As Bangladesh has partnership with EU, EFL can exploit the markets in global markets. Dependency on US market might cause problems. US generalized system of preference (GSP) has been cancelled. As a result the purchase from US might decrease significantly. So EFL needs to find out more potential markets for cannibalization.

Who will implement it?

Top management: Top management has to keep the way clear for good communication with potential buyers and orders. They will have to adapt to decision that would help to get benefit for EFL. HRM department:Human resource department & third parties must ensure effective communication with buyers to receive order on time. There will have to continuous communication with foreign potential buyers regarding orders. There is big role for third parties to play. Many a times just because of not having good link with the buyers the garments industries from Bangladesh do not get the orders. Market analysis teams:Market analysis teams will conduct market research about the demand of EFL products. They will try to select the attractive markets in EU and Canada.

How it will be implemented? To implement this process EFL needs to conduct international potentials market research by its market analysis teams. EFL also needs to do feasibility test & cost effectiveness to see the prospect in those markets. Then EFL needs to select and send representatives to do result oriented negotiation with the international buyers from EU and Canadian markets. EFL must ensure smooth trade between countries after their agreement. EFL has to go for cannibalization

with full potential with the international players in international players. So the below chart would make it a simplified form:

Where to implement it? This process should be implemented at top level mainly with the support from the marketing and product development side. Workers at production floor also should participate in producing quality products which will ensure company good image to the other buyers.

When will it be implemented?

Whenever other global markets are attractive enough to enter, EFL would take the opportunity to exploit the markets. EFL will have to reach full potential to serve the markets. That would be the suitable time to go for more markets.

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