A case study on the report “leaving bangladesh not an easy choice for brands”
A Case Study on the Report “Leaving Bangladesh? Not an
Easy Choice for Brands”
Submitted ToMr. Shakil Huda
University of Dhaka
Submitted BySadman Prodhan
Roll No- 47
Date of Submission: 5th June 2013
Institute of Business Administration
University of Dhaka
Bangladesh is a large exporter of ready-made garments and textiles that exports
garments product to Europe and America. But due to some recent incidents like Tazrin
garments and Rana Plaza tragedy, it is facing a lot of difficulties in doing business. In
Bangladesh most of the garments company does not follow the safety code and the
laws regarding the issues are very lenient. As a result many foreign companies are
looking for substitute suppliers and others are pushing Bangladeshi government to take
necessary steps regarding safety and other relevant issues. Protests have been
observed throughout the world. So importers are trying to resolve the issues by
pressurizing the garments owner.
Issue 1: Retailers Looking for Substitutes
First issue of the case is that the foreign companies are facing too much protest from
public and various Human Right organizations. As a result many companies such as
Walt Disney Co. and many other retailers are getting reluctant in doing business with
Bangladeshi companies. So they are looking for substitute suppliers that are less risky
than Bangladesh; such as India, China, Pakistan or Indonesia. It is definitely alarming
news for Bangladesh where textile and readymade garments is no 1 export product.
Issue 2: Pressurizing the Garments Owner and Government
Many retailers like Walmart, H&M, GAP, Sears, Mango etc has decided to operate their
business in Bangladesh. But to do so they are forcing the garments owner to change
their working condition as well as revise their safety conducts. The government is also
facing legitimate pressure as the whole world is looking towards them about the
decisions they are going to take regarding this issue. As well as the retailers are forcing
them to make the proper amendments on existing laws and enforce them forcefully. As
a developing country with limited resources, Bangladesh government finding
themselves in a very awkward situation as enforcing the law requires higher resources.
Plus any quick but wrong decision might put the government in worse situation. So the
pressure is high and the stake is higher.
Issue 3: No Promise on Cutbacks
As we mentioned before, many retailers like Walmart, H&M, GAP, Sears, Mango etc
has decided to operate their business in Bangladesh but their decision of staying in
business does not assure the full dependency on Bangladesh. According to experts- not
today but after a certain period of time the retailer will start cut-back their demand. It
may be quick or slow but it is certain to happen. As a result the market of readymade
garments is sure to deteriorate. This is an alarming threat on the future of Bangladeshi
Major Problem 1: Safety Issue
Analysis: It is one of the major problems faced by the readymade garments industry of
Bangladesh. Bangladesh emerged in garments sector at the early 80’s. But it was the
90’s when it observed the boom. In that time most of the garments factory established
which are still operational. At that time the building code were not very much planned or
structured. As a result the obsolete safety conducts still exist. Also the garments owner
are reluctant in taking proper safety measure as the law is not very strict regarding
these issues. Plus many of the factories are established on residential area or even
inside a market where it is impossible to follow the safety measures.
Solution: To overcome the problem regarding the safety issue, government has to
practice the law regarding the issue very strictly. It is the perfect solution for the above
problem. Proper amendments of law should be taken and punitive action should be
severe so that no one will take the risk of breaking the code of conduct. Also the
building codes should be revised and made it more structured. Safety drills like fire,
earthquake and lockdown drill should be conducted regularly.
Alternate Solution: There are also some alternate solutions which might be proven
costly but will be effective.
1. Obsolete buildings for garments factory should be closed or repaired
2. No factory should be established in market or residential area
3. Every factory should have fire safety experts
Major Problem 2: Working Condition
Analysis: Working condition is also a major problem that is distracting retailers from
Bangladeshi market. There should be a standard condition that must be maintained
throughout the garments industry in Bangladesh but no such measures are there.
Working condition includes working hour, environment, wages, benefits etc. The labors
of these garments are lacking this issues starting from the initiation of the industry. The
garments owners constantly depriving the workers from their rights and benefits and
they don’t even bother to change the situation. Retailers are willing to provide with
necessary inventories to provide the proper working condition for workers but the
owners are reluctant to do so because it cuts back their profit margin. Though the most
attractive package of Bangladeshi market is labor cost but they should be given at least
the minimum benefits.
Solution: The solution is almost similar as the first one. Bangladesh Labor Code: 2006
have proper provisions regarding the following issues. But as per times passage they
requires some mandatory changes in the field of wages, environments, working hours,
overtimes etc. Retailers are willing to provide with necessary inventories to provide the
proper working condition for workers but the owners are reluctant to do so because it
cuts back their profit margin. So enforcement of law is essential to confirm the proper
working condition which could be ensured by government itself.
Alternate Solution: The alternate solution the problem could be such as1. Transfer the industry to a new location with planned structure
2. Introduce shifting system in each and every garments factory
3. Job satisfaction of worker should be ensured by providing better benefits
Apart from the major issues there are some minor problems that might bother the
retailers. Such as1.
Policy regarding pregnancy
Compensation for accidents, death and disability
Workforce training and development
Analysis: These are the minor issues which are not essential right now but will bring
satisfaction to both workers and retailers. Worker below 18 could be said child labor.
They are never to be used in factory work because law regarding child labor is one of
the strict laws that enforced in Bangladesh. Also policy for pregnant worker should be
revised properly so that future mother does not face any risk in giving birth to a child.
Another issue is the compensation issue for accidents. Only a small number of
companies are providing accident victims or their families with compensation. This must
be changed and every company should follow standards for the issue. The final problem
is regarding training and development. Workforce of Bangladesh is cheaper but not
expert. Only the basic parts of products are prepared in our country. This could be
changed by providing proper training to them.