A case study on the report “leaving bangladesh not an easy choice for brands”


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A case study on the report “leaving bangladesh not an easy choice for brands”

  1. 1. A Case Study on the Report “Leaving Bangladesh? Not an Easy Choice for Brands” Submitted ToMr. Shakil Huda Professor IBA University of Dhaka Submitted BySadman Prodhan Roll No- 47 Batch- 48D Date of Submission: 5th June 2013 Institute of Business Administration University of Dhaka
  2. 2. Summary: 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 Analysis: 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.
  3. 3. 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 economy. Problem Analysis: 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
  4. 4. 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
  5. 5. Minor problems: Apart from the major issues there are some minor problems that might bother the retailers. Such as1. 2. 3. 4. Child Labor 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.