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A critical appraisal of the competitiveness of the Bangladesh Ready-made garments industry in the international market

Mohammad Shah Mizan B0629RORO0411 Declaration


This work has not previously been presented in any form to the University or to Any other body whether for the purpose of assessment, publication or any other Purpose (unless otherwise indicated). Save for any express acknowledgements, References and bibliographies cited in the work. I confirm that, the intellectual content of the work is the result of my own efforts. Signature.. Date..

Acknowledgements
I would like to express my sincere gratitude to my supervisor, Mr. David Hall for his help regarding the dissertation. It is nearly impossible to complete this dissertation in time without his patient guidance, understanding and inspiration. I would also like to thank all the respondents who spend their valuable time and shared their experience with me. Without their help this research would never be completed in time. Finally, I would like to thank my parents who brought me to this earth, my two younger brothers and friends for their help and appreciation with the project. Especially, I would like to grateful my God who made me everything possible.

Executive summary
To survive and succeed in garment manufacturing business in todays era of globalisation and Increasing competition, it is important for industry to analyse the competitive performance and status of the Bangladesh RMG industry. To stay in the competitive international market Bangladesh RMG industry must follow the lower price strategy by maintaining quality as well as decrease the production cost. Therefore, various factors, in the form of theories, affecting the success of the firms or industry critically evaluated during the literature review. The theories are strategic management; PEST analysis; five forces model; and swot analysis.

The interviews of garment manufactures were gained so as to get an insider view of this industry and gain the practical side with their relation to the theories. The Competitive performance of Bangladesh RGM in surface-level competitive performance is good in the international market over the year. On the other hand, Deep-level competitiveness is not in satisfactory level. Bangladesh must expand the backward linkage to support the garments industry to avoid the over dependency of raw material from foreign source. In addition, to stay in the competitive market Bangladesh must take some initiative to reduce long lead time and improve port management and solve other important issues as soon as possible.

Table of Contents Chapter 1: Introduction 1.0-Introduction 9 1.1-Background of the industry 9 1.2- Research objectives and questions 10 1.3- Bangladesh RMG industry export performance 10 1.4- Market concentration .11 1.5- Product concentration 11 Chapter 2: Literature review 2.0-Introduction 14 2.1- Factors affecting by Bangladesh RMG industry 15 2.2- Identification of competitiveness 18 2.3- Competitive performance 23 2.4- Strategic management process 23 2.5- Internal and external environmental analysis 24 2.5.1- External analysis 25 2.5.1.1- Pest analysis 25 2.5.1.2- Five forces 26 2.5.2- Internal analysis 28 2.6- Corporate business strategy 29 2.6.1- Supply chain management 29 2.6.2-Lead time management 30 2.6.3-Diversification 30 2.6.4- Backward linkage 31 2.6.5- Global competition 31 2.6.6- The multi-fibre (MFA) agreement 32 Chapter 3: Research Methodology 3.0- Introduction 35 3.1- Research philosophy 37 3.2- Research approach 37 3.3- Research design 38 3.4- Research Strategy 39 3.5- Data collection method 43

3.6- Data analysis 44 3.7- Data access 45 3.8- Credibility of the research 45 3.9- Ethical issues of the research 46 Chapter 4: Findings and discussion 4.0- Introduction 47 4.1- Surface-level competitive performance 47
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4.1.1- Export performance in US market 47 4.1.2- Export performance in EU market 49 4.1.3- Price competitiveness 53 4.1.4- Lead time analysis 56 4.2 - Deep-level competitiveness performance 60 4.2.1-Backward linkage expansion 60 4.3-Swot analysis 67 4.4- Five forces analysis 70 4.5- Conclusion 75 Chapter 5: Recommendation 77 Bibliography 80

Chapter1: Introduction
1.0 Introduction Bangladesh ready-made garments industry is the largest industrial sector in the Bangladesh. This sector plays a very important role in the countrys economy over the last 25 years and emerged as a threat to the major competitor in the international market. However, cheap labour cost, government policy, global trading agreement and private entrepreneurship and quota free market helped the Bangladesh to achieve handsome share on the international garments business. After the end of the multi-fibre agreement (MFA) world garments business more competitive than previous time and it was predicted that Bangladesh RMG industry would face strong challenges as it would lose business to major competitor like china and India, but the predication has been proved wrong. 1.1 Background of the industry Bangladesh RMG industry started its journey in late 1970s with a quiet small investment and narrow export; the main success in early 1990s and has become the largest industrial sector in Bangladesh. However, this sector has become the largest foreign earning sector in 1990s, it has reached high importance in terms of its contribution to GDP within very short time ( Mahmud et al. 1991). Bangladesh has achieved nearly $15 billion by exporting garments products in 2011-2012 and RMG sector covers over 80%of the total export of the country. Moreover, the industry has become a vehicle for further industrialization of the country. Now near about 15 million peoples livelihoods directly and indirectly depend on this single industry and it accounts 40 percent of industrial employment (World Bank

2012). More than 5 million garment workers are working in approximately 5000 RMG units; of them over 85 percent are women. From the beginning, some association has been working to support, protect and find the potentiality to export in international market. BGMEA is the main association in this sector to protect the higher interest rate and the promoter of
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trade negotiation in international market like WTO, EU Commission, US trade association, UNCTAD etc. 1.2 Research Objectives: Critically assess the competitive performance of the Bangladesh RMG industry. To diagnose competitive status of the Bangladesh RMG industry. To recommend the proper strategies best reflects the status of the Bangladesh RMG industry. Research questions: How Bangladesh perform surface and deep level competitiveness in the international market? What are main challenges for the Bangladesh RMG industry to compete in the international market? What factors affect the competitive status of Bangladesh RMG industry in international market? Which strategies best reflect for the Bangladesh RMG industry?

1.3 Bangladesh RGM industry export performance


Bangladesh emerged as a strong competitor in the world market by following low cost strategy. Bangladesh has achieved good performance over the last 25 years which contributes to GDP and generate foreign currency as well as creating employment over the year. This industry usually export mainly woven and knit garment to the international market. Figure: 1 Ready-made garments export of Bangladesh (Amount in million US $) Source: BGMEA, 2012 The chart shows that Bangladesh RMG exported $4000.20 million woven product to the international market in the fiscal year of 2011-2012.The export performance of the woven garments increasing over the year which represents $5918.51 million in the fiscal year of 2008-2009.On the other hand, Knit garments product also has good performance in the year of 2004 to 2009 which delineates $ 2819.47 to $6429.26 million. However, Bangladesh RMG exports both knit and woven product at the amount of $12347.77 in between the year of 2004 to 2009. This achievement indicates that Bangladesh RMG enjoying great performance in world garments export market. The Bangladesh RMG industry faced a difficulties for the three months after withdrawn the quota restriction and that time woven garments export declined by 5.6%.After the three month this industry again grown up by the 13% in the fiscal year of 2010-2011 and knit garments growth by 35%.The economy of Bangladesh highly dependent on the garments sector and this industry became the life line of the country economy.

1.4 Market concentration: Bangladesh mainly concentrates the product in EU and US market. This industry exports 90% of the total product to the EU and US market. Bangladesh enjoying the quota free restriction in the US and EU market, thats why they mainly focuses on these two major market. However, after the end of MFA period US ma took restriction to avoid the over dependency of Chinese product. 1.5 Product concentration: Despite of great performance in the international market, Bangladesh RMG not properly aggressive for the market concentration as compare to other major rivals like china, India, Vietnam etc. Bangladesh only exports very few product categories in the international market, only five items dominated in the EU and US market. These five items are Trousers, shirts, t-shirt, sweaters, jackets which cover near about 80% of the total garments export. These five items still performs very well in the international market.

Chapter 2: Literature Review


2.0 Introduction
This section reviews the literature relevant to competitiveness of the Bangladesh garment industry and different important studies about the competitiveness. There have been a variety of studies examining the importance of the RMG industry in Bangladesh and theories of competitiveness and internal and external environmental issues. Bangladesh RMG industry has been maintaining good performance in the international market with competing big competitors, such as China, India, Mexico, Indonesia, Turkey, Pakistan etc. The competition has been increasing due to end of quota restriction after 2005.So it is important for Bangladesh RMG industry to understand the internal and external environmental analysis and competitive advantage .All these theories about competitive advantages and environmental analysis has been published by different authors in their books, journals, research papers and articles etc. This literature review mainly concentrated about major factors of Bangladesh garments industry, strategic management process and competitiveness and as well as competitive advantages of the Bangladesh ready-made garments industry. Here researcher has been discussed about some major factors faced by the Bangladesh industry and then discussed about competitiveness in different level. Later two important components of strategic management (External and Internal analysis) are reviewed .In addition, corporate strategy of Bangladesh RMG industry and other factors which are affecting by garments industry also discussed. This literature review critically examined by referring to various related articles, books and journals.

2.1 Factors affecting in Bangladesh ready-mate garments industry


Bhattacharjee and Hossain(1993) have conducted a study on Key Factors Affecting the Export Decision of Garment Products in Bangladesh. The authors have tried to identify the factors affecting the export decision of garments

manufacturers in Bangladesh. According to the authors national export policy, comparative marketing distance, lack of export commitment, exogenous economic constraints and competitive rivalry have been identified as major barriers to export decision of garment products. They also discussed about the diversification of export market, export promotion and government facility to support this industry as well as the Physical presence in the foreign market must be ensured to cultivate business contracts and to gain the attention of the foreign buyers. Many researches concentrated on MFA quota issues and focus on the result of post quota period. All of these studies predicted more or less matched the Bangladesh ready-mate exports after the quota free period. Moreover, western researcher gave negative outcome, in contrast local researcher was challenging. Swiss consultant,(Ghazi Textile Organisation)predicted bad scenario unless Bangladesh improved its infrastructure, and suggested that exports would decline by $2 billion and around 800,000 jobs would disappear. However, The World Bank (Sattar et al. 2005), predicted export shocks and economic welfare losses for Bangladesh by using Global Trade Analysis Project (GTAP) model. In terms of this prediction Bangladesh could be losses 17% workforce in apparel and 5% from textiles and some other studies predicted loss of 1 million jobs. On the other hand, local researchers Islam (2001), Dowlah (1999), Bhattacharya and Rahman (2000), Khundker (2002) was analysing post MFA situation. They mainly concentrated on the main reason for fall of the garments export, new policy reform, infrastructural development, and compliance and labour law implementation but with local tacit knowledge. In addition, Rahman (2000) studied how Bangladesh could dramatically expend in apparel market after MFA. After MFA US apparel would grow up from $79 billion to $120 billion and
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Bangladesh could achieved 2.5% to 3% of the market share and remarkable growth at the same time(Rahman,2000). Mohiuddin(1991) described the factors that brought Bangladesh into the attention of the entrepreneurs as an attractive place of full- fledged readymade garments industry, find the conducive factors for its rapid growth and compare the size of the industry with its competitors as well as identification of customers by developing new strategy to capture new markets for the industry. Mahmud and Nizami (1993) have focused the Growth, contribution to the Economy, Problems and Prospects in Bangladesh garment industry. They asses the perspective of the growth and development of the industry and examine the problems of the industry in different fields, and suggest for solution of the problems. The authors described the responsible factor for rapid growth were identified to be Government encouragement and fiscal incentives, comparatively low investment requirements, liberal bank loan, cheap labour and provision for technical staff assistance from abroad, ethnic problem of Sri Lanka, imposition of quota on neighbouring countries, high demands of readymade garments abroad etc. Problems that were identified for the garment industry were non-availability of related raw material in the local market, limited scope for product diversification, power failure, high labour turnover, labour unrest, underutilization of capacity, lack of skilled workers, marketing and political problems, lower working facilities, indifference of Government and exploitation by middlemen etc. Rahman(1995) has written a paper entitled GSP and export competitiveness of Bangladesh: Some Emerging Issues of Post-GATT Phase wherein he has

examined the role of generalized system of Preference Schemes in enhancing export competitiveness of Bangladesh in the global market. The author found that although as a least developed country Bangladesh shall continue to enjoy many of the benefits for which she is currently eligible under GSP, the preferential margin will considerably diminish as tariff rates are further reduced and rationalized in the coming future. The author also found that the relative price competitive strength can only be maintained if the GSP schemes are both broadened and strengthened simultaneously. Chowdhury and Hossain(2000) have emphasized on the development of the quality of products and factors affecting the quality of the products. They described the main factors affecting the quality of garments product and suggest manufacturers a priority list of the factors for proper maintenance and control of the same. According to chowdhury and hossain (2000) the manufacturers of this industry need to use a better quality of raw materials to raise the quality of their products to compete in the international market and need of skilled labour which is also an important key factor to produce quality product. But the industry is expanding so fast that the management of skilled labour recruitment has become unmanageable. The relative importance of the factors varies in affecting quality of garment products. Quality of raw materials, workmanship of the workers and the style of the products are given the highest weight by the respondents then again level of technology used, packaging used and factory condition stand as the next important factors for the same product (chowdhury and hossain ,2000). The authors identified some key factors affecting quality such as quality of raw material, workmanship of workers, level of technology used, per unit export price, packing materials used, style of the products, efficiency of supervision are factors that affect quality of products but did not consider other factors such as quality of the machine, the standard of acceptance or rejection region that may also affect quality. Adhikary (2005) has conducted a study on Looking for Cost Competitiveness -A Proposal for the Readymade Garments (RMG) Sector of Bangladesh. He discussed the cost of current transporting channel for RMG products, attempts to stock lots and loan defaults, comparison between cost of track shipment and railway shipment. He also suggests the setting up of a viable organization catering to the needs of cost effective transport leading to cost competitiveness of the RMG sector.
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According to M. Mohiuddin (1991), the Bangladesh RMG is still a growing industry supported by less developed and old technology. As a result this industry is mainly labour intensive. The industry is financed by the private and public commercial banks. This industry is a result of off-shoring by the US market. The lead time is yet to be reduced to ensure the customer satisfaction. Besides, firms require more investments to be able to produce in large volume in order to get the benefit of economy of scale and volume (M. Mohiuddin, 1991). Mahmud and Nizami(1993) in their article, Garment Industry in Bangladesh: Growth, contribution to the Economy, Problems and Prospects argue that there are firms that dont utilize their full production capacity. The main source of labour is female who are illiterate. Therefore, main strength of this industry is the cheap labour rate. The industry has been unable to attract talented managerial skills which seem to be one of the weaknesses (M. Mohiuddin, 1991). For the

enhancement of the competitive advantage there is a need of backward linkage industry of its own in the supply chain of Bangladesh RMG (Siddiqi, 2005). This will help the industry to reduce the dependency on foreign sources of raw materials and retain the core competence of low price. Even though the Multifiber agreement has abolished, as a least developed country Bangladesh enjoys GSP facilities which helped to detain the competitive position in the world market. But in the coming future if the tariff rate decline that will encourage the rival within the industry. In that case the GSP facility will help no more ( Rahman 1995).

2.2 Identification of Competitiveness


Competitiveness is about productivity, which in turn is a function of factors related to cost of products, as well as those related to non-price factors such as delivery schedules, reliability of producers, and such intangible factors like image of the country/company and brand equity. A company is competitive if it is able to produce products that either cheaper or better than those of other firms.
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The concept of competitiveness is broad. Different author identified the theories of competitiveness by different ways. Its meaning, implications, adaption and achievement vary from country to country, industry to industry or firm to firm. However, Michel E.Porter is the pioneer of the competitiveness theory in 1990 and cho and moon discussed its national and macro level in 2000.However, the literature provides no universal agreement on the definition of competitiveness. Moreover, some author, researcher reflects the labour cost, exchange rate, unit cost, price of input and other price or cost related factors for measuring the competitiveness of an industry/manufacturing firm(Edwards and gloub,2004) and Cockburn and others,1998).In contrast, some other researchers consider the innovation ,design, quality, distribution network, sales service, transaction cost, bureaucracy of export procedures and other non-price factors for measuring the competitiveness of a manufacturing firm and industry( sachwald,1994). In a world increasingly global and competitive it is essential that companies develop a strategic management in order to follow the complexity of the environment, the trends and competitiveness of the market to gain competitive advantages .This study attempts to incorporate price, non-price and result (for example, market share) factors in order to address the international competitiveness of the Bangladesh RMG industry. According to porter(1990), the main indicator of competitiveness is about productivity and then productivity is the main element of the living elements of country due to contribution of the countrys gross national income capita.(Porter,1990) identified four determinants of competitive performance, such as- (1)Factor condition, it is includes with fracture, expertise and requirement of the industries competitive action;(2) demand condition, requirement of particular goods and service for the domestic demand;(3)business structure and rivalry: its includes the business organization and management, characteristics of local rivalry as well as the situation of the country;(4) the presence of supporting industries, its includes the supplying industries support the main industries to be competitive in international market. According to (Ferreira and Alberto, 2008) location is one of the main important sources for the business
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competitiveness and company cannot change the location where it is in the right place. Thats why attractiveness factors can be offer by region so that business can

be located there and how the investor can do (or not) business with regional actors. The concept of competitiveness has been exercised in level of business or firm. The world competitiveness report well defined the business competitiveness as the ability to produce markets goods with design and services and price and none price factors with more attractive package than the competitors (IMD & WEF 1990, cited in DCruz and Rugman 1992).However, competitiveness in the firm level is simply the sustained ability of firm to generate profitability in open market. The department of trade and industry in UK defined the competitiveness of the firm as the capability to produce goods and services of the right price and quality as well as right time. Its means fulfil the goods and services to the customers by effectively and efficiently rather than other competitors (DTI 1998, cited in Budd & Hirmis, 2004) there are other some indicators of firms competitiveness like cost, productivity, profitability and market share. The term competitiveness has also been applied at the industry or sector level. In industry level, competitiveness is ability to achieve goals by performing with their competitors without subsidies and protection. However, it includes total profitability of nations firms in the industry, trade balance in the industry and balance of inbound and outbound foreign direct investment as well as cost and quality at the industry level. A competitive industry is one comprising firms operating profitably in open markets on a sustained basis. Cost, profit and productivity are some possible indicators of competitiveness at the industry level ( McFetridge (1995).The industrial level competitiveness is often better indicator of nation economic health than firm competitiveness level the success because of government support, monopoly rents and pure efficiency. Evaluating the competitiveness of an industry, successful firm asses On the other hand, it is also significant to note that the single firm competitiveness does not essentially indicate the competitiveness of an industry.
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Competitiveness is about ability to provide the services and products to the customer by effectively and efficiently than competitors. However, the success of trade sector achievement in international markets without subsidies and protection and provides direct measure of firms competitiveness by performance in international market. On the other hand, competitiveness is ability to match or beat the best firms in goods and services by cost and quality in the non-trade sector. Moreover, assessing the competitiveness in non-trade sector is more difficult because of no direct market performance test. National competitiveness defined as the competitiveness of a nation or country in which under the fair and free market condition ,produce goods and services which meet the test of international markets, whereas concurrently sustaining and increasing the real income for its people for the long term(OECD,1996, cited in Budd & Hermis 2004).In the European Competitiveness Report, the European Commission stated that competitiveness is understood as a sustained rise in the standards of living of a nation or region and as low a level of involuntary unemployment as possible. The World Economic Forum, in its Global Competitiveness Report, defined competitiveness as the set of institutions, policies and factors that determine the level of productivity of a country (WEF 2007). Moreover, The only meaningful concept of competitiveness at the national level is national productivity (Michael Porter 1990). The concept of competitiveness may seem easy to understand, however the

complexity of the concept is clear when we want to define and analyse, from various sources of literature. Porter (1990) argues that its ambiguity arises from the huge variety of definitions and perspectives on competitiveness, which makes it difficult to give an exhaustive and indisputable definition. Porter (1990) considers that are the companies and not the countries that compete in the international market, however the success of companies can be explained by the economic environment, institutions and by government policies. This means that the nation or region competitiveness is build up on the success that companies
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reach on the international market. According to Porter (1990) the analysis should focus on specific industries or on industry segments and not on the economy as a whole, since it is inconceivable that all companies in all sectors have a competitive advantage. For the nation, competitiveness means achieve high standard of living by the nations citizens. However, the standard living determined by level of productivity with organized nation resources and output of the economy per unit of labour. The whole economy is being competitive if the overall framework of macroeconomic is in equilibrium and increase or maintain the capacity in international market share when rising the standard living of population at the same time (ECLAC, 1990).A high rising of the standard living can be achieve only by continuing improving productivity either higher volume of productivity in existing business or successful entry into higher productivity business. The other authors have given similar definition about competitive nation A competitive nation is one that can succeed in international trade via high technology and productivity, with accompanying high wages and income(Dollar and Wolff, 1993).According to porter(1990) and krugman(1994) the finest Definition of competitiveness has long been used in international comparison ,that is productivity. Location competitiveness refers the ability to geographic areas to attract and hold productive workers and capital resources. Its covers the city, rural or industrial areas .However, cities play the important factors of production, such as -capital and labour (OECD,2006).The success of urban competitiveness have ability to continually improve business environment ,physical, social and cultural infrastructure, innovative and profitable firms, high employment rate, high wages, high GDP per capita, lower inequality of income and social exclusion (DCLG 2006).Some studies have accepted storpers definition The ability of an (urban) economy to attract and maintain firms with stable or rising market shares in an activity while maintaining stable or increasing standards of living for those who participate in it. (Storper, 1997).
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2.3 Competitive performance


The main indicators to measure competitive performance are product price, marker share, quality etc. and some other factors influencing competitive performance. Such as- wages, production cost, productivity and other issues. According to Fujimoto (2001) firms or industries competitive performance influenced by capability and enhancement of competitive performance depends on improvement of capability. However, an improvement of industry or firm capability takes time but it confirms the long-term sustainability of a industry or firm. On the other hand, improvement of competitive performance without capability may not be enough to ensure long-term sustainability of the industry or firm. (Fujimoto,

2001) proposed three approaches for measuring the competitiveness of a manufacturing firm .These are deep-level performance, surface-level performance and profit performance. .This study describes the surface-level and deep-level competitive performance. Surface-level competitiveness reflects the competitive performance of a firm or industry that is directly observable to consumers. In the earliest time, Bangladesh readymade garments industry exercised the surface-level competitiveness under the quota free trading environment. On the other hand, Deep-level competitiveness emphasizes on the capability and not directly involve with customers. Surface-level performance may be improve by the development of deep-level performance and ensure the long term sustainability

2.4 Strategic Management Process


Strategic management process plays a very important role in global business environment .However, strategic management process is a rational approach firm or industry use to achieve strategic competitiveness and earn above average return(Hitt,Ireland,hosskison,2009).The process of strategic management divided in two categories: one is strategy formulation and other is strategy implementation. Strategy formulation achieves the organizational goals through determining creating strategies in the organization. On the other hand, strategy implementation is a process where strategy implemented by practicing
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organizational policies. According to Browne,(1994) The strategic analysis process helps to integrate opportunities with the distinctive competencies of a firm to create an effective strategy. The company needs strategic management process for achieve their internal success. The garment firms in Bangladesh can generate a number of strategies by analysing its internal and external environment.

2.5 Internal and external environmental analysis


A number of books, articles and journals have concentrated on the external and internal analysis of industry and firm to understand their present and future situation. (Barney and Hesterley, 2007; Morden, Hitt et al, 2007; Macmillan and Tampoe, 2000; Luffman et al, 1996). Ready-made garment industry can recognize their potential threats and opportunities its competitive environment by practising external analysis (Hitt, Ireland, hosskison,2009).). On the other hand, internal analysis helps the organization to find the strengths and weakness (Analoui and Karami, 2003). Internal analysis also emphasizes on the specific resources of the firms and its assets, information and technology, capabilities (Barney, 1991). Fashion is always changing and a very important factor in the clothing industry. Hence, skilled manpower, developed technology, better raw material are required. Furthermore, working environment and effective supervision of the management brings out the best from the employees (Z. Chowdhury et al., 2004 ). All these internal factors may enhance the company performance but external factors such as the national export policy, comparative marketing distance, and lack of export commitment, exogenous economic constraints and competitive rivalry have been identified as major barriers to export decision of garment products. To help this situation out foreign based service should be carried out and finally the government should take some responsibility in arranging trade fair in abroad (H. Bhattachajuee et al. 1993). Cheap labor is the core competence of Bangladesh RMG. To be more cost effective they can look for an alternative transportation means ( Adhikary, 2005).

2.5.1 External analysis According to Duncan (1972) and Milliken (1987) uncertainty exists in a firm due to its external environment if the decision makers do not understand the future events or are unable to assign probabilities about the particular changes that will be incurred. Luffman et al (1996) stated that Environmental change is one of the major influences upon the performance of business. These types of development may affect to garments industry in a particular country (Tsiakkiros, 2002). According to (Morden, 2007; Hitt et al, 2003; Macmillan and Tampoe, 2000; Luffman et al, 1996) environmental analysis consists of Political, economic, social and cultural, and technological factors (PESTEL).Bangladesh garments industry faces various problems due to political instability, government rules and regulation, bureaucratic process etc. However, in economic factor Bangladesh garments industry faces obstacle because of global recession, fluctuation of exchange rate and inflation. In global competition due to lack of technological advancement Bangladesh garment industry have not been properly compete with their competitor .Moreover, SWOT also includes in external analysis and develop a plan for potential strength, threat, opportunities and weakness. According to (porter,1998) PEST analysis is very important strategic tool which is find out the actual position of the business and also give the way for business operation. 2.5.1.1 Pest analysis Political Environment (Keim, 2001; Hitt et al, 2003) stated that political factors are those in which organisations and interest groups compete for attention, resources, and a voice of overseeing the body of laws and regulations guiding the interactions among nations. Garments industries affected by government rules, laws, policies and created strategy which arise opportunities and threats (Luffman et al, 1996). Economic Environment Economic environment gives the direction to industry for understand economic environment, real scenario, identifying the changing trends, strategic implications
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and impact of the business environment (Hitt et al, 2000).According to (Morden, 2007; Macmillan and Tampoe, 2000) economic environment analysis includes GDP, exchange rate, recession, capital market, rates of labour market, government policies ,tax and interest rates. Social and Cultural Environment Social and cultural environment consists of work patterns, age, growth of population, psychological changes, Such as- consumer taste, habits, attitude, consumer behaviour, values of culture inside the society (Morden, 2010).Many authors said that these types of factors form a foundation a society. Technological Environment Nowadays analysis of technological environment plays a vital role in global competitive market and many of exporting and importing firms focuses on continuous innovation to achieve competitive advantage (Gavetti and Levinthal (2000) and Coff (1999). In external economy firms can make strategic decision through utilizing technological circumstances and knowledge. However, a firm produce more quantity, improve quality, delivery and replace labour with capital by implementing advancement technology. According to (Macmillan and Tampoe, 2000) PEST analysis is very important for garments manufacturing units

and emphasizes on change in external environment which are very necessary for the industry. 2.5.1.2 Five forces Porter's framework is known as the five forces model. It focuses on five forces that shape competition within an industry. The porter five forces provide an outline to the managers in organisations for firms or industrial analysis. However, firms or industries success depends on their own or competitors strategy and should develop a positive strategy by analyse different factors. (Barney and Hesterley, 2007) stated that defined strategy as a theory about how to achieve high performance by a firm within the markets and industries it is operating. Grant (1991) defined strategy as the match an organisation makes between its
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internal resources and skills...and the opportunities and risks created by its external environment. According to (Macmillan and Tampoe, 2000) High industry attractiveness and low barriers to entry leads to high threat of entry. However, existing firms could under the threat if the new competition arises and new competitors provides additional production capacity with low returns or revenues for the competing firms if the demand not increase in the market (Luffman et al, 1996; Barney, 1995). Porter (2008) stated that barrier changes can increase or decrease the threat of new entrants. The competition of garments industry is progressively increasing because of low barrier in the market. Nowadays in the industry most of the products and services executing same functions due to availability in the market, satisfying the needs of customers which creates high threats of substitute (Porter).However, threats of new substitute can be developed over the time by implementing advance technology. In addition, Porter (2008) stated that to overcome this situation firm could use new product feature in existing product or offering better value to the customers by providing broader accessibility. Bargaining power could be higher if the total supply in the industry is small amount of the suppliers total output (Macmillan and Tampoe, 2000). According to(Morden, 2007; Hitt et al, 2003 )in this situation, supplier can dominate over the firm by increasing prices and decrease the quality of the products. For instance, airlines industry before only depends on the travel agents to sell tickets but now they sell ticket by online.
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Porter (2008), stated that Powerful customers-the flip side of powerful supplierscan capture more value by forcing down prices, demanding better quality or more service (thereby driving up costs), and generally playing industry participants off against one another, at all the expense of industry profitability. Bargaining power is high if the buyer can easily switch to the other supplier to get discounts or additional features or services. Porter (2008) suggested that to overcome this situation company should expand their services, maintain good relation with the buyer or find alternative way to reach customers. Porter (2008) stated that, Rivalry among existing competitors takes many familiar forms, including price discounting, new product introductions, advertising campaigns, and service Improvements. If the high rivalry exists in the garments industry then the profitability would be limited. (Hitt et al, 2003). 2.5.2 Internal Analysis Nowadays internal analysis plays a very important role in business environment.

Internal analysis consists of identifying the problem, developing strategy, protecting problem, deploying resources, capabilities and core competencies. However, internal analysis describes the internal changes in the firm on the basis of performances. In addition, (Hitt et al,2003) stated that, a garments industry requires practical resource analysis, firm capabilities and core competencies to achieve competitive advantages. Firms resources consists of firms production process, such as capital equipment, employees skill, finance, management etc. In garments industry tangible and intangible resources can be quantified by resource analysis but does not create a strategic advantages of a firm. Firm capabilities depend on its skill and knowledge of employees and organize resources that have been deliberately combined integrated to achieve goals. Resources and capabilities created foundation of competitive advantages for firms competitor. Many researchers suggest that a firm should develop 3 to 4 core competencies. Resources and capabilities are the continuous learning process of the organization
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and cannot change rapidly due to both are created through organization history (Teece et al, 1992).

2.6 Corporate business strategy


2.6.1 Supply chain Management Supply chain management is very crucial factor in todays competitive business environment. To increase competiveness and generate more profits many firms utilizing SCM in many countries in the world. Many Bangladesh ready-made garments industry implementing SCM to reduce lead time (Bruce, 2004 ). Supply chain management is processes which are cover the shortage of raw materials and inventory process as well as finish goods from point of origin to point of consumption. In garments sector supply chain involving in separate activities. According to (Cooper et al., 1997) SCM is concerned with the effectiveness of dealing with final customer demand by the parties engaged in the provision of the product as a whole.Hege (2004) stated countries would increase value added and achieve more export earnings if the local textile industry and export oriented industry maintains a strong linkage. In Bangladesh garments sector supply chain usually recognize in the textile sector, backward linkage, import from neighbour country or the same country. The importance of the supply chain focused on the outsourcing growth, global competition and effects on the corporate strategy. However, present situation of supply chain emphasizes on total quality management, customer satisfaction-commerce etc. Supply chain perform the functions of procurement of materials, immediate transfer of materials and finish good as well as distribute finish goods to the customers.
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2.6.2 Lead time management: Nowadays, global competitive market highly concentrates of the value of quality and delivery on time. However, manufacturers are very conscious to maintain quality with low prices and deliver the product to the buyers rather than competitors to achieve competitive advantages. According to (Charles J. Murgiano, 2007) Lead time differentiate the firm from competitors and help the company to make a strong image in the market which makes increase sales. The definition of lead-time differ company to company how or which part company concentrated upon.(Li,2000) stated that lead time is process between placing an order and deliver the product. Nowadays, average lead times are between 90 to

120 days and sometimes 90 to 120 days. However, Lead time usually involve with order process period, procurement, manufacture and deliver the product through different stages of supply chain. In addition, lead time can be reduced if deliver the product instantly after manufactured or fast response from suppliers (Simchi,david et al., 2000). In ready-made garments sector, lead time starts from getting the buyer order confirmation and then ordering raw materials (Fabrics and accessories) to the supplier and after that production starts and process run by shipment of final product and then receive by the buyers. 2.6.3 Diversification Diversification plays a very important role in todays business world.(Porter,1998) )stated that diversification based on interrelationship is the form of diversification with the greatest likelihood of increasing competitive advantages in the existing industries or leading to sustainable competitive advantage in new industries. He also discussed that market based diversification strategy is about sell new products to new buyers, channels, geographic markets in order to reap the benefit of the market interrelationship and the product oriented diversification based on manufacture same product with share production activities.
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2.6.4 Backward linkage Siddiqi (2005) focused on the development of backward linkages to combat the challenges that may arise after 2005. The author examined the possibility of establishing backward linkages in Bangladesh garments industry. However, Our RMG may lose the comparative advantage in cheap labour in the long run if it does not increase its labour productivity and with this end in view Bangladesh must train the workers, supervisors and factory managers and reduce the dependency from foreign sources. He also discuss the improve capacity to spin yarn, weave cloth and process grey fabrics, continue to thrive as long as labour remains cheap and government policy to reform this sector. Moreover, he also concentrated about development of human resources and explores new market independently and Bangladesh must explore access to duty-free markets and try to improve law and order situation. 2.6.5 Global competition Nowadays level of global competition in the garments industry not only arise in the domestic boundaries but also compete in the global (Ernst andConnor, 1989).The firms are now expend their business in international new market to achieve competitive advantages through favourable government policies and low costs (Qian and Li, 1998). According to Spulber (2007) four types of trade costs such as transaction costs, tariff and non-tariff costs, transportation costs and time costs and these costs may vary country to country. Anderson and Gatignon (1986) stated that in global business different countries have different meanings, such as cultures, traditions, customs and societies, business practises and marketing methods etc. According to Rousslang and to (1993) in transportation cost such as shipment of export and import, supply chain and distribution channel is still a trade barriers in many countries. Barney and Hesterley (2007) mentioned about cost advantage to firms. They includes differences of size, production capacity

,machineries, plant and equipment costs, employee specialisation, spread, physical limits to efficient size, worker de-motivation, market distance, suppliers, cost advantages, competitive advantages , labour, land, capital and raw material,
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technological advantages and finally policy issues. Bangladesh ready-made garments industry can achieve competitive advantages through analysing these factors. Porter (1990) concentrated some important factors for the organization such as innovation, improvement and up gradation. However, Simon (1996) stated that a firm can achieve competitive advantages if the firm practicing continuous improvement in the products and services. In addition, Hamel and Prahalad(1991) recommended to experiment new product lunch in the market for recognize new successful product. However, Porter(1990) stated that quality can creates a structure of business environment to achieve competitive advantage in market .There are some factor which are shaping a environment to create competitive advantages such as factor conditions; demand conditions; related and supporting industries; and firm strategy, structure and rivalry. These factors are very important in Bangladesh garments industry for determine the product cost. For this reason Bangladesh needs to recognize these factors to compare with their main competitors.

-3: Research methodology


3.0 Introduction
Research methodology and its procedure have been discussed thoroughly in this chapter. From the beginning research have been discuss in initial level and then consider about research philosophy and research approach in broad way. However, research design has been conducted under the research philosophy and research approach. Later research strategy has been conducted in this research. Moreover, instruments of data collection method plays a very important role in this research as well as data sampling and sampling design also been conducted in this section. Finally discussion of ethical issues has been mentioned in this chapter.

3.1 Research Philosophy


In this research, researcher focuses on the philosophical inferences. According to (saunder,2007) Philosophical framework of social researchers effects on their understanding and perceiving all social phenomenon and behaviour (Saunder, 2007). He also stated that, Philosophy effects on research topics, designing and methodology. However, researcher selects their approaches and topic by using different philosophical assumption.There are three major philosophies are identified namely positivism, interpretive, and realism. Positivism Knowledge can be clearly organized and commonly recognized in positivism. Here everything ignores from philosophy but the knowable things of usual phenomena, time and space, unchanging relations of coexistence and succession. According to (Levin, 1998), Positivists believe that reality is stable and can be observed and described from an objective viewpoint. Positivist looks how a

specific relationship has produced and its effect without interfering phenomena being studied. Phillips and Burbules (2000) discussed that, People cannot be
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positive about claims of knowledge when studying the behaviour and actions of humans. However, separation of fact and value is the most significant argument of positivism, which continually determined to work inside fair attitude. According to Bryman and Bell (2001), identified, positivism is the most often treated as a supporting quantitative method. Above the statement of Bryman and Bell(2001) quantitative research is more used than qualitative research in positivism. The philosophy of positivism also discovers the reliability or scientific validity of prescriptive knowledge of real world(Don ethridge,2004).To summarize and understand, the approach allows the focus of research to be on understand what is happening in a given context. However, It contains the consideration of different actor perspectives ,researcher participation, multiple realities taking account of the situation of the phenomena understudy, and analysis of data as well as contextual understanding .(David carson,Audery gilmore,chad perry and kjell,2001).

3.2 Research Approaches


Deductive approach: It starts with general and ends with detailed and sometimes this strategy known as top down approach. Moreover, in this strategy we can think about interest or issue and apply in a theory and after that we can test a specific hypothesis. Deductive approach commonly used in the nature of the relationship between theory and research ( Bryman and Bell 2001). Deductive approach, linked with quantitative method to the relationship research and hypothesis which the inflection is placed on the testing of theories. Deductive theory represents the similar analysis of the nature of the relationship between research and theory (Bryman,Bell, 2007).Moreover, (Hussey and Hussey,1997) stated that deductive research is a study in which a conceptual and theoretical structure is developed which is then tested by empirical observation, thus particular instances are deducted from general influences. This approach is moving from general to particular and tested by experimental observation.
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Inductive approach: It involves method from a specific case. Inductive is usually moving from specific to general. This theory moving from detailed observation to broader theories and generalization .In addition, informally this theory sometimes it called bottom up approach. It can be informally called as a bottom up approach .Here researcher has been collected the data through interview, observation or question and then make a general conclusion. However, according to ( Byman and Bell,2007) Qualitative research emphasizes on inductive approach to the relationship between research and theory, in which the highlight is placed on the generation of the theories Here researcher has been used a grounded theory approach to the analysis of data and to generation of theory and researcher has been conducted with inductive approach because it matched with qualitative research.

3.3 Research design


Research design plays a very import role for research and researcher can use different research design techniques for any particular topic. (Bryman, Bell, 2007) Stated that Research design provides a frame work for the collection and analysis of data and it reflects decision about the priority being given to a range of dimensions of the research process Open-ended questionnaire: In Open-ended questionnaire respondents answer question by their own words and it is also known as subjective question. However, this type of questionnaire requires more than a word answer and starts with who, which, what, where and why etc. Researcher has been conducted an open-ended questionnaire consisting of 32 questions. This questionnaire has been pilot tested and necessary modifications have been made. There are some different forms of open-ended questionnaire that have used due to the data collection process as well.
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Sampling Patton (2002) stated that sampling depends on the real condition being analyse and not follow the established procedure for an appropriate sample size. This means number of sample should be selected according to present situation and other information which are related to the research (Mason, 2002). For this reason, researcher has been used different survey method through selecting specific sample size and conducted interviews to achieve proper justification for the researched topic (Yin, 1994). This study was identified through Garments owners, Managing directors and potential garment expertise from seven different ready-mate garments industry in the Bangladesh. For this research ,researcher has been selected the participants who are able to provide best answers to the research question(Creswell, 1994).To collect the information researcher has been selected directors of the firm, senior executives, production managers, operational mangers who has minimum five years of experience in garments manufacturing unit. However, researcher also has been selected five ready-made garments firms as the sample of the study and 100-200 workers selected from seven different garments firms.In this research, samples has been selected according to research question.

3.4 Research Strategy


Research strategy provides the way to the researcher and supports the researcher to do the research in organised way. In research strategy, researcher commonly used two types of strategies: Qualitative and Quantitative research strategy. This two research strategy helps the researcher in methodological issues to differentiate the both research and classifying the different methods of business. (Brayman and Bell 2007), stated that the connection between theory and research, epistemological considerations and ontological considerations both the research can be taken two distinctive cluster of research strategy. Above this both authors opinion, researcher can use both strategies to the conduct of business research.
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Quantitative research: This approach quantifies the market measurement with data. However, information relates to size of market, market growth and market share as well as penetration of the market etc. Furthermore, quantitative approach also use to measure in attitudes of consumer ,Customer satisfaction ,commitment and a

collection of other previous useful market data as well as used as a data collection technique(such as questionnaire) or data analysis procedure(such as graph or statistics) that generate on uses numerical data(Bryman,Bell, 2007). This research requires a deductive approach to the relationship towards research and theory. Qualitative research: Qualitative research helps the variety of settings and conduct different business to business as well as consumer market covering a range of issues by qualitative research. However, qualitative research strategy usually emphasis words rather than quantification in the collection of data and analysis .According to (Bryman and Bell, 2007) it used as a synonym for any data collection technique, such as interview or data analysis procedure, such as categorizing data, that generates or use non numerical data.However, this research usually emphasizes words rather than numbers in the collection and analysis of data. (Bryman and Bell,2007),stated that Qualitative theory is supposed to be outcome of an investigation rather than something that precedes it. Thats mean this research considered a method in theory and classification develop out of the data collection and analysis. However, qualitative research involves the group of theories rather than testing theories at the beginning.
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In this methodology, researcher has been conducted the qualitative research in the making of the dissertation. However, researcher has been gathered the data according to research objectives and question and also collect some real issues regarding the Bangladesh ready-made garments industry through qualitative approach. Why Qualitative research? Qualitative research is the most suitable method for explore the objective of the research and give the clear understanding of the topic that can deliver the description which is not deliver through any other research method. Silverman (2000) stated that, because of ability to data analysis quantitative method do better than qualitative which based on typical samples that organize large number of people for the events or activities through complete categorization. Moreover, in this study the gain of qualitative research is negligible as it contains folding data from different sources and understanding the depth of the topic. However, Halfpenny (1979) believes that Qualitative research is concerned with developing concepts rather than applying pre-existing concepts. In research method, a researcher ability depends on the availability of the data and how a researcher well make a foundation for the research by using proper method. According to (Maanen, 1998) Qualitative research is powerful tools for business and management subject which provides a clear understanding in the research for the particular subject such as- general management, public sector management, entrepreneurship and small business, marketing, human resource management, development of strategies, organizational theory and operation management.

3.5 Data collection method


Data collection method is a very important element for any kind of research to collect the information methodically .Researcher might be face difficulties to get the answer of the research question if the researcher not able to collect the data in systematic way. There are two kinds of data for any research. One is primary data

and the other is secondary data. Primary data: In primary data collection method, researcher has been conducted semi-structured interviews on the basis of research questions and objectives. Here researcher has been focused on the competitive status and performance in international market and as well as other important factors of the Bangladesh ready-made garments industry by using self-completion questionnaires. However, researcher has been selected seven garments factory owners, directors, senior executives by the using sample criteria. In addition, researcher has been conducted semi-structured interview which covered a list of ideas and question, although these may depend on interview to interview. This means that researcher omitted some question in particular interview, given a specific organizational context that is encountered in relation to research topic,(saunders,lewis and thornhill 2009). These primary data might be quantitative or qualitative in nature as well. In this research paper, researcher has been collected primary data through open-ended questionnaire.In semi structured interview researcher has been covered a list of ideas and question, although these may depends on interview to interview. Secondary data: Researcher has been collected secondary data through publications, articles, journals, magazines, journal, government statistics, annual company or industry report, and web pages were consulted for an understanding of the ready-made garments industry. However, researcher also collected data from literature, book, relating to the manufacturing industries and of ready-made garments industry of
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Bangladesh. On the other hand, researcher also has been collected secondary data through by post, email or fax. Semi-structured interview: Semi-structured interview can be used if the researcher have knowledge about the topic and able to make questions in advance of interviewing.(Bryman and Bell,2007) stated that Semi-structured interview typically readers to a context in which the interviewer has series of question that are general forms of an interview but it is able to vary the sequences of question. This interview usually founded open question to enter in a detail in a particular topic. In this interview researcher has been asked the same question of all participants.

3.6 Data analysis


Data analysis is a technique of making sense of outline are in or can be entailed on the set of figure (Bryan Nolan,1994).The analysis is based on the result of a consolidated evaluation of relevant theory and empirical information collected accordingly. All the collected information has been observed through the gloss of theoretical framework and has been used for answering the problem statement. In addition, Patton (2002) discussed that examining an interview after it is completed can also be the beginning of analysis. Qualitative data analysis is a creative process and it involves major demands, thoughtful works and knowledgeable severity. However, purpose of the topic and nature of investigation were analysed by the interview. Researcher has been analysed the important notes of data during the interview and other copied data. In addition, according to( Bogdan and Biklen ,1982) expresses qualitative data analysis as "working with data, organizing it, breaking it into manageable units, synthesizing it, searching

for patterns, discovering what is important and what is to be learned, and deciding what you will tell others". Here interpretation engaged importance of analysis, descriptive patterns, relationship and linkage between various descriptive dimension and assigning meanings (Patton, 2002). Researcher has been analysed
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the data in different stages as suggested by (Miles and Huberman ,1994) suggested that data can be analysis in two ways which are follows Consolidation and data reduction: Continually write note on relevant topic, main idea and identify categories. Data Display and Interpretation: Data transferred from comparisons and interpretation, draw the conclusion.

3.7 Data access:


Researcher has been talked with managing director of seven firms and described them about dissertation topic and research objectives. They confirmed that they would give the full support in terms of direct and telephone interview. Researcher has been maintained communication with them to get more information if necessary. Moreover, researcher has been also maintaining a good relation with the company that helped the researcher to find easy access to accomplish the research.

3.8 Credibility of the research:


Reliability is the context to which a measurement procedure yield the same answer however and whatever it is carried out and degree of which the findings is independent of accident circumstances of the research(Jerome krik,mark.l miller,1986). Validity is the context to which it gives the correct answer. However, validity is the finest accessible estimation to the reality of a particular proposal and conclusion .The researcher has been conducted the probable finding of the study to the existing theory of the business strategy and find out which characteristics of the result are more valid than others. The results could donate to the generalization of some theories by that technique Researcher has been narrated the findings of the study to existing theories of ready-made garments industry in dissertation and come across which
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characteristic of the findings are commonly more applicable than the others. By that method, the findings could contribute to the generality of several aspects of the theory, as opening another opportunity for prospective upcoming research. The finding of the credibility mainly depend on the results of the questionnaire, and respondents enquired to remain anonymous, objectivity of the answers and impartiality. However, the researcher does not give one hundred present guaranties for validity and reliability, because it was very difficult to avoid the subjective interpretations.

3.9 Ethical issues of the research


Research ethics is very important things for every research. According to (Bryman and Bell, 2007). This part of the research considered as the morality and the value of the rresearch .Here research ethics has been considered in every stages of research.There were some ethical issue that may occur from the making of research. One of the problems was carrying out the research plagiarism. Plagiarism means follow the research or work which is done by the others.

However, researcher has been also used appropriate usage of Harvard referencing system to solve the issues of plagiarism. Another ethical issue may be arising that is copyright. Researcher makes sure that he took the permission to use figures and tables from other published sources.
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Chapter: 4 Findings and discussion


4.0 Introduction
This study will consider and bring out the competitive performance of the Bangladesh RMG industry under the both the surface and deep level dimensions in USA and EU market as compare to mainly china and India in US and EU market as well as some other competitors. This research also investigates the internal and external factors to find out the competitive status of the Bangladesh RMG industry. However, recommendation will be provided on the basis of findings and analysis.

4.1 Surface-level competitiveness performance


This section considers the surface-level competitive performance of Bangladesh RMG industry as compare to mainly china, India and also other competitors in US and EU market. In addition, price competitiveness and lead time also analysed in surface-level performance. 4.1.1 Export performance in US market: Bangladesh has recently practised some product diversification for its export garments product in US market as compare with earlier time. But the upgrade of its product are not significant in US market as compare with other competitors like china and India, Vietnam, Cambodia etc. (Haider 2006).However, Bangladesh enjoyed sharp increase to the US market in the 1990s but later 2002 and 2003 faced declined in export earnings from garments sector. After the fiscal year of 2002-2003 export performance slowly increasing till 2009.Moreover, RMG exports of India experienced slow progress in last few years but RMG export of china to US market have increased at the starting rate over the year.
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Garments exports performance of china increased $32.6 billion from 1990s to 2009 and India increased $8.8 billion. Whereas, Bangladesh experienced $4.1 billion. China challenged all major competitors by their rapid expansion of garments product in the US market. Bangladesh exporting 99 types of textile and product category to the US market but the most of the contribution of product category is minimal. However, India and china exporting respectively 161 and 167.According to director of kds limited In spite of good performance of Bangladesh, we are not aggressive for product diversification in the market but our major rivals china and India are far more aggressive than us. In US market, Bangladesh has experienced highest earnings from Category 340 (cotton non-knit shirts, Jackets, trousers), amounting $780 million and only eight categories exported more than $470 million. Moreover, a total of 16 and 31 categories exports respectively only $180 million. Indian highest earnings from category 369 (miscellaneous cotton manufactures) which represent $580 million from the United States and they also earned $439 million,$168 million from 12,20 and 56 categories. Source:BGMEA

On the other hand, the significant changes in china are different than all others competitors. China earned $5.2 billion million from670 (man-made fibre flat goods/handbags/luggage) and 9,62,78 and 124 categories crossed respectively the $1.7 billion, $1.3 billion and $780 million .The Indian RMG more diversified than Bangladesh and china is significantly more diversified than India and Bangladesh. In addition, exports of Bangladesh RMG more concentrated mainly in man-made
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fibre or cotton. On the other hand India and Bangladesh diversified in all fibre groups. 4.1.2 Export performance in EU market: The export earnings of Bangladesh ready-made garment products increased 8.1 billion euros in 1996 to 2009.On the other hand, India and china increased respectively 5.7 billion and 37.1 billion euros between from1996 to 2009. However, the director of clipton group stated that Europe is our largest market and our performance is better than our rivals India. Bangladesh generates most export earnings from garments product in EU market which represents 95% and only 5% earned from textile. In contrast, India and china exports both textile and garments products in EU markets which stand below 75% and 90% respectively. This trend shows that Bangladesh textile sector far behind than china and India in EU market but maintaining a strong performance in EU market. Bangladesh experienced 75% of total garments export from top five categories in 1996 and it increased by 12% in 2008 but the India and China were decreased their main product category by 28%and 6% share to improve the other medium or low product categories .This trend shows that Bangladesh has lower product diversification than India and china to the European market. At this moment Bangladesh mainly focuses on the USA and UE market and low involvement of diversification, on the other hand India and china has continued to diversify its markets and change products mix of its exports. However, Bangladesh has increased production and marketing capabilities by showing recent performance but still lack of core competence to compete with major competitors in international market.
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In EU market, Bangladesh has experienced highest earnings from Category 340 (cotton non-knit shirts, Jackets, trousers), amounting $2.9 billion and category 8 exported more than $ 500million. Moreover, a total of 16 and 31 categories exports respectively only $320 million and $10 million. Indian highest earnings from category 369 (miscellaneous cotton manufactures) which represent $1.9 billion from the EU and they also earned $450million and $175 million from 32and 11 categories. Source: BGMEA On the other hand, China has significant performance than all other competitors. China earned $ 7 billion from 670 (man-made fibre flat goods/handbags/luggage) and 43,91,74 1categories crossed respectively the $6 billion, 2 billion, and $1 billion .The Indian RMG more diversified than Bangladesh and china is significantly more diversified than India and Bangladesh. In addition, exports of Bangladesh RMG more concentrated mainly in man-made fibre or cotton. On the other hand India and Bangladesh diversified in all fibre groups.

The table delineates that Bangladesh enjoyed tremendous performance in EU market. However, Bangladesh RMG exported $ 3941million knit garments in year of 2009, whereas, India exported $2829 in 2009.Bangladesh has more successful than India in EU market. On the hand, China has significant growth in EU market which shows $12143 million. In contrast, Bangladesh and Indian both declined in non-knit product in EU market but china increasingly export their non-knit product in EU market. In the made-up product category Bangladesh and India slightly increase in their export in the year of 2004to 2009.The charts also delineates that Bangladesh export more knit garments than woven garments (nonknit) from 2004 to 2009. The share of knit garments has been increased significantly due to quantity and value in total exports. On the other hand, the share of woven (non-knit) garments has been dramatically decreased by 86%.This sector has been able to modify its product categories which added value and more design, such as-fashionable shirts, designed shirts, quality jeans ,jackets, jumper, eco 0friendly cloth, embroidered wear etc. Figure: 3 Share of oven imports in EU market Share of EU woven imports ,2007 Source: Eurostat Knitwear product, Bangladesh exports grew up by near about 7% while world exports increased by 2.3% in 2008.However, China had a mass growth which represents 32.58% and Vietnam increased by 11.88%.China knitwear market share in EU increased by 12% from 2007 to 2008 but Bangladesh and India felt by2% market share. Duty free access offered to boost Bangladeshi product in EU market for knit clothing. But the situation for woven product is different as compare to knit product. 2008 due to weaker retail sales in EU and rising taka against euro. Above the discussion from the analysis, product diversification of Bangladesh ready-made garments industry is lower as compare to EU market. However, this industry also should develop structural changes in product mix and develop a research and development programme to make quality and fashionable product as well as meet the demand of international market. 4.1.3 Price competitiveness Price is the most important factor for the global competition. In last few years china and other major competitor applied price cutting strategy for export garment products. However, Bangladesh did not take any strategy for price cutting policy. China dropped 29 categories of garments product by 46% in USA market. On the other hand, all other competitor cut the price by 2%.China quickly achieved the price competitiveness in EU and other international market but Bangladesh failed to respond price cutting policies to stay in competitive in quota free international market. The sales executives of clipton ltd stated that Raw material price is becoming is higher thats why we are not able to take price cutting policies. Moreover, production costs are becoming higher due to increasing lead time, insufficient power supply and unstable political situation etc. Price per dozen in dollar selected Asian countries: 2008 (Dozen of price in dollars)

The chart represents the price of cotton trouser from Bangladesh is more cheaper than other competitor which is about 5.54 and Pakistan is the main competitor, whereas china charged the price around $85.50.On the other hand, Pakistan supplied the cheapest woven shirt which is around $23.59 which is two time cheapest than Bangladesh and Chinese woven was the most expensive. Moreover, Bangladesh supplied the most cheapest slacks to US market than all other competitor and nearest rival was Vietnam which is around $54.14.In addition, for the knit shirts Bangladesh was the price leader in compare to other competitor and the price of that product category was the most cheaper than china, Vietnam, Pakistan and India. In trouser category, Pakistan charged the cheapest price than all other competitor, whereas Bangladesh charged $35.17.In addition, the price of cotton under for Bangladesh was $8.69 and Chinese price almost double which was around $17.93.Moreover, Bangladesh and Pakistan was the closest rival in terms of woven blouse and knit blouse. Above this analysis shows that Bangladesh was the top price competitive country in the Asia and maintain low price strategy. In spite of low prices Bangladesh lost its market share to the china due to value terms. So Bangladesh have must take initiatives to improve value
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addition, otherwise they would lost their market share to china or other strong rivals. Labour cost: Lower labour cost is the main competitive advantage for Bangladesh in compare to other all competitors. Bangladesh offering lowest labour cost all south Asian country and its 2.5 times lower than china per hour. The Labour cost includes wages, social charges, and a series of bonuses. Figure: 4 Garments Manufacturing Labour Cost in 2010 Source: Jassin ORourke, 2010 Although china cut their price for 29 categories but other product categories price increased by 37% the year in between 2005 to 2008 and supplier shifted to the higher part of the market in order to take full advantage of restriction imposed by
Bangladesh

Labour cost in US$


Labour cost in US$

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US. However, raising the production cost is the main reason for the high product price. But at the same time Bangladesh declined their price by 7%, whereas Vietnam and Cambodia dropped their price respectively 14% and 19%.China and Mexico were the top supplier of trouser in US market as their price respectively $80 and $86, while Bangladesh sell only $52 which is lower than all other competitors and Bangladesh has achieved highest share of trouser in US market which is about 14%.This trends shows that price competitiveness has been main key to achieve market share. The import volumes in clothing sector have been on downturn in US market. The import of mans and boys non-knit shirts declined by 14.44 % for volume and 8.45% in terms of value terms but China increased their export by 16.27% in terms of value terms. As a result, china achieved a highest share of the US market in 2009 which is affected other competitors, like Bangladesh, India, Cambodia, Vietnam and other countries. However, Bangladesh lost the leading position in

terms of volume as order declined by 17% and ranked behind china in 2008.Moreover,average shirt price is $76 per dozen. Bangladesh sold $49 per dozen which rather cheap than china, India and Vietnam but Pakistan set their price only $39 per dozen. This analysis indicates that Bangladesh not strong in value terms. Thats why in spite of low price Bangladesh lost their market share to the china. 4.1.4 Lead time analysis: Lead time refers to the time required for supplying the ordered garment products after the export order has been received. Lead time in garments industry was 120150 days during 1980s and later it is about 30-40 days. The average lead time of Bangladesh of ready-made garments industry is about 90-120 days for woven garments and 60-80 days for knit garments. On the other hand, the average lead time for china takes 40 to 60 days for woven and 50-60 days for knit product, India takes 50-70 days for deliver the woven product and 60-70 days for knit products. The best way for Bangladesh to reduce lead time by developing
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backward linkage that helps to avoid the high dependency of raw materials from outside. If Bangladesh develops this strategy that will improve not only deep-level performance and but also develops surface-level performance. Bangladesh RMG can improve surface level competitiveness by reducing long lead time. Bangladesh imports most of the raw materials like fabrics and other important accessories from abroad. The industry spends 55-75 days to get the raw materials from abroad (Nuruzzaman, 2012). This is the main factor for long lead time and other factor is lack of speedy process on Chittagong port (Nuruzzaman, 2012).In the Chittagong port containers stuck for 15-20 days, which is required to be out between 3 to 5 days. Bangladesh garment industry would lose their reputation and image in the international market if the raw material remains shiftless at Chittagong port 10 to 15 days (Kutubuddin Ahmed, 2002). Moreover, managing director of Mohammad garments ltd. Stated, we are spending 15-20 days for receiving raw materials from port which is more significant for increase lead time. Researcher collected primary data from 7 export oriented garments firm to find out the probable reason for long lead time. According to them, 72% respondent said that inefficient port management, poor infrastructure and communication system. Moreover, researcher has been also collected secondary data by Managing director of Khaja fashion limited. The Managing director of this divided lead time in three broad stages. In the first stages, fabrics supplier takes 40-55 days including duration of fabric manufacture to the supplier and then the second stage, sea port to manufacturer takes 15-20 days and in final stage manufacturer takes 35- to 45 days to deliver the product to the buyer. Source: Khaja fashion Ltd The most important thing is sending the raw materials to manufacturer from the port. The total procedure usually takes only 2 to 3 days but Chittagong port takes 15 to 20 days due to inefficient port management and poor infrastructural facility. So it is clear that manufacturer of Bangladesh spent 55-75 days to get raw materials. According to 67% responded stated that , buyer make contract with the raw material suppliers before giving final order to the manufacturers and increase efficiency at sea port by the government. According to the director of khan

Group, Normally after the final contract with buyer we give the order to the fabric supplier and wait for 15-20 days for make fabrics. Above the discussion, some manufacturer stated that shipping and unloading port procedure is the main reason for long lead time. On the other hand, 31%respondants thinks infrastructure of poor transportation increases lead time. In addition mangling director of clipton ltd also stated that we can reduce lead time effectively by reducing more dependency on raw materials from abroad. Above the discussion, the competitiveness deeply affected by lead time and its also affecting the supply chain because of inefficient management. In the first four steps time spend is the main reason for long lead time. Long lead time can be
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reduced through by develop port management, effective transportation system and improve communication. By analysing the interview researcher got an idea how lead time involved in supply chain by seeing the lead time equation and use the projected time. Total lead time = [{Information lead time} + {(Order lead time)}] Order lead time = Fabrics manufacturing time+ time spend in shipment+ unloading from container +Receive by manufacturer+ final production of product+ shipment for final export. So, order lead time =7+15+25+14+6+23+20 Total lead time = 120 Above the equation, manufacturer receives the fabrics from supplier by four steps which take more than 60 days. However, shipping time is unchanged but we can reduce the other time for the lead time process. From the beginning manufacturer needs to place order to the foreign supplier and then supplier send fabrics through shipment and later product reach in the port and then fabrics unloading from the container and send to the manufacturer. Manufacturer needs 55-75 days for completing the whole process, but the duration of whole process can be reduce 30-35 days by implanting effective supply chain management and for the shipment needs only 25-35 days. Bangladesh RMG also can reduce lead time by manufacturing fabrics locally and it can reduce 55-75 days from total lead time and then this sector will able to export their products 45-60 days regularly.

4.2 Deep-level competitive performance


4.2.1 Backward linkage expansion: Backward linkage expansion supports the Bangladesh RMG industry to availability of raw materials, control production cost, export raw materials etc. Every year Bangladesh imports a huge volume of raw materials from outside the country. According to 66% respondent, production and consumption of yarn increased but the gap between production and consumption of yarn decreased over the year. This trend shows that Bangladesh already started the linkage expansion. However, a huge number of manufacturer still prefer to import raw materials from outside instead of local supplier due to price difference. However, Managing director of khan garments limited stated that we brought ya rn from the local market at the price of $2.80 per kg, whereas our neighbour country India sells same quality at the price of $2.1 per kg. Here Bangladesh is just a price

taker for its import raw materials from foreign sources. On the other hand, India and China expand their textile sector and developing themselves as a prominent textile supplier in the world market. Both these country support their RMG to avoid import of raw materials from external sources which facilitate the easy
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availability of raw materials and helps to add the value addition. For this reason, development of backward linkage is very important for Bangladesh RMG. Analysis of six different stages in backward linkage chain to clothing exports of Bangladesh In this analysis, the demand-supply gaps in garments industries of Bangladesh by dividing in different 6 stages. This total chain of production and supply in the garments industry reasonably perceived as the backward linkage to the global market of RMG product. Stage-1: Clothing in global market In this stage Bangladesh needs to find the niche market in global market for its garments export because most of market driven firms are more aggressive than ever before to remain in the market. So identification of market and product of each market is very important. There are different types of garment manufacturing industry in Bangladesh which can produce the support of new backward linkage facilities and serve these markets. Moreover, Bangladesh can export more products by backward linkage initiatives and follow the moving up market to prevent low cost competition from other countries which gain requires exploring new markets through extensive market research. In addition, Bangladesh RMG far away for export intermediate goods, such as yarn, grey and finished fabrics etc. This issue gives the clear idea Bangladesh garments industries will face tremendous challenge in open market. Stage-2: Clothing production and export of Bangladesh At this moment Bangladesh textile mills not able to meet the demand of local garment manufactures and they only produce 10% of the demand and the prices are higher than foreign suppliers. According to 38% respondents, raw materials price inside the country is higher than foreign sources. In addition, other another issue in the RMG export in Bangladesh is lead time. Bangladesh cannot properly deliver export garments product within average lead time because of long time to get raw materials, poor port management, undeveloped transportation facility, lack of communication etc. Diversification of product is another important element in the export of ready-made garments. Many garments exporting countries involved capital-intensive high technology, such as-Thailand, Korea, Hong Kong, turkey etc. Thailand based on low capital per worker and adopted simple technology. To develop effective production and export Bangladesh may improve management system by engineering, management information system but which is involved high cost. However, if Bangladesh takes initiatives for build
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an institution of fashion technology it will boost up for Bangladesh RMG. For instance, Hong Kong trade development council has established a fashion library which is very useful for fashion designers as it provides updated information and communication in this field. India and turkey have also developed fashion

institute which adapts to changes in fashion and provides latest fashion trends. Stage-3: Finished fabric making In Bangladesh dying, printing, and finishing industries have moderately grown during last few years. But it depends substantially on imported grey which again involves additional cost in import tax, transportation cost etc. Moreover, subsector lacks modern equipments and demanded quality. Only few units can do proper dying having particular deficiencies with colour shading. However, at present dying facilities commonly depends on export fabrics from outside and not available dying facilities inside the country. Stage -4: Grey fabric making (weaving and knitting) Bangladesh weaving mills continually drops short of production owning to chain link shortage of yarn production in spinning sub-sector. As a result has to import 3.15 billion metres grey fabrics adding tax, transport and other cost making the fabrics expensive. If the Bangladesh able to produce fibre locally and supply the manufacturer at cheap or same price as compare to the foreign raw material supplier then Bangladesh strongly compete with major competitor like china and India. On the other hand, knitting segment of grey cloth making is Bangladesh is better than others and meet local demands but faces some difficulties. This subsector still needs modern facility for modern quality. BKMEA(Bangladesh knitwear and manufactures and exporters association) has some demand i.e. waiver of import tax, Vat from spare parts, dyes and chemicals, support measure
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of 5%FOB value to deter devaluation of neighbouring countries,7% flat interest rate on all advances/terms loans, financial subsidy of at least 6-7%,waiver of peak hour electricity charge, textile park reschedule of container handling charge and training centre for skill development. Stage-5: Production of yarn through spinning mills Bangladeshi labour productivity is about 0.65 kg per mam-hour in spinning sub sector and it is lower than other competitors of the country. The yarn gap is filled by imports of 3.15 billion meters of grey every year. Only 21% of total demand for is met locally in Bangladesh. Spinning mills dramatically increase and expansion of sub-sector also have good position but present gap in yarn, according to CPD study, is 500 million kg for export and local market. Again, the spinning sub-sector is plagued with the technician shortage, power crisis and shortage of raw materials. The towering gap between demand and production of yarns entails massive imports under bonded warehouse facility which flawed by leakage. In Hong Kong .modern and open end technology is used in spinning mills to produce yarn which is supplied to the local knitting and weaving industries. In spite of countrys competitive advantages of lower waste percentage, lowest power price, low depreciation rate, only two factors take away the competitive advantage of Bangladesh takes over India and Pakistan that are price of auxiliary materials in Bangladesh is the highest among the all yarn producers and low conversion rate. Bangladesh spinning mills produces mostly low grade yarn and does not have capacity to produce good quality combed yarn and blended yarn. Stage-6: Fibre production or imports The position of fibre production in Bangladesh vis--vis other leading countries (China, Pakistan, India, turkey etc.) from which it is obvious that extensive natural fibre production, mainly cotton, is not feasible owing to growing demand

for food to feed a gigantic population and paucity of cotton land. This entails the massive import of cotton by the spinning sub-sector of the country. Now china, India, Pakistan, turkey enjoying the fibre advantages in backward linkage chain. Therefore, Bangladesh comparative advantage in natural fibre does not break off the spirit of backward linkage if the other segments of the chain emerged as dynamic and potential but the condition is not feasible for Bangladesh.

4.3 Swot analysis


Strength The main strengths of Bangladesh ready-made garments are availability of labour and low labour cost than other competitors. The average hourly wages for Bangladesh, India, china and Pakistan are respectively $0.23, $0.51, and $0.37. However, Bangladesh has created already a strong brand image in the world market by maintaining international standard. However, R&D sector developed BIFT (Bangladesh Institute of Fashion & Technology) which gives the idea of fashionable product diversification, providing latest fashion trends, develop new fashion design and creates fashion designers to support the Bangladesh RMG. Weakness The main weakness of Bangladesh RMG industries is high dependency of raw materials from outside the country. Market and product are not properly diversified as compare to other major competitor like china and India. Bangladesh RGM industry also have several major weakness which are low productivity, lack of knowledge in information of international market, political instability, poor port management, ineffective transportation system and huge dependency on ready-made garments subsector.Bangladesh may face difficulties for dependence
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raw material from foreign source, such as India, china ,south Korea etc. These direct competitors would charge high price for raw materials or stop selling raw materials. However, Bangladeshi labour productivity is much lower than its competitors like Srilanka, south Korea and Hong Kong and its might be affect in low labour cost of competitive advantages. Moreover, the major weakness for Bangladesh is poor port management. At this moment Bangladesh experiencing long lead time because of inefficient port management. These inefficiencies might be arise serious problem for the Bangladesh in international market. However, political instability also affects Bangladesh RMG industry. In political factors, unloading, shipment and production usually stuck by the strikes which affects in product delivery to the buyer. The product quality and quantity of Bangladesh RMG is still not in the satisfactory level to meet the global demand. The product quality of South Korea, Hong Kong, Taiwan and countries are far better than Bangladeshi product. Moreover, other main weakness is value addition, in RMG value addition only 30% because 70% of the other value import from outside the country. The value addition of Bangladesh is low to compare other major competitor because backward and forward linkages still not developed. The other main weakness is limited capacity of produce raw materials like fabrics but competitor like china, India, Pakistan, Thailand, South Korea and other countries produces quality fabrics. Opportunities: Bangladesh RMG needs to find out the opportunities in order to face global

competition in the free market environment. Now many foreign investors interested to establish garments industry in Bangladesh due to availability of low cost labour, superior geographic location and a huge number of skill and semiskill worker. If foreign investors establish industry in Bangladesh then more jobs will be create and government generate money as well as opportunity to get technological support. The main opportunities for Bangladesh RMG are quota free world market and United Nations Commission for Trade and Development (UNCTAD 1986) assessed that developing countries will expand their garments by 135% and textile
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by 78% and this change will be much larger. In 2000, USA raised their import by 105% for garments and textile item, whereas EU rose by 190% and demand of both garments and textile increasing over the year in global market. Moreover, Bangladesh can get utilize this opportunity to develop forward and backward linkage with RMG. Bangladesh RMG achieved significant competitive advantage over the competitor in the knitting sector. Bangladesh able to produce yarn per kg only $1.48,whereas Pakistan $1.60,india $1.78,korea $1.73 .In addition, Some EU and Asian countries willing to establish knit industry as an option to china because of low labour cost and inexpensive energy cost. However, there are some Korean firm operating export processing zone in Dhaka and Chittagong. These zones have producing trousers and jacket with high quality. Bangladesh RGM can take latest technological facility from these export zones producing high quality garments products. Threat: The biggest threats would be arise from big competitors like china, India, Vietnam, Srilanka etc. Bangladesh RMG faces threats from the competitors not only by marketing but also from outsourcing. As the discussed before in weakness, Bangladesh imports a huge quantity of raw materials from direct competitors. These competitors might be stop export raw materials to Bangladesh or charge higher price. If the competitor will take this action against Bangladesh then RMG will face serious problem to compete with major competitor in international market. In addition, nowadays, child labour is very sensitive issues in international market specially market.
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4.4 Five forces analysis


Nowadays many industry asses their different level of competitive by using the five forces model. There are many explanations for that fact; one of them is the industry structure. Porter built up this reference to analyse the industry that is influenced by five important factors (Supplier power, Threat of substitutes, Barriers to entry, Buyer power and Rivalry).The analysis of five forces in Bangladesh RGM industry are as below:

Threats of new entrants


Barrier to entry Bangladesh already makes a good reputation in world market and export dramatically increased over the year. For this reason many domestic competitor involved in this sector. On the other hand, Bangladesh did not get GSP facility after the MFA. Therefore, many new competitors entered in US market and make a strong competitive environment. Costs advantage, economies of scale, governments policies, capital requirements

and power of retaliation towards entering companies explain why it is difficult to enter in this industry. Most of the export oriented company in the domestic market created strong power by cost advantages and economies of scale and make huge investment and that are now sunk cost. For this reason, if a new competitor wants to enter in the market they must have to break the barrier by offering lower price with good quality, bringing additional production capacity at initial level. According to 70% respondent, this industry already established if any new company enter this market they will face huge challenges. Here barrier to entry is high because of high competition reduce the profitability and the technology of this industry naturally capital intensive. Time and cost of entry To establish a garments industry setup requires huge investment, research and development, innovation and understanding of customer needs. In garments industry, market entry is not much difficult but achieving a strong position in a market is very tough. New entrants might be face different tough situation likeoperational expertise, machinery, skill worker, infrastructure development and continuous production management. On the other hand, new entrants also face other problem, such as-over dependence of supplier, risks of raw materials, change in customer demand, etc. Cost advantages Most of the new entrants faces the problem of low margin and large operational cost because of unavailable economies of scale, high initial investment and compete with giant firms. The managing director of KDS group limited stated that The establishment cost of new export oriented factory cost and operational cost is very expensive. Above this analysis, threats of new entry is low to medium for the existing manufacturer because a huge number of garment industry available in Bangladesh as this sector very potential.

Bargaining power of supplier:


Bangladesh RMG exports a huge quantity of raw materials from outside the country like china, India, Pakistan etc. The sample companies import their raw materials from china and India and collect the cotton from domestic market. At this moment few manufacturer buying raw materials from local market which are relatively higher than foreign market. Bangladesh highly depended on the outsourcing raw materials and accessories which carries 70% of the total raw materials due to lack of enough capacity to produce export quality fabrics and
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accessories. Bangladesh imports 90% of woven fabrics and 60% of knit fabrics. The industry is based primarily on sub-contracting, under which Bangladeshi entrepreneurs work as sub-contractors of foreign buyers. It has grown by responding to orders placed by foreign buyers on C-M (Cut and Make) basis. During its early years, the buyers supplied all the fabrics and accessories or recommended the sources of supply from which Bangladeshi sub-contractors

were required to import the fabrics. However, situation has improved. At present, there are few large firms, which do their own sourcing. In Sample Company mainly import from India and china .They also collect raw materials from local market in case of emergency. They are not vertical integrated for this reason they are not able to maintain availability of raw material at all time and does not get proper support from backward linkage industries. Above the analysis of all factors bargaining supplier power is high.

Bargaining power of buyer:


The manufacturer of Bangladesh RMG industry produces their product according to buyer specification. If the manufacturer fails to maintain product quantity, quality and price then the buyer easily switch to the competitors like china, India, Srilanka, Vietnam which are able to meet buyers requirements. According to the sample company most of the buyer places their through buying agents. At present Bangladeshi entrepreneurs created a strong reputation in the world apparel markets and Bangladesh an increasingly becoming attractive place for the foreign buyers to take the advantages of cheap labour sources. It has been seen from last 10 years especially after MFA the world textile market becoming competitive day by day and now buyer are demanding high quality product with low price. Number and size of customers The customers have strong bargaining power because of two reasons; one is many garment manufacturers in Bangladesh RMG and other Bangladesh RMG highly dependent on foreign buyers. In Bangladesh almost has more than 4500 garments industry and 90% of the product export the foreign countries.
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Price sensitivity Foreign buyer and buying agent have high power for bargaining of pricing issue. Buyer has lots of option to place their order from many countries due to competition increasing in quota free world over the last five years. If the Bangladesh fails to maintain price then the buyer will switch to the other competitors. Quality: Quality is the other main factor in the garments industry. If the manufacturer not able to maintain the quality requirement then the buyer might be cancel the order or switch to the other competitor. For example-Bangladesh lost its t-shirts market share to china in US market in terms of value in 2005. Above this discussion, the bargaining power of buyer is relatively high.

Threats of substitute
Bangladesh RMG has very low threats of substitute because garments products are the basic necessity of human life and customer cannot move to other products by leaving garments products. On the other hand, the price of substitute products is more expensive. Moreover, the quality, features and benefits of substitute products are generally lower.

Rivalry
Number and size of firms

The garments industry has varied number of players with some major garments producers who have created a strong brand image in world market, such as-KDS limited, pacific jeans limited, clipton group etc. KDS is the market leader because of its long list of product line and coverage of different geographical area as well as main raw materials manufacturer in Bangladesh. However, in Bangladesh
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many small and medium sized firms also competing in the international market. Both these companies can be considered as potential threats due to strong production capacity, quality, knowledge and prices. Quality differences Quality differences and product specification is a major concern in this industry. The major garments firms of Bangladesh like kds ,clipton, pacific jeans, and other major rivals are able to meet the international standard in terms of quality. Switching cost For the garments industry switch the cost is very difficult because of expensive machinery and infrastructure cost involve with the whole manufacturing cost which prevents the garments manufacturer to change over from existing production method to newer innovation. Moreover, switch the supplier also risky because of consistency in product quality. Economies of scale The world garments market becoming competitive day by day. Now the large garments manufacturer targets at economies of scale by product standardization, such as- product design, high quality over a much larger on sales base. KDS is the market leader because of its economies of scale by bulk production which help them to manufacture large volume of product .This price down strategy can takes those firms which have vast investment, good market reputation, strong marketing strategy and ability to take risk in the business. Competition between local and foreign firms Rivalry among the foreign and local competitors is very high because of economies of scale, low diversity and number of competitors and higher industry growth indicates market rivalry is high. In local market order are limited and their competition based on cost. Bangladesh garment industry competing the international market by maintaining low cost strategy .If the other manufacturing country like India, china, Vietnam or other country offer the best price with same quality then the buyer will switch to the other competing country. Above this analysis, the trends show that the Structure of Bangladesh RMG is totally different. This industry has lot of opportunity but bargaining power of supplier and buyer are relatively high. On the other hand, threats of new entry medium to low. So it is clear that rivalry in this market also high in both domestic and international market.

Conclusion
The competitive performance of Bangladesh RMG in surface-level is somewhat good by quantitative developments of export growth in competitive international market over the year. However, the RMG industry of Bangladesh has already started the development of its surface-level competitive performance. For instance- Bangladesh RMG industry entered some product diversification and US and EU market. This industry also trying to concentrate in market concentration, as this sector already entered in japan, Australia, Middle East and some other countries. The industry recently took some initiatives for product upgrade in EU market but not emphasizes on US market. Some areas need more consideration to achieve deep-level competitiveness by backward linkage expansion. Bangladesh government should take some initiatives to support this industry to make a strong image in the global competitive world. The most emergency tasks for Bangladesh are reducing long lead time; otherwise international buyers may switch to other suppliers. However, the best way to progress surface-level competitiveness through reducing long lead time, which will also help to develop deep-level competitiveness. In addition, Bangladesh must take some strong initiative to establish backward linkages but it is not possible to establish overnight. Bangladesh also has to think about other alternatives to maintain competitiveness in international market. Bangladesh RMG must be avoiding to over dependency of raw materials from foreign sources and concentrates on local raw materials production. Moreover, globalization giving forces to the Bangladesh to take that threat. So, Bangladesh should take an effective strategy to improve not only
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surface-level competitiveness but also deep-level competitiveness. A good balance in surface and deep level competitiveness will achieve a good position in the world market and the same time improvement of the countries present position by providing full-package garments pro duct. On the other hand, Bangladesh must improve their working environments in the factory, as international buyer giving the pressure for compliance with codes of conducts. Now many big buyers interested to expand their in Bangladesh if they able reduce long lead time and meet the compliance issues. So, Bangladesh should more focus these issues very carefully and directly. At this moment Bangladesh experiencing some product and market diversification but this process far behind than major competitors. So, Bangladesh RMG must take some product and market diversification strategy to increase its market share. Only Simple shirts or t-shirts manufacture will not help the country to remain competitive in international market for a long time, thats why Bangladesh needs to develop quality and high price garments products. However, port management must be develop and strengthen in order to stay in the international market. Such all these steps will help the Bangladesh RMG industry to improve the competitive performance in the international market.
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Chapter 5: Recommendations
Pricing strategy Pricing strategy will be the best reflects the competitive status of Bangladesh RMG industry. The main suggestion for Bangladesh RMG industry is to maintain low pricing strategy. This sector already achieved competitive advantage by its

low price strategy. Bangladesh should maintain this pricing strategy to stay in the competitive international market. If the Bangladesh exports their product at a lower price than competitor then more buyers will place the order or existing buyer will get high volume of product order. Bangladesh RMG should also focus on product cost strategy. If the product cost is lower than they manufacturer able to export lower price than competitor.
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Improvement of quality Quality is one of the main factors for global competitive market which makes the customers loyal to the product. According to sampling group quality can affects the sales in international market because now customers are very quality conscious and fashionable. However, they also believe that growth of business depends on by providing good quality, effective design and ability to fulfill the requirement of changing fashion trend and style. Improvement of lead time Long lead time which has negative impact on export growth of Bangladesh garments industry. We must take some initiative to reduce the long lead time by development of port management, efficiency of goods unloading, implementing new technology and avoid over dependency of raw materials. If we can achieve this strategy we can definitely improve lead time and deliver the product very shortly which will create a strong position for the Bangladesh RMG in international market. Now the most important task for Bangladesh RGM industry is reduce long time. If the RMG do not take any initiatives to reduce long time then in future might be switch to competitive countries in the present quota free business environment. However, the best way for Bangladesh to progress its deep level competitiveness through reducing production and distribution time, which will improve surface level competitiveness by decreasing long lead time. Develop labor productivity We have to improve our labor productivity by providing good wages and other facilities, like-bonus, free medication, child care etc. If we provide these facilities then the labor will be more motivated and that will became more productive.
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Market diversification Bangladesh mainly exports in EU and US market and recently some other geographical market. This sector already builds a good reputation in the market, so they should enter the other market and give more attention to minor market. The governments of Bangladesh should encourage the manufacturer to enter in the other markets with high growth potential that have not been capture by the rivals. The advantage of early move helps the industry to build long term prospects. At present the share of Bangladesh RMG in middle east and Africa is only 7.9% and 1.1%.The present share shows that Bangladesh can utilize this opportunities by strategically enter these market. Expansion of Backward linkage: Backward Integration refers to the development of subsidiary industries in order to reduce Bangladesh garments dependence on imported inputs i.e., the supporting industries that produce garment accessories and the initial processing of imported gray fabric. If RMG sector expends backward linkage, it will support the RMG sector for avoid the over dependency raw materials from foreign

sources. However, Manufacturer can also buy raw materials at a cheap price which will help the manufacturer to sell their product at cheap price than competitor in the international market. In addition, expansion of backward linkage will also support the industry to reduce long lead time and that will help the manufacturer to send the product within international standard lead time. Diversify the product range Nowadays, major competitors like china and India highly diversifying the product in international market but Bangladesh garments industry still not much aggressive for their product diversification. Bangladesh should come with wide range of product in international market. If the Bangladesh RMG more diversify the product in the international market then it will create strong competitive environment and Bangladesh RMG industry emerge as strong threat for the major competitor.

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