Operation Strategy in

Bangladesh
An Exploratory Study (1991-2016)

Submitted by-
Khairul Islam Shuvo

ID 08-014

Department of Management Information Systems

University of Dhaka

Submitted to-

Dr. Md. Hasibur Rashid

Professor

Department of Management Information Systems

University of Dhaka
Date of Submission: 12 th February, 2018
Letter of Submission

Date: 12th February, 2018

To,

Dr. Md. Hasibur Rashid

Professor

Department of Management Information Systems

University of Dhaka

Subject: Submission of Term Paper

Sir,

It is my great pleasure to submit the term paper “Operations Strategy in Bangladesh: An Exploratory
Study (1991-2016)” as per your instruction.

It would be kind of you if you accept this report. Your response regarding this matter

would be very much helpful for me to understand things better.

If you need any further clarification or interpretation regarding this report, it would be my pleasure to
answer any of your queries.

Sincerely yours

……………………………..

Khairul Islam Shuvo

ID 08-014

Department of Management Information Systems

University of Dhaka

2|Page
Table of Contents
Letter of Submission ..................................................................................................................................... 2
Executive Summary....................................................................................................................................... 4
Introduction .................................................................................................................................................. 5
Objective of the study ............................................................................................................................... 5
Research Methodology ............................................................................................................................. 5
Limitations of the Study ............................................................................................................................ 6
Literature Review .......................................................................................................................................... 6
Operation Strategy in Bangladesh ................................................................................................................ 7
Manufacturing Industry ............................................................................................................................ 9
Textile Industry ................................................................................................................................... 11
Bangladesh GDP From Manufacturing.................................................................................................... 13
Possibilities of manufacturing sector ...................................................................................................... 14
Operation Strategy in manufacturing sector ......................................................................................... 15
Service Sector.......................................................................................................................................... 18
GDP contribution from service sector .................................................................................................... 21
Future of service sector .......................................................................................................................... 22
Service sector and operations strategy .................................................................................................. 23
Conclusion ................................................................................................................................................... 25
Recommendation.................................................................................................................................... 25
References .................................................................................................................................................. 26

3|Page
Executive Summary

The market-based economy of Bangladesh is the 44th largest in the world in nominal terms, and 32nd
largest by purchasing power parity; it is classified among the Next Eleven emerging market economies
and a Frontier market. According to the IMF, Bangladesh's economy is the second fastest growing major
economy of 2016, with a rate of 7.1%.Dhaka and Chittagong are the principal financial centers of the
country, being home to the Dhaka Stock Exchange and the Chittagong Stock Exchange. The financial
sector of Bangladesh is the second largest in the subcontinent. This has been made possible because
both the industrial and service sector development. Both of these sectors have contributed for the
overall development of the country.

Primary purpose of this paper is to track the overall changes that have been occurred in the industrial
and service sector from 1991 to 2016, the contributions of these sectors and the applicable operations
strategic framework for both of these sectors.

4|Page
Introduction

According to the Asian Development Bank, Bangladesh’s economy grew by 7.1% in 2016, the fastest
expansion in 30 years. It was also the sixth year in a row that GDP growth was greater than 6%. Most
analysts expect this run to continue. Ratings firm Moody’s, for example, says the country’s growth is
likely to remain “robust.”

To ensure a sustainable economic growth powered by contributions from manufacturing industry as

well as service sector , the effectiveness of operation strategy and management have to quantified to
have an overview of how much flexibility and capabilities operation strategy provides and how.

Objective of the study

The main objective of this report is: To study Operations Strategy in Bangladesh for the duration
between 1991 to 2016.

Research Methodology

Exploratory research, as the name implies, intends merely to explore the research questions and does
not intend to offer final and conclusive solutions to existing problems. This type of research is usually
conducted to study a problem that has not been clearly defined yet.

Conducted in order to determine the nature of the problem, exploratory research is not intended to
provide conclusive evidence, but helps us to have a better understanding of the problem. When
conducting exploratory research, the researcher ought to be willing to change his/her direction as a
result of revelation of new data and new insights.

Information Sources are Reports of various government and Financial Institutions, Existing Studies and
publications,Internet.

5|Page
Limitations of the Study

While conducting this research the factors mentioned below limited the quality of the report.

1. Lack of accessible data.

2. Unavailability of industrial data for public usage.
3. Exploratory studies generate qualitative information and interpretation of such type of
information is subject to bias.

Literature Review

Exploratory research design does not aim to provide the final and conclusive answers to the research
questions, but merely explores the research topic with varying levels of depth. It has been noted that
“exploratory research is the initial research, which forms the basis of more conclusive research. It can
even help in determining the research design, sampling methodology and data collection method”.
Exploratory research “tends to tackle new problems on which little or no previous research has been
done”

6|Page
Operations management is an area of management concerned with designing and controlling the
process of production and redesigning business operations in the production of goods or services. It
involves the responsibility of ensuring that business operations are efficient in terms of using as few
resources as needed and effective in terms of meeting customer requirements. It is concerned with
managing an entire production system which is the process that converts inputs (in the forms of raw
materials, labor, and energy) into outputs (in the form of goods and/or services), as an asset or delivers
a product or services.Operations produce products, manage quality and creates service. Operation
management covers sectors like banking systems, hospitals, companies, working with suppliers,
customers, and using technology. Operations is one of the major functions in an organization along with
supply chains, marketing, finance and human resources. The operations function requires management
of both the strategic and day-to-day production of goods and services.

In managing manufacturing or service operations several types of decisions are made including
operations strategy, product design, process design, quality management, capacity, facilities planning,
production planning and inventory control. Each of these requires an ability to analyze the current
situation and find better solutions to improve the effectiveness and efficiency of manufacturing or
service operations.

Manufacturing is the process of converting raw materials, components, or parts into finished goods that
meet a customer's expectations or specifications. Manufacturing commonly employs a man-machine
setup with division of labor in a large scale production.(Business Dictionary) Service is an industry made
up of companies that primarily earn revenue through providing intangible products and services.
(Business Dictionary) Operations strategy is made up both in manufacturing as well as service sector.
Though primarily, it was considered that operations strategy in related only to the manufacturing sector,
more research is now being conducted as how to develop operations strategy for the service sector as
well. Page | 6 Service sector is now gaining more importance than manufacturing in twenty-first
century. As a result, more and more new ways are now being identified through research to improve the
service sector as a whole.

Operation Strategy in Bangladesh

Strategic operations management in both service and manufacturing industries provide goods and
services and synchronize through ensuring supply to make business operations efficient in terms of
utilizing resources as indispensable and effective in terms of gathering customers‟ requirements.
Strategic operations management often includes considerable measurement and analysis of internal and
external factors based on strategy formulation and proper implementation process of a business
organization. Harry and Schroeder (2000) defined strategic operations management as a transformation
process in organizations. Operations management strategies in both service and manufacturing
industries deal with the supply of goods and services and engage with the responsibility to make
business operations well-organized in terms of using resources as required and valuable requisites to
arrange customers‟ requirements through ensuring effective distributional channel. The process of

7|Page
operations management involves value chain facilities which convert input to output. This may be
helpful for creating core competencies as well as achieving distinct capabilities. Bangladesh has been
lagging behind to ensure proper strategic operations management to improve its business
organizations and to thrive in the global business environment. Operations management should act
along with strategic management to create core competencies and appropriate measures are required
for business organizations so that the organizations are able to create distinct competencies, raise
profit and in the long run able to survive in a competitive environment. The function of operations
management is to convert an organization‟s inputs into the finished goods or services. The nature of
how operations management will be carried out in an organization depends on the nature of the
products or services of the organization. The success of the organization generally depends on the
control and fulfillment of the business processes. Efficient strategic operations management can lead to
an organization‟s success. Strategic Operations management can be improved in the business
organization through business process reengineering, product design and specification, strategic
capacity planning for products and services, aggregate planning, improving supply chain management,
lean operations, improving waiting time, simulation and carrying efficiency in inventory management as
well as project management. Strategic Operations management must add value during the conversion
process and value chain may be created for the betterment of the business organizations.

As a result costs of factors will be minimized and profit will increase. Quality assurance in operations is
also important. This will create efficiency and effectiveness so that distinct competencies can be earned
which ultimately achieve long run sustainability. These days‟ business organizations in Bangladesh are
using improved information and communication technologies and enterprise resource planning
software. But still the country needs to improve operational efficiencies. Sometimes selling cost of
product of the country becomes high due to corruption, rent seeking and transportation cost etc. For
example, due to inefficiencies, corruptions and nepotisms in the Chittagong port, international business
of the country has been greatly hampered. For this reason it is difficult to develop proper supply chain
management in either manufacturing or service industries. Faulty inventory management system
creates wastage of capital. Moreover, maintenance systems in organizations in the country are also
poor. Just in Time and Lean Manufacturing systems can help business organizations compete in the real
world. Project management and waiting line systems are also not working efficiently in the country.
Ensuring simulation technique through creation of a mathematical model for some procedures,
conditions, etc, can help to calculate approximately its characteristics or solve troubles about it
probabilistically. Similarly some other factors like infrastructure, value chain, risk factors, political
instability, lack of corporate culture and environment, domestic and global warming etc. are also
creating hindrance for smooth business functions of the country. Despite all these negative aspects, for
an organization to remain in the business process, efficient product and service design and strategic
capacity planning for products and services are required.

8|Page
Manufacturing Industry

The Bangladesh economy has witnessed significant structural changes over the last four decades. The
share of agriculture in GDP has declined while the relative significance of industry and services sectors
has increased substantially. Over the past two decades or so, Bangladesh has experienced sustained
overall economic expansion. However, the economy is yet to have a strong manufacturing base. The
pace of reduction in agriculture’s share in overall employment has however been much slower than the
pace of reduction in agriculture’s share in GDP. This suggests that growth in the overall manufacturing
and services sectors have not been strong enough to reallocate surplus labour from agriculture. This
indicates that as far as the overall manufacturing sector is concerned, there remains a challenge for
employment creation at a larger scale.

Manufacturing is now an overwhelmingly salient component of the country’s export composition,

thanks largely to the rapid expansion of the RMG industry. RMG has been an important contributor to
the growth and employment generation in Bangladesh. However, the question remains as to whether
the current structure of the manufacturing sector would continue as a sustained driver of economic
growth and employment creation in Bangladesh in the future because of two reasons. Firstly, given the
existing heavy reliance on the RMG sector and weak performance of most of the non-RMG
manufacturing sectors, achieving sustained and long term growth in the manufacturing sector in
Bangladesh remains a challenge. Secondly, it can be argued that the growth in the RMG sector in
Bangladesh has, to a large extent, been driven by some sizeable ‘rents’ generated in this sector, and
there are possibilities of shrinking the sizes of such ‘rents’ in the future due to both domestic and
international factors. There have been five major sources of ‘rents’: the Multifibre Arrangements (MFA)
quota (which no longer exists) and the Generalised Systems of Preference (GSPs); different forms of
subsidies; tax exemption; the labour regime; and compliance.

Other industries which have shown very strong growth include the pharmaceutical industry, shipbuilding
industry, information technology, leather industry, steel industry, and light engineering industry.

The MFA regime was phased out by the end of 2004, though the GSP facility of the EU is still in place.
However, there are concerns with regard to the continuation of such facilities in the future on grounds
of lack of compliance, weak labour standards and the conflictual political situation in Bangladesh.

The RMG industry also enjoys support from the government in the form of export subsidies, interest
rate subsides and subsidies on the cost of utilities. ‘Rent’ in this sector is also generated by the tax
exemption facilities. It is estimated that the size of the tax foregone in the RMG sector due to the
provision of tax exemption facility in recent years could be as high as 6.3 percent of the total tax

9|Page
revenue. However, the size of such ‘rent’ could shrink over time due to the budgetary constraints of the
government.

Over the past three decades, the RMG industry has benefited from a labour regime, supported by the
major political parties, which has been able to keep the wages of labour in this industry very low.
However, recent labour unrest over the hike of the minimum wages in this sector as also the pressure
exerted by the international community poses serious challenges in terms of the ‘sustainability’ of such
a labour regime. Similarly, a regime of lack of compliance, especially with regard to the working
environment and factory standards, in the context of weak regulatory institutions, has generated ‘rent’
for this sector over the years.

However, such ‘rent’ has become highly unsustainable due to the serious international pressure for
enforcing compliance in the wake of recent incidents of fire and building collapse, which have resulted
in a large number of deaths of RMG workers. All these developments suggest that the RMG sector in
Bangladesh needs to undergo some major structural changes in the future for ensuring its sustainability,
which would have important implications for the growth of both the manufacturing sector as also of the
overall economy.

Against this backdrop, it is important to highlight that in order to become a sustained driver of economic
growth and employment creation in Bangladesh, the manufacturing sector needs to lay stress on
expanding and diversifying its base. It is important to support macroeconomic, trade and industrial
policies, and to address the policy-induced and supply side constraints, which have hampered the
growth of the non-RMG sectors. Some of these constraints include the lack of investment funds and
working capital, prevalence of high interest rates, shortage of skilled workers, lack of entrepreneurial
and managerial skills, availability of poor physical infrastructure, and inefficient ports along with high
transport costs, weak institutions, a poor law and order situation, and high invisible costs of doing
business, among other things.

Apart from RMG, the export response of all other major commodities has been very weak. The RMG
sector also appears to be the main beneficiary of the export incentives while for the non-RMG sectors,
such schemes have proved to be less effective. This situation also raises a critical question as to whether
rents are needed for the promotion of the non-RMG sectors. The current industrial policy highlights the
importance of economic diversification and of providing incentives to other sectors in order to generate
some rents in the non-RMG sectors. However, it should be kept in mind that the manner in which the
RMG sector has been able to generate ‘rents’ through the suppressed labour regime and weak
compliance is not sustainable and cannot be replicated in the other sectors. Hence, there is need for a

10 | P a g e
well-designed and effective industrial policy wherein monetary (interest rate subsidies) and fiscal
incentives (reduced taxes or tax holidays) should be transparent and time-bound. The current industrial
policy, however, lacks vision and is also poorly designed. In addition, industrial policy needs to address
issues of education and skill development for facilitating higher capabilities, in which Bangladesh is
lacking.

Textile Industry
Bangladesh's textile industry, which includes knitwear and ready-made garments (RMG) along with
specialised textile products, is the nation's number one export earner, accounting for $21.5 billion in
2013 – 80% of Bangladesh's total exports of $27 billion. Bangladesh is 2nd in world textile exports,
behind China, which exported $120.1 billion worth of textiles in 2009. The industry employs nearly 3.5
million workers. Current exports have doubled since 2004. Wages in Bangladesh's textile industry were
the lowest in the world as of 2010. The country was considered the most formidable rival to China
where wages were rapidly rising and currency was appreciating. As of 2012 wages remained low for the
3 million people employed in the industry, but labour unrest was increasing despite vigorous
government action to enforce labour peace. Owners of textile firms and their political allies were a
powerful political influence. in Bangladesh. The urban garment industry has created more than one
million formal sector jobs for women, contributing to the high female labor participation in Bangladesh.
The RMG industry also enjoys support from the government in the form of export subsidies, interest
rate subsides and subsidies on the cost of utilities. ‘Rent’ in this sector is also generated by the tax
exemption facilities. It is estimated that the size of the tax foregone in the RMG sector due to the
provision of tax exemption facility in recent years could be as high as 6.3 percent of the total tax
revenue. However, the size of such ‘rent’ could shrink over time due to the budgetary constraints of the
government.

Bangladesh’s export earnings from the apparel industry, the lifeline of foreign currency earners, have
seen only a 0.20% rise to $28.15 billion, which is the lowest on record in the last one and a half decades,
in the just-concluded fiscal year.

However, Bangladesh’s overall export earnings stood at $34.83 billion in FY’17, which is 1.68% higher
than the $34.25 billion a year ago.

Since the inception of RMG export, Bangladesh has registered negative growth only once in 2001-02
fiscal year, by 5.68%, to $4.58 billion.

Trade analysts and businessmen have blamed average price fall of products, ongoing structural reforms
in the apparel industry, economic slowdown and sluggish demand in export destinations, devaluation of
Euro and appreciation of BDT against US dollar, for the lackluster export growth.

11 | P a g e
According to provisional data of Export Promotion Bureau (EPB), Bangladesh’s export earnings from the
RMG sector stood at $28.14 billion, posting 0.20% growth in the past fiscal year. The figure is 7.34% less
than the target of $30.38 million.

In the last fiscal year, Bangladesh earned $28.09 billion from the clothing industry.

Of the total amount, Knitwear products earned $13.76 billion, which is 3% higher than the $13.35 billion
in the same period a year ago. Woven products earned $14.39 billion, down by 2.35%, compared to
$14.73 billion a year ago.

As per the provisional data, in FY’17, Bangladesh’s overall export earnings stood at $34.83 billion with
1.68% growth. The figure is over $2 billion less than that of the government target of $37 billion set for
the previous fiscal. In June, export earnings saw a 15.27% fall to $3 billion, which was $3.59 billion in the
same period last year.

12 | P a g e
Bangladesh GDP From Manufacturing

GDP From Manufacturing in Bangladesh increased to 19776.50 BDT Million in 2017 from 17822.30 BDT
Million in 2016. GDP From Manufacturing in Bangladesh averaged 12329.94 BDT Million from 2006 until
2017, reaching an all time high of 19776.50 BDT Million in 2017 and a record low of 7383.40 BDT Million
in 2006.

Figure 1: GDP from manufacturing sector.

13 | P a g e
 Figure 2 Trend of RMG export volume nad contribution to GDP

Possibilities of manufacturing sector

Growth in FY2017 (ended 30 June 2017) was higher than expected as consumption picked up in
response to rising income, and as public investment strengthened. Inflation was lower than projected,
and the current account moved into deficit, as expected, with a wider trade deficit and lower
remittances. For FY2018, this Update retains the Asian Development Outlook 2017 growth projection
but anticipates slightly lower inflation and a larger current account deficit. Recent flooding is unlikely to
affect growth, which could improve if infrastructure development accelerates. Mobilizing domestic
revenue remains a priority.

14 | P a g e
 Figure 3 GDP of Bangladesh 2012-2018.

Operation Strategy in manufacturing sector

There are a number of frameworks that has been proposed by various researchers over time. They
focus on various aspects of the manufacturing, its relation to the overall corporate strategy and the
ways to retain the competitive position in the market place. A list of prominent frameworks proposed by
various scholars is given below:

15 | P a g e
 Skinner(1969) Hayes and Fine and Hax(1985) Hill (1987) Swamidass and
•Manufacturing strategy Heelwright(1985) •It is a critical part of •It represents a newell(1987)
refers to exploiting •A sequence of the firms corporate coordinated approach McGrath and
certain properties of decisions that over and business which strives to achive Bequillard(1989)
the manufacturing time ebables a strategies,comprising a consistency between
function as a set of well coordinated functional capabilities •The effective use of
business unit to
competitive weapon. objectives and action and policies and the manufacturing
achieve a desired
programs aimed at agreed current and strengths as a
manufacturing
securing a long-term future competitive competitive weapon
structure,infrastructure
sustainable advantage advantage necessary for the achivement of
and set of specific
over competitors. for success in the business and corporate
capabilities.
marketplace. goals manufacturing
strategy as the overall
plan for,how the firms
should produce the
product.

Figure 4 Authors of Operations Strategy Framework

The framework proposed by Terry Hill in has been used to understand the manufacturing

strategy used by various industries in this country. The framework consists of five steps:

1. Define corporate objectives

2. Determine marketing strategies to meet those objectives

3. Assess how different products win orders against competitors

4. Establish the most appropriate mode to deliver these sets of products

5. Provide the infrastructure required to support operations

16 | P a g e
 Figure 5 Terry Hill Framework

Hill provides an iterative framework that links together the corporate objectives; which provide

the organizational direction, the marketing strategy; which provides the direction of how the

company will compete in the chosen markets, and the operations strategy; which provides

capability to compete in those markets.

17 | P a g e
Service Sector

The service sector in Bangladesh registered a steady growth of 6.5 per cent in the fiscal year 2016-17, up
from 6.25 per cent in 2015-16. However, industrial output growth dipped to 10.5 per cent last fiscal
from 11.09 per cent of the previous year.

The World Bank (WB), in its latest report, said the service sector is projected to grow at a steady rate of
6.0 per cent in the current fiscal year. Despite cutting down the growth forecast, the global lender said
Bangladesh's economic growth remains resilient.

According to the estimates of the Bangladesh Bureau of Statistics (BBS), small industries grew faster
than large and medium industries in the fiscal year that ended in June this year, indicating a slowdown
in export growth.

Of the service sector, wholesale, retail trade, real estate, hotel, restaurant and transport sectors
performed well. However, financial sector registered slowdown in growth. As a result of higher gross
domestic product (GDP) growth, the per capita income rose to $1,602 in fiscal 2016-17, up 9.35 per cent
year-on-year.

The service sector, also called tertiary sector, is the third of the three sectors. The other two are the
primary sector, which covers areas such as farming, mining and fishing; and the secondary sector which
covers manufacturing and processing.

The service sector provides a service, not an actual product that could be held in one's hand. Activities in
the service sector include retail, banks, hotels, real estate, education, health, social work, computer
services, recreation, media, communications, electricity, gas and water supply.

The service sector is, in fact, an important part of a country's economy. In India, there has been a huge
growth in service sector businesses which made up 55 per cent of India's GDP in 2006-2007. Computer
software businesses in India are increasing at a rate of 35 per cent per year.

18 | P a g e
In the process of global economic integration, competitiveness plays a vital role in the success of
international trade. In addition, the competitive environment of domestic markets facilitates higher
economic growth and can help in reducing poverty. Competition in the services sector can, therefore,
play a fundamental role in ensuring the competitiveness of an economy.

Over the past few decades, Bangladesh has transformed itself from a controlled economy to a market-
oriented economy through a wide range of policy reforms which include reforms in trade policy,
industrial policy, monetary and fiscal policy, exchange rate policy, and promotion of foreign direct
investment.

Trade liberalisation has gone through one of the major policy reforms in Bangladesh. During the course
of overall trade liberalisation, liberalisation of service sectors (especially telecom and financial sectors)
received much importance. Service sector's employment has also shown a rising tendency but its
contribution to total employment is much lower than its contribution to country's GDP. During the late
1990s and early 2000s, when liberalisation of some service sectors like telecommunication and financial
intermediaries was one of the major policy reforms, employment share of service sector grew
substantially reaching 34.6 per cent.

At present, using information and communication technology (ICT), banks have vastly reduced the
number of people they need to employ, and lowered the cost of providing bank service. For example, an
automated teller machine is able to provide basic banking services 24 hours a day, seven days a week, in
many different places.

In the current fiscal year, Bangladesh is likely to attain higher than 7.0 per cent annual growth through
increased productivity growth and higher participation of females in the labour force. Despite the
increase in the number of women joining the labour force, the number of working women is still much
lower than their male counterparts: in 2013, only 33.5 per cent women worked in productive sectors.

The WB has projected that the agricultural sector would register higher growth this fiscal year as
farmers responded to the relatively good prices of rice, vegetables and livestock. Industrial growth may
edge down due to softer export growth and weaker domestic demand associated with remittances.

What Bangladesh and other Least Developed Countries (LDCs) need at this hour is to ensure affordable
and productive use of adequate electricity for economic transformation which is crucial to achieving the

19 | P a g e
Sustainable Development Goals (SDGs). The latest edition of a United Nations (UN) report regarding
trade and development noted that the purpose of electricity access should not only be to meet basic
domestic needs as lighting, but also to use it for productive purposes. It was found that around 53 per
cent of enterprises in Bangladesh identify lack of consistent access to energy as a major constraint.

Some services have been identified in Bangladesh that could potentially compete at the global level. As
the fifth most populous Asian country, it has a large domestic market and a swelling workforce. Between
2010 and 2016, exports of commercial services from Bangladesh surged from $300 million to $1.9 billion
per year. Services, including digital ones, now account for half of GDP and two-fifths of the
employments.

In order to enhance the service sector activities, there is a need for boosting the ICT capacity and
expand services in the areas of health, tourism, accounting, engineering, and to increase coordination
across government ministries. Overseas experts or exchange programmes can help local institutions to
overcome the shortage of local experts in the medical and other potential fields.

All said and done, the paramount need of the hour is that government officials, corporate leaders, and
civil society representatives should forge a unique partnership and exchange ideas and insights for
steady growth of the service sector.

20 | P a g e
 Figure 6 Trend of Bangladesh Economy

GDP contribution from service sector

GDP From Services in Bangladesh increased to 127417 BDT Million in 2017 from 118665 BDT Million in
2016. GDP From Services in Bangladesh averaged 91659.58 BDT Million from 2006 until 2017, reaching
an all time high of 127417 BDT Million in 2017 and a record low of 62352 BDT Million in 2006.

21 | P a g e
 Figure 7 Bangladesh GDP from service sector

Future of service sector

Over the past few decades, Bangladesh has transformed itself from a controlled economy to a market-
oriented economy through a wide range of policy reforms which include reforms in trade policy,
industrial policy, monetary and fiscal policy, exchange rate policy, and promotion of foreign direct
investment. The annual average growth in services has increased from 3.71 percent in 1981-90 to 4.48
percent in 1991- 2000 to 5.67 percent during 2001-05 for Bangladesh. The significant change in
Bangladesh’s approach towards trade and investment liberalisation in services may be attributed partly
to the growing importance of the services sector in the economy and its trade and investment flows in
recent years.

The contribution of service sector to the national economy shows decline in the current fiscal year,
according to Bangladesh Bureau of Statistics (BBS) data.

According to BBS, contribution of broader service sectors' to the GDP has been declining for the last four
subsequent years and a recent data has estimated that during 2016-17 financial year, service
contribution to the GDP share came down to 52.73 per cent from 53.12 per cent in the past fiscal year.
Thus, contribution of broader service sector to GDP declined for the consecutive fourth year.

22 | P a g e
According to BBS data, broader service sector contributed 53.95 per cent in FY14, which later dropped
to 53.58 per cent in FY15. The GDP is not physical rather it is due to use of old data as there is no
adequate survey on newly flourished business sectors.

Bangladesh Bureau of Statistics (BBS) states the contribution is showing less in GDP due to non
availability of latest data on service sector, if the government conducts survey on new sectors, service
share to the national economy will rise along with agriculture and industry. the state owned statistics
agency is facing manpower crisis and when compared to other countries of the world, it is not
modernized as per Bangladesh's economic growth. He insisted on at least five to eight surveys on newly
flourished service based sectors. The contribution of service sectors to the economy is growing but not
at the required account, he added..

Provisional estimation of BBS, however, showed that output of the overall service sector jumped to
Tk4.79 trillion in the ongoing fiscal year, which was Tk 4.50 trillion in FY16. Thus, broader service sector
posted around 6.50 per cent growth in the current fiscal year.

There are eight major sectors under the broader service sector which are wholesale and retail trade;
hotel and restaurants; transport, storage and communication; financial intermediations; real estate,
renting and business activities; public administration and defense; education; health and social works;
and community, social and personal services.

due to use of old data it is difficult to forecast the growth of the service sector and in many cases latest
development performance are being excluded in national account.

Service sector and operations strategy

Service operations strategy is concerned with the alignment and fit of marketing and operations

in aservice environment. Roth and Menor propose that firms need to consider the strategic

alignment of three elements: their targeted market and customer segments, the notion of the

service concept as a complex bundle of offerings, and their service delivery system design

choices. Each element combines with the others to influence the customer encounter and, in

turn, the evoked customer response to the service delivery system.

Chirs Voss, Aldea V. Roth and Richard B. Chase built and the conceptualization of service

operations strategy content by Roth and Menor(2003) and Roth et al. (1996) by providing an

experiential service research architecture that is organized around the following areas:

23 | P a g e
(1) Operations strategy design choices comprising four content areas which is recast as

stageware,orgware, customerware, and linkware;

(2) The direct outcomes of the service delivery system, which comprise the customer’s realized

total experience from the encounters (e.g., the resulting evoked emotions and responses to the

service context); and (3) The resulting performance outcomes, which are defined in terms of perceived
customer value.

Figure 8 Framework for Service Sector

Operations strategy in service sector is still a new concept. Many researchers are doing various studies
in this area, so that service that customers can experience such service that makes them to visit a
certain service point over and over again, that ultimately results in generation of more profits for the
service provider.

24 | P a g e
Conclusion

The possibilities of the econmy of Bangladesh is limitless but the recent decline of contribution to GDP
by RMG sector can be taken as signal which triggers changes, changes in Indiastrial policy,Improving
basic salary of the worker and providing them a safe,secure and sound working environment may
increase total productivity.

Political stability is also required to attract more foreign investment.

Operation management is a popular term in manufacturing sector but relatively new phenomenon in
service sector.

Effective operation management can improve the growth in service industries and almost whole
agriculture industry out of modern management tools and methods.

If the current growth rate is sustained and nurtured, we can hope for leading the economic movement
in the south asia.

Recommendation

1. The industry wide Policy should be adopted to encourage investment.

2. Planned industrialization to protect agriculture and agriculture based industries.
3. A nation wide culture should be promoted which encourage research and development.
4. Improving transportation and power supply to industrialize underdeveloped ares of the country
to improve the overall life of the local community.
5. Structural framework for service and agriculture industry.

25 | P a g e
References

https://www.researchgate.net/publication/265005483_Identifying_Problems_of_Strategic_Operations_
Management_in_Business_Organizations_in_Bangladesh_An_Empirical_Analysis

http://www.theglobaleconomy.com/Bangladesh/Share_of_manufacturing/

https://tradingeconomics.com/bangladesh/gdp-from-services

http://www.theindependentbd.com/post/74702

https://www.textiletoday.com.bd/overview-bangladesh-rmg-2016/

https://www.adb.org/countries/bangladesh/economy

https://thefinancialexpress.com.bd/views/reviews/2017-18-global-economic-outlook-implications-for-
bangladesh-1509809728

https://hbr.org/1978/07/strategy-is-different-in-service-businesses

http://www.dhakatribune.com/business/2017/07/07/rmg-export-earnings-lowest-15-years/

http://www.economywatch.com/world_economy/bangladesh/industry-sector-industries.html

http://www.bbs.gov.bd/site/page/dc2bc6ce-7080-48b3-9a04-
73cec782d0df/%E0%A6%9C%E0%A6%BF%E0%A6%A1%E0%A6%BF%E0%A6%AA%E0%A6%BF-

26 | P a g e