Assignment on Questionnaire

Survey on Industry Competitiveness

Course Name: Managerial Economics

Course No. : E 501

Prepared for:

Sheikh Morshed Jahan

Assistant Professor
IBA, D.U.

Prepared by:

Mujtuba Kabir
Roll# 17
MBA 41D

Md. Iftekhar Alam

Roll# 01
MBA 41D

Sheikh Nasir
Uddin
Roll# 38
MBA 41E

Asheque Elahi
Roll# 111
MBA 40D
 Date of Submission: May 28, 2008
Institute of Business Administration
University of Dhaka

After deteriorating the contribution of agricultural products like

Jute, Tea to the country’s economy (in terms of export), the
attention has turned to the role of manufacturing sector, especially
in garment industry. The garment industry in Bangladesh has
become the main export sector and a major source of foreign
exchange since 1980. The last several decades have seen that
Bangladesh’s dependency on the garment sector grow significantly.
So is the competition among the entrepreneurs. Our survey was
mainly designed to reveal the competitiveness of the garment
industry as well to recommend steps based on the overall business
environment which will offer a boost to the economy. The findings
along with the profile of the entrepreneurs have been furnished
below:

FINDINGS
FROM SURVEY
 Case-1 (Business type: Supplier of dye chemical)
Company: Scarlet Services Ltd. (Distributor of DyStar Chemicals
GBH)
Product(s): Dye chemical(s), Color powder
Year in business: 13 years
Key Customers: Knit factories, Yarn factories

‘As more and more entrepreneurs are looking for value addition,
demand for dye chemicals and color powders have been steadily
increasing’, said Mr. Russell. There is no dearth of textile engineers to
market this kind of product. However producing this sort of material
is not feasible in Bangladesh because of high cost of machineries

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and raw material as well as dearth of technical capabilities of local
chemical engineers. As a distributor, Scarlet Service Ltd. Faces
competition from giants likes BASF. It also has to compete with
cheap Chinese and Indian products. Most of the producers come
from developed countries like Germany and Switzerland. The
entrepreneur is, however, optimistic about demand for such
products to rise. However competition will also increase from cheap
brands.

Fake products are a problem in this industry. Since he is a

distributor, he does not have any idea about role of government in
this regard. He hopes government will encourage more dyeing and
knitting factories because that will also increase his sales. Scarlet
Service has been able to expand its customer base steadily for the
last couple of years. The M.D. attributed this success to availability
of quality textile engineers in the marketing process and a working
culture at Scarlet where everybody respects each other’s works.
However not all companies were that lucky.

Finally producing this type of product is not ruled out once the local
industries create a substantial amount of demand. However the
technological deficiencies would be a huge task, he noted. Fewer
complexities in opening a L.C. will facilitate his business. Banks
demand large amount of collateral and impose some undue
conditions, which discourages small businessman like him. Also
interest rate is quite high to go for short-term borrowing. He
proposed a specialized bank for the textile sector catering to the
needs of textile and garments sector.

To improve the quality of locally made knit and dyeing products

(woven), the basic materials like dye color and colored powders can
make significant difference. They play significant role in improving

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the quality of the final products made in the form of cloth and
accessories.

 Case-2 (Business type: RMG)

Company: Mirpur Garments Ltd.
Product(s): T-shirt, polo-shirt, top, shorts
Year in business: 04 years
Key Customers: European market

The main drive to be in this business is money and freedom of

choice and it’s booming indeed. According to the interviewee, bigger
market and wider customer range is the greatest opportunity. While
China and India are losing price competitiveness, our industry can
take this advantage to explore. He thinks that unstable labor market
is the threat for this business. The weaknesses of this firm are Poor
management, compared to garments within EPZ, and low
productivity. Main challenges include tough competition within the
industry in terms of price, employee dissatisfaction with low wage
structure. He thinks that workforce is not a problem for the
entrepreneur as mostly unskilled or semi skilled labor force is
required. But providing job specific training could improve the
situation. As most of the labors are illiterate, it’s hard to develop a
culture within the firm.

The industry standard itself is very low in terms of local suppliers

but the entrepreneur is unable to provide any specific suggestion to
improve the situation in this regard. Demand and growth
opportunity is already pretty good in this sector. He claimed that
technology is world standard in the firm but due to Euro being
costlier everyday, machines manufactured in Europe will soon be
not cost effective any more. The entrepreneur thinks that the
government lacks proper direction and commitment regarding
policies although it has cash incentive support for backward linkage

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industries. Government might give this industry higher priority in
terms of allocating electricity and gas. To the entrepreneur, private
initiatives are the main factor that has contributed to the growth of
this sector and they should be highly encouraged for the sake of
further growth of this industry.

RECOMMENDATIONS

The recommendations furnished below are based on our surveys

that we believe have the greatest potential to result in improved
business environment. There is no order of importance to the factors
discussed below:

 Skill in this sector doesn’t require formal education so

government institutions which are arranging or are supposed
to arrange trainings must not be too rigid for the would-be-
workers for having a minimum educational qualifications
rather those should be flexible and welcoming.
 Finance and credit facilities should be welcoming. Some
initiatives like LC opening needs to be easier, loan facilities
should be increased and interest rate revised.
 Government may need to change regulations regarding
Bond Licensing which says there’s a restriction in importing
threads but that shouldn’t hamper local producers.

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 The new entrepreneurs are encouraged with their outputs
which tells us there’s a healthy competitive atmosphere
around and rather steady growth in the business.
 Government can ensure continuous supply of electricity &
gas by government backed power plant & gas exploring & dis-
tribution companies.
 Government and other business associations can help local
competing firm to cope up with globalization effect.
 Business associations can encourage global players / make
them aware to give contract to local firms. Even they can in-
volve throughout negotiation, shipment & cash disbursement
process.
 Entrepreneurs learnt that looking at short term goals (low
and irregular salary, lower quality) may hamper growth. It is
essential for a firm to follow a competitive strategy that
enhances quality, flexibility, innovation and customer service.
If they depend on low costs by reducing workers’ wages and
other services, they will loose workers’ commitment to work.