FASHION INDUSTRY IN

BANGLADESH: A STRATEGIC
MANAGEMENT COLISEUM
Bangladesh University of Professionals (BUP)
Term Paper

FASHION INDUSTRY IN BANGLADESH: A

STRATEGIC MANAGEMENT COLISEUM
Strategic Management
(MGT-8503)

Submitted to

Major General (Retired),

Professor Alauddin M A Wadud, BP

Submitted by
Group 3

Name ID Signature
Ziaul Haque Khaled Ev 18018095

Md. Farhan Fuad Ev 18018023

Md. Shahidul Islam Ev 18018035

Yeasin Khan Ev 18018055

Tarif Ahmed Ev 18018099

Rythm Quraishi Ev 18018101

Kazi Zahangir Hossain Ev 18018061

Date of Submission
30 November, 2019
 Letter of Transmittal

5 October, 2019
Major General (Retired), Prof. Alauddin M A Wadud, BP
Faculty of Business Studies
Bangladesh University of Professionals (BUP)

Subject: Submission of Term Paper

Dear Sir,

With due respect, we would like to inform you that, it’s an honor and great privilege for us to be able
to submit this paper titled “FASHION INDUSTRY IN BANGLADESH: A STRATEGIC
MANAGEMENT COLISEUM” which was assigned to us as a prerequisite for the completion of our
“Strategic Management” course. We are truly grateful to you for giving us this topic for our assignment
and it is a pleasure for us to present this paper under your kind supervision.

This paper is a result of our best efforts. However, should your kind honor come across any
unintentional flaws then it would be our pleasure to answer for any clarification as your kind honor
deem necessary.

In the circumstances stated above, we would truly appreciate if your honor is kind enough to accept
this paper and oblige thereby. For this act of kindness, we shall remain ever grateful to you.

Sincerely Yours,

Ziaul Haque Khaled

ID: Ev 18018095
On behalf of Group 3
Section: A Professional MBA
Batch: May, 2018
 Executive summary

This paper explores the Fashion Industry in Bangladesh and the competitive business strategies that
takes place in the market. We analyzed the fashion industry and decided to work with Aarong by
comparing between a number of major competitors against some key factors. We also evaluated
Aarongs business strategy and commented on how it relates to the goals and objectives set by the
company.

We also conducted a number of analysis including SWOT, Portar’s 5 Forces, PESTEL to understand
the performance and competitiveness of Aarong and presented some potential key success factors.

Finally, we recommended on a few of strategic changes bases on our previous analysis.

 Table of Contents
Industry Overview: ........................................................................................................................................2

Current Scenario in Bangladesh: ...............................................................................................................2

Group Mapping: ........................................................................................................................................9

Competitive business strategy of Aarong................................................................................................13

Aarong- Why we choose this Brand? ..........................................................................................................13

Aarong’s Goal .........................................................................................................................................14

Aarong’s Objective: ................................................................................................................................15

Aarong’s Strategic Analysis: .......................................................................................................................15

SWOT Analysis: .....................................................................................................................................15

Porter’s five forces models for Aarong: ..................................................................................................17

Aarong’s value chain analysis: ................................................................................................................19

PESTEL analysis on Aarong ...................................................................................................................21

Aarong’s Business Strategy Evaluation: .....................................................................................................23

The BRAC-Aarong model ......................................................................................................................23

Qualitative Differentiative Strategy: .......................................................................................................24

Cost Leadership Strtaegy: .......................................................................................................................24

High-Price Strategy.................................................................................................................................24

Image differentiation strategy .................................................................................................................25

Channel differentiation strategy ...............................................................................................................25

Key Strategic success factors Of Aarong ....................................................................................................26

Recommendation .........................................................................................................................................28

Conclusion...................................................................................................................................................29

Reference:....................................................................................................................................................29

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Industry Overview:

Current Scenario in Bangladesh:

1.Growing Industry:

There is no doubt that Bangladesh has emerged as a powerful garment manufacturing country in the past
decade. Bangladesh is the world’s second largest Readymade Garment (RMG) exporter, just behind
China. Country’s 81% of exports come from the RMG sector, and the textile and Apparel sector
contributes around 20% to Bangladesh’s GDP. It employs around 20 million people in the country and is
the major driving force of the country’s economy.

Bangladesh plans to get the middle-income country status by 2021, and RMG sector is going to play a
major role in it. Bangladesh has set itself a target of achieving apparel exports worth $50 billion by 2021,
and it seems to be on the right track. In the last financial year, FY18, the Export Promotion Bureau (EPB)
states that Bangladesh’s overall exports grew by 5.81%, reaching $36.67 billion, owing to the growth in
apparel exports. The garment exports as per EPB registered an 8.76% growth in this fiscal year, which
was 1.51% higher than the set target.

2.Bangladesh’s RMG sector has many factors that attract global attention:

a. Quick Returns. The biggest factor being the quick returns this segment offers the
investors. This is the only sector in the country that gives returns in 3 to 5 years. Also, being the second
biggest apparel exporter globally, there are huge growth opportunities that the sector offers.

b. Share of Global Apparel Exporters (2016)

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Moreover, China is losing ground, owing to its growing production costs, which opens an
immense prospect for Bangladesh to seize more market share.

c. Labor Availability. The biggest strength that Bangladesh has over its competitors is its cheap
and vast workforce. The minimum wage in Bangladesh is lower than that in China, Cambodia,
India, and Vietnam.

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Also, there are around 37 private and public universities producing textile graduates in the
country every year, further adding to the skilled manpower for the segment. Moreover, favorable
government policies, bank facilities (for raw material purchase), and strengthening backward
linkage supporting industries create a strong case for the sector.

d. The Duty-free Advantage. Bangladesh has Least Developed Country (LDC) status that
qualifies it for duty-free market access or reduced tariff facilities to many developed and
developing nations, globally. Bangladesh enjoys duty-free access to around 52 countries,
including countries in the EU, the USA, Australia, Switzerland, Japan, Turkey, Russia, Norway,
New Zealand, China, South Korea, Thailand, Malaysia, and India, for the trade of many products.

Bangladesh has also signed many trade deals offering Bangladesh exports a preferential
treatment, like SAARC Preferential Trading Arrangement, Asia-Pacific Trade Agreement, Bay of
Bengal Initiative for Multi-Sectoral Technical and Economic Co-operation, South Asian Free
Trade Area, and the Trade Preferential System among the OIC member states.

e. Technology Adoption. Bangladesh has attracted many major global retail brands, and with the
technology and quality compliance parameters has also seeped in Bangladesh’s apparel
manufacturing systems. Moreover, Bangladeshi manufacturers and exporters have built excellent
vertical capacities, which only China could offer before, which help global brands to ensure more
transparency and coordination in their supply chains.

The country has henceforth adopted the most sophisticated apparel manufacturing and
management technologies to cater to their international customers. This has resulted in a
substantially high rate of quality achievement and technical compliance in Bangladesh’s RMG
sector.

f. The growing export numbers from the sector is a sound example of the same

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3. Future of Bangladesh’s Fashion Sector

Bangladesh has three financial years left to match its annual apparel exports target of USD 50 Bn. This
requires the sector to grow at a war footing at a rate above 60%.

The year 2016–17 showed a sluggish growth for the country, owing to the slowing down of trade with the
US. The 2017–18 shows more promise, but the current trends make it difficult for Bangladesh to achieve
the set target, but it is not yet impossible.

To achieve a USD 50 Bn target, an annual CAGR of 16.9% is needed, which can be achieved, provided
Bangladesh keeps on capitalizing on available opportunities and its strengths.

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4. What is holding Bangladesh Back?

After multiple incidents like Rana Plaza, Bangladesh came on global radar for its labor practices and
safety standards. Since then, Bangladesh has come to a long way building green factories and meeting
safety standards and compliance strictly.

What still worries industry experts is the fact that garment workers are still being paid one of the world’s
lowest minimum wages in the country. Fashion industry thrives in the west but standing on the backbone
of the workers from the third world countries like Bangladesh, which struggle every day to survive above
the poverty line. The government’s vision of achieving USD 50 Bn worth of apparel exports by 2021,
nowhere mentions of concerns itself with the well-being of its workers.

An Oxfam research has highlighted that for every garment sold in Australia; only 2% of its price goes to
the factory worker who made it. Cheap labor is the main factor; Bangladesh’s apparel industry is
capitalizing on when it comes to attracting big retail brands. Hence, the demand of raising the minimum
wages substantially cannot be fulfilled, at least in the near future.

5. The Road Ahead

The numbers indicate a positive shift in Bangladesh’s apparel exports, after a sluggish FY17. Achieving
the USD 50 Bn target in the next three years seems insurmountable at the first sight, but is not
impossible. A fast and consistent growth in the sector, owing to the favorable government policies, and
global attention will felicitate this feat. What needs to be kept in mind during this journey is to take the
workers of the garment industry in the country along with the growth. The government will have to take
stringent steps to ensure better living standards for its garment workers and their survival.

A technology advancement plan can also help, which also focuses on the skill development of the
workers through regular training programs. This will enable the garment manufacturers and exporters to
make more profits and pass on the benefits to the workers in form of better pay.

Hence, the growth that Bangladesh’s apparel industry envisions needs to be a holistic growth to stay
sustainable in the long run.

6. How the Journey Started

It all began with Nipun in 1973. That’s when fashion officially began as an industry in Bangladesh. And
there’s been no looking back over these past four decades.
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The next milestone was Aarong, founded in 1978 as a project of the Mennonite Central Committee
(MCC). In 1980 BRAC took Aarong under its wing and it is now one of the top lifestyle brands in the
country.

In the mid-eighties Cat’s Eye marched in on the fashion scene as a brand for western-style men’s wear.
Pearson’s also appeared prominently around that time, but did not last long.

New Market, Science Laboratory, Elephant Road and Shahbagh were the fashion hubs in the eighties.
For men’s tailoring it was Bangabandhu Avenue. There were several men’s tailors also at Green Road,
Paltan, Fakirapool and Mirpur Road. Fabric House and Ganges were renowned at the time too. Karika
and Bhushan were also popular brands.

Tangail Saree Kutir, followed by Kaniska, revived the lost glory of the local saris towards the end of the
eighties. Things accelerated in the fashion world when Kay Kraft, Anjan’s, OG and Rang sashayed into
the scene in the nineties.

Soul Dance was the first to step from the readymade garment industry sector to the local fashion industry.
Then many other houses followed suit.

Bangladesh’s fashion industry was hardly very well-planned. Most of the pioneers entered without any
solid plan or vision, but managed to take firm root. Ironically, Pearson’s had well-laid out plans, but it
fizzled away in no time.

7. Category of Fashion Industry

There are roughly three categories of the local fashion industry. One - those who came in on a whim, but
later adopted a professional shape. Two –followers of the pioneers, some who entered the scene
randomly and others with a plan. And three – the brands who were armed with experience from the
readymade garment industry and were well prepared and planned for the promising market.

The local fashion industry has played a laudable role in making local fabrics popular among the people. It
is a breakaway from the western concept of fashion where clothes are designed according to the seasons.
Our clothes are more festival-based. The world over, fashion belongs to the rich, but here the industry
aims at the middle class.

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In the meantime, the new millennium ushered in change and the Internet turned things around radically.
Our industry has tried to keep up with the wave of globalisation, though it hasn’t quite managed to keep
up with the global couture as yet.

All said and done, fashion has been firmly established as an industry here. It does need a bit more oomph
to be happening and also needs a bit of fusion with the western trends. This will slow the onslaught of
western fashion imports and promote local products more.

8. Contribution to Local Economy

With fashion houses opening outlets all over the country, this has opened employment opportunities too.
According to the Fashion Entrepreneurs Association of Bangladesh (FEAB), at least 10 million people
are directly and indirectly associated with this industry. There are around 5,500 fashion houses of varying
sizes and styles all around the country and the industry has an annual turnover of around Tk 80 billion to
Tk 85 billion. The government receives significant revenue from this sector too.

The turnover pattern is quite interesting as the industry is based on festivals. The fashion houses make the
most money during Eid-ul-Fitr when the turnover makes up 40 per cent of the total. The next 20 per cent
is made during the Bangla New Year’s Pahela Baishakh festival. While more clothes are sold during
Baishakh the revenue is relatively less. Even five years ago, sales during Eid-ul-Azha were good, though
that trend has changed. Now Falgun, the advent of Spring, has become another lucrative festival for the
fashion industry.

9. Satisfying Customers Demand

Bangladesh’s fashion industry has been a boon for the local handloom industry. Sari sales have increased
and all sorts of experiments are carried out in weaving. There is still room for qualitative improvement in
handloom fabrics. If this can be brought about, demands will multiply.

Designers are cropping up all over too and so are new brands. They are meeting the needs of all sections
of the society. Bangladesh has a huge youth demographic who are basically global citizens. They keep up
with the times and are up to date with global fashion trends. They are more attracted to the local brands
that are offshoots from the readymade garment industry as these brands have the experience and know-
how of what is ‘in’ and what is ‘out’.

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The middle class in Bangladesh is steadily expanding as is the size of the wealthy class. This spells
promise for the local fashion industry. If the demand within the local market can be met, then there is
hardly need to look any further. But that means keenly following the trends and capturing the potential
local market. Edging out the foreign imports and taking full control of the local market will be the
ultimate feather in the local fashion industry’s cap.

Group Mapping:
Top 10 Fashion Houses in Bangladesh

There are more than hundreds small and large boutique house or fashion house in Bangladesh. It is really
tough to select top ten boutique house or fashion house from huge numbers. Yet some information of the
fashion brand or clothing brand in Bangladesh are shown below:

Aarong. Aarong is the top lifestyle retailer in Bangladesh operating under BRAC, a non-profit NGO. A
socially responsible organization. Working as a platform where independent co-operative groups and
family based artisans market their craft.

Aarong At a glance:

Establishment Year: 1978. Founder: Ayesha Abed.

Product types : Saree, Salwar Kamiz, Scarf, Address: Aarong centre, 346, Tejgaon Industrial
Kurti, Fotua, Panjabi, Shirt, Kids Wear, Foot Area, Dhaka-1208
wear, Bag, Handicraft, Nokshi Katha, Ceramic,
Jewellery etc.

Phone: 88028891404 Website: http://www.aarong.com/

Cats Eye. Cats Eye is one of the leading fashion houses of Bangladesh. It is popular for unique and
trend setting fashion. It is the pioneer in design for man's clothing in Bangladesh. Now they are also
working on women’s dress.

Cats Eye At a glance:

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 Establishment Year: 1980. Founder: Mr. Sayeed Siddiqui Rumi and Mrs.
Ashrafun Siddiqui Dora.

Product types : Men's & Women's clothes Address: Minita Plaza (6th Floor), 54 New
(Shirts, pants, Panjabi, jeans, salwar kameez Elephant Road, Dhaka-1205.
etc), shoes and others fashion accessories.

Phone: 02 9665184, 02 9660486 Website: https://www.catseye.com.bd/

Richman. Richman is one of the top leading fashion house in Bangladesh. It is popular for men’s wear.
Lubnan Trade Consortium Ltd is the mother company of Richman.

At a glance of Richman: Founder: Mr. Mohammad Junaid

Product types: Shirt, t-shirt, polo shirt, pant, Address: Home Stead Link Tower, TA-99,
formal pant, casual pant, denim pant, blazer, Gulshan Badda link Road, (12th & 13th floor),
accessories etc. Dhaka-1212

Phone: +88-02-9841504, +88-02-9860614 Website: http://www.richmanbd.com

Yellow. YELLOW is the trendiest fashion brand from Bangladesh, is mostly distinguished for its true
international quality designs and fabrics. It is sister concern of Beximco.

At a glance of Yellow:

Establishment Year: 2004. Founder: Salman F Rahman.

Product types: Men's, Women's, Children's Address: Beximco Industrial Park, Dhaka,
Apparel & Accessories Bangladesh

Phone: 88 01754455533 Email: [email protected]

Website: http://www.yellowclothing.net

Ecstasy. Ecstasy is a famous Bangladeshi fashion house. Its dress is very popular among the youths for
its modern design. As a result Ecstasy has quickly become one of the nation’s largest fashion retailers.
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At a glance of Ecstasy:

Establishment Year: 1997. Founder: Tanjim Haque.

Product types : Men’s jeans, shirt, t-shirt, casual Address: 156 Kemal Attaturk Avenue, Concord
shirt, casual pant, women’s tops, Salwar Kamiz, Colosseum, 12th Floor, Banani, Dhaka 1212,
Fotua, Kids Wear, Foot wear, Bag, Handicraft, Bangladesh.
perfume, Jewellery and other accessories etc.

Phone: +8801941719894 Website: http://ecstasybd.com

Rang
Rang, country’s one of the top fashion houses. Rang has been contributing to the growth of handloom
and handicraft industry.

At a glance of Rang:

Establishment Year: 1994 Founder: Biplob Saha.

Products type: Saree, Salwar Kamiz, Fotua, T- Address: Shoilo Nibas Hossain Ahmed Road,
Shirt, Panjabi, Kurta, Handicraft etc. Block # 2 Police Line, Narayangonj-1400
Dhaka, Bangladesh.

Phone: +880177774434, +8801984888444 Email: [email protected]

Website: www.rang-bd.com

Kay Kraft. Kay Kraft is a leading brand in the fashion industry of Bangladesh. It is a retailer and
wholesaler of Bangladeshi Fashion Wear for Women, Men and Kids.

At a glance of Kay Kraft:

Establishment Year: 1993. Founder: Khalid Mahmood and Shahnaz Khan

Product types : For women’s (Saree, Salwar Head Office: 1/A North Adabar, Shaymoly,
Kamiz, Scarf, Tops, Fotua). For men’s (Short Dhaka 1207, Bangladesh.

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 Panjabi, long Panjabi, exclusive Panjabi, Shirt),
Kids Wear, accessories etc.

Phone: +880 2-9872427 Email: [email protected]

Website: http://kaykraft.com

Dorjibari

Dorjibari is a renowned fashion house in Bangladesh. It has become one of the leading manufacturers &
exporters high fashion apparel & accessories for Men, Women & Kids.

At a glance Dorjibari:

Establishment Year: 2007. Founder: Md.Fazlur Rahman

Product types : Shirt, pant, Saree, Salwar Price Range: 750/- to 35,000/-
Kamiz, Scarf, Kurti, Fotua, Panjabi, Shirt, Kids
Wear, Foot wear, Bag, Handicraft, accessories
etc.

Address: 4/1, Simson Road, (5-6th floor ), Phone: 02-57396389, 01920215707

Ambia Tower, Shaddar ghat, Dhaka-1100.

Email: [email protected] Website: http://www.dorjibaribd.com/

Anjan’s. Anjan's is a famous Bangladeshi fashion house. So, Anjan’s contribution is not only in the
making fashion line rather has also arranged work arena among the poor village women.

At a glance Anjan’s:

Establishment Date: 15th February 1994 Founder: Shaheen Ahmed

Products type: Saree, Salwar Kamiz, Kurti, Address: Khan Villa, 34/B, Chowdhury Para,
Fotua, Panjabi, Shirt, Kid’s Wear, Handicraft, Dhaka, Bangladesh.
Hometex, Etc.

Phone: 88-02-9362019, 88-02-8357754. Website: www.anjans.com

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Competitive business strategy of Aarong

Competitor analysis in marketing is an assessment of the strengths and weaknesses of current and potential
competitors. This analysis provides both an offensive and defensive strategic context through which to
identify opportunities and threats. Competitor profiling coalesces all of the relevant sources of competitor
analysis into one framework in the support of efficient and effective strategy formulation, implementation,
monitoring and adjustment.

Aarong has its own version of the competitive analysis and its function is clear: to line up your product with
other products and show where yours falls short and where yours is superior. Each industry brings a different
spin to this old favorite and user experience design has its own set of criteria by which to judge competitors.

Aarong has competitive advantage over its competitors on almost every factors. Only few companies have ability
to chase some sort of advantage like Aarong. Such as Anjans’s product features, qualities and
innovativeness, Kay-Kraft and Anjan’s supplier, Rang’s color.

competitive advantage of strategic group of Aarong

3
Aarong Rang kay craft Anjans

product feature quality price supplier distribution

Aarong- Why we choose this Brand?

A pioneer in the country's craft industry, Aarong's unique product designs have brought consumer
attention back to crafts and materials indigenous to Bangladesh, as its designers blend the traditional

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with the contemporary in a way that continues to win consumer appeal. Its success revolutionized
trends and virtually created the market that has now been taken up by countless other boutiques and
brands. Aarong caters to this growing urban consumer base through outlets in every major city in
the country.

Their discerning style and high-quality craftsmanship make every Aarong product unique and demand for
them has been consistently rising due to Aarong's focus on innovation, quality, value-based pricing and
superior in-store customer service. All these elements, backed by a robust distribution network and
strong supply chain, have made Aarong a true household brand in Bangladesh.

Being one of the leading lifestyle brands of Bangladesh, Aarong’s top competitors are: Yellow, Sailor,
Artisan and Ecstasy and Deshi Dosh. There are some other brands who are potential competitors for Aarong
in future: Cats Eye, Rang, Dorjibari, Kay Kraft, Bibiana, Jatra, Anjan’s etc. Aarong has its own unique
way of its competitive analysis as having high competitive advantages over its top competitors on almost
every factors including product features, quality, supplier, technology, finance, distribution, product
innovation and costing.

Just as Bangladeshis living abroad look to Aarong for products that connect them to their heritage, the
Aarong experience is an essential part of any trip to Bangladesh by foreign visitors - a phenomenon
chronicled in the "Lonely Planet" guide to Bangladesh. Aarong products are not only the gift items
of choice for every occasion for local and expatriate Bangladeshis but also the quintessential cultural
mementos for these visitors. Aarong's growing presence outside Bangladesh - through fair- trade
networks in Europe as well as a retail franchise in London - continues to broaden the market for
Bangladeshi craft globally.

That is the reason we chose Aarong as Bangladesh’s market leader for fashion industry.

Aarong’s Goal
 Empowering destitute rural women by providing opportunities for employment and income
generation.
 Ensuring commercial success of the enterprise of women producers.
 Reviving traditional skills of rural artisans.
 Aarong started its journey as fighting to uphold the dignity of the marginalized poor rural people of
the country

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  Since its inception, Aarong, which means 'village fair' in Bengali, has been working towards BRAC’s
mission of poverty alleviation through economic development and human capacity building, with a
specific focus on the empowerment of women.
 BRAC took the initiative to create a platform so that rural women could sell their products to the urban
market;
 Thus, Aarong was launched in 1978, creating a linkage between the rural poor and urban retailers.

Aarong’s Objective:
BRAC-Aarong takes a holistic approach in conceptualizing and developing each of its enterprises. As
BRAC enterprises have expanded from program support mechanisms to surplus generating
enterprises with financial and social missions, each enterprise has ensured that it complying the four
fundamental objectives of a BRAC-Aarong enterprise:

 Creating job opportunities

 Generating surplus for BRAC in order to minimize donor dependency
 Ensuring long-term support and contribution toward the sustainability of BRAC’s development
interventions such as microfinance, education and skills development etc.
 Becoming viable investments in the long run in order to act as ‘hedge’ against future liquidity.

Aarong’s Strategic Analysis:

SWOT Analysis:
SWOT analysis is a powerful technique for understanding organizations Strength & Weakness and
looking for the Opportunities & Threats it may face. Used in a business context it helps organization
carve a sustainable niche in a market. This analysis is mainly based on an imaginary situation.

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 SWOT ANALYSIS

S W O T

STRENGTHS WEAKNESSES OPPORTUNITIES THREATS

1. Valuable physical 1. Inability to supply. 1. Globally expand its 1. High price.
asset. 2. Higher price. business. 2. New competitors.
2. Market 3. Lack of proper training 2. Exploring online 3. Lower quality and
business. less uniqueness of
advantages. 4. Decentralized
production 3. New distribution products.
3. Strong financial
5. Less
channel. 4. Economic crisis
foundation
4. Franchise ventures 5. Smuggled goods
4. Handmade & unique appealing
products 5. Lowering the
5. Good brand image products to price
6. Traditional the young
7. Socially responsible
generation
8. Legal enterprise

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Porter’s five forces models for Aarong:
This theory is based on the concept that there are five forces that determine the competitive intensity and
attractiveness of a market. Porter’s five forces help to identify where power lies in a business situation.
This is useful both in understanding the strength of an organization’s current competitive position, and the
strength of a position that an organization may look to move into.

Aarong uses Porter’s five forces to understand whether new products or services are potentially profitable.
By understanding where power lies, the theory can also be used to identify areas of strength, to improve
weaknesses and to avoid mistakes.

Porter’s five forces of competitive position analysis:

High

High

Low Moderate

Moderate

Figure 8: Porter’s five factor at Aarong

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Supplier power

An assessment of how easy it is for suppliers to drive up prices. This is driven by the: number of
suppliers of each essential input; uniqueness of their product or service; relative size and strength of the
supplier; and cost of switching from one supplier to another. The bargaining power at Aarong is low
because Aarong has determines the price of the product for the supplier.

Buyer power

An assessment of how easy it is for buyers to drive prices down. This is driven by the number of buyers
in the market; importance of each individual buyer to the organization; and cost to the buyer of switching
from one supplier to another. If a business has just a few powerful buyers, they are often able to dictate
terms. Handicraft based retail industry like Aarong has a strong potential buyers, so they may reduce their
switching cost as well as increase the buyers value.

Competitive rivalry

The main driver is the number and capability of competitors in the market. Many competitors offering
undifferentiated products and services, will reduce market attractiveness. Aarong follow the differentiated
market strategy for different segmented customer. So its status in competitive rivalry is modaret.

Threat of substitution

Where close substitute products exist in a market, it increases the likelihood of customers switching to
alternatives in response to price increases. This reduces both the power of suppliers and the attractiveness
of the market. Aarong may face modaret threats but because of its differentiated market strategy and
quality of product customer are not willing to switch to alternatives.

Threat of new entry

Profitable markets attract new entrants, which erodes profitability. Unless incumbents have strong and
durable barriers to entry, for example, patents, economies of scale, capital requirements or government
policies, then profitability will decline to a competitive rate. As handicraft based lifestyle retail industry
encourages new entry, Aarong creates high entry barrier through its high level of quality and brand value.
so Aarong has a high threats on new entrance.

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Aarong’s value chain analysis:
Aarong’s value chain is the movement of materials as they flow from their source to the end customer.
The whole value chain of Aarong includes purchasing, manufacturing, warehousing,
transportation, customer service; demand planning, supply planning and Supply Chain
management. It is made up of the employees, activities, information and resources involved in
moving a product from Aarong’s supplier to its customer.

How Aarong’s Supply Chain Management System is build

Aarong’s supply chain management system is a group of things working together. Computers, fax
machines, data storage system, operating personals, procedures for the employees and the most vital
components of Aarong’s supply chain management system are its telecommunication system.

Cell phones helped Aarong to create a communication network with every suppliers and transportation
partners across the country. All this components work together to provide information to collect products,
manage the suppliers, to provide services, create report etc.

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 Figure 8: supply change management system at Aarong

There is also a value chain management software developed by Aarong. This software is used
for both value chain planning and to help them to execute the supply chain steps. Aarong
has hired trained professionals to operate its supply chain management system and keep updating
Aarong is value/ supply chain management system can be divided into two systems. Both of
this system is vital for Aarong is business.

Aarong’s value Chain Management Process:

1. Planning: Aarong’s supply chain management planning starts at the top of the
management. Management tries to balance out the demand and supply to meet
Aarong’s sourcing, production, delivery and return requirements.
2. Sourcing: Aarong has large pool of sources to meets it supply. As the demand requires
suppliers come up with raw materials and goods. Then it creates a product which we
can exploit.
3. Making: Co-operatives comes up with final goods and they deliver them to the final
processing section of Aarong. The goods or products are ready to use for the
customers.

4. Delivering: Aarong is delivering process is managed by its own transportation. Aarong

directly distributes its product to the consumers. Their job is to distribute shipments properly.
“Just-in-time” is followed in delivery process.

5. Returning: Return process is consisting of product returns and post-delivery customer

support which is done by Aarong. Generally Aarong obtained their products to their
consumers within 30days. It’s also includes Aarong’s return process.

6. Logistics: Aarong’s top level management plans, supportive relation to their consumers
and control of all other factors that have an impact on the supply chain.

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 figure 9: Value-chain of Aarong

PESTEL analysis on Aarong

A PESTEL analysis is a framework or tool used by marketers to analyse and monitor the macro-
environmental (external marketing environment) factors that have an impact on an organisation.

Figure 10: PESTEL analysis

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Political Factors

These are all about how and to what degree a government intervenes in the economy. This can include
government policy, political stability or instability in overseas markets, foreign trade policy, tax policy,
labor law, environmental law, trade restrictions and so on.

It is clear from the list above that political factors often have an impact on organizations and how they do
business. According to political agreement of Bangladesh government Aarong is now export their product
in UK and USA. Organizations need to be able to respond to the current and anticipated future legislation,
and adjust their marketing policy accordingly.

Economic Factors

Economic factors have a significant impact on how an organization does business and also how profitable
they are. Factors include – economic growth, interest rates, exchange rates, inflation, disposable income of
consumers and businesses and so on.

These factors can be further broken down into macro-economic and micro-economic factors. Macro-
economic factors deal with the management of demand in any given economy. Governments use interest rate
control, taxation policy and government expenditure as their main mechanisms they use for this. Aarong
concentrates on economic factors and they ask customer for tax through Vat with the actual price of the
product. Micro-economic factors are all about the way people spend their incomes. This has a large impact
on B2C organizations in particular.

Social Factors

Also known as socio-cultural factors, are the areas that involve the shared belief and attitudes
of the population. These factors include – population growth, age distribution, health consciousness,
and career attitudes and so on. These factors are of particular interest as they have a direct effect
on how marketers understand customers and what drives them. Aarong follows the social factor
and by concentrating on that, it determine its target customer and marketing strategies.

Technological Factors

We all know how fast the technological landscape changes and how this impacts the way we market
our products. Aarong established online shopping for distributing their product to their target
customer. It follows social media as well as electronic media for communicating with their target
market as well as for their promotional activities.

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Environmental Factors

Aarong considers environmental factor important due to the increasing scarcity of raw materials,
pollution targets, doing business as an ethical and sustainable company, carbon footprint targets
set by governments. These are just some of the issues marketers are facing within this factor.
More and more consumers are demanding that the products they buy are sourced ethically, and if
possible from a sustainable source.

Legal Factors

Aarong follows legal factors include - health and safety, equal opportunities, advertising standards,
consumer rights and laws, product labelling and product safety. It is clear that companies need to
know what is and what is not legal in order to trade successfully. If an organization trades globally
this becomes a very tricky area to get right as each country has its own set of rules and
regulations.

Aarong’s Business Strategy Evaluation:

Business strategy of Aarong
The BRAC-Aarong model
BRAC-Aarong‟s model for poverty alleviation and empowerment of the poor addresses the various
causes of poverty through interlinked programs including economic development, health, education,
human rights, legal services and disaster management. Key features of the BRAC-Aarong
development model include:

 Focus on empowering poor rural women: From its inception, BRAC focused mainly on
rural women, by making small loans available to them for income generating activities
that enabled them to take charge of their lives and make improvements for themselves,
their families and their communities. Today, more than 98 per cent of BRAC’s
borrowers are women.
 Making a significant difference: The national scale and impact of BRAC’s antipoverty
interventions are what makes BRAC unique in the development community.
 Social enterprises and long-term financial sustainability: In addition to BRAC’s core
programs, it also runs commercially operated, pro-poor enterprises that are
strategically linked to its development programs. These enterprises form the crucial

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 value chain linkages to increase productivity of assets and labor to reduce risk for the
poor. BRAC’s enterprises range from agriculture and dairy farming, to water
sanitation, handicrafts and fashion through Aarong. The enterprises also help to make
the organization increasingly self-sustaining.

Qualitative Differentiative Strategy:

Qualitative differentiation strategy is characterized by the creation of a product/service which will be
perceived as unique by the customers. This is achieved through design or brand image, superior
technology, great customer service or diversified distribution network. This strategy does not allow for
ignoring the incurred costs, but they are not the primary strategic objective. Aarong introduced different
features in men and women wears like taaga, Jamdani Sari, Khaki Punjabi, Pakistani Luann and such
product

Qualitative differentiation is a viable strategy for achieving above than average returns because it creates
a defensible position for coping with competitive forces. Differentiation provides protection from
competitors in a sense that consumer brand loyalty makes the firm less sensitive to changes in price.
This increases the profit margin and avoids the need for setting up a low-cost position in the market.
Consumer loyalty and competitors’ need to fight the uniqueness of the firm provide entry barriers to
potential entrants. Interestingly enough, the realization of differentiation will sometimes prevent the
company from achieving a high market share, which is due to the fact that the products/services are often
perceived as exclusive, which is incompatible with a high market share.

Cost Leadership Strtaegy:

Aarong is a firm that chose the cost leadership strategy aims to lower its production costs by implementing
cost reduction through experience, constant cost control, cost reduction in the areas of research and
development, advertising, promotion, etc. Having relatively lower costs than competitors becomes the goal
of the strategy, although quality of services and other areas must not be ignored. Aarong concentrates its
quality and features, and follow the promotional Activities like sponsors on fashion shows, online
advertisement, exhibitions to retain its market position in the industry.

High-Price Strategy
Aarong prices its products or services higher than its competition to create a perceived value.
Consumers wonder why a particular company is able to sell its product for more or why its fellow

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consumers are willing to pay more for the product. In the end, it may believe that the higher-priced
product or service is worth more. Aarong produce best quality product with unique features
comparatively high price than its strategic groups.

Image differentiation strategy

As a leading brand of Bangladesh, Aarong certainly desires its presence in any mass media.
But since Aarong’s market is defined geographically by the outlets in the four metropolitan cities, it’s
not very efficient to go for those mass media that have a significant coverage beyond Aarong’s
geographic market if we compare the cost and benefits. Billboards appeared to meet both the
criteria wonderfully. Billboard is a “one to many” type of communication media with a control
over the geographic reach through photo-shoot. There are two types of photo shoots for Aarong’s
promotion.
• Commercial Photography
• Thematic Photography
Since all the customers come to Aarong for making purchases, marketing communication at outlets
is highly fruitful. Keeping this in mind, in store display boards were installed with impressions that
have been used on billboards and magazines.

Channel differentiation strategy

Aarong used selected press media as another channel of communication. Since Aarong is a fashion
brand, placing advertisements on Magazines, Fashion supplements etc. was expected to be
more effective in reaching the target customers.

Considering Face book as a very popular social networking media, the billboard impressions
were uploaded on Face book Aarong Page and all the members were notified about it. There
was a huge increase in the visit frequency of Aarong Page shortly after that.

Next, Aarong’s shopping bag was recognized as a very efficient channel to reach out to the
customers intimately. Therefore, a new shopping bag was introduced incorporating the essence
of the new brand image – a vibrant orange bag replaced the old black one.

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Key Strategic success factors Of Aarong
Aarong develops strategic plans. It carefully creates a vision of its future and the strategies needed to get
there. In Aarong experience, there are 5 critical factors that would ensure its strategic plans are successfully
implemented.

Engagement

Strategic Planning is a process not an event. A key element in the process is the engagement of all levels
of staff throughout the organization. Staff engagement generates additional input and helps build their
commitment to the end plan. It is essential to involve employees in the planning of strategy and direction
for the organization. Employee's input will:

Provide insight into issues, challenges, concerns, and opportunities which may not have been known or
fully understood.

Ensure their "buy-in" to help execute the strategies.

The senior management team will not execute the strategies - staff will. Aarong Engages its staff and its
strategy execution success rate would increase dramatically and make it’s the most successful social
enterprise.

Communication

Strategic Planning processes are successful when a bottom up and top down communication approach is
taken. It starts off with a communication to all levels of employees informing them that a Strategic
Planning process will be undertaken. It includes how they will be involved in this process. This is the
bottom up communication. Employees will provide input to the strategic planning process through feedback
s u r v e y s , focus groups, meetings, etc. regarding their ideas for organizational direction, etc.

It is followed by the top down communication. At Aarong, Senior management would share the strategic
plan with employees. They communicate to all employees how their engagement will help ensure success
in the execution of these strategies.

Innovation

Aarong believes in innovation of new products or deliver a new service or re-structure a department.
Recently Aarong has introduced new product in their department that is maternity wear for women.
They also start to give innovative service on online shopping.

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Project management

Once the strategic plan is together, there are two critical elements related to project management. One
is to identify the projects that are required to ensure success in the execution of each strategy. Another
is to develop a prioritization of all these projects to ensure the high priority ones have the
proper resourcing to ensure success. This requires a high involvement and commitment on the part
of employees to spend the time required on the project. Aarong follows the high level of involvement
of employees ensures that they understand the strategic plan. It increases their level of commitment to
ensure the strategy is successfully executed because they understand how their work and the work
they’re completing on the project helps the organization to realize some or all of one of their key
strategies.

Culture

Organizational Culture is the commonly held attitudes, values, beliefs and behaviors of its employees. The
culture of Aarong is as unique and diverse as an individual's personality. If the employees of an
organization believe that change is something to be feared and avoided, then change implementation is often
reactive and haphazard. If the employees believe that all change should be aggressively implemented "from
above", then change is seldom supported. However, if the employees of an organization believe that
change is worthwhile and everyone's responsibility; then change and growth occur with relative ease.
These are the culture of Aarong that continue to excel in their industry.

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Recommendation

The recommendations according to analysis the organization and secondary data analysis
for this report are:

 Aarong needs to improve their CRM section. Recovery sections have to be fast and should take
clear information about the customer.
 Aarong should increase their product.
 Aarong need to increase their membership card holder
 Aarong need to increase direct Marketing.
 Aarong have very strong backup power from government so they can use those powers
properly and increase their facilities.
 Aarong need to promote their facilities for the customer by giving advertisement to the TV,
Radio, Sponsorship and different kind of promotional activities.
 Aarong Card holders don’t have any clear knowledge about their services. So they need to
increase their communication with the prospective customers.
 Aarong need to start their online shopping system for the people because some of the
organizations are providing this service. For that’s why they are losing their customers.
 They should develop their web site. That helps their customers to get proper idea about Aarong
and their services.

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Conclusion
Aarong is not only a fashion house it is more than that. With times Aarong has evolved itself as one of
the most successful lifestyle store in our country maintaining the tradition and the trends. Besides
becoming the leading lifestyle chain store in Bangladesh they have cherished the traditional crafts of
Bangladesh through Ayesha Abed Foundation and have been able to create employment of thousands
of people. As a result Aarong is a fair trade organization reaching global market by representing
folklore tradition of Bangladesh. Aarong plays the role of protector and promoter of traditional
Bangladeshi products and designs. The designers and the innovators of the products offered by Aarong
have not only established the organization of as leaders in handicrafts but have also reignited interest
and popularity for styles and traditional crafts that are native to the country. It is this gracious blend of
contemporary and customary that ensures that each product is original and saleable in a modern
society. With Aarong growing on this scale, it is Aarong’s marketing departments’ tribute that Aarong
can work with almost more than one hundred thousand people. In the end of my study I would like to
conclude by sharing my feeling that, it was a great journey of my internship in Aarong. I have achieved
contemporary marketing issues which are now practicing in most modern organization. Thus we hope
Aarong will keep up their journey and would become one of prestigious brand by representing
Bangladesh.

Reference:
Chowdhury, M. M. (2017). Unfolding a Stunning Story. Lifestyle.
Hossain, M. (2017). HERSTORY by Aarong 2017. Weekend Tribune.
Smith, M. (2016). Business Strategy Analysis of Aarong.
Wee, J. (2015). Aarong: Social Enterprise for Bangladesh’s Rural Poor. INSEAD.

The Balanced Scorecard: Translating Strategy into Action (Hardcover) by Robert S. Kaplan (shelved 3 times
as strategic-management)

Strategic management ( Hardcore) by John A. Pearce II (shelved 2 times as strategic-management)

Businessnewsbd24.com
www.brac.net
Wikipedia. (2013, November 19). Fast Fashion. Retrieved November 28,2013
Wikipedia: http://en.wikipedia.org/wiki/Fast_fashion
Wikipedia. www.Aarong.com
Bangladesh handicraft based retail industry

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