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    1) The RMG industry is very important for Bangladesh's economy, accounting for over 10% of GDP and 80% of export earnings. It employs over 1.5 million workers, mostly women. 2) Bangladesh has emerged as a key player in RMG exports since 1978. Exports have grown from $3.5 million in 1981 to $10.7 billion in 2007 thanks to favorable trade arrangements. 3) To double exports to $30 billion by 2030, Bangladesh should focus on a cost leadership strategy by building an RMG zone with adequate infrastructure to lower costs and ensure compliance, as well as training programs to develop higher-skilled workers as automation increases.

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    1) The RMG industry is very important for Bangladesh's economy, accounting for over 10% of GDP and 80% of export earnings. It employs over 1.5 million workers, mostly women. 2) Bangladesh has emerged as a key player in RMG exports since 1978. Exports have grown from $3.5 million in 1981 to $10.7 billion in 2007 thanks to favorable trade arrangements. 3) To double exports to $30 billion by 2030, Bangladesh should focus on a cost leadership strategy by building an RMG zone with adequate infrastructure to lower costs and ensure compliance, as well as training programs to develop higher-skilled workers as automation increases.

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    30 views5 pages

    Assignment-Mohammad Irfan Amin Tanim - 1721862

    Uploaded by

    Mohammad Irfan Amin Tanim
    1) The RMG industry is very important for Bangladesh's economy, accounting for over 10% of GDP and 80% of export earnings. It employs over 1.5 million workers, mostly women. 2) Bangladesh has emerged as a key player in RMG exports since 1978. Exports have grown from $3.5 million in 1981 to $10.7 billion in 2007 thanks to favorable trade arrangements. 3) To double exports to $30 billion by 2030, Bangladesh should focus on a cost leadership strategy by building an RMG zone with adequate infrastructure to lower costs and ensure compliance, as well as training programs to develop higher-skilled workers as automation increases.

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    of 5

    INDEPENDENT UNIVERSITY BANGADESH

    Assignment: Spring 2022

    Course : MBA550
    Faculty: Dr. Md. Nazmul Hossain

    Date : 13th February 2022

    Submitted by
    Mohammad Irfan Amin Tanim
    ID: 2222292
    Introduction
    RMG (Ready Made Garment) is very important and helpful for Bangladesh. Bangladesh has
    emerged as a key player in Ready Made Garment since 1978. Textile and clothing for about 85%
    export income for Bangladesh out of which 75% comes from apparel sector which covers the
    major product knit and woven shirt, blouses, trousers, skirt, shorts, jacket, sweater sportswear
    and many more casual and fashionable outfit. This sector at present employs approximately 1.5
    million-plus worker mostly female who is comes from underprivileged social class.
    Bangladeshi RMG industry is an essential part of the national economy, constituting more than
    10 percent of the GDP, 80 percent of earnings from exports, and well over one-third of the
    employment.

    History
    The industry is around 40 years old and began from nothing. To offer some perspective, the
    export of RMG from Bangladesh was the only USD 3.5 million in 1981. This figure had
    increased to USD 10.7 billion in 2007, in large part thanks to the favorable trading arrangements
    that resulted in industrialized countries outsourcing garment and textile production to Asia.

    STRATEGY TO ACHIEVE THE TARGET

    The strategy we need to achieve it is Cost Leadership & Differential Strategy.


    While global demand for RMG products is expected to surge in the coming years, Bangladesh's
    sector must continue to progress and evolve in order to take advantage of it.

    Some of the RMG industry's most pressing current issues include poor compliance, inadequate
    infrastructure, and power capacities, all of which hinder overall competitiveness.

    My selected strategy aims to expand compliance industry-wide. Bangladesh has made progress
    toward eliminating child labor and curtailing long working hours, but the Tazreen Fashion fire of
    2012 and the Rana Plaza collapse of 2013 demonstrate that compliance is still lacking in many
    respects, particularly when it comes to safety.

    These disasters have focused global attention on Bangladesh's sector, heightening consumer
    awareness about garment production and making improvements in compliance even more crucial
    to ensuring sustainable growth of the industry.
    Source: Dhaka Tribune
    Competitive strategy for Bangladesh apparel industries refers to a way of creating a competitive
    advantage over competitors like China, Vietnam, India, Sri-lanka, Ethiopia, Cambodia, and some
    others. It represents a greater value for the customer, created either by lower prices or by
    providing greater benefits and services that justify higher prices.

    Cost leadership strives towards cutting costs to a minimum possible level in order to provide
    customers with lower prices and thus boost their savings. In most cases, cost strategy for first-
    movers leads to a significant increase in market share and capacity utilization that further drives
    down costs.
    Cost Leadership will be the best strategic choice for Bangladesh apparel industries. Bangladesh
    has a low labor cost compared to its competitors.

    Figure: RMG export earnings in 2020

    Reason to select the Strategy

    Cost Leadership strategy


    Cost leadership strives towards cutting costs to a minimum possible level in order to provide
    customers with lower prices and thus boost their savings. In most cases, cost strategy for first-
    movers leads to a significant increase in market share and capacity utilization that further drives
    down costs.
    Building a strategy on minimizing costs requires a company to achieve:
    1. High productivity
    2. Lower labor cost
    3. Use of bargaining power to negotiate the lowest prices for production inputs
    4. Lean production methods
    5. Effective production process
    6. Effective distribution channels

    Differentiation strategy
    Differentiation strategy is built on a belief that one needs a clear and unique positioning.
    Differentiation leadership focuses on providing perks that add value for consumers, while higher
    prices are a sort of “make up” for their higher costs. Building a strategy on a differentiation
    requires a company to continuously invest in and develop:
    1. Superior product quality (features, benefits, durability, reliability)
    2. Branding (strong brand recognition, desire and loyalty)
    3. Industry-wide distribution across all major channels (i.e. the product or brand is an
    essential item to be stocked by retailers)
    4. Marketing capabilities (advertising, sponsorship, etc.)

    IMPLEMENTATION PLAN OF CHOSEN STRATEGY


    We will have to create an RMG Zone “special zone” that's perfectly suited for garment
    production. This area would essentially be an industrial park, with ample infrastructure for
    factories and straightforward ways to monitor compliance, allowing firms to produce readymade
    garments efficiently and safely.
    A separate RMG zone would allow factories to cluster in a single geographic location, which
    would reduce production costs, allow for simple transfer of knowledge and technologies, make
    pollution reduction easier, and promote other positive spillover effects.
    A Chinese firm has already performed feasibility and environmental studies for the 530-acre
    Palli zone for Bangladesh that would include utility services, medical facilities, pollution
    treatment plants, daycare centers, and other similar infrastructure. The zone would employ an
    estimated 300,000 people at more than 250 factories.
    The analysis estimates that due to the creation of such an RMG Zone, there would be an
    additional 142 factories over the next three years when compared to the long-run growth of the
    industry. The incremental costs to build these additional factories are estimated to be Tk. 1.3
    billion. Thanks to increased productivity and better capacity utilization within the special zone,
    the authors estimate that the total export earnings from the more than 250 factories would equal
    Tk. 312 billion. Each taka spent on the investment would do an estimated 8 takas of social good.
    How Bangladesh can double its RMG export by 2030
    BASIS indicates that 60 percent of garment workers in Bangladesh will lose jobs by 2030 and
    will be replaced by robots because of the automation brought about by factory owners. With the
    introduction of
    emerging technologies like blockchain, simulation, cloud computing, 3D printing, adaptive
    manufacturing, human-machine cooperation, speech processing, sensors, big data, and virtual
    and augmented reality the manpower will decrease. If Bangladesh has to double its GDP by 2030
    the report and analysis say that demand for skilled workers in using machinery and technology
    will continue to increase. The industry will be generating more output with less number of
    people. So even there are machines humans will still be needed to support the machines to do
    their jobs by performing the higher-order skilled tasks—problem-solving, selective attention,
    critical thinking, handling ambiguity, judgment, empathy, etc.

    To solve this problem government and private firms must focus on


    1) Upgrading many textile plants will call for more foreign workers unless there is a well-
    directed training program.
    2) Establishing a university-level program to train mechanical engineers, chemists, and material
    engineers. One way to achieve this is to seek association with one of the leading western
    universities with excellent textile credentials for the garment and textile sectors.
    2) Training research and development program is needed to raise Bangladesh to the frontier of
    garment and fabric production techniques

    Conclusion

    We are confident that Bangladesh will exceed the target of USD 30 billion with its current
    momentum. However, what we hope is that it can stand up to tap the potential for the quantum
    leap for USD 100 billion. As mentioned, the key will be the development of management staff
    for leadership and innovation. Few transformational changes that the industry would have to
    make to sustain growth and take an increasing market share are moving from transactional
    relationships with buyers to more strategic partnership.

    References
    • Experts warns— ‘adapt or die’ By 2030 robot to devour 60% RMG job, 02 December 2020
    Dhaka-Retrieved from http://theapparelnews.com/article/2282/index.html

    • Crafting strategy for apparel industry 2025, 13 November 2020


    Dhaka- Retrived from https://www2.slideshare.net/AlHafijProdhan/crafting-strategy-for-apparel-
    industry-2025.html

    • Is automation a threat for RMG workers in Bangladesh?


    China- Retrived https://www.globaltimes.cn/content/1166912.shtml

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