Multinational companies like Walmart,Mango,etc are now in dilemma about terminating their contracts with Bangladeshi manufacturing industries after the building collapse in Savar. The eight-storeyed building Rana Plaza was one of hundreds of buildings in the crowded streets of Savar, an industrial suburb of Bangladesh's capital and the center of the country's $20 billion garment industry. If Bangladesh remains one of the world's poorest nations, it is no longer a complete economic cripple. Instead, it turned its poverty to its advantage, heralding workers who make some of the world's lowest wages and attracting some of the world's leading brands.But this same economic miracle has plunged Bangladesh into a vicious descending spiral of keeping down costs, as major retailers compete for customers who want ever cheaper clothes. On one hand,the multinational companies do not want to leave Bangladesh because of cheap labour cost.On the other hand,they are feeling pressure from consumers to leave Bangladesh if the working condition do not improve. In this case study,we have analyzed the problems that multinational companies are facing and offering solutions for the major and minor problems they are facing.
Statement of the Problem
Major Problem for Multinational companies doing business in Bangladesh: Further tarnishing of their reputation Frequency of accidents of labours increasing at an alariming rate Pressure from angry consumers to move out from Bangladesh It takes months to build good relationship with new factories in other countries Cheapest labor wage in Bangladesh Their profit will decrease as cost will increase
Minor Problem for Multinational companies doing business in Bangladesh: If they stay, they might have to spend large amount of money for improving working condition in Bangladesh If they leave, they will face criticism for abandoning a developing country There are shortage of skilful workers in Bangladesh
Alternatives and Solution for major problems: Problem:Further tarnishing of their reputation Alternative 1:They can initiate new marketing strategies to improve their reputation. They can publicize how they have helped the troubled workers in Bangladesh.They can offer monetary compensation to the victims of garment fires and building collapse. Alternative 2:They can provide information to consumers that working conditions in other developing countries are much worser than that of Bangladesh According to Maplecroft’s Labor Rights and Protection Index which measures risk with violations of labor rights, Bangladesh ranks less risky than India,Pakistan on other labor issues like child labour. Alternative 3:They could publicize targeting the female consumers about the information that most garment workers are females Girls and women are major constituents of workforce in Bangladesh.If multinational companies leave Bangladesh,the female labours will be unemployed,This will cause more sorrows and pain for the labours. Garment sector is the largest employer of women in Bangladesh.The garment sector has provided employment opportunities to women from the rural areas that previously did not have any opportunity to be part of the formal workforce. This has given women the chance to be financially independent and have a voice in the family because now they contribute financially. Women are paid far less than men mainly due to their lack education. Women are reluctant to unionize because factory owners threaten to fire them.
Disadvantages and Limitations of Alternatives: There is less chance that people will be persuaded if Alternative 3 will be used.This is because it will focus on females.After the recent devastating accident which is fresh on people’s mind,arguing and promoting that Bangladesh is less riskier may backfire.But alternative 2 can be implemented after some months.So,the best solution will be to initiate marketing strategies in order to gain customer...
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