Rise of Bangladesh’s Textile Trade

Topics: Economics, International trade, Globalization Pages: 5 (1474 words) Published: January 27, 2013
CASE 3: Rise of Bangladesh’s Textile Trade
Zlatko (Zac) Simjanovski

MBA 727-03 (FA12)
Professor WS
November 17, 2012

Table of Content
Introduction............................................................................................................................3 General description of Bangladeshi Textile Industry............................................................3 Central issue of the case analyses .........................................................................................3 Industry's goals overview .....................................................................................................4 Constraints of the problem....................................................................................................5 Relevant alternatives to the issue..........................................................................................5 Best Alternative and Implementation Plan...........................................................................6 References ............................................................................................................................7 Appendix A (Grading Rubric) .............................................................................................8

Introduction
The Textile Industry in Bangladesh is growing fast despite the fact of the global economicslowdown. In current situation, businesses like Wall Mart and their customers look very cautiously towards the product necessity, value and price. Firms are more focused to lower the operational and transaction costs and to maintain their profit margins. In this global condition, various factors contributed that Bangladeshi textile industry move towards the path of growth and leaving noticeable footprint in the global textile industry as a success story. General description of the Bangladeshi Textile Industry

Bangladeshi Textile Industry has pivotal role to the country’s economic growth for several reasons. First, the exports contribute to the balance of payment accounts of the country with almost 80 percent which is around $5 billons per year just to European Countries, Canada and the US. This industry provides 45 percent of all industries employment (over four million people) and contributes largely to the gross national income. As perRaymond Vernon, after the independence of Bangladesh in 1971, West Pakistanisdeserted their firms and the new socialistic government took the ownershipover these companies.After ten years, with the denationalization by the Government,around 300 companies are returned to their previous owners.(Vernon,1997, p128). This sets textile industry to operate in three main areas as Public, Private and Handloom segment. The private segment, supported with some foreign direct investments, is increasingly growing but the handloom is providing the most employment as wellin sources significant partof required quantities of fabrics to local market.(Malhotra, 2012). By end of 2004 the Bangladeshi phenomenon,even one of the poorest countries in the world, was raising the textile industry exports exponentially utilizing the situation over the export quota system and gaining market at Western countries. This trend continues after 2004even these quotas are seized and the free trade waive took place. In 2009 jump of 15 percent export increased for the textile business in Bangladesh.(TWB,2012, p206) Central issue of the case analyses

Bangladeshi Textile Industry is typical case where it proves the principle that international trade is beneficial to the country’s economic growth. Furthermore I’ve observed few factors that are in favour of the textile industry growth are linked to low labour cost, low salaries of the workers and on the other side the first movers philosophy and specialization in the textile manufacturing that leads to efficiency increase (in this case more static then dynamic efficiency). Also, the development of domestic sourcing...

References: Charles W.L. Hill (2012). International Business: Competing in the Global Marketplace, (9th ed.). McGraw Hill/Irwin.
Ravi Ramamurti, Raymond Vernon (1997) Privatization and Control of State-Owned Enterprises(4th ed.).Retrieved fromhttp://elibrary.worldbank.org/content/book/9780821318638
Textile World Asia, T.C. Malhotra (2012) Bangladesh: A Growing Textile Economy, Retrieved from http://www.textileworldasia.com/Articles/2006/January/Features/Bangladesh_Country_Profile.html
The Daily Star (2012) Political unrest makes H&M wary of Bangladesh, Retrieved from
http://www.thedailystar.net/newDesign/news-details.php?nid=236149
The World Bank (2012), Bangladesh Economic Update October 2012: Resilient Growth Likely to Continue, Retrieved from http://www.worldbank.org/en/news/2012/10/21/bangladesh-economic-update-october-2012-resilient-growth-likely-to-continue-in-bangladesh
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