...MBA 727 Bangladesh – Case 3 Kimberly Huff Description of Company Bangladesh is one of the world’s most densely populated countries, with its people crammed into a delta of rivers that empties in the Bay of Bengal (BBC News Asia, 2013). In the country of Bangladesh poverty is a well known issue and research states that almost fifty percent of the population lives on less than one dollar a day (BBC News Asia, 2013). Agriculture is the country major source for employment. However, jobs are still limited and many Bangladeshis seek work in other countries, which is sometimes illegal (BBC News Asia, 2013). The country has made progress in areas of education, health and reduction in population growth the main focus is trying to “diversify its economy with industrial development” (BBC News Asia, 2013). Central Issues One of the central issues in the country of Bangladesh is fire-related risk in factories. Wal-Mart had a special interest in this issue and took it on as global approach to safety that included collaboration with different brands and retailers to achieve industry-wide results ("Fire safety in," 2013). Wal-Mart first implementation was in 2012. They phase out facilities that were high risk for fire-related incidents ("Fire safety in," 2013). In order for these facilities to be closed there were one or more criteria they must have met according to the fire safety risk. Wal-Mart followed certain guidelines and safety standards that were required off all facilities...
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...The Rise of Bangladesh’s Textile Trade 1. Why was the shift to a free trade regime in the textile industry good for Bangladesh? Employment and economic growth in Bangladesh depends upon exports of textile products which were allowed through a preferential quota system for textile market export from poor markets to rich markets. As soon as the shift to a free trade regime appeared along with the competition with countries such as China and Indonesia the quick collapse of Bangladesh’s textile industry has been predicted. However, the opposite occurred. We can highlight three major reasons to explain what happened: * Labor costs are low, even lower than in China. Obviously low hourly wages rates explain it but not only. Investments by textile manufacturers in productivity-boosting technology lowered the labor costs in Bangladesh making it one of the world’s low-cost producers. Indeed, this was an advantage during the recession because big importers increased their purchases at low prices. * Strong network of supporting industries. Thus, garments manufacturers save transport and storage costs, import duties which boost their productivity. * Many Western importers looking to diversify their supply sources. Indeed, importers fear to become too dependent toward China. As a conclusion, the reasons why Bangladesh took advantage from the shift to a free trade regime in the textile industry are beyond only low wage rates. Moreover, Bangladesh’s textile market may keep...
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...| | | | Bangladesh’s Textile Industry Theoretically, free trade eliminates imposed governmental barriers to international trade. Expressively, free trade is a Pandora box of confusing issues addressing basic rights, international fiscal development, ecological principles and global employment formations (Chmielewski and Media, 2016). Chmielewski and Media (2016) implied that free trade was the best thing that could happen to Bangladesh’s textile industry. Free trade is an attempt to improve the international economy on the principle of “comparative advantage”. Bangladesh prospered by using their abundance of textile to trade for products that other countries have abundance. The main purpose of the “free trade” was to improve the global economy using the principle of “comparative advantage”. The shift to a free trade regime in the textile industry was good for Bangladesh’s employment and economic growth. Initially, textile products were exported through a preferential quota system from poor markets to rich markets but the shift accounted for lower labor cost, support from other industries, and increased business with western importers. Labor costs decreased to a level lower than China. Lower labor cost was due to low hourly wages and the use of technology. The use of technology increased productivity which allowed consumers to buy more for less money. Importers brought more textiles for less money during the recession. Free trade provided opportunities to build a...
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...1) Why was the shift to a free trade regime in the textile industry good for Bangladesh? It gave them more opportunities to sell the product. More profit was made and Bangladesh was able to grow more rapidly with the increase of income. Labor costs are low, investment by textile manufacturers in productivity – boosting technology lowered the labor costs in Bangladesh making one of the world’s low-cost producers. The advantage is that big importers increased their purchases at low prices; strong network of supporting industries; Many Western importers looking to diversify their supply sources. Textile manufacture is a labor-intensive business, and the cost of labor is very low in Bangladesh. The lack of regulations governing business practices, including building codes, worker safety, and working conditions also lower costs in Bangladesh. There is a critical mass of textile factories in Bangladesh and a large reservoir of appropriately skilled labor, suppliers, and export companies. This geographic concentration of workers and enterprises produces positive externalities that benefit the entire local industry and arguably leads to productivity gains. The shift to a free trade regime was good for Bangladesh because their exports continued to grow even through the economic crisis the rest of the world was having. They continued to grow because labor is so cheap and because of the economic crisis companies like Wal-Mart were looking for low cost garments. Employment...
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...The Rise of Bangladesh’s Textile Trade 1. Why was the shift to a free trade regime in the textile industry good for Bangladesh? Employment and economic growth in Bangladesh depends upon exports of textile products which were allowed through a preferential quota system for textile market export from poor markets to rich markets. As soon as the shift to a free trade regime appeared along with the competition with countries such as China and Indonesia the quick collapse of Bangladesh’s textile industry has been predicted. However, the opposite occurred. We can highlight three major reasons to explain what happened: * Labor costs are low, even lower than in China. Obviously low hourly wages rates explain it but not only. Investments by textile manufacturers in productivity-boosting technology lowered the labor costs in Bangladesh making it one of the world’s low-cost producers. Indeed, this was an advantage during the recession because big importers increased their purchases at low prices. * Strong network of supporting industries. Thus, garments manufacturers save transport and storage costs, import duties which boost their productivity. * Many Western importers looking to diversify their supply sources. Indeed, importers fear to become too dependent toward China. As a conclusion, the reasons why Bangladesh took advantage from the shift to a free trade regime in the textile industry are beyond only low wage rates. Moreover, Bangladesh’s textile market may keep...
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...The Rise of Bangladesh’s Textile Trade Bangladesh, one of the world’s poorest countries, has depended heavily upon exports of textile products to generate income, employment, and economic growth. Most of these exports are low-cost finished garments sold to mass-market retailers in the West, such as Wal-Mart. For decades Bangladesh was able to take advantage of a quota system for textile exports that gave it, and other poor countries, preferential access to rich markets such as United States and the European Union. On January 1, 2005, however, that system was scrapped in favor of one that was based on free trade principles. From then on, exporters in Bangladesh would have to compete for business against producers from other nations such as China and Indonesia. Many analysts predicted the quick collapse of Bangladesh’s textile industry. They predicted a sharp jump in unemployment, a decline in the country’s balance of payments accounts, and a negative impact on economic growth. The collapse didn’t happen. Bangladesh’s exports of textiles continued to grow, even as the rest of the world plunged into an economic crisis in 2008. Bangladesh’s exports of garments rose to $10.7 billion in 2008, up from $9.3 billion in 2007 and $8.9 billion in 2006. Apparently, Bangladesh has an advantage in the production of textiles – it is one of the world’s low-cost producers – and this is allowing the country to grow its share of world markets. As a deep economic recession took hold in developed...
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.............................................................. 4 1.2 History of RMG Sector in Bangladesh: ................................................................................................ 4 1.3 Objective of Study: .............................................................................................................................. 6 1.4 Methodology: ...................................................................................................................................... 6 1.4 Limitations of the study: ..................................................................................................................... 7 CHAPTER 2: ................................................................................................................................................... 8 2.0 AN OVERVIEW OF RGM .......................................................................................................................... 8 . 2.1 Ready Made Garments Export Condition in brief: .............................................................................. 8 2.3 RECENT GLOBAL TRENDS IN TEXTILE AND GARMENTS: ..................................................................... 9 2.4 Contribution of RMG sector in total export in Bangladesh: ............................................................. 10 2.5 Problem of RMG Export in Bangladesh...
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... 1. What is the major benefit of trade identified in the theories of international trade? 2. What do theories of international trade teach us about the pattern of trade in the world economy? 3. 6 4. What are the main differences among mercantilism, Adam Smith’s theory of absolute advantage, and David Ricardo’s theory of comparative advantage? 5. Why is the theory of comparative advantage so important in today’s world? 6. According to the theory of comparative advantage, what is the relationship between free trade and economic growth? Does the empirical evidence support this prediction? 7. What is the criticism that Paul Samuelson made of theories that advocate free trade? 8. How is the Heckscher- Ohlin theory different from the theory of comparative advantage? 9. What is the Leontief paradox? Why is it important? 10. What are central predictions of the product life- cycle theory? What are the limitations of this theory? 11. What does new trade theory tell us about the pattern of trade in the world economy? 12. What are the implications of new trade theory for government policy? 13. According to Porter’s theory of national competitive advantage, what elements explain why different countries achieve international success in certain industries? 14. What are the implications of Porter’s theory for government policy? 15. What are the implications of theories of international trade such as the theory of comparative advantage...
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...http://www.bangladeshaccord.org/bangladesh/ The southern Asian country of Bangladesh, bordered by India and Burma, has a population of approximately 164 million people[1]. The Bangladesh economy has grown an average of six percent a year over the last two decades and has a population increasing by an average of 1.59% a year[2]. This manufacturing industry accounted for almost 12% of Bangladeshi GDP in 2009 and 2010[3] and employs approximately four million people[4]. The export-oriented Bangladeshi garment manufacturing industry has boomed into a $19 billion dollar a year industry[5] following the expiry in 2005 of an international agreement on textiles and clothing import quotas in place since the early 1960’s[6], duty-free access offered by western countries, and low labour costs. The Bangladeshi textile and garment manufacturing sector is fuelled by young, urbanizing, workers many of whom are women. With the majority of production destined for U.S. and European markets, Bangladesh’s ready-made garment industry now accounts for approximately 78% of total exports[7], second only to China as the world’s largest apparel exporter. However, Bangladesh has a long history of health and safety tragedies in garment and textile manufacturing. Garment factory fires and collapses have killed at least 1800 workers since 2005[8]. The Tazreen Fashions fire on 24th November 2012 and the unprecedented disaster of the collapse of the Rana Plaza factory complex on 24 April 2013, together...
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...Economic Development of Bangladesh Economy of Bangladesh Economic Position in World: The economy of Bangladesh is a rapidly developing market-based economy. Its per capita income in 2010 was est. US$1,700 (adjusted by purchasing power parity). According to the International Monetary Fund, Bangladesh ranked as the 43rd largest economy in the world in 2010 in PPP terms and 57th largest in nominal terms, among the Next Eleven or N-11 of Goldman Sachs and D-8 economies, with a gross domestic product of US$269.3 billion in PPP terms and US$104.9 billion in nominal terms. Growth rate and Economic Sectors: The economy has grown at the rate of 6-7% per annum over the past few years. More than half of the GDP is generated by the service sector; while nearly half of Bangladeshis are employed in the agriculture sector. Other goods produced are textiles, jute, fish, vegetables, fruit, leather and leather goods, ceramics, RMGs. Remittances from Bangladeshis working overseas, mainly in the Middle East, is the major source of foreign exchange earnings; exports of garments and textiles are the other main sources of foreign exchange earnings. Ship building and cane cultivation have become a major force of growth. GDP's rapid growth due to sound financial control and regulations have also contributed to its growth; however, foreign direct investment is yet to rise significantly. Bangladesh has made major strides in its human development index. The land is devoted mainly to...
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...The Bangladesh Garments Manufacturers and Exporters Association (BGMEA) has predicted textile exports will rise from US$7.90 billion earned in 2005-06 to US$15 billion by 2011. In part this optimism stems from how well the sector has fared since the end of textile and clothing quotas, under the Multifibre Agreement, in early 2005. According to a United Nations Development Programme report "Sewing Thoughts: How to Realize Human Development Gains in the Post-Quota World" Bangladesh has been able to offset a decline in European sales by cultivating new markets in the United States.[15] "[In 2005] we had tremendous growth. The quota-free textile regime has proved to be a big boost for our factories," said BGMEA president S.M. Fazlul Hoque told reporters, after the sector's 24 per cent growth rate was revealed.[16] Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA) president Md Fazlul Hoque has also struck an optimistic tone. In an interview with United News Bangladesh he lauded the blistering growth rate, saying "The quality of our products and its competitiveness in terms of prices helped the sector achieve such... tremendous success." Knitwear posted the strongest growth of all textile products in 2005-06, surging 35.38 per cent to US$2.82 billion. On the downside however, the sector's strong growth came amid sharp falls in prices for textile products on the world market, with growth subsequently dependent upon large increases in volume. Bangladesh's quest...
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...EAST WEST UNIVERSITY EMBA Program MKT502/EMBA_591: International Business /Business in the Global Environment Spring-2016 Group Assignment: Analysis of Selected Case Studies Instructions 1. Each group (six students, max.) will analyze the four cases attached herewith by answering the cases related questions. 2. Students are advised to apply relevant concept available in lecture materials, textbook, and/or any related sources while answering case related questions. 3. Length of each case analysis must be 2-5 pages including explanations, related charts, and images, if any. 4. The deadline of submission is April 05, 2016. Don’t miss the deadline. However, early submission is acceptable. 5. Each group must submit both hard and soft copies of the assigned work. 6. Please make sure that all group members’ names and IDs are on the cover page. Nevertheless, group leaders are advised to exclude the particulars of the group members who are free-rider in nature. 7. Last but not least, be cautious about plagiarism!!!!!!! 1/9 Case study 1: The Globalization of Starbucks Thirty years ago, Starbucks was a single store in Seattle's Pike Place Market selling premiumroasted coffee. Today it is a global roaster and retailer of coffee with some 16,700 stores, 40 percent of which are in 50 countries outside of the United States. Starbucks set out on its current course in the 1980s when the company's director of marketing, Howard Schultz, came back from a trip to Italy enchanted with the Italian...
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...[pic] [pic]Economy of Bangladesh From Wikipedia, the free encyclopedia Jump to: navigation, search |Economy of Bangladesh | |[pic] | |Kawran Bazar (A commercial hub of Bangladesh) | |Rank |48 | |Currency |Bangladesh Taka (BDT) | |Fiscal year |1 July - 30 June | |Trade organisations |WTO, WCO, IOR-ARC, SAFTA, D8 | |Statistics | |GDP |$256 billion (2010 est. PPP) | |GDP growth |5.7% (2009 est.) | |GDP per capita |$1,600 (2009 est. PPP) | |GDP by sector |agriculture: (18.6%), industry: (28.6%), services: (52.8%) (2009| | |est.) | |Inflation (CPI) |5.4% (2009 est.) | |Population |36.3% (2008 est.) ...
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...our country’s foreign trade, export and import, top five imported goods, top five exported goods, top five import and export destination and trade of balance from the year 1990 to the year 2012, as per instruction we have collected the data from Bangladesh bank library. In this report we have included the yearly export and import which indicates the total amount of import and export of the country per year. And from those import and export payment receipts we have calculated the trade balance which is the result of the difference between the payment of import and export receipts. We have found out the major import and export goods to understand the foreign trade composition. Among them we have specifies the top five goods that are imported for the consumption and top five goods that are exported to other foreign nations to utilize the excess supply. We have also outlined the top five export destinations and top 5 import destinations to figure out the performance of foreign trade. From the analysis we have found out that our most preferred export countries are USA, Germany, UK, France and Japan. And preferred import countries are The report also comprises the Foreign Direct Investment inflow which has played key role in the modernization of Bangladesh for the past 15 years. We have included foreign direct investment to understand the impact of foreign venture. After analysis all the data we have organized a foreign trade performance of Bangladesh to indicate if the current...
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...turning to Bangladesh to make clothes, not least because China is the global leader in clothing manufacturing and exports. But the shift is happening for very obvious reasons.” BBC new 29/08/2012. Using the theory of comparative advantage, discuss the possible reasons why this shift is being observed. Globalisation from the facts of Economics ‘is considered by a rise across borders in the flow of goods, services and financial resources alongside with a rise in international movement of technology material and characters’ Boyes & Melvin (2011). As it was announced on BBC News (2012) about how Chinese companies are moving to Bangladesh to make clothes even though China is a worldwide leader in the manufacturing businesses. Absolute advantage involves the specialism of trade benefit among countries, well as according to the law Comparative advantage is that ‘when one Country has fewer efficiency then it has absolute disadvantage with detail to the further Countries production of both merchandises, there is still a source for commonly useful trade’ Simatele (2013). Heckscher- Ohlin (H-O) theory is founded on two theories, the H-O theorem and the factor price Equalisation theorem. The following essay will outline the trade established on Absolute advantage, H-O Theorem, the theory of Comparative advantage and the way the theory opportunity cost can be used to explain Comparative advantage then examples will be given to illustrate the movement of Chinese firms to Bangladesh to make...
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