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Export Oriented Footwear Industry of Bangladesh
Presented byLaboni Aktar Tarana; Roll: 14
Md. Touhidur Rahman; Roll: 39IBA, MBA 52D
Leather Industry Exports (in million USD)
FY10 FY11 FY12 FY13 FY14(Jul-Apr)050
100150200250300350400450500
226.1
297.83330.16
399.73 424.05
29.0655.42
99.36161.62
197.36204.09
297.8335.51
419.32 443.54
Leather Leather Product Footwear
Growth of Footwear Exports of Bangladesh (USD million)
2006 2007 2008 2009 2010 2011 2012 2013 20140
100
200
300
400
500
600
95 123159 183 204
298336
419
550
PESTLE Analysis of Leather and Footwear Export Industry
• Political unrest • Poor enforcement of environmental laws and rules Political Factors
• Cheap labor • Poor infrastructure • Unavailability and high cost of power supply
Economic Factors
• Large population • Change in buying patterns Social Factors
• Technological development• Information and communications
Technological Factors
• Tax policies• Duty free facilities• Safety regulations • Compliance issues
Legal Factors
• Environmental regulation and protection • Renewable resources
Environmental Factors
Porter’s five forces Model of Export Footwear Industry
Competitive Rivalry (High)
Bargaining Power of
Suppliers (Low)
Threats of New Entrants (Low)
Bergaining Power of
Customers (High)
Threats of Substitutes
(High)
110 export-oriented factories Foreign brands
Available raw materials Imports from China, India, etc. Unorganized suppliers
Multiple options Discretionary
purchases Required high investment Poor infrastructure
Various substitute products
Low cost substitutes Price variations
Business Canvas Model of Export Footwear IndustryKey Partners Suppliers
(Farmers) Distributors Retailers Foreign buyers Customers
Key Activities Infrastructure
building Training labor force Manufacturing Marketing & Sales Product R&D Consumer Education Branding
Value Propositions Comfortability Durability Stylish
appearance Trends Competent price Good for health Status symbol
Customer Relationships Bulk buyers Loyalty Reliability
Customer Segments Foreign Countries Bangladeshi
Customers Mid to High Quality-conscious
Buyers Fashion-conscious
Buyers Key Resources Product Brand Team Partner & Retail
Network
Channels Shipping Transportation Social Media Websites Cellphones
Cost Structure Product Inputs (raw materials) Workers’ wages Equipment & Facilities Regulatory & Compliance Power supply
Revenue Streams Product Sales Shoes and accessories Leather products Other synthetic/natural products
Strengths and Weaknesses of Export Footwear Industry
Strengths• Governments declared “Thrust
sector” & highest priority to Footwear & Leather Goods
• Almost 90% materials are locally available
• High quality and reputation of natural leather
• Availability of labour and low labour cost
• Comparative price advantage in international market
• Favourable geographical location
Weaknesses• Selective and limited Access to
Finance• Lack of Skilled Workforces• Lack of access to latest
technology and machinery facilities
• Poor/or no R&D, laboratory facilities
• Poor compliance practice • Poor infrastructure, power
supply • High rate of interest on term
loan
Opportunities and Threats of Export Footwear Industry
Opportunities• Increasing International and Local
demands for value added leather products
• Low wage workers convertible to skilled ones
• No duty on shoes, leather products made and exported from Bangladesh
• Local and Foreign Direct Investment opportunity in value added leather products sector
• China is losing competitiveness • Government policies - GSP, Cash
Incentive; etc. • Already big players invested in BD
signalling many more to follow
Threats• Absence of integrated long term
policy• No dedicated skill development
institute• Political instability, corruption • Increasing import of low priced
synthetic products • Illegal export of raw hides/skins
Smuggling• Potential buyers stringent stands for
compliances, and delay in building Common Effluent Treatment Plant (CETP)
• Emergence of alternative sources like Myanmar
Triple Triangle Framework/ Three Domain Framework (1/4)
Triple Triangle Framework/ Three Domain Framework (2/4)
• Capital • Substantial amount of capital required in near future
• Culture • Increasing global competition • Global Strategy - “Think Global, Act Global” • Maintaining international qualities
• Capabilities • The second best leathers in the world • Low cost labor • VRIN model – Valuable, Rare, Inimitable and Non-substitutable
Triple Triangle Framework/ Three Domain Framework (3/4)
• Customer • Foreign customers • Customers from USA, Japan, Canada, etc.
• Competitor • Competition is high
• Collaborator • Quality of raw materials, equipment and machineries • Delivery process
Triple Triangle Framework/ Three Domain Framework (4/4)
• Technology and Innovation • Machines from Italy and Germany
• Government and Society • Interrupted power supply & poor infrastructure • Technological upgradation and insufficient R&D initiatives and facilities • High rate of interest on term loans and working capital, limited access to finance • Leather smuggling to India
• International Factors • Increasing demand in international markets • Expected shift from China and India • Competition from countries like Myanmar
Thank You
Questions?