Success criterion of Manufacturing industry in a Developing country

7/28/2019 Success criterion of Manufacturing industry in a Developing country

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SUCCESS CRITERION OF MENUFACTURING

SECTOR OF A DEVELOPING COUNTRY

A KNITWEAR INDUSTRYOF

BANGLADESH PERSPECTIVE

Welcome to Presentation


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Group Members

Sujon Saha (17)

Borhan Uddin (21)

Nepal Chandra Dhar (30)

S.M. Khairul Islam (42)

Arijit Kumar Saha (57)


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Introduction

In the early 1980s, there were small-scale independent investments in the

readymade garments (RMG) sector. At that time, it was not considered viable and

received very little government attention.

Within a decade, the RMG industry in Bangladesh had flourished and by the early

1990s it had emerged as a major employer. Under the dynamic leadership of the

private sector together with policy support from the government, the export

oriented RMG industry has shown a spectacular growth during the last two and a

half decades.

In the last couple of years Bangladesh has emerged as an important supplier of

quality Knit wear products like- T-shirts, trousers and Sweaters in the global

market.


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Evolution of Knitwear Exports

Bangladeshi KNIT WEAR products are mainlyexported to the US and the EU markets.

With their earnest efforts from late 1980s the RMG

exporters were able to export US$ 393.26 million inFY 95. Of this amount, the shares of the EU and theUSA were US$ 274 million and US$ 98 millionrespectively.

The cumulative average growth rate of the sector isabout 20%.

But BKMEA says it will be 25% within 2015


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Development of Knitwear Production in Bangladesh

That knitwear manufacturing activities inBangladesh have spatiality is evident from theunevenly distribution of these activities over severalpockets in the country. However, there is a largeconcentration of these activities in Narayanganj.

Economic history can shed lights behind thisgeographic concentration of interconnected

businesses emerged in the area. Narayanganj is atown in central Bangladesh, 20 km southeast ofDhaka, the capital.


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Capacity and Actual Production ofKnitwear Firms

The major strength of the Bangladesh textile industry is the poolof motivated workers. The sector has created jobs for about 2.5million people

The number of factories in the RMG sector increased in tandem

from less than a thousand in FY 91 to about 7 thousands in FY 10.

The major impetus behind the phenomenal growth of theknitwear sector is the labor intensity in the production process

The core strength of the knitwear sector is its backward linkage

the knitwear sector is the highest contributor in terms of bothgross and net export earnings


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Organization and Growth: Firm Level

Perspectives

The organization of production and marketing is a complexjuncture of overlapping dimensions. The most straightforward pattern consists of firms that attempt to controlevery conduit in the production and marketing process.


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Perspectives [Contd.]


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Perspectives [Contd.]


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Experiences of Business Operation

Experience seems to be a catalytic factor in knitwear business. Most

of the firm owners had prior experience in the same line of business

before venturing into the current ones.

This observation equally holds for the majority of the shareholders

in case of partnership firms. Many of the shareholders reported to

have involved into the business first as professionals.

Gradually they gained both confidence and experiences in thecrucial areas of the business and started similar business on their

own.


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Raw Materials

Value addition in knitwear sector is the highest among the RMGmanufacturing in Bangladesh. It varies between 70% and 90%depending on the type of products and firms. Scope of the business andproduction patterns mainly influence the choice of raw materials.

At present procurement of raw materials from local market is common

except for cases where 14 orders are tied with some specific origins ofraw materials. Self-procurement of raw materials is most common.

Larger firms procure raw materials on their own except for somecontracts where the buyer supplies the raw materials.

Almost all of the medium firms self-procure raw materials.

In contrast, only a few small firms procure raw materials on their own;most of them receive the required ram materials with the ordersbecause many of them are engaged in Sub-contract from medium firms.


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Enterprise Formation and Entrepreneurial Growth

Within two years of operations majority of largefirms reach the milestone and become profitable andsustainable.

The history for medium firms is bit different. Most ofthe medium firms were established in the early1990s. On average most of them are in operations forthe last 15 years.

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Success criterion of Manufacturing industry in a Developing country