Modern management has transferred itself from a
production to a sales orientation and finally to marketing oriented view of
business. The Marketing Concept is a philosophy and like any philosophy it
cannot be defined with precision. It is in fact an attitude governing the whole
management approach. to the firm’s operations from step to step. One of the
recent slogans of today’s economist is’ either export or be ruined’. They are
not willing to show any other path ‘between this.
The present export pattern of Bangladesh has changed
recording to the above slogan. Now eight commodities have taken the position of
93% of the export earnings and ready made garments is one of those. Major
products of Bangladesh Ready-made Garments industry for export Marketing are
woven shirts, trousers, Jackets J-shirt, short Briefs and major Buyersof Bangladesh Garments
are the USA, EEC, Canada and other European Countries.
The export earning from garment sector increased
steadily from a meager amount of US$ 3.24 million in 1980-8 1 to U:S$ 1064.00
million started sprouting up here and there. Only a few years back where it was
difficult to find a re liable and quality Buying House, but now, there are so
many of’ those. Buying Housing industry is one of the essential supports of
Garments Export. In one hand foreign Buyers of garment products are largely
dependent on this industry for searching suppliers, who are capable to produce
and supply buyers demanded products.
In
other hand garments producers are also dependent on this industry for searching
buyers who places the order of certain garment item such as sweater that the
producer produces. So the relationship between garment industry and buying
house industry are interdependent. The existence of one without other is hardly
possible. The reason for this again exporting garment product involves so many
stages from marketing to distribution, which is not possible by any single
group to do alone. For the convenience of both buyers and suppliers, the buying
house industry today has developed enormously with a vision to perform
marketing and distribution task of garment industry.
Location and Historical
Back ground:
FC Group is a service based organization with basic
objective of providing marketing related services to local garments
manufacturers and working as a representative of foreign buyers.
• In 2008 for better quality service to local
manufacturers the company started to supply garments accessories to the
garments manufacturers through its company owned accessory supplier named F.M.
Printing and Packaging Ltd. For a smooth manufacturing the assurance of on time
delivery of fabric and accessories is must. To assure this supply, Merchandising
Inc. utilizes two sources. One is its sister concern FM. Printing and Packaging
Company. Another is the outsourcing from its suppliers of long term
relationship. As a result the manufacturer doesn’t need to be worried about the
availability of accessories.
• By arranging all the accessories for suppliers, the
company reduced the work pressure of its suppliers by helping them only to
concentrate on production.
• Besides supplying accessories the company also
controls the product Quality of the suppliers by sending its quality inspector
to the factories. Thus the company ensures the quality of the suppliers
products.
• For the distribution of the final goods the company
recently opened a company owned shipping agency named NEFF A Freight System Ltd.
with objective to carry goods from factory to the port and prepare all
necessary documents forexports.
When the order of the buyer is ready this company take the responsibility% of
loading the goods on the ship with all necessary steps. They also prepare and
arrange the necessary documents for export such as bill of exchange, bill of
lading, commercial invoice, certificate of origin, packing list etc.
• As a representative of foreign buyers, the company
makes a product sample for the buyer according to buyer specification.
• The company also searches for a good supplier for
the buyer to execute his order.
• The company is committed to growth and improvement
of all aspects of its operation and willing to be a leader in the industry.
Merchandising in Corporation
Findings of
value chain analysis:
We have found the following findings related with the
value chain aspects from my working experience in the organization and the
personal interview through my working tenure:
Findings
related to primary activities:
• Although for their unsatisfactory services at
beginning stage M.Inc. lost some big American buyers but now M. Inc receives
order mostly from European countries. Most of these buyers are permanent for
their satisfactory services, which shows their effectiveness in achieving
orders.
Findings related
to Supporting activities:
Mission
To
obtain a sustainable position in the FC Group Buying House sectors of
Bangladesh as well as internationally.
Vision:
Buying house industry is in its growth industry but
this growth is a result of so caned blessing of quota system but not the
achievement of their efficiency. This is the warming of undesired maturity for
this industry. Even though they are aware about the guillotine of year 2008,
but it seems that they are ready to dye out.
Organizational Goals
vTo employ resources as incendiary for the growth of FC
Group.
vTo provide service for the parties involved and
invention of the necessary new service dimension.
vTo search for new buyers for investment and help to
develop Products to suit such needs.
Strategic
View of FC Group:
• A
truly international outlook for
exporting
• A long-term commitment for exporting
• A
strategic approach to the development of new export market
• Credibility
and close and long-term relationship in export market.
• An
international reputation for quality
• Resources available for export support
Functional
Departments or M. Inc & Their Activities:
All
the functions of Merchandising Inc. are operated under four major departments:
1. Merchandising
department.
2. Sampling,
department.
3. Commercial
department.
4. Accessory
supply department.
5.Production
department.
6. Shipping department.
Merchandising Department:
This
department of M. Inc. is responsible for the following activities:
Searching bullers:The task of this department started with the searches
of buyers, who want to import garment products from our country, to get the
order of the garment product manufacturing.
Introduce letter:
After
finding suitable buyers this dept. issues an introducing letter to the
respective buyers which describes M. Inc.’s total years of experience, its
parameter of total activities, efficiency and effectiveness and relationship
with existing buyers.
CM:CM
is another important activity that stands for Cost of Making. Here the
merchandiser of this dept. determines what are the things are required to make
an unit or dozen of an order. Then he makes calculation’ of per unit cost on
the basis of accessories consumption, fabric consumption, labor cost and other
relevant costs.
Price negotiation:
When
this department has the clear idea about the cost involved in the desired
transaction they start price negotiation to determine a final price that the
buyer agrees to pay.
Select supplier:
Merchandising
department recognizes the effectiveness, of their commitment to buyers and
there by it shoulders the responsibility of finding out efficient buyers. The
bases of efficiency include supplier’s adequate administrative setup to prepare
all necessary documents for exports, supplier’s financial status and adequate
capacities etc.
Sampling Department:
Commercial Department:
The
commercial department of M. Inc prepares pro-forma invoice for the respective
buyer. The invoice includes the quantity of the buyer’s order, its unit price
and total price. The commercial department also transfer master L/C on the name
of selected supplier.
This
department also maintains all clerical activities such as maintaining the
accounts of daily transaction, maintaining payroll, keeping the accounts of
daily expenditures etc.
Accessory
supply department:
For a
smooth manufacturing, the assurance of’ on time delivery of fabric and
accessories is must. The responsibility of supplying accessories to the
suppliers landed on the ground of this department. To assure this supply
Merchandising Inc. utilizes two sources. One is its sister concern FM. Printing
and Packaging Company. Another is the outsourcing from its suppliers of long
term relationship. As a result the manufacturer doesn’t need to be worried
about the availability of accessories.
Production Department:
Although
named as production department, this service department rather follows up
production dividing its activities into following sections of responsibilities:
Quality
monitor and control: This dept. supervises the manufacturing process to
maintain the quality and scheduled progress of the manufacturing in behalf of
merchandising Inc.
Final
Inspection: For its reputation, buyers usually delegate the responsibility of
final inspection on the shoulder of quality. Inspector of Merchandising Inc.
The efficient inspection is the responsibility of the quality inspector of
Merchandising Inc.
Shipping
Department:
As
the name mentions the task of shipping department of M. Inc starts from
-receipt of final goods from the supplier factory after the final inspection
and ends- with loading of the goods bound for supplier. This department also
prepare the supporting documents for export such as bill of exchange, bill of
lading, commercial invoice, certificate of origin, packing list etc.
Organogram ofthe Merchandising Incorporation
Merchandising Dept.
Accessory Supply
Dept.
Commercial
Dept.
Production
Dept.
Shipping
Dept.
Merchandiser
Sampling Manager
Accessory Manager
Commercial Manager
QC Manager
Shipping Manager
Asst. Merchandiser
Supervisor
Accountant
QC Inspector
Supervisor
Pattern
List Of Clients Or Foreign Buyers:
NAME
EXODUS LTD.
COUNTRY
USA
SYL VIE ITALY SPA.
ITALY
EUROD UFUSENE SPA
ITALY
FIORIPAOLO SPA.
ITALY
ITAL Y
BEX OF SCANDI NA VIA
SWEDEN
SWITZERLAND
CREATION NICOLAS SA.
SPAIN
* Provided
by the organization
List Of Suppliers / Garment Manufacturers:
NAME
TYPE
KUSHIRA COMPOSITE AND KNIT INDUSTRIES LTD.
KNITTING COMPANY
HYDORY APPAREL LTD.
KNTTT1NG COMPANY
KNITTING COMPANY
WEST WEAR L TD.
KNITTING COMPANY
ROCKY KNITIING MILLS LTD.
KNITTING COMPANY
APPAREL PROFILE LTD.
KNITTING COMPANY
AMITEX SWEATER LTD.
SWEATER COMPANY
CONFIDENT APPAREL INT. LTD.
KNITTING COMPANY
* Provided
by the organization
Value Chain Analysis M. INC.
As buying houses provide service as intermediary
between garment manufacturers and foreign buyers, their success depend
on the value they are able to provide to both of these groups. So to analyze
its ability to provide value to its customers I have analyzed M. Inc. ‘s
ability regarding this matter. Value chain analysis is a useful framework for
systematically identifying strength and weakness of any organization. Value
chain analysis assumes that a firm is a collection of activities necessary to
design, produce, market and support its products and each of these activities
could add value to product, or service. Each of them can also be a source of
competitive advantage for a firm.
Value provider activities of M. Inc. can be divided
into two major categories, primary activities of M. Inc. and its supporting
activities. Primary activities contribute to the physical creation of the
products, its sales and transfer to the buyer, and after sales service. Support
activities assist the primary activities and each other.
M. Inc.’s Value chain could see as below:
The Value chain: Primary and support Activities
Firm
Infrastructure
Human
Resource Management
Technology
Development (If any)
Inbound
Logistics
Operation
Outbound Logistics
Marketing Sales Service
Following
Factors affect the primary and secondary activities of any value chain of
M.Inc.:
Inbound Logistics
M. Inc.’s effectiveness in achieving orders.
Soundness of accessory control systems of M.Inc.
Operations
Productivity of personnel compared to that of key
competitors of M. Inc.
Efficiency of service processes of M.Inc.
Effectiveness
of service control systems of M. Inc. to improve quality and reduce costs
Its efficiency to plant layout and workflow design.
Outbound logistics
Timeliness and efficiency of delivery of finished
logistics goods and services of M. Inc.
Efficiency
in shipping activities of finished goods.
Its effectiveness of market research to identify
Sales customer segments and needs.
Innovation in sales promotion and advertising of M.
Inc.
Motivational
competence of H.R. capital of M.Inc.
Development of and image of quality and a favorable
reputation of M. Inc.
Its extent of brand loyalty among consumer
Customer
It means to
solicit customer inputs for service improvement
Its
promptness of attention to customer complaints Service
Its appropriateness
of warranty and guarantee policies
Its quality of customer education and training
Its ability to provide replacement parts and repair
service.
Human Resource Management
Efficiency of
recruiting, training, and promoting all levels of employees of M. Inc.
Its appropriateness of reward systems for motivating
and challenging employees
A work environment of M. Inc. that minimizes
absenteeism and keeps turnover at desirable levels
Active participation by managers and technical
personnel in this professional organization
Levels of
employee motivation and job satisfaction in M. Inc.
Technology
Development
Success
of research and development activities of M.Inc
Quality
of working relationship between personnel in M. Inc.
Timeliness
of technology development activities in meeting cirtical deadlines
Qualification
and experience of technological personnel in M. Inc.
Its ability of establishing work environment to
encourage creativity and innovation.
Procurement
Development of alternate sources by M. Inc. for
inputs to minimize dependence on a single supplier
Procurement of raw materials by M. Inc.
On a timely basis
A lowest possible cost
At acceptable levels of quality
Its procedures for procurement of plant, machinery
and building
Its development of criteria for lease versus
purchase decision.
Its good, long-term relationship with reliable
suppliers
Firm Infrastructure
Its capability to identify new product market
Infrastructure opportunities and potential environment threats
Its
quality of the strategic planning system to achieve corporate objectives
Its
coordination and integration of all activities associated with the value
chain among organizational sub units
Its
ability to obtain relatively low cost funds for capital expenditure and
working capital
Its ability to obtain relatively low cost funds for
capital expenditure and working capital
Its
level of information systems support in making strategic and routine
decision.
Timely
and accurate information for management on general and competitive
environment of M. Inc.
Its
relationship with public policy makers and interest groups.
Key
Success Factors:
Key success factors (KSFS) are important areas in
which good results will ensure successful competitive performance for M.
Inc. In this industry key success factors refer to-
communication skills
Competitive
Competition of Merchandising Inc.
In our country, as Buying
Industry itself growth industries, M.Inc.
has surpass a strong competition for its success. To analyze its feasibility as
a buying house it is necessary to look into the competitive situation of the buying
house industry.
The ‘Five Forces ‘Model of Industry Competition’
developed by Michael Porter is the must commonly utilized tool for examining
the competitive scope of M. Inc. in its buying house industry. It may describe
the competitive environment in terms of five Basic competitive forces.
It is also applicable to this buying house industry.
And thereby it is an important tool for M. Inc. to consider the competitive
situation of its own industry. The forces with their influencing factors are as
below:
Five Forces Model of Competition
Buyers
Suppliers
Suppliers
So,The
Five Forces model of competition describes the competitive environment of M.
Inc. in terms of five basic competitive forces:
The threat of new entrants:
As
the buying industry in our country is in the stream of growth the industry
provides a good feed to new entrants. So. in this industry M. Inc. as a buying
house needs high strategic stakes to survive.
The bargaining power of the firm’s
suppliers:
In
this industry as garment manufacturers are numerous and their forward
integration system are not strong for their illiteracy or inability to convince
the foreign buyers. Therefore M. inc. as a buying house enjoy little bargaining
tendency of garment manufacturers.
The bargaining power of the firm’s
customers:
In our country buying house industry faces a little
bargain over the negotiation as a boon of quota system. As a result the
bargaining power of M. Inc. is very little. But this scenario will change after
the withdrawal of quota system.
The
threat of substitute products:
In this industry this
aspect. is not considered because there
is no perfect substitute for their provided service.
The
intensity of rivalry among competing firms:
In
this industry there prevails heavy
competition among the existing buying houses. There are about 300 hundred buying houses in this country and they compete strongly
with each other for the orders from their buyers. So this aspect is a great
constraint for M. Inc.
SWOT
Analysis of M. Inc
Strength of Merchandising Inc. Skilled workforce:
From
its inception Merchandising Incorporation look into the combination of
effectiveness and efficiency regarding its objectives. As a result within a few
days it got the higher regard from its buyers. In fact, its swift growth of the
company is the combination of two skills required for a competent buying house:
Communication
skills:
From its inception Merchandising Incorporation has
proved themselves attractive in the eyes of the foreign buyers because of its
strong communication skills. For example, as the perpetration of entering the
European market the organization has employed personnel with the communication
power in Italian language for the convenience of Italian buyers to communicate
with them. Even the organization renders time to time information to the
foreign buyers on the progress of the manufacturing process of their ordered
garment products.
Collaboration with
suppliers:
To
provide higher value in their value delivery process Merchandising Inc. has
built the long-term relationship with some competent suppliers. This
collaboration makes this organization honest to its commitment of quality and
scheduled delivery to its buyers.
Permanent
Buyers:
For
its reputation’ of committed organization it has built a marketing network with
some prominent buyers. These buyers are not easily vulnerable to other buying
houses, as they are satisfied with Merchandising Inc. for its efficiency and
effectiveness.
Collaboration
with backward linkage industry:
To be
ever successful in their commitment to their buyers they always assure the on
time delivery of the accessories needed in the manufacturing process.
Merchandizing Inc. has taken the responsibility of supplying these accessories
to the manufacturing process for its assured supply. For the convenience of
this responsibility they have built long term relationship with the suppliers
of accessories that they don’t manufacture and done necessary paper work with
strong term and conditions with those accessory suppliers.
Company
owned fabric and accessory supplier:
To assure the on time delivery of accessories
Merchandising Inc. has shard the responsibility of supplying a part required
accessories. The sister concern company devoted to this responsibility is FM
Printing and Packaging Ltd.
Long
term relationship with butlers:
Merchandising Inc. honors the long-term
relationship with their buyers.
Weaknesses of Merchandising Inc.:
Fail
to attract big Butlers:
Despite effectiveness and efficiency one of the weaknesses
of Merchandising Inc. is its short capacity. For its low level capacity Merchandising
Inc. its deprived from potential growth resulting from its present reputation
which could be achieved otherwise.
Not international
standard certified:
Merchandising Inc. is not ISO certified organization.
Not to say that, being as a proof of quality, ISO certificate is very much
essential for the spreading of its market.
Merchandizing Inc. could be more communicative if it
had a web site. Much of the business correspondence executed on online. Buyers
would feel more convenience if Merchandising Inc. had a web site of its own.
Opportunities of Merchandising Inc.
They are in the growth industry: With the advantage of
increased attraction toward fashion buying houses are enjoying a perineum growth
in its industry. This is an opportunity for Merchandising Inc. to increase its
sphere own world.
Cheap
labor industry
In our country Bangladesh with all other
employers Merchandising Inc. has the basy access of cheap labor.
Threats of Merchandising Inc.:
Local
competitors:
Bangladesh is a lucrative domain for foreign buyers of
garment products. As a result the buying house industry itself is very
lucrative to the local entrepreneurs.
Political
unrest:
In our country political instability often hampers the
effectiveness and efficiency of business organization. Thereby political unrest
is a notable threat to the smooth function of Merchandising Inc.
Importance
of the study:
Simple wording cannot shed proper light to the Immense
importance of buying house industry. There are so many reasons for which it is
so important for garments industry. This industry indeed plays a significant
role in mostly marketing related activities for garment industry.
Marketing is one of the most crucial parts of to day
business. If anyone lacks marketing skill he has the danger of sink in the
business-. On the other hand innovative marketing skill one need to outperform
its competitors easily by increasing its market share by selling more of its
products. Like other businesses, marketing is a big factor in exporting garment
products. Buying House performs this activity for garment manufacturers. They
take the responsibility of searching buyers, convincing them and finally making
the deal final. So, producer can fully concentrate in its business. The
producer does not need to wont about selling its product since buying house
bring them buyers.
Through
regular inspection of the production the buying house help the producer to
produce quality products. It also monitors the production to ensure that the
production is on schedule.
Buying
house works as a support for garments industry. This specific industry performs
marketing activities for garment industry. Besides this marketing activity it
supply accessory for garment industry which is necessary for production such as
fabric, button and also supply Polly bag, back ‘board which is necessary for
fished good.
Objective
of the Study:
vTo examine the export marketing process of garment
products through Buying Houses from our country.
vTo examine its efficiency and effectiveness.
vTo investigate the obstacles to the efficiency and
effectiveness of export of garment products through Buying, Houses.
vTo provide standard services.
Methodology of
the Study:
Search Buyers
Issue Introducing Letter
Merchandising
Price Set
Sample Making
Prepare Pro forma Invoice
Select Suppliers
Transfer LC
Follow Up Production
Final Inspection
Follow Up Distribution
DIAGNOSIS OF MARKETING PROCESS OF BUYING HOUSE:
Overview of
Marketing Process of FC GROUP Buying
Houses:
As
Philip Kotler has defined marketing as the social and managerial process by
which people and organization gets whatever they want by creating, offering and
exchanging the goods of value with each other.
In
our country the marketing process of buying house can be seen as below:
· Not are currently
importing or new importers names are not mentioned in the list as the lists or
records are quit1e old. For these reasons nowadays buying houses are
very much encouraged to search buyers through method.
· The second source
of searching buyers is to contact with the respective foreign country embassies
of our country and to ask them to provide the list of garment importers of
their country who import garment products from our country.
· The Buying House
can also send its representatives to foreign countries and over there they can
contact our local high commission who has also the records of importers. They
can help the Buying House representatives in this respect; So, either of the
ways Buying House tan get information of importers.
· The third or most
updated way of searching buyers is to get information of international buyers
from the web sites and then contact with them through email, fax or telephone.
This way of searching buyer is very new and helpful in this technological age.
With almost no money they can contact with foreign buyers and make the
dealings. However, since our country has yet not been so technologically
updated, this method of communicating buyers is not yet been very popular.
· By organizing
different exhibitions or trade fairs in our country or in the foreign country and by participating those
places Buying House can present themselves in front of foreign buyers of
different countries. This method of searching is very useful. These kind of
exhibitions are often held our country where both buying houses and foreign
buyers participate and gets to see each other, know earth other and are able
make deals.
· The fifth and
most commonly way of searching buyers is getting new buyer by the
exiting buyers. Sometimes Buying House. request its existing buyers, to give
them some new buyers. Their existing Buyers who are satisfied by doing business
then give them new buyers. This method is very trust worthy because, in one
hand Buying Houses get the. Information of that buyers with the reference of
its existing buyers, on the other hand a new buyer can also feel safe as he
gets the reference of the buying houses from his known person who is already
involved in business with them.
Buyers
Inquiry to Buying House:
Once
the buyer received the introducing letter from the buying it is his time to
introduce himself to the buying house. Actually in this letter buyer informs
the Buying house about his demand of the product. A typical inquiry sheet
includes the requirements of the products in quantity, item description, order
detail and order specification etc. This inquiry sheet is very important to
buying house because with the help of this inquiry sheet they set price and
cost. In the inquiry sheet buyer also want ask the buying house to inform him
the total price that the buyer have to give for his order.
Merchandising:
Then
the job of merchandising starts. The merchandiser first determines what are the
things required to make an unit or a dozen of an order. Then he estimates the
per unit fabric consumption, accessory consumption, cost of making (CM) and
other costs such as freight cost. Price is usually set per dozen.
Sample
Making:
Sample
can be defined as two types. One is the original sample that the buyer sends to
the buying house and another one is known as counter sample, which the house
sends to the buyer for the buyer’s approval. Once the price is set the task of
buying house is to make a sample of the product. For this buyer has two options.
First one is buyer can buy the original sample of the product from the market
of his country, send that to the buying House and ask the buying house to make
same copy of the sample. Second option is buyer can make a sketch of the
product by using computer-aided design (CAD) and that to the buying house and ask them to make an original sample according to this. The
buying houses then make counter sample of the product and again send it
to the buyer for final approval. The buyer can check the sample to ensure
the quality, size and color of the fabric and accessories. In
case, the buyer not satisfied with the counter sample then he send. Remarks to
the buying house and ask them to send again correction sample.
Preparing Pro-forma Invoice:
This is the job of the commercial department of the
Buying House. They prepare the pro-forma invoice. The pro forma invoice
includes the quantity of the buyer’s order, its unit price and the total price.
This pro forma invoice is very important to avoid any sort of communication gap
or future confusion between both parties. When the buyer receives the pro forma
invoice, lie sends work order to the buying house. In the mean time the buyer
the buyer forward the pro forma invoice to its bank to open a LC (Letter of
Credit) in favor of a buying house.
Selecting
Suppliers:
The buying house needs to be very careful in selecting
its suppliers where it will place the buyers’ order. The future relationship
between buyer and buying house is very much dependent on this because if the
supplier fail to make product as buyer specification or as per schedule, buying
House will loose this buyer in future. Usually the select the supplier on the
basis of certain things. Firstly, they examine whether the supplier has enough
machine capacity and machine speed to do the work and to finish the work on
time.
Secondly, they also see whether the supplier has
adequate administrative setup to prepare all the necessary documents for export
such as shipping document, document of CO (country of origin) issued by EPB to
export the goods and others.
Another most important thing in selecting
supplier is its banking status. Now a day this is given the highest priority.
Supplier usually needs to open back to back LC (BB LC) in order to
import necessary raw material to make the product. The capacity of opening
BB LC means that the supplier has a loan capacity. But sometime bank does not
allow the supplier to open LC due to its bad debt or previous bad reputation.
In such case buying house has to change the supplier and find another supplier
who has good banking status. Selecting another supplier is time consuming and
expensive which result late delivery and poor quality of products.
So in
order to avoid this kind of situation Buying House needs to be very careful in
selecting suppliers.
LC Transfer:
Once
the Buying House is confirmed that the supplier has the ability to do the work
they negotiate for the price. Once the price is set with the supplier the
commercial department of buying house immediately transfer the master LC in the
name of supplier.
Production Follow Up:
When
the production goes on in the factory, the job of buying house is to monitor
whether the production is on schedule.
They
also inspect quality of the product by sending Us QC known as quality
controller in the factory.
Final Inspection:
Buyers
usually delegate the responsibility of final inspection on the shoulder of
buying house.
Socioeconomic Role of Buying House:
Development of garments industry:
For
immense support and service of Buying House today, the garments is earning over
seventy percent of the nation’s total foreign currency. In addition to earning
lion’s share of the country’s total foreign exchange, this sector has brought
about a positive, transformation in the overall socioeconomic condition of the
country. Since its inception till date, the industry has earned nearly
US$22billion (tk. 103.4 thousand core) the country. The Value Addition portion
has been about US$6.6 billion (TK. 31 thousand crone). However, the earning is
approximately about four times the investment the industry. Estimated, present
total investment is about Tk. 16,300 core.
Linkage Industries:
Garment
is now the only base for further industrialization in the country. Presently,
the total fabric requirement of out captive market is for about 3 billion
yards, of which about 85-90 percent we import from abroad. Fabric
requirement is increasing at the rate of 20% per annum. This offers a
tremendous ‘opportunity for developing textile industry in our country.
Thanking
the global context within the purview of open market economy by the year 2005,
we can exploit the benefit of the potential textile industry of the country by
immediately establishing 60 moderate size composite textile mills, capable of
producing 30 million yards of fabric per factory. With local capital, This size
of composite mills satisfies the economy of scale in our country.
Besides,
a large number of ancillary industries have been emerged and growing as well.
Estimate shows about 80% percent of garment accessories like cartons, threads,
label, ploy bags, gum tapes, shirt board, neck board and shine ace etc. are now
being produced in our country, contributing to the national GDP. It is creating
further employment opportunities in the country also.
Employment
generation: ~
Buying
Houses are increasing their number of orders for FC GROUP products every year
as a result industry of Bangladesh has it meteoric rise, from less than 10
factories in 2008 to over 700 by now.
In the same period the level of employment has risen
from some 10,000 to approximately (05 lac) today, with its share of
employment in the manufacturing industry increasing from a mere 2 percent to 15
percent. About 90 percent of the workers are women, constitution almost 70 percent
of all female employment in this nation’s’ manufacturing sector. This has
created a vast scope for employment and uplift of the hitherto neglected
section of our population, thus radically transforming the socioeconomic
condition of the country.
Development
of Banking sector:
The Buying house sector has been
playing role as one of the main B catalyst contributing to the tremendous
development of Banking and Insurance
sector in our country. Presently, our commercial banks are earning over TK 1600 cores per year from
garments export. By now, some bank charges have increased to even three times
the charges in 1985, whereas our last ten years total bad and doubt fallibility
does not exceed TK. Sob Crosse.
The development of Insurance Sector:
Insurance
companies, even after reducing different rates by about 54 percent, are
presently earning about Tk 150 core per year from the garments export as
various types of premiums for insurance policies.
Shipping Business:
The main increase in the shipping business in
Bangladesh including setting up of a several container yards (including an
Inland Container Yard at Dhaka by the Bangladesh Railway), expanding the port
facilities to handle large containers, introducing special container carrying
trains, and the increasing of cargo handling and storage facilities at the
Hajurat shahajalal International Airport have been due to a garments export. C & F Business:
The
unprecedented increase in the C & F and Stevedoring business is because of
the huge import. of garment raw material and export of ready made garments. On
average, they earn 1 percent on all exports and imports which amounts to nearly
TK. 230 core per annum.
Tax on Export Earnings:
The government is earning TK. 40 core from garment
exports in addition to its regular corporate taxes Waste recycling Industry:
About
0.2 million people are engaged in waste (mainly, the waste cut pieces of
fabrics) recycling industry. With these wastes, they are stuffing toys,
pillows, quilts, cushions etc. and earning about Tk. 1 500-2000 per month.
Population Control:
With
the opportunity of earning more, girls now want to enjoy their lives. This need
is helping girls avoid early marriage and frequent pregnancy. It is
contributing to the birth control of our country also
Transport:
The
road transport business has been expanded because the 1ion~s share of cargo,
moving between Dhaka to Chittagong and Dhaka to Beanpole by road, is on account
of the garment exports. Those who once started transportation business with
rented trucks, many of them by now are the proud owners of even ten to twelve
trucks. As blessing of this sector each day, on an average, trucks are taking
about 1k. 2 crore a day, This transport sector’s contribution to the GDP now
stands at about 12 percent.
Emerging Consumer Market:
The 1.5million
workers in the industry are appearing in the consumer: market with a demand
worth US$ 0.70 million (Tk. 05 crore). An increasing demand for moderate
cost cosmetics, sharee, footwear, fast food and other consumer products is also
a direct result of about 0.5 million new consumers.
Buying House Industry Of Bangladesh :
The problems and barriers that are hindering e growth of export
oriented Buying House industry are classified under the following major
functional areas:
o Human resource development
o Infrastructure.
o Marketing
Human resource problems of Buying House:
Unskilled Employee:
Most of the employees of Buying Houses are not enough
skilled to perform their job. In the
Buying House there are some post
such as quality controller,
design maker, merchandiser that require technical skill to be performed
but as the employees do not have any institutional training they lack such
technical skill. Only way they can learn is through on the job training.
Convincing foreign buyers and establishing long term relationship with them is
one of the most important task of Buying Houses. To perform this job employee~
of Buying Houses need proper language and communication skill. 1 3ut in our
country as the education medium is Bengali and there are less opportunity to
learn other foreign languages
therefore employees lack communication skill to convince and establish long
term relationship with foreign Buyer.
Lack of career development:
Employees involved with this industry have fewer
chances for career development because of small structure of the industry. As a
result less people are interested to come to this field.
Dictatorship of employer:
Employers of buying houses are usually autocratic with
their subordinate employees as a result of which employees are often
demotivated to work. They feline they are always under pressure.
Infrastructural problem of Buying House
industry:
Buying house industry is in its growth industry but
this growth is a result of so caned blessing of quota system but not the
achievement of their
Insufficient and Poor Backward linkage industry:
Threat, button, cartoon, backboard these are treated
as accessory of garments product. Industries of these products are treated as
backward linkage industry of garment exports. Most of the times Buying House
supply these accessories to garment manufacturers. But due to insufficient
number of factories, Buying House faces difficulties to supply these
accessories on time. The quality of these accessory most of the time do not
matches, as it demanded due to their inefficiency and ineffectiveness in
production. Majority people involved in this sector are illiterate. As a result
of which they are not concerned of the consequence of tile late delivery as
well as poor quality.
Rules and Regulations:
There are also no written rules and regulation for
operating this industry. As a result, people involved in this industry
operating their business according to their willingness.
Marketing problem of Buying House
Industry:
Short
Shipment:
This means delivering goods with inappropriate
quantity. This is a very common problem for all Buying Houses. Garment
manufacturers of our country are the victim of many natural contingence
including strike, hartal or political instability: So a result they often fail
to finish their on time which result short shipment. Due to this short shipment
respective buyer become dissatisfied with the Buying House and the Buying House
I loses that buyer forever.
Poor product quality of supplier:
Another important problem of Buying House is
the poor quality of its supplier (garment manufacturer). Desired quality is the
first condition of the foreign buyers to the Buying Houses. Garment
manufacturers due to their unskilled worker cannot produce the product with
expected quality. As a result buyers reject the product.
Improper document:
At the time of releasing goods from the port,
a buyer needs to show some documents such
as to prove his authentication. These documents are send to buyer from buying
house or the respective supplier. However, sometimes due to lack of experience
or knowledge they sometimes fail to send appropriate documents for which the
buyer cannot discharge his goods from the port. As a result the buyer becomes
dissatisfied with the buying house.
Document
Delay:
Besides improper document, some times the supplier or
buying house fail to send documents on time. With out proper document the
foreign buyer cannot discharge goods from the ship. This problem is very
irritating to buyer as the product has arrived at the port but due to
unavailability of proper document he is unable to discharge goods from the
port. For this reason sometimes the buying house has to break relationship with
its buyers.
Other
Problems:
As the buying house is related with garment export,
any problem occur in any stage of export channel from manufacture to
distribution ultimately becomes the problem of Buying House. Thus the
following problems of garments export can be consider as an indirect problem of
buying houses.
Problems regarding
exporting garments through air:
1. Open cargo
shade.
2. Lack of
security.
3. High
royalty rates.
4. Handling
system.
5. Problem of damaged cargo
inspection and not allowing of short landing and short deliver certificate.
6. Temporary
bonded warehouse for garment industry at the airport.
Problem in banking sector
for exporting:
1. Force /
demand loan.
2. Back to
back P.A.D force loans.
3. Overdue F.B.P.
4. Exporter cannot open the L/C due to clear
the liability.
5.Stock-lot problem cannot permit BBL/C open.
6. Banking irregularities.
7. Bangladesh
Bank does not provide enough money for cash incentive.
8. Need the separate bank for generals industry
9. ECG policy.
Industrial
Analysis
FC Group
Buying House Industry in Bangladesh:
Buying House industry is a substantial proportion of
the industrial sectors of Bangladesh. Compare to other industrial sectors of
Bangladesh, this specific industry plays a significant role in the economy of
our country. This industrial sector has been expanding rapidly, since its
inception. The aggregate order of garments products through all the buying
houses sums up to a huge monetary value and thus plays a prominent role in
enhancing the GDP of the economy. According to recent survey there are about
200 to 300 buying houses in the country. Most of them are centered in the capital
Dhaka. However, only few of them are in Chittagong.
The
importance of Buying House and the role it can play in the socio-economic
development of a nation can not be over emphasized. The Third world has
witnessed phenomena growth in this, over the last decades, and the countries
which made a conscious decision to take advantage of such growth, have made
unprecedented progress. Examples are in abundance: India, Malaysia, Thailand,
china.
Relationship between Buying Houses and FC Group:
Garment industry is involved in the production of
ready made garment items. They can take order from two sources. One is from
local Buying Houses’ another is from foreign buyers. The commonality between
Garment and Buying House industry is that both have the ultimate objective to
deal with garment exports. The difference between these two industries is that
one is in the service industry and other is in the production, meaning- Buying
House Industry is involved with the marketing of garment products and the
Garment Industry is involved with the production of garment products. Apart
from this difference these two industries is very much alike and they share the
same problems. If any problem, buying house faces ultimately it becomes the
problem of garments producers. In the same way if any problem the producer
faces, ultimately buying House become part of that. For example, for any reason
if the producer fails to finish the production on schedule and the buyer
refuses •to take the product, both the producer and buying house suffer in that
case. Producers suffer because they lose the money and buying houses suffers
because it loses its commission as well as its relationship with that buyer.
The idea of Buying House is developed to perform the
marketing activity of garment industry thus in turn to help the producers only
to concentrate on production, as they don’t need to be anxious about riding the
buyers of their garment products. Again, as exporting garments products
involves too many layers of activities, and is not possible to be performed
efficiently and effectively only by garment manufacturers, the buying house
industry has exerting their hands as a true friend helping them to concentrate
only on production and thus to ensure efficient and effective export process.
Opportunities of this industry:
Increasing
demand:
The population allover the world is increasing
very fast with the intense increase of fashion trend among people. As a result
the demand for garment products is increasing in a high rate. This represents a
great opportunity before the buying house industry as intermediaries.
Globalization:
Entire world is facing the wave of globalization. Now
the world business comes out of the boundary of its own country or nation.
Business people allover the worlds are seeking intuitively the low cost,
quality, effectiveness and efficiency all over the world. Fashion industry in
its generic form is mainly based on cost versus quality. Our country is a red
apple for foreign buyers for its lower manufacturing costs. As a result of this
globalization, buying house industry can be benefited as it is a part of
garment product marketing organizations by attracting more foreign buyers by
convincing them on these, advantages provided by our country.
Withdraw of
quota facility:
Now a day our country has been facing quota
facilities. As a result they don’t need to think much about the choice, needs
and wants. of their foreign buyers. But after 2005, when the quota facility
will be over, they will have to compete globally with their competitors.
Forearm
Competitors:
Our country is not only garmenting product exporters
in the world. We have to face competition against the foreign buyers. As a
result of this, any type of competitive movement by foreign buyers possesses
great threat for this industry in our country.
Political
Unrest:
Now a
day foreign buyers are getting frightened to deal in our country for the recent
increase of political unrest in an alarming rate. Today our country can’t
assure any foreign buyer a smooth, secured and punctual transaction. So foreign
buyer are falling back from their will to place order in our country.
Achievements:
Bangladesh has been dependent grad tally on the
garment export for the largest part of its foreign exchange. Our country is
blessed with its buying house sector as the foreign exchange it earns in
garment export is gained via buying houses. The immense contribution of buying
house, for its importance existence in the garment export process, can be
highlighted as follows:
vGarment export has been increasing on an average 24%
each year. As the rate of increase, not less than 20% per year is expected to
continue through the MFA phasing out transition, growth prospect of
Bangladesh’s apparel industry looks very bright. This achievement can be credited
partially to the buying house industry because it is an inseparable ‘part of garment export process.
vBangladesh presently hold 6th largest apparel exporter
sector in USA and 5th largest in ED. Country’s FC GROUP producers are steadily moving toward high value sophisticated items like high quality suits,
jackets, banded jeans items, embroidered ladies wear etc. increasing @ 25% per year, over the last few years, they have utilized quota and
diversified their products into non quota items.
vBangladesh has recently entered the extremely quality consciousgarment market of
Japan and created a niche for itself. In 2007-08 export of garment to Japan
from Bangladesh jumped tip to USS 5.6! million or by 168% on previous years
export figure. In 2007-2009 export of garment to Japan was US$ 5.72 Mn. And in
2007-2009 it was US$ 9.35Mn.
vEU took the largest share followed by US, Germany has
led the EU market in the last few years followed by UK, France, Italy and the
Netherlands. In 2007-2009 Germany along imported apparels worth US$ 482.87
million against the purchase of US$ 392.09 million in 2007-08. Only Shirts and
T-shirts worth of US$ 202.36 million were imported to Germany in 2007. However,
as a single country, US has been the highest apparel importer from Bangladesh
Annual Financial
performance of FC Group:
Financial Information of FC Group:
FC
Group is new buying house industry and its total capital is near about 300 (lac
Taka). FC Group has 100 lac taka and 200 lac has taken from the Bank.
Financial
Information
Taka
(lac)
Bank
Investment
200
FC
Group
100
Total
Investment
300
Export performance of FC Group:
View
form the export statistics, it is observed that the company sales turnover has
been accumulated in every year. Growth in annual sales of the company has been
raised. It can be estimated that the company export performance is growing day
by day.
SL
Export (2011)
Export Value
(Value in lac tk)
01
January
15
02
February
13.5
03
March
18
04
April
16.8
05
May
12.6
06
June
15
07
July
19
08
August
17.5
09
September
14
10
October
15.5
11
November
13
12
December
20.5
Total export
190.4
Table: FC Group export sales turnover
(Since the year of 2011).
· Annual
Report of FC Group-2011
Figure: Annual report of FC Group in 2011 (value in lac tk)
Development
Strategy
Development Strategy of FC Group
FC
Group is working as a buying house/commission agent in the region of garments
industry. Our vital concern is to play our roll as a buying house to our valued
& honourable customer. One of our elementary responsibilities as a buying
house is to assure that the good purchased and released for shipment confirms
to be customer’s requirement. Our services include all that a buyer needs for
successful buying .FC Group is born the beginning of the year in 2008 having
massive experiences people on its back in dealing all categories of garments(
MAINLY EMPHASIZING ON ANY SORT OF KNITTED & SWEATER ITEM) where 25 people
are working in different sector.
Our
Production
Men’s
Collection
Women’s
Collection
Kid’s
Collection
Development Strategy
Develop sample
for buyer upon receipt of spec / sketch and other details.
Ø Organize fabric
and accessories from local and foreign sources.
Ø Negotiate price
and delivery.
Ø Strictly control
the quality, right from beginning of production to export and follow fit
comments of the buyer.
Ø Day-to-day
in-line inspection by the standby quality controllers.
Ø Undertake
Initial, mid term and final inspections by our highly skilled technicians.
Ø Keep day-to-day
Email / Fax / Phone/chat communication with buyer.
Ø We believe in
commitment and positive attitude, which is the route of success in every sphere
of trade and life.
Ø
Research and development or RESEARCH AND DEVELOPMENT is related with product
development.
Ø
Concerned Merchandiser forwards the Fabrication Info to the Product Library and
will get the exact match.
Ø
If there is required match, Documentation and Planning is done, Merch is
developed and PD Plan is made by the PD center.
Ø
If there is no exact match, Technical evaluation (Pricing), Documentation and
Planning is carried out. RESEARCH AND DEVELOPMENT starts working here. After
that PD Plan is made by the PD center.
Responsibilities of the research
development &Manager:
Ø
She decides the fabric styling, finishing Routes. He submits the fabric in the
Lab.
Ø
He compiles the results.
Ø
He sends the results to the buyer.
Ø
If OK for the results, Data is inserted into the computer for making the file.
If result is not OK, we refinish the fabric.
Ø
RESEARCH AND DEVELOPMENT sends the developed samples to the P.I. Lab, for the
quick wash and sees the results after the 3 washes and required GSM is
produced. After the quick wash, 20-30 g (weight) of the fabric is reduced just
because of chemicals and detergents. Maximum sample weight is 10 Kg but is
according to the merchandiser’s requirement. Yarn Count, Single Knit/Double
Knit, Width and GSM is calculated and observed in RESEARCH AND DEVELOPMEN
RECOMMENDATION
& CONCLUSION
Solution of human resource problem
• After recruitment of employee, buying house should provide them
three to six month training to learn the technical work to perform the
technical job such as the job of merchandiser, quality controller, quality
inspector, sample maker etc.
• The buying house should provide money to its employee to develop’
communication skill in particular language in order to communicate with a
particular buyer for the buying house.
• Instead of full autocracy or democracy, the employers of buying
house should show lenient view in all aspects so that they get motivated to
work.
• Employee pay structure should be consistent with the employee –
work pressure, in order to stop their tendency to switch job.
• Buying
house should introduce service bonus or service benefit in order to encourage and motivate their employee.
Solution of the problems of Infrastructure:
• Having no visions of prospects the buying
house industry in our country is bound to suffer from the worst deterioration
with their withdrawal of quota system. So the only remedy to develop this
scenario is to strengthen their infrastructure through combined effort of both
government and non-government for proper support and facilities. Encourage
people to develop industry such as threat, button, interlining and other
packing materials treated as backward linkage industry of garment export by
make short term or long term contract of taking goods so that buying house do
not have to import those at higher price or the local supply can the fulfill
the required demand of the industry.
• Government of our country should also provide
incentives to develop backward linkage industry of PC. export, for the smooth
supply of accessories by buying house to garment factories.
Solution of marketing problems:
• Buying house should be more careful and
attentive in monitoring the production of the garment manufacturers so that
production goes on schedule and any unwanted occurrence such as short shipment
may not occur due to late delivery.
• In the findings T have mentioned that buyers
do riot want to negotiate on quality. So, maintaining product quality for
buying house is very important. To maintain appropriate quality, buying house
should take necessary steps such as training course for their quality
controller or inspector etc.
• For improper document or document delay
buyers cannot receive his product from the ship in his country for which
relationship between he and buying house may break up. So buying house should
be always careful in preparing right documents. They also should send documents
at right time.
• The total industry should keep in mind that
they need a truly international outlook for exporting to attract buyers as well
as long term commitment with both of their buyers and suppliers.
• The total industry must achieve an
international reputation for quality to challenge the quota free environment.
• They should ensure that they have all the
resources for garment export.
• They should start marketing through trade
fair.
• They should start marketing through internet.
Solution
of Banking sector problems:
• Requirement of obtaining approval from
Bangladesh Bank for creating Forced/Demand loan by the lien banks should be
withdrawn.
• Back to back A.D/Force loans should not be
considered as default loans. Loans of this nature should be converted into
interest free block Accounts and amortized against future proceeds.
• The overdue F.B.P created against the
liability of any L/C should also not be considered as default loans.
• Exporters failing to clear the liabilities in case of Back – to back
P.A.D / Forced Loans, overdue F.B.P etc. Should be allowed to open L/Cs.
• Bangladesh/bank should provide the lien
banks with adequate funds for necessary payment of cash incentives to our
exporters without delay.
• Procedure of
obtaining prior permission from Bangladesh Bank for exporting goods
against stock-lot should be withdrawn.
• Negotiation Bank should be authorized to
take into consideration for deciding upon discount unto 20%.
• Condition for obtaining approval for
discount from the Bangladesh Bank should be relaxed and discount approval by
the EPB should be treated valid.”
• From the date of document negotiation,
forty-five days should be allowed for fund remittance. Overdue interest should
not be charged in the event if remittance is delayed.
• All private sector commercial banks should
immediately cease charging L/C Acceptance charges like the nationalized Banks
of the country.
• Fresh laws should be enacted announcing that
the Banking Companies Act passed by, the Jatio Shangsad (The parliament of the
country) on 13th March 2008 is not applicable to the export-oriented FC Group
sector of the country.
• Procedure of making down payment for rescheduling
loans should be withdrawn. It should be rescheduled in accordance with the
applications, when submitted, by the exporters concerned. In such cases, the
rescheduled amount may be adjusted by charging @ 20/0 on the future exports
proceeds. Legal action may be taken in case any of the exporters fail to adjust
the dues after three consecutive rescheduling.
• In case of
Stock lot, the requirement for submitting statement by the
commercial
banks to the NBR should be waived.
• FC Group exporters should not be held
responsible if proceeds against their exports are not realized owing to the
reasons beyond their control.
• Opening
of LO / C based on Realization Clause should be reintroduced.
Solution of Air shipment problems:
• To strengthen the security in cargo shade of
Airport forming and to take necessary steps to exporting through air at the
pick time of RJVIG.
• To formulate a joint action plan with the
chairman of the BG MEA standing committee on port and transport.
Conclusion:
Garments export contributes major foreign exchange to
our economy. To ensure a rich flourishment it needs a channel, which will
bridge between buyers and manufactures of garments a win- win relationship. No
doubt, role of FC Group Buying House Industry, marketing to distribution, is
very important to establish this bridge. However the exuberance of foreign
currency through garment export is very much dependent on the effectiveness and
efficiency of this industry. So removing all its inefficiencies and
ineffectiveness this industry should move ahead with a vision to support the
garment “export of our country especially to face the challenges of quota free
environment after 2007
References:
Strickland,
Thompson (2007)“ Strategic Management” Mc Graw Hill, 14th Edition.
Malhotra, Naresh K
& Dash, Satyabhushan (2006) “Marketing
Research” , Hall of India Private Limited, 5th Edition
Kotler, Philip
& Killer, Kevin Lane (2008) “Marketing Management”, Mc Graw Hill of India,
12th Edition.
Armostrong, Gary
(2005), “Principles of Marketing” Pearson Prentice Hall, 13th
Edition.
Annual report of
FC Group-2011.
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