A General Review of Merchandising to the Knit Garment Sectors in Bangladesh

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“A General Review of Merchandising to the Knit Garment Sectors in Bangladesh”.

Chapter 1

1. Introduction:

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. According 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 knit T-shirt, Polo shirt, trouser, woven shirts, trousers, Jackets J-shirt, short Briefs and major Buyers of 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 1980-81 to US$ 1064.00 million in 1991-92 and to US$ 1240.48 million during the fiscal year ended June in. 1991-92 and US$ 1310 million in 1992-93 fiscal year. The contribution of this sector to the total national export earnings increased from 0.40% in 1980-81 to 69.41% in the year 1992-2007.

1.1 Background of the study

Any academic course of the study has a great value when it has practical application in the real life. Only a lot of theoretical knowledge will be little important unless it is applicable in the practical life. So we need proper application of our knowledge to get some benefit from our theoretical knowledge to make it more fruitful. When we engage ourselves in such field to make proper use of our knowledge in our practical life only then we come to know about the benefit of the theoretical knowledge. Such an application is made possible through internship. My internship was carried on in a cannon garments limited company.

When theoretical knowledge is obtained from a course study it is only the halfway of the subject matter and procedure through which acquired knowledge of subject matter, which can be fruitfully applied in our daily life.

1.2 Objective of the Report

The purpose of the Report is to identify the merchandising division’s work of Ababil Knit Composite Ltd. We also try to find out the duties and responsibilities of merchandisers. Another objective of this Report was to find out the opportunities and threat of this industry. This Report also includes the behavior, expectation and feelings of foreign customers. The general objective of this study is to determine the present activities of buying houses and the significance of their role for smooth, efficient and effective marketing process of garment products overseas.

The specific objectives of the study are describing as follows:

· To find out the buying and buyer communication strategy in merchandisers company.

· To identify the merchandising division’s work of Ababil Knit Composite Ltd.

· To find out the duties and responsibilities of merchandisers.

· To find out the opportunities and threats of Ababil Knit Composite Ltd.

· To find out the existing problems of Ababil Knit Composite Ltd.

· To examine the efficiency and effectiveness of Ababil Knit Composite Ltd.

1.3 Literature Review

Hyman, Jeffrey A.; Homan, Molly E, January 1, 2001, falling merchandise (Retail liability for injuries caused by merchandise falling from shelves) .Merchants know falling merchandise presents dangerous risks to unwary customers, and courts are holding them accountable.(www.http:// attachment:/572/1G1-69662366.html) Posch, Robert November1, 1994 Direct Marketing Substituted or unordered merchandise (Inventory management) Managing your inventory requires that you perform a delicate balancing act. Too little inventory makes for unhappy customers and lost sales/good will. Too much inventory incurs high financing and storage costs.

Information technology makes the process more flexible, but the tension of a just-in-time ordering mindset grappling with a customer accustomed to superior service remains a primary administrative and legal problem of the database marketing manager. (www.http://attachment:/584/1G1-16939803.html).

ISLANDIA, N.Y.–(BUSINESS WIRE)–October 2, 1997–o determine the resources required to bring its 6,000 custom-designed legacy software programs into compliance with the Year 2000 century date change requirement, Service Merchandise Company has selected CA-Impact/2000, a key component of Computer Associates’ Discovery 2000 solution. America’s largest jewelry retailer, Service Merchandise operates 357 stores in 37 states. (www.http://attachment:/572/1G1-19808754.html).


Chapter 2

2. Methodology

Methodology is defined as a particular procedure or set of procedures, refers to the rationale and the philosophical assumptions that underlie a particular study.

However, this study is a ‘Non-intervention Study’, a type in which the researcher just observes and analyses researchable objects or situations but does not intervene. Thus I have closely observed all departments’ work procedures and tried to analyze them from my own point of view and from company’s personnel’s point of view by interviewed them. All necessary and relevant information and data have been collected thorough following ways:

2.1 Sources of information

To carry out the proposed study, data have been collected from two sources: Primary and secondary sources.

2.1.1 Primary source:

Primary sources include interacting with employees and face-to-face interviews with the personnel through an open-ended questionnaire.

2.1.2 Secondary source:

Secondary sources are company website, brochure, outlets, other research reports, literatures/magazines and the internet.

2.2 Data collection

Two types of data collection techniques have been used as follows:

2.2.1 Observation Technique:

Participant observation approach has been used where I have been took part in daily work routine of the organization.

2.2.2 Interview Technique:

I have followed the ‘Researcher Administered Interview’. Open ended questionnaire has been used for interview where all respondents used their own words to describe particular work process and problems.

2.3 Sampling plan of the study

Sample for the interview has been taken as three employees from each department randomly. Thus total sample size is 15 out of total 110 employees.

Departments Total number of employee Respondents
Marketing 20 3
Merchandising 18 3
Production 23 3
Logistics 24 3
Commercial 25 3
Total: 110 15

Chapter 3

3. Industry Overview: Ready-Made Garments (RMG) Sector

The sector of RMG in Bangladesh can be broadly subdivided into two product categories, namely woven and knitted garments. Since the industry accounts for approximately 80% of overall exports of Bangladesh and generates a significant amount of foreign exchange its activities form a vital part of the national economy. Geographically, most of the garment enterprises are clustered around the urban areas of Bangladesh.

Both external and internal factors contributed to the phenomenal growth of RMG sector. One external factor was the application of the GATT-approved Multi Fibre Arrangement (MFA), which accelerated international relocation of garment production. Under MFA, large importers of RMG like USA and Canada imposed quota restrictions, which limited export of apparels from countries like Hong Kong, South Korea, Singapore, Sri Lanka and India. On the other hand, application of MFA worked as a blessing for Bangladesh. As a least developed country, Bangladesh received preferential treatment from the USA and European Union (EU). Thus by 1985, Bangladesh emerged as a powerful competitor for traditional suppliers in the US, Canadian and European markets along with the government initiated pragmatic steps to streamline export-import formalities.

Till the end of 1982, there were only 47 garment manufacturing units. The breakthrough occurred in 1984-85, when the number of garment factories increased to 587. The number of RMG factories shot up to around 2,900 in 1999. Bangladesh is now one of the 12 largest apparel exporters of the world, the sixth largest supplier in the US market and the fifth largest supplier of T-shirts in the EU market. The industry has grown during the 1990s roughly at the rate of 22%. In 1998-99, the export earnings of the RMG sector were $5.51 billion, which was 75.67% of the total export earnings of the country. In 2007 total export earnings from RMG is $ 7.8 billion. Although Bangladesh exports garments to some 30 countries, its exports are highly concentrated in two major markets, the USA and EU. USA imported 43.24% of total garments exported from Bangladesh in 1998-99. However, if European Union is considered as a single market, the US market becomes the second largest. Bangladesh exported 52.38% of its apparel exports to the EU in 1998-99. In the last five years Bangladesh’s exports to the EU have grown by 174%. The main reason for this phenomenal growth is the almost duty free (due to GSP privileges) and quota-free access to this market.

Today the contribution of this sector is much higher among 140 export items. Global market share of top five export items are as, RMG 74.16%, Frozen Foods 4.86%, Jute goods 3.55%, Leather 2.55% and Raw Jute 1011%.

[Source: Export Promotion Bureau].

Table-1: Macro Contribution of RMG Sector:

RMG Earnings Amount

(billion US$)

As Percentage of GDP
Total RMG Exports 4.5 9.5
Local Value Retention 2.1 4.4
Direct Value-Addition by RMG 1.2 2.4

Source: Export Promotion Bureau

Diagram-1: Product-Wise Contribution to GDP on 2004-5:

Source: Export Promotion Bureau

3.1 Emergence of Knit-RMG

The growth dynamics of the sector over the last decade evince two clearly discernible phases: during the initial period it was the woven-RMG which dominated the structure of apparel exports, whilst in recent years which could be termed as a second phase, it is the knit-RMG which emerged as no less of an important segment in the RMG sector with its share growing up steadily and local value retention fast approaching the level of woven RMG. During the July-November period of fiscal Year 2007-08 woven export fell by 3.17 per cent while knitwear exports increased by 6.19 per cent.

Table-2: Statement of monthly export’ 08 (Value in thousand Taka)



H.S. Code/

Heading No.

Name of Commodities December






% of total
8. H.S Code Knitwear: 31063216 117095217 163068805 37.98%
9. H.S Code Woven Garments 31931629 124838687 163467864 38.07%

Source: Export Promotion Bureau

3.2 Diversification of RMG Sector

Within the apparels sector, Bangladesh has been able to accomplish product diversification by extending product line from T-shirts, pajamas, ordinary shirts, shorts, caps, women’s and children’s wear to shirts of complicated designs and jackets; and some brand items have also emerged where the value was added to both the export earnings and the local value retention.

Table-3: Main apparel items exported from Bangladesh (in Million. US$)

Year Shirt T-Shirt Trousers Jackets Sweater
1999-2000 805.34 225.90 80.56 126.85
2000-2001 791.20 232.24 101.23 146.83
2001-2002 807.66 366.36 112.02 471.73 70.41
2002-2003 759.57 391.21 230.98 309.21 196.60
2003-2004 961.13 388.50 333.28 467.19 296.29
2004-2005 1043.11 471.88 394.85 393.44 271.7
2005-20006 1021.17 563.58 484.06 439.77 325.07
2006-2007 1073.59 597.42 656.33 573.74 476.87
2007-2008 (December) 666.18 403.98 449.18 296.82 362.23

Source: Export Promotion Bureau

3.3 Challenges of RMG Sector

Bangladesh’s Ready Made Garments (RMG) sector today operates in a highly competitive global environment. The phasing out of quota privileges and varied facilities from developed countries offers new challenges as well as opportunities. The challenges include becoming more competitive in terms of quality, price, timely delivery, financial capacity, labor compliance standards, customer base, vertical setup, design and product development capability, advanced production facilities and long term business relationship. Increasing its international market share of existing exports, product diversification, efficiency gains through economies-of-scale and possible gains from vertical integration (e.g. establishment of composite industries for garment) can be characterized as the key opportunities.

There are several weaknesses of the RMG industry of Bangladesh like low labor productivity, the industry is vulnerable because as highly dependent on the imported raw materials, underdeveloped infrastructure, problems in power supply, transportation and communication, inadequate port facilities and port congestion. For RMG sector, the backward linkages are weaving the fabric, spinning the yarn, and dyeing, printing and finishing operations.

Chapter 4

4.1 History

Ababil Knit Composite Ltd. is an export oriented high-tech buying house Garments manufacturer and exporters in Bangladesh. It was established in 2004.This industry is one of the leading garment buying house in Bangladesh.

The company is not use to promote any product in domestic market. The object of the company is to produce various types of readymade Garments like men’s T-shirt, polo shirts, trousers, etc.

The factory has been running by highly trained and skilled manpower, which have been in this sector for quite a long time, and are able to keep continuing the production process with utmost accuracy and flawless finishing. The company has guaranteed uninterrupted production and timely supply of sweaters as per the schedule and time frame of buyers. The production unit has its own high powered generator that is being used as back-up sources of electricity, which gives the manufacturing chain a lot more dynamism and continuity. Wide array of indoor and outdoor facilities along with safety measures is one of the prominent features.

4.2 Objective of the Ababil Knit Composite Ltd.

The main objective of the company is to earn profit. Besides this there are some other objectives, which are as follows:

q To generate employment opportunity

q To perform social responsibilities

q To provide quality product to the customers

q To provide service for the parties involved and invention of the necessary new service dimension.

4.3 Vision of the Organization

To obtain a leading position in the Buying House sectors of Bangladesh as well as international through maintaining standard quality.

1. in time action.

2. Clear understanding of customer’s instructions.

3. Clear communication with vendors

4. Clear instructions for production

5. Strict compliance with quality control system.

6. Total devotion maintains first class quality standard.

7. Absolute efforts for in time shipments.

4.4 Mission of the Organization

Ababil Knit Composite Limited is committed to maintain discipline, punctuality and quality products at reasonable price and ensure quality service. Their focus is on the customer needs and satisfaction. They always maintain delivery schedule according to buyer’s requirement.

4.5 Corporate Values

Ø Team work

Ø Integrity

Ø Excellence

Ø Commitment to buyer.

Ø Maintenance of consistent

4.6 Organization Structure:

Structure of the organization is flat and functional. And it is to some extend is a mechanistic organization. But it is due to its mass production .The organization along with its functional structures has horizontal linkage which is most necessary thing in garment industry because of high quality consciousness. The organization’s most of the plant and equipment is procured internationally, configured to generate optimal production at all stages and to ensure high quality.

2.8 Management:

Technically sound and professionally skilled board of directors is for production and human Resource management of the company. Policy formulation and operational strategy are being taken care of by the board. The Chairman is the chief executive to look after the business affairs and other logistic support of the company. In addition to dealings with the international delegates and buyers, they spearhead the every affair of company from supervising and keeping on working the technical staff to having a through looking of the qualities of products. The management structure of the company is formed with board of directors as the head, and Chairman as the chief executive. They are to communicate and exchange views as well as suggestions with the directors who get General Manager (GM) as their supporting hand. GM is to manage the Factory Manager, Accounts Officer and Commercial Manager. Factory Manager supervises the production and maintenance staffs, while Accounts Officer and Commercial Manager manage the accounts respectively.

Mrs. Laila Begum


Mr. Shafiullah Mollick


Iftekhar Moinuddin

Mrs. Ababil Mollik


2.9 Hierarchy of the company

Board of Directors
Managing Director
General Manager
Merchandising Dept. Sampling 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
Cutting Master

4.9 Product of Ababil Knit Composite Limited

Ababil Knit Composite Limited produces categories of product for men, women,

Kids etc such as:

Basic T-Shirt, Polo Shirt, Tank Top, Ladies Dress, Night Gown, Fleece T-Shirt, Jogging Suits, Fleece Jacket, Rugby shirt, etc.

4.10 Ababil Knit Composite Ltd. Provide services to:


  • As an exporter
  • As a buying agent
  • As a sourcing company
  • To set-up QA systems


  • As an order supplier
  • As a liaison agent between factory and buyer
  • For Technical assistance

Ababil Knit Composite Ltd. has factories with the best machinery, manpower with commitment towards delivery & quality standards. These factories can produce any quantities under our guidance and control. Some factories are approved for quality from buyers like GAP, WAL-MART, TARGET, PVH and JC PENNEY etc.

Chapter 5

5.0 Theatrical perspective Buying Houses Of Ready Made Garments

Buying Houses of ready-made garments have developed with the growth of garment export of our country. It is the combination of all marketing activities relating to searching foreign garment buyers for the order of garments products, taking order of ready made garment products form them, placing order to local factories and providing overall support to the both prospective buyers and suppliers.

It has not been a long time since Buying Houses have started sprouting up here and there. Only a few years back where it was difficult to find a re1iable 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 Knitwear 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. Ababil Knit Composite Limited is one of the buying houses in Bangladesh. It is 100% export oriented garment. It is determined to build long term customer relationship with its foreign clients. It tries to maintain better qualify.

Chapter 6

6.0 Finding and analysis

Merchandising is a global process through which products are produced, sourced, and sold all over the world. Merchandisers must have leadership for the value chain (developing, distributing, and selling products) in a global market.

Merchandisers need to see “the whole process” from product innovation through consumer satisfaction. This requires logical thought processes such as problem solving, decision-making, and resource management. It is a critical need for merchandisers at Ababil Knit Composite Ltd., which has strong business background, yet it also stays focused on fashion or other products that undergo continuous change in the consumer-driven market. Merchandise displays are special presentations of a store’s products used to attract and entice the buying public. The nature of these displays may vary somewhat from industry to industry, but all merchandise displays are predicated on basic principles designed to increase product purchases. Indeed, merchandise displays are an integral element of the overall merchandising concept, which seeks to promote product sales by coordinating marketing, advertising, and sales strategies.

Here, the merchandising department is mainly divided into accounts buyers. This shows that there is individual or a team of merchandising, who takes care of a specific buyer or account.

6.1 Merchandising serves the following purposes at Ababil Knit Composite Ltd.

Ø Gateway:

It acts as a bridge between buyer and the company for communication.

Ø Marketing:

Merchandiser has to market his company in order to increase his customers and generate more and more revenue.

Ø Costing:

Merchandise makes a cost sheet to see if the product is feasible or not in terms of cost and revenue. Merchandiser has to calculate the cost of products including all wastes and accessories to tell the final cost of the product to his customers.

Ø Negotiation:

Merchandiser must have a negotiating power on the price to convince his buyers on specific price to lessen the chances of loss.

Ø Sampling:

Merchandiser must send the sample to his buyers for confirmation and satisfaction. At this stage, Sampling is also done to avoid loss.

Ø Information Management:

As merchandiser has direct contact with his buyers so the buyers have to give information about their product’s requirements and if there is any problem the merchandiser has to inform his buyers in return.

Ø Implementation:

It is the responsibility of merchandiser to prepare the product according to the requirement of buyer.

Ø Production Follow Up:

Merchandiser must be aware of the quality, packaging and on time delivery.

6.1.1 Buying & Merchandising strategy of Ababil Knit Composite Ltd.

Help retailers involve a merchandise mix that ensures financial optimization by improving sales and margins and reducing inventory carrying costs and the need for mark downs.

This would encompass three broad areas of consulting:

Ø Sourcing

Ø Vendor Management

Ø Pricing

Buying and Merchandising Strategy Service caters to the needs of: Entrepreneurs and organizations venturing into the retail domain Retailers who want to optimize financial returns by improving sales and margins, reducing lost sales and markdowns existing retail businesses eyeing new and innovative product lines as a part of their differentiation strategy


Buying & Merchandising Strategy based on the following strengths:

  • Large team with over 200 man-years of retail operations and business experience
  • Successful implementation track record of similar projects
  • Constantly updated repository of best business practices in retail from across the world
  • Data bank of benchmark retail performance data
  • Access to macro-economic data impacting overall retail and consumer businesses

6.1.2 Brand Strategy

The aim is to help retailers enhance the power of their brands to fulfill their business and financial objectives. This would include:

  • Brand Building
  • Brand Extension or Re-positioning
  • Finding synergies between two existing brands that leverage each other to improve business.

Brand Strategy Service caters to the needs of:

  • Entrepreneurs and organizations entering the retail industry
  • Retail organizations wishing to leverage their unique product-mix and service experience by creating a “brand”
  • Retail organizations planning for Brand Re-positioning
  • Retail organizations who wish to develop strategic alliances with other brands as a part of their growth strategy

6.1.3 Distribution Channel Strategy

His service aims to facilitate the evaluation of various channels of distribution available to the brand owners and choose the ones that best fit their overall brand strategy.

Distribution channel strategy confirms to the needs of Brand owners and


  • Who are in the process of launching a brand or setting up a distribution channel for their brands/products?
  • Who would like to expand or rationalize their existing distribution channels in-line with their current business and financial goals
  • Who are looking at re-launching or re-positioning their brands in line with their current business goals?

6.2 Financial performance:

6.2 .1 Financial Information of Ababil Knit Composite Ltd .

Ababil knit Composite Ltd. is new Garments industry and its total capital is near about 1000 Lac Taka. Ababil Knit Composite has 200 Lac Taka and 800 Lac has taken from the Bank.

Financial Information Taka (Lac)
Bank Investment 400
Ababil Knit Composite Ltd. 200
Total Investment 600 (Lac Taka)

6.2.2 Export performance of Ababil Knit Composite Ltd.

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.

Table-4: Ababil Knit Composite Ltd. export sales turnover (Since the year of 2005- 2009).

SL Year of Export Export Value

(Value in Lac $ US)

01 2005 400
02 2006 570
03 2007 700
04 2008 950
05 2009 1080

6.2.3 Size & Growth of Market

The Company’s marketing operations continued its emphasis on export sales over the years as depicted below:

Year – 2009 Year – 2008 Year – 2007
Tang Top 99,800 527,903 539,417
0.68% 3.68% 3.95%
T-Shirt 14,554,342 13,817,314 13,129,599
99.32% 96.32% 96.05%
Total Sales 14,654,142 14,345,217 13,669,016
100% 100% 100%
Sales Revenue
Tang Top 9,455,588 32,576,936 46,956,494
0.45% 1.82% 2.26%
T-Shirt 2,093,214,675 1,756,441,450 2,029,968,545
99.55% 98.18% 97.74%
Total Sales 2,102,670,263 1,789,018,386 2,076,925,039
100% 100% 100%

The above figures show that the export sales increased by 19% in 2007over the previous year with greater exposure to international market scenario and risk.

6.2.4 Buyer and Exporting Country of Ababil Knit Composite Ltd.

Matalan Retail, UK, H&M, Sweden, Carrifour, France, Dikies, Musto/Volvo, Rivermead, Animal, UK, Inditex–Zara, Spain, Tuscania, Italy, A.B.C.I. SPA, Guess, Phard, Italy, Instyle, SPA, Italy, Pizza Italia, Italy, Tessival, Italy, OBS. Italy, DHL (Melchers) Germany, Guldenpfennig, Germany, Samar SPA, Italy.

Diagram-2: Graphical representation of major buyer’s positions of Ababil Knit Composite Ltd.

6.2.5 Production Capacity of Ababil Knit Composite Ltd.

Items/Products Per month
Finished Fabrics 18000 Kg. per day
Basic T-Shirt 104, 0000 pieces per month
Polo Shirt 330,000 pieces per month
Sweat shirt (One side brush) 130,000 pieces per month
Yarn died 4000 kg. per day
Brush 4,000 kg. per day
Emarizing 3,000 kg per day
Printing 25,000 pieces per day
Embroidery 30,000 pieces per day
Total Production Capacity 179, 4000 pieces per month

6.2.6 Export history of Ababil Knit Composite Ltd.

Year Amount in USD
2002 3.5 million
2003 4.0 million
2004 7.0 million
2005 13.60 million
2006 10.67 million
2007 14.00 million
2008 30.00 million
2009 35.00 million

Source of all information: Corporate office of Ababil knit Composite Ltd.

Chapter 7

7.1 Merchandising / Marketing Department

The duty of this department is to communicate with the buyers and aware about the pricing based on fabrics materials and production cost. Marketing division is supported by an independent sample production in order to meet all sorts of sample enquiry from the end of buyers. The marketing strategy is designed to sell quality product at low price. Merchandising section consists with the sorts section it has planed to customize every inch shelf space in each story with goods in the right quantity and at the right time.

Merchandising process at a glance:

Flow chart: Follow-up of merchandising department


A+J = Admin + Job

7.1.2 Financial Department

Ababil Knit Composite Ltd. finances its money from the bank. Facilities will be provided to open back to back LC for exportable items and the proposals for importing capital machineries with soft term loan with lesser interest rate. They have an independent unit dealing accounts and financial activities of the company. They fund allocation of the industry is directly led by the general manager (Finance and Admin) under the supervision of chairman of the industry. This unit responsibility covered the areas; determine daily cash flow requirements, credit collections, inventory control, recording and monitoring, allocation of resources, providing financial data on company’s strategic decisions.

7.1.3 Commercial Department

As soon as an order is placed, commercial department starts its work. Once the LC (Letter of Credit) is opened by buyer and order is received by MFL, commercial department received a copy of that LC from marketing department. Then the L/C has been scrutinized by them. Unit price, quantity, clause, expiration terms and conditions, payment clause, bill of lading clauses, amendment clauses of yarn and accessories and other terms and conditions based on negotiation between buyer and seller must be examined very carefully by this department. At the one end while the production is running, commercial department also is involved in arranging related documentation on the other end for the shipment of goods. This department has to communicate with other departments as well as suppliers, shipping lines, freight forwarders, clearing and forwarding agents and several other parties including buyers for preparing and dispatching accurate documents as per L/C. Beside this, this department also has to prepare several more documents which have been stated in ‘Appendices Part’.

Below are the two most important documents commercial department deals with:

Letter of Credit (LC): Originally, a Letter of Credit (LC) was quite literally that – a letter addressed by the buyer’s bank to the seller’s bank stating that they could vouch for their good customer, the buyer, and that they would pay the seller in case of the buyer’s default. They were used then, as they are now, for any transaction wherein one or more parties to the transaction require the comfort zone of guarantee of payment by a reputable bank. The sequence of information on an LC and the trade terms used are set forth in the standards established by International Chamber of Commerce (ICC).

Back-To-Back Letters of Credit: Back-to-Back Letters of Credit are used in international and domestic trade. The parties to a Back-to-Back Letter of Credit are:

  • The buyer and his bank as the issuer of the original LETTER OF CREDIT,
  • The seller/manufacturer and his bank,
  • The manufacturer’s subcontractor and his bank.

This type of credit transaction is used when a seller/manufacturer has to purchase a component or farm out part of the manufacture of a product, but may not have the cash flow to do so. In this case, the seller/manufacturer applies to his bank for a letter of credit, identical to the original Letter of Credit he received from the Buyer, except that it is for a lesser value. This second letter of credit, called a Back-to-Back, is sent to the subcontractor’s bank and therefore the subcontractor knows that he will be paid and can proceed with his part of the transaction – supplying components or service to the manufacturer.

7.1.4 Sample Department

Buyers usually provide sample to the garments factory. They also give sketch pad in which they mention their requirements. By considering their sample and other requirements, the factory tries to supply the products.

7.1.5 Store Department

Store section is also essential part of the company. It also linked with merchandising section. Job of this department is to keep inventory or record of fabrics materials and supply to department of production, cutting and finishing.

7.1.6 Production Department

Once the merchandising department issues order sheets and buyer’s all requirements, production department starts its works. A composite knit unit starts from procurement of yarn, then the process starts knitting of gray fabrics, dyeing of fabrics, finishing of fabrics for making of garments and finally of readymade garments. A typical flow process for the manufacturing of the above products Mix is show below:

Production process at a glance:


Scouring & Bleaching




Cuff/Collar/button attaching


Finishing & Packing

7.1.7 Quality control Department

Ababil Knit Composite Limited has trained quality control team who closely supervise production line in each of the manufacturing unit. Individual quality control team is assigned for each manufacturing units to look after product quality and productivity. They also prepare production planning and all issues are controlled evaluated by the concern director of each manufacturing unit.

7.2 Marketing Concept of Ababil Knit Composite Limited

Ababil Knit Composite Limited follow the marketing philosophy that, “the job of the company is not to find the right customer for right product but the right product for right customer. The produced the product as per buyer requirements discuss with the buyer before manufacturing a product because if buyer wants to make any change in pattern they can change.

7.2.1 Marketing mix of the Ababil knit Composite Ltd.

The marketing mix strategy of Ababil Knit Composite Ltd. Includes:

· Product: Ababil knit Composite Limited tryst always to deliver the product as the buyer wants. They always provide better service and higher quality. Design, packaging, sizes all of there are selected by the buyers.

· Price: By negotiating with the buyer they fix a price for the product.

· Discount: It the buyer increases the quantity of the product then the company gives them some discount.

· Payment period: The buyers pay after the shipment of product.

· Credit terms: The buyers pay to the company by credit which call letter of credit (LC).

· Promotion: Ababil Knit Composite Limited uses direct marketing and personal selling strategy for advertising or increases their sale. The company attracts the buyer by direct mail tale marketing. Internet marketing is known as direct marketing. Personal selling is the most effective tool for buying process.

7.2.2 Necessity of the Merchandiser

Ababil Knit Composite Limited merchandising team makes direct interface with the manufacturing units to avoid communication gap in production stage. Merchandising can be either direct or indirect. Some time the company merchandising directly in the foreign markets.

A merchandiser fixes the supplier to buy raw materials for production. At first the merchandiser contact with the supplier’s by any phone call, by send mail or by visiting their office. The merchandiser talks with the supplier about the raw materials. Ababil Knit Composite Limited has managed the merchandising section by young, qualified and highly trained merchandiser. They are well exposed and highly professional. Merchandiser of the company must have some knowledge about the important issues of garments which significant for merchandising such as:

7.3 Key Success Factors for Merchandiser

The buying house export trade starts with the buyers placing an order with the seller. There fore it must be noted that if the vendor is unable to secure order from buyer, he is out of business. In order to be successful in securing orders continuously he must consistently make delivery in the right quality, at the right time and at the right price. To maintain these attributed and standards price, quality and delivery the vendor will be require consistently upgrading their production facilities, increasing productivity and having a strong management team.

Chapter 8

8.1 Communication

Communication may be through Internet or face to face setting. In Ababil Knit Composite Limited both two ways are available. Merchandiser of the company communicates their buyers with directly. They also are their own website for the buyer.

8.2 Determining Price

Once the merchandiser of Ababil Knit Composite Ltd. receive client’s product specification such as sketch, design, measurement, design sheet, tech pack, fabric construction & color or even sample. They explain the clients about the manufacturing cost, time and other factors. If the cost is reliable for the buyer they finally agree to make business contract with the company.

Example of estimated cost per unit of knitwear:

Full chest 112cm+8cm (allowance) = 120cm [150GSM (Gram Square Meter)]

Total length 70+5 (allowance) = 75cm

Sleeve length 30+5 (allowance) = 35cm


Full length (body + sleeves) = 110cm

Total fabric required

Consumption= 120cm*110cm*150GSM*12dz*/10000000=*10%/+ =2.62kg

Fabric price= 2.62*$4.70 = $ 12.31

Knitting & Dying= $ 1.30

Collar & cuff= $ 5.00

CM (Cost of Making) = $ 5.00

Print/embroidery= $ 2.50

Accessories= $ 3.00

Buying Commission= $ 1.80 [Varies from buying house to Buying House]

Bank Commission = $ 0.15

Total= $ 31.06 per dozen

Per unit price of a complete knitwear= $31.06/12 = $2.58

Note: Price varies from item to item.

8.3 Sample making

When the estimated price is acceptable then the merchandiser of Ababil Knit Composite Ltd. develops the sample from their industry according to the sample will be evaluated by the buyers.

8.4 Signing Contract

After making the sample the merchandiser of Ababil Knit Composite Ltd. gives a accurate price. When they get sample approval from the clients they both sign a contract to further the process. Here they agree on price, delivery period, shipping method etc. Then the customer issues an L.C. (Letter of Credit) through their bank to the cannon garments Limited against the work order.

8.5 Final Approval

After signing the contract the merchandisers of Ababil Knit Composite Ltd. purchase the required fabric. When the fabric is approved then they make another sample for final approval. Upon approval they start manufacturing the product. It requires three or four months to manufacture, tag, label and package for shipment.

8.6 Labeling Requirements

For the consumer information and protection according to U.S.A labeling act, all garments to import into the U.S.A. must by label with correct and sufficient information as follows:

· Identification number: They use identification number as RN 00000

· Country of origin: The Company must clearly indicate on the label where the goods are made. Such as: Made in Bangladesh.

8.7 Packing

Packing is an important part for maintaining merchandising. If the merchandisers are not aware about packing the product may hampered. As for reason they may loss a lot of money after completing the packing it is ready for shipment.

8.8 Payment by L/C

Business transaction begins with a purchase order which represent by the mail or phone call or a fax received from the buyer. But it is not secure to the company. The order should treat as an agreement binding both parties the buyer and seller. For that contract they are L/C. It is for the seller to use to obtain payment for the merchandise shipped. The L/C means it is issued by the bank for the buyer and received and accepted by the seller. It cannot be cancelled or withdrawn by the buyer or the opening bank unless with the consent of the buyer.


The Letter of Credit involves the following parties:

Ø Applicant: The importer or buyer or purchaser or drawer upon whose request the L/C is issued.

Ø Beneficiary: The exporter or seller or supplier or shipper to whose favor the L/C is issued. He is entitled to the payment against which he has supplied the goods.

Ø Issuing Bank: This is Importer’s or the buyer’s bank that issues the L/C on favor of the importer, pays or accepts Bill of Exchange or authorize another bank to negotiate the same on presentation some documents as per terms and conditions of L/C opened.

Ø Confirming Bank: The bank, which adds confirmation to the credit. It is done at the request of issuing bank though sometimes confirming bank may or may not be the advising bank.

Ø Advising Bank: It advises the L/C to the beneficiary and confirms the genuineness of the L/C. The bank through which the L/C is advised to the exporters. Sometimes this bank also performs the role of confirming and negotiating bank depending upon the condition of the L/C. The advising bank is situated in the exporter’s bank and must be a branch or a correspondent bank of the issuing bank. It may also assume the role of confirming and/or negotiating bank depending upon the condition of the credit.

Ø Negotiating Bank: The bank, which negotiates the bill and pays the amount to the beneficiary. The responsibility of the bank is to scrutinize the documents before negotiation in order to see whether the documents are apparently in order or not. If the bank negotiates discrepant documents, responsibility lies with it. The advising bank and the negotiating bank are not the same. Sometimes, it can also be the confirming bank.

Ø Paying/Reimbursing bank: It is the bank on which the bill is drawn (as per conditions of the credit). It is nominated in the credit to make payments against stipulated documents complying with the terms of the credit. It may or may not be the issuing bank.Issuing bank must have NOSTRO account with the reimbursing bank and it will make payment by debitin