Export Oriented Footwear Industry of Bangladesh Presented by

Export Oriented Footwear Industry of Bangladesh Presented by Laboni Aktar Tarana; Roll: 14 Md. Touhidur Rahman; Roll: 39 IBA, MBA 52 D

Leather Industry Exports (in million USD) 500 450 399. 73 400 350 297. 83 300 250 226. 1 297. 8 424. 05 443. 54 335. 51 330. 16 204. 09 200 197. 36 161. 62 150 99. 36 100 50 419. 32 29. 06 55. 42 0 FY 11 Leather FY 12 Leather Product FY 13 Footwear FY 14(Jul-Apr)

Growth of Footwear Exports of Bangladesh (USD million) 600 550 500 419 400 298 300 200 100 95 123 159 183 336 204 0 2006 2007 2008 2009 2010 2011 2012 2013 2014

PESTLE Analysis of Leather and Footwear Export Industry Political Factors Economic Factors • Political unrest • Poor enforcement of environmental laws and rules • Cheap labor • Poor infrastructure • Unavailability and high cost of power supply Social Factors • Large population • Change in buying patterns Technological Factors • Technological development • Information and communications Legal Factors • • Environmental Factors • Environmental regulation and protection • Renewable resources Tax policies Duty free facilities Safety regulations Compliance issues

Porter’s five forces Model of Export Footwear Industry § Required high investment § Poor infrastructure Threats of New Entrants (Low) Bergaining Power of Customers (High) Bargaining Power of Suppliers (Low) § Available raw materials § Imports from China, India, etc. § Unorganized suppliers § Multiple options § Discretionary purchases § Various substitute products § Low cost substitutes § Price variations Threats of Substitutes (High) Competitive Rivalry (High) § 110 export-oriented factories § Foreign brands

Business Canvas Model of Export Footwear Industry Key Partners Key Activities Value Propositions Suppliers (Farmers) Distributors Retailers Foreign buyers Customers Infrastructure building Training labor force Manufacturing Marketing & Sales Product R&D Consumer Education Branding Key Resources Product Brand Team Partner & Retail Network Cost Structure Product Inputs (raw materials) Workers’ wages Equipment & Facilities Regulatory & Compliance Power supply Customer Relationships Comfortability Bulk buyers Durability Stylish appearance Loyalty Reliability Trends Competent price Good for health Status symbol Customer Segments Foreign Countries Bangladeshi Customers Mid to High Quality-conscious Buyers Fashion-conscious Buyers Channels Shipping Transportation Social Media Websites Cellphones Revenue Streams Product Sales Shoes and accessories Leather products Other synthetic/natural products

Strengths and Weaknesses of Export Footwear Industry Strengths • Governments declared “Thrust sector” & highest priority to Footwear & Leather Goods • Almost 90% materials are locally available • High quality and reputation of natural leather • Availability of labour and low labour cost • Comparative price advantage in international market • Favourable geographical location Weaknesses • Selective and limited Access to Finance • Lack of Skilled Workforces • Lack of access to latest technology and machinery facilities • Poor/or no R&D, laboratory facilities • Poor compliance practice • Poor infrastructure, power supply • High rate of interest on term loan

Opportunities and Threats of Export Footwear Industry Opportunities • Increasing International and Local demands for value added leather products • Low wage workers convertible to skilled ones • No duty on shoes, leather products made and exported from Bangladesh • Local and Foreign Direct Investment opportunity in value added leather products sector • China is losing competitiveness • Government policies - GSP, Cash Incentive; etc. • Already big players invested in BD signalling many more to follow Threats • • Absence of integrated long term policy No dedicated skill development institute Political instability, corruption Increasing import of low priced synthetic products • Illegal export of raw hides/skins Smuggling • Potential buyers stringent stands for compliances, and delay in building Common Effluent Treatment Plant (CETP) • Emergence of alternative sources like Myanmar

Triple Triangle Framework/ Three Domain Framework (1/4)

Triple Triangle Framework/ Three Domain Framework (2/4) • Capital • Substantial amount of capital required in near future • Culture • Increasing global competition • Global Strategy - “Think Global, Act Global” • Maintaining international qualities • Capabilities • The second best leathers in the world • Low cost labor • VRIN model – Valuable, Rare, Inimitable and Non-substitutable

Triple Triangle Framework/ Three Domain Framework (3/4) • Customer • Foreign customers • Customers from USA, Japan, Canada, etc. • Competitor • Competition is high • Collaborator • Quality of raw materials, equipment and machineries • Delivery process

Triple Triangle Framework/ Three Domain Framework (4/4) • Technology and Innovation • Machines from Italy and Germany • Government and Society • Interrupted power supply & poor infrastructure • Technological upgradation and insufficient R&D initiatives and facilities • High rate of interest on term loans and working capital, limited access to finance • Leather smuggling to India • International Factors • Increasing demand in international markets • Expected shift from China and India • Competition from countries like Myanmar

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