Disaster in Bangladesh: The Collapse of the Rana Plaza Building Harvard Case Solution & Analysis

Disaster in Bangladesh: The Collapse of the Rana Plaza Building Case Solution

After analyzing the issue from the economic perspective, it can be seen that Bangladesh is a very poor country and its entire employment as well as the growth in the economy is highly dependent on exporting textile related products to the outside world. It can be seen that the quota system for the exports of textile products from the poorest countries to the richest countries has been prevailing in the country, which significantly helps in earning more, relative to the other countries. When the overall system changed to a free trade regime in addition to this, a stiff competition initiated from the two major competitors, China as well as Indonesia, a significant collapse was predicted for the Bangladeshi textile industry.

However, the real results were extremely different from what was expected. The country was able to increase its overall production significantly. Moreover, it increased its employment rate for the nationals living in the country as well. By analyzing the case, the shift to the free trade regime and its effectiveness can be seen on Bangladesh.

The first and the foremost benefit that Bangladesh possesses relative to the other countries and even China is in its lowest labor cost, which is approximately $ 38 a month whereas in China the prevalent wage rate is $ 138 a month. With the significant investments by the manufacturers in the technology sector for increasing the productivity in the textile industry, Bangladesh is considered as the world’s low-cost producer because of its decreased labor cost.

In the times of economic crisis, when the world is facing significant issues to meet the demand of their nations, they try to make orders to Bangladesh because of it being a low cost provider and the country gained significantly in those times as well. The other major advantage with the shift to a free trade regime for Bangladesh is related to sound network of supporting countries. It can be seen that in order to increase the productivity and stabilizing the balance of payment and additional economic issues, the manufacturers from different countries tried to save their transportation cost and charge least import duties to promote free trade with the rest of the world. This positively affected on the country’s economic perspective and for its growth.

Last but not the least reason, which goes in the favor for Bangladesh government of focusing towards the free trade, is that many western importers are diversifying and shifting their focus from China to Bangladesh. This is because there is too much dependency on just one source, which is China, and it could be highly typical for the countries to outsource their manufacturing to the country; therefore, they started focusing towards the Bangladesh’s textile manufacturers.

All these reasons are sufficient to conclude that the shift to free trade regime could significantly provide benefits for Bangladesh’s government in terms of economy, mainly because of two very important reasons, which include the lowest labor cost and the shift of significant western importers towards the Bangladesh’s products. The analysis of historical trends in Bangladesh economy is given in exhibits below. (Finance, 2015)

 Who might lose? Do the gains outweigh the losses?

From the detailed analysis of the case, it can be seen that when the retailers in the periods of economic crisis shifted their supply focus from other countries towards the low cost countries, such as Bangladesh; the beneficiaries from the economic perspective are underlined below:...................

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