SubContracting in bangladesh’s garment industry Harvard Case Solution & Analysis

SubContracting in bangladesh’s garment industry Case Solution

Introduction and Problem Statement

Bangladesh is the second largest exporter of garments in the world. Most of the research shows that the Bangladeshi garment sector is considered as one of most significant industry in the country as it generates approximately 80% of its export income from this market. Mostly, the manufacturers at Bangladesh prefer to use low-cost labor, which helps the company in overcoming infrastructure hurdles as well as help firms in increasing their production costs. On the other hand, after analyzing the global competitiveness report, it is evaluated that the World Economic Forum ranks Bangladesh’s infrastructure at 127 out of 144, which is three times bigger than other competitors companies.

Basic Black is an American-based outfit brand that focuses on fast fashion products. The company targeted those customers who always prefer fashion forward outfits that matched with the needs of the customers as well as interlinked with the latest market trends. The company mostly sell full line products which include children's, women's and men's outfits. The company mainly offers high-quality products to the customers at lower prices. Its products include jeans, dress shirts, dresses, t-shirts, and sweaters. Moreover, the niche market led the Basic Black to the steady business growth over the past ten years.

As per the analysis of the company, it is evaluated that the company outsources  approximately 50% of clothes manufacturing to Bangladesh. Primarily, the company has maintained its strong relationship with Raz Fashion, which helps the company in overcoming the issues that are raised in the market due to the violation of human rights. The main advantage of this relationship is that it prohibits the Raz to place the order without the permission of Basic Black.

The production of garments has increased a risk of human rights violations in Bangladesh, which led the company to disastrous condition. The key factors that led the company to success are the low costs of labor as it has significant downward pressure on wages and working conditions. As the company faced many challenges in Bangladesh, market which affected the market position of the company in the highly competitive market. Moreover, non-governmental organization and labor groups have identified that the right of worker are violating in the Bangladesh market. On the other hand, most workers do not get an active remuneration; child labor and overtime shifts are rampant in the Bangladeshi textile industry. Moreover, trade unions in Bangladesh are remarkably fragile. The government authorities do not bring laws or rules and regulation for the workers so that it protects the rights of workers. In order to resolve these issues the company will launch the audit system in the organization that helps the companies in maintaining its strong relationship with the suppliers as well as assist them in securing rights of the workers in the factories.(Vijay Padmanabhan , 2013)

Basic BlacK Respond to the Violation of the Supplier Agreement by Raz Fashions

As the company has faced potential problems in the Bangladeshi market, the major problem that the company faced is the lack of government investment on roads and ports, production limitation, electricity, and heavily invested in the projects of power generation and distribution infrastructures. Due to these issues, the company would not be able to access larger and more established markets like China.

There are various high profile incident exposed in the market, which created unsafe and deadly situation for laborers in the Bangladesh garment industry. In 2012, one of the major incidents happened in the Bangladesh market, which took lives of many workers. The Tareez garment factory caught fire, which took the lives of 112 workers, and another 200 workers were injured. On the other hand, the Rana Plaza has collapsed in 2013, which included five garment industries and other commercial facilities.....................

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