Export Oriented Footwear Industry of Bangladesh

Presented byLaboni Aktar Tarana; Roll: 14

Md. Touhidur Rahman; Roll: 39IBA, MBA 52D

Leather Industry Exports (in million USD)

FY10 FY11 FY12 FY13 FY14(Jul-Apr)050

100150200250300350400450500

226.1

297.83330.16

399.73 424.05

29.0655.42

99.36161.62

197.36204.09

297.8335.51

419.32 443.54

Leather Leather Product Footwear

Growth of Footwear Exports of Bangladesh (USD million)

2006 2007 2008 2009 2010 2011 2012 2013 20140

100

200

300

400

500

600

95 123159 183 204

298336

419

550

PESTLE Analysis of Leather and Footwear Export Industry

• Political unrest • Poor enforcement of environmental laws and rules Political Factors

• Cheap labor • Poor infrastructure • Unavailability and high cost of power supply

Economic Factors

• Large population • Change in buying patterns Social Factors

• Technological development• Information and communications

Technological Factors

• Tax policies• Duty free facilities• Safety regulations • Compliance issues

Legal Factors

• Environmental regulation and protection • Renewable resources

Environmental Factors

Porter’s five forces Model of Export Footwear Industry

Competitive Rivalry (High)

Bargaining Power of

Suppliers (Low)

Threats of New Entrants (Low)

Bergaining Power of

Customers (High)

Threats of Substitutes

(High)

110 export-oriented factories Foreign brands

Available raw materials Imports from China, India, etc. Unorganized suppliers

Multiple options Discretionary

purchases Required high investment Poor infrastructure

Various substitute products

Low cost substitutes Price variations

Business Canvas Model of Export Footwear IndustryKey Partners Suppliers

(Farmers) Distributors Retailers Foreign buyers Customers

Key Activities Infrastructure

building Training labor force Manufacturing Marketing & Sales Product R&D Consumer Education Branding

Value Propositions Comfortability Durability Stylish

appearance Trends Competent price Good for health Status symbol   

Customer Relationships Bulk buyers Loyalty Reliability

Customer Segments Foreign Countries Bangladeshi

Customers Mid to High Quality-conscious

Buyers Fashion-conscious

Buyers Key Resources Product Brand Team Partner & Retail

Network

Channels Shipping Transportation Social Media Websites Cellphones

Cost Structure Product Inputs (raw materials) Workers’ wages Equipment & Facilities Regulatory & Compliance Power supply

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

Thank You

Questions?