Bangladesh footwear industry competitive advantage vs india
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. BIG PROJECT FOOTWEAR INDUSTRY OF BANGLADESH
Industry Overveiw 1
4. Woven 37% Knit 40% Frozen Food 3% Jute 5% Leather 1% Agro Products 2% Engineering Products 2% Footwear 1% Others 9% Market Size of Footwear Sector Footwear sector: 1% Source: Lightcastle, 2014
5. $550 millionGrowth Profitable SectorAfter RMG, Footwear Positions Female Customer Male Customers, Children’s
6. Leather Vs Non Leather Local market Global market 0 10 20 30 40 50 60 70 Leather Non Leather 0 10 20 30 40 50 60 70 80 Leather Non Leather
7. Export to Foreign Countries Bangladesh Japan EU Countries USA Australia
8. Market Share, 2014 BATA 22% APEX 6% Others 72% BATA is the Market Leader Source: BRAC EPL Investment
9. Growth Trajectory 2
10. Projected @1.9% CAGR Source: Transparency Market Research on Footwear GLOBAL FOOTWEAR DEMAND (USD Bn) 185 189 192 196 200 203 207 211 170 175 180 185 190 195 200 205 210 215 2011 2012 2013 2014 2015 2016 2017 2018
11. Growth of Footwear Export ( USD mn) 95 123 159 183 204 298 336 419 550 2006 2007 2008 2009 2010 2011 2012 2013 2014 Source: Lightcastle, 2014 Increasing Growth
12. Strategic Group Mapping
13. Value Chain Analysis 3
14. Profiles of Large, Medium & Small Manufactures Small Medium Large Business Model Subcontracting, Low quality manufacturer Subcontracting & own Mostly own Types of Machines Used Local Local & Imported Imported Types of Labour Unskilled & Semi skilled Unskilled & Semi skilled Trained Channels & Distribution Sold to wholesaler Own wholesale shop Use own channel & distribution Export Not all Sometimes Majority exports fromo this segment
15. Value Chain Dynamics Raw material and Leather Supply Manufacturing Marketing, Sales and Distribution Customers -2 types: Leather processing & assembling - Fluctuations in raw material price affecst small scale shoes the most - Good factory condition - Qualified workers vs. Less qualified - Innovation vs. Les innovation - Proper distribution channel for big players - SMEs sells to ditributors - Promotions: Ad, trade fair, warranty - Domestic market size is growing - Demanded by foreign customers - Mostly B2C: low & middle income for SMEs - Big players: Upper to middle class
16. Leather Importer Additive importers (Design/color) Machine imported from Germany, China SMEs (own/rented factory) Own Assembling Centers Own factories (Big players) Principal Wholesaler/ Retailer Independent Distributors Company owned showrooms, Sales centers B2C:Household (Domestic) B2B: (Domestic) Direct Export Input Suppliers Manufacturers Marketing Buyers Value Chain
17. Tripple Triangle Framework 4
18. Internal Factors Culture Very fast growing companies Not environment conscious Capital Depends upon their market Bank loans are not much available for SMEs the bigger the company, the bigger the capital Capabilities Capabilities of the firm decides which strategy the firm follows. Not capable of exporting Footwear to cover a big portion of world market Except the big players, others not capable of large scale export
19. Middle Factors Customers Vary depending on the type of the company Segmented based on gender and income level and age Competitors Fierce competition Presence of local and global competitors Competitor are also segmented in terms of their target market Collaborators Large parts are located in the country Roles begin in the very early stage of operations Vertical integration tends to reduce the dependence
20. External Factors Technology Except Bata, no other companies are using the latest machineries This creates a negative impact on environment Govt. Factors Rising export of footwear has made the government interested in this sector Actively trying to stop environmental pollution by the tanneries Tannery shifting plan is changing the dynamics of the sector International Factors China is going away from Footwear export business Negative growth rate of Romania and Brazil will help Bangladesh to capture more market from US and Germany. Labor cost is lower than average labor cost of other countries
21. Porter’s Diamond Framework Nation’s Competitive Advantage 5
22. 6 Factors in Porter’s Diamond
23. Firm Strategy and Rivalry SMEs Exposed to international competition More flexible lack investment capability Often does contract work for large companies Intense rivalry among the SME’s to gain local market Large Companies Constant growth in annual turnover, employability and profitability Focused around employing cheap labor and using low cost resources Aside from Bata, all the other top players are export oriented Rivalry is high between Bata and Apex, but the rest don’t
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The Footwear Industry in Bangladesh has started since the colonial era, although its modernization took place only in the late 1980s. During the British period, there was no footwear manufacturing firm producing on a mass scale in East Bengal. However, a traditional cottage type footwear industry with limited production facilities existed in a skeleton form in the district towns during that time. Various types of footwear were imported, mainly from Calcutta. After the partition of Bengal in 1947, foot wears were imported from West Pakistan.
When Bata Shoe Company established its manufacturing plant at Tongi in 1962, it was the first manufacturing plant to produce shoes on a large scale in East Pakistan. In 1967, Eastern Progressive Shoe Industries (EPSI) established its production plant. It began exporting footwear to USSR, Czechoslovakia and England. Both Bata and EPSI held major shares in the local footwear market. The footwear industry suffered a major setback during the war of liberation but was rehabilitated after independence. New footwear manufacturing units have recently been established. Among them are Apex Footwear, Excelsior Shoes, and Paragon Leather and Footwear Industries.