CASE: 1
SUREKHA GARMENTS
Surekha Garments Ltd is a large concern engaged in the manufacture of textiles.
Over 60% of its sales are by the way of exports to foreign countries. It has Team of able,
alert and industrious executives. Its newly-recruited export manager is indeed a hard-
driving man who displays a near obsession with shipping the goods no sooner than the
orders reach his desk.
However, of late too many shipments, that were to have been rushed, had been
inordinately delays. The export manger lost no time in arguing with the production
manager about the obvious incompetence on the part of the latter's departinent.
The production manager blamed it all on irritating and time-consuming inspection
procedures recently introduced by the quality control department which, when contacted,
said this was done on the orders from the general manager.
The general manager attributed his orders to the difficulty the collection department
experienced in realizing a bill from a foreign customer, who had nearly refused to accept
a consignment alleging poor quality. If he ultimately gave up, it was due to a 25% cut in
the amount of the bill unwillingly agreed to by the company,
1. Does the company have satisfactory means of communication among its
personnel?
2. What aspects would you recommend to ensure against recurrence of such
situations?
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Answers
Answer:
COVID-19 could trigger the biggest economic contraction since World War II, affecting all industries from finance to hospitality.
As there is significant uncertainty about how the epidemiological and economic situation will evolve, assessing the duration and the gravity of the pandemic seems like an impossible task.
However, recent forecasts suggest: trade volumes decreasing between 13% and 32% in 2020 (WTO, 2020), global growth falling to -3% (IMF, 2020) and different maritime seaborne scenarios ranging from a return to sector average (around 3% p.a.) after 2022 to growth rates falling by 17% by 2024 (Stopford,2020)[i].
Garment factory
Industries whose operations are more globalized (and particularly those that rely on Chinese inputs for production) were most exposed to initial supply chain disruption due to COVID-19. This was the case for precision instruments, machinery, automotive and communication equipment (UNCTAD, 2020).
Given its non-essential nature, the fashion industry faces significant risks. Indeed, in times of COVID-19, as consumers around the world remain in lockdown, they no longer need new products. This industry is characterised by a highly integrated global supply chain.
In it, many developing countries play the role of the supplier of low-cost inputs. This article highlights some of challenges and concerns that some of these countries face, many of which are dependent on textile and garment exports.
The textile industry supply chains, trade logistics and developing countries
The accession of China to the WTO (2001) and the expiry of the WTO Agreement on Textiles and Clothing (which ended a 10-year trade regime managed through quotas) on 1st January 2005 contributed to making China an important centre of textile and clothing global value chains (GVCs).
These two developments led to shift apparel production and sourcing (by globalized retailers and producers) to China and other Asian countries because of low labour costs (UNCTAD, 2005), following the cost-reducing logic of GVCs.
As wages gradually rose in China and Chinese plants moved to produce higher-value goods, countries like Bangladesh, Pakistan and Vietnam, with lower wages costs started attracting factories to relocate their production from China.
At the global level, China remains an important supplier of fashion goods (as shown in Figure 1) but has also become an important consumer of this industry.