Export Oriented

Footwear Industry of
Bangladesh
Presented by
Laboni Aktar Tarana; Roll: 14
Md. Touhidur Rahman; Roll: 39
IBA, MBA 52D
 Leather Industry Exports (in million USD)
500
443.54
450 419.32 424.05
399.73
400
350 330.16 335.51
297.83 297.8
300
250 226.1
204.09 197.36
200 161.62
150
99.36
100
55.42
50 29.06
0
FY10 FY11 FY12 FY13 FY14(Jul-Apr)

Leather Leather Product Footwear

 Growth of Footwear Exports of Bangladesh
(USD million)
600 550

500
419
400
336
298
300
204
200 183
159
123
95
100

0
2006 2007 2008 2009 2010 2011 2012 2013 2014
PESTLE Analysis of Leather and Footwear Export Industry

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

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

• Large population
Social Factors
• Change in buying patterns

Technological • Technological development

Factors • Information and communications

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

Environmental • Environmental regulation and protection

Factors • Renewable resources
 Porter’s five forces Model of Export Footwear
Industry  Multiple options
 Required high investment Bergaining  Discretionary purchases
 Poor infrastructure Threats of New Power of
Entrants (Low) Customers
(High)  Various substitute products
 Low cost substitutes
 Price variations
Bargaining Threats of
Power of Substitutes
Suppliers (Low) (High)
Competitive
Rivalry (High)
 Available raw materials
 Imports from China, India, etc.
 Unorganized suppliers  110 export-oriented factories
 Foreign brands
 Business Canvas Model of Export Footwear Industry
Key Partners Key Activities Value Propositions Customer Customer Segments
 Suppliers Relationships  Foreign Countries
 Infrastructure building  Comfortability
(Farmers)  Training labor force  Durability  Bulk buyers  Bangladeshi
 Distributors  Manufacturing  Stylish appearance  Loyalty Customers
 Retailers  Marketing & Sales  Trends  Reliability  Mid to High
 Foreign buyers  Product R&D  Competent price  Quality-conscious
 Customers  Consumer Education  Good for health Buyers
 Branding  Status symbol  Fashion-conscious
Buyers
Key Resources Channels
 Product  Shipping
 Brand  Transportation
 Team  Social Media
 Partner & Retail  Websites
Network  Cellphones
Cost Structure Revenue Streams
 Product Inputs (raw materials)  Product Sales
 Workers’ wages  Shoes and accessories
 Equipment & Facilities  Leather products
 Regulatory & Compliance  Other synthetic/natural products
 Power supply
 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?