“MERCHANDISING IN READYMADE GARMENTS

INDUSTRY-
A CASE STUDY ON CLASSIC GROUP”

1
 Internship Report

On

“MERCHANDISING IN READYMADE GARMENTS

INDUSTRY-
A CASE STUDY ON CLASSIC GROUP”

Prepared for,
Professor Dr. A.K Shamsuddoha

Dean, School of Business

Bangladesh University of Business & Technology

(BUBT)

Prepared by,
Md. Shah Nauaz Hasan
ID: 08092101192
Major: Marketing
Bachelor of Business Administration

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 Letter of Transmittal
Date: 12-01-13
To
Professor Dr. A.K Shamsuddhoha
Internship Supervisor
Bangladesh University of Business & Technology (BUBT)

Subject: Submission of Internship report on “Merchandising in Ready Made Garments– A

Case study on “CLASSIC GROUP”.

Dear Sir,

It is a great pleasure for me to submit the Internship Report on “Merchandising in Ready

Made Garments Industry” prepared based on the experience that I have gathered during
my internship period in CLASSIC GROUP.

I have tried my best effort to gather all necessary information to the concerned parts of the
report to enrich it. I believe that, within my limited knowledge this report provides a core
concept of merchandising in readymade garments industry in Bangladesh.

I hope that you would be kind enough to accept my report and oblige me thereby.

Thank you.

Sincerely yours,

...................................
Md. Shah Nauaz Hasan
ID :08092101192
Batch: BBA 18th
Major in Marketing
Bangladesh University of Business & Technology (BUBT)

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 EXECUTIVE SUMMARY

This is an internship report based on the internship program took place in Classic Group Ltd., at
Classic centre, Banani. The main objective of this report is to explore the Merchandising roles in
readymade garments industry. Besides another objective it is the prerequisite for completing the
BBA program.

The report is on the “Merchandising in Ready Made Garments Industry– A Case study
on “CLASSIC GROUP”.”
In this report things that I have performed in the CGL office are briefly explained along with the

special assignment that I have done as per the instruction of my supervisor in the university and

also from the office.

To explore the Merchandising trends in readymade garments industry was the intended purpose

of this report. Analyzing the activities of merchandising in readymade garments industry was the

basic task to be sought out and the layer wise duties & responsibilities have been evaluated. The

growth and trends in exporting rate and employment has been analyzed in this report. The

marketing tools basically which are related with merchandising sector such as sourcing, pricing,

supply chain management, assortment has been discussed from the strategic viewpoint on the

basis of its positive and negative perspective.Also I have tried to relate the practical experience

with the theoretical perspective. Accomplishing the merchandising tasks in step by step were

shown in a well-designed manner. the role of merchandising is vast & the growth and trends are

positive so it has tried to assemble the importance of those things altogether.

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 Acknowledgement

The situation and euphonies that accompany the successful completion of task would be
incomplete without the mention of the people who made it possible, because success is an
epitome of hard work, sincerity, missionary zea1 steadfast determination and most of all
encouraging guidance. Therefore, with immense, I acknowledge a11 those people whose
guidance and encouragement served as a platform for success. I feel it is my privilege to place on
record my warm salutation to Merchandising Incorporation and Bangladesh University of
Business and Technology (BUBT), which gave me an opportunity to work on this project.
I sincerely thank Taef Azmi Irfan Director and Merchandising Incorporation for extending his
valuable guidance and cooperation.

I would like to give my utmost gratitude, for my project guide Professor Dr. A.K Shamsuddhoha
without whose guidance this project would not have been a reality.
Finally, I express my sincere thanks to all those who have either directly or indirectly helped me
in this project.

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 Table of content
Title Description
Executive Summary An overview of the report iv
Chapter 1 Introduction
Background of the Study
1.1 Objective of the study
1.2 Scope of the study 7-12
1.3 Methodology of the study
Data instrument
Data collection procedure
Source of Data
Primary data
Secondary data
1.4 Limitation of the study

Chapter- 2 Literature review 13-17

Chapter-3 Overview of the company 19-27

Chapter – 4 An overview of merchandising in Ready- 28-47

Made Garments sector

Chapter – 05 Findings and Analysis 48-65

Chapter – 06 66
Major Findings

Chapter – 07 Conclusion 67-68

Recommendation 69-71
Chapter – 08
Chapter – 09 References 72

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 Part-1

Introduction

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1.1 Background of the report
The ready-made garment (RMG) industry of Bangladesh started in the late 1970s and became a
prominent player in the economy within a short Period of time. The industry has contributed to
export earnings, foreign exchange earnings, employment creation, poverty alleviation and the
empowerment of women. The export-quota system and the availability of cheap labor are the
two main reasons behind the success of the industry. Bangladesh exports its
RMG products mainly to the United States of America and the European Union. The Ready
Made Garments (RMG) sector plays a pivotal role in the economy of Bangladesh. This sector
accounts for approximately 78.60% of the total export earnings and nearly 11.5% of GDP.
Riding on a steady growth, readymade garment (RMG) grabs a larger share in national export, as
other products are experiencing a drastic fall in exports amid global recession.
During the July-March period RMG contributed 79.17 percent to the national export. In the July-
April period Bangladesh exported RMG products worth $10.133 billion, registering an 18.13
percent rise over the same period of last fiscal year. In 1983-84 the number of workers in the
ready-made garments industry of Bangladesh was 0.040 million and it grew up to 3.600 million
in 2010-11 and in 2011-12 it grew up to 4 million.

1.2 Justification of the report

The ready-made garments industry in Bangladesh has emerged in the late 1970s but not from the
traditional economic trends. At the beginning some of our entrepreneur’s initiatives and foreign
investment bring this industry at this position. Although this venture is in pick position in local &
international market, but also there is enough scope of improvement. From that point of view it
has tried to prepare report which can be helpful for the organization.

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1.3 Scope of the report
During my intern period I have got chances to visit some buying house, factory, handle suppliers,
supervise some production process and completed many sample programs. This period offers me
the opportunity of getting the experience about merchandising profession practically& using this
knowledge i will try to elaborate the merchandising profession and the production and marketing
process of a garments factory.

1.4 Report objective

Broad objective

 To understand and explore the merchandising procedure and activities of RMG industry
in BD from Classic Group’s point of view.

Specific objective

 The objective of the study is to develop the concept about the role of merchandising in
RMG industry in BD.
 To high light the growth and trends of RMG industry in BD.
 To show the reasons why RMG market of BD is attractive to the investors/buyers
compared to others and which factors can also make this industry more attractive.
 To focus the importance of merchandising roles in RMG industry in BD.
 To identify the weaknesses and probable solutions.

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1.5 Research methodology
Type of research:

This is a exploratory type of research in nature.

Data collection procedure

The source of data or information we divided into two parts that are primary and secondary
source.
Source of Data

PRIMARY SECONDARY
DATA DATA

Figure: Sources of data

Both primary and secondary data sources were used to generate this report.

Primary data

In the primary source data are collected directly from Classic Group Limited.
Secondary data
Secondary data are collected through different website journal and textbook and other data also
collect by going various buying house.

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The Primary sources are follows:

Primary data are measurements observed and recorded as part of an original study. When the
data required for a particular study can be found neither in the internal records of the enterprise,
nor in published sources, may it become necessary to collect original data. For the completion of
this report, the primary sources of data are-

* Face-to-face conversation with the respective officers and staffs

* Informal conversation with the clients.

* Practical work exposures from the different desks of the departments .

* Experts’ opinion and comments,

The Secondary sources and data are follows:

The data which has already been collected by others, such data are called Secondary data. For
this internship report, the secondary data are collected from the below sources-

* Training materials available at the garments,

* Various books articles, compilations etc. regarding marketing of financial products are
informed below:

* Published of different products,

* Office circular and other published papers,

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1.6 Limitations

 It’s very hard to find necessary information because there is no fixed place such as library
where data is kept.
 Time was one of the major constraints. As our internship program is only three-month
long, it was difficult to cover and collect all the necessary materials for completion of
such a large report within this time boundary.
 The people of Merchandising Incorporation are under tremendous workload. Although,
they wanted to cooperate with me in writing my report, their busy schedules sometimes
did not allow them to do so. On the other hand, due to secrecy of official information,
sometimes they showed unwillingness to provide me information.
 There are many code names in garments industry that is very important for production
process, and which remain vague not being so clear understanding with this terms.
 In garments factory most of the employee doesn’t have any educational background they
do their job only with experiences.

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 Part-2:
Literature review

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2.1 Merchandising

o Merchandising is the direct sales pitch to the consumer conducted in an

immediate, often face-to-face manner. Thus, display cases, in-house consulting
and sample issuance are just a few examples of merchandising techniques. The
goal of merchandising is to compel the consumer to buy the product.
Merchandising seizes on the typically brief opportunity to sell directly to the
customer; the parties responsible for successful merchandising include the
salesperson and the layout of the store itself. The salesperson engages directly
with the customer by providing a sales pitch or demos of the product. The layout
of the store is a highly influential method of merchandising: Having a product
directly at eye level, for example, can make the difference between a sale or the
customer not seeing it and therefore walking away.

2.2 Marketing
o Merchandising is a subset of marketing. Marketing has several other arenas that
do not overlap with merchandising. For instance, marketing also entails how to
distribute the product and how best to package the item. Gathering data is another
marketing field, from issuing surveys to holding consumer focus groups. Other
issues include in-house marketing. This pertains to devising strategy, assessing
which price is best for the product and outlining the objectives of campaigns,
promotions and other marketing endeavors

2.3 Relationship
o Without the other disciplines within marketing, merchandising would not be
effective. For example, if a company has no0t assessed which audience will be
most desiring of the item, the business cannot effectively pitch its wares within
the retail store. Likewise, without proper analysis of how display cases boost sales
or the mannerisms adopted by customer service representatives to capitalize on
sales, many unrelated fields of marketing cease to be effective. Indeed,

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 merchandising is at the tail end of the marketing chain. While the first links
include product design, packaging considerations, distribution and ad campaigns,
merchandising is the most time-sensitive links. Businesses have a fleeting
moment by which to persuade the consumer to take the item to the cash register.

2.4 Considerations
o Merchandising applies only to a retail setting, whereas marketing applies to most
every business, including financial services, tourism and hospitality. In order to
merchandise, companies must have a tangible product to offer the consumer.
Therefore, service-based industries do not engage in merchandising due to the
lack of merchandise, unless the industry sells apparel or products related to its
industry, such as sports jerseys for athletic teams.

The BCG matrix

The BCG matrix (Boston Consulting Group analysis) is a chart that had been created by Bruce
Henderson for the Boston Consulting Group in 1968 to help corporations with analyzing their
business units or product lines. This helps the company allocate resources and is used as an
analytical tool in brand marketing, product management, strategic management, and portfolio
analysis.

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The BCG matrix is used to rank the business units (or products) on the basis of their relative
market shares and growth rates.

Cash cows
Cash cows are units with high market share in a slow-growing industry. These units typically
generate cash in excess of the amount of cash needed to maintain the business. They are regarded
as staid and boring, in a "mature" market, and every corporation would be thrilled to own as
many as possible. They are to be "milked" continuously with as little investment as possible,
since such investment would be wasted in an industry with low growth.

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Dogs
Dogs, or more charitably called pets, are units with low market share in a mature, slow-growing
industry. These units typically "break even", generating barely enough cash to maintain the
business's market share. Though owning a break-even unit provides the social benefit of
providing jobs and possible synergies that assist other business units, from an accounting point
of view such a unit is worthless, not generating cash for the company. They depress a profitable
company's return on assets ratio, used by many investors to judge how well a company is being
managed. Dogs, it is thought, should be sold off.

Question marks
Question marks (also known as problem child) are growing rapidly and thus consume large
amounts of cash, but because they have low market shares they do not generate much cash. The
result is a large net cash consumption. A question mark has the potential to gain market share
and become a star, and eventually a cash cow when the market growth slows. If the question
mark does not succeed in becoming the market leader, then after perhaps years of cash
consumption it will degenerate into a dog when the market growth declines. Question marks
must be analyzed carefully in order to determine whether they are worth the investment required
to grow market share.

Stars
Stars are units with a high market share in a fast-growing industry. The hope is that stars become
the next cash cows. Sustaining the business unit's market leadership may require extra cash, but
this is worthwhile if that's what it takes for the unit to remain a leader. When growth slows, stars
become cash cows if they have been able to maintain their category leadership, or they move
from brief stardom to dogdom.
Merchandising business in our country is in stars category compare to most of the countries of
the world and it has huge possibility to be the cash cow. The company I have worked in classic
group International will also fall in stars compare to other merchandising companies of our
country.

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2.5 The marketing mix

 Product - A product is seen as an item that satisfies what a consumer needs or wants. It
is a tangible good or an intangible service. Intangible products are service based like the
tourism industry, the hotel industry and the financial industry. Tangible products are
those that have an independent physical existence. Typical examples of mass-produced,
tangible objects are the motor car and the disposable razor. A less obvious but ubiquitous
mass produced service is a computer operating system.
 Price – The price is the amount a customer pays for the product. The price is very
important as it determines the company's profit and hence, survival. Adjusting the price
has a profound impact on the marketing strategy, and depending on the price elasticity of
the product, often it will affect the demand and sales as well. The marketer should set a
price that complements the other elements of the marketing mix.

 Promotion - represents all of the methods of communication that a marketer may use to
provide information to different parties about the product. Promotion comprises elements
such as: advertising, public relations, personal selling and sales promotion.

 Place - refers to providing the product at a place which is convenient for consumers to
access. Place is synonymous with distribution. Various strategies such as intensive
distribution, selective distribution, exclusive distribution and franchising can be used by
the marketer to complement the other aspects of the marketing m

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 Part 3-
Overview of the company

3.1 Organizational Profile:

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CLASSIC GROUP

CLASSIC is a group of vision-oriented companies consisting of Garments Manufacturing

Unit, packing Industries and many other businesses in relation to textile and Garments
sector.

3.2 Management Philosophy

3.2.2 Vision: To become a garments manufacturer of creative design – not dependant

on buyers choice only, rather can amaze the buyers with own creations.

3.2.3 Objective: The objective of Apparel Division is to attain and maintain the
current International standard and pursue for exceeding the regional standard in all
respect.

3.3 Philosophy: In order to attain the objective, philosophy of the Apparel Division is
to effect a Total Quality Management (TQM). The quality to be achieved not only in the
production output standard, but also in the ‘Compliance’ aspect. A supportive model of
management system is to be implemented to make employees own the companies and
feel homely while at work.

3.4 Code of conduct: In pursuance of achieving the excellence, the companies of

apparel Division is committed to respect the following codes of conduct:

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 a) The companies shall run the operations in full compliance with the existing laws,
rules, regulation and the norms.
b) The companies shall show full respect to the aspects of citizenship
responsibilities and shall not agree to any business where these
responsibilities are ignored.
c) The companies shall reject the use of child labor or forced labor.
d) The companies shall not accept any form of discrimination whatsoever.
e) The employees must enjoy the right to avail a healthy and safe working
environment.

The companies shall focus their maximum to the environment preservation

aspect.

Raw materials, chemicals and the processes used for production as well as the
waste coming out is treated in a manner that best protects the environment. Their no
action in any way should become a threat for maintenance of a high standard of healthy
and risk-free environment. The companies also expect all associated with them in the
related fields to follow the same and thus make the sector a citizen – friendly busine
environment.

3.5 Specialties and Standard:

The Garments manufacturing units are producing a variety of high qualities woven
items. Using modern machinery along with the guidance and assistance of foreign
experts, the factories have reached at the TOP END in items of quality. As a result, the
products have found access into Europe market. To achieve the international standard,
initiatives and measures that have been taken are given in the succeeding paragraphs.

3.6Quality Control:

Effective quality management systems are implemented with emphasis on extremely

tight quality controls. Stating from procurement, the management remains vigilant till
shipment to ensure the quality. Through out all production – related steps, from pattern

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making to sewing, washing, ironing and packing, laid down and standard procedures are
followed. The companies’ quality standard is therefore not only meet but also exceed
the client’s expectations.

3.7 Bus Bar for Electricity:

To keep the plants safe from any unwanted electric hazard and exhalation, the use of
Bus Bar system has been made.

3.8Health Care Measure:

To diagnose and ensure the physical and mental health of the workers and staff, full
time doctor, nurse and medicines have been made available in the factory premises.

3.9 Basic Information:

3.9.1 Size: (Total area 75,000 sq. ft)

Unit
Space No of Workers
Classic Fashion Concept Ltd.
25,000 sq. fl 1,200
Fashion Innovation Ltd. 25,000 sq. ft

Acumen Knitting 600

25,000 sq. ft

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3.9.2 Production Capacity:

Unit
Capacity Total
Classic Fashion Concept Ltd. 10,000 DZ shirt per Month 240,000 PCs shirt
Fashion Innovation Ltd. 10,000 DZ shirt per Month per month

42,000 Dz Pillow Cover per 500,000Pcs Pillow

month Cover per month

Acumen Knitting 20,000 Dz T-shirt/month 240,000 T-shirt

7500 Dz Polo shirt/month 90,000 Polo shirt

Ansear S.C.M Ltd 120000 pcs denim trouser,

100000 twill trouser per 37000 sft
month

3.9.3 Products:

Item
Type
Men’s and Ladies Woven Shirt,Pant, Blouse, Pajama set

Men’s and Ladies T-shirt, Polo shirt, Thermal, Sports item

Pillow Cover Basic, all over printed pillow cover

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3.9.4 Major Buyer:

A) LIDL STIFTUNG, GERMANY.

B) REWE ZENTRAL
C) WAL-MART. CANADA, USA.
D) NKD, VERTB, GERMANY, TPS, AUSTRIA.
E) AWG MODE, GERMANY.
F) MANIPATTURA, CORANA, ITALY.
G) MATALAN, UK.
H) LE&FUNG, UK.
I) BANNER, AT LAST, LOLYTOGS, USA..
J) Kenneth Cole
K) Padma
L) Serious Sally, Sweden
M) Emporio
N) Root Canada

3.9.5 Achievements:

(A) Wal-Mart Evaluated.

(B) WRAP (Worldwide Responsible Apparel Production) Certified.

(C) C-TPAT (Customs Trade Partnership Against Terrorism) Certified.

(D) BSCI Certified

(E) K- Mart Evaluated

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 Organogram
Chairman

Managing Director

Director Director Director Director

Merchandising Commercial Purchase Production Accounts

Manager Manager Manager level managers Manager

Merchandisers Commercial officer Accounts officer

Store manager General Manager I E Manager Production Quality Manager

manager

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  Company SWOT analysis
 SWOT Analysis of Classic Group

SWOT Analysis is a strategic planning method used to evaluate the Strengths,

Weaknesses, Opportunities, and Threats involved in a project or in a business venture. It
involves specifying the objective of the business venture or project and identifying the
internal and external factors that are favorable and unfavorable.

 Strengths: attributes of the person or company that are helpful to achieving the objective.
 Weaknesses: attributes of the person or company that are harmful to achieving the
objective.
 Opportunities: external conditions that are helpful to achieving the objective.
 Threats: external conditions which could do damage to the objective.

The Strengths, Weaknesses, Opportunities and Threats (SWOT) analysis described in the
following tables:-

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  Highly experienced employees.
 Good number of existing local and foreign buyers.
STRENGTHS
 Dedicated employee base.
 Have good reputation among buyers for the quality of their
product.
 Have good reputation among buyers for on time delivery.
 Strong communication to communicate with buyers.

 Small size of the company.

WEAKNESSES
 Capital of the company is not big enough compare to to the lage
competitors in the market.
 No treaning facility of its own to train its employees.

 Highly adoptable compare to business rivals.

OPPORTUNITIES
 Number of potential buyers are increasing specially the overseas
buyers..
 Easy bank loan opportunity.

 Number of new copetitors are increasing.

THREATS
 Threats on overal RMG industry.
 Increased competition for market share.

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 Part-4:

An overview of merchandising in Ready-Made

Garments sector

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4.3 The concept of merchandising in general terms:

The activity of promoting the sale of goods at retail.

Merchandising activities may include display techniques, free samples, on-the-spot

demonstration, pricing, shelf talkers, special offers, and other point-of-sale methods. According
to American Marketing Association, merchandising encompasses "planning involved in
marketing the right merchandise or service at the right place, at the right time, in the right
quantities, and at the right price."

In the broadest sense, merchandising is any practice which contributes to the sale of products to
a retail consumer. At a retail in-store level, merchandising refers to the variety of products
available for sale and the display of those products in such a way that it stimulates interest and
entices customers to make a purchase.

Merchandising is the methods, practices, and operations used to promote and sustain certain
categories of commercial activity
There are:
1) Promotional merchandising
2) Trading industry
3) Retail supply chain
4) Licensing
a) Children
b) Adults
5) Prop replicas

4.3.1 Promotional merchandising:

In retail commerce, visual display merchandising means maximizing merchandise sales using
product design, selection, packaging, pricing, and display that stimulate consumers to spend
more. This includes disciplines in pricing and discounting, physical presentation of products and
displays, and the decisions about which products should be presented to which customers at what
time.

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This annual cycle of merchandising differs between countries and even within them, particularly
relating to cultural customs like holidays, and seasonal issues like climate and local sporting and
recreation.

In the United States for example, the basic retail cycle begins in early January with merchandise
for Valentine's Day, which is not until mid-February. Following this, Easter is the major holiday,
while springtime clothing and garden-related merchandise is already arriving at stores, often as
early as mid-winter. Mothers Day and Fathers Day are next, with graduation gifts (typically
small consumer electronics like digital cameras) often being marketed as "dads and grads" in
June (though most semesters end in May). Summer merchandise is next, including patriotic-
themed products with the American flag, out by Memorial Day in preparation for Independence
Day (with Flag Day in between).

By July, back-to-school is on the shelves and autumn merchandise is already arriving, and at
some arts and crafts stores, Christmas decorations. By September, the summer merchandise is on
final closeout and overstock of school supplies is marked-down some as well, and Halloween
(and often even more of the Christmas) merchandise is appearing. As the Halloween decorations
and costumes dwindle in October, Christmas is already being pushed on consumers, and by the
day afterward retailers are going full-force with advertising, although the "official" season does
not start until the day after Thanksgiving. Christmas clearance sales now begin even before
Christmas at most retailers, and continue on to as little as New Year's Day or as long as
February.

Merchandising also varies within retail chains, where stores in places like Denver, Minneapolis,
or Buffalo might carry snow blowers, while stores in Florida and southern California might
instead carry beach clothing and barbecue grills all year. Coastal-area stores might carry water
skiing equipment, while ones near mountain ranges would likely have snow skiing and
snowboarding gear if there are ski areas nearby.

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4.3.2 Trading industry:
In Eastern Europe, particularly in Russia, the term “merchandising” is commonly used within the
trading industry and denotes all marketing and sales stimulation activities around PoS (point of
sale): design, creation, promotion, care and training of the sales staff. Basically a merchandiser is
someone who is continuously involved in business promotion by buying and selling of goods.

4.3.3 Retail supply chain:

In the supply chain, merchandising is the practice of making products in retail outlets available to
consumers, primarily by stocking shelves and displays. While this used to be done exclusively by
the stores' employees, many retailers have found substantial savings in requiring it to be done by
the manufacturer, vendor, or wholesaler that provides the products to the retail store. In the
United Kingdom there are a number of organizations that supply merchandising services to
support retail outlets with general stock replenishment and merchandising support in new stores.
By doing this, retail stores have been able to substantially reduce the number of employees
needed to run the store.

While stocking shelves and building displays is often done when the product is delivered, it is
increasingly a separate activity from delivering the product. In grocery stores, for example,
almost all products delivered directly to the store from a manufacturer or wholesaler will be
stocked by the manufacturer's/wholesaler's employee who is a full time merchandiser. Product
categories where this is common are Beverage (all types, alcoholic and non-alcoholic), packaged
baked goods (bread and pastries), magazines and books, and health and beauty products. For
major food manufacturers in the beverage and baked goods industries, their merchandisers are
often the single largest employee group within the company. For nationwide branded goods
manufacturers such as The Coca-Cola Company and PepsiCo, their respective merchandiser
work forces number in the thousands.

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4.3.4 Licensing:
In marketing, one of the definitions of merchandising is the practice in which the brand or image
from one product or service is used to sell another. Trademarked brand names, logos, or
character images are licensed to manufacturers of products such as toys or clothing, which then
make items in or emblazoned with the image of the license, hoping they'll sell better than the
same item with no such image. For the owners of the intellectual property in question,
merchandising is a very popular source of revenue, due to the low cost of letting a third party
manufacture the merchandise, while the IP owners simply sit back and collect the merchandising
fees.

Children:
Merchandising for children is most prominently seen in connection with films and games,
usually those in current releases and with television shows oriented towards children.

Merchandising, especially in connection with child-oriented films and TV shows, often consists
of toys made in the likeness of the show's characters (action figures) or items which they use.
However, sometimes it can be the other way around, with the show written to include the toys, as
advertising for the merchandise. The first major example of this was the TV show "He-man and
the Masters of the Universe," in the early 1980s, but this practice has been common in children's
broadcasting ever since.

Sometimes merchandising from a television show can grow far beyond the original show, even
lasting decades after the show has largely disappeared from popularity. In other cases, large
amounts of merchandise can be generated from a pitifully small amount of source material
(Mashimaro).

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Adults:
Example of professional sports merchandising - A Boston Celtics cap manufactured by Adidas
The most common adult-oriented merchandising is that related to professional sports teams (and
their players).

A smaller niche in merchandising is the marketing of more adult-oriented products in connection

with similarly adult-oriented films and TV shows. This is common especially with the science
fiction and horror genres. Occasionally shows which were intended more for children find a
following among adults, and you can see a bit of a crossover, with products from that show
oriented towards both adults and children.

Sometimes a brand of non-media products can achieve enough recognition and respect that
simply putting its name or images on a completely unrelated item can sell that item.

Prop replicas
Yet another path official merchandising follows sometimes is the one so-called prop replica
market. Mainly focused on fan-made articles, prop replicas are becoming more and more famous
as users tend to collect those pieces of movie memorabilia that med/big companies do not mass-
produce, reaching even higher levels of quality than certain 'licensed' replicas.

4.4 Operations related to merchandising:

Payment procedure:
Deal of all financial matter with the buyer conducted by the advising bank. Off course it is a
matter that influence by the relationship with the buyer. Most common way is-
 Receive L/C
 At sight

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Letter of Credit (LC):
 Letter of credit (LC) is a financial instrument opened by importer.
 LC can be opened in favor of exporter. It gives assurance that the importer is solvent.
 Most of the LC is irrevocable. An irrevocable LC means that once the exporter has
accepted the credit, the buyer cannot alter it without any permission of exporter.

4.4.2 Transaction of letter of credit (LC)

7. Authorization of payment

2. LC
Exporter Bank Importer Bank

3. Document 1. Request

5. Of To open LC 8. Debited

6. LC

Importer
Exporter

1. shipment

4. SHIPMENT

Of good

34
 1. Buyer requests the bank for open a letter of credit.
2. Issuing bank open an irrevocable LC and send it to exporter bank.
3. Advising bank prepare letter of conformation of LC and send it to exporter
4. Exporter review the LC. IF acceptable, exporter arranges with freight
forwarder to delivery the goods.
5. Exporter present delivery documents to advising bank for payment.
6. Advising bank forward the entire document to issuing bank to authorize
payment.
7. At the same time, advising bank pays necessary payment to exporter.
8. Buyers account in the issuing bank is debited

4.4.3 Terms of LC:

C.I.F (Cost, Insurance and freight):

 Charge by the exporter- the goods, transportation, insurance, miscellaneous etc.
 Must mention a delivery point up to where the exporter will bear the cost of freight.

C.F (Cost and Freight)

 The exporter quotes a price including the cost of goods and transportation.
 The insurance cost by importer.
 Importer knows such insurance company who offer lower insurance price.

F.O.B (Free on Board)

 F.O.B means exporter will take the responsibility up to the goods are loaded on the ship
 Importer has own transportation
 Ship company is well known to importer

Commercial invoice:
Commercial invoice is the final bill that allows the importer about how to pay to exporter.
Commercial invoice is needed customs to impose tax.

35
Bill of lading:
A bill of lading is a documents issued by the ship-owner or by the master or captain of the ship
or other agent in exchange of mate’s Receipt after the goods have been placed on the board the
ship for being carried to a specific destination. It is used when the goods shipped from only a
part of the cargo of a ‘general ship’

Backward Integration:
Customers are another potential source of competition. For reducing the production cost
manufacturer make linkage or own the source of raw materials. Those linkages are called
backward linkage or backward integration.

Labor-Capital relationship:
In countries where there is little capital available for investment and where the amount of
investment per worker is low, manager might expect to find cheap labor rate and export
competitiveness in product that require large amount of labor relative to capital.

4.4.4 Production Process of Classic Group

4.4.4.1 Buying house

Buying house is the middleman between the buyer and RMG factory. It is quite difficult to
arrange buyer for RMG factory because most of the buyer come from foreign. And RMG
factories website is not that much effective that’s why a class of broker grow in this gap between
buyer and the manufacturer. As they always maintain correspondence with the buyer they have
better understanding of buyer’s requirement. They act as a helping hand for us.

36
4.4.4.2 Buyers Order
At first buyer request sample from the garments factory with all the necessary information
regarding to their product and then we match our capability with the buyer’s requirement. If
capability matched then we submitted a fare costing of that product to the buyer. Here I present a
copy of buyers order.
Date – 26th Sept 2007
Subject – WARREN
Hi babu,
Pls find below a file of man t-shirt to make as follow at 2.40€:
WARREN
- 95% cotton 5% lycra
- enzyme wash
- neck width 19cm, neck drop 1.5cm, neck depth 17cm
- with our badge on back collar
- DTL-1: thick embroidery in silver lurex yarn on the right shoulder at 3cm from the seam
- DTL-2: thick embroidery in silver lurex yarn 6x2cm
- DTL-3: cross with 5 plies in silver lurex yarn on front left armhole at 4cm from the shoulder
- DTL-5: make exactly same seam on all the body in grey color reverse seam on sides body +
sleeves sewed with a ton to ton chain seam
Rgds,
Noémie

37
4.4.4.3 Costing
For costing of garments we have consider so many things such as fabric consumption,
accessories, fabric GSM, colour, Print, embroidery, sewing charge, and other additional expenses
that is required in the production process here I present some copy of costing of sample program

Cost Break Down

Normal/High/Super High Jeggings long denim pant

Buyer: Serious Sally

O/Qnty: 14736 pcs

Item Total qty Unit Price Total Price Supplier Remarks

Body Fabric(Denim) 16027.00 Yds $2.05 $32,855.35 Aragon Denim
Body Fabric(Twill) 3200.00 Yds $2.25 $7,200.00 Buyer Nmted
Interlining 400 Yds $1.00 $400.00 Etasia
Sewing thread20/2 573 Cone $0.82 $469.86 Classic Thread
Sewing thread40/2 585 Cone $0.65 $380.25 Classic tThread
Elastic 12,108 Yds $0.09 $1,029.18 Buyer Nmted
Alloy Button (1pcs each) 106 Gross $8.40 $890.40 Yester
Rvts(4pcs Each) 430 Gross $3.40 $1,462.00 Yester
4.5# Metal zipper logo pullar 1299 Dzn $2.00 $2,598.00 Buyer Nmted
Studs(22pcs each) 135 Dzn $5.00 $675.00 Yester
Badge(1pcs each) 106 Gross $5.00 $530.00 Yester
Main label 1,250 Dzn $0.18 $225.00 Mr Akash
Care label 1250 Dzn $0.11 $137.50 Mr Akash
Leather Patch 1250 Dzn $0.39 $487.50 Mr Akash
Hang tag 1,250 Dzn $0.24 $300.00 Mr Akash
Hang tag string 4 Box $2.50 $10.00
Waist Tag 1,250 Dzn $0.12 $150.00 Mr Akash
Plastic care tag 1,250 Dzn $0.35 $437.50 Mr Akash
Warning Caution 1,250 Dzn $0.12 $150.00 Mr Akash
Price sticker/Barcode sticker 1,250 Dzn $0.08 $93.75 Mr Akash
Poly sticker 1,250 Dzn $0.08 $100.00 Mr Akash
Wash 1,250 Dzn $8.00 $10,000.00 Unique Wash
Poly bag 1250 Dzn $0.60 $750.00
Carton 625 pcs $2.00 $1,250.00
Gum tape 100 Roll $0.44 $44.00
Total 48723.00 $62,625.29

Total Value $101,097.60

Accessories,Trims,Fabric $62,625.29
Buyer Comission $2,947.20
Bank Charge(3%) $1,878.75
SGS Inspection(1%) $1,010.98
C.M
Total C.M $32,635.38
C.M/Pcs $2.21
C.M/Dzn $26.52

38
4.5 Order:
If costing is in satisfactory level than the buyer will send the order sheet to the factory and will
request to send sample of the ordered garments for approval. Here I present some copy of order
sheet

Supplier: Classic Group.

Mode of Delivery: Boat
Time of Delivery: End December

Style: Serious sally

Composition: 95% cotton 5% elastane
Wash: Enzyme
Weight: 180/200 gsm
Shrinkage: 4% maximum
Label: HOPE ‘N LIFE
Price: 7.00 USD/PC FOB

Assortment: S M L XL

BODY / CONTRAST + BUTTONS + THICK PRINT / PRINT + CHAIN SEAM

WHITE / GREY MELANGE / LILAC 2 2 2 2
PINK / WHITE / CHOCO 2 2 2 2
BLACK / WHITE / PINK 1 1 1 1
TURQUOISE / WHITE / ANTHRACITE 1 1 1 1

Pieces/box: 24 pieces
Total pieces: 1008 pieces
Total box: 42 boxes
We won’t accept not assorted boxes

39
4.6. Dyeing program:
After receiving the order of program merchandiser at first prepare the color and size ratio of the
program and after that they prepare the knitting and ratio program. There some law for fabric
consumption that is important to identify the required quantity of fabrics.
After knitting program we send 1x1m fabric to the buyer for the approval of color and shade of
the fabric. If the fabric matched with the requirement than we use the fabric for production
purpose.

4.7 Cutting:
After the fabric arrive in the factory then we send the fabric along with the measurement sheet to
the cutting section. In cutting section cutting master cut the fabric according the measurement &
sends it to printing section or embroidery section if necessary.
4.8 Printing:
In printing section print master at first develop the design of the print and make frame according
the print. Before printing print master send a printing sample to the merchandiser. Merchandiser
mach the print with the requirement and color Pantone if matched than he give permission to
print the fabric. Here I present a copy of printing requirement.

40
4.9 Embroidery:
When printing finished then print master send the fabric to th embroidery section if necessary. In
embroidery section embroidery designer make the design of embroidery and set stitches for that
design here I present some copy of embroidery design.

41
Embroidery patch

Embroidery design

4.10 Sewing Thread:

Thread may be contrast or in same color it must be matched with requirement. Store manages the
sewing thread and the merchandiser approves the color and quality.

4.11 Sewing:

After embroidery of fabric in charge of the section send the Fabric to the sewing section in
sewing section we send some of the accessories which need to be attached with the garment.
Sewing section in charge and production manager observes the sewing process and keep them
update with comments from the measurement. (Here by comments I mean the correction of order
sheet and approval from buyers

42
4.12 Finishing:

After sewing the RMG goes to finishing sector for attachment of other accessories, folding,
packing, here we aid them with folding and packing approval from buyers. Here I present some
list of accessories

4.13 PRODUCTION ACCESSORIES

- Hang tag: 6x10cm
Paper thickness 500gsm
Background white colour
Attached with orchid satin lace & a silver pin

FRONT SIDE

43
 Background draw orchid 17-3628 TP

Outline + lettering in bright silver foil

After attachment of all accessories and packing the finishing section pack the garments in
required carton in proper ratio and put the level of buyer address and the factory address
on the carton. After Buying Quality Controller come in inspection to if the product meet
their requirement. Then they send theses carton in our store house before shipment date

4.14 Cargo booking:

Cargo booking is another impotent responsibility of merchandiser there is a law of cargo
booking.
After booking of cargo we send RMG to port and there Buyer runs an inspection where the
product is ok or not if products ok then the commercial merchandiser take the shipment document
after customer clearance and submit the document to exporter bank and receive the LC money

44
4.15 Functional Departments of Classic Group
All the functions of Merchandising Inc. are operated under six major departments:

1. Merchandising department.
2. Sampling department.
3. Commercial department.
4. Accessory supply department.
5. Production department.
6. Distribution department.

4.15.1 Merchandising Department:

This department of merchandising department is responsible for the following activities:
Searching buyers:The task of this department started with the searches of buyers, who want to
import garment products from our country, to get the order of the garment product
manufacturing.
Introduce letter:After finding suitable buyers this department issues an introducing letter to the
respective buyers which describes merchandising department's total years of experience, its
parameter of total activities, efficiency and effectiveness and relationship with existing buyers.
Cost of Making:CM is another important activity that stands for Cost of Making. Here the
merchandiser of this dept. determines what are the things are required to make a unit or dozen of
an order. Then he makes calculation' of per unit cost on the basis of accessories consumption,
fabric consumption, labor cost and other relevant costs.

Price negotiation:When this department has the clear idea about the cost involved in the desired
transaction they start price negotiation to determine a final price that the buyer agrees to pay.
Select supplier:Merchandising department recognizes the effectiveness, of their commitment to
buyers and therebyit shoulders the responsibility of finding out efficient buyers. The bases of
efficiency include supplier's adequate administrative setup to prepare all necessary documents
for exports, supplier's financial status and adequate capacities etc.

45
4.15.2 Sampling Department:
It starts its activities after receiving the original sample or sketch sample from the buyer with an,
intention to testify the capability of sampling department to meet the desired standard of the
products. Two people contribute toward the efficiency of sampling dept. They are sampling man
and pattern master of M. Inc.

4.15.3 Commercial Department:

The commercial department of Classic Group prepares pro-forma invoice for the respective
buyer. The invoice includes the quantity of the buyer's order, its unit price and total price. The
commercial department also transfers master L/C on the name of selected supplier. This
department also maintains all clerical activities such as maintaining the accounts of daily
transaction, maintaining payroll, keeping the accounts of daily expenditures etc.

4.15.4 Accessory supply department:

For a smooth manufacturing, the assurance of on time delivery of fabric and accessories is must.
The responsibility of supplying accessories to the suppliers landed on the ground of this
department. To assure this supply Merchandising Inc. utilizes two sources. One is its sister
concern FM. Printing and Packaging Company. Another is the outsourcing from its suppliers of
long term relationship. As a result the manufacturer doesn't need to be worried about the
availability of accessories.

4 .15.5 Production Department:

Although named as production department, this service department rather follows up production
dividing its activities into following sections of Responsibilities: Quality monitor and control:
This dept. supervises the manufacturing process to maintain the quality and scheduled progress
of the manufacturing in behalf of merchandising Incorporation.
Final Inspection: For its reputation, buyers usually delegate the responsibility of final inspection
on the shoulder of quality. Inspector of Merchandising Incorporation. The efficient inspection is
the responsibility of the quality inspector of Merchandising Inc.

46
4.15.6 Shipping Department:
As the name mentions the task of shipping department of M. Inc starts from -receipt of final
goods from the supplier factory after the final inspection and ends- with loading of the goods
bound for supplier. This department also prepares the supporting documents for export such as
bill of exchange, bill of lading, commercial invoice, certificate of origin, packing list etc.

47
 Part-5
Findings and Analysis

48
5.1 The prerequisite of merchandising tools about various aspects

such as-

 Raw materials nature (textile/fabric nature)

 Price of raw materials ( fabric price)

 Consumption of garments

 Required accessories and price

 Cost of making( CM)

 Freight cost.

 Product quality sense/ garments quality sense.

 Commercial knowledge (LC & documents)

 Shipping (export & import)

 Sources of raw materials ( fabrics & accessories)

 Concern item suitable manufacturer.

 Assortment

 Washing type & price.

 Print, embroidery type & price.

49
 5.2 Evaluation of supply chain performance of Classic Group-
 Facilities:
Actual physical location for supply chain network is a vital thing for any organization & it’s also
plays the same role for classic group. Decision regarding role, location, capacity & flexibility
have a significant impact on supply chain performance likewise for classic group. Here the
facilities role for the supply chain can be receive the goods in hand timely which results the
delivery of ordered products in-time to the buyers.

Facilities also play an important role in the competitive strategy. Efficiency & responsiveness are
the key factors in achieving competitive advantage. For instance, delivery duration in the
garments industry is limited & hereby in making any garments product some essential facilities
are- knitting plant, waving plant, dying plant, garments making factory, washing plant,
accessories factory are required. One of the major roles of merchandising is to collect all the
things which are required to make any garments product. Here in case of classic group, they have
only the capacity of garments making and other things which is essential to make any garments
product are not available for them. This results the barrier in achieving the responsiveness. In
case of competitiveness Classic group is lagging behind compared to some other industries.

 Inventory:
Inventory encompasses all raw materials work in process, finished goods within a supply chain.
A common perception and experience is that supply chain management leads to cost savings, largely
through reductions in inventory. Firms use one of three general approaches to manage inventory. First,
most retailers use an inventory control approach, monitoring inventory levels by item. Second,
manufacturers are typically more concerned with production scheduling and use flow management to
manage inventories. Third, a number of firms (for the most part those processing raw materials or in
extractive industries) do not actively manage inventory. Material flow time is the time that elapses
between the points at which the material enters the supply chain to the point at which it exits. In case of
garments industry the product design varies or changes very rapidly and its life cycle is very short which
causes difficulties in maintaining inventory management in a right way. This is also same for Classic
group. In a garment making industry customers’ requirement for goods varies rapidly as a result inventory
management is held for short time. Normally management maintains the cycle inventory.

50
  Transportation
Transportation plays an important role in case of RMG industry’s supply chain management
process. Normally buyers select the mode of transportation for shipping. Generally the
transportation is held in sea ways but sometimes it occurs by airways as per buyers’ requirement.
Internal transportation facilities are there for the Industries some are inbound and some are
outbound. In case of inbound transportation the company gains much benefit by delivering the
product on time compared to outbound.

 Information:
Information deeply affects every part of the supply chain and impacts every other driver. Good
information flow on supply and demand can help improve the utilization and responsiveness of a
facility .In garments industry both push & pull system is being used. Supply chain coordination
occurs when all stages of a supply chain work toward the objective of maximizing total supply
chain profitability based on shared information. In supply chain information flow network of
classic group sometimes fails to achieve the goal cause sometime concern bodies’ ignorance &
sometimes inability of them. This effects on supply chain negatively.

 Sourcing:
In the ready-made garments industry, a lot of requirements needed to make any product but most
of the organization don’t have all kinds of facility. Sometimes they don’t go for to have all kinds
of sourcing facility. In this industry, there are several layers working on, this layers are
interrelated to each other. Sourcing is one of the key responsibilities of merchandising.
Efficiency & responsiveness mostly depends on sourcing decision. For example in the garments
industry when buyer gives a purchase order (PO) he/she mention the shipment date at the same
time which must be followed by the company, here if any supplier fail to provide the required
goods timely then shipment will delay and sometime buyer breach the contract. For instance in
case of classic group they outsource everything except garments making facility and sometime
they even outsource the garments making facility also that’s why the dependency increases at an
alarming rate. It also increases the per unit production cost.

51
  Pricing:
Determination of price is one of the major responsibility of merchandising. Pricing decision
mainly depends on the consumption of any product. When merchandising department ensures
the price with profit & consumption then the organization go for it. Classic group also does the
same. I have discussed the consumption detail in a chart previously. Pricing decision varies
according to order quantity, if order quantity is higher then the opportunity to achieve economies
of scale increases so it moves towards low pricing. Generally Classic group follows high low
pricing.

5.3 Obstacles to achieving strategic fit

The key to achieving strategic fit is a company’s ability to find a balance between responsiveness and
efficiency that best matches the need of its target customer. In deciding where this balance should be
located on the responsiveness spectrum, companies face many obstacles.

 Increasing variety of product

Product proliferation is rampant today. With customers demanding ever more customized products,
manufacturers have responded with mass customization and segment-of –one views of the market.
Companies view each customer as an independent market segment. In the RMG industry such obstacle is
very common. Cause product requirement especially product design varies from one buyer to another&
even one buyer several requirement on each order.

 Decreasing product life cycle

The life cycle of products has been shrinking. Today there are products whose life cycle can be measured
in months, compared to the older standard of years. Life cycle For RMG product is too limited to the
customer & retailer and its effect the Bangladeshi manufacturers also.

 Increasingly demanding customer

Customers are constantly demanding improvements in delivery lead times, cost, and product
performance. If they don’t receive these improvements, they move on to new supplier. That’s why the
RMG product suppliers such as classic group have to be highly product sensitive which is too much
critical to carry on a regular basis.

52
  Fragmentation of supply chain ownership

Over the past several decades, most firms have become less vertically integrated. As companies
have shed non core functions, they have been able to take advantage of suppler and customer
competences that they themselves did not have. With the chain broken into many owners, each
with its own polices and interests, the chain is more difficult to coordinate. In the Bangladeshi re
Bangladeshi RMG industry can be like that-

Foreign owned buying house/liaison office Local buying house Local

manufacturer Local suppliers

 Globalization

Supply chains today are more likely than ever to global. Establishing a global supply chain
creates many benefits such as ability to source from a global base of suppliers who may offer
better or cheaper goods than where available in a company’s home nation. For instance BD
RMG industry mostly depend on another such as China, India, Hong kong, Srilanka, Pakistan,
Canada and some more for raw materials, accessories, machinaries. For BD RMG industry
mainly they are lagging behind compared to another because of globalization effect.

5.4 Why buyers come here:

The principal static comparative advantage that Bangladesh enjoys over potential competitors is
its cheap labour force. The wage level in the RMG industry is low both for males and females,
compared with workers in a similar category in other sectors. For instance, a comparison on the
basis of wage data provided by Bangladesh Bureau of Statistics8 shows that the average monthly
wage of skilled RMG factory workers is 1.4 to 2 times lower than that of similar factory workers
in the textile and other sectors.

53
Table : Labor costs in selected countries (in US $/hour)

Countries 2010 2011

Bangladesh NA 0.16
India 0.25 0.27
Pakistan 0.24 0.27
Sri Lanka 0.39 0.35
China 0.24 0.25
Indonesia 0.18 0.28
Thailand 0.59 0.71
Italy 13.5 NA
UK 7.99 NA
US 6.77 NA

Table : Unit price realization of selected garment exports (in US $/piece)

SITC Product Bangladesh India Pakistan Sri Lanka China Thailand

description

Men’s woven wear

8414 Trousers 4.21 3.91 3.67 6.44 5.74 6.35
84151 Cotton shirts 4.82 5.59 3.74 6.15 4.02 7.51
84159 Shirts (others) 4.17 6.16 2.89 5.72 5.28 4.85
Men’s knit wear
84324 Trousers 3.17 2.80 3.21 3.90 2.04 3.29
84371 Cotton shirts 2.97 4.53 4.06 7.44 5.49 7.48
84379 Shirts (others) 3.45 4.62 3.81 6.08 8.14 3.34
Women’s woven wear
8425 Trousers, breeches
3.47 4.77 4.04 5.39 7.53 6.05
8426 Blouses, shirt-blouse
4.55 4.22 3.67 5.87 5.85 7.13
8427 Skirts 3.28 3.94 3.14 5.69 6.77 7.04
Women’s knit wear
8425 Skirts 0.00 2.92 5.68 4.85 3.13 4.41
8426 Trousers, breeches
2.59 3.74 2.90 4.82 6.78 4.54

54
5.5 Problems and Barriers of RMG merchandising - supplier
Industry of Bangladesh:
The problems and barriers that are hindering the growth of export oriented Buying House
industry are classified under the following major functional areas:
 Human resource development
 Infrastructure.
 Marketing

Human Resource Problems of Buying House:

Unskilled Employee:
Most of the employees are not enough skilled to perform their job. In the there are some post
such as quality controller, design maker, merchandiser that require technical skill to be
performed but as the employees do not have any institutional training they lack such technical
skill. On1y way they can learn is through on the job training. Convincing foreign buyers and
establishing long term relationship with them is one of the most important tasks. To perform this
job employees need proper language and communication skill. 13ut in our country as the
education medium is Bengali and there is less opportunity to learn other foreign languages
therefore employees lack communication skill to convince and establish long-term relationship
with foreign Buyer.

No training Institution:
There are no such courses designed in any of the public or private educational institutions of our
country which can give employees training specifically to perform their job. As a result people
usually coming to this field are from different background. They are usually unskilled and
inexperienced. Fleeting tendency of Employees has a very high tendency to switch their jobs.
This may be because of their poor salary structure and no service benefit. As a result whenever
they find any better offer they try to switch they exist one.

55
Lack of career development:
Employees involved with this industry have fewer chances for career development because of
small structure of the industry. As a result less people are interested to come to this field.

Dictatorship of employer:
Employers are usually autocratic with their subordinate employees as a result of which
employees are often demotivated to work. They feline they are always under pressure.

No Trade Union:
As the employees of this industry do not have any union to support their claims, the employers
always neglect their demands.

Infrastructural problem:

No vision:
RMG industry is in its growth industry but this growth is a result of so caned blessing of quota
system but not the achievement of their efficiency. Even the constituents of this industry buying
houses have never been shown any vision of prospect, both in their attitude and actions. This is
the warming of undesired maturity for this industry. Even though they are aware about the
guillotine of year 2008, but it seems that they are ready to dye out.

Insufficient and Poor Backward linkage:

Threat, button, cartoon, backboard these are treated as accessory of garments product. Industries
of these products are treated as backward linkage industry of garment exports. Most of the times
supply these accessories to garment manufacturers. But due to insufficient number of factories,
they face diff1culties to supply these accessories on time. The quality of these accessory most of
the time do not matches, as it demanded due to their inefficiency and ineffectiveness in
production. Majority people involved in this sector are illiterate. As a result of which they are not
concerned of the consequence of the late delivery as well as poor quality.

56
Rules and Regulations:
There are also no written rules and regulation for operating this industry. As a result, people
involved in this industry operating their business according to their willingness.

5.6 Marketing problem of Buying House Industry:

Short Shipment:

This means delivering goods with inappropriate quantity. This is a very common problem for all
working in this sector. Garment manufacturers of our country are the victim of many natural
contingences including strike, hartal or political instability: So a result they often fail to finish
their on time which result short shipment. Due to this short shipment respective buyer become
dissatisfied with the Buying House and as a result all parties involved suffer loss.

Poor product quality of supplier:

Another important problem is the poor quality of its supplier (garment manufacturer). Desired
quality is the first condition of the foreign. Garment manufacturers due to their unskilled worker
cannot produce the product with expected quality. As a result buyers reject the product.

Improper document:

At the time of releasing goods from the port, a buyer needs to show
Some documents such as to prove his authentication. These documents are sending to buyer from
buying house or the respective supplier. However, sometimes due to lack of experience or
knowledge they sometimes fail to send appropriate documents for which the buyer cannot
discharge his goods from the port. As a result the buyer becomes dissatisfied.

57
Document Delay:
Besides improper document, sometimes the supplier or buying house fails to send documents on
time. Without proper document the foreign buyer cannot discharge goods from the ship. This
problem is very irritating to buyer as the product has arrived at the port but due to unavailability
of proper document he is unable to discharge goods from the port. For this reason sometimes the
suppliers has to break relationship with its buyers.

Commission Recover Problem:

This problem mainly occurs due to unethical practices of few people. Normally, the amount of
the commission is specifically written at the back of letter of credit. So, nobody can deny paying
the house. However sometimes due to ill intention of the people of bank of the merchandiser
faces difficulties to receive its commission.

58
5.7 SWOT analysis of merchandising in RMG industry of
Bangladesh-

 Sound profitability and growth with good capital generation.

 Large client base.
 Experienced and efficient management team and human
resource.
 Quaity products and services.
 Energy at low price .
S  Rreputation and goodwill of bangladeshi business personal.
T  Easily accessible infrastructure like sea road, railroad, river
R and air communication.
E  FDI is legally permitted.
N  Moderately open Economy, particularly in the Export
G Promotion Zones.
T  Bangladesh is a member of Multilateral Investment Guarantee
H
Agency (MIGA) under which protection and safety measures
S
are available.
 Investment assured under Foreign Private Investment
(Promotion and Protection) Act, 1980 which secures all foreign
investments in Bangladesh
 Excellent Tele-communications network of E-mail, Internet,
Fax, ISD, NWD & Cellular services
 Weakness of currency against dollar and the condition will
persist to help exporters.
 Convenience of duty free custom bonded w/house.
 Readiness of new units to enhance systems and create
infrastructure accordant with product growth and fast reactions
to circumstances.

59
  Market share is not at satisfactory level.
 Lack of marketing tactics
 The country is deficient in creativity
 Absence of easily on-hand middle management
 A small number of manufacturing methods
W  Low acquiescence: there is an international pressure group to
E
compel the local producers and the government to implement
A
K social acquiescence.
N
 The machinery required to assess add on a garment or increase
E
S competence are missing in most industries.
S
 Lack of training organizations for workers, supervisors and
E
S managers.
 Autocratic approach of nearly all the investors.
 Fewer process units for textiles and garments.
 Incompetent ports, entry/exit complicated and loading/unloading
takes much time.
 Speed money culture.
 Time-consuming custom clearance.
 Unreliable dependability regarding Delivery/Product
knowledge.
 Communication gap created by incomplete knowledge of
English.
 Subject to natural calamities.
 Political usability in Bangladesh.
 Frequent hortals and blockades.

60
  There are a ever expanding market worldwide.
 EU is willing to establish industry in a big way as an option to
O
china.
P
P  Bangladesh is included in the Least Developed Countries with
O
which US is committed to enhance export trade.
R
T  Skilled technicians are available thanks to various training
U
institutes.
N
I  Government’s policy of encouraging heavy inflow of foreign
T
investment.
I
E  Regulatory environment favoring private sector development.
S
 Increasing trend in international business.

 Increased competition for market share in the industry.

T
H  The exporters have to prepare themselves to harvest the
R
advantages offered by the opportunities.
E
A  We have to compete with the competitors of first world
T
countries who have access to advanced technologies.
S
 Market pressure for lowering product rate.
 National and global political unrest.

61
5.8 Comparative statement onexport of RMG and total export of

Year Export of RMG (in Total export of Bangladesh % of RMGS to total

Million US$) (in Million US$) Export

1987-88 31.57 811.00 3.89

1988-89 116.20 934.43 12.44
1989-90 131.48 819.21 16.06

1990-91 298.67 1076.61 27.74

1991-92 433.92 1231.20 35.24
1992-93 471.09 1291.56 36.47
1993-94 642.16 1523.70 40.96
1994-95 866.82 1717.55 50.47
1995-96 1182.57 1993.92 59.31
1996-97 1245.01 2382.89 60.64
1998-99 1555.79 2533.90 61.40
1999-2002 2547.13 382.00 65.61
2002-2004 3001.25 4418.28 67.93
2004-2006 3781.94 5161.20 73.28
2006-2008 4019.98 5212.86 75.67

2008-2010 4669.61 5701.13 77.09

2010-2011 5560.57 6724.40 79.07
2011-12 19089.69 24287.66 78.60

62
 Bangladesh’s export

30000

25000

20000

15000

10000

5000

1997-98
1984-85
1985-86
1986-87
1987-88
1988-89
1989-90
1990-91
1991-92
1992-93
1993-94
1994-95
1995-96
1996-97

1998-99
1999-00
2000-01
2001-02
2002-03
2003-04
2004-05
2005-06
2006-07
2007-08
2008-09
2009-10
2010-11
2011-12
Export of RMG (In million USD)
Total export of Bangladesh( in million USD)

5.9 Growth & trends

A Glimpse of The Growth & Status of Ready-Made Garment Export of

Bangladesh:

Growth of the industry and Employment:

There has been a steady growth in the field of RMG during last two decades. The RMG industry

enjoyed a meteoric rise from 30 enterprises in 1980 increased to about 5150 in 2010-11 fiscal

year. The growth of the industry in terms of number of units and employment generation is

shown in table - 1 below:

63
 Year Number of Garment Factories Employment in Million Workers
1983-84 134 0.040
1984-85 384 0.115
1985-86 594 0.198
1986-87 629 0.283
1987-88 685 0.306
1988-89 725 0.317
1989-90 759 0.335
1990-91 834 0.402
1991-92 1163 0.582
1992-93 1537 0.804
1993-94 1839 0.827
1994-95 2182 1.200
1995-96 2353 1.290
1996-97 2503 1.300
1997-98 2726 1.500
1998-99 2963 1.500
1999-2000 3200 1.600
2000-2001 3480 1.800
2001-2002 3618 1.800
2002-2003 3760 2.000
2003-2004 3957 2.000
2004-2005 4107 2.000
2005-2006 4220 2.200
2006-2007 4490 2.400
2007-2008 4743 2.800
2008-2009 4925 3.500
2009-2010 5063 3.600
2010-2011 5150 3.600

2011-12 5400 4.00

Out of 3.6 million manpower employed in BGMEA member factories, 2.88 million are women
(80%), majorities of them are disadvantaged and economically poverty stricken women folk. The
country's RMG sector, to a creditable level has relieved Bangladesh from over populous
unemployment burden through providing the largest employment next to agriculture, transport,
trade and industry sector. This sector has uplifted the neglected section of the population, thus
radically transforming the socio-economic condition of the country. Such empowerment and
employment raised awareness regarding children education, health safety, population control
disaster management only so for. It is an epoch making event in the history of Bangladesh.

64
 0
1000
2000
4000
5000
6000

3000
1.5
3.5
4.5

2.5

0
1
2
3
4

0.5 0.12
1984-85

384
1984-85
1985-86 1985-86
1986-87 1986-87

594 629
1987-88 1987-88

0.2 0.280.310.32
1988-89 1988-89
1989-90 1989-90

0.34 0.4
1990-91 1990-91

685 725 759 834

0.5
1991-92 1991-92

1163
1992-93 1992-93

1537
0.8 0.83
1993-94 1993-94

1839
1994-95 1994-95

2182
1995-96
Employment in million workers

1995-96
1.2 1.29 1.3

1996-97 1996-97

23532503

65
1997-98 1997-98

2726
1998-99 1998-99

2963
1.5 1.5 1.6

1999-00
1999-00

3200
2000-01
2000-01

3480
1.8 1.8

2001-02
2

2001-02

3618
2002-03
2

2002-03

3760
2003-04
2

2003-04
2004-05

Number of garments factories

2004-05
2.2

39574107
2005-06
2005-06
2.4
Employement in million workers

4220 2006-07
Number of garments factories

2006-07
2.8

4490

2007-08
2007-08
4743

2008-09
2008-09
2009-10
3.5 3.6 3.6

2009-10
49255063

2010-11
4

2010-11
5150

2011-12
5400

2011-12
 Part-6:
Major Findings
 It is seen that the growth and trends in readymade garments industry is expanding
rapidly from the perspective of BD. Which is indeed poses hope for the future
economy of our country.
 As Bangladesh is densely populated country where unemployment problem is a
major challenge to overcome, here RMG industry has managed to remove this
problem to an extent for the past few decades.
 It is also found that the buyers are on the move in search of quality, in time
delivery, low cost.
 Why buyers are attracted with us also with our company and by removing which
type of weaknesses we can go a long way to create a value on the minds of the
buyers are also sought out.
 In a whole merchandising is the heart of garments industry. Merchandising
activities like searching buyers introduce letter, determine the cost of making,
price negotiation, and supplier selection is observed and evaluated.
 The importance of supply chain management’s in the overall performance in
RMG industry is clarified.
 The overall pricing, sourcing, inventory decision regarding buyers are briefly
classified.
 The SWOT analysis of the overall merchandising industry has been done to
evaluate itst. current situation.
 Company’s efficiency and responsiveness towards their buyer is a vital thing. So
which initiative to remove the obstacles of it has been sought out.

66
 Part-7:
Conclusion

Garment industry is controlled by the transfer of production. The globalization of garment

production started earlier and has expanded more than that of any other factory. The global
economy is now controlled by the transfer of production where firms of developed countries
swing their attention to developing countries. The garment industry of Bangladesh has been the
key export division and a main source of foreign exchange for the last 35 years. Many people
have earned their livelihood through this industry. There may be gender discrimination, low
wage level exist in the garments industry, but still, they supply employment for all of theses
people who come here to live. The Ready Made Garment industry in Bangladesh is made up of
3,986 manufacturers and accounts for 80% of total foreign exchange earnings. It employs about
250,000 managers and 3.6 Million workers, of whom 2.6 Million are women. In Bangladesh, the
RMG industry has emerged as a major economic sector and has had its impact on the financial
services sector, communications, transportation, and on other related industries. The RMG
industry has had a major social impact. It has empowered 2.6 million women with employment
and economic independence, which in turn has earned for Bangladesh recognition as a modern
and enlightened society. The surface-level competitive performance of the Bangladesh RMG
industry israther good, as indicated by quantitative expansions of its exports to major
internationalmarkets over the time period. Moreover, the industry has already initiated the
process of enhancing its deep-level competitive performance. For example, the Bangladesh
RMGindustry has achieved some product diversification in both the United States and the
European Union as a garment supplier. Recently, the industry has achieved some upgrading of its
products in the European Union, but this has not occurred to a significant extent in the United
States. Some important areas which require more attention to sustain and enhance deep-level
competitiveness of the industry are reduction in “production and distribution “time, expansion of
linkages, compliance with code of conduct of buyers and changes in product/market

67
composition. The Government of Bangladesh should also provide more active policy support.
Figure 5 illustrates a simple competitiveness enhancement model for the Bangladesh RMG
industry. The most urgent and important task for the Bangladesh RMG industry is shortening the
lead time; otherwise, international buyers may divert their attention towards other suppliers for
the importation of garment products in the current quota-free business environment. The best
option for Bangladesh is to improve its deep-level competitiveness by reducing total “production
and distribution” time, which will improve surface-level competitiveness by reducing lead time.
An important precondition for implementing that strategy is the existence of a strong domestic
textile industry. Bangladesh faces significant constraints in this regard and hence it is not
possible to establish strong backward linkages overnight. Therefore, to retain competitiveness in
the global market, Bangladesh has to think of other alternatives. The establishment of common
bonded warehouses in the private sector for storing raw materials for use in export-oriented
garment factories under some special incentives, such as duty-free imports, could play a
significant role in reducing lead time. Such a policy runs the risk of delaying the initiatives that
are necessary in order to strengthen deep-level competitiveness. However, globalization is
putting pressure on the country to accept that risk. The establishment of common bonded
warehouses and the expansion of backward linkages are two options for the Bangladesh RMG
industry. While the establishment of common bonded warehouses will improve only surface-
level competitiveness, the latter will improve both surface and deep-level competitiveness. A
good balance between these options will sustain and enhance Bangladesh’s position in the world
market, and at the same time upgrade the country’s current status of being only an assembler so
that it could become a full-package supplier of garment products. Second, Bangladesh needs to
concentrate on improving the working environment in factories and address other social issues
related to the garment industry. The RMG firmsin Bangladesh have been facing immense
pressures from international buyers for compliance with their codes of conduct. In contrast, the
big buyers are interested in continuing and expanding their business with Bangladesh if shorter
lead time and compliance standards can be met. Therefore, Bangladesh should address these two
issues very carefully and immediately, which are the least conditions necessary to survive the
competition.

68
 Part-8:
Recommendation
 Due to low labor productivity Bangladesh is competitive, with low value and thus low-priced
items, at the lower end of the RMG market. RMG production is concentrated in a relatively
limited range of products such as shirts, T-shirts, trousers, and shorts. To be internationally
competitive, Bangladesh needs to expand its product range and should begin producing
fashion-wear and higher value-added items. Product diversification is essential to meet the
challenges of the world.
 Establishment of backward linkages, especially the domestic production of yarn, can reduce
the cost of production. The current gap in demand and domestic production, met through
imports, is estimated to be 480 million kg for yarn, and 2,300 million meter for fabrics. The
country could thus save considerable foreign exchange by increasing domestic production of
yarn and fabric. Production costs would also be reduced, since the RMG manufacturers
would not have to buy fabrics at international prices that are not necessarily competitive.
 RMG industry in Bangladesh is the slow rate of increase in productivity, and the gap that
exists between this country and other competitors in this regard. There is also scope for
capacity building in different types of skills and processes
 A considerable gap also exists in knowledge about trade and investment flows. This is
understandable, given that most entrepreneur interactions are with buyers who merely specify
their product needs, provide the designs, etc. The emerging global environment, however,
calls for more strategic action with regard to major competitors.
 Encouragement for relocation of factories outside main urban areas, with serviced plots being
made available and adequate supervision to ensure that factories are functionally designed.
 Instead of full autocracy or democracy, the employers of buying house should show lenient
view in all aspects so that they get motivated to work.
 Employee pay structure should be consistent with the employee .work pressure, in order to
stop their tendency to switch job.
 Company should introduce service bonus or service benefit in order to encourage and
motivate their employee.

69
 Government of our country should also provide incentives to develop backward linkage
industry of RMG export, for the smooth supply of accessories by buying house to garment
factories.
 Company owned accessory supplier can also the developed to maintain quality or on time
delivery.
 Maintaining product quality is very important. To maintain appropriate quality, buying house
should take necessary steps such as training course for their quality controller or inspector
etc.
 For improper document or document delay buyers cannot receive his product from the ship in
his country for which relationship between he and buying house may break up. So buying
house should be always careful in preparing right documents. They also should send
documents at right time.
 The total industry should keep in mind that they need a truly international outlook for
exporting to attract buyers as well as long-term commitment with both of their buyers and
suppliers.
 The total industry must achieve an international reputation for quality to challenge the quota
free environment.
 Company should ensure that they have all the resources.
 Company should start marketing through trade fair.
 The liability of any L/C should also not be considered as default loans.
 Bangladesh/bank should provide the lien banks with adequate funds for necessary payment
of cash incentives to our exporters without delay.
 Negotiation Bank should be authorized to take into consideration for deciding upon discount
unto 20%.
 From the date of document negotiation, forty-five days should be allowed for fund
remittance. Overdue interest should not be charged in the event if remittance is delayed.
 All private sector commercial banks should immediately cease charging L/C Acceptance

70
 charges like the nationalized Banks of the country.
 submitting statement by the commercial banks to the NBR should be waived.
 To waive the high royalty rates at specific times of the tear so that the emergency import of
raw material and export of readymade garment could remain steady.
 To reduce Communication gap created by incomplete knowledge of English.
 Need to right time make decision.
 Workers should have awareness about the quality of product.

71
 Part-9:
References
1. Daniels, Jhon D. and Radebaugh,Lee H. and Sullivan, Daniel P. (2004). “International
Business” 10th Ed.153.
2. ESCAP (2000), Development through Globalization and Partnership in the Twenty-First
Century: AnAsia-Pacific Perspective for Integrating Developing Countries and
Economies in Transitioninto the International Trading System on a Fair and Equitable
Basis, ESCAP, United Nations,
3. * The paper was prepared under the UNDP Dhaka funded Globalization SPPD and is
being published by the ILO as a part of the Globalization Report titled, Bangladesh:
Economic and Social Challenges of Globalization, University Press Ltd., Dhaka (200
4. http://EzineArticles.com/?expert=Gaurav_Doshi
5. www.fibre2fashion.com/industry-article
6. www.bdyellowbook.com/catalog/Garments___Accessories/
7. www.bdtradeinfo.com/yellowpages/des_data.asp?page=3&subcategory_id=420 - 115k
8. www.cpd-bangladesh.org
9. http://www.bangladeshgarments.info/bift/background_BIFT.htm
10. 23rd BATEXPO 2012 Catalogue.
11. Data source Export Promotion Bureau Compiled by BGMEA

72