1. INTRODUCTION: Packaging industry Packaging is a prerequisite for marketing, selling and handling products. Packaging also has a purpose of storage. Packaging industry has developed following the huge demand of packaging products. In Bangladesh, though the packaging industry developed from 1970’s, still the industry started flourishing from the 1990’s. As garments sector created a bumper demand for packaging products, many packaging plants started booming along with garments factory. Mainly the factories are situated near-by the garments factory.
The packaging manufacturing plants are of international standard, and their outputs are also of international standard. In Bangladesh, there are around 700 packaging factories. Mostly 97% of the factory concentrates on manufacturing corrugated box. Packaging industry includes a huge number of packaging products. Poly bag is holding the second position in the packaging sector. Garments sector flourish both poly and corrugated box industry. Other than garments sector, fish export business creates a lot of demand for packaging products. It was in 1964, a Nobel award winner started his own packaging plant.
And he became successful in this business. A great amount of revenue is earned from this industry. Bangladesh once was sufficient in paper production. But now, Bangladesh has a lacking in paper production. For the huge demand of corrugated box, packaging factories are importing huge amount of paper from Korea and also India. Though Bangladesh government has been providing tax- holiday opportunity, packaging industry will be lot more benefited if paper manufacturing plants are established. Packaging includes lot of item. They are described below. Packaging
Packaging is the science, art and technology of enclosing or protecting products for distribution, storage, sale, and use. Packaging also refers to the process of design, evaluation, and production of packages. Package labelling (BrE) or labeling (AmE) is any written, electronic, or graphic communications on the packaging or on a separate but associated label. The purposes of packaging and package labels: Packaging and package labelling have several objectives: ?Physical protection ?Barrier protection ?Containment or agglomeration ?Information transmission ?Marketing ?Security ?Convenience ?Portion control
Packaging types: Packaging may be looked at as several different types. For example a transport package or distribution package is the package form used to ship, store, and handle the product or inner packages. Some identify a consumer package as one which is directed toward a consumer or household. It is sometimes convenient to categorize packages by layer or function: “primary”, “secondary”, etc. Primary packaging is the material that first envelops the product and holds it. This usually is the smallest unit of distribution or use and is the package which is in direct contact with the contents.
Secondary packaging is outside the primary packaging – perhaps used to group primary packages together. Tertiary packaging is used for bulk handling, warehouse storage and transport shipping. The most common form is a palletized unit load that packs tightly into containers. These broad categories can be somewhat arbitrary. For example, depending on the use, a shrink wrap can be primary packaging when applied directly to the product, secondary packaging when combining smaller packages, and tertiary packaging on some distribution packs.
Corrugated box: Corrugated fiberboard is a paper-based construction material consisting of a fluted corrugated sheet and one or two flat linerboards. It is widely used in the manufacture of corrugated boxes and shipping containers. The corrugated medium and linerboard are made of paperboard, a paper-like material usually over ten mils (0. 010 inch, or 0. 25 mm) thick. Paperboard and corrugated fiberboard are sometimes called cardboard by non-specialists, although cardboard might be any heavy paper-pulp based board. History:
In the mid-19th century, an ingenious concept enabled flimsy sheets of paper to be transformed into a rigid, stackable and cushioning form of packaging for delicate goods in transit. The corrugated box was initially used for packaging glass and pottery containers, which are easily broken in transit. Later, the case enabled fruit and produce to be brought from the farm to the retailer without bruising, improving the return to the producers and opening up hitherto unaffordable export markets. (There had previously been a great deal of waste when, for example, oranges were craned out of the hold of a ship, having been bulk loaded into it. Manufacture of Corrugated Board Corrugated board is manufactured on large high-precision machinery lines called Corrugators running at 500 lineal feet per minute or faster. These machines over time have become very complex with the objective to avoid some common problems in corrugated board production, such as warp and washboarding. In the classical corrugator the paper is humidified by means of high pressure steam. The humidity aims to soften the paper fibres so that the formation of the flute and the consequent glueing will go smoothly. The process adds a considerable amount of water to the papers.
After the formation of the board this humidity has to be removed by drying in the so-called dry-end. Here the newly formed corrugated board is heated from the bottom by hot plates. On the top various pressure is applied by a load system on the belt. The corrugated medium is usually a 26 lb/1000 sq ft (127 g/m2) paperboard; higher grades are also available. It arrives to the corrugator on large rolls. At the single-facer, it is heated, moistened, and formed into a fluted pattern on geared wheels. This is joined to a flat linerboard with a starch based adhesive to form single face board.
At the double-backer, a second flat linerboard is adhered to the other side of the fluted medium to form single wall corrugated board. Linerboards are often kraft paperboard (of various grades) but may be bleached white, mottled white, colored, or preprinted. Common flute sizes are “A”, “B”, “C”, “E” and “F” or microflute. The letter designation relates to the order that the flutes were invented, not the relative sizes. Flute size refers to the number of flutes per lineal foot, although the actual flute dimensions for different corrugator manufacuturers may vary slightly.
Measuring the number of flutes per lineal foot is a more reliable method of identifying flute size than measuring board thickness, which can vary due to manufacturing conditions. The most common flute size in corrugated boxes is “C” flute. Box Manufacture Boxes can be formed in the same plant as the corrugator. Alternatively, sheets of corrugated board may be sent to a different manufacturing facility for box fabrication. The corrugated board is creased or scored to provide controlled bending of the board. Most often, slots are cut to provide flaps on the box. Scoring and slotting can also be accomplished by die-cutting.
The “Flexo Folder Gluer” is a machine that in one single pass prints, cuts, folds, and glues flat sheets of board to convert them to boxes for any application, from storing old family pictures to shipping the biggest of plasma TV sets to the global market. The most advanced of FFG’s can run at speeds of up to 26,000 boxes per hour. The most common box style is the Regular Slotted Container. All flaps are the same length and the major flaps meet in the center of the box. Box blank showing score lines, slots, and manufacturer’s joint The manufacturer’s joint is most often joined with adhesive but may also be taped or stitched.
The box is shipped flat (knocked down) to the packager who sets up the box, fills it, and closes it for shipment. Box closure may be by tape, adhesive, staples, strapping, etc. Many other styles of corrugated boxes and structures are available: Market structure: Global packaging industry was worth $424 billion in 2004 dominated by paper and plastic materials. In Bangladesh packaging industry has a good hold. More than that demand for paper packaging products are increasing day by day. Products started diversifying. So there is an opportunity for paper packaging industry to flourish. BPAMEA:
BPAMEA stands for Bangladesh Packaging and Accessories Manufaturing and Export Association. All packaging factories are member of this association. Registration fee is tk 5000 and they need to pay tk 800 monthly. This association is almost like BGMEA. Corrugated Box Manufacturing Process The whole corrugated box manufacturing process is quite like a assembly line. The total process is not automated. But in advanced country there are totally automated process. The assembly line can be U shaped or else can be a vertical chain type. The machineries included are: 1. Paper Feeder 2. Corrugator 3. Sheet Cutter 4. Pasting Machine . Creasing 6. Slotting 7. Stitching The whole process are shown below 2. INDUSTRY ANALYSIS: The PESTLE analysis is a constructive instrument for understanding risks associated with market growth or decline, and as such the position, potential and direction for a business or organization. The PESTLE Analysis is often used as a generic ‘orientation’ tool, finding out where an organization or product is in the context of what is happening out side that will at some point effect what is happening inside an organization. These factors are used to assess the market for a business or organizational unit. Political Factors:
Despite the political instability, government has quite open policy to pursue foreign investment in the country. Incentives for investors include: 100% ownership in most sectors; tax holidays; reduced import duties on capital machinery and spares; duty-free imports for 100% exporters; and tax exemptions. There are few performance requirements, and these do not generally present a problem for foreign investors. As there is no mechanical engineering firm in Bangladesh and as it is a very prospectus business venture, Bangladeshi government wouldn’t create any obstacle in the way of flourishing this type of business.
Along with inviting foreign investment in the country, the government is also trying to shape up the communication industry, by introducing policy and reforms and strengthening the technological infrastructure of the country. We will be discussing about the following topics: 1. Political Ideologies 2. Social & security policies 3. Monopoly legislation 4. Taxation policy 5. Government stability and policy 6. Civil Unrest Political Ideologies Political ideologies mean the view for doing business of political party who are in the power.
If the political party wants to build an industrial nation then it is a great advantage for the industries to do business in that country. This gives lot of benefits for the business and creates a business friendly environment. This is a significant issue for doing business all over the world. Another concern in this regard is to what extent the political parties believe in freedom of doing business. In a country like Bangladesh political ideology it is more significant matter for doing business than many other countries in the world. In most of the case giving money to the political people is must for starting and running business.
The competitive advantage of a company can be political affiliation with the ruling party of the company. Companies in Bangladesh get lot of advantage just because they are some how affiliated with the company or they give money to the party fund. Recently the caretaker Government backed by military force, created a lot of political stability. This short time political stability prevailing in our country has given the foreign buyers to do business in Bangladesh. Garments industry being a highly potential industry in Bangladesh, is depended on the foreign buyers motive.
So it is a matter of pleasure for the garments industry to have a stable political situation. More-over Packaging Industry is almost depended on the garments industry. As 90% of the exported goods packaged are readymade garments so packaging industry especially corrugated box industry is totally depended on garments industry. So recently, we can conclude that, packaging industry is a highly potential and profitable business during this present political situation. Articles Collected: Hyperlink file Political Ideologies of BD Social & security policies Social policies and security is a big factor for doing business in a country.
If the society does not accept any product or service then that industry can not operate in that country. One should be aware of the social practices before going into business. If there are no security in the country there will be less business, plain and simple. Security is a prime concern of the investor. Is the environment of doing the business is not secured enough people will be scared to invest money. An appropriate business environment should consist with security factor. If people do not feel safe they will not invest their hard earned money.
So the state has to provide enough security in order to create a good business environment. Bangladesh is a Muslim country and no one eats pork here so it is absolute madness to get into such a business like that. So the business has to be socially accepted. People from all walks of life buy shoes. They are no religious of social restriction of leather shoes. So social policies have no effect on leather shoes any where in the world. Bangladesh lacks the security factor for doing business. Law and order and the police force have failed to give the companies enough security to the companies.
That is a reason Bangladesh is not getting more industrialized. People do not feel like investing in business. They feel scared that they will loose the money because of lacking of security system. Articles Collected: Hyperlink file Social and security policies Monopoly Legislation A monopoly is defined as a persistent market situation where there is only one provider of a product or service, in other words a firm that has no competitors in its industry. Monopolies are characterized by a lack of economic competition for the good or service that they provide and a lack of viable substitute goods.
The company which has monopoly power controls the whole industry. Monopoly by law is illegal for many places in the world but not in Bangladesh. Companies of Bangladesh can enjoy monopoly if they can attain such position and can sustain that. There are no anti monopoly law in our country. Packaging Industry have not experienced any monopoly. In fact, the packaging industry is totally depended on the huge number of manufacturers. Only one organization cant cope up with the extreme demand for packaging products in a monopoly way. Taxation policy:
Taxation one of the major sources of public revenue to meet a country’s revenue and development expenditures with a view to accomplishing some economic and social objectives, such as redistribution of income, price stabilization and discouraging harmful consumption. It supplements other sources of public finance such as issuance of currency notes and coins, charging for public goods and services and borrowings. The term ‘tax’ has been derived from the French word taxe and etymologically, the Latin word taxare is related to the term ‘tax’, which means ‘to charge’. Tax is ‘a contribution exacted by the state’.
It is a non-penal but compulsory and unrequited transfer of resources from the private to the public sector, levied based on predetermined criteria. Packaging Industry consists of all manufacturing companies. The tax structure is similar to all the manufacturing factories, except the bonded warehouse facility. The packaging manufacturers enjoy bonded warehouse facility. According to Article 152(1) of the Constitution of Bangladesh, taxation includes the imposition of any tax, rate, duty or impost, whether general, local or special, and tax shall be construed accordingly.
The national board of revenue (NBR) is the apex tax authority of Bangladesh and it collects around 93% of total taxes or 76% of total public revenues. The NBR portion of total taxes includes customs duty, value added tax (VAT), supplementary duty (SD), excise duty, income tax, foreign travel tax, electricity duty, wealth tax (collected as a surcharge of income tax since fiscal year 1999-2000), turnover tax (TT), air ticket tax, advertisement tax, gift tax and miscellaneous insignificant taxes. Other taxes (amounting to around 7% of total taxes or 5% of total revenues) are often referred to as ‘non-NBR portion’ of tax revenue.
Articles Collected: Tax Holiday in Packaging Industry: Tax holiday is a provision given by Bangladesh government to new companies. It is a great opportunity for new companies to build up a strong base and flourish in the future. In the tax holiday period companies do not need to pay income tax to government. Indeed they have to invest a certain percentage of income in other companies or buy treasury stocks. Hyperlink file: Tax Holiday Taxation Taxation in Bangladesh. Its history. The present tax policy and structure. Hyperlink file: Taxation Government stability and policy:
The stability of the government and policy gives companies to make long term operation plans. If the policies of the government keeps on changing policies frequently companies face difficulty in their operations. They do not feel confident to make longer term structure. As they know the current policy might change after a while they fail to make long term plans. It makes them suffer in the long term. If the policies of a country is stable and the government has a vision for the long term future then companies feel positive about the situation.
They make long term investment keeping an eye on the long term policies taken by the government. In Bangladesh the policies of the government are not stable. They frequently change make policies regarding doing business. Sometimes the policies get changed in a very short notice that becomes very challenging for the small and medium businesses. Government of Bangladesh tries to make such policies which are only fruitful full for their supporters not the whole business environment. But the policies taken are changing day by day, and they are becoming better. Policies from Bangladesh Government Open Door Policy of Government ?No prior approval needed ?Equity sharing is not mandatory ?Facility to import raw materials at international rate ?Financial incentives Articles Collected: Policies from Bangladesh Government In this article the policy of Bangladesh government has been discussed on the context of packaging industry. Hyperlink file: Policies from Bangladesh Government Civil Unrest Civil unrest happens when country goes through a transaction. It is critical time for the country. Every person takes defensive strategy in this period of unrest in the country.
People can not be sure about what will happen in the future so they don not want to take any new initiative they become defensive in nature. Same this goes for business. As they can not be sure about the future condition of the country and the market they take defensive strategy. Companies just try to stay in the business they do not want to take new steps of expunction. New investments are less likely to happen in the period of civil unrest. In Bangladesh, most of the people live below the poverty line both from the urban areas and from the rural areas.
They are not well educated. They have been working for the growing Packaging sector of Bangladesh from the beginning of Packaging and RMG sector, with very low wage rate. Now, the time has changed, the consumer price index (CPI) has increased a lot, but their wage rate did not. In addition, they do not get their earned wages on time and do not get any money for working overtime, hazardous working environment. When, these deprived people come on the road for their right, it is called Civil unrest. Hyperlink Civil unrest in the RMG sector Economical Factor
Here we will discuss about the economic factors that affect our Ready-made garments industry. We have discussed about the following points: ?Monetary policy ?GNP Trends ?Inflation rates ?Employment (wage rates) ?Disposable income ?Business cycle ?Budget deficits Monetary policy Monetary policy is a set of rules to regulate currency and reserves; to manage the monetary and credit system; to preserve the par value of domestic currency; to promote and maintain a high level of production, employment and real income; and to foster growth and development of the country’s productive resources in the best national interest.
Although the long term focus of monetary policy in Bangladesh is on growth with stability, the short-term objectives are determined after a careful and realistic appraisal of the current economic situation of the country. Major instruments of monetary control available with Bangladesh Bank are the bank rate, open market operations, rediscount policy, and statutory reserve requirement. At present, the money supply is regulated through indirect manipulation of reserve money instead of credit ceiling. The Govt. has gradually reduced the interest rate from 9. 75% in January 1990 to 5% in March 1994.
It was raised to 5. 75% from 10 September 1995 and further, to 7. 5% and 8% from 19 May 1997 and 20 November 1997 respectively. The rate was lowered to 7% from 29 August 1999. Currently the interest rate is 7. 5%, which represents that the cost of borrowing has gradually been reduced so that the large investor (of packaging industry) can borrow more money and invest easily. It is now building and breaking its own records. It has also solved our unemployment problem largely. Billions of dollar transactions are being made every day due to the RMG and its accessories (i. e. ackaging) industries. Therefore, a constant and positive attitude of the Govt. towards the industry is always required. Again, the targeted growth of M2 depended on a realistic forecast of the growth rate of real GNP, an acceptable rate of inflation and an attainable level of international reserves. Articles Collected: Hyperlink file Monetary Policy GNP Trends GNP is the abbreviation of the economic term ‘Gross National Product. ’ ‘GNP is defined as the total value of all goods and services produced within or outside that territory during a specified period (most commonly, per year).
Another definition is that ‘the GNP is the market value of all the goods and services produced by labor and property of the country; it may be inside the geographical region or outside the territory. ’ GNP can be estimated by the following way: GNP= consumption + investment + government expenditures + (exports – imports) + the net inflow of labor and property incomes from abroad. Currently Bangladesh is at the 55th position with a yearly GNP of $66. 2 billion. Throughout the first half of the 1990s, GNP growth rate was 4. 06 percent. The growth rate of GNP continued to increase. During 2001 to 2005, the growth rate of GNP was on average 5. 9 percent. In the period of 1949-50, agricultural contribution to GNP was 70 percent. During 1959-60, share of agriculture in GNP started to fall and it continued until FY 1973-74. However, the rise precipitated from FY 1990-91, when industries started to grow exuberantly and in FY 2001-2002, the percentage of agriculture in GNP reduced to only 24, which was to some extent recovered by the service sector and the industrial sector (RMG and accessories industries) and specially by the foreign remittances. If the GNP growth rate of Bangladesh rises to 5% and sustains this position constantly, Bangladesh may develop in 2020.
By raising the growth rate of exports to 20. 83 percent and reducing the growth rate of imports to 17. 58 percent, we can achieve this desirable growth rate of GNP. Agricultural and Industrial GNP are small in recent years, but Service Sector’s GNP is swelling. This kind of imbalanced swell of one sector except other two causes inflation. The contribution of all sectors to GNP needs to increase equally. Articles Collected: Hyperlink file GNP trend Inflation rates Inflation is an increase in the overall price level of the commodity. Keeping inflation low has long been a goal of government policy.
Especially, problematic are hyperinflations, or period of very rapid increase in the overall price level. In order to increase the rate of economic growth, it is necessary to ensure frequent movement of resources among different economic actors or agents, different consuming units (households) and between different sectors of the economy. However, inflation alone can be the biggest hindrance in this regard. The recent experience of fairly low and stable rate of inflation is widely regarded as being the result of last four years’ bumper production of food and cereals in Bangladesh, since the end of record disastrous flood of 1998.
The fact that the CPI (base; 1995=100) is heavily weighted toward food items (more than 58-percent) where the share of cereal items including rice in CPI food items represents almost 80 percent. Therefore, the cereals combined have been assigned almost 50-percent weight in the CPI. Thus, any good harvest of rice and other cereals would have a very strong impact in lowering the overall price level in terms of CPI. As the inflation has gradually lowered by the government’s effective intervention, the condition for investment in different sort of business has encouraged a lot.
This is the same reason why the packaging industry has a boom in the recent years. Articles Collected: Hyperlink file Inflation rate Employment (wage rates) The total labor force of a country is consists of both employed and unemployed people. Any people is said to be employed if he/she is 16 tears old or older, who work; for pay, who has a job but has been temporarily absent, with or without pay. The wage rate is defined by the quality or ability of the workforce and their productivity rate. In our country the unemployment rate is much higher because of the lower educational and skill level and for the lack of industrial advancement.
Again, the wage rate is always low for the macroeconomic reason; as the supply of labor is higher than the demand. In Bangladesh, we do not have such skilled labor force for the packaging industry like the competitors. Our skilled workforce are not efficient enough even compare to the semi-skilled labor of China. The scrap rate is almost ten times in our industry compare to the Chinese people. Therefore, from the business people’s point of view it is difficult to sustain into the competitive market providing a higher rate of salary and wage rate.
Again political unrest, unions, mismanagement these are some of the common problems in our country. For the political intervention and unions, the company has to keep more employee than whatever they need. Again, those who are the actual workforce are not getting the full benefits provided by the company. In addition to his mismanagement is one of the most important reasons for selecting and maintaining the wrong workers which eventually decreases the company’s output level and quality of finished goods. The recent employee unrest in November 2005 is the mixed result of mismanagement and political intervention.
Minimum Wages (Monthly): •Apprentices/Trainee US $27. 00 •Unskilled US $43. 00 •Semi-skilled US $53. 00 •Skilled US $70. 00 Articles Collected: Hyperlink file Employment Disposable income Disposable income is the income of individuals after the tax deduction. Personal income is the total income of the households. Taxes, dividends from the corporations, social insurance payments must be subtracted from the national income before computing the personal income as they are received by the households. Two components must be added to the personal income; those are: interest income and transfer payments.
The amount of income that left for the households to spend or save is called disposable income or after tax income. Disposable income depends on the GDP trend of a nation. The history of Bangladesh reveals a steady and sustainable growth of GDP till date. There are ups and downs in recent years, but concerning the overall scenario it is pretty much shows a stable growth. Earlier 1990s the disposable income was growing at an increasing rate, the pace has reduced now days but still it remains at an acceptable level. The propensity to save has been reduced due to the government’s recent action taken by reducing the risk free rate.
Again the investments have been encouraged a lot. The savings has reduced at the same time the expenditure has tremendously increased, which opened the scope for Multinational Corporations to invest more into the nation. Therefore, we are now enjoying branded products like the developed world. The choice and preferences have been changed for the global international business. This is the indication of the early stage of development of a nation, which is favorable for the future growth of the Bangladeshi economy. Articles Collected: Hyperlink Disposable Income Business cycle
Business cycle represents the difficulties over the life period of the business. Throughout the life, cycle of the business there will be good times as well as bad times, which actually combines the cycle of the business. In a cycle, there must be an upward trend and a downward trend. These difficulties may vary from different dependent and independent variable of the economy of the country and may depend on the nature of the business. The prime objective of the Bangladeshi industries should be to attract the foreign buyer during November to February so that they can avoid the seasonal barriers.
Because from November to February we usually have less rain and the probability of other natural calamities is proportionately low. Again, if we can produce earlier then the pressure for the pick time will also reduce. Again, we will have enough time for the shipment of the product. The business cycle of Packaging Industry concentrated on RMG in Bangladesh is positively correlated to the investor as the pick time is much higher (8 month) compare to the off pick time (4 month). Therefore, the condition for investment into the Packaging Industry (producing Corrugated box) sector is still favorable for Bangladesh.
Articles Collected: Hyperlink file Business cycle Budget deficits Budget: Government the forecast of a government’s expenditures and revenues for a specific period. The period covered by a budget of the government of Bangladesh is a financial year that starts on 1 July of a calendar year and ends on 30 June of the next calendar year. Government budget contains the strategies for mobilization, allocation and disbursement of public money by means of fiscal and monetary operations with due consideration of political, economic, and bureaucratic decision-making process.
It developed in Bangladesh based on legal requirements, economy’s management needs, conventions, functional conveniences as well as accounting and auditing requirements, including transparency and accountability. Bangladesh is consistently facing a Budget deficit every year. From the history of trade of Bangladesh, have so few trade surpluses. There are various reasons for that like, excess demand than production, alarming population growth, dependency on foreign goods etc. In 1997, the budget deficit was around $1. 4 billion, which was at the pick in 2000, $2. 1 billion. Again, in 2003 it has gradually decreased to $1. 8 billion.
This trend is relatively higher among all the competitors of RMG sectors in southern Asia. One of the most significant reasons for this is the dependency on the foreign goods. In this regard, RMG along with Packaging and accessories sector can help us to overcome such problems. Currently we are producing in such a higher rate; we are satisfying our buyer demand as well as our local market. As a healthy portion compare to others are not being shipped to the foreigners, these undervalued garments are being sold into the local market at a much lower price. Which eventually, fulfill our local demand for cloths largely; especially the men’s wear?
Now we have to import less than whatever we are importing a few years back. As we are moving towards of reducing trade deficit, so with the increase of export, the usage of corrugated box is increasing. Articles Collected: Hyperlink file Budget deficit Socio Cultural Factors: Here we will discuss about the socio cultural factors that affect our Packaging industry (producing corrugated box for RMG sector). We will discussed about the following points: Demographics Social mobility/Diversity Lifestyle preferences New consumerism Levels of education Attitudes about the QWL Social values Demographics
Demographics refer to the combined set of the geo-political environment, population characteristics, culture and social values. For any kind of industry setup the evaluation of its demographics is very crucial. These demographic factors determine the competitive advantage as well as the sustainability of that particular industry. Similarly for Packaging industry in Bangladesh the demographic factors play a vital role. Packaging industry is a labor intensive industry. As Bangladesh is a high density and over populated country with low skilled labor, RMG and Packaging with all the accessories industry developed a lot in this country. Over opulation makes cheap and easy source of labor supply. In this country birth rate is very high than death rate and sex ratio is near to 1. Since female workers are the main working force for Packaging industry and there is no other such industry, packaging industry enjoys privilege over the labor supply. All these demographic characteristics make accessories along with packaging industry a sustainable and lucrative industry in Bangladesh. Articles Collected: Hyperlink Demographics in Bangladesh Social mobility/Diversity Social diversity refers to variety regarding social life style, perception about life, values, norms and morals.
The mobility indicates that the different social class also influences the mentality and attitude in society. Thus, social diversity also affects job criteria and work place environment. In Bangladesh various group of people live with social harmony. There are differences in religion, ethnic group, social and economic class. Annually, only the Dhaka city draws an estimated 300,000 to 400,000 mostly poor migrants who provide critical employment for the city’s industries and services. About 45% people live below the poverty line in Bangladesh (2006 est. ).
This huge portion of poor people is the major source labor for the Packaging industry. Since most people are not well established in urban area with suitable jobs, so after came to city they prefer low paid jobs like Packaging factories. Again, since they are helpless, employers can recruit them at a lower cost. Sometimes socially diverse group of people became the target of this job with a inferiority views. In Bangladesh, the social diversity depends on the economic class. Other than, this ethnic diversity is another minor reason for social differences but this is not a major one.
Sometimes religious differences cause social diversity also. In Bangladesh, the major ethnic group is Bengali and considering the religion it is Islam. However, Bangladesh is a secular country. Articles Collected: Hyperlink Social diversity in Bangladesh Lifestyle preferences The way general or most of the people live their life or expect to live is the preferred lifestyle. Lifestyle preference dictates peoples’ way of thinking and perception of social life. In society, peoples’ perception varies a lot in terms of lifestyle preferences.
Some prefer expenditure oriented life or some other may like to have savings type life. Therefore, this type of preferences influences demand and supply of labor. Strong competitions from other major Packaging products supplying countries, the working condition of workers are actually going down. For more profitability, factory owners are depriving the workers rights on every aspect. Therefore, the living standards for RMG along with Packaging Industry workers are very low in Bangladesh. Lots of research had conducted to improve the lifestyle of workers but none of them is sufficiently implemented yet.
Therefore, the lifestyle is still so far from the expectations. Articles Collected: Hyperlink Lifestyle Preferences New consumerism New consumerism refers to the movement towards the advanced customer service in terms of goods and related facilities. The movement seeking to protect and inform consumers by requiring such practices as honest packaging and advertising, product guarantees, and improved safety standards improves consumer satisfaction. This theory states that a progressively greater consumption of goods is economically beneficial. This way Industrial evelopment successively increases the consumer consciousness and ultimately improves the quality of products. Over the last few decades, Bangladesh economy is going through economic vulnerable condition. Inflation rate goes up to almost 7. 2% currently. One major reason for this high rate is lower investment. Currently about 24. 9% of GDP are invested in different industries. Again, another major reason is the currency devaluation against US dollar. Especially in last five to ten years, Bangladeshi TK depreciates a huge percentage against the US dollar.
Therefore, the purchasing power of general people goes down. All these forced to shift towards a new consumerism. Articles Collected: Hyperlink New consumerism Levels of education By educated or literate person it is used to mean that the person of age 15 and over who is able to read and write. Education is one of the basic rights, which are mostly ignored in third world countries like Bangladesh. According a survey around 43. 1% of total population of Bangladesh is literate by the definition of literacy. Among them 53. 9%, are male and 31. 8% are female (Bangladesh Bureau of Statistics, 2003).
For not only Packaging industry but also for the development, advancement of any industry it is very important to have educated workforce. Education improves the skill level and makes it easier to cope with changed technology. Since for the last two decades there is vast technological advancement in the Packaging sector, so it is crucial to have educated workers in the factories. Then it becomes easier to train them and employ them for better quality. At the end of the day, this skilled workforce will be the most competitive advantage over the competitors.
Articles Collected: Hyperlink Levels of Education Attitudes about the QWL Quality work life refers to the attitude and expectation regarding job environment, provided facilities and the implication of the set of such expectations on work life. Generally, people prefer jobs that sufficiently fulfill all the needs and guided to better life style. At the same time, it must have impact on the quality of work life. In Bangladesh Packaging industries used to value the employees particularly workforce by forcefully working them for longer time with appropriate compensation.
Beside this management have a common tendency to facilitate them using different motivation technique. But there are some die hard rules and regulation maintained by the factories. For example for few minutes’ late coming workers may loose the attendance for the whole day and thus refused to pay for that working day. Again late night working time or extensive or overtime work period is very common here. Many Packaging factories do not provide childcare center, medical center, dinning room, prayer room or even sufficient toilet facilities. These factors definitely decrease the quality of work life.
Because everybody has minimum expectations regarding work life and those are mostly regretted in Bangladeshi Packaging manufacturing plants. However things are changing. People are moving towards quality work life. Articles Collected: Hyperlink Working life of RMG workers Social values Social values play a significant role in business environment. It is actually a combined set of traditional attitude, norms, morals, ethics, philosophy, perception regarding life and social culture. Social values dominants peoples’ attitude towards business environment and guides the way of performance.
For any kind of industry, it is mandatory to set business operation and ethical, moral standard that is suitable to that particular country and society. In Bangladesh for local investors or business entrepreneurs’ social values consideration is not a big problem. Since they are familiar with the social values, it is not a great problem for them. However, this can be a serious issue for foreign firms that are doing business operation in Bangladesh. Social Structure a term loosely applied to any recurring pattern of social behavior or, more specifically, to ordered interrelationships between different elements of a society.
So local entrepreneurs will get extra benefit in investing in packaging industry. Articles Collected: (Vital information is not available) Technological Factor Here we will discuss about the technological factors that affect our Packaging industry. We have discussed about the following points: Speed of technology transfer New discoveries and innovation Effects of new technology on business structure in the country Information technology Product life cycles Focus of private & government supported R & D expenditure Speed of technology transfer
The major challenge for the woven factories in least developed countries like Bangladesh is that technological advancement erodes the advantage of labor intensity. Technological transfer refers to adapting a new technology that is new to the operating environment and that is more advanced than that is used previously. Recent times the speed of transfer of technology is very high. To satisfy the increasing demand of high quality products and to be competitive in international market Bangladeshi companies are introducing new machineries as well.
The globalization of business has increased the shares of international trade of the developing countries. Technological change has replaced labor-intensive garment manufacturing processes with new and advanced technologies requiring workers more sophisticated skills. This factor cause loss of comparative cost advantage of developed countries and shift in exports from more restricted to less restrict among the developing countries due to the discriminatory nature of the restriction imposed by the Multi-fiber Arrangement. The fast the technology can change or transfer from one to another form, generally people cannot.
This gap is wider for poor, developing countries like Bangladesh. Technological shift causes significant change in socio-cultural environment, business structure and operation and ultimately affects the workers working condition. The adaptability of workers with technological transfer provides competitive advantage over rivalries. Articles Collected: Hyperlink Technological Change and the Overall Impact New discoveries and innovation New and advanced machines and manufacturing systems make the production process much cheaper most of the times. This is also a key to achieve the competitive edge of an industry.
So for the last two decades a large number of new discoveries and innovation had take place regarding Packaging Industry Products manufacturing process. The pioneer of this trend is the China. Although china has competitive advantage over labor force, it invested a lot in technological advancement in order tot ensure better quality. To be competitive in Packaging industries, all countries all over the world are now focusing on advanced machineries and automated processing technologies. In Bangladesh, investors are interested to invest labor force rather than machineries since labor are very cheap here.
In contrast, establishment of new machineries and implication of new automated process system requires high skilled labor to operate and maintain those sophisticated systems. However, high skilled labor force is not very frequent here. So although there are lots of new discoveries and innovation in RMG accessories, such as: Packaging industries but those have little of no implementation in Bangladesh Packaging industry. There is lots of advancement in the automated process in Packaging sector. In each stage of process, new machineries are replacing human labor. Machines can do starting form fabric preparation to final product all works.
Fabric preparation, cutting, materials handling, fusing, sewing, pressing, finishing, dyeing everything can be done through the machines. Thus new discoveries and innovations directed Packaging industry towards the automated process to be competitive in the global market. Articles Collected: Hyperlink New Discoveries and Innovations Effects of new technology on business structure in the country Implementation of new technology means change in capital structure as well as the business operation. New technology essentially reduces the cost of production but increase the initial capital requirement for investment.
Since Packaging industry is a highly labor oriented industry by its nature and it is not possible to make it fully automated, Bangladeshi investors are not willing to change the business structure. Introducing new processing plants and manufacturing systems the business operation and maintenance system also change. This change is actually interrelated with the advancement of new technologies and information sharing mentality. Since in Bangladesh investors are not so much adaptive to the changes so it is difficult or them to manage changed business structure and doing business under the changes system.
Again new technology is definitely going to reduce the production cost with improved quality. With the change of technology the whole business structure changes. This change mostly affected by the employees. Especially labor oriented industries suffer a lot form thus change. Business structure change mainly hamper the job security and satisfaction level of the employees. Moreover, the change in business structure due to technological change influences to change the work relation between workers and the employers. Employees feel inferiority and think that technology if going to replace the job.
This is mostly common in unskilled labor oriented industry like Packaging in Bangladesh. Articles Collected: Hyperlink Effects of new Technology on business structure in the country Information technology Information Technology plays a very crucial role for merchandising different accessories of readymade garment industry. Information technology refers to the sourcing of latest information regarding the prices, quality, sources, places, technological advancement, shipping information, buyer – supplier communication and many more. In short, it is the key to be updated and enjoying competitive advancement.
In Bangladesh, information technology is not widely used for Packaging manufacturing industries. Although latest information can provide manufacturer many advantages over the competitors like China, they are not that much aware of its advantages. At the same time Bangladeshi Packaging, industry is not the cheapest source of Packaging manufacturing for the same reason. Introducing latest technologies like internet for updated information or LAN/WAN system in several processing zones under the control of central authority, flow of information can be made supportive and fluent.
In Bangladesh Packaging industry, the sharing of information with the workers is a rare practice. However, this actually tends towards the lower job satisfaction and ultimately lower productivity. Adaptation of new and advanced technology in this industry forces workers to be more aggressive. Another reason for this unrest is that due to limited sharing of information with the workers, workers relocation program frequently occur. This also tends to lower labor participation in the production process. Articles Collected: Hyperlink Information Technology Product life cycles
Product life cycle used to indicate the acceptance level or requirement about the product over its lifetime. It shows the product in which stage of its lifetime. For general products, it is a useful tool to analyze its acceptance level, but for Corrugated box needed for readymade garment products, this is not a very useful technique. Because there is always demand for clothing’s and this is something that is not going to decline. Therefore, Packaging products for RMG products are always in shakeout stage that means demand approaches saturation, replacements.
Since for Packaging products the mature or decline stages are not relevant, which is important is the replacement or change. To be competitive in the international market, Packaging Products manufacturers must be innovative in design, quality and service. In this regard Bangladeshi manufacturers are far behind the world class competitors. In Bangladesh Packaging industry there is little effort in innovative designs and better customer satisfaction. So certainly, this factor is pulling back the advancement of the Packaging sector related to RMG in Bangladesh.
Articles Collected: Hyperlink Not enough information available in the Websites. Focus of private & government supported R & D expenditure For long-term sustainability research and development is mandatory for any kind of business. Since in this globalization, era world is changing in a high rate and consumers’ preferences are changing in much more faster rate, there is not alternative of R for continuing business operation. In Packaging sector design and taste of preference is changing even within days.
So continuous adaptation and new development is must of this industry. Until 2007, Bangladesh has no dedicated research institute related to the apparel sector and its accessories along with packaging. RMG is highly fashion oriented and constant market research is necessary to become successful in the business. Here India has had a head start and Mumbai and Delhi are on line to become fashion centers on a global scale. At present whatever design work is done in the country, these are mostly carried out with foreign workers and experts.
BGMEA has already established an institute, which offers bachelor’s degree in fashion designing, and BKMEA is planning on setting up a research and training institute. These and related initiatives need encouragement possibly intermediated by donor-assisted technology and knowledge transfer. A facilitating public sector role can be very relevant here. For packaging industry, the government has a dedicated corporation, Bangladesh Packaging Manufacturer’s Association. Here in this organization, there should be research institute. Other countries have different research institutes.
For the last two-decade new and advanced technologies are frequently introduced in the RMG and Packaging industry. To meet the demand of improved quality and better productivity there is pressure regarding automated processing. To cope with the changed business environment, Packaging sector along with other accessories of RMG in Bangladesh need dedicated research and development institutes. Large allotment in this regard from both BPMA and government is mandatory for the survival of this sector in the future. Articles Collected: Hyperlink Focus on private and government supported R& D expenditure
Legal Factor Here we will discuss about the legal factors that affect our Ready-made garments industry. We have discussed about the following points: Specific laws Employment laws Trade union policies Labor training policies Taxation laws International trade agreements Specific laws There are specific laws for the business institutions in a particular business industry. The government and other related governing bodies set these rules and regulations for the business industries. They set these rules and regulations in such a way, so that the industry grows.
They do it to attract the investors in this industry. They also have to keep in mind that the business institutions from the foreign countries come in the domestic market and exploit the domestic market. The regulatory bodies also have to keep in mind about the people related to this business. They have to ensure that those people are getting their right. They also have to keep an eye on the environment issue. They also have to stop the environment pollution. After the government, in Bangladesh, there is Bangladesh Garments Manufacturing & Exporters Association (BGMEA), to monitor all the ctivities. BGMEA has the responsibility to ensure proper business condition for all its’ members, who are involved in the manufacturing garments business. They make all the rules and regulations for controlling the Ready-Made Garments (RMG) industry. They are there to protect and uphold the interest of the industry by helping formulation of government policies congenial to the healthy growth of the sector. They help the member units explore new markets by holding fairs and expositions. Articles Collected: Hyperlink Specific law for RMG Industry
Employment laws Employment Law regulates matters, such as, labor employment, remunerations, and conditions of work, trade unions, and labor management relations. They also include social laws regulating such aspects as compensation for accident caused to a worker at work, fixation of minimum wages, maternity benefits, sharing of the company’s profit by the workers, and so on. Most of these legal instruments regulate rights and responsibilities of the working people. Paper based packaging sector is labor-intensive business.
Bangladesh is getting success in this sector because of low wage rate. In Bangladesh, wage rate is low due to low living standard, un-educated workforce and unskilled workforce. Here, the workers live hand-to-mouth. To protect their rights, we need proper laws and regulation for them. This is necessary. These laws should be properly implemented so that, the employers cannot exploits them as they want to. The workers must also be aware of the fact. Articles Collected: Hyperlink Employment law Trade union policies Generally, Trade Union means an association of workers.
A trade union is an essential institution in an industrial organization. Trade union means any combination, whether temporary or – permanent, formed primarily for the purpose of regulating the relations between workmen and employers, or between workmen and workmen, or between employers and employers, or for imposing restrictive conditions on the conduct of any trade or business, and includes any federation of two or more trade unions. In the early 1980s, the military government of Bangladesh banned all trade union activities in the country.
Then an alliance of the National Federation of Trade Unions (NFTUs) emerged in the name of Sramik Karmachari Oikka Parishad (SKOP) to establish the democratic rights of workers as well as to fulfill their economic demands. Most NFTUs were in SKOP and since 1983, most trade union movements in Bangladesh have been organized under the leadership of SKOP. The opportunism and lenient attitude of the trade union leaders including SKOP gave the ruling regimes a chance to disregard the agreements signed between the government and the trade union leaders.
At present, the leaders of nineteen of the twenty-three NFTUs are included in the SKOP. After its formation, SKOP submitted a 5-point charter of demands for establishing their democratic rights and higher wages through rallies, torch processions, demonstrations, strikes, hartals, blockades etc. Articles Collected: Hyperlink Trade union International trade agreements The World Trade Organization (WTO) (OMC – French: Organisation Mondiale du Commerce, Spanish: Organizacion Mundial del Comercio) is an international organization that establishes rules for international trade through consensus among its member states.
It also resolves disputes between the members, which are all signatories to its set of trade agreements. Only one element of the ITO survived the General Agreement on Tariffs and Trade (GATT). Seven rounds of negotiations occurred under the GATT before the eighth round – known as the Uruguay Round —, which began in 1986 and concluded in 1995 with the establishment of the WTO. The WTO adopted the GATT principles and agreements. The packaging industry has the direct use of packaging products for export-oriented products.
Therefore, the international trade agreements increasing export of different products along with ready-made garments is very import. The STA and LTA formed the foundation of the MFA. During Tokyo Round, the US wanted a more effective mechanism of protection for its textile and clothing industry. The result was the Multi-fiber Agreement (MFA). The GATT- approved MFA allowed the use of quota restriction, a deviation from the GATT’s principle of non-discrimination and an explicit and effective form of Non-tariff Barrier (NTB). Articles Collected: Hyperlink International trade agreements ENVIRONMENTAL FACTORS
Here we have discussed about the environmental/ethical/ecologial factors that affect our Ready-made garments industry. We have discussed about the following points: Climate issues Environmental protection issues Human rights issues Pollution Recycling and environmental friendly issues Hazard prevention Green environmental issues Climate issues Environment the aggregate of conditions affecting the existence or development of life and nature. The overall global environment is declining fast and for Bangladesh, it has been doing so more rapidly during the last few decades because of many obvious reasons.
Bangladesh passed an act on environmental conservation in 1995. However, the environmental problems of the country are becoming acute because of population explosion, lack of adequate forest areas and nearly complete absence of any controlling measure on the part of industry or the transport system. Bangladesh is located in the low-lying Ganges-Brahmaputra River Delta or Ganges Delta. This delta is formed by the confluence of the Ganges (local name Padma or Podda), Brahmaputra (Jamuna or Jomuna), and Meghna rivers and their respective tributaries.
The alluvial soil deposited by these rivers has created some of the most highly fertile plains of the world. Most parts of Bangladesh are less than 12 meters (39 ft) above the sea level, and it is believed that about 10% of the land would be flooded if the sea level were to rise by 1 meter (3 ft). The highest point in Bangladesh is in Mowdok range at 1,052 meters (3,451 ft) in the Chittagong Hill Tracts to the southeast of the country. Articles Collected: Hyperlink Climate issues Environmental protection issues Environmental Laws are legal measures for the conservation and protection of the environment and ecology.
These laws lay down the rights and duties of citizens and public agencies in consonance with the global call for a healthy environment. Environmental laws existed in the country right from the 19th century; although they remained either unenforced largely or were vaguely known to the people and the responsible public agencies. The prevailing traditional practices were not conducive to environmental protection or conservation of resources. Some laws have also become redundant, as the conditions for which these were enacted do not exist any longer. There are certain environmental issues that the business people must take into consideration.
There are different laws and regulation for the protection of the environmental biodiversity. If the business people certainly caught while not exercising the environmental laws their business will be at stake. The laws that are mostly practiced in Bangladesh are stated below. Articles Collected: Hyperlink Environmental protection issues Human rights issues People working in Packaging like RMG are amongst the most marginalized group in any community. There are numerous barriers faced by workgroups worldwide, which prevent them from getting and enjoying their equal opportunities.
These barriers include: 1. Access to education – less than two per cent of people in poor countries attend school, though the level in Bangladesh is a little bit higher but quality is below the satisfactory level. 2. Access to rehabilitation, aid and appliances – only about two per cent of people in poor countries receive rehabilitation service that they require. 3. Poverty – in general, people are the poorest of the poor. According to World Bank estimates, one in five of world’s poorest people are disabled, and most of them fall within low and middle-income groups. 4.
Attitudes and negative stereotypes – these are commonly attached to the lower earnings group that often leads to discrimination and social exclusion. 5. In Bangladeshi about 1. 5 crore people are disabled having almost no education or healthcare facilities and lead a miserable life. Bangladesh Packaging manufacturers has already implemented some major steps to control the human rights issues. People working in Packaging Industries are getting the facilities from BGMEA, though there is a separate association for Packaging manufatuerers. Articles Collected: Hyperlink Human rights issue Pollution
Packaging Industry can pollute the environment more in terms of minimal way. There is a very little chance of water and air pollution by the packaging industries. As the scrap rate in our country is higher, the rate of solid waste is even higher. Packaging industry creates almost nil amount of solid waste. Commercial waste occurs due to the activity of offices, markets, stores, production plant etc. Industrial waste includes process unit residue, plastic, ash, packaging wastes, etc. Hazardous wastes comprise of explosives, radioactive materials, toxic materials, toxic chemicals etc. The wastage part of packaging industry is very important.
The paper-cut residue are sold to local people. These wastage are used for recycling purpose. So the total packaging industry is providing total value addition to the product, with negative environmental effect. A very popular way to improve waste management is the “3-R Principle” which is practiced by the packaging industries throughout the year. Articles Collected: Hyperlink Pollution Green environmental issues Keeping the environment pollution free is the most important challenge for the industrial nations. Our country is agricultural based and the pollution is much less than that of the developed nation.
Yet, we have to concern more about the green environmental issues before its too late. In our country we don’t have such practice of keeping the environment green, but we can follow some set structure of the developed nations. Such an alternative is Environmental Management System. Protecting the Environment is Everyone’s Job, And So Is Maintaining the EMS. Environmental Management System lay out tools and systems for the management of numerous environmental obligations and ensure to conduct activities without disturbing or minimizing the disturbance to the environment.
It is a system, which companies set in place to manage their environmental impacts, both current & future. An EMS integrates environmental management into a company’s daily operations, long term planning & other quality management systems. •EMS does not prescribe environmental performance. •EMS does not dictate environmental standards for pollution control. Articles Collected: Hyperlink Green environmental issues Risk of entry by potential competitors The threat of a new organization entering the industry is high when it is easy for an organization to enter the industry i. e. entry barriers are low.
In such a situation, new entrants could change major determinants of the market environment (e. g. market shares, prices, customer loyalty) at any time. There is always a latent pressure for reaction and adjustment for existing players in this industry. There are like 700 packaging factories in Bangladesh. The more innovation the more will be the competition: Packaging is very important for all kinds of consumable and non-consumable goods to be marketed and to make them available to consumers. So packaging can be said as a pre-requisite for every product. It works as a W-I-P (work-in-progress) for all garments manufactu