Understanding Globalization of Markets and Production
Question:
Discuss about then Using Globalization to Further the Prospect of DesignCrowd.
DesignCrowd was chosen as a startup company in Part A of the same study. The first part had shown the kinds of different strategies that the company will adopt. Now, this study is based on identifying a future prospect from a selected perspective. Globalization is selected for the purpose and will be utilized to see whether there is any prospect for the selected startup business. The paper identifies some prospect for the already chosen business in Bangladesh. The paper proposes a suggestion to include the cloths in the product line specifically manufactured under the name of DesignCrowd. Moreover, customers will be able to identify their selected brand. The decision to select Bangladesh to manufacture the cloths is driven by a fact that globalization offers a widened market, which makes resources available that are not accessible in the home country (Phillips, 2014). The study is aimed at understanding the utilization of globalization to further the business of DesignCrowd.
Globalization is done in two ways like globalization of markets and globalization of production. Globalization of markets can be understood as one single market that has been created by a particular brand. It means that a particular brand will offer products, which will be appropriate to the target culture but must maintain the trademark quality unique to the brand only (Beck, 2015). Globalization of production means access to services and goods from different locations across the world to get benefit in terms of cost of materials & labors, reduced restrictions of the regulatory framework and enhanced technological tools (Beck, 2015).
Globalization has redefined the business and sourced the foreign goods and services to local regions. Such a big exchange of goods and services had required the governance of a regulatory framework. Moreover, it laid the foundation of few such governing bodies like the World Trade Organization (WTO), World Bank, International Monetary Fund (IMF) and United Nations (UN) (McBride, 2016). All had arrived to serve the different purposes. Attempts were taken to facilitate more and more globalization with reduced barriers.
Cheap labor costs and the raw materials have driven the perception towards selecting Bangladesh. The plan is to get the benefits from the globalization of production as this will help to facilitate manufacturing at a much competitive price (Anisul Huq, Stevenson & Zorzini, 2014). The strategy will be to outsource the manufacturing of the selected line of clothes to Bangladesh, which means that DesignCrowd will not rely upon over Bangladesh as a whole (Anisul Huq, Stevenson & Zorzini, 2014). Globalization of production may also arise some barriers. In this regard, business relationships between Australia and Bangladesh will be important (Anisul Huq, Stevenson & Zorzini, 2014). Outsourcing will only be profitable if there are fewer barriers and many opportunities (Willcocks, Lacity & Sauer, 2017).
Labor Cost
It is even cheaper than China. Interestingly, China is also considering Bangladesh to outsource the manufacturing process. The reason is the incrementing GDP of the country, which has contributed to raising the minimum wages. Factories are losing its competency. Moreover, manufacturing in China is now costlier (BBC News, 2017). On the other hand, cheap labor costs in Bangladesh will be a good option for DesignCrowd. Outsourcing will enable the company to offer clothes at competitive prices in Australia. However, there will be the need to maintain an effective communication with the outsourced agency. An effective communication will help to monitor the manufacturing process, which is a challenge in an outsourced business (Shockley-Zalabak, 2014).
Reducing Barriers and Facilitating Globalization
Trade relationships between Australia and Bangladesh-
Australia is one of the potential trading partners for Bangladesh. There exists a bilateral trade of above one billion American dollars annually (Bhcanberra.com, 2017). The bilateral trade is steadily progressing. Additionally, Bangladesh gets benefitted from quota and duty-free access to Australia. This is an added advantage, which will prove the competency of the outsourced manufacturing. Bangladesh is already in exporting relations with Australia for readymade garments, knitwear, woven fabrics, leather goods, cotton, fertilizers and much more. The growth of exporting goods has dramatically increased from Bangladesh. In just five years from 2009-10 to 2014-15, the import values have risen from 110.79 US$ Million to 500.89 US$ Million (Bhcanberra.com, 2017). This just means that business should not have many barriers.
As discussed earlier, there are ample of benefits of manufacturing in Bangladesh. The identified reasons are low labor costs and free duty access to Australia. However, there are some challenges as well. The unstable political condition is one of such issues (Yunus & Yamagata, 2012). Violent labor protests are a very common scenario. The protest is for their several demands, which is ethical as well. They are demanding improved policies for monthly wages and the working conditions. They have also complained that there are few western companies, which are in favor of hiking the wages. However, the political leaders have been defiant in their part. They used to say that the monthly wages have recently been hiked (Yunus & Yamagata, 2012). The industry is missing in terms of a balanced relation between the monthly wages policies and the competitiveness of factories. Moreover, a repairing is indeed required that will probably keep on attracting numerous such protests in future as well (Yunus & Yamagata, 2012).
An unstable political condition in Bangladesh is an identified challenge. This may at any time disrupt the business. Strikes are an evident outcome of such circumstances. The political condition is unstable due to various reasons. One of such reasons is the protesting demands of labor activists. They are fighting against the low labor wages and an insufficient working condition. Western companies are ready to fulfill their demands; however, the political parties are defiant in this part. This is probably a bigger concern for the clothing manufacturers (Bhuiyan, 2012).
To DesignCrowd, it is necessary that suitable decisions are taken on appropriate occasions. At the moment, the startup business is only planned. The planning will come alive in the format of a retail store in Australia. For the company, this is more necessary to generate a healthy cash flow. Moreover, the company is aimed at attaining a profitable venture in the next two years. The initial action should be limited only to gain a profitable venture (De Mel, McKenzie & Woodruff, 2014).
The cash generated from the profitable venture will then be utilizable for the proposed outsourcing of manufactured clothes from Bangladesh. The first and foremost priority for the instance is to create some identity in the market. Once the customers are familiar with the stores, this will open up ways for few other stores. Hence, there will be an increase in the inward flow of cash. Moreover, the company will then be in a state to spend some money on the proposed import relationships with Bangladesh (De Mel, McKenzie & Woodruff, 2014).
Conclusion:-
To conclude, DesignCrowd will have better prospects in Bangladesh. However, they need to ensure few things. The first and foremost will be to wait until the time they have sufficient funds. Once they have the required funds, they will be able to move to outsourcing of manufacturing in Bangladesh. However, they will be needed to take the help of a consulting firm who will guide on how to approach the manufacturers in Bangladesh. The firm will also support the list of manufacturers. Moreover, the firm will teach on every technicality, which is involved in starting up an outsourced business.
References:-
Anisul Huq, F., Stevenson, M., & Zorzini, M. (2014). Social sustainability in developing country suppliers: An exploratory study in the ready made garments industry of Bangladesh. International Journal of Operations & Production Management, 34(5), 610-638.
BBC News. (2017). Chinese factories turn to Bangladesh. [online] Available at: https://www.bbc.com/news/business-19394405 [Accessed 20 Dec. 2017].
Beck, U. (2015). What is globalization?. John Wiley & Sons.
Bhcanberra.com. (2017). Bangladesh – Australia Trade Relations | Bangladesh High Commission Canberra. [online] Available at: https://www.bhcanberra.com/trade-investments/bangladesh-australia-trade-relations [Accessed 20 Dec. 2017].
Bhuiyan, M. I. (2013). Reasonable wages for workers to eliminate unrest in Bangladesh’s ready-made garments (RMG) sector.
Bhuiyan, Z. A. (2012). Present status of garment workers in Bangladesh: An analysis. IOSR Journal of Business and Management (IOSRJBM), 3(5), 38-44.
De Mel, S., McKenzie, D., & Woodruff, C. (2014). Business training and female enterprise start-up, growth, and dynamics: Experimental evidence from Sri Lanka. Journal of Development Economics, 106, 199-210.
McBride, B. (2016). The Globalization of Adoption: Individuals, States, and Agencies Across Borders. Cambridge University Press.
Mohanty, M. K., & Gahan, P. (2012). Buyer supplier relationship in manufacturing industry-findings from Indian manufacturing sector. Business Intelligence Journal, 5(2), 319-333.
Phillips, J. (2014). A comparison of Coalition and Labor government asylum policies in Australia since 2001. Parliamentary Library.
Shockley-Zalabak, P. (2014). Fundamentals of organizational communication. Pearson.
Willcocks, L. P., Lacity, M. C., & Sauer, C. (Eds.). (2017). Outsourcing and Offshoring Business Services. Springer.
Yunus, M., & Yamagata, T. (2012). The garment industry in Bangladesh. Dynamics of the Garment Industry in Low-Income Countries: Experience of Asia and Africa (Interim Report). Chousakenkyu Houkokusho, IDE-JETRO
Order an Essay Now & Get These Features For Free:
Turnitin Report
Formatting
Title Page
Citation
Outline
