An ASSIGNMENT

On
“International Marketing on exporting Readymade
Garments to the United States”
Course No: MKT- 42

Prepared for
Md. Sadiqul Azad
Assistant Professor
Department of Marketing
Islamic University, Bangladesh

Prepared by
Group 1
Session: 2016-17
Department of Marketing
Islamic University, Bangladesh

Date of Submission: 28th November 2021

 Team Members
Name Roll Email

Rashedul Islam 1625012 [email protected]

Md Jakir Hossain 1625014 [email protected]

Md Mustak Ahmed 1625035 [email protected]

Shuvo
Ayesha Akter 1625066 [email protected]

Tajnuba Mehejabin 1625067 [email protected]

Doly
Muhtasim Iradot 1625079 [email protected]
Sakkor
Samar Dewan 1625082 [email protected]
Introduction

Bangladesh, the southern Asian country has a population of approximately 164 million people.
The economy of Bangladesh is significantly dependent on agriculture. But it’s great news for the
country that, garments sector (RMG) sector of Bangladesh has raised as the biggest earner of
foreign currency. This sector creates about 4.4 million employment opportunities and
contributes significantly to the GDP. Readymade garments (RMG) of Bangladesh are powered by
young, urbanizing, workers and most of them are women.

History of RMG Sector in Bangladesh:

The foundation of the textile sector was first established in the 60th decade of the 19th century.
For the first time, the industry exported shirts (Mercury shirts) to the European market in 1965-
66, which were produced from Karachi. In the latter, 9 exporting industries were available in
1977-78. The three largest industries at that time were Riaz Garments, Jewel Garments, and Paris
Garments. Among those, Riaz Garments was the most famous and oldest industry at that time.

In the earlier stage, Riaz Garments of Mohammad Reaz Uddin started its business with some
tailoring shop in the name of Riaz store. Later, the name turned into Riaz Garments from Riaz
store in 1973, and from 1978 the company started exporting products abroad by exporting 1
million pieces of shirts in the South Korean Company named “Olanda”. “Desh Garments” is
another pioneer of the Bangladesh RMG sector. In 1979, Desh Garments started a joint project
with the South Korean company “Daiyuu”.

At the same time, several garments were introduced such as-Stylecraft limited by Shamsur
Rahman, Aristocraft Limited by AM Subid Ali, Azim Group by Engineer Mohammad Fazlul Azim,
and Sunman Group by Major (Retd) Abdul Mannan.

By following the beginners of the RMG sector, some other discreet and hard-working
entrepreneurs started their RMG business in the country. From there, the RMG sector of
Bangladesh was developing day by day. Though this sector had passed various critical stages
through the path. In that time, we learned about child labor in 1994, and in 1995 we made our
garments industry free from child labor very successfully.

Present Situation of RMG Sector in Bangladesh:

The quota system was a great blessing for establishing our garments industry. We were strongly
benefited from using that. As a result, we can see a matured garment industry today. But while
the quota system was approaching an end in 2004, there were so many who got upset about the
RMG sector of Bangladesh. Though in the latter it can’t be affected here as the experts seemed.
We conquered the post-quota challenges and made that a successful story.
In the RMG sector of Bangladesh, there are more than 5000 garment factories (private statistics)
at the current time, employing more than 12 lakh laborers, where 85% of the labor force is
women. But, according to BGMEA, the number of garment factories in Bangladesh is around
4000. Now, the RMG industry is the country’s largest export earner with a value of over $27.9 bn
of exports in the last financial year 2019-20. It’s great news for us that Bangladesh is clearly ahead
of other South Asian suppliers in terms of the capacity of the ready-made garments industry.

Though there are various types of garments manufactured in Bangladesh, all the ready-made
garments are classified into two broad categories, where one is woven products and another one
is knitted products. Woven products include Shirts, Pants, and Trousers. On the other hand, the
knitted product includes T-Shirts, Polo Shirts, Undergarments, Socks, Stockings, and Sweaters.
Woven garments still dominate the export earnings of the country. From the BGMEA website,
it’s seen that Day by day knitted items production is increasing at a considerable rate and now
about 40% export earnings have been achieved from knitted products.

Contribution of RMG Sector to the National Economy:

The role of the RMG sector in Bangladesh’s economy is remarkable. It’s seen that, from the last
decade, the RMG sector contributes to the national economy at a considerable rate. About 76%
of the total export earnings come from the RMG sector. According to the latest data of
Bangladesh Bureau of Statistics (BBS), the contribution of merchandise exports to the country’s
GDP came down to 13.37% in the fiscal year 2017-18 from 13.95% in FY 2016 -17.
In 2014-15, the contributing share of exports to the economy was 15.98%, which slid to 15.47%.
On the other hand, Bangladesh registered a 7.81% GDP growth in FY18, which was 7.28% the
previous year. In FY18, Bangladesh’s GDP was Tk22,504,793 million at current market prices,
while overall export earnings from goods were Tk3,010,456.75 million. The RMG sector, the
lifeline of the economy, has contributed Tk2,513,471 million or 11.16% of GDP. The services
sector contributed 56% of GDP, followed by industry at 18.99%, and 34.82% for the agriculture
sector.

Potentiality of exporting RMG to the USA

The single largest market for "Made in Bangladesh" garments is the United States of America. In
2016, Bangladesh exported $5.5 billion worth of garments to the US market slightly less than the
$5.6 billion in 2015. Bangladesh is the fourth-largest supplier to the US following China, Vietnam,
and India. As for sourcing, the main event that is going on is the total US market is declining - a
$7 billion decline from 2015 to 2016. Most of this decline was in China's exports which is almost
more than $5 bn and all other major suppliers lost sales except for Vietnam which increased
slightly. So, Bangladesh is not doing badly over the past two years; it has lost a little as everyone
has. The challenge is to come in the next three years when the US demand for garments is going
to rise.

With the world economy starting to expand, we should see a large increase in the US imports of
garments. Bangladesh must prepare itself for meeting the rising demands.

The current picture is that there will be a strong rise in demand due to the rising American income
levels. Although the income earned by lower-middle and middle-class households has been
rather stagnant, it is starting to rise. We expect a strong market demand in the next three years.
Prices will also rise with this greater demand.

Over the next three years to export more to the USA, there are a number of actions that the
Government and the industry should ensure are done.

There are ten categories of garments that cover 75 percent of Bangladesh's exports to the United
States. While diversification is important to other categories, these ten represent the most
important areas for export increase.

International marketing decisions

International marketing decisions are the same as domestic marketing; the only difference is that
all marketing decisions are taken with reference to foreign or international markets (or
customers). More clearly,

Those firms planning to enter the global markets have to decide on the following key decisions:

1. International Markets Decision:

product, price, promotion, and distribution decisions are made for international buyers.

Whether to go for the international market?

2. Market Selection Decision:

To whom of which country to sell?

3. Market Entry Decision:

How to enter the international market?

4. Marketing Mix Decision:

Which type of marketing mix should a firm prepare?

5. Organisation Decision:

What type of organization should a firm adopt to manage the international business?

Let’s describe in brief these key decisions.

International Markets Decision:

The first few important questions a firm has to answer are should a company go for the
international market? Why should a company prefer to enter the global market? Does the
company capable to transact in international markets? Obviously, answers come from the
company’s current domestic market position and the types of opportunities available in the
foreign markets. When international markets seem to be more attractive and the company is
capable to exploit these markets, the company decides to enter the international markets.

In short, a company prefers to enter the international market in the following situations:

1. When companies have excess production capacity and there exist attractive opportunities
outside, and/or

2. When compared to domestic markets, foreign markets seem more attractive or profitable,
and/or

3. When a company has enough capabilities to deal with international markets, and/or

4. When domestic governments insist, force, and/or encourage businessmen for international
markets.

Market Selection Decision:

Once a firm has decided to enter the international market, the next important marketing decision
is market selection. As per the company’s present product mix, production capacity, and
proposed expansion strategy, it selects one or more countries to operate in. In the same way, it
has to decide on the type of foreign buyers to be served.

Market segmentation and target market selection are two basic issues in the decision. Initially, a
firm targets the most attractive and comparatively easy international markets. Global marketing
research can help a company to study international consumer behavior, segment the
international market, and select the few most profitable markets.

To assess international markets, the following criteria may be used:

1. Present market opportunities

2. Future market opportunities

3. Market share

4. Uncertainties and challenges

5. Cost-profit estimates

6. Return on investment

Market Entry Decision:

A firm has selected international markets to operate in. Now, the next imperative marketing
decision is a market entry, i.e., how to enter the market; which of the options to be used for
foreign market entry. There are several options to choose an appropriate entry strategy.

1. Exporting:

Exporting involves selling domestic products in foreign markets. It is an easier and common entry
option. Exporting consists of producing the products in the home country and selling or exporting
the same in the international market. There are two options in exporting, the first, the company
itself exports products in foreign markets, and, the second, the company exports through an
intermediate agency or agent.

Some entry options in exporting, as suggested by Philip Kotler, include:

i. Export Department:

A company maintains a full-fledged export department to sell its products in foreign markets.
The department is responsible for searching for export opportunities, promoting and selling
products, and performing all activities related to the export business.

ii. Opening Branch in Foreign Market:

Some companies open their branches or shops in foreign markets to serve consumers. The head
of the branch is responsible for all activities related to the promotion and distribution of the
company’s products.

iii. Appointing Traveling Salesmen:

Some companies appoint salesmen to search for customers in the foreign markets and serve
them. They collect orders and manage necessary procedures. They can help develop relations
with foreign agencies, retailers, and customers.

iv. Appointing Distributors:

In this entry option, a firm appoints agents, representatives, or middlemen in foreign markets.
They are responsible for carrying out all activities to promote and sell the company’s products.

2. Direct Foreign Investment:

A company sets up its own factory in other countries. It carries out all production and marketing
activities in a foreign land. But, the option depends on a lot of factors such as market stability,
costs of production and marketing, competition, government policies, and other factors
determining the favorableness of the situation. The company should select this strategy carefully
as there are considerable risks and uncertainties in some countries.

3. Joint Venture:

The joint venture is jointly owned and managed by host and foreign companies, by two
companies of two nations. A foreign company holds the necessary equity to get a voice in
management but not enough to completely dominate the venture. The structure of a joint
venture depends on government policies and the approach of the host country.

In underdeveloped and developing countries, many multinational corporations are operating as

joint ventures. For example, HMT represents a joint venture with Swiss Machines and Tools,
Proctor and Gamble have a joint venture with Godrej, Suzuki of Japan has with Maruti Udyog,
etc.

At present Indian governments and companies operate with more than 50 countries as joint
ventures. When a giant company invests directly in many countries, it is called a multinational
company (MNCc). There are several forms of joint ventures, such as mixed companies, joint
ownership companies, licensed companies, contract manufacturing, management contracts, etc.

Socio-Economic Environmental situations of the United States

Usually, culture is different from person to person, region to region as well as country to country.
The United States is one of the most developed countries in the world. The United States of
America has one of the most complex cultural identities in the world due to its immense size and
diverse heritage. Millions of immigrants from all over the world have journeyed to America since
Europeans discovered and colonized the land back in the 17th and 18th centuries. The culture of
the US is mixed, diverse, and open.
The economy of the United States is a highly developed free-market economy. It is the world’s
largest economy by nominal GDP and net wealth and the second-largest by purchasing power
parity(PPP) in 2021.

The nation’s economy is fueled by abundant natural resources. As well as a very well-developed
infrastructure and high productivity. Americans have the highest average household and
employee income. In 2019 GDP per capita was USD $64,674. In the next year, 2020 due to the
covid pandemic GDP per capita was down to USD $57,589. But in this year 2021 GDP per capita
is estimated as USD $68,310.

Product Decision
The product is at the heart of the marketing mix. If the product fails to satisfy the end-user or the
consumer in his/her needs, no additional efforts on any of the other ingredients of the marketing
mix will improve the product performance in the marketplace. If the RMG product that fails to
perform satisfactorily will not become more attractive to the buyer just because large sums have
been spent on an international marketing campaign.

Product policy
Product policy for international/export marketing has two major interrelated dimensions. This
Policy same to the RMG :
(1) product planning and development, and
(2) product strategy.
These are applicable to both a single product itself and the total product mix. The product mix
refers to the set (or assortment) of products that a company offers to customers. This assortment
may consist of one or more product lines as well as individual products not part of a product line.
Product lines are groups of products that are similar or have something in common – used
together, sold to the same customer, handled through the same distribution channels; or are
different versions (models) of the same thing. The important product policy questions facing the
international marketer are as follows:
●● Should the company keep a commitment to its existing product mix as the products reach
maturity?
●● How strongly should the firm follow a strategy of new product acquisition/innovation?
●● What are the organizational requirements for following each of the above approaches?
In the case of international export RMG in USA, product strategy translates into policy regarding
product adaptation or standardization (globalization). This is the extent to which the
international marketing company adapts (or customizes) its products to USA markets. Product
strategy together with market selection define the company’s export (international) marketing
strategy and can be shown in the framework of a product/market matrix.
Product planning and development
In international/export marketing there are four major forms of product development:

1. new product development or addition;

2. changes in existing products;

3. finding new uses for existing products;

4. product elimination.

All of these decision areas are important to the success of managing the product mix, although
primary attention is frequently given to the problem of developing, adding, and modifying new
products. Since any product may be at different stages in its life cycle in different national
markets, concern for potential new uses and product elimination is as necessary as concern for
the other facets of product development if a company is to operate effectively in foreign markets.

Product mix decisions

Determining the export product mix involves making decisions with regard to the breadth and
length of the product mix sold in a company’s foreign market areas. Our major concern in this
section is with those factors that affect such breadth and length. When these factors are used in
product mix determination the analysis should be individual product-market situational.

Product portfolio

One approach that has been suggested for achieving an optimal export product mix, both within
and across countries, is the product portfolio approach . The major assumptions of this approach
are as follows:

●● The two most relevant characteristics of a product portfolio are its expected return and its
riskiness.

●● Managers will choose to hold efficient portfolios that are defined as either maximizing
expected returns for a given risk or minimizing risk for a given expected return.

●● It is theoretically and operationally possible to identify efficient portfolios by a systematic

analysis of information for each of n products
Pricing decisions
The management of prices and price policies in export marketing is somewhat more complex
than in domestic marketing. Due to increasing complexity of markets, price decisions are
becoming more critical than ever. All markets are becoming more segmented, which results in
firms having to broaden their product lines with different products aimed at different types of
customer. Of concern to the export marketing manager are the following:
●● Pricing decisions for products that are produced wholly or in part in one country and marketed
in another (exports).
●● pricing decisions that are made on products produced or marketed locally but with some
centralized influence from outside the country in which the products are produced or marketed;
●● The effect of pricing decisions in one market on the company’s operations in other countries.

Pricing for the last type of purchaser involves the use of transfer prices. Other pricing decisions
include the following:
●● Determining the relationships between prices of individual products in a product line and
between products in the product mix;
●● Whether to offer bundle pricing or price by individual product or component;
●● Deciding, in larger companies, on the type and amount of central control to be exercised to
ensure that the price to ultimate consumers and users is maintained at a certain level;
●● Establishing a geographic pricing policy, for example whether or not to quote uniform
delivered prices, or free on board (FOB) factory prices.
The issue of differential pricing is important with regard to most of these decisions, especially
the differential between export prices and domestic prices. Decisions must be made on the
relationships between the prices of products sold in multiple national markets, that is, whether
the price to customers in one foreign market should be the same, lower, or higher than in other
foreign markets or in the domestic market.

Promotion
The promotion decisions faced by export marketing management can be reduced to the
following:
●● What messages?
●● What communications media?
●● How much effort or money to spend?
These decision areas are interrelated. Export marketing promotion takes various forms:
●● Personal selling: sales people are used to communicate primarily face-to-face with
prospective customers. Personal selling is person-to-person communication between a company
representative and a prospective buyer. The seller’s communication effort is focused on
informing and persuading the prospect with the goal of making a sale. The salesperson’s job is to
understand the buyer’s needs correctly, attach those needs to the company’s product(s), and
then persuade the customer to buy.
●● Advertising: a non personal presentation of sales messages through various ‘mass’ media,
paid for by the advertiser. Advertising may be defined as any paid message placed in a medium.
International or global advertising is the use of the same advertising appeals, messages, art copy,
stories, and so forth, in multiple country markets.
●● Sales promotion: all sales activities, which supplement and strengthen personal selling and
advertising. Activities usually are non recurrent and have a relatively short-run ‘life.’ sales
promotion as including all sales activities that supplement and strengthen personal selling and
advertising. For the most part sales promotion activities are of a relatively short-run duration that
add tangible value to the product or brand. The tangible value created by the sales promotion
may come in various forms, such as price reduction or a ‘buy one, get one free’ offer. The purpose
of a sales promotion may be to stimulate nonusers to sample a product or to increase overall
consumer demand. Also, sales promotions are designed to increase product availability in
distribution channels.
●● Publicity: any kind of news about a company or its products that is reported by some media,
and is not paid for by the company. Publicity, which is any form of nonpaid significant news or
editorial comment about a company, its practices, its personnel, or its products, is a major
component of the public relations activities of a company. Public relations is the marketing
communications function that carries out programs designed to earn public understanding and
acceptance: it should be viewed as an integral part of the export marketing effort. There are, of
course, some exceptions but the trend is toward closer coordination of public relations activities,
which are designed to accomplish marketing objectives.

Supply Chain Management and Handling Export Orders

The success or failure of the export business of a firm depends entirely upon securing orders
from buyers, delivering products in good condition at the correct time, and receiving payment.
 Figure: The export procedure

1. The Sale Importer makes inquiry from potential supplier. Exporter sends catalogs and price list.
Importer requests samples. Importer requests pro forma invoice (price quote). Exporter sends
pro forma invoice. Importer sends purchase order. Exporter receives purchase order.
2. Importer arranges financing through his bank.
3. Importer’s bank sends letter of credit (most frequently used form of payment). Note: for
alternative options for payment.
4. Exporter’s bank notifies exporter that letter of credit is received.
5. Exporter produces or acquires goods.
6. Exporter arranges transportation and documentation (obtained by exporter or through freight
forwarding company). Space reserved on ship or aircraft. Documents acquired or produced, as
required:
(a) Exporter’s license
(b) Shipper’s export declaration
(c) Commercial invoice
(d) Bills of lading
(e) Marine insurance certificate
(f) Consular invoice
(g) Certificate of origin
(h) Inspection certificates
(i) Dock receipts
7. Exporter ships goods to importer.
8. Exporter presents documents to bank for payment.
9. Importer has goods cleared through Customs and delivered to his warehouse.

Holding the export order

The inquiry and response
The initial inquiry or order for goods from a prospective foreign buyer may be unsolicited, or may
come from the efforts of an export management company, agents, or a company’s own efforts.
No matter in what form it may be received, every inquiry should be handled seriously with the
expectation that it may lead to a profitable sale. A leading business executive in one of the largest
South American countries made it a practice to make regular tours of inspection of his various
activities. When he was advised of the need for a piece of machinery, for additional raw materials,
or other items, he would rapidly scribble a letter of inquiry on a blank page of a pad of paper he
carried with him, slip it into an envelope, and have it mailed.

Order received directly from prospective importer

There is no such thing as a standard order form. Some companies merely use a letterhead; others
have regularly printed forms with spaces provided for all necessary information. As long as the
order contains the essential facts concerning the desired merchandise and how it is to be
shipped, no special form or procedure is necessary. When the actual order is received, the
exporter will normally send a confirmation of receipt, followed by a commitment to fill the order
if the exporter finds all of the terms and the payment arrangements acceptable. If there are any
problems the exporter should not agree to the sale until the problems have been resolved.

Order received from branch or representative overseas

Where the exporter has an overseas representative who visits the prospective customer the
representative may use a combination order form and sales contract. When the sales
representative has received approval from the exporter to accept the order the form is
completed and signed by both the seller and the buyer. All the terms of the contract are printed
on the reverse side of the form and may be considered legally binding unless changed by prior
agreement.
Performance of a contract
In the export business generally it is difficult to enforce performance of a contract. At the very
least litigation between the nationals of two countries is so expensive as to make it virtually
prohibitive. Both buyers and sellers, therefore, are likely to disregard a breach of contract if no
monetary obligation has been created or if no considerable damages have been created or
inflicted.
Export licenses
The need for export licenses, using the United States as an example, was given in the
Introduction. For potential exporters in every country, no contract to supply goods or services
should be accepted until the potential exporter ascertains that the material can be legally
exported. Export regulations are presently in a state of flux with changes occurring frequently.
Individual countries have their own export laws, and may control the export of products to
specific countries for reasons of national security, foreign policy, short supply, preservation of
cultural property, assisting of industries using domestic products, and revenue purposes.
Financing/payment and other terms of sale
A key element for the exporter in any transaction is assuring that payment will be made by the
importer. With the difficulties of international litigation, collection of overdue international
accounts may simply become impossible
The importer, or the exporter in some instances, will also normally specify which party is to be
responsible for making the following arrangements:
1. Getting the merchandise from the exporter’s plant to the port;
2. Getting the merchandise through outbound Customs;
3. Getting the merchandise aboard ship (or other mode of transport);
4. Paying for the freight;
5. Paying for insurance.
Importance to management
There are many reasons that export marketing managers should be concerned with the physical
distribution of their companies’ products. The price that the ultimate user in foreign markets has
to pay is strongly influenced by the way in which the product is physically moved from the
manufacturer/exporter
Decision areas
Nature of the shipment
Transportation
Warehousing
Materials handling
Carrying inventory
Order processing and documentation