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SWOT Analysis of Footware Industry

The document provides a SWOT analysis of Bangladesh's export-based footwear industry. Strengths include government incentives for exporters, availability and quality of leather raw materials, and low labor costs. Weaknesses are a lack of incentives for materials beyond leather and less active industry associations. Opportunities exist in the small size of the sector and low production costs. Threats include price competition from China due to lower costs and more advanced technology, as well as the lack of last factories in Bangladesh.

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Danish Sarwar
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145 views4 pages

SWOT Analysis of Footware Industry

The document provides a SWOT analysis of Bangladesh's export-based footwear industry. Strengths include government incentives for exporters, availability and quality of leather raw materials, and low labor costs. Weaknesses are a lack of incentives for materials beyond leather and less active industry associations. Opportunities exist in the small size of the sector and low production costs. Threats include price competition from China due to lower costs and more advanced technology, as well as the lack of last factories in Bangladesh.

Uploaded by

Danish Sarwar
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
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Export-based footwear Industry

SWOT Analysis:
Strength:

 Government Incentive: The government provides subsidy for the exporters to promote
export in the country. This is a huge strength of the industry. There are mainly two kinds
of government incentives.

1. An incentive is given when a new shoe exporting business begins for the first
time. In this sort of incentive, the company does not need to pay any tax for initial
five years of its operation.

2. The second type of incentive is that the company gets incentive of 15% for every
export they conduct.

 Availability of raw materials: This is another big strength for the shoe exporters. The
main raw material for shoe is the leather that is pretty much available in our country. The
amount of leather is more than enough to meet the present demand of shoes. Moreover
there are enough tanneries in the country mainly in Hazaribag to support this industry.

 Quality of leather: Besides the availability in the country, the quality of the leather is
also very good. This leads to better quality of product when compared against close
competing shoe industries of other countries in the export market.
 Cheap labor: Another important strength for the industry is the cheap labor available in
the country. In Bangladesh the labor is very cheap; according to an interviewee raw
labors are available for only Tk 1500-2000. This cheap labor helps to reduce the price of
Export-based footwear Industry
the finished goods. Ultimately the producers and the exporters gain a lot from the low
cost in production.

 Scarcity of trade unions: In our country, the trade unions tend to create many problems,
leading to maximum export losses. In this sector there is not much of trade union, or it
can be said there is no trade union as the sector is very small.

Weakness:
 Not enough incentive: Although the government is giving incentives for promoting the
industry, according to the producers and exporters, it is not enough for this sector. The
government is giving 25% incentive to the garments industry and now as the quota for
garments is being withdrawn the government has to care more about that area. But the
shoe sector is not very large, it is rather small. It will be easier for the government to
control and make improvements in this sector. Though there are incentive for shoes but
there is not much incentive for leather or other raw materials. As a result the cost of
production is mostly raised.

 Associations are less active: There are two associations for this shoe industry. One is
“Leather goods & Footwear Manufacturers & Exporters Association of Bangladesh” that
is located in Banani and another association is the “Bangladesh Finished Leather goods
& Footwear Exporters Association” located in Dhanmondi. These associations are not
very much active to help the sector promote. This is certainly a weakness for the industry.

 High price of leather: Though the leather is very much available in country but the cost
of leather is high. The main reason behind this is said to be the huge overhead cost.
The high price of leather increases the production cost of the end product.
Export-based footwear Industry

 Technological disadvantage: The technology in our country, Bangladesh is not very


advanced. The exporters are thus facing problems competing against technologically
advanced competitors like China.

 Less buying house: Another problem that the shoe exporters are facing is the small
number of buying houses. As the number of buying house is less, most of the buying
houses are doing oligopoly over the producers. Sometimes or most of the times the
producers are facing loss for this buying house.

Opportunity:
 Small sector: The shoe sector of Bangladesh is not very large comparing to the garments
sector. So it is easier to handle this sector. It will be easier for the government to do
something better for this sector.

 Less costing: As mentioned before that the labor cost is very cheap in our country.
Moreover, the raw materials are available easily. So the costing of production is less
when compared to India and Pakistan.

 Leather Technology College: There is a leather technology college in Bangladesh. So,


in near future it is expected that more work and development will be done on leather and
shoe sector. That will help the shoe sector of Bangladesh to compete with other countries
of the world.
Export-based footwear Industry
 Government incentive: Bangladesh government gives incentive to the shoe exporters to
boost this sector. So, the exporters are one step ahead of others from this point of view
and moreover there is always option for the government to increase the incentives.

Threat:
 Price competitiveness: This is price competitive world. The main competitor of
Bangladesh in China and is giving product at a very lower price than that of Bangladesh.
China’s technology and manpower are boosting up their sector as well enabling them to
curb down the cost of production. In Bangladesh mostly cow leather is used but in China
they mostly use pig leather that is much cheaper than our cow leather. For example, the
cost for cow leather per square feet is $1.50 on other hand the cost for pig leather per
square feet is $0.50. It is a big threat for our exporters.(Source: Interview)

 Last factory: There is no last factory in Bangladesh. But it is very important for the shoe
production. Last is the thing that is made of plastic in size of feet. That is put in the
machine and the shoe of that size comes out. In Bangladesh they make on standard size
of 5,6,7,8,9,10 (Bata standard) but as there is no last factory it is difficult to change the
size. But out neighbor competitor India has that technology and gains a huge advantage
over it. In India it is possible to give the buyer a sample of the shoe while the buyer takes
a tour of the factory facility but in Bangladesh it takes 2/3 days to do so as it need to be
sent to India for last. (source: Interview)

 Technology: In Bangladesh the technology in not very advanced comparing to the


technology that China has. As a result China is having the competitive advantage over
Bangladesh. For their high technology China is being able to keep the price very low.
This technological inequality is a huge threat.

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