Assignment Sample on C10IB1 International Business Management
Introduction
With the 37th largest economy in the world, Bangladesh’s economy has been characterized amongst the developing countries with a growth of 5.5% in its GDP rate in 2021 (Mia, 2017). According to the annual business reports, Bangladesh is included in one of eleven emerging markets that continue to grow even after facing an economic crisis in recent years. Even with various setbacks and production downfall, Bangladesh managed to maintain its economy since 2011. Before the COVID-19 outbreak, the country’s annual report declared an overall GDP growth rate of 6%, which increased by 2.2% by the end of 2019 (Sarker et. al. 2018).
When the deadly pandemic hit the world, the GDP of Bangladesh remained green, indicating a rise of 3.8% in 2020 (Reza et. al. 2017). According to the International Monetary Fund, the GDP of Bangladesh is expected to rise by 4% by the end of 2021 and 7% by the end of 2022. With the world’s lowest wage rates in Bangladesh, the country’s export economy is directed through RMG manufacturing. Although the agricultural sector in Bangladesh dominated more than 40%, the agricultural share in GDP accounted for not more than 13% in 2017 (Islam, 2019).
Dhaka, the heart of Bangladesh, is the political, cultural, technical, and financial base that is expected to be the country’s economic hub (Murshed, 2020). Bangladesh has been a leading financial sector for the past two decades, the third-largest growing economy in the Indian subcontinent. Bangladesh is an export-oriented country which key export services in industries like leather goods, textiles, shipbuilding, seafood, and fishing. Apart from these industries, Bangladesh has expanded its pharmaceutical business and steel manufacturing business since 2015, which has consistently added to the GDP growth of the company (Mosharraf et. al. 2019). The telecommunication sector of Bangladesh is yet another rapidly flourishing company that increased its revenue over the years.
Political issues
Bangladesh is a country with parliamentary democracy (Riaz, 2016). The taxes come from corporate taxes and personal income taxes in the country, and 15%VAT levied on various consumer goods. Concerning trade relations, the nation has maintained quite good relations with the US. The present ruling party in Bangladesh is Bangladesh Awami League. This is the current governing party of the nation, which is keeping high expectations from the Joe Biden administration.
This ruling party of Bangladesh will remain the active and dominant force in the country’s politics till 2025. The political environment of Bangladesh affects the operations of the business, including Consumer Goods Company. As per the International monetary fund, the GDP of Bangladesh has reached $329.12 billion in 2019-20, with a yearly growth rate of 3.8 percent.
In 2019, the selected nation was found as the 46th largest trading partner of the US. In this year, two-way trade between Bangladesh and the United States touched $9.0 billion. It is an increase of 10.2 percent from the last year. The US can be considered Bangladesh’s principal single nation export destination and the third-largest source of imports for Bangladesh.
The political aspects of the country take place in a model of parliamentary representative Democratic Republic (Mahbub and Jongwanich, 2019). The head of the Government of the country is being considered the Prime Minister. The Government of Bangladesh exercises the executive powers. However, the legislative power is vested in Parliament as well as Government. In 1972 the constitution of Bangladesh was written and had undergone approx. 17 amendments.
Corruption in Bangladesh is a major problem, and it has been identified as one of the most corrupt countries globally. Anti-corruption Commission was formed in 2004 in Bangladesh. However, it is considered ineffective in preventing and investigating corruption cases due to the governmental control over it. The causes of corruption affect the overall sectors and industries of the country (Chan et. al. 2016). The major dimensions are rent-seeking, inappropriate uses of government funds, bribery, long-time delays in-service performance, and irresponsible conduct from the officials.
There are also some social issues in the country, including religious freedom, modernity, and women’s right (Kawser and Samad, 2016). These need to be dealt with as soon as possible.Also, the pandemic has forced the Government to change the regulations and rules of the political system for business functioning and international trading. Therefore the companies are required to adopt these policies while operating in the international and domestic market.
Economic factors
As per an estimate, the annual GDP of the country has been identified as 348 billion dollars in the year 2020. This has been said as the 35th highest all over the world. On the other side, the per capita income was 5138 dollars. This has been ranked as one 35th highest globally (Bhuiyan et. al.2020). However, the pandemic has decreased the growth of the country. In this scenario, it is important to note that the plan of the Government to introduce an 8573 million dollar recovery package to the business is also significant. This package of Government and this initiative will help generate numerous employment opportunities and thus ensure further growth.
The service industry of Bangladesh is one of the biggest contributors to the overall GDP. It contributes around 53.5%. This also includes technical expertise as well as freelancing (Islam et. al. 2016). The Government is planning to amplify it by the end of 2021. Cotton Industry is also a second crucial sector of Bangladesh which contributes around 28% to the economy. Another crucial sector is agriculture which adds value by 13%.
The covid-19 outbreak is an economic crisis for the global economy. This is impacted the Bangladesh economy as well. This has forced the companies to stop their operations, and this caused loss of jobs for millions of workers (Farid et. al. 2015). This has declined the sales volume and affected the economic growth rate. The pandemic has made a catastrophic impact and pressure on the labor market of the country. Various people have lost their jobs due to the lockdown and economic slowdown. The situation mostly affected the urban employment that has been resulted in reverse migration, poverty, and inequality.
This has reduced the opportunities available for youth skills development and also shared the opportunities for upcoming graduates. The lockdown policy of the Bangladesh government has made the largest jobs destruction in history. This has been due to the coronavirus outbreak. Thousands of individuals abroad and at home have lost their employment. Various technicians, field officers, and administrative level officers are also included in this. Apart from this, the lockdown policy has saved the public from infectious disease but increased the living cost. The increasing unemployment rate and growing spending enhance individuals’ frustration (Sultana and Fatima, 2017).
It is evident that economic development has fallen in recent years due to the pandemic and global crisis. The International Monetary Fund has predicted that the country will increase it by 9.5 % in the coming year. The Government is planning to develop more packages and employment opportunities for people in the upcoming days. Bangladesh earns a lot of revenue from export to other countries. This decline in the income source has reduced the level of investment and changed consumers’ buying patterns. Due to covid-19, people prefer saving their money for future expenses and uncertainties instead of investing and consuming the same. This has reduced the profitability and production of the country.
Consequently, to cut costs and survive, various companies have adopted the layoff policy. Investment is a crucial factor in a country that affects the protection capacity of a business and thus economic growth. This pandemic has made investors, including the domestic and foreign-made, feel insecure about investing in the country. This is the major obstacle for the generation of employment opportunities for graduates and postgraduates.
Social factors
The consumer goods industry is one of the country’s biggest sectors, serving domestic consumer goods companies (Shahabuddin et. al. 2017). The country’s middle-class population, combined with the rising per capita income, emerged as a strong propagator for the industry’s growth. The affluent and middle-class people of Bangladesh are about to reach 34 million in the upcoming 5 years. The pandemic has largely impacted the country’s demands of consumers. The sudden variation in the demand for consumer goods has affected the overall industry. The income level of the people has also been adversely impacted due to the pandemic. This has created an influence on the consumer goods firm of Bangladesh. However, the country has experienced a dramatic drop in consumer goods firms’ sales compared to other sectors. Considering the culture, Bangladesh is a nation with an amazingly rich culture. This can be identified and observed by the clothes, dance, music, and architecture.
The major three religions in Bangladesh are Islam, Buddhism, and Hinduism. The urban population of the nation is about 39.4%, and the remaining is in rural areas. The people who are indulged in business activities mainly interact in the English language and the rest communicate in Bangla. The country is a believer in hierarchical values, and Youngers are taught to value and respect elders (Barikdar et. al. 2016). This practice and value are also applied to the business section. The country’s best part is that everyone has a high tolerance for each other’s practices and belief systems.
After the pandemic, there has been a short-term high spike in the essential products and commodity demands. The industry has not been able to satisfy the growth of the demands of consumer goods products. In this context, the superstores and departmental stores have reported stock-outs. Due to the global supply chain disruptions, sourcing raw materials has become challenging for numerous manufacturers. This has resulted in products shortage and an increase in pricing (Belal, 2016). The major pillars of this industry in the nation are the rapid rural to urban immigration and the rise of the middle class. The job opportunities are concentrated in several urban centers, and thus it is experiencing immigration.
The design and manufacturing of the consumer goods business in Bangladesh has its distinguished features, including technology, low capital intensity, and third-party manufacturing. The marketing and distribution expenses in the nation have high initial launch costs, limited mass media options, and a huge distribution network. On the other side, the major problems in the country’s consumer goods sector have been identified as lack of research and development, highly competitive market, lack of brand loyalty, and easy entry. The consumer demands of the country are unpredictable, and in this context, the sector is required to conduct detailed market research and analyze consumer demands (Hossain et. al. 2017). Also, it is recommended that as the social forces have a strong impact on the overall business sector and thus the investment should be done in the research and development. The Government can also make efficient and reliable measures to avoid illegal business activities and fake product marketing. In a nutshell, it is said that the social dimensions, including the culture and values, drive the business sales and revenues. The social and cultural forces have a strong influence on the overall development of the consumer goods industry in Bangladesh.
Operational
Bangladesh has had a world-class record of reducing poverty and increasing its economy over the past decade (Soewarno and Tjahjadi, 2020). The country’s economic system was found to be among the fastest emerging economies, with a growth pick-up rate of 6.4%. After the independence, Bangladesh was counted as one of the poorest nations with the lowest per capita GDP. The per capita GDP eventually increased, and the lowest status reached to lower-middle-income status in the mid of 2015 (Islam and Haque, 2018). With increasing relationships with New Zealand and adjacent countries, there has been vital inflation in two-way trade that increased 8.8% in 2020. The government is constantly working towards strengthening two-way ties with New Zealand, Australia, China, and the UAE so that they can contribute more towards the economy of Bangladesh.
New Zealand has positively reacted towards growing its business relations in textile, readymade garments, pharmaceutical companies, and the healthcare sector (Mia, 2017). All the above-mentioned companies not only signify domestic and international market growth, but these businesses will perform tremendously, impacting the macroeconomic objectives of the company. With time, Bangladesh has created numerous jobs, mostly for women in the private sector (Bangladesh’s Economy, 2021). With the increase in job opportunities, the export earnings accounted for ready-made garments augmented 9.5% in 2010, which further rose to 14% in 2015 (Sarker et. al. 2018).
Apart from textile, production, food, and pharmaceutical companies, the shipbuilding and shipbreaking industry has a vast network operating in Bangladesh and outside of the country (Soewarno and Tjahjadi, 2020). The annual report notices a great potential for expansion in the shipbuilding industry in the future. Compared with other Asian countries like China, Japan, Iran, and South Korea, Bangladesh could be the global market competitor that may employ more than 2 50,000 employees by the end of 2022 (Reza et. al. 2017). The COVID-19 pandemic affected the worldwide economies, yet the country managed to deal with the crisis by adopting effective finance models and economic stimulus.
Although Bangladesh could be the future of the Textile, agriculture, shipbuilding, and pharmaceutical industry, there are certain challenges that the country can face (Islam, 2019). When compared with other markets, the export revenue to Bangladesh considerably decreased from 18.1% to 14% in 2020. To recover its economy successfully, the country needs to focus mainly on addressing OVID-19 challenges like vaccinating its entire population (Soewarno and Tjahjadi, 2020).
The shipbuilding industry aims to create jobs by the end of FY2022, yet other industries face employment problems in an extremely competitive business. Addressing all these gaps eventually will lead to a more sustainable economy in Bangladesh. Despite various complications and manufacturing downfalls, the country grew its relation both in global and domestic markets (Economic Update for Bangladesh, 2021). Amid COVID-19, Bangladesh has shown resilience and immense recovery, which positively impacts the countries’ economic growth. Moreover, the country constantly enriches its resources and has developed a strong inflow so that its economy and GDP are increased with time.
Conclusion
The financial bureau of Bangladesh has recorded a gradual increase in its annual GDP rate from 5.25% to 7% since 2019. This increment was recorded as the highest increase in GDP rate among the Asian countries. The government has decided on the exclusive 8th five-year plan on different growth parameters that will revise the budget target for all five years in Bangladesh. Undoubtedly, every economy notices inflation and deflation depending upon the market condition, yet the country has prioritized various sectors to recover the economy by the end of 2024.
Despite the country having progressed significantly well in the pandemic period, the UN evaluation committee has suggested transforming domestic and international business. After noticing the economic growth in the past five years, the government of Bangladesh proposed a definite growth target of more than 21 percent by the end of 2021. There is a greater need to boost industrial sectors like textile and agriculture as the share of these industries is considerably low in Bangladesh’s GDP.
The pharmaceutical sector has also performed well with textile industries, providing high export growth of 17.6% in 2020. The production and manufacturing of antiviral drugs during the COVID-19 crisis positively impacted Bangladesh’s economy.
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