Bangladesh officially the People’s Republic of Bangladesh. is a country in South Asia. It shares land borders with India and Myanmar (Burma). Nepal, Bhutan and China are located near Bangladesh but do not share a border with it. The country’s maritime territory in the Bay of Bengal is roughly equal to the size of its land area.
Bangladesh is a middle power and a developing nation. Listed as one of the Next Eleven, its economy ranks 46th in terms of nominal gross domestic product (GDP) and 29th in terms of purchasing power parity (PPP). It is one of the exporters in the world. Its major trading partners are the European Union, the United States, China, India, Japan, Malaysia and Singapore. It is also a member of the Commonwealth of Nations, the Developing 8 Countries, the OIC, the Non Aligned Movement, the Group of 77 and the World Trade Organization. Bangladesh is one of the largest contributors to United Nations peacekeeping forces.
Figure 1.1: Bangladesh(Source: Oxfam America)How the country leverage resources and capacities?Leverage is the investment strategy of using borrowed money specifically, the use of various financial instruments or borrowed capital to increase the potential return of an investment. Leverage can also refer to the amount of debt used to finance assets. When one refers to something (a company, a property or an investment) as “highly leveraged,” it means that item has more debt than equity.
Resource and capabilities are tangible and intangible assets a firm uses to choose and implement its strategies. A firm’s capacity to dynamically deploy resources, suggesting a dynamic capability view that emphasizes a crucial distinction between resources and capabilities. Tangible Resources of Bangladesh Tangible resources and capabilities are assets that are observable and easily quantified.
They can be broadly organized in four categories. Agricultural Resources Agriculture plays a key role in Bangladesh by contributing 12% of its exports,23.50% of its GDP and employing more than 62 percent of its man power. Agriculture is the largest sector in Bangladesh.
The performance of this sector plays a vital role on major macroeconomic objectives like food security and resource development. Bangladesh is the fourth largest rice producing country in the world.National sales of the classes of insecticide used on rice, including granular carbofuran, synthetic pyrethroids, and malathion exceeded 13,000 tons of formulated product in 2003.Mineral Resources Mineral Resource’ is a concentration or occurrence of material of intrinsic economic interest in or on the earth’s crust in such form, quality and quantity that there are reasonable prospects for eventual economic extraction. (Mineral resource classification – Wikipedia)At present, natural gas is the only mineral commodity significantly contributing to the national economy.
More than 90% of the country’s energy needs are met by gas, total reserves of which are 21.35 trillion cubic feet (TCF) and 12.43 TCF, respectively. Huge reserves of hard rock (granodiorite, quartz diorite, gneiss) and coal in northwest Bangladesh will help, in the near future, to meet the growing demand for construction materials and energy for the ever-growing population. Total coal reserves are 1753 million tons (MT), the market value of which is more than US$110 billion. Hard rock reserves are 115 million tons, valued at over US$3 billion.
Fully fledged extraction of these resources would help to alleviate the country’s poverty through industrialization. It is expected that coal will soon be extracted on a commercial basis, of which 70 to 80% will be used in power generation. (AKHTAR, A)Figure 1.2: Industrial Contribution(Source: ORDNUR TEXTILE )Textile Industry Almost 80% of total export covers from this Sector.
RMG impact a lot in the economy of Bangladesh such as contribution a large portion in the GDP (Gross Domestic Product), Contribution to the GNP (Gross national Product), Economic Empowerment especially for Women because 80% of The Garments Worker are Women. (RAHMAN, M. A.
)The market-based economy of Bangladesh is the 44th largest in the world in nominal terms, and 32nd largest by purchasing power parity; it is classified among the Next Eleven emerging market economies and a Frontier market. According to the IMF, Bangladesh’s economy is the second fastest growing major economy of 2016, with a rate of 7.1%. Dhaka and Chittagong are the principal financial centers of the country, being home to the Dhaka Stock Exchange and the Chittagong Stock Exchange. The financial sector of Bangladesh is the second largest in the subcontinent.In the decade since 2004, Bangladesh averaged a GDP growth of 6.5%, that has been largely driven by its exports of readymade garments, remittances and the domestic agricultural sector.
The country has pursued export-oriented industrialization, with its key export sectors include textiles, shipbuilding, fish and seafood, jute . (ECONOMY OF BANGLADESH) Culture of BangladeshFigure1.2: Culture (Culture Differences China/West)Facts and StatisticsCapital: DhakaLocation: Southern Asia, bordering the Bay of Bengal, between Burma and IndiaClimate: tropical; mild winter (October to March); hot, humid summer (March to June); humid, warm rainy monsoon (June to October)Population: 166,280,712 (July 2014 est.)Ethnic Make-up: Bengali 98%, tribal groups, non-Bengali MuslimsReligions: Muslim 83%, Hindu 16%, other 1%Bangladeshi Culture & SocietyHierarchyBangladesh is a hierarchical society.People are respected because of their age and position.Older people are naturally viewed as wise and are granted respect.
Bangladeshis expect the most senior male, by age or position, to make decisions that are in the best interest of the group. This is also valid in businesses, the majority of which will be family owned/run.ReligionThe majority of Bangladeshis are Muslim.
However, most still very much mix this with pre-Islam folk traditions.Bangladeshis identify with the folk traditions of Bengali culture. This includes belief in shamanism and the powers of fakirs (Muslim holy men who are exorcists and faith healers), ojhaa (shamins with magical healing powers), and Bauls (religious mendicants and wandering musicians).There is a strong tradition of music, dance, and literature that includes classical devotions of Hindu and Muslim music.FestivalsIslam defines many of the festivals in Bangladesh. These include two Eids (one after Ramadan and one after the Hajj) Shab-e-Qadr (the night of power), Milad un-Nabi (birth date of the Prophet Muhammad) and Shab-e-Barat (the night of the fortune).Hindu influences festivals include Durga Puja and Kali Puja (community worshipping of Goddess Durga and Kali).
On the whole an entire community participates in each other’s religious ceremonies.The culture of Bangladesh is composite and over the centuries has assimilated influences of Islam, Hinduism, Buddhism, and Christianity. It is manifested in various forms, including music, dance, and drama; art and craft; folklore and folktale; languages and literature; philosophy and religion; festivals and celebrations; as well as in a distinct cuisine and culinary tradition.
Why international business is important?International business is the exchange of goods and services among individuals and businesses in multiple countries. International business may be defined simply as business transactions that take place across national borders.International Trade Raises a Country’s Standard of LivingExports boost the economic development of a country, reduce poverty and raise the standard of living. The world’s strongest economies are heavily involved in international trade and have the highest living standards, according to the Operation for Economic Co-operation and Development.
Countries such as Switzerland, Germany, Japan and the Scandinavian countries have high volumes of imports and exports relative to their gross domestic product and have high standards of living. Nations with lower ratios of international trade – Greece, Italy, Spain, Portugal – face serious economic problems and challenges to their living standards. Even with low wages, less developed countries can use this advantage to create jobs related to exports that add currency to their economy and improve their living conditions.Exports Increase SalesExporting opens new markets for a company to increase its sales. Economies rise and fall, and a company that has a good export market is in a better position to weather an economic downturn. Businesses that export are less likely to fail. It’s not only the exporting companies that increase sales; the companies that supply materials to the exporters also see their revenues increase, leading to more jobs.
Exports Create JobsA company that increases its exports has to hire more people to handle the higher workload. Businesses that export have a job growth 2 to 4 percent higher than companies that do not export; these export-related jobs pay about 16 percent more than jobs in companies with fewer exports. The workers in these export-related jobs spend their earnings in the local economy, leading to a demand for other products and creating more jobs.Imports Benefit ConsumersImported products result in lower prices and expand the number of product choices for consumers. Lower prices have a significant effect, particularly for modest to low-income households. Studies show that lower import prices save the average American family of four around $10,000 per year. Besides lower prices, imports give consumers a wider choice of products with better quality. As a result, domestic manufacturers are forced to lower their prices and increase product lines to meet the competition from imports.
Even further, domestic vendors may have to import more components of their products to stay price competitive.Benefits of Pay Global BusinessBangladesh aims to become a middle income country by 2021.The government’s strategic vision for 2021 is a plan for growth through massive investment in infrastructure, skills development and trade. Partnership with the private sector and global donor agencies is expected.Bangladesh Imports: CommoditiesHere are the major and main import commodities of Bangladesh:Machinery and equipmentChemicalsIron and steelTextilesFoodstuffsPetroleum productsCement Bangladesh Imports: PartnersThe following were Bangladesh’s import partners as of 2008:China: 15.8%India: 15.
7%Kuwait: 8.1%Singapore: 7.6%Japan: 4.4% Bangladesh Exports: CommoditiesHere are the major and main export commodities of Bangladesh:Garments (totaling $12.
3 B)Seafood and fishjutes goods and juteLeatherBangladesh Trade: Export PartnersThe following were Bangladesh’s export partners as of 2008:United States: 24%Germany: 15.3%United Kingdom: 10%France: 7.4%The Netherlands: 5.5%Italy: 4.5%Spain: 4.2% Bangladesh Trade: GrowthThe government of Bangladesh undertook significant steps during the 1980s. Consequently there was a tremendous increase in the export of ready-made-garments and knitwear, which garnered maximum foreign exchange for the country.
Cheap labor and low conversion costs are the major factors behind the growth of Bangladesh’s garment industry. Over 3 million Bangladeshis (90% women) are employed in this industry. Bangladesh shares excellent trade relations with the US, showing noteworthy trade surplus with the latter. The country is an active partner of the Asia Pacific Trade Agreement and the World Trade Organization. A number of Export processing zone have been set up by the government to increase economic growth by attracting foreign investment.
Fiscal YearTotal ExportTotal ImportForeign Earnings2007-2008$14.11b$25.205b$8.
9b2008-2009$15.56b$22.00b+$9.68bStrengths of the Bangladesh market include:annual progress rate of at least 5.3% over the last 16 yearsstable credit ratingclose to issuing first Sovereign Bondpoverty levels cut by half in the last decadecompetitive labour forceReady Made Garment ( RMG ) export levels quadrupled in 5 yearsAbsolute advantage: In economics, the principle of absolute advantage refers to the ability of a party (an individual, or firm, or country) to produce more of a good or service than competitors, using the same amount of resources.Net exports: The balance of trade is the difference between the monetary value of exports and imports of output in an economy over a certain period.
It is the relationship between a nation’s imports and exports.Advantageous trade: Advantageous trade is based on comparative advantage and covers a larger set of circumstances while still including the case of absolute advantage and hence is a more general theory.Absolute DisadvantagesAdverse effects on the economy: One country affects the economy of another country through international business. Moreover, large-scale exports discourage the industrial development of importing country. Consequently, the economy of the importing country suffers.
Competition with developed countries: Developing countries are unable to compete with developed countries. It hampers the growth and development of developing countries unless the international business is controlled.Rivalry among nations: Intense competition and eagerness to export more commodities may lead rivalry among nations. As a consequence, international peace may be hampered.Colonization: Sometimes, the importing country is reduced to a colony due to economic and political dependence and industrial backwardness.Exploitation: International business leads to exploitation of developing countries the developed countries. The prosperous and dominant countries regulate the economy poor nations.
Legal problems: Varied laws regulations and customs formalities followed different countries, have a direct bearing on their export and import trade.Publicity of undesirable fashions: Cultural values and heritages are not identical in all the countries. There are many aspects, which may not be suitable for our atmosphere, culture, tradition, etc. This indecency is often found to be created in the name of cultural exchange.