Disaster in Bangladesh: Assignment Instructions
First, read Case 27, “Disaster in Bangladesh: The Collapse of the Rana Plaza Building.”
Instead of answering the questions in the text, read the following material and write a report addressing the questions below:
Suppose that you are the Sourcing and Import Manager for a publically-owned North American firm in the apparel and fashion industry. Your firm contracts with garment factories in China and Bangladesh, imports the clothing, and sells it through several major retailers in the U.S. and Canada, including Nordstrom’s, Sears and Sports Authority. Your company discontinued contracts with U.S. garment manufacturers over twenty years ago. Domestic suppliers were no longer cost competitive, given unit labor prices and the cost that U.S. garment manufacturing firms pay for imported textiles. Bangladesh was seen as an attractive source for garments, not only because of low costs (including lower labor costs than all other countries with similar capacity and productivity), but also because Bangladesh has over 5,000 factories in the garment industry, double than that of Indonesia or Vietnam. An urgent order can be addressed through the supplier’s local networks—a factory owner can subcontract an order to a nearby manufacturing facility.
Recent events, however, have led your firm to reconsider your firm’s relationships with Bangladeshi suppliers. Should your company continue its relationships with Bangladeshi suppliers, and if so, under what conditions? If you don’t continue with Bangladeshi suppliers, what steps would you take to replace the production currently provided for you in Bangladesh?