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The Bangladesh Business Summit-2023, emerging as a vibrant platform for new and proactive thoughts, has apparently dealt with issues that are already on the country's business agenda. From reports carried in newspapers, one may tend to think that the Summit organised by the Federation of Bangladesh Chambers of Commerce and Industry (FBCCI) has not gone beyond routine discussion sessions. However, the fact remains that the issues -- not fundamentally new -- constitute the core of increasing the country's export capacity and marketing.
In one of the key sessions of the Summit, speakers including business leaders spoke of product development and diversification as the major strategies to keep up the growth momentum of exports, especially of the lead export product -- readymade garments. No doubt an important issue, it was expected that the deliberations would address some of the challenging factors now prevailing globally when it comes to product development and diversification. What seems missing is product adaptation without which product development and diversification make little sense. At the time of developing a product for a new or traditional overseas market, it is essentially the consumers' taste and preferences that come first. That is to say, developing a product is integral to what the consumers in a given market want. Also, it is important to see who the competitors/suppliers are to that market. It is only then that probing analysis and research on developing and adapting a product in keeping with consumers' choice can work. Mere diversifying product range without thorough market knowledge may be a disappointing experience.
To successfully develop a new product, companies thus must understand the needs of their target market through market research, surveys, interacting with focus groups, and taking interviews. Once the target market has been identified, enterprises can assess what their customers are looking for in a product. Customer feedback is essential at this stage. It can help understand what features to include in the product.
Besides, businesses must also be aware of what their competitors are offering. By understanding the competition, companies can position their product to set them apart from other similar products on the market. Ultimately, product development is a lengthy and complex process that requires careful planning and execution to be successful.
Diversification is the process of expanding into new markets or industries. Businesses can develop new products or services or acquire new companies. Diversification can help reduce risk by spreading investments across different sectors. It can also provide growth opportunities, as companies can tap into new markets and generate new revenue streams. However, diversification can also be risky, requiring significant resources and management attention. Therefore, businesses need to carefully assess whether they have the capabilities to succeed in new markets before diversifying. Otherwise, they may spread out too thin and struggle to achieve their goals.
Product development is a crucial part of any business strategy and can help achieve several important objectives. By developing new products, a manufacturer can increase sales, gain market share, and boost profitability. At the same time, product development can help build a stronger brand and differentiate the product/s from those of the competitors.
Diversification is a business strategy that involves expanding into new markets or product lines. The goal of diversification is to reduce risk by spreading resources across different investments. For example, a company that manufactures only one product may be at risk if demand for the same declines. However, a company that manufactures multiple products is less likely to experience a significant drop in sales if one of its products experiences a decrease in demand. Additionally, diversifying can help tap into new markets and expand customer base. For example, a company that only sells products in the United States may be able to increase sales by selling in other countries. Finally, diversifying can also help improve financial performance by increasing economies of scale. Economies of scale occur when a company grows more prominent and can achieve cost savings due to its size. For example, a company that doubles its production may reduce its per-unit cost, say, by 20-25 per cent. As a result, diversification can be a helpful tool for companies looking to minimise risk and improve their financial performance.
So much for product development and diversification. There were few other issues that got highlighted at the Summit. One was the need to incentivise manufacture and investment of manmade fibre (MMF). Speaking on the occasion, Bangladesh Garment Manufacturers and Exporters Association (BGMEA) President Faruque Hassan termed high inflation in advanced economies, rising geopolitical tension, and climate crises as top risks for Bangladesh RMG and textile sector. He also identified volatile energy prices and frequent changes in trade policies as challenges for the industry. He stressed the need for increased investment in backward linkage industry to develop a strong manmade or artificial fibre base, as the global consumption pattern is changing towards non-cotton, durable and circular fashion. This surely is a message worth paying attention to. The shift to artificial fibre is a global phenomenon, and it is here that our backward linkage industries have to concentrate more.
The BGMEA president said that overconcentration on a few products and markets is also a concern for local apparel industry. As a least developed country (LDC), about 70.58 per cent of Bangladesh's exports have enjoyed duty-free market access, and the benefit would erode following the LDC graduation. So, preparing for the days ahead would call for equipping the industry as early as possible with the required strength for global marketing and competition.
In fact, it is the absence of preferential treatment following graduation that is at the crux of the sustainability of the growth momentum of the garment sector. One hopes the messages, though much talked about, are well taken by the stakeholders, including the government.