Footwear Industry Bangladesh - A Comparative Study

D Y N A M I C S O F T H E F O OT W E A R
INDUSTRY OF BANGLADESH
A C O M PA R ATI V E S T U D Y O N T H E B U S I N E S S M O D E L S O F F O O TW E A R C O M PA NI ES
Prepared for
Mr. Sheikh Morshed Jahan
Associate Professor
Course Instructor: Bangladesh Studies (G201)
Prepared by
Group 5, Section A, BBA 20th
ZR-05 MD. Mazharul Islam
ZR-08 Abashesh Biswas
RH-09 Tashfia Rawnak Anika
ZR-15 Fahmin Rahman
RH-19 Fableeha Bushra Chowdhury
RH-28 Syeda Shehtaz Hasib
ZR-31 Nishadul Haque Nihal
ZR-32 Rakib Khan
ZR-39 Sabbir Hossen
RH-48 Sadia Samira
ZR-60 Sajeed Alam
ZR-62 Ahnaf Ahmed
Institute of Business Administration

University of Dhaka
24 June 2014
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June 24, 2014

Mr. Sheikh Morshed Jahan
Course Instructor: G201 Bangladesh Studies
Associate Professor
Institute of Business Administration, University of Dhaka
Dear Sir,
As commissioned under the term paper submission of your course, we are submitting the
attached report titled Dynamics of the Footwear Industry of Bangladesh - A Comparative
Study on the Business Models of Footwear Companies. The major areas of analysis in our
report include a detailed analysis of six of the major footwear companies operating in
Bangladesh (local and international) in terms of manufacturing, sourcing and retail ; an
analysis of the export-oriented operations and marketing activities of these companies ; and
some company-specific case studies.
In completion of this report, we would like to thank you for the opportunity to work on this
assignment as it has helped us explore a key industry in our economy in terms of domestic
consumption and international presence. We hope you find this report satisfactory.
Sincerely,
______________________ ____________________
________________________
MD. Mazharul Islam ZR-05 Abashesh Biswas ZR-08 Tashfia Rawnak Anika RH-09
___________________ _____________________________ _________________
Fahmin Rahman ZR-15 Fableeha Bushra Chowdhury RH-19 Sabbir Hossen ZR-39
_______________________ _______________ ________________ ________________
Syeda Shehtaz Hasib RH-28 Rakib Khan ZR-32 Sadia Samira RH-48 Sajeed Alam ZR-60
_______________________ _________________
Nishadul Haque Nihal ZR-31 Ahnaf Ahmed ZR-62
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Enclosure: Dynamics of the Footwear Industry of Bangladesh - A Comparative Study on the

Business Model of Footwear Companies.
CONTENTS
Executive Summary...............................................................................................6
1.
Introduction....................................................................................................7
1.1 Purpose........................................................................................................8
1.2 Objective of the Report..................................................................................8
1.3 Scope..........................................................................................................8
1.4 Limitations...................................................................................................9
1.5 Methodology.................................................................................................9
2. Overview of Footwear Industry in Bangladesh......................................................10

2.1 Local Scenario.............................................................................................10
2.2 Export Scenario...........................................................................................10
2.3 Industry Analysis.........................................................................................11
2.3.1 SWOT Analysis.......................................................................................11
2.3.2 Porters Five Forces Analysis....................................................................12
2.4 Case: Footwear Industry The Next Big Thing................................................18
3. Bata...............................................................................................................20
3.1 Company Overview......................................................................................20
3.2 Value Chain Delivery....................................................................................21
3.3 Supplies.....................................................................................................21
3.3 Manufacturing.............................................................................................22
3.4 Distribution.................................................................................................23
3.5 Product Offerings.........................................................................................24
3.6 Batas Leadership Points...............................................................................24
3.4 Case: Batas Stronghold in the footwear industry of Bangladesh........................25
4. Apex Adelchi Footwear Limited...........................................................................28
4.2 Manufacturing.............................................................................................28
4.3 Supplies.....................................................................................................28
4.5 Distribution.................................................................................................31
4.6 Exports......................................................................................................33
4. Case: Why is Apex Failing to be the Market Leader in the Local Market?...............34
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5. Arbana............................................................................................................37
5.2 Supplies.....................................................................................................37
5.3 Manufacturing.............................................................................................37
5.4 Distribution, Retail Outlets and Exports..........................................................38
5.5 Product Portfolio..........................................................................................38
5.6 Case: An Architect of Footwear......................................................................38
6. Fortuna Leather Craft Ltd..................................................................................40
6.1 Company Profile..........................................................................................40
6.2 Supplies.....................................................................................................40
6.3 Manufacturing.............................................................................................41
6.4 Exports......................................................................................................41
6.6 Retail Outlets..............................................................................................43
6.7 Case: Fortuna Leading Bangladeshs Footwear Industry with Visionary Thinking. .43
7. Leatherex........................................................................................................46
7.1 Company Profile..........................................................................................46
7.2 Supplies.....................................................................................................47
7.3 Manufacturing.............................................................................................49
7.4 Distribution.................................................................................................49
7.5 Exports......................................................................................................50
7.7 Retail Outlets..............................................................................................50
7.8 Case: Evolution of Leatherex- All the Right Moves............................................51
8.0 Bay Emporium...............................................................................................53
8.1 Company Profile..........................................................................................54
8.2 Supplies.....................................................................................................54
8.3 Manufacturing.............................................................................................54
8.4 Distribution.................................................................................................55
8.5 Exports......................................................................................................55
8.7 Case: How Bay positioned itself in the market.................................................56
9.
Comparison of Business Models........................................................................57
Appendix A: Hazaribagh the Footwear Haven..........................................................59

Appendix B: Questionnaire for Organization Personnel..............................................61
References..........................................................................................................64
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EXECUTIVE SUMMARY
The footwear industry of Bangladesh, due to its rapid growth in demand both in the local
and global market, is now considered the next ready-made garments sector. With around
41% of the export earnings coming from the leather-based footwear industry in the
fiscal year 2012-2013 (Export Promotion Bureau, 2013), it is not very surprising that
entrepreneurs are entering this sector in great numbers. The low entry barrier and the
high demand from the consumers, is only facilitating the new ventures, and the industry
is well set to expand in the future. Footwear companies like Arbana Fortuna, Leatherex
and Bay Emporium have entered the market in a time span of less than a decade.
Consequently, the footwear industry has been experiencing an annual growth rate of
21% according to Leather Goods and Footwear Manufacturers and Exporters Association
(LGFMEAB).
When it comes to the local footwear market, Bata is still considered the family brand
and most people believe it to be a local company because of its domestic approach.
Starting its journey in 1962, this multinational company with outlets in over 90
countries, enjoys revenue of around 5 million a year. Following Batas lead, Apex started
in the early 2000s with a view to take away a sizeable portion of Batas market share.
Both the companies employ similar business strategies like offering a wide range of
products to reap the benefits of price discrimination and reach out to a larger target
market.
In a time span of less than a decade, footwear companies like Arbana, Fortuna,
Leatherex and Bay Emporium have entered the market with a different aim in mind.
These companies chiefly produce leather footwear and other accessories. Their footwear
is more customized, hence more differentiated, and cost more than Bata and Apexs
footwear. However, customers still tend to value these locally made creative products,
and companies like Arbana, boasts their 100% hand crafted designs. Arbana also sells
with its own brand name in Middle Eastern countries like Dubai.
Vertical linkage in the latter group of companies is a common phenomenon. Backward
and forward integration helps these companies coordinate the demands of the production
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line expansion, actively control production costs, reduce material lead time, and master
production cycles to deliver value to its customers. Most of these companies have a zero
or one level supply chain, hence, are able to offer their customers competitive prices and
superior buying experience.
1.
INTRODUCTION
This term paper is prepared with an intention to meet partial requirement of the course
Bangladesh Studies. The paper focuses on the dynamics of the footwear industry of
Bangladesh. Government of Bangladesh has identified the Leather sector as one of the
thrust sectors. Leather sector earns a substantial amount of foreign currency every year
through export of leather and footwear. Footwear industry, which constitutes a significant
portion of the leather industry, is now playing an important role in the global market.
Leather processing is an old manufacturing sub-sector in Bangladesh with a long
heritage of over six decades. Availability of indigenous raw material (hides and skins)
facilitated the setting up of the industry in early 1940s in the then East Bengal. During
Pakistan period (1947-1971), the industry was dominated by non-Bengali migrants from
India, who had the knowledge and the know-how of leather processing industry. At that
time, leather processing was limited to the production of wet blue leather (semiprocessed tanned leather) and the non-Bengali traders exported a large part of the
produce to West Pakistan for further processing and production of leather goods. A few
small tanning units belonged to Bengali entrepreneurs who processed leather mainly for
the domestic market (Ali, 2011).
After the independence of Bangladesh, the government took over the tannery industry
abandoned by the departing non-Bengali entrepreneurs but had limited success in
operating them under the public sector. Export of processed leather consisted almost
entirely of wet blue leather till 1980-81. After 1981, a number of policy support
measures aimed at raising the level of value addition in the industry provided incentive
for new private investment in leather industry. The ban on export of wet blue leather in
June 1990 led to the setting up of modern leather tanning units for the production of
crust leather (tanned leather after further processing of wet blue leather) and finished
leather and this was followed by new investment in leather goods industry, particularly
leather footwear (International Monetary Fund, 2000).
There are three broad components of the leather industry (i) Leather tanning
(Bangladesh Small and Cottage Industry Corporation, BSIC Code, 1911), (ii) Leather
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footwear (BSIC Code 1921) and (iii) Other leather products such as handbags, carry
bags, wallets, cases etc. (BSIC Code, 1912). According to Export Promotion Bureau,
Leather footwear accounted for 41% of export earnings from leather and leather
products in 2012-13, while the share of leather and other leather products were 39%
and 20% respectively. Thus notwithstanding its small size, leather industry in
Bangladesh seems to have undergone significant transformation during the past two
decades from a low value addition tanning activity to an exporter of leather footwear and
leather goods (Ahmad &Bakht, 2010).
1.1 PURPOSE
This report was done to study the business models of some of the popular footwear
companies in Bangladesh in order to understand the overall dynamics of the footwear
industry by evaluating their value delivery processes and particular issues true for each
of them.
1.2 OBJECTIVE OF THE REPORT

Broad objective: To assess the current position and analyze the dynamics of the
footwear industry of Bangladesh.
Specific objectives: The specific objectives of this report entail the following
The current position of footwear industry

The value delivery process of the established brands
Supply chain analysis of the industry
Cases focusing on particular issues true to each of the companies
Potential of the industry
1.3 SCOPE
This study encompasses some notable names in the footwear industry of Bangladesh.
Because the footwear industry is closely intertwined with the leather industry and
products of the two are perceived to be substitutes, the report refers to both these
industries in the discussions. Some of the companies studied for this report sells both
leather and non-leather footwear, while other solely produce leather footwear, but since
all these companies target the same or similar segments, the companies business
models are comparable.
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1.4 LIMITATIONS
Some restraints that were faced at the time of preparing the report are given below:
The insufficiency of information acted as the main constraint of the study

Time limitation created obstacles as some of the executives said they will only be
available after the deadline of this report

Data collected from the secondary sources were often out dated, and possibly did
not paint the correct picture of the current footwear industry

Organizations were reluctant to disclose sensitive information about their
business
Only six of around fifty footwear names in the industry, were studied
1.5 METHODOLOGY
For preparing this report, information was gathered from the following sources:
Primary data: To collect inside information of the footwear industry, we have

interviewed personnel from the major footwear companies including Bata, Apex,
and Leatherex. Direct interviews with key informants through structured
questionnaire have contributed to the credibility of the report.

Secondary data: Secondary data and information were collected from various
concerned government and non-government organizations and a thorough review
was held on their publications, studies, reports, journals, newspaper articles,
books, and websites to make this study potential and consequential.
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2. OVERVIEW OF FOOTWEAR INDUSTRY IN

BANGLADESH
Bangladesh is set to emerge as the next manufacturing hub for the global footwear
industry. The cheap labor is prompting top manufacturers to relocate their factories in
the country. The good news is that a number of foreign investors as well as buyers have
already shown interest in Bangladeshs leather and footwear sector.
2.1 LOCAL SCENARIO

Import dependency on brand footwear for both sexes has come down as local
manufacturers are gradually replacing those, thanks to their world class quality and
reasonable prices. Most sophisticated and high-end customers now prefer locally-made
footwear over imported ones.
Following the success of a few entrepreneurs around a decade ago, a number of new
industrialists have come forward to take advantage of an emerging market in domestic
footwear and thus succeeded in saving a substantial amount of hard earned foreign
exchange.
Top manufacturers including Apex Adelchi Footwear Ltd., Leatherex Footwear Industries
Ltd., Bay Footwear, Jennys Shoes Ltd. and Fortuna Leather Crafts Ltd. are now market
leaders for the country for such footwear.
The local footwear industry is experiencing an annual growth rate of 21 percent,
according to a spokesman from Leather Goods and Footwear Manufacturers and
Exporters Association of Bangladesh (LGFMEAB). However, to continue the trend, the
present level of growth is not only to be maintained; it also has to be taken to a still
higher level, if Bangladesh is to match the success of its immediate competitor, Vietnam.
2.2 EXPORT SCENARIO

Growth in exports is due to the low production cost in Bangladesh compared to its
neighboring countries: China, India and Vietnam, who also have a very well entrenched
leather and footwear export industry. Orders which earlier used to be given to China or
India are now being handed out to footwear manufacturers in Bangladesh because they
are able to produce low-priced but quality shoes, which have now found its way in to key
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markets in EU and Japan. Japan and Germany are now the biggest markets for
Bangladeshi footwear but US buyers are increasingly showing interest in sourcing from
Bangladesh.
This growth in footwear exports has come as a blessing in disguise at a time when
leather exports have fallen by a massive 18 percent in the period under review. Experts
attribute the growth in footwear exports, thanks to machineries imported from Italy that
is trusted for its quality output. In recessionary trends, high-priced products tend to
register a negative growth, as consumers tend to shy away from them in preference for
value for money items. In this scenario, it is a golden opportunity for the leather and
footwear sector to increase its global market share by producing simply day-to-day
footwear at affordable rates.
Despite the high quality of local animal hides both in raw and finished form, Bangladesh
was still trailing behind Vietnam and China in the export of footwear and other leather
products in the European and other markets, but this scenario is quickly changing.
2.3 INDUSTRY ANALYSIS

SWOT and Porters Five Forces tools have been used to analyze the situation of the
footwear industry of Bangladesh.
2.3.1 SWOT ANALYSIS

Strengths:
Low labor cost

Domestic manufacturing facilities are export oriented
Standards and quality of products are high
Strong vertical value chain linkage
Industry well experienced in the production of footwear and well networked by
now
Similar prices in among shops, hence high competition and better consumer
experience
Weaknesses:
No longer a High Priority Sector (HPS)

Safety standards in the tanneries not met by smaller enterprises
Environmental concerns are being raised
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Designs from
not
company
to
company
do
vary much
Opportunity:
Shift of China to High-Tech industries leaves a Demand-Supply gap to be
conquered
Consumers preference of local, high quality products, over cheap, Chinese and
Burmese imports
Getting media attention and therefore attracting resources like capital, land and
labor
Threat:
Political unrest
Volatility of the world economy and hence demand for footwear manufacture in
Bangladesh
Maturity of the industry from infancy
Government withdrawing aids gradually
Threat of removal of international trading aids
Vietnam excelling at productivity and low cost footwears
Ongoing law suits against the leather cottages in Hazaribagh
2.3.2 PORTERS FIVE FORCES ANALYSIS

The Footwear Industry of Bangladesh was analyzed with the view point of Porters Five
Forces Model. The analysis of the industry is given below :
ANALYSIS ON THE LEATHER FOOTWEAR INDUSTRY OFGLADES
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Force 1: Threat of New Entrants

A factor that indicates that the likelihood of entrants coming into an industry and
creating competition for existing companies is known as threat of new entrants. It is
higher if there is an excessive profit to be earned or entrance barriers are lower. In
Bangladesh the leading footwear companies are Bata, Apex Adelchi, Jennys Shoes,
Landmark Footwear, Leatherex Footwear, Bay Emporium Footwear, Fortuna Shoes ltd etc.
Among them Bata and Apex Adelchi are the organized retail manufacturer and distributor
who can boast of sizeable market shares. However, the entrants of new companies can
still be observed, which is due to low production cost, high quality, durability and
attractive design of footwear from the countries like China, Thailand, India etc. The
threat of new entry into an industry depends on
the barrier to entry that is present, coupled
with the reaction from existing competitors that the entrant can expect.
The major sources of barrier to entry include-
Economies of Scale: Economies of scale refers to declines in unit costs of a

product as the absolute volume produced per period increases. New entrants in
the leather footwear industry cannot easily take over the existing companies as
the existing companies of Bangladesh have low production cost and is enjoying
large economies of scale compared to its neighboring countries. So, the new
entrants have to come in a large scale and risk strong reaction from existing firms
or accept a cost disadvantage.
Product Differentiation: Product Differentiation means that established firms
have brand identification and customer loyalties, which branch from past
advertising, customer service, product differences, or simply being the first in the
industry. The leather footwear industries of Bangladesh such as Bata, Apex are
leading the market from the very beginning which has already created their brand
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name and customer loyalty. Thus new entrants have to invest a lot to build their
own brand name.
Capital Requirements: They need to invest large financial resources in order to
face the barriers to entry particularly if the capital is required for risky or
unrecoverable up-front advertising or R&D. Capital may be necessary not only for
production facility but also for covering start-up losses. The leather footwear
industries currentlyhave lots of financial resources by which they can now even
enter any new industries. Such as, Fortuna has already entered in to food
industries named Fortuna Fried Chicken (FFC).
Access to Distribution Channels: It refers
to
the
access
to
favorable
locations, proprietary technology or proprietary production material inputs which

increase the entry barriers and decrease the threat of entry. The more the
existing companies have tied up with these things the more the tougher new
entry will be. In this case, Bata, Apex and Bay footwear Ltd has their own secured
distribution channels which are
barriers for the new entrants. So in this sector the
new entrants must have strong and secured distribution channels of their own products
to enter and compete into the industry. O
Force 2: Threats of Substitute Products
Substitute products are those products that can perform the same function as the
product of the industry. There are a lot of substitute products of leather footwear like
footwear of Rexine, Plastic, Rubber, and Jute. These substitute products give a great
competition to the footwear in many sectors. Such as-
Buyers Choice of Substitute: Bangladesh is a country of middle class people.

Here, most of the people are not willing to spend a huge amount of money for
footwear. Leather
footwear
is
comparatively
more
expensive
than
other
substitute products like, rexine, plastic, etc. Rexine is a product which fulfills
almost all there quirements of leather and it looks quite similar.
Relative Price-Performance of Substitute: It refers to the cost-effectiveness of the

substitute products. Alternative products that provide overall savings to the
customers, without influencing the quality of the customers products or services.
The substitute products of leather footwear like, rexine is comparatively less
costly and also by buying rexine footwear, consumers can have a taste of leather.
Number of Substitute Products Available in the Market : There are many types
of footwear in the market but the major substitute of leather footwear is rexine,
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Plastic,Rubber, Fabric, Jute, etc. Major portion of customer from leather footwear
are diverting to Rexine footwear because it looks quite similar to leather but is
less expensive.
Force 3: Intensity of Rivalry among Existing Competitors
Rivalry among existing competitors takes the familiar form of jockeying for position by
using tactics like price competition, advertising battles, product introduction and
increased customer service or warranties. Rivalry occurs because one or more
competitors either feels the pressure or sees the opportunity to improve position. The
leather footwear industry is thus facing such rivalry among existing competitors. Factors
that increase competitive rivalry among existing firms include:
Numerous Competitors with Roughly Equal Size & Power: If there are more firms
within an industry; there is an increased competition for the same customers
and product resources. There is even greater competition if industry players are
equal insize and power, as rivals compete for market dominance. It is seen that in
the leather footwear industry, most of the companies from 109 firms are of equal
size and power which increased competition for the same customers and product
resources such as Bata, Apex, and Fortuna etc.
Slow Industry Growth: When an industry is growing rapidly, firms are able to
increase profits because of the expanding industry. When growth slows down and
industries reach the maturity stage of the industry lifecycle, competition increases
to gain market share. This is an example for Bata which is leading the market
from a very long time. It reached to maturity stage and now competes to gain
market share. Apex is also reaching the same stage gradually.
High Fixed or Shortage Costs: In industries where the fixed costs are high, firms
will compete to gain the largest amount of market share possible to cover the
fixed costs. This is what every firm is trying to reach the fixed costs and shortage
its costs in the leather footwear industry.
High Exit Barriers: When high exit barriers exist; firms will stay and compete in
an industry longer than they would if no exit barriers existed. In leather
footwear industries of Bangladesh exit barriers condition varies from company to
company. For example Bata, Apex and other established existing companies
cannot easily cross the barriers, considering the major sources such as
specialized assets, fixed costs of exit strategy, interrelationships, emotional
barriers, government and social restrictions. On the other hand exit barrier is low
for those new firms entering into the industry.
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Force 4: Bargaining Power of Buyers

Bargaining power of buyers mean the buyers/customers have little power to set the
terms and conditions under which they will buy. Basically it is an advantage to
consumers that comes from gathering together to put collective pressure on producers
to lower prices or improve quality. Bargaining power of buyers in the leather footwear
industry is increasing day by day as new footwear companies with optimistic future plan
and changing trend and quality consciousness is increasing day by day. Individual
consumers of leather products in this industry have much bargaining power in
negotiating price concession or other favorable terms with seller, hence, the individual
buyers mostly pay the sellers posted price.
People want durable shoes as well as modern designs, so to satisfy customers the
companies have tokeep up with the trend as well. In our country Bata and Apex are the
main footwear industry but the substitute products are many more. These substitutes
are fulfilling the samedemands with some extra features. The entrance of foreign brands
like Nike, Reebok does notmake the scenario easier. More international buyers are
moving towards Bangladesh as it hascost competitiveness in terms of gas supply, cheap
labor cost, skilled labor. As the number of sellers, both in local and international market,
is growing, the bargaining power of buyers is being strong. Buyers are particularly
powerful when-
Buyers are Concentrated or Purchase Large Volumes Relative to Seller Sales: The
leather footwear sellers are supplying footwear to a large number of consumers.
Theconsumers who are fond of leather, always use or purchase leather footwear
and alsoleather footwear are also use as a formal dress-up. In this scenario, the
purchasers aremuch larger and so can exert pressure on the suppliers.
The products Purchased from the Industry are Standard or Undifferentiated:

Customer bargaining power is greatly increased when alternative suppliers are
easy to find and competitors are played against each other. People can now easily
evaluate which type of footwear is good for them and also they can compare
prices by assessing the market or through Internet. This particularly happens
when the footwear are not that much different from the others.
Buyers Faces Few Switching Costs:The customers can easily switch to an

alternativefootwear company because they do not have to have any disadvantage for
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switching.Anyone wearing footwear of BATA can easily switch to APEX at their

convenience.
Force 5: Bargaining Power of Suppliers
Where very few products are chased by a large number of buyers there poses a
bargaining power of supplier. In Bangladesh, there are many leather footwear industries. As
we all know there are many steps needed to prepare the leather before manufacturing. This
increases the production cost. Besides there are some other barrier like water effluent
treatment plants delay in payment by the buyers, slow process in sanctioning funds by
bankers, unauthorized labor absenteeism, poor quality of equipments, political condition and
government restrictions. Sometimes it is harder to fight back with all these problems. As a
result the price of the product either increases or become stable at previous price. On the
other hand the substitute products, they do not have to face all these problems. They are
independent to set the price at a lower rate and consumers find the substitute product with the
same features with a lower cost, which grab the leather market customers and divert them to
other substitute product market. The conditions making suppliers powerful are largely the
inverse of those making buyers powerful. A supplier group is powerful if:
The Supplier Groups Possess a Credible Threat of Forward Integration: It provides a

check against the industrys ability to improve the terms on which it purchases.
The threat of forward integration by the suppliers is high as brand identity is not a
critical issue in the leather footwear industry in many cases in Bangladesh.
The Supplier Groups Product is Differentiated or It has Built Up Switching Cost:

Differentiation or switching costs cut off buyers options in playing one
supplier against another. The bargaining power of supplier is moderate but the
number of suppliers is huge. Moreover, the upcoming and other shoe companies
buy in so much quantity that the suppliers have to satisfy them even if by
increasing quality and by decreasing price. For Example Bata not only provide
good quality at reasonable price but also it gives warranty for its products.
2.4 CASE: FOOTWEAR INDUSTRY THE NEXT BIG THING
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With Bangladesh having developed a strong position amongst European and US buyers,
many countries are already having eager to evaluate the future potential of this
country.(Bangladesh Ready Made Garments Landscape: The Challenge of Growth)
with this statement in mind it can be said that Bangladesh is going through a booming
phase where not only can it expand its RMG sector but also venture into new sectors to
reach the big market.
Currently Bangladesh exports leather, leather goods and footwear is valued at around $1
billion a year which is about only 0.05% of the global market. Some of the companies
already export standard quality products which are highly appreciated by the export
countries. As a result the potential for this sector to grab a large share in the global
market is very promising.
Some say that after RMG, Footwear Industry will be the next best thing for Bangladesh.
Bangladesh RMG is the second largest exporter of RMG which is approximately 80% of
the total export. But it is evident that the condition of the RMG sector has grabbed the
attention of millions of people around the world and sadly their perception about
Bangladesh RMG is somewhat negative especially after the Rana Plaza incident. It has
been evident for the policy makers that it will be difficult for us to move on to the next
phase of Bangladeshs economic progress without developing new industries. Ifty Islam,
Managing partner at AT Capital.
This is where Footwear comes in. Some of the factors that will highly help this sector to
grow is the availability of the elements, raw materials and cheap labor (high working age
population). But the major drawback that is stopping this sector to flourish are the
nonexistent environmental friendly tanneries. According to some analysts, Bangladesh
will be able to earn at least $5 billion in exports from leather, leather goods and footwear
in the next decade if it can properly address health, environment and compliance issues
in the sector. The only solution to this is the relocation of the tanneries. This step will
help
the
footwear
industry
to
go
through
boost.
The benefits that the footwear industry at the moment poses are immense. The benefits
as a whole will be able to take the country to the next phase in the global market.
Studies show that if the desired export amount is reached then the country will be able
to increase domestic manufacturing output by 9.2 percent and agricultural output by 6.7
percent according to a 'simulation exercise' conducted by Khondker and M Abu Eusuf, a
professor at the development studies department at DU. The reason of increase in
agricultural units will be because of the future increase of the demand of livestock. Also
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according to this study it shows that approximately 4.4 million jobs will be created and
this will lead to a high economic growth.
The high potential of footwear industry has already been addresses to. Due to relocation
Tannery owners require money and for this reason government is asked to take
necessary steps to help the owners. First step could be long- term loans with single digit
interest.
Tannery owners also urged the government to provide long-term loans at single digit
interest rates. In par with that the owners are also urged to maintain the standards from
the beginning. Each tanneries also need proper equipments to increase quality and
efficiency. A total of 127 tanneries out of 155 already submitted their factory layoutto
Bangladesh Small and Cottage Industries Corporation (BSCIC), the implementing
agency, of which 85 of them are approved. After approval these factories are subjected
to loans from the government.
If the footwear industry is given importance by solving problems from the core with a
fresh start then the future of this industry will hold a strong position in the economy of
Bangladesh.
3. BATA
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The Bata Shoe Organization was established in August 24, 1894 in Zlin, Czechoslovakia
by Tomas Bata, along with his siblings Antonin and Anna. Although a new venture, the
Bata family had been involved in eight generations of shoe making which spanned over
three hundred years. The Bata business aimed at becoming one of the first modern shoe
manufacturers, a team of stitching workers and shoemakers creating footwear not just
for the local town, but also for distant retail merchants. This departure from the
centuries-old tradition of the one-man cobblers workshop was a brand new concept,
creating an entirely new industry. This industry has developed exponentially over the
years and currently Bata operates in over 70 countries under three strategic business
units: Bata Europe (based in Italy), Bata Emerging Market (Latin America, Africa and
Asia Pacific) and Bata Protective (worldwide B2B Operations).
Bata estimates that it serves more than 1 million customers per day, employing over
30,000 people, operates more than 5,000 retail stores, manages 27 production facilities
and maintains a retail presence in over 90 countries. Although the company originated in
Czechoslovakia, family migration to Canada has shifted the company heritage and
culture to a Canada based company. The global headquarters of Bata are in Lausanne,
Switzerland. Thomas G. Bata, grandson of Tomas Bata currently heads the organization
and the Bata family still maintains a majority of company ownership.
3.1 COMPANY OVERVIEW
Bata started its operations in Bangladesh in 1962 and has grown to become the market
leader in the local footwear industry. Bata Bangladesh is a public limited company, with a
51% to 49% share with the Bangladesh government. The company is also one of the
largest taxpaying corporate bodies contributing Tk. 1.2 billion in 2009, which represents
approximately 70% of tax paid by the entire footwear sector of Bangladesh. Currently
Bata Bangladesh operates two manufacturing facilities, one in Tongi and the other in
Dhamrai. With a production capacity of 110,000 pairs of shoes daily, the company also
has a modern tannery facility with an output of 5 million square feet of leather annually.
Annual shoe sales currently stand at slightly more than 30 million with a turnover for the
year 2009 of Tk 5 billion.
The company also maintains a diverse brand portfolio with each brand catering to a
specific consumer segment. These include: Bata, Ambassador by Bata, Bata Comfit, Dr.
Scholl, Hush Puppies, Marie Claire, Nike, Bubblegummers, Sandak, Weinbrenner, Bfirst
Page | 20
and Power. Based on local demand, personalized brands are also created such as
Mocassino by Bata and the company is continually developing marketing intelligence to
consolidate its market position.
3.2 VALUE CHAIN DELIVERY

As a global organization, Bata maintains an extremely coordinated and efficient supply
chain starting from sourcing to distribution and retailing. Along each horizon of the
supply chain, the company continually adds value to the process involved, along with
increasing the strategic fit between product responsiveness and cost efficiency.
The
value addition starts from the core values of Bata categorized as the Bata leadership
points. Furthermore, each segment of the supply chain (sourcing, manufacturing,
distribution and retailing) focuses on continuous value addition.
3.3 SUPPLIES
Bata Bangladesh procures leather from two sources:
Tannery facility at Hazaribagh

Batas own modern tannery facility located at Dhamrai
About 20 to 30 per cent of raw materials are sourced from Batas Dhamrai facility. This
accounts to about 5 million square feet of leather annually. Also, the specific tannery
facility at Hazaribagh that Bata contracts with maintains an efficient delivery system of
leather within 7 days of order. In the case of inventory management, Just-in-time
inventory management practice is followed.
Artificial leather, plastic and rubber materials are procured from foreign sources, mainly
Thailand and China, on a contractual basis.
3.3 MANUFACTURING
Bata Bangladesh has four different sources of manufacturing: own facilities, satellite
facilities, outsourcing and imports.
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i. Own facilities:
Bata Bangladesh has two factories, one in Tongi and the other in Dhamrai. The combined
capacity of the factories is 110,000 shoes daily. All the rubber and related materials
production and assembling is done in the Tongi factory, whereas, leather products are
been manufactured in the Dhamrai factory. About 92% of all Bata products are produced
in these two factories. These production facilities not only have state-of-the-art
manufacturing equipment imported from Singapore and China, but they also maintain
environmental safety through effluent treating plants (ETPs).
ii. Satellite:
There are some satellite production factories, which produce solely for Bata with the
production facility of those factories set up by Bata Bangladesh itself. About 4% of
footwear production is from satellite sources.
iii. Outsourcing:
Bata Bangladesh outsources a very small part of its production to different small shoe
industries mainly from the Dhaka region. The quality and the specification at these
production facilities are ensured and strictly evaluated by the Bata technical team. The
participation of outsourcing in the companys business is 4%.
iv. Import:
Bata imports part of its products, mainly the global flagship brands like Hush Puppies
and Nike, to keep up with the market trend and demand. In spite of high import duties
of around 101%, imports for such products are still conducted.
In terms of manufacturing efficiency, Bata Bangladesh uses ERP (Enterprise Resource

Planning Software) Version 2002. ERP coordinates between resources and the marketing,
finance, planning, strategy, design and merchandising departments.
3.4 DISTRIBUTION
The distribution channel of Bata Bangladesh operates as follows:
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1. The physical distribution starts from sourcing the raw materials and delivering
them to the production facilities at Tongi and Dhamrai.
2. From there, the manufactured shoes are sent to the CDC (Central Distribution
Center) located in the Tongi factory. Product packaging is done at the Tongi
facility.
3. After receiving the products, completing the packaging and allocating quantities
based on the destination, the products are delivered from the CDC to the
respective destinations via Batas own transportation vehicles. Bata has trucks,
pickup vans and covered vans for transportation. The CDC gets the daily update
and the last situation of retail stores. In case special orders are placed on
demandable products, an area manager ensures the availability of the products
into the specific stores through proper channeling. For instance, if products are
needed within 24 hours it is usually informed to the area manager and based on
the information, he/she informs distribution manager at CDC. The CDC then
supplies the product lot to retail stores over the phone. Another way is to follow
the inter-transfer system, which involves getting the products from a nearby
store.
There is a separate process for distributing to Batas own retail stores and to those of the
wholesalers and dealers. An equally extensive network of depots and dealers
supplements this extensive retail network.The goods for agencies and stores gone
straight to the store headquarter and goods for others gone to the 13 depots around the
country from where they collect the goods.Bata has 13 Wholesale depots covering
Bangladesh. Under these depots 453 RWD (Registered Wholesale Dealers) and 670 DSP
(Dealer Support Program) stores are operating.
In retail, Bata Bangladesh operates through a chain of exclusive own and franchise
stores.Ithas a network of 265 retail outlets located strategically in different parts of the
country at prime locations.70% of Batas sales are from its own retail outlets. Besides
there is a network of about 500 exclusive wholesalers who service about 300 retail
stores all over the country.This increases widespread availability of Bata products and
increases efficiency in distribution and delivery of value to the end consumers.
3.5 PRODUCT OFFERINGS
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Product designs are mostly imported from regional Bata subsidiaries. However, Bata
Bangladesh maintains a market intelligence wing to monitor demand patterns. In fact,
one of the notable activities of the market intelligence include introduction of Mocassino
by Bata, a range of loafers in order to meet the growing demand of loafers in
Bangladesh. In terms of brands, Bata maintains brands in three broad categories:
children, women and men. Following are some of the notable brands offered by Bata
Bangladesh:
B-first: shoes for school-going children

Bubblegummers: shoes for children aged between 3 and 6 years
North-Star: stylish and trendy canvas shoes and sneakers for teenagers
Bata range of formal leather footwear for men
Ambassador by Bata: a premium range of leather footwear for men
Power: athletic shoes of the Bata Brand
Marie Claire: shoes for women
Dr. Scholl: comfortable premium shoes for men and women
Hush Puppies: premium leather footwear for men
3.6 BATAS LEADERSHIP POINTS

In spite of maintaining operations in different economic and cultural environments
globally, Bata maintains a consistent value chain delivery in all of its global operations.
The common elements in this value chain delivery are coined as the Bata Leadership
Points. These elements, according to the company are categorized as follows:
The best product: Bata companies offer customers fresh, fashionable footwear
and accessories, designed specifically for the needs of the local market. The shoes
are made from quality materials. In Bangladesh, high quality leather from Batas
own tannery and selected tanneries is used. Furthermore, even manufacturing
equipment is state of the art and sourced from China and Singapore. Plastic and
non-leather items for shoe manufacturing are imported from selective companies
in Thailand and Singapore.

The best service: Across all horizons, Bata strives towards maintaining excellent
consumer service. Sales representatives receive frequent training on customer
satisfaction and product knowledge building. In fact, Bata follows a 5-step
i.
ii.
iii.
iv.
customer policy for sales representatives. This includes the following steps:
Welcome every customer.
Ask him or her about the need.
Show him or her three types of demanded product:
- Customers own choices
- Similarto that choice
- Highest pricing product
Try to add-on selling (Socks, shoe polishand leather rmade bag).
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v.
Thanking the customer to revisit.
The best value and quality: Through the efficient sourcing and distribution of Bata
products, cost and quality are firmly regulated. Bata maintains a Central
Distribution Center (CDC), which regulates efficient delivery systems across the
300 outlets of Bata nationwide.

The best locations: Bata stores are modern, attractive and located at convenient
and prime locations. Furthermore, the company operates 265 retail outlets
strategically located across the nation, and these are also segmented based on
the customer demand: Bata Bazar, Bata Family Stores and Bata City Stores. The
company also maintains franchising and wholesale dealership to increase product
availability.
3.4 CASE: BATAS STRONGHOLD IN THE FOOTWEAR INDUSTRY OF

BANGLADESH
It is rather impressive for Bata to remain the market leader in the footwear industry of
Bangladesh for decades. Leather manufacture and exports have risen sharply and a
growing number of footwear companies have established themselves in the marketplace.
Namely, Apex, Jennys, Leatherex, Bay and Fortuna have sizable portions of the market
share. There are also various independent shoe manufacturers due to the widespread
availability of cheap leather and footwear material. These independent shoes can be
further categorized in the price range of high to low, thus, catering to customers of all
economic segments. Surprisingly, the nature of the footwear industry is very much
dependent on the aesthetic appeal of the footwear, particularly for women. Furthermore,
the industry is highly price sensitive, which leads customers to compromise quality
(genuine leather) for better looking and affordable footwear. This has presented a host of
challenges to Bata Bangladesh. However, with effective strategic planning
and
implementation, Bata Bangladesh has retained its market stronghold.

As the market leader, Bata Bangladesh is already effectively positioned into the
consumer mindsets as the family brand with high reliability, quality and convenience.
Due to its affordable pricing, a diverse portfolio of brands to cater to a wide range of
customers, and the Bata brand promise, it retains a market stronghold. In fact, Bata is
widely perceived as a local brand despite its foreign roots, because of the heavy
integration with the consumer culture of Bangladesh. Also, its diverse product portfolio
ensures maximum reach to all sorts of target consumer segments in the footwear
industry. Effective campaigns such as First to Bata, then to school, make the product a
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definitive for school going students and in terms of quality; none dismiss the authenticity
and craftsmanship of Bata footwear.
In the case of catering to the aesthetic factor and appeal that drives footwear purchase
decisions in consumers, Bata has a market intelligence wing, which analyzes consumer
trends and market demographics. On the basis of that, the results are forwarded to the
design and strategic divisions, which then decide what range of products to import and
design. For instance, the increasing demand for loafers in Bangladesh has led to the
introduction of Mocassino by Bata, Batas very own chain of loafers. When globally, the
Converse All-Star shoes became a fashion icon among the youth, Bata introduced its
own range of canvas shoes, North Star, to tackle competition. Also, with growing
consumer purchasing power and demand for premium footwear, Bata has had immense
success through the introduction of Hush Puppies. In fact, Hush Puppies also has its own
retail outlets due to increasing demand for the brand. Bata also frequently introduces
trade promotions and brings in new product designs to keep consumer inflow intact.
One of the greatest successes of Bata has been its geographic reach. It is the first
footwear company to have introduced wholesaling and dealership programs to allow
franchising of the brand. A lot of outlets in the rural areas have thus been established by
these franchisees, increasing the scope of market coverage of Bata, something which
none of its competitors possess. Also, Bata is the only footwear company to conductthe
segmentation of retail outlets according to profiles of different market segments and the
introduction of novel concepts such as Bata City Stores. These selective outlets, in
conjunction with other types of outlets such as Bata Bazar and Bata Family Stores, are
adding a new level of consumer satisfaction. The City Stores incorporate spacious floor
space allowing a comfortable shopping experience, modern interior dcor enriched with
novel shelving systems, fittings, fixtures and lighting that can be found in the large retail
shops in the Far East and Europe.
Overall, the company is not only building its brand by covering as many diverse
consumer segments as possible and keeping up to the pace of consumer trends, it is also
increasing accessibility to the brand. The segmentation of outlets has also led to marked
success in brand coverage, which has provided it an immense competitive advantage
over its biggest competitors, who have almost no commercial activity within Bangladesh
outside the capital and Chittagong. Bata hence, continues to retain its stronghold over
the Bangladesh footwear industry.
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4. APEX ADELCHI FOOTWEAR LIMITED

Apex Adelchi Footwear limited one of the oldest footwear industries in Bangladesh. It
starts its journey in January 04, 1990 as Apex Footwear limited; Later on in December
27, 2006 it changed its name in to Apex Adelchi Footwear Limited.

Apex Adelchi Footwear Limited is a fully export oriented company. Now-a-days it is
leading manufacturer and exporter of leather footwear from Bangladesh to major shoe
retailers in Western Europe, North America and Japan. AAFL has equity, technical and
marketing participation from La Nuova Adelchi one of the largest footwear manufacturers
of Italy.
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4.2 MANUFACTURING
Apex Adelchi Footwear Bangladesh Ltd has total 304,545 square feet of factory area
complied with Global Standards of Footwear Production and imported machinery from
Germany, Italy and Taiwan. In the year 2012, Apex Adelchi Footwear Bangladesh Ltd
utilized its 92.03% of the whole production capacity. It manufactures 5000 pairs of
leather shoes everyday while its competitor Bata produces only 4000 pairs.
4.3 SUPPLIES
Role of suppliers in the Competitive Strategy
The level of efficiency and responsiveness the supply chain can achieve is affected by the
sourcing decisions taken, which makes it crucial to the production process. Most of the
leather is procured from Apex Tannery Ltd. to ensure best quality and increase
responsiveness. When located within Dhaka City, Apex uses private carrier to deliver
product from central distribution center (CDC) to Gallerie Apex. On the other hand if it is
located outside of Dhaka city, it uses package carriers or rent transports from third party.
For export, it also uses third party, like Cost and Freight Forwarding Agents, to achieve
economies of scale.
Purchasing Strategies
A firms competitive advantage no longer depends solely on its competency in providing
a competitive range of offerings. It also depends on the firms skill to establish superior
purchasing strategies in complex inter- organizational settings of numerous suppliers.
Firms are no longer able to develop major product or service innovations alone because
of the dispersion of knowledge and technological resources driven by organizational
specialization. In addition, the growing need for greater effectiveness to focus on its core
competencies leads to the externalization of the activities to partners.
Apex Adelchi Footwear maintains both single and multiple sourcing strategies. It looks
for single sourcing strategies when it has only one supplier for each product and service.
It seeks scale advantages through lower cost products in a dyadic relationship. Multiple
sourcing strategies are adopted when the buyer systematically utilizes several suppliers
for each product and service. Apex considers quality foremost here. Those who maintain
quality gets most of the business from Apex.
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Apex Adelchi Footwear procures its raw materials from both local and foreign sources. It
collects leather from Apex Tannery Ltd. It imports soles, line lather, stickers or
ornaments, glue, shoelace, and yarn from China and India. It import directly from the
manufacturers of raw materials who meets quality and its requirements. It also imports
by using local third parties. In case of procurement of raw materials, it only focuses on
the quality. It does not maintain partnering, relationship buying or collaborative network
with its suppliers. It maintains transactional exchange through the following strategies:
Single purchase
Focus on quality
One time purchasing event
Significant purchase
After sales experts
Maintaining services
Quality is always prioritized, and Apex Adelchi Footwear is ready to procure leather from
suppliers at a relatively higher cost if the high quality is assured. When suppliers
maintain their reliability in ensuring high quality over a long time, then it repurchases
from these suppliers for a longer duration.
Apex Adelchi Footwear always maintains its relationship strategy through the following
terms:
Long term orientation

Repetitive purchase
Dyadic partner
Diminishing price
Win- win situation
Research and development projects
Otherwise, it purchases from different suppliers in from time to time by direct

bargaining. It maintains the following strategies here:
Strategic procurement
Key partner network
Decreased no suppliers
Better knowing of chosen suppliers
Updated product versions
Mutual knowledge transfer
It takes two months to get raw materials arrived its factory from any country since it was
ordered. It uses both air and ocean for importing raw materials.
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Eid ul Adha provides a high amount of the leather used in the production of Apex Adelchi
Footwear. Most of the leather used during the year is obtained during this period, and it
is absolutely essential to utilize all the available resources in gathering leather from as
many sources as possible.

Apex Adelchi Footwear Bangladesh Ltd has a wide a range of collection of shoes /
sandals available for selling. Currently, the company has around 2500 different types of
designs of products at its disposal. This products are mainly classified into two
categories; laced and without lace. There are some other types of designs and they are;
Back Belt, Slippers, Sandal, and Sports. Apex Adelchi Footwear Bangladesh Ltd
manufactures all of its leather products in Bangladesh. But the sports shoes are imported
from China and India and then marketed here in Bangladesh under the Brand name.
Apex Adelchi Footwear Bangladesh Ltd concentrates on producing various designs of
leather products and they are listed below:
Mens dress and formals

Mens Casual
Mens Dress and Casual Boots
Ladies Boots
Mens and Ladies Hand stitched Moccasins
In the recent times, Apex Adelchi Footwear Bangladesh Ltd is concentrating on designing
new and innovative products. As a result, it has come up with a new athletic shoe named
Aetrex Performance Footwear. This sports shoe is very comfortable and at the same time
uses top class design performance using state-of-the-art technology and materials.
Apex Adelchi Footwear Bangladesh Ltd designs its products based on the following
categories;
Category
Category
Category
Category
A: The best
B: Better
C: Good
D: Moderately good
Apex Adelchi Footwear Bangladesh Ltd also sells some high end footwear products
representing the brand. Some of these products are; IT (Italian) Project, ID Shoe,
Franco and HW (hardy worker).
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4.5 DISTRIBUTION
Ordering System
Gallerie Apex orders its required products to the Central Distribution Center (CDC),
situated at Tejgoan in Dhaka City, by completing a Special Requirement Form. Store
manager fill up this form mentioning the code of the product, quantity and other things.
The order is made on a weekly basis and placed early enough to avoid running out of
stock. This form is sent to CDC either by the sales force or a courier service. CDC
accumulates several requirement forms of Gallerie Apex and sends it to the factory. The
lead time varies from one month to two months depending on the situation and nature of
the product. If the required products are available in the CDC or factory, the products
are sent within a very short time. In order to digitize its process through electronic
medium, Apex Adelchi Footwear is going to start internal online ordering system within a
few days.
Distribution System
Apex Adelchi Footwear distributes its products to Gallerie Apex by using own distribution
channels with in the Dhaka City. For distributing its products outside the Dhaka City it
uses Courier services or rented truck. Its products come to CDC from the factory, and
then they are delivered to Gallerie Apex from CDC.
Distribution strategy
Apex Adelchi Footwear follows selective and Intensive distribution.
Selective Distribution: When a new product is introduced in the market, it first appears
in the divisional outlet only.
Intensive Distribution: If the new product best fits with the customer demand and if the
sales growth of the new product is high enough in the divisional outlets, then Apex
decides to go for intensive distribution. It then makes the product available in all the
Gallerie Apex.
Value Creation Stages in the Supply Chain
When marketing to local consumers, a 2 level Marketing Channel is maintained. In the
primary stage, value creation begins with new product development, which creates
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design and specifications for the product. Marketing and Sales generate demand by
publicizing the customer priorities that the product will satisfy. Marketing and Sales also
brings customer input back to new product development. Using these new product
specifications, the manufacturing unit transforms inputs to outputs to create the product.
On the first level, the Central Distribution Center delivers the product to various sales
centers (Gallerie Apex) to make the product available to the customers.
Gallerie Apex then displays the product and sells it to the customers. It also provides
after sales services.
4.6 EXPORTS
Apex Adelchi Footwear started exporting in 2000. Below is the list of the major countries
where Apex Adelchi Footwear Bangladesh Ltd exports its products.
Japan
Germany
Italy
France
Austria
Scandinavian region and Switzerland
Other EU countries
USA
Canada
On an average, 75% of its total revenue generated from export mainly to EU

(Internatinal Leasing Securities Limited, 2013). Below is a graph representing export of
Apex Adelchi Footwear Ltd.
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In the year 2008, Apex Adelchi Footwear Bangladesh Ltd exported shoes worth Bdt. 5.07
billion (Choudhury, 2010). The export of Apex Adelchi Footwear Bangladesh Ltd got a
new dimension after the affiliation with the Italian footwear producer La Nuova Adelchi
Footwear. The primary joint venture capital provided by La Nuova Adelchi Footwear was
Bdt. 150 million. So, it is evident that the capital contribution was not that significant.
But the main benefit of the affiliation was that Apex Adelchi Footwear Bangladesh Ltd got
recognition in the European countries and its export has boosted since then. Apex
Adelchi Footwear Bangladesh Ltd now designs its products using Italian product
development & technology. At the very first year of operation (after the affiliation), the
annual export was expected to be Bdt. 900 million and later on Bdt. 2 billion. Currently,
Apex Adelchi Footwear Bangladesh Ltd is responsible for exporting almost two-third of
the countrys whole footwear export.
4. CASE: WHY IS APEX FAILING TO BE THE MARKET LEADER IN

THE LOCAL MARKET?
Apex Adelchi Footwear started its business through exporting in the year 2000. As of
now, it exports to Italy, Germany, Western Europe, Japan, and North America. It exports
directly from its factory, and is the biggest footwear exporter of Bangladesh.
Apex Adelchi Footwear is the market follower in the country market. It just follows the
country market leader Bata Shoe Company and tries to achieve the equal market share
that Bata holds. It has not set its sights on surpassing Bata in the local market yet.
However, it maintains a strong foothold through more than 106 outlets all over the
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country, which makes it the second largest shoe retail chain after Bata. Its market share
is growing fast along with the emerging middle income population of the country.
Bata and Apex Adelchi, two of the country's leading shoe manufacturers and retailers,
are set to intensify its battle for customers with both companies sharply increasing its
number of stores. Comparisons between them are shown below:
Apex Adelchi Footwear Limited
Bata Shoe Company Limited
It has more than 106 retail outlets
It has 237 retail stores.
It plans to set up some 20 new retail It will set up 40 different stores this year 10 city
outlets
stores, 11 super stores, 14 family stores and 5

franchise stores
It aims to cater to the footwear needs It caters to the demands of all income groups
of the middle class to upper middle
class in the urban and semi-urban
areas across the country
Its main objective is to provide It will focus on providing products within a price
customers enough choices in a fairly range that is affordable for different types of
narrow price range.
customers. It focuses on providing wider priceranged products than Apex Adelchi.
Its strategy is sustainable growth Its strategy is rapid expansion through delivering
through
delivering
high
product products of all qualities
standards
It wants to set up some complete Its biggest focus now is on the city and super
family stores enabling its customers to stores
have a pleasant shopping experience
Apex Adelchi Footwear Ltd
Bata Shoe Bangladesh
(in 1000s)
(in 1000s)
Revenue
5992.5
5273.2
Gross Profit
719.1
1821.6
Gross Margin
12%
35%
Net Profit
247.3
476
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Net Margin
4%
9%
ROE
32%
53%
Source: Annual Reports

From the above table, it can be observed that the annual net margin of Apex Adelchi
Footwear Bangladesh Limited is much lower than its counterpart Bata, though its annual
revenue is higher than that of Bata. All these issues are not letting the company to excel
in the local market and need to be addressed if Apex is to come anywhere near the
market leader, Bata.
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5. ARBANA
When it comes to making Products, they make handmade shoes which are made out of
100% leather. Moreover, as mentioned earlier, their shoes are contemporary and
fashionable. They basically make Footwear for both Men and Women. Apart from
producing shoes, Arbana also makes Belt, Office Bag, Womens Bag, Money bag and Key
ring.
Arbana is a contemporary footwear brand. Their mission is to develop new footwear

architecture in Bangladesh. It was founded in 8th May 2011 as a local Footwear style
brand. Its image stands for freshness, spontaneity and youthfulness. Its customers are
modern men and women who enjoy underlining their personality with a contemporary
look. It is a local brand with global attitude. They make rigorous testing for better
design, better comfort and not to forget better quality. They aim for perfection, thereby,
assuring
the
best
for
their
customers.
They
use
generations
of
accumulated
craftsmanship, combined with todays modern techniques to create individual shoes with
an exclusive "Arbana" personality. That is why they term themselves as Footwear
Thinkers.
5.2 SUPPLIES
Arbana buys the small components for shoes like insole, cushion material, buckles,
outsole and other tools and materials like glue, sturdy threads and cutting tools from
Puran Dhaka. The suppliers of that region normally charge lower prices for these raw
materials which is cost effective for Arbana.
5.3 MANUFACTURING
They have their own manufacturing department and tannery in Hajaribagh, Puran
Dhaka. They say it cost them more if they buy tannery from suppliers. So they set up
their own tannery to save cost and moreover this backward integration has also made it
Page | 36
more accessible to supply leather to their manufacturing department on time without

any delay in the production process.
All the shoes in the manufacturing department are handmade, as mentioned earlier.
Thus, the process is labor intensive. Bangladesh being a developing country has
abundant cheap labor supply which is a major contribution for Arbana, mentioned one of
the employees of the company.
5.4 DISTRIBUTION, RETAIL OUTLETS AND EXPORTS

Arbana makes its own shoes and distribute them to its own retail outlets. However, they
also sell its shoes to Ecstasy and Doors. They have a very good relationship with these
companies which help Arbana sustain a healthy supply of their products.
Arbana has many retail outlets in some of the happening zones in Dhaka city. The
shopping malls which the company has chosen are Simanto Square, Dhanmondi-2;
Elephant Road; Plaza AR, Sobhan bagh, Dhanmondi-19; RAK Tower, Uttora, Sector-3 and
many more. They market in these malls so that they can better capture their target
customers and tackle their competitors effectively.
Arbana is not only local; it is also successful in being global for its ultra sophisticated
shoes. Currently it exports its product to Dubai, Malaysia and Italy with its own brand
name.
5.5 PRODUCT PORTFOLIO

Shoes of Arbana are self designed by the Managing Director of the company. He is an
architect who gives voguish designs and chic styles to the looks of different varieties of
shoes. It is asserted that their footwear is fashionable and all the designs are up-to-date.
Overall, Arbana has succeeded in becoming a well established fashionable footwear
company which sells its produce to men and women not only of Bangladesh, but also of
other countries. It is doing its business well and hopes to prosper much more in the
future.
5.6 CASE: AN ARCHITECT OF FOOTWEAR

Page | 37
The footwear industry of Bangladesh has been traditionally being dominated by Bata in
almost all customer segments, as the market leader; while organizations like Apex as the
market challenger, and Bay Emporium, Jennys, Zeils and Leatherex as market followers
are continuously fighting to retain and increase their existing market share. All of them
have significant export revenue to back up their reputation and local sales. They have
their unique and strong supply and value addition chain. Also, there are lots of other
local manufacturers who are operating the market not only as suppliers of the big
brands, but also with their small-medium and meager number of outlets. Therefore, the
footwear industry of Bangladesh is quite competitive; and successful emergence of a
new player in this field is surely going to be challenging.
Arbana emerged in this saturated competition on May 8, 2011 with their mission is to
Develop new footwear architecture in Bangladesh. Founded by Mr. Mahim Rashid, an
architect of refined taste, the Arbana staffs proudly introduces themselves as the
Footwear Thinkers. Arbana is a local brand with global attitude. Besides operating in
the local market, it exports to a few countries like Dubai, Malaysia and Italy. Its
customers are modern men and women of the medium and upper income class who
enjoy underlining their personality with a contemporary look that combines freshness,
spontaneity and youthfulness. They make footwear for both Men and Women. Apart from
producing shoes, Arbana also makes Belt, Office Bag, Woman Bag, Money bag and Key
ring. The company boasts about its footwear which is 100% leather made and they
exhibit the traditional line of hand-crafted footwear. This gives the customers a sense of
superior quality and artistic sophistication. This feature has been very effective as
Arbanas point of difference for competitive advantage. People who purchase the
products of Arbana get an antique feeling of class. This makes them consider Arbana
product to be worth the money spent and repeat purchase. Therefore, keeping the
supply wheel rotating and maintaining the quality are what keep Arbana is business.
Although Arbana hasnt yet been able to capture enough market shares to significantly
challenge the likes of Bata, Apex or Bay, it has successfully achieved a good number of
loyal customers with its unique design, promised comfort and quality. The aristocracy
and uniqueness of the footwear design has the point of parity for Arbana from the very
beginning. All the designs are the creation of the Managing Director Mr. Mahim Rashid,
who himself is an architect and renders the footwear with artistic touch and at the same
time trendy as the go.
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6. FORTUNA LEATHER CRAFT LTD

Fortuna shoes is a sister concern of Fortuna Bangladesh Group which was established in
1984. It is a major industrial conglomerate in Bangladesh and its strategic business units
sell products ranging from fast food items to footwear and IT services. Fortuna initially
started its venture as a garments unit with only 140 sewing machines and 250 workers
in its own 120,000 square feet facility.
The footwear unit was later established in 2010, with the vision of Fayaz Taher (CEO of
Fortuna) to become one of the leading footwear exporters in Asia. A company that
started with only 140 sewing machines and over 2,000 workers in its 120,000 square
feet factory facility, is now one of the leading footwear exporters in Bangladesh. It has
also attracted domestic consumers with its world-class shoes and other accessories
which are made from quality leather sourced from Fortunas own tannery in Hazaribagh.
6.1 COMPANY PROFILE

The Fortuna group started with the vision of M. Abu Taher, who has years of
experience in the industrial sector. The management team of Fortuna, has over
40 years of entrepreneurial business experience both in the domestic and
international market. The group is a privately held company that is open for
strategic partnerships and joint ventures for its business.
Fortuna footwears mission is to provide the optimal blend in style, quality, and
affordability in footwear and accessories. The company sells shoes, leather bags,
etc, in its 20 or so retail outlets around Bangladesh. It also exports to countries in
European Union and United States. It has a cutting edge web portal installed by
Infrablue Technology. an award winning IT division of Fortuna group that started
in 2008.
6.2 SUPPLIES
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Fortuna has its own tannery unit which sells to both its footwear unit and other
clients. Ruma Leather Industries Ltd was bought in 1991 by the Fortuna group as
a strategic unit. The tannery is located in Hazaribagh on a three quarter acre plot
of land. It has state-of-the art equipment in its tannery with a capacity of
producing 500,000 square feet of finished leather per month. Ruma is targeted to
reach $12 million in exports, annually, by leveraging its experience technicians
and management team.
Other materials are sourced from China, India and Taiwan.
6.3 MANUFACTURING
Fortuna Park is the manufacturing department of Fortuna shoes. It is located in
Kunia, Gazipur and was set up in 2010. The manufacturing plant, which required
an initial investment of Tk 56 crore to set up, has a capacity to produce around
6000 pairs of shoes and 500 bags per There are four lasting lines - the 40,000
square feet factory in unit 1 and 30,000 square feet in unit 2. The factory
produces footwear products mainly for the international market, but also
manufactures shoes and accessories for the domestic market.
Fortuna also has its own shoe moulding factory. The moulding factory sources
plastic from China and India, and ensures the shoes are perfectly shaped.
6.4 EXPORTS
Fortuna closed down its garments unit in 2009. By opening Fortuna Park the next
year in 2010 and establishing Bangladeshs first shoe mould manufacturing
factory, Fortuna entered the international footwear industry. It started with the
aim to earn around Tk 200 crore in foreign currency a year. The reason Fortuna
closed down its garments manufacturing plant in 2009, was because of the
anticipated growth in the shoe and leather industry. Even though the demand for
fashionable and high quality leather shoes had declined in the international
market due to the recession at the time, there was still an opportunity to
leverage the demand for simple but necessary shoe products. At the time, shoe
industry was in the early stages that is similar to the early days of the
readymade garment industry. The CEO Fayaz Taher, marked this opportunity and
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quickly grasped it. Now, Fortuna is one of
the leading footwear exporters in
Bangladesh.
As Chinas labor cost is increasing, foreign buyers are looking for other places
where they can outsource their manufacturing department. Countries like China
and India are unable to produce high quality leather shoes at a low-cost. Foreign
buyers are nowadays seen shifting their manufacturing strategy and locally
producing the shoes. This gives Bangladesh the potential to meet the demand of
foreign buyers. With its own leather manufacturing department, Ruma Leather
Industries Ltd, Fortuna is vertically integrated and is able to enjoy a competitive
edge in sourcing its supplies. The company also partners up with foreign
companies. For instance, it had teamed up with a chinese company to establish
the countrys first shoe mould factory. This sets Fortuna apart from other
footwear companies, most of which uses wooden moulds that are not as
accurate. In addition, the company is in a joint venture with a Spanish company
to make outsoles. It collects over 100 different outsole styles from Spanish
sources. Fortuna also has state-of-the art management team, and undertakes
public relation move to promote its factory compliance, environmental standards
and ethical work culture. Buyers usually inspect Fortunas plant facilities and
retail outlets before placing order on the company.
Fortuna has worked with foreign companies like H&M, Melillo and Anto Harness. It
makes ballerina shoes, boots, sandals, etc for ladies, men and children to meet
the orders set by its foreign buyers.

The Fortuna shoe factory is overseen by foreign personnels which includes Chinese
professionals who look after the technical and production side. An American fashion
designer supervises the designing department to help Fortuna stay at par with its foreign
clients demands. Following are the types of shoes Fortuna sells -
Womens Shoes: Fortuna produces heels and flats for women. Most of these
footwear are made of leather and are have a fusion of both local and foreign
designs. Its prices range from around 600 Tk to around 3000 Tk for womens
footwear in the local markets.
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Mens Shoes: Fortuna has a wider range of mens shoes than womens. It sells
converse, sandals, shoes, EVA sandals, etc, for men. It terms its mens shoes as
intelligent, confident, stylish, creative, relaxed, driven, modern and out of the
box. Shoes for men has a higher average cost with minimum price starting from
around
Kids Shoes: Alongside selling women and mens designs, Fortuna also
specializes in producing kids shoes. Kids shoes range from lightweight to
medium weight to provide extra support for the kids.
Other Items: Fortuna also sells bags, wallets and other leather accessories.
6.6 RETAIL OUTLETS

Fortuna is a brick and click type company. It has both physical outlets and online
marketplace for its shoes.
Retail Shop: It has around 20 retail outlets around Bangladesh, 15 of which are in
Dhaka, others are located in Sylhet, Tangail and Kushtia. Over the years,
consumers are increasingly being attracted to the local designer shoe stores like
Fortuna. With its attractive store design, and quality assurance by its
shopkeepers, Fortunas domestic sales have been growing ever since its
inception in 2010.
Online Shop: In response to the growing footwear demand, Fortuna has opened
an online marketplace to make the buying experience more convenient for its
consumers. Its e-store gives home delivery services and packages are generally
dispatched within 2 days after receipt of payment and are shipped via USP with
tracking. Consumers are hence, able to track their package online. Consumers
are also given the option of replacing their bought product within three days of
payment.
6.7 CASE: FORTUNA LEADING BANGLADESHS FOOTWEAR

INDUSTRY WITH VISIONARY THINKING
The chief executive officer of Fortuna, Fayaz Taher is set out to promote
Bangladesh as the Next Footwear Destination in the US Business Delegation trip.
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His vision is to make Fortuna the best footwear manufacturer in Asia. It is a

challenge Mr Fayaz has undertaken but through continuous improvement, and
with one of the best management teams in Bangladesh, this visionary CEO is
hopeful about reaching this goal. Sometimes people look at me and say - why
dont you just be the best in Bangladesh? remarked Mr Fayaz on how people are
resistant to setting high goals. But I say, why would I do that? Why cant I be the
best in Asia? he continued explaining how he would not let negative thinking
keep Fortuna from becoming the best in Asia.
Back in 2009, it was Mr Fayaz who sensed the potential of the footwear industry
of Bangladesh. We wanted to be a part of the next boom and opportunity and
we feel footwear is the next one, explained Mr Fayaz. Chinese manufacturers
are now producing shoes at a higher cost because of the increase in labor wages.
Many of the foreign buyers, as a consequence, are shifting from an outsourcing
strategy and are now producing locally. But if Bangladesh is able to leverage its
vast leather industry coupled with cheap labor and high-tech imported
machinery, then it can well be the next footwear destination in the international
market. The ready made garments industry, which started to boom in the 1980s,
was able to put Bangladesh at a recognizable position in the foreign market. With
this in mind, Mr Fayaz believes, that footwear industry will have an upper hand
due to the countrys reputation of producing quality products for its foreign
clients.
With the Ruma tannery in Hazaribagh, Fortunas vertical linkage gives it an
additional competitive edge. The high-tech web portal set by its sister concern
Ifrablue, which has won accolades from foreign buyers, also sets Fortunas
footwear apart from its competitors like Bay Emporium and Jennys
in
Bangladesh. Fortuna also aims to have an online presence and uses third party
B2B websites like Alibaba to showcase its products to foreign buyers.
Even though the recession hit the countries in the west quite hard, there is a
demand for day-to-day footwear at an affordable price. This is where
Bangladeshs capabilities comes in and Mr Fayaz hopes to leverage these
opportunities to help Fortuna move forward. We want to continuously improve,
he believes. His young team who has been with the footwear unit since its
inception, are a mixture of young, ambitious and capable employees who share
the same vision as their boss.
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Mr Fayaz has also set quantifiable goals for its footwear unit. He believes that
Fortuna will reach China standard some day. Currently China makes 400-500
pairs of ballerina shoes per hour, whereas Fortuna makes 250-275 per hour. The
target is to make 300-325 ballerina shoes per hour by the end of this year, and
keep increasing its capabilities in the years to come.
Apart from Fortunas advantage of being a large conglomerate with an
established brand name, Mr Fayaz believes that its young team is the biggest
asset of the company. Nashad Moyukh, who is the assistant factory manager of
Fortunas footwear unit, joined in 2010 right after graduating in engineering from
University of Dhaka. With on-the-job-training from his seniors, Mr Nashad now
believes that he has become fully capable of handling the factory work. He
boasts Fortunas fully compliant factory which foreign buyers always inspect
before placing orders at Fortuna. Altogether, Mr Nashad envisions that Fortuna
will be able to get to the next level by increasing its plant capacity and
productivity.
Fortuna also maintains its business by employing the values of Total Quality
Management. As Ashraful Alam, the quality manager of Fortuna explains, the
company follows all the requirements of the foreign buyers and has state of the
art lab facilities for its moulding unit in the factory. Shoes are checked at every
level and a final inspection is done to make sure the end-product meets all the
requirements of the buyer. Furthermore, Ashiq Iqbal, head of planning, explains
how Fortunas customized excel sheet helps to maintain good production flow in
the factory. There are plans to build a cloud system so that the work can go
digital and communication is enhanced. This will help to monitor and share
planning reports, production reports as everything will come under one platform.
Consequently, deadlines can be met more smoothly when such digitization has
been installed.
With his entrepreneurial vision and the passion and commitment of the young team, Mr
Fayaz Taher strongly believes in taking Fortuna, and ultimately Bangladeshs footwear
industry to a higher level through continuous improvement and forward thinking. Its
advanced factory facilities, public relations and brand name, are only some of the tools
and Mr Fayaz believes in leveraging his young team to achieve the ambitious vision.
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7. LEATHEREX
Leatherex Footwear Industries Limited, which is 100% leather based Footwear Company,
is registered in Bangladesh as an SME. It has been working continuously with inherited
expertise and know-how. It is now a leading footwear manufacturer in Bangladesh,
catering to the footwear needs of a global clientele alongside local demand. It
manufactures and exports all kinds of Leather Footwear and footwear components.
7.1 COMPANY PROFILE
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Founded in March 2000, Leatherex has utilized most modern state-of-the-art machinery
for production of footwear. All its manufacturing operations include both automated and
manual components. This permits a yearly production of up to 800,000 pairs of shoes
and sandals. Leatherex is operated under technical collaboration with Japan, Italy and
Taiwan. The main advisor for Leatherex Footwear Industry Limited is Japanese and
because of good relationships, most exports are made to Japan and a lot of assistance is
also obtained from Japan. Its main products are leather casual, basic and formal shoes,
mesh shoes, pumps, men's and ladies sandal and boots.
Working Experience of a decade in the field of leather chemicals, processing of raw-hides
to finished leather, producing shoe upper to footwear, all contributed to shape the
company to what it is today.
Leatherex Footwear Industries Limited has been awarded as one of the top 16
companies in Bangladesh in 2010. It has also won numerous other awards and accolades
over the years in lieu of its excellence, including D&B Corporate Award 2010, The
Financial Mirror Business Award 2005, and National Export Trophies for the years 200809, 2005-06 and 2001-02.
Leatherex Footwear Industries Limited is associated with five other companies, namely
Impex International
Impex, founded in 1999 is an expert and experienced in handling leather sector for more
than a decade. Impex International is a buying agent on behalf of many world famous
companies; Sannyo Leather Co. Ltd., Himeji, Japan being one of them.
Catalyst Polymer
Catalyst Polymer Industries Limited is a 100% export shoe component manufacturing
industry in Bangladesh. Founded in 2001, it is now manufacturing following Shoe
components :
TPR Sole
Mid Sole
Heel
Lift
Different Wedges
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The technology of Catalyst is adopted from Japan, Italy and Taiwan. Catalyst exports for
the footwear of Europe, Japan and Korea. Catalyst imports raw materials from reputed
suppliers globally. Catalyst has its own design development and processing lab (R&D), it
can develop products according to the design of the buyers, new ideas, new creations,
new inventions to the reality.
Nazmul Food Ltd.
It is a sister concern of Leatherex Footwear Industries Limited.
Scarpe e Moda Ltd.
An Italy-Bangladesh joint-venture leather footwear manufacturer, Scarpe e Moda Ltd.
operates under Italian technical know-how and to produce hi-tech and top Italian brands
in Bangladesh, those of which are sold in Europe, USA and Australia. The company has
started its commercial production from 2nd May, 2011. Scarpe e Moda Ltd. is the sister
concern of Leatherex Footwear Industries Limited.
In order to gain a better understanding of Leatherex, we must look at six components
that make up a footwear industry - suppliers, distributors, manufacturing, designs,
exporting and retailing.
7.2 SUPPLIES
Leather
Leather is one of the main, and most important component of a footwear product for
Leatherex. Leather for shoes and sandals is obtained from:
1.
Local tanneries of Hazaribagh - Ninety percent of Bangladesh's shoe leather is
made in the Hazaribagh district. Leatherex also obtains nearly all of its leather for
processing into footwear from one of the 200 tanning factories in Hazaribagh district.
2.
Impex International Limited - Impex is an association and sister concern of
Leatherex, owned by the same owner Mr. Nzamil Hassan. It is engaged in the
manufacturing and exports of Crust, Lining and Finished leather of Cow, Goat and sheep
in Bangladesh.
The company has a lot of experience in trading of raw hide and
processed leather.
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3.
Lastly, if the demand for leather is still not met then Leatherex imports from India,
Pakistan or Italy.
Outsole
The outsole is the layer in direct contact with the ground. Dress shoes often have leather
or resin rubber outsoles; casual or work-oriented shoes have outsoles made of natural
rubber or a synthetic material like polyurethane. The outsole may comprise a single
piece, or may be an assembly of separate pieces, often of different materials. On some
shoes, the heel of the sole has a rubber plate for durability and traction, while the front
is leather for style. Outsole is obtained from:
1.
Manufacturers located in Gazipur supply the plastic and TRP soles.
2.
Catalyst Polymer Industries Limited, a sister concern of Leatherex manufactures
outsoles, TRP soles, mid soles, heels and other components of the outsole. This is used
by Leatherex in the manufacture of their footwear.
Insole
The insole is the interior bottom of a shoe, which sits directly beneath the foot under the
footbed (also known as sock liner). The purpose of insole is to attach to the lasting
margin of the upper, which is wrapped around the last during the closing of the shoe
during the lasting operation. Insoles are usually made of cellulosic paper board or
synthetic non woven insole board. Insole is obtained from:
1.
With the use of imported shank boards and sheets, Leatherex manufactures their
own insoles in house.

2.
If demand requirements cannot be met, insole is imported from Japan, Italy,
Korea or Taiwan.
Molds
Molds for shoes and sandals are imported from Taiwan, Japan and Korea.
Other required materials such as Glue/Adhesive, Zippers/Buckles, Primer, Chemicals,
Synthetic Linings, Cotton Linings, Toe Puff, Different Sheets may be locally sourced or
imported. The packing inner box, master carton and silica gels, and wrapping paper are
also locally sourced and imported.
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The company has a Supervisory Bond License and imports of all of its raw materials duty
free covering GSP regulation.
7.3 MANUFACTURING
Leatherex Footwear has a factory facility of 75,000 square feet with 1200 employees, 3
assembly lines and a capacity utilization of 60-70%. Currently it can produce up to
800,000 units per year depending on the design and article, but the expansion of
production and production capacity is possible. Production facility components comprise
of insole and components, cutting section, sewing section, lasting section, outsole
section - leather, jute or plastic, TRP sections, finishing section and finally packing
section.
7.4 DISTRIBUTION
Leatherex is mainly export oriented; they take orders from buying agents and marketing
companies working for large overseas clients such as Japan, UAE, USA and European
Union. The buying agents represent these clients and price negotiations, negotiations of
payment, terms and conditions are all done through them. In order to be certain that the
factory is compliant with rules and regulations, these buying agents also make regular
visits on behalf of their clients. Furthermore, the agents are responsible for product
inspection and supervision of packing and container stuffing to ensure that the footwear
does not get damaged during shipment.
Leatherex has also recently opened a retail outlet for the domestic consumer market
where they sell their products directly to the consumers. There are no intermediaries and
a 0-level supply chain is followed.
7.5 EXPORTS
As previously mentioned, Leatherex is more export focused. The owner Mr. Nazmul
Hassan is vastly experienced in international leather products training and because of his
good trade relations is able to export to Japan, Korea, USA, UAE, Germany and Italy.
Leatherex is well equipped as per GSP regulations and KPT (for Korean market) for duty
free access and duty free raw materials import. An Annual revenue of 35 million USD is
made from exports only. The main exporting companies are B.Z. Moda by Everybody,
Italy, Regal, Alfredo Bannister In, ITO-Yokado and Fitfit.
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The designs are made as specific instructions from buyer companies and clients. For
exporting purposes Leatherex is associated with Dongguan - Honk Kong Multi trade for
designing and sample development. Since they have also opened a retail outlet, there is
also an in house innovation team that is working on research and development (R&D) for
manufacturing footwear better suited to consumer needs in Bangladesh.
7.7 RETAIL OUTLETS

To offer genuine and fashionable leather goods to the Bangladeshi people, Leatherex
Fashion and Footwear which is a sister concern of Leatherex Footwear Industries Limited
started its journey two years ago in 2012. They have four outlets at Gulshan,
Dhanmondi, Farmgate & New Elephant Road.
Mens sandal, casual, formal, womens sandal, pumps, and boots are their main
products. Mens sandals are priced from Tk 1,000 up to Tk 7,000 whereas womans
sandal starts from Tk 700. Starting from Tk 1500 mens shoe can go up to Tk 12,000.
The outlets remain open every day from 10.00 am-8.00pm, except the weekend
Tuesday.
'I have shopped here for some time and wouldnt buy my shoes from anywhere else
now. Leatherex offers first rate goods at a very competitive price, said Karin Ashraf a
student of a private university while she was buying her shoes from Leatherex.
Every product of Leatherex is strength tested and we emphasize on quality. We never
compromise with the genuineness of leather, said Nazmul Hassan, the managing director
of Leatherex.
They have divided their shoes into sections for women, men and kids, and the shop
organizes their inventory in multiple ways: one can shop by category; they keep it basic
with sandals, heels or boots or by special occasions, casual, dress or office. Whether
considering Leatherexs impressive inventory and extended categories, their wonderfully
showcased outlets, their hard-to-find specialty sizes or superior customer service, it is
clear that it is one of the best shoe stores.
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Leatherex has launched international brands of leather shoes and bags and Italian
famous brand Garden Franco Ballin and Tu Ogi. Now customers residing here can enjoy
world class foreign shopping at home.
Leatherex also offers both the in-store and online shopping. To shop online, a customer
needs to simply choose his/her design from the official facebook page. Their product
number, price including VAT and product description and then need to contact any
helpline to book an order can be seen with the picture. To make shopping experience
more convenient, they also offer home delivery services. Considering their huge
inventory with finely tuned categories and their variations, Leatherex is the shoe store
worth checking out.
7.8 CASE: EVOLUTION OF LEATHEREX- ALL THE RIGHT MOVES

Strong Vertical Linkage
Before founding Leatherex, Mr. Nazmul Hassan Sohail, was involved in the international
trade of leather. With years of experience, in 1999 he established Impex International.
Impex International started small but is now a buying agent for many companies around
the world including Sanyo Leather Co. Ltd, Japan. The company specializes in the
manufacturing and exports of crust, lining and finished leather of cow, goat and sheep.
In 2000, seeing the potential of Bangladesh in manufacturing footwear using cheap labor
and the available high quality raw materials sourcing from inside Bangladesh, Mr. Hassan
founded Leatherex Footwear Industries Ltd.
Leatherex being associated with Impex Intl. gets cost advantage and has a strong
backward and forward vertical linkage. For sourcing the main raw materials, i.e. leather,
for its footwear, Leatherex does not have to look for suppliers. Leatherex has more
control over the value chain in terms of both quality and costs the raw materials for the
ultimate product. This also gives the company competitive advantage over its rival firms
such as Fortuna. Differentiation is more viable thanks to the strong value chain
integration.
While sourcing leather and manufacturing process, for the most part, was internalized to
ensure greater control and competitive advantage, the company still had to depend on
local suppliers and sometimes imports for the soles. Mr. Hassan felt the need to integrate
the production of soles in to the production process of Leatherex. However, soles of
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shoes require a different approach for producing than does the manufacturing of finished
leather.
This dilemma lead Mr. Hassan to establish a new company, in 2001, which
specialized in the manufacturing of soles of different kind aptly named Catalyst Polymer
Industries Ltd. This move further strengthened the value chain for Leatherex giving it
further competitive advantage.
Exporting to non-traditional market

The demand of footwear products overseas can be subject to a lot of factors which are
out of the control of the manufacturer. The global recession affected the market demand,
especially in Europe, for shoes made in Bangladesh. As such, Leahterex expanded its
services to non-traditional markets like the Middle East and countries in Asia like Japan
and Taiwan. These markets are now more accessible than ever due to the fact that
China, mover of 80% of global footwear shipment, is now moving into high-tech
industries thereby giving Bangladesh a good potential chance to capture the market.
Recognizing the domestic market

Given the context of volatile international demand for the manufacturing services of
footwear offered by Bangladesh and hence Leahterex, the company decided to
rationalize the international market with the domestic market demand. Not only would
establishing Leahterex as a domestic brand ensure a constant revenue stream, it would
also act as a launching pad for any future plans of internationalizing the Leatherex
Brand. In 2012, Leatherex opened up its first retail outlet showcasing, its premium
products for men, women and children under its own brand name Leatherex. The
demand for leather shoes is growing among Bangladeshis and there is awareness in the
local market, thanks to media coverage, about the high quality, world standard products
that local companies are being able to produce. This adds to the sustainability factor of
launching brands with export quality product lines. Examples of success stories of brands
like Bay Emporium and Apex Adelchi only further reinforce the point.
Diversification and expansion

Leatherex Industries Ltd. recently expanded their 35,000 sq. ft. factory to a 75000 sq.
ft. facility now. They are currently operating at 50% capacity and can fit in more
production. The company has also ventured into the production of wider range of
footwear and into other leather goods such as wallets, belts, jackets and bags. They are
looking for strategic partners both in and out of the country to move more goods. Many
exporting companies have already started producing premium quality leather jackets,
belts and bags and are marketing them domestically, under their own name brand.
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Leatherex, although a bit late in the game, is following the footsteps of Apex Adelchi and
Bay Emporium and making use of their production capacities and marketing to the
domestic market.
8.0 BAY EMPORIUM

Bay Emporium Ltd was established in 2001. It is a footwear marketing company with a
wide range of products for men, women & children. Its target customer is medium to
medium high income groups.
8.1 COMPANY PROFILE
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It is currently one of the major shoe retailing companies. The brand is getting popular
very fast. It has 42 retail stores nationwide set at different strategic locations. The brand
is famous for leather shoes & leather sandals.
Bays mission is to satisfy customers by providing commercial fashion footwear at
superior value and quality served by competence sales associates. Its vision is to
position Bay Emporium as one of the leading marketers of family footwear for medium to
medium high income group of customers in Bangladesh.
Since Bay Footwear Ltd has been established, it has kept the cooperation reciprocal
benefit management conception. Bay Footwear makes efforts to seek customers,
suppliers and utilizes growth together to anticipate the mutual assisting and cooperation
and create benefit. This also is the origin of their company name Bay Footwear which
emphasized Three Wins management conception.
8.2 SUPPLIES
Bay collect their product from its own processing factories. Its first production factory,
Unit-1, which was established in 2001, is conveniently located near Dhaka in Konabari,
Gazipur. At that time, Bay Footwear Company still focused on vlcanized shoe, sold mainly
in Europe & East Asia. Bay Footwear second factory that means Unit-2 in Mouchak,
Konabari was set up in 2007, and started to produce cold cemented shoes. In 2008,
Unit-2 introduced Goodyear Welted construction and the stitch down technology from
Europe and started to produce special structured shoes. In order to manage the main
materials, Bay Footwear engaged in vertical integration and established the material in
factories to coordinate the demands of the production line expansion and to actively
control production costs, reduce material lead time and master the production cycles.
8.3 MANUFACTURING
Bay Footwear Ltd has two production factories in Konabari & Gazipur which are capable
of producing vulcanized, cemented, Goodyear Welted, stitch-down, safety shoes and
other construction shoes. The maximum capacity exceeds 5,000 pairs per day. Following
along with the improved production quality, the production system regulation conformity,
as well as the research and development designed capacity enhancement. Bay do not
have any training program of their own, thats why they only recruit trained employees
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with higher salaries. At present Bay has got around 850 employees working in different
branches.
8.4 DISTRIBUTION
Bay focuses only on customers and distributes products accordingly. It uses a one-level
consumer marketing channel. It has Tannery factory at Hazaribagh and processing
factory at Konabari acting as Manufacturers, and the Bay emporium retail shops situated
nationwide sells only to the final consumers. At present Bay Emporium have 42 branches
established around the nation and sells around five thousands pairs of shoes every year.
8.5 EXPORTS
Bay used to supply to different countries including Hong Kong, Italy, France, Japan and
UAE. But it decided to terminate its export due to high increase of local demand but
relatively lower increase in production rate. So at present Bay sells only in the domestic
market.

Every year, Bay works with European designers and develops fashion and comfort shoes.
Moreover, Bay participates APLF in every year. And also participates Japan Trade Fair 07.
In order to stabilize product quality, enhance working efficiency and promote customer
service, Bay Footwear uses the advanced management system. Its main corporation and
the factories provide a quality guarantee with which Bay Footwear offers its products.
The current product features of Bay includesMens: Sandals, Lace ups, Boots, formal shoes, loafers
Ladies: Boots, Sandals, Ballets
8.7 CASE: HOW BAY POSITIONED ITSELF IN THE MARKET

Bay launched their business in 2001. When Bay started their business in market they
adopted some action programs. At first Bay decided which customer segment to
penetrate and they chose to target the medium to medium high income group of
customers in Bangladesh. Then Bay introduced their brand like other brands, and Bay
Page | 55
wanted to become profitable. It took a handful of marketing campaigns and advertised

their product in Television alongside hanging a few billboards. Sometimes Bay gives
discount to their customer in order to supply their shoe at minimum price. The company
had been continuing the same action program up to 2011.
In 2012 Bay took some new action programs. In first five months Bay gave a lot of mass
media advertisement of their product. Bay also increased their showroom across the
country like Bata and Apex. After that they set up some bill board near the more busy
roadsides. In second three months Bay released advertisements by popular celebrities
and offered 25% discount. But when eminent brands like Bata and Apex are the
competitors and new brands like Jennys are trying to capture the market, Bays efforts
could not reach the target and it is clear that company needs some extra moves to
create a solid position in the market.
In response to the stringent competition in the footwear industry of Bangladesh, Bay
acknowledged its competitive threats and decided to manifest them more glamorously.
When it set up a retail store in Elephant Road, it knew there were already retail stores
established by the competitive brands. Nevertheless, they managed to position
themselves in the market through effective marketing strategy. The retail stores of Bay
Emporium are situated at the 1st floor of the building and another store of Apex is also in
operation there. But from the roadside view only the billboard of Bay Emporium is visible
because of its enormous size. The company has also painted both sides of the escalator
with their logo to lead potential consumers directly to its store. Such extensive
marketing program may not have any effect on the loyal customers of other brands, but
Bay have successfully managed to catch up to other brands by their tactical marketing
strategy aimed to attract potential customers.
9.
COMPARISON OF BUSINESS MODELS
The report has evaluated the business models of six footwear companies - Bata, Apex,
Arbana, Fortuna, Leatherex and Bay Emporium.
Among them, Bata is the oldest
footwear organization whereas Arbana is the most recent. All these companies differ
from the others, in one way or the other. Their differences reveal some key dynamics of
Page | 56
the footwear industry especially when they are compared in terms of their suppliers,
manufacturing department, distribution methods, exports scenario, product offerings and
retail outlets. Each of these factors is considered separately, and the major factors are
emphasized.
Supplies Large companies like Bata and Apex, tend to procure their raw
materials from independent suppliers. While Bata sources part of its raw materials
from independent suppliers at Hazaribagh, Apexs production depends entirely on
them. These companies employ transactional exchange relationship with their
suppliers, which are marked by short-term contracts with little repercussions.
Smaller scale companies, and more export orient ones like Fortuna and Leatherex
have backward linkage and source raw materials from sister concerns of the
company. Due to the low bargaining power enjoyed by smaller counter parts,
companies like Arbana are forced to have their own tanneries in Hazaribag. Other
items like insoles, cushion material, buckles, outsole and other tools and
materials like glue, sturdy threads and cutting tools, are usually sourced from
China, India and Taiwan. These raw materials are available in Puran Dhaka, but
companies willing to maintain high quality, source it directly via B2B contracts.
Manufacturing All of the companies covered in this report, manufacture their
own branded footwear. However, Bata, Apex and Leatherex, import premium
shoes from places like Italy, India, and Thailand. With a import duty of around
101%, too much import affects the profitability of the companies but low price
elasticity gives them an upper hand.

Distribution Large companies like Bata and Apex have their own central
distribution centers in Tongi and Tejgeon, respectively. Others, like Fortuna,
Leatherex and Bay Emporium, are mostly brick and mortar companies, with
Fortuna and Leatherex introducing e-store alternatives for their consumers.
Arbana on the other hand, is purely brick and mortar.

Exports Since Bata is a multinational company, its exports does earn foreign
currency for Bangladesh. Other companies like Apex, Fortuna, Arbana, and
Leatherex, all export to different countries. Japan is the biggest importer of
Bangladeshi made footwear. Among the export oriented firms, Arbana stands out,
in the fact that it uses its own brand name when selling in middle eastern
countries like Dubai. Apex Albechi sells 75% of its exports to European Union
countries and its exports make up two thirds of the countrys footwear exports.
Bay Emporium, on the other hand, is seen to take a completely different
approach from its competitors by closing down its export facilities and solely
concentrating on local sales.
Page | 57
Product Offerings Bata and Apex employ price discrimination strategy by

offering footwear for many different customer segments that differ in terms of
income, age and other demographics. This allows them to enjoy higher
profitability and maintain their leading position in the footwear industry of
Bangladesh. Other companies like Fortuna, Leatherex, Bay Emporium and
Arbana, are more product focused and invest on maintaining high-quality and
differentiation in their leather based products. Consequently, they do not have a
very wide range of different products and its target customer consists of some
homogenous segments which consists of high income groups and fashion
conscious individuals. In terms of design of the product, Arbana stands out as its
founder and designer Mr Mahim Rashid invests on coming up with highly
differentiated handcrafted footwear.

Retail Outlets Bata leads the local retail market in Bangladesh with more than
200 outlets around the country. Apex follows with a bit more than 100 outlets.
Other companies like Fortuna, Leatherex and Bay Emporium, have around 20
retail outlets, most of which are located inside the Dhaka city. Other smaller
footwear producers like Arbana have only a few retail outlets located in some
major shopping malls inside Dhaka city.
Hence, the above comparison gives a comprehensive view of the dynamics of the
footwear industry in Bangladesh. For instance, it can be inferred from this analysis, that
large companies like Bata and Apex tend to have a higher bargaining power when it
comes to dealing with suppliers; hence, are able to employ transactional exchange with
the independent suppliers. Much less established and newer companies like Fortuna, Bay
Emporium, Arbana and Leatherex cannot enjoy such advantage and are compelled to
vertically link their source of raw materials. This gives them a more comprehensive value
chain formation, and it is not surprising that the latter group is able to offer more
differentiated and high quality footwear products, which are mostly leather based, albeit
at a higher price. Furthermore, as Bata and the follower Apex leads on the local footwear
industry of Bangladesh, newer ventures with their ambition and creativity, are tapping a
more fashion-conscious market whose consumers are ready to pay at a premium to
acquire stylish leather footwear manufactured locally.
APPENDIX A: HAZARIBAGH THE FOOTWEAR HAVEN

Linkage between Hazaribagh& Footwear Industry
Page | 58
Hazaribagh
has been a controversial name around the
nation for
its serious
environmental effects. But it also plays an unparalleled role in the growth of the leather
industries of our country. The location acts as central hub of all the tanneries from which
processed materials are delivered to different footwear industries situated nationwide.
About 30,000 people work in the tanneries, producing leather for shoes. Ninety percent
of Bangladesh's shoe leather is made in the Hazaribagh district (Kogure, 2013). So the
location has significant influence over the development of the footwear industry.
Importance of Hazaribagh in the Footwear industry
Hazaribagh holds the key to the flourishing of the footwear industry, because of its Locational Concentration
Historically, the tannery industry got concentrated in the Hazaribagh area of Dhaka city
where nearly 90% of all tanneries are located. A number of tanneries took the
opportunity in 1990s for the production of crust and finished leather. There are
reportedly around 220 tanneries in Bangladesh but, in fact, only 113 tanneries are in
effective operation, out of these 20 units are reported to be fairly large (7 units very
large), around 45 units are considered of medium size and around 48 units are
considered small groups. With the exception of ten tanneries located in Chittagong (and
a few in other cities) the leather tanning industry is concentrated at Hazaribagh area in
Dhaka (Biswas & Hamada, 2012)..According to estimates, almost 90 percent of the
countrys leather and leather goods come from Hazaribagh, suggesting the significance
of the location.(Ahmed & Bakht, 2010).
Synchronized Developmental Trait
The development of tanneries in Hazaribagh can have profound impact in the
development of footwear industry. Among the three sub-sectors of the leather sector, the
tanning industry is the most important and fundamental of all. There are more than 200
tanneries while the majorities are concentrated in the Hazaribagh area of Dhaka. More
than 400 million square feet of raw hides and skins are processed and exported by
tanneries each year in recent times. This sub-sector earned revenues in excess of USD
330.16 million during 2011-12 with a growth rate of more than 10 percent. The
importance of this sub-sector is grounded on the regular and abundant supply of raw
materials from the local livestock base. Additionally, the significance of this sub-sector
also stands on the fact that it holds key to the enormous growth potential of other two
sub-sectors. It is evident from research that the sector loses massive value addition
opportunities in exports as 50% of leather is being exported as lower value-added
Page | 59
products in the form of semi-finished and finished leather. Even though the other 50% is
being converted into footwear and leather products, most of the exports are targeted
towards low-end market. These findings indicate that the planned development of the
tanning industry could help entrepreneurs of other leather sub-sectors like footwear
indutry to tap bigger export potentials.
Economies of Scale
The footwear companies are reaping the facilities of economies of scale due to high
concentration of tanneries in Hazaribagh. The established brands like Bata and Bay
Emporium have their own shoe processing factories at Hazaribagh. The factories enjoy
positional advantage as they can collect raw materials and components at a lower price
than the factories located elsewhere. This diminishes the production cost of the
companies and allows them to deliver products in the market at a lower price. Besides,
the centralization of the processing factories encourages mobility of labor force within
the firms, leading to quality product design.
Environmental Trade-offs
The contribution of Hazaribagh in the growth of footwear industry is undeniable. But the
terrible environmental condition of the place begs the question whether the revenue
earned from the sector should be addressed as blood money. There is no waste
management system at Hazaribagh. Dozens of chemical materialsincluding chrome and
sulfur compoundsare used to process the leather. The chemicals create a foul-smelling
stench that hangs in the air of the Hazaribagh district. Despite the use of hazardous
materials, most workers in the tanneries do not wear gloves or masks. A survey
conducted in 1999 on 179 workers at tanning factories by the Society for Environment
and Human Development, a nongovernmental organization, found high levels of disease.
The incidence rate of dermatitis among the tannery workers was 52 times that of the
national average, and the rates for gastritis and asthma, respectively, were 37 times and
six times the national average. The poor waste management has also contributed to the
deterioration of water quality of Buriganga (Paul et al., 2013).
The factories and tanneries require installing modern technologies in their production
and waste management systems. But the production cost will go up then and it may turn
to be a big constrain for Bangladesh to compete with others in the global market. So it
Page | 60
can be assumed a trade-off relation between the export trend of leather sector and the
water quality of Buriganga.
Footwear Industry Potential &Hazaribagh

The massive environmental effects incurred by Hazaribagh may pose something more
than just an ethical dilemma for the footwear industry. The export of the industry will be
seriously threatened if the current condition goes on. Major destinations of our footwear
industry like USA and Japan have been constantly raising questions about the
manufacturing practices of the industry. Bangladeshi leather products will have no access
to developed countries, including those of European Union if the government fails to set
up the CETP by June 2014. The industry in Bangladesh as a whole, faces considerable
concerns with regard to end-of-life, recycling and re-use of leather and leather products.
So the renovation or relocation of the factories manufacturing at Hazaribagh has become
a doctors order to retain national image and ensure uninterrupted growth of the
footwear industry.
APPENDIX B: QUESTIONNAIRE FOR ORGANIZATION

PERSONNEL
1. Suppliers of Leather material:
a. Who supplies?
b. Is the leather processed before being supplied or after?
c. If before, what kind of processing specification does the company
(Bata, Apex, Leatherex)
d. require?
e. d. How does Eid ul Adha affect things regarding supply of leather?
2. Suppliers of other essential parts: (Sole, Velcro, Tag, Insole, Heel, etc.)
a. Do you make or buy these parts?
b. If you make, do you make other products in the same facility
unrelated to shoes
c. If you buy, do you buy domestically or import from abroad?
d.
If you buy, how strong is the suppliers bargaining power?
3. Distributors:
a. Do you market to consumers or industries or both?
b. What type of supply chain do you follow?
Page | 61
c. Elaborate on the supply chain intermediaries, if you have any.

i. Value addition by intermediaries
ii. Terms of trade
iii. Power of negotiation
iii. Nature of relationship (longstanding or new)
4. Manufacturing:
a. How many production facilities (shoes and shoe related
plastic/metal/textile product) do you have?
b. Where are your factory/factories located?
c. How long have they been active?
d. How big is the facility in terms of size and production capacity
e. What is the industry average of the size and capacity?
f. How many workers are employed?
g. How long are they trained for?
h. Who engineers/designs the manufacturing for the many different types
of shoes that
might be required to produce? (not every shoe is produced using the same
technique)
5. Design:
a. What type of shoes do you produce (male/female)
(formal/sneakers/ballerinas/high heels)
b. Who designs your products? (local inhouse designers/foreign
designers from foreign buyer companies like H&M and what not)
c. Are your in house designers trained? If so, by whom?
d. Are your designs inspired by local or international trends?
e. How do you make sure your designs are in line with your brand
image (when youre selling under your own name as opposed to
exporting)?
Page | 62
6. Exporting:
a. Do you export?
b. Do you export shoes designed by yourselves or do you act as only a
manufacturing facility for foreign designed products?
c. Where do you export?
d.
Name a few of your famous buyers
e. What type of incentives/facilities from the governments of

Bangladesh and the importing nation do you get, being an exporter
from a developing nation?
f.
g.
Recently the leather industry was removed from PRIORITY

SECTOR. How does that affect you?
Do you:
i. export to established name brands? (H&M)
ii. export to countries under you OWN brands?
iii. export to countries without as brandless products?
h. How sustainable do you think the export market is compared to the

local demand?
i.
Who are your competitors in exporting (other large exporters from

BD)?
j.
Who are your competitor countries in exporting?
7. Retail:
a. How many retail outlets do you have? Since when are they
operating?
b. Where are they?
c. How is the local demand pattern (design, frequency of purchase,
reservation price) compared to international?
d. How does Eid and other festivals affect demand?
e. How does local non-brand retailers located in cluster on and near
Elephant Road affect your business?
f.
Who are your main industry competitors? (Apex VS Bata)
g. Who are you main market competitors? (Cats Eye, Artisti, Mustafa
Mart VS Apex) [Different industry same market] [Please note that
Cats Eye and Artisti outsource their manufacturing and designing
to Thailand for shoes. Ato boro gadha -_- ]
h. What would you say your current local market share is like?
i.
Do you have any INTERNATIONAL retail outlets? If so where? Since

when? How has it been doing?
8. Talk about an issue specific to your company.
Page | 63
REFERENCES
About. (n.d.). Retrieved from Fortuna Bangladesh: http://www.fortunabd.com/about
Ali, M. S. (2011, July 9). Leather Industry development. Retrieved from News of
Bangladesh: http://bangladesh-web.com/view.php?hidRecord=359590
Ahmed, N., & Bakht, Z. (2010). Leather Footwear Industry in Dhaka: A Case Study.
Dhaka: Bangladesh Institute of Development Studies.
Akter, S. (2010, june 30). Footwear maker eyes expansion. Retrieved from The Daily
Star: http://archive.thedailystar.net/newDesign/news-details.php?nid=144761
Bangladesh Bureau of Statistics. (2009). Yearbook 2009. Dhaka: Bangladesh Bureau of
Statistics.
Bata. (n.d.). About Us. Retrieved from Bata Shoe Company (Bangladesh) Ltd.:
http://www.batabd.com/about-us.html
Bata Shoe Company (Bangladesh). (n.d.). Retrieved from Bata: http://www.batabd.com/
Page | 64
Business to Business- Wholesale. (n.d.). Retrieved from Bata:

http://www.batabd.com/B2B/Wholesale
Biswas, B., & Hamada, T. (2012). Relation between Hazaribagh Tannery Industry
Development and Buriganga River Pollution in Bangladesh. International Journal
of Environment, 2(2), 117-127.
Choudhury, P. M. (2010). Apex Adelchi Footwear Limited. Dhaka: BRAC EPL.
D.K.Acharya. (2011, December). Buyer Seller Meet cum Exhibition of Footwear
Components, Dhaka, Bangladesh, Dec.10 -11,2011. Retrieved from Leather News
India.
Dhaka Tribune. (2013, November 7). Relocation of Hazaribagh tanneries by end next
year.
Retrieved
from
Dhaka
Tribune:
http://www.dhakatribune.com/bangladesh/2013/nov/07/relocation-hazaribaghtanneries-end-next-year
Export Promotion Bureau. (2006-2007). Bangladesh Export Statistics. Dhaka: Export
Promotion Bureau.
Internatinal Leasing Securities Limited. (2013). Apex Adelchi Footwear Bangladesh
Limited. Dhaka: The Financial Express
Gazi,
R. (2014, March 28).
A cheaper
way. Retrieved
from The
Daily Star:
http://www.thedailystar.net/wide-angle/a-cheaper-way-17655
Guardian, T. (2012, December 14). Dhaka's leather industry thrives on poor wage,
clean-up. Retrieved from The Financial Express: http://www.thefinancialexpressbd.com/old/index.php?ref=MjBfMTJfMTRfMTJfMV8xXzE1MzE1OQ==
International Monetary Fund. (2000). IMF Staff Country Reeport. Retrieved from IMF
Staff Country
Report
Kogure, T. (2013, November 26). Bangladeshi tanneries making shoe leather for Japan
poison
workers.
Retrieved
from
The
Asahi
Shimbun:
http://ajw.asahi.com/article/asia/aroundasia/AJ201311260007
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Niloy,
S.
(2013,
October
bdnews24.com:
16).
Hazaribagh
ready
for
rawhide.
Retrieved
from
http://bdnews24.com/bangladesh/2013/10/16/hazaribagh-
ready-for-rawhide
Nur, S. A. (2013, September 8). Footwear customers now prefer local brands. Retrieved
from
The
Financial
Express:
http://www.thefinancialexpress-
bd.com/old/index.php?ref=MjBfMDlfMDhfMTNfMV85MF8xODI2OTk=
Paul, H. l., Antunes, A. P., Covington, A. D., Evans, P., & Phillips, P. S. (2013).
Bangladeshi Leather Industry: An Overview of Recent Sustainable Developments.
PKF. (2013). Technical Report: Leather Sector Includes a Value Chain Analysis and
Proposed Action Plans.
Saha, S. (2014, May 14). Leather industry hits record exports: $1b . Retrieved from
http://www.parliament.gov.bd/e-clipping/media/news_file/1400046081.pdf
Page | 66

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D Y N A M I C S O F T H E F O OT W E A R

Institute of Business Administration

June 24, 2014

Enclosure: Dynamics of the Footwear Industry of Bangladesh - A Comparative Study on the

2. Overview of Footwear Industry in Bangladesh......................................................10

Comparison of Business Models........................................................................57

Appendix A: Hazaribagh the Footwear Haven..........................................................59

1.2 OBJECTIVE OF THE REPORT

The current position of footwear industry

The insufficiency of information acted as the main constraint of the study

available after the deadline of this report

not paint the correct picture of the current footwear industry

Primary data: To collect inside information of the footwear industry, we have

questionnaire have contributed to the credibility of the report.

2. OVERVIEW OF FOOTWEAR INDUSTRY IN

2.1 LOCAL SCENARIO

2.2 EXPORT SCENARIO

2.3 INDUSTRY ANALYSIS

2.3.1 SWOT ANALYSIS

Low labor cost

No longer a High Priority Sector (HPS)

Shift of China to High-Tech industries leaves a Demand-Supply gap to be

2.3.2 PORTERS FIVE FORCES ANALYSIS

ANALYSIS ON THE LEATHER FOOTWEAR INDUSTRY OFGLADES

Force 1: Threat of New Entrants

the barrier to entry that is present, coupled

Economies of Scale: Economies of scale refers to declines in unit costs of a

locations, proprietary technology or proprietary production material inputs which

barriers for the new entrants. So in this sector the

Buyers Choice of Substitute: Bangladesh is a country of middle class people.

Relative Price-Performance of Substitute: It refers to the cost-effectiveness of the

Force 4: Bargaining Power of Buyers

The products Purchased from the Industry are Standard or Undifferentiated:

Buyers Faces Few Switching Costs:The customers can easily switch to an

switching.Anyone wearing footwear of BATA can easily switch to APEX at their

Force 5: Bargaining Power of Suppliers

The Supplier Groups Possess a Credible Threat of Forward Integration: It provides a

The Supplier Groups Product is Differentiated or It has Built Up Switching Cost:

2.4 CASE: FOOTWEAR INDUSTRY THE NEXT BIG THING

3.1 COMPANY OVERVIEW

3.2 VALUE CHAIN DELIVERY

Tannery facility at Hazaribagh

In terms of manufacturing efficiency, Bata Bangladesh uses ERP (Enterprise Resource

3.5 PRODUCT OFFERINGS

B-first: shoes for school-going children

3.6 BATAS LEADERSHIP POINTS

in Thailand and Singapore.

Thanking the customer to revisit.

300 outlets of Bata nationwide.

3.4 CASE: BATAS STRONGHOLD IN THE FOOTWEAR INDUSTRY OF

implementation, Bata Bangladesh has retained its market stronghold.

4. APEX ADELCHI FOOTWEAR LIMITED

4.1 COMPANY OVERVIEW

Long term orientation

Otherwise, it purchases from different suppliers in from time to time by direct

4.4 PRODUCT OFFERINGS

Mens dress and formals

On an average, 75% of its total revenue generated from export mainly to EU

4. CASE: WHY IS APEX FAILING TO BE THE MARKET LEADER IN