International Business Environment – Assignment

Group 2: Amit Semwal, Harshit Gupta, Pritam Mondal, and Vikash Garg.
Assignment: PESTLE Analysis of Bangladesh.

Name of the Country: Bangladesh

Name of the Company: Razorpay

POLITICAL

Bangladesh being a very populated country always wanted to have a representative

government since its partition in 1947 from India and separation from Pakistan in 1971. It
helped in creating a democratic political system. The constitution was publicised in 1972.
Later, the hero of 1971 war Sheikh Mujibur Rahman changed the constitution and took
over the power as a dictator. The successors of him all were expressing military interests.
But still the fight for equality was active in the country as in the 1980’s.

There started the evolution of different political parties but each with a different view and
all of them wanting to rule the country. The socialist, the communist, the centrist and
various traditional Islamic parties were few of them. There was lot of political instability in
the country during 1982 when parties refused to take part in parliamentary politics when
Hussain Muhammad Ershadi was the president. It resulted in the military to continue its
autocratic rule. Ershadi held power and bought in a change by introducing the structure of
local elections in the country which showed some democratic ideals. This resulted in
bringing up new political leaders and groups for representative race throughout the
country.

Current Political Leaders

President: Abdul Hamid (Since 24 April 2013).

Prime minister: Sheikh Hasina (Since 6 January 2009).

Executive Power

The Head of State, the President of the Republic, is elected for a 5-year term by the
Parliament. The President of Bangladesh has a representative role as the Prime Minister
holds most executive powers. The latter is appointed by the President and must be a
member of the majority party in the parliament. The government is composed of
ministers selected by the Prime Minister.

Legislative Power

Legislative power is vested in a unicameral parliament called the House of Nations or

Jatiya Sangsad. Its 350 members are elected by direct universal suffrage for a five-year
term.
Main Political Parties

- Awami League (AL): governing party, center to center-left;

- Workers Party of Bangladesh: left-wing to far-left, communism, Marxism-
Leninism;
- Jatiya Party: center-right to right-wing;
- Bangladesh Nationalist Party (BNP): right-wing, national and social conservatism,
economic liberalism
- Awami League (AL): governing party, center to center-left;
- Workers Party of Bangladesh: left-wing to far-left, communism, Marxism-Leninism;
- Jatiya Party: center-right to right-wing;
- Bangladesh Nationalist Party (BNP): right-wing, national and social conservatism,
economic liberalism.

Bangladesh: Political stability index (-2.5 weak; 2.5 strong)

For that indicator, we researched data for Bangladesh from 1996 to 2019. The average
value for Bangladesh during that period was -1.21 points with a minimum of -1.86 points in
2005 and a maximum of - 0.37 points in 1998. The latest value from 2019 is -0.92 points.
For comparison, the world average in 2019 based on 195 countries is - 0.05 points.

ECONOMIC

Bangladesh recorded one of the fastest growth rates in the world in the past few years
with a stable economic performance that has helped to reduce poverty and social
inequalities. GDP growth was estimated to have reached 7.9% in 2019 and is forecast to
fall to 2% in 2020 due to the outbreak of the COVID-19 and pick up to 9.5% in 2021,
according to the updated IMF forecasts from 14th April 2020. The post-pandemic global
economic recovery and the private consumption boosted by strong remittance flows from
the Bangladeshi diaspora around the world are expected to be the key drivers of growth
in 2021.

Some Key Economic Indicators in 2019

• GDP- $347.99 Billion

• GDP per Capita- $2000
• General government gross debt- 34.6% of GDP
• Public debt ratio to GDP- 35% (appx.)
• Inflation- 5.5%
• Current account deficit- 2.8% of GDP
• Official unemployment rate- 10% (appx.)
Main Sectors of Industry

Agriculture represents 13.1% of GDP and employs 39.7% of the total workforce. Main
crops include rice, tea, jute, wheat, sugarcane, tobacco, spices, and fruits. Bangladesh is
the world's fourth biggest rice producer, although shortages caused by natural disasters
occasionally force the country to import rice.

Industry represents 28.5% of GDP and employs 20.5% of the total workforce. Textile is by
far the largest industry, accounting for more than 80% of the country's total exports. A risk
factor for the clothing industry is the gap between local supply and demand of cotton
(Dhaka Tribune). Secondary industries include paper, leather, fertilisers, metals, and
pharmaceuticals.

Services account for 53.5% of GDP and employ 39.8% of the total workforce. Microfinance
and computing are among the largest sectors, with the country's technology exports
reaching around USD 1 billion per year. The government aims to increase technology
exports to USD 5 billion by 2021.

SOCIAL
Educational System of the Bangladesh: -

Their Education system is impressive. They are also too much concentred-on education
system. At all levels of education, students can decide to take liberation of their education
in English or Bangla. Private schools are tending to make use of English-based study
intermediate at the same time as government-sponsored schools use Bangla.

Culture of Bangladesh

Bangladeshi culture is very colourful. Similar like Indian culture. They celebrate every
festival with great joy and colours. Bangladesh has a gorgeousness culture about the
wedding and different types of colourful occasions. Clothes are the integral part of the
Bangladesh culture.

In Bangladesh most of the population is Islam. That’s while in Bangladesh most

communicating language is Urdu but in Bangladesh mix culture and mix-up of religions
that’s while many of the Hindus also stay there. So that Many Bihari, Sanskrit, etc.
Communicating languages are use in Bangladesh. Bangladesh is also extremely taking part
in the art and cultural event. We can see this thing on 16 January 1951 when they took the
part in the occasion in addition to was hosted by the Dhaka Art Group. From that time
onwards art galleries in Bangladesh began springing up. Today there are a lot of art galleries
all the way from side to side Bangladesh.

Corporate Culture in Bangladesh

Bangladesh’s corporate culture is also interesting to know. Mainly MNCs has a

marvellous attention of creation of it as of this marketplace. Bangladesh is good enough
in the Business world. For the Business and for the export and import Bangladesh has
much kind of the rules and regulation. Bangladesh got support from the U.S.A.
government.

Ethical & Political Issues in Bangladesh

Bangladesh makes good ethical and policy culture country. However, many of the ups and
downs came in the climate and in the economic and many storms came on the country
although they are growing successfully. Bangladesh culture is most interesting things.
However, Bangladesh has lots of the colourful culture and religions also. Their education
systems and their policies for the Business and for maintain the relationship with the
foreign also somehow impressive.

TECHNOLOGICAL

A National Science and Technology rule has been formulated and adopted by the
Government. It has laid down the directions for S and T activities and learning, institutional
and manpower development. Dissemination and certification services. The National Council
for art and skill (NCST) determines S and T policies, reviews the activities of Dissimilar
institutions and provides direction towards S and T study and actions. Bangladesh has a
comparatively long understanding in the use of computers - the first second generation
computer was introduced in 1964 at Dhaka & very soon some of the large banks &
manufacturing concern started using PC mainly for bookkeeping & payroll applications. The
utility companies (e.g. gas, electricity) also started using the agency services of these
installations for their client billing. Unfortunately, the financial crisis that the nation faced
instantly after its independence in 1971 did not permit the sustenance of this early lead &
lack of protection forced the closure of most of this installation. Today information
technology (IT) is a topic of major attention in Bangladesh. Present Government already
considered Information Technology as a major concern sector and for that it is providing all
required supports to the private and public sectors so that they can expand in the market to
provide data processing and other software services. Considerate the bright future in
information technology and great number of students, businessmen and young
professionals are showing their interest in getting information on computers and its
applications.

LEGAL

The parliamentary process and the political dialogue at the national level are presently
not conducive to broad socioeconomic development. The democracy is young and fragile
and state institutions are weak.

The incidence of violence, even murdering of political figures and journalists, seems to have
increased during recent years. The law and order situation are not upheld in society and the
risk for further deterioration is apparent. Human rights violations continue, especially linked
with political activities. At the local level there has been some positive progress, but the
democratic process is shaky and dependent on the local power structure. Consequently, the
majority of the population is unable to have a voice in the political process and lacks access
to decision-making, both locally and nationally. Therefore, there is challenge for the country
to create a real participatory democracy, built on the rule of law for all its citizens.

The centralised, corrupt and inefficient state structure is a hindrance to development.

There is limited accountability and transparency, which has created a breeding ground for
corruption and a growing mistrust from the public. The public administration also lacks
financial and adequate human resources to perform its duties. Management of public
institutions needs to be strengthened at all levels and remains one of the obstacles for
change. As a consequence, there are negative effects on the general public, as it cannot
receive the public services it requests, and not least the private sector, as the red tape and
corruption create inefficiencies in industry and commerce and reduce the potential for
Bangladesh to compete in the world market. It is also a negative factor for foreign investors
as they analyse potential markets. It is therefore a major urgent national challenge to
reform the public administration and reduce corruption for the benefit of the whole
economy.

The polarization & hostility between AL & BNP continue & the opposition frequently uses
traditional ―Hartals‖ (civil disobedience general strikes) as political arms. Political
demonstrations often end in violent clashes between different groups & politically
induced murders occur regularly. The political, administrative & economic power is
concentrated within a small elite with inherited vested interests. The elite with its family
&kinship bonds, is well connected within all spheres of society & patronage is used to
retain profits. Hence, the Political procedure at the national level is driven more by
personal & power rivalry than ideology or social & economic concerns. Society therefore
is highly politicized & the main parties make frequent use of their close connections with
student unions; trade unions & local ―Mastaans (petty criminals).

The state structure is highly centralized, inefficient & oversized in relation to the
economic status of the country & the current low level of state income generated which
called income most state institutions perform poorly & they are even considered in some
instances to be liabilities not as assets in terms of their contribution to socioeconomic
development29. There is limited accountability & transparency for those in authority on
the use of public capitals.

ENVIRONMENTAL

Bangladesh has shown tremendous efforts in the sustainable growth in the recent years.
With nearly 150 million citizens on a landmass of 147,570 square kilometres, Bangladesh is
among the most thickly populated countries in the world. It’s Sustained growth in recent
years has created higher demand for electricity, transport, and cable services, and
contribute to widening communications deficit. Becoming a middle-income country will
require substantial efforts on many aspects. These covers maintaining strengthening
revenue recruitment; macroeconomic constancy; deepen financial-sector and external
trade reform; improving labour skills, tackle energy and communications deficit; economic
supremacy, and urban management; and adapt to climate change. Bangladesh can be an
export source of power, with its labour-intensive manufactured and service exports rising at
double digit on a sustained basis, if it boosts up government decision-making.