Memorandum

The Knobbly Pratt Co.

Date: 18/08/2015
TO: Yulius Santoso, CEO
FROM: Michael Fung, COO
SUBJECT: Political Risk in Bangladesh
I recommend that, in the wake of the Rana Plaza incident, we must engage with improving
the working conditions, as well as have good relations with the government of Bangladesh in
a climate of heightened political risk. It is in the best interest of the company to promote a
safe workplace environment, a more open workplace communications network between
employees, managers, and our UK based company, as well as account for the supply chain
from production to sales in stores.
At the meeting, executive members have expressed invested deep interest in the changing
political risk in Bangladesh over the past two years. While Bangladesh is often used as a lowcost supplier in the garment industry, workers unrest over wages and work conditions have
only been brought to the public surface since the Rana Plaza disaster, causing death to
approximately 1100 people. This has sparked activism against retailers, evident in
examination of the backlash on UK companies such as Primark, Bonmarche and Matalan.
Naturally, it of high concern that we take action now in improving our relations with
Bangladesh in order to survive the current unrest. Studies have shown that there is close
relations between political risks taken by MNEs and their performance (Delgado-Garca &
Jimnez, 2012), which is indication that we should consider the obvious need for corporate
social responsibility. In reflection of the devastation caused by the garment-factorys collapse,
we identified several issues which we need to counter-act against. This largely fell under a
lack of corporate social responsibility, consequently damaging the reputation and evoking

reactions of companies from their stakeholders. This includes failure to maintain a safe work
environment, workplace corruption, lack of thought towards Bangladeshs competitive
clientelism in keeping up with Western consumer demand, unstable governance of the RMG
sector, and essentially flawed labour laws in Bangladesh (Surowiecki, 2013). This is evident
in the BGMEA (Figure A), where the demand from Western consumers has resulted into a
doubling of workers and a lack of growth in garment factories.

Our first focus should be attaining a stronger supplier connection by means of improving
working conditions. Currently, the Bangladesh garment industry is largely associated with
low wages and the lack of legal legislation enforcement. Even while there are labour laws
which gave workers certain rights, it is the lack of enforcement of these rights which have
allowed employers to take advantage of their employees (Amirul and Blanch, 2013).

While this is an ideal course of action, this is under the assumption that we are able to attain
good relations with the Bangladesh government in order to implement these measures. While
implementing policies which give workers more security, it is hard for such an immediate
change in the working lifestyle in Bangladesh. Quite likely, while the Bangladesh
government has worked with the ILO in enforcing minimum labour standards and adopting a
law reform proposal, it may very well amount to nothing, as in the case with the 2006
Bangladeshi Labour Law (Amirul and Blanch, 2013).