Noakhali Science and Technology University

A Group Assignment
0n
Impact of General Environment On different industries of Bangladesh

Course Name: Strategic Management

Course Code: MBA 5101

Submitted To
Suborna Biswas
Assistant Professor
Dept. of Business Administration
Noakhali Science & Technology University

Prepared By-:Group No-8

Md Ekramul Islam
Abu Faisal M Tanvir Ahmed
Tama Dhar
Farzana Binte Iqbal
Ahamed Hossain
 Group No-8
Group Information

Name ID Contributions

Farzana Binte Iqbal BKH1810051F Demographic Environment

Tama Dhar BKH1810036F Introduction, Socio-cultural

Environment, Technological
Environment
Ahamed Hossain ASH1810063M Economic Environment

Md. Ekramul Islam ASH1810003M Political-Legal Environment

Abu Faisal M Tanvir ASH1810030M Global Environment

Ahmed
Introduction
According to UBC Net Tutor Commerce (2008), environment is the sun total of conditions that
surrounds us at a given point of time and space. It is comprised of the interacting systems of
physical, biological and cultural elements which are interlinked both individually and
collectively. It states further that environment is the sun total of conditions in which an organism
has to survive or maintain its life process. It influences the growth and development of living
forms. Environment refers to anything that immediately surrounds an object and exerting a direct
influence on it. It consists of the interacting systems of business physical and cultural elements
which are interlinked both collectively. Blurtit (2013) also regards business environment as those
conditions and forces which are eternal to the business and are beyond the individual business
unit, but they all operate within it. .Fermando (2011) regards business environment as external
forces, factors and institutions that are beyond the control of the business and they affect the
functioning of a business enterprise.These include customers, competitors, suppliers, government
and the social, political, legal and technological factors etc. Oyebanji (1994) defined business
environment as those factors that can influence the individual’s business organization. He
stressed further by saying that every organization must take into consideration the environmental
constraints, material and human resources in their respective Business environment differs from
place to place, region to region and country to country. (Ogundele 2012)According to Adebayo
et al. (2005) business environment can be broadly categorized into internal and
external environment with the former comprising variables or factors within the control and
manipulation of the firm to attain set objective while the latter encompasses factors that are
outside the control and manipulation of the firm. Hence, firm must develop a plan that will help
it to cope with the various environmental forces (Oluremi and Gbenga, 2011). Similarly, the
nature of business environment are said to be classified as dynamic, stable and unstable which
often help a firm in the selection of appropriate strategies (Ibidun and Ogundele, 2013).
Adeoye (2012) opined that in order for business to cope with the dynamic and rapidly changing
business environment, there is a need to develop and implement appropriate strategies that would
safeguard their operations and yield the desired results. Similarly, Ogundele (2005) added that a
firm perception of the nature of the business environment is a function of its size and industry.
This environment is typically composed of factors such as social values, educational
political, economic, legal, behavior demographic, natural environment, natural resources,
technologies etc. Now we will see the impact of each environment on different industries of
Bangladesh in term of positive, neutral and negative
Demographic Factors:
Demographic analysis is the study of a population in relation to attributes like age, race, and sex.
Demographic data is the statistical expression of socioeconomic information, including
employment, education, income, marriage rates, birth and death rates, and more.
When attempting to understand and meet client wants, demographics are an important set of
factors that shouldn't be overlooked. A few examples of the variables that can have a big impact
on consumer behavior include age, sex, income, education, marital status, and mobility.
Additionally, different socioeconomic groups have a propensity to buy things of various quality
and varieties. As a result, different socioeconomic groups frequently make purchases in very
different ways. This suggests that the target demographics’ income may be a key consideration.
For instance, many upscale clothing businesses cater to high-end clientele, whereas Kmart
focuses on middle- and lower-class demographics.
Trends Industry Positive Neutral Negative
Aging Population Health care 
Automobile industry 
Baby products 
Rising Affluence Brokerage services 
Education 
Fast foods 
Changes in ethnic Financial institution 
composition Tourism & Travels 
Geographic Online Banking 
Distribution of Agriculture 
Population Mineral water 
Greater disparity in House building 
income level corporation
Daily necessary 
products
Baking products 

Reasons:
Aging population
As people get older, they visit the doctor more often because illnesses and infections are more
prevalent. This has a positive effect on healthcare. On the other hand, as people get older, their
rate of car use decreases, which is bad for the auto industry. Baby products may be dangerous
because children constantly use them.

Rising Affluence
Since brokers may get fees, increased customer wealth has a beneficial effect on brokerage
services. As we age, we consciously avoid eating fast food as much as possible since it is
unhealthy, which has a negative impact on the fast-food industry. Growing wealth has a good
effect on the education industry. Parents are now financing their children's education beyond the
requirements of compulsory schooling, all the way through college and beyond. Families in the
middle class spend 13% of their primary income, second only to food, on education.

Changes in ethnic composition

Bangladesh's financial institutions are negatively impacted by changes in its ethnic makeup. Job
security, discontent with compensation ranges and gaps, ethnicity, disability, and supervisors'
assessments are among the factors.Due to the diversity of ethnic groups' lifestyles, changes in
ethnic makeup draw tourists. The local population has the potential to profit financially from the
natural and cultural treasures found close to where they live thanks to tourism. Tourism is
benefiting from this.

Geographic distribution of populations

People in rural places can readily use online banking services because of how positively online
banking influences geographical dispersion.The agriculture industry significantly overstates the
negative geographic distribution of the population. Bangladesh's economy is heavily focused on
agriculture, however due to its extraordinary population density, it runs the risk of achieving
agricultural production saturation.Since fresh water is not readily available everywhere in our
nation due to geographic distribution, we rely on mineral water to suit our demands. Therefore, it
may be concluded that the geographical dispersion of mineral water has a good impact.

Greater Disparity in income level

It is not feasible for everyone to build homes in residential regions due to growing income
inequality, hence it can be claimed that this has a negative impact on the residential construction
business.Common grocery items must be purchased, which has a neutral effect despite larger
wealth gap.Despite our bigger economic disparity, it has no positive or negative impact because
we can afford the ingredients in baked products. Thus, it is neutral.
 Socio- Cultural Environment

Concept of Socio-Cultural Environment

Socio-cultural environment in broad terms consists of both the social system and the culture of a
people. It refers primarily to man created intangible elements which affect people’s behavior ,
relationship, perception and way of life, and their survival and existence. In other words, the
social-cultural environment consists all elements, conditions and influences which shape the
personality of an individual and potentially affect his attitude, disposition, behavior, decisions
and activities. Such elements include beliefs, values, attitudes,buying habits, forms of behaviour
and life styles of persons as developed from cultural, religious, educational and social
conditioning, ( Bennett and Kassarjian, 1972; Adeleke et.al, 2003 ). These elements are learned
and are shared by a society and transmitted from generation to generation within that society.
Thus, social-cultural environment, in relation to business, can be defined as consisting of all the
elements of the social system and culture of a people which positively or negatively affect and
influence business emergence, behavior and performance, and overall development in general.
It also include to people’s attitude to work and wealth, role of family, marriage, religion and
education (Tacheva, 2007). The social environment of business includes social factors like
customs, tradition, values, beliefs, poverty, literacy, life expectancy rate etc. Ajonbadi (2017) the
social structure and the values that a society cherishes have a considerable influence on
the functioning of business firms. For example, during festive seasons there is an increase in the
demand for new clothes, sweets, fruits, flower etc. Due to increase in literacy rate the consumers
are becoming more conscious of the quality of the products. Due to change in family
composition more nuclear families with single child concepts have come up. This increases the
demand for the different types of household goods. It may be noted that the consumption patterns,
the dressing and living styles of people belonging to different social structures and culture vary
significantly. Bangladesh is a nation with diverse cultures and a multi ethnic background. These
connotations have their own spell on the activities that go on in the her business environment.
These are the social and cultural aspects and include health consciousness, population growth
rate, age distribution, career attitudes and emphasis on safety nets. Trends in social factors affect
the demand for a company’s products and how that company operates. There are many strong
factors which ensure a successful business in the country and abroad. Furthermore, social
considerations include protecting the health and safety of the general population, avoiding harm
to the natural environment, developing and deploying ethical standards and practices, meeting
cultural and social norms, balancing interest of the business with the interests of the society, and
being a proactive entity. The culture of a people will go a long way to influence the kind
and pattern of business activities to engage in hence the impact of culture on the Bangladesh
business environment. The culture in riverine areas may permit the trading of fish and other sea
or river products.
These different socio-cultural factors have different impact on different industries in prespective
of Bangladesh. Some of These are presented in the table:
Serial Socio-Cultural Environment
No.
Factors Industry Positive Neutral Negative

1. Population growth rate Agricultural industry 

2. Age distribution electronic Industry 

3. Career barriers Banking industry 

(non Islamic)
4. Lifestyle attitude Consumer Electronics 
Industry (Home
Appliance)
5. Safety emphasize Garments Industry 

6. Religion Alcohol/ liquor 

7. Health consciousness Liquor/ Cigerrate 

8. Social Class Health Care Industry 

9. More Women In workforce Ready Made Garments 

industry

10. Values Health Industry 

11. Beliefs Manufacturing Industry 

12. Going Concern For Pharmaceutical 

Environment
Explanations:
Population growth rate: Negative- agriculture Industry
In Bangladesh, Agricultural land decreases by 13.5% and arable land decrease by 10% between
the period of 1989 and 2016, which demonstrate that excess population taking over agricultural
land rapidly. Forest areas are decreasing rapidly in Bangladesh. The over population of
Bangladesh increasing the food insecurity because our agriculture is mainly based on labor and
the production is far behind than its need. For this reason the country has to rely on import of
food grain from other countries. Using advanced technologies in agriculture industries and
avoiding further environmental damage is increasingly necessary, yet climate change may lead to
unpredictable and extensive changes in the near future As a result, to maintain the balance of
food security amid inevitable population growth and environmental preservation, on the other,
larger-scale policies need to rapidly integrate adaptive measures that include regional differences,
small-scale stakeholders, and climate-related strategies .Here we can see that overall scenario of
agricultural industry along with the growing population rate:
Age distribution: neutral – electronic industry
Age distribution refers the proportionate numbers of persons in successive age categories in a
given population. Different ages of people have different choice in their daily life stuffs like:
cloths, accessories , mobile. In a statistics it is found that the young generation of Bangladesh
aged under 15 and older generation above 65 have a negative effect on electronic gadgets.
possible explanation for the behavior of these two age group can be : uncertainties of income or
no income, saving tendency, life span etc. where the prime age group , aged 25 to 55 has a
positive effect on these consumption due to handsome income, a tendency to use new
technologies and innovations, to maintain social class.
Career Barriers: Negative – Banking (non Islamic) industry
The majority of the Bangladeshi population identifies as Muslim . Giving loan and charging
interest thereupon is pure interest-based transaction declared haram (prohibited) by Islamic
Shariah. In Islam Alcohol is also decleared as haram . For this reason Bank that does not run in
accordance with islamic rules can be a career barriers to the islamic people as well as liquor
industry.

Lifestyle attitude: Negative – Consumer’s Electronic industry (Home Appliance)

Home appliance refers to electronic products, devices, or equipment used for various household
purposes, such as TVs, refrigerators, ACs, or washing machines. At present, this sector has
become a growing sector of the overall consumer electronics industry in Bangladesh with a
market size of Tk 20,000 crore. With increasing purchasing power and economic expansion, the
home appliance industry in Bangladesh has gained a lot of traction in the last decade, and as a
result, the volume of sales has climbed multiple times. The sector has created a competitive
market with a wide range of products offered by local and foreign manufacturers. While foreign
brands are gaining customer preference owing to brand value and reliable quality, many
customers are opting for local brands due to aggressive pricing and high-quality product
offerings. Currently, the market size of the home appliances sector in Bangladesh is $2.4 billion,
which has been increasing at an average rate of 14% per annum for the last one decade.
According to UCB Asset Management, the country’s home appliance market will reach $10
billion by 2030. Television is one of the best selling products among the major home appliances.
In 2017, the size of the domestic TV market in Bangladesh was 414 million dollars. According to
Ceicdata, Bangladesh exported only $1.25 million worth of TVs in 2020, compared to $33.66
million in TV imports. According to Marketing Watch Bangladesh, of all the electronics
products sold in Bangladesh, television has a market share of 30.03%. The market size of the
country’s television was $636 million in 2020, which was expected to reach $687 million by
2021.

This is because of Change in lifestyle , income level , technological innovation , better

communication systems. we can say that lifestyle attitude positively affect home appliance
industry of Bangladesh.
Safety Emphasize: Negative- Garments Industry
A safe and secure working environment is the fundamental right of the workers (UDHR, 1948.
The collapse of the Rana Plaza in 2013, killing 1134 garment workers in Dhaka, Bangladesh, has
revealed the unacceptable working conditions of the whole fashion industry to the world.
Employees usually work with no ventilation, breathing in toxic substances, inhaling fiber dust or
blasted sand in unsafe buildings. Accidents, fires, injuries, and disease are very frequent
occurrences on textile production sites.Without any doubt, Bangladeshi garments sector is
treated as one of the riskiest working environments. Building collapse is deadlier than any other
deadly incidents, but fire incidents are the most likely incidents in Bangladeshi garments industry.
Even it is a deadly incident also. In this case, owner, management, government and employees
are responsible for controlling building collapse risks by 71.43%, 0%, 35.71%, 0% respectively
and in case of fire incident, owner, management, government and employees are responsible for
controlling fire incident by0%, 92.85%, 0% and 7.14% respectively (Hasan & Mahmud2017). So,
the owner, management, government and employee should be aware of reducing the possibility
by following the controlling techniques. Government should continue strict justification for the
infrastructural standard of all the factory buildings and take safety measures for employees .
Already government has set rules but they are not maintained .

Religion: Negative-liquor Industry

Bangladesh is a predominantly Muslim country and it is Haram (not permissible) for Muslims to
drink alcohol, so majority of people do not drink it. Moreover it is seen as a very bad habit and
extremely detrimental to health which is true so due to low demand and strict rules alcohol is not
even sold in most places, only a handful of place sells alcohol legally.

Social Class: Negative-Health Industry

A person's social class has a significant impact on their physical health, their ability to receive
adequate medical care and nutrition, and their life expectancy. Individuals of lower
socioeconomic status have lower levels of overall health, less insurance coverage, and less
access to adequate healthcare than those of higher SES. Individuals with a low SES in the
Bangladesh experience a wide array of health problems as a result of their economic position.
They are unable to use healthcare as often as people of higher status and when they do, it is often
of lower quality.

More Women In workforce:

The readymade garments sector has paved the path for the development of that section of the
society, which has been limited to the private sphere, i.e., women. Bangladesh being a
developing state has not been able to provide the amenities required for the progress of women
like, education, jobs, etc. But with the advent of the RMG factories, many women were able to
utilize their proficiency and aptitude for the betterment of the family, society and country.
Women, from lower to lower middle class in the urban and rural regions, are being employed in
huge numbers in these garment factories. This has served to be the basic means of earning for
these women and with financial independence they are not only having a say in their families but
also in the public sphere. Women constitute about 80% of the working forces in this sector. With
their increased participation, the export rate of the RMG sector has also shown a steady rise.
During 2012–2013, we can see that there were around 3.1 million women employees (i.e. 79%
of total employees) and the amount of RMG export to the GDP was about 21515.73 million USD
(16.13% of total GDP). Then in the time-period 2013-2014, the data went up to 3.2 million
female RMG workers (80% of total workers at the garments sector) and total RMG exports
escalated to 24491.88 million USD (16.33% of total GDP). Therefore, presenting a directly
proportional relation between the two variables. So, it can be said that RMG sector is helping the
women in Bangladesh to be liberated and empowered with a voice of their own and in turn
aiding in sustainable development of the country

Technological Environment
Technology is understood as the systematic application of scientific or other organized
knowledge to practical tasks. Technology changes fast and to keep pace with it. Businessmen
should be ever alert to adopt changed technology in their business.

Serial Technological Environment’s impact on different Industries in perspective of

no Bangladesh

Factors Industry Positive Neutral Negative

1 R & D activity Pharmaceuticals 
Industry
2 Technological Consumers 
Changes Electronics (Mobile)
3 Technological E-commerce; 
Awareness Online shopping
4 Pollution/Global Chemical Industry; 
Warming Almost all Industry

Explanation
R & D Activity: Pharmaceuticals Industry-Positive
According to Bangladesh Association of Pharmaceutical Industries (BAPI) and Directorate
General of Drug Administration (DGDA), approximately 257 licensed pharmaceutical
manufacturers are operating in Bangladesh and about 150 are functional . These manufacturing
companies meet around 98% of local demand. Specialized products like vaccines, anti-cancer
products and hormone drugs are imported to meet the remaining 2% of the demand. 80% of the
drugs produced in Bangladesh are generic drugs, rest 20% are patented drugs. According to
Director General of Drug Administration (DGDA), the industry has 3,657 generics of allopathic
medicine, 2,400 registered Homeopathic drugs, 6,389 registered Unani Drugs and 4,025
registered Ayurvedic drug. To meet 98% of the local demand and to produce medicine of new
disease this industry has to invest in R&D.

Technological Changes: positive-Consumer Electronics (Mobile)

According to the Global Data Lab, in Bangladesh, having a population of more than 160 million,
only 41.30% of the households have refrigerators, and 57.40% have televisions. So, it is
comparatively a small market in terms of global standards. Moreover, the useful life of these
goods usually tends to last for a longer time than the global benchmark. However, the lion’s
share of this market has already been served by local manufacturers like Walton, dominating the
market with a 26% market share as of last year. As per the recently published news in a national
daily, Mr Anisur Rahman Mallick, Chief Business Officer of Walton’s refrigerator wing, said the
company’s market position remained virtually unaltered in 2019 and 2020. However, their
refrigerator sales dropped in 2020 as a result of the COVID-19 pandemic. In 2021, the volume of
sales climbed again. Their market share was 84.50% at the time. Bangladeshi consumers mainly
rely on international brands when it comes to consumer electronics over local brands. LG’s
television sales jumped by 10%. On the other hand, Singer Bangladesh announced a 64% drop in
television output in 2020. In the domestic market, Rangs, MyOne, and foreign brands such as
Sony, Samsung, Panasonic, Toshiba, and Philips sell televisions. Butterfly, LG’s local business
partner in Bangladesh, has set up a factory to make smart TVs in the country. To Sustain
business local technological brand are investing in R& D to add new features to attract
customer and satisfying them.

Technological Awareness: E-Commerce-Positive

In an era of digitization, online retailers are quickly becoming easy targets for cybercriminals to
steal massive amounts of information. Retailers are facing a tough balancing act between
proactively seeking out fraud and delivering an exceptional customer experience. customers
expect easy, safe online transactions and if it’s not delivered, there’s a risk to quickly lose their
loyalty. For this reason Technological awareness is necessary to save customer from becoming
the victim of fraudalent due to lack of knowledge.

Pollution : All Industry- Negative

Factories dealing with medicines, readymade garments, dyeing, cement and other products have
been discharging waste into the Buriganga, Shitalakshya, Turag, Dhaleshwari and Balu rivers in
an unbridled manner for many years without any effective measures to curb it.The rapid growth
of corporations in different sectors in Bangladesh to fulfill the rising demand of the increasing
vast population caused the high consumption and emission natural resources and power
consumption consequently the pollution of water, air, soil and noise has been increasing day by
day.

Political-Legal Environment
Concept of political-legal environment:
The political-legal environment is a combination of a lot of factors such as the current political
party in power, the degree of politicization of trade and industry, the efficiency of the current
government, government policies, current legal framework, the public attitude towards the
economy, etc. This is a non-market factor but it can still greatly impact a business. The political-
legal environment is a combination of a lot of factors such as the current political party in power,
the degree of politicization of trade and industry, the efficiency of the current government,
government policies, current legal framework, the public attitude towards the economy, etc. All
these factors will shape the political-legal environment in which the firm has to operate and
compete. There are three main elements of a political-legal environment. Let us have a look. An
election year is an extremely important factor for the economy. This is why the type of
government governing at the centre and the state has a huge impact on the businesses. The
government decides all the fiscal policies, monetary policies, and taxation modules as well.So the
type of government in power has a huge impact on the economy and the firms that operate and
compete in the economy. Like for example, the current government has the Make in Bangladesh
initiative which is good for the manufacturing sector. A sound legal system is essential to the
success of any business. So a country must have a sound and functioning legal system with laws
that equally protect both consumers and manufacturers. There are various other matters like
company law, royalties law, patent law, intellectual property rights. International laws etc. that
also have a great influence on the business of firms. For example, the new GST laws are going to
have a significant effect on the businesses. Political stability in a country is essential for a stable
economy and stock market. Also, various political groups also hold a lot of influence on
businesses and unions. So the political environment of a country is a major factor in the success of
a firm.

Impact of politica- legal factors on different industries:

Positive Neutral Negative

1. Government Pharmaceutical 
policy

2. Political Tobacco 
stability
3. Corruption Banking 

4. Foreign trade Textile 

policy

5. Tax policy Agriculture 

6. Labour law Readymade 

Garments

7. Trade Automobile 
restrictions

Explanation:

Government policy: positive- pharmaceutical industry

The pharmaceutical industry in Bangladesh is moving forward with great potential as 98% of the
country’s total demand for medicine is being met by domestic institutions. In addition to meeting
the domestic demand, the companies also export medicines to several countries of the world. In
the fiscal year of 2019-20, Bangladesh’s pharmaceutical export revenue was 136 million.
Besides, Bangladesh ranks 71st out of 134 countries in the world in terms of global
pharmaceutical exports. Apart from allopathic medicines, Bangladesh also produces
homeopathic, unani, and ayurvedic medicines. At present, there are about 257 pharmaceutical
companies in Bangladesh which manufacture about 80 percent of generic drugs.

Political stability : Neutral- tobacco industry

The demand of tobacco does not increase or decrease for political stability. So, this factor has a
neutral impact on tobacco industries.
Corruption: Negative-banking industry
Discipline in the banking sector is apparently under strain. At the same time Criminal activities
in bank have increased. In absence of good governance, many banks have indulged in irregular
activities and corruption. Sensational stories are emerging from the banking sector. As a result,
customers are losing confidence. As no firm action has been taken against those responsible,
these events are multiplying. Apart from Sonali Bank scandal, the central bank has found cases
of cheque forgery, investment fraud and irregularities in some other banks.

Foreign trade policy: positive-textile industry

Low-cost and high-quality products that are produced on time, reliably and very competitively
with a skilled work force. A unique regional location for expansion into key Asian and other
markets. Access to large markets including the EU, Japan, and Canada. Clusters of companies
providing a local supplier base with depth in skilled labor, training, and technical development
facilities. In FY 2020-21, Bangladesh’s RMG exports grew 12.55 percent to $31.46 billion (out
of $38.76 billion in total exports) as demand in major markets in Europe and North America
began to recover from the demand shock induced by the COVID-19 pandemic. Despite the
challenges posed by the global pandemic, global competition, factory safety issues, and
infrastructure deficiencies, the long-term outlook for the RMG sector remains positive.

Tax policy: positive-agriculture industry

The tax-base of Bangladesh has been narrow and inelastic which is reflected in the low tax-GDP
ratio. In 1978-79 the ratio of taxes to GDP was 7.9 percent which is much below the level
attained by some other developing countries with comparable levels of per capita income. In
spite of the fact that the larger part of tax revenue arises from indirect taxes, the tax mechanism
failed generally to capture the inflationary gains and gains originating from speculative trade and
business because of the simple nature of the economy. The share of land revenue was only 1.19
percent of total tax revenue in 1980-81 which is very low by any standard (GOB 1980; BBS
1981).

Labour law: positive-readymade garments industry

The RMG labour laws of Bangladesh require the management of an organisation to comply with
the detailed requirement mentioned in the Act and Rule with a help of a RMG Labour lawyer in
Bangladesh. Compliance with the RMG Labour Laws in Bangladesh is required for maintaining
suitable working conditions at the work places for the workers. It also ensures the degree of
compliance for inspection by the government authorities from time to time. There is a recent
report from Human Rights Watch which stipulates that, fire and safety factory inspections
continued in the garment industry following the agreement between big brands and Bangladesh
government.
Trade restrictions: positive-automobile industry
Automobile industry is one of the growing sectors in Bangladesh. Compared to the last decade,
the growth of the automobile industry has gradually increased due to the socio-economic
development and purchasing power of the middle and upper middle class of the country.
According to BRTA data, the number of passenger car vehicles increased at a 5.43% CAGR rate
from 2011-2020. However, compared to other Asian countries, the passenger car penetration is
still very low in Bangladesh. There are only 2.5 car owners per 1000 population. In India, 30
people among 1000 individuals owned a car at the end of 2018. In Myanmar, about 12 people
out of 1000 own a car. Higher tax rate on automobiles, inadequate and narrow national highways,
high traffic density, high price of fuels, higher interest rate on private vehicle financing are
responsible for the lower number of car owners in Bangladesh. Due to the covid-19 pandemic,
sales of automobiles declined to its lowest in 7 years.

Economic Environment
Economic segment of general environment
In the context of business and strategic management, the economic segment is one of the
components of the general environment that organizations operate within. The general
environment refers to the external factors that influence an organization's operations and
performance but are beyond its direct control. The economic segment specifically focuses on the
economic conditions and factors that impact businesses and industries.
Economic factors include elements such as interest rates, inflation rates, gross domestic product,
unemployment rates, and levels of disposable income etc.

The impact of Economic factors on various industries

Economic factors Industry Positive Neutral Negative

affecting business
Interest rate increase Banking and Financial 
Services
Real Estate and 
Construction
Consumer Goods and 
Retail
Technology and Startups 
Unemployment rates Consumer Goods and 
Retail
 Housing and Real Estate 

Manufacturing and 
Industrial Sectors

Travel, Tourism, and 

Hospitality
Disposal Income Banking and Financial 
Services
Defense 
Manufacturing and 
Industrial Sectors

Travel, Tourism, and 

Hospitality
Growth GDP Consumer Goods and 
Retail
Housing and Real Estate 
Technology and 
Innovation
Financial Services 
Inflation rate increase Retail and Consumer 
Goods
Housing and Real Estate 
Manufacturing and 
Production
Tourism and Hospitality 

Explanations of the Economic Segment

Economic factors have a significant impact on various industries, shaping their performance and
growth prospects such as:
Interest Rates: Changes in interest rates influence borrowing costs and investment decisions.
Lower interest rates can stimulate borrowing, encouraging businesses and individuals to invest
and spend, which can benefit industries such as housing, real estate, automotive, and consumer
goods. Higher interest rates, on the other hand, can increase borrowing costs, impacting
industries reliant on credit, such as construction and consumer durables.
Unemployment Rates: The level of unemployment directly affects consumer spending and
demand. High unemployment rates can reduce consumer purchasing power, leading to decreased
demand in sectors like retail, consumer goods, and hospitality.
Disposable income: which refers to the income remaining after taxes and essential expenses, has
a significant impact on the economy. Higher disposable income positively impacts industries
GDP Growth: The overall economic growth, as measured by Gross Domestic Product (GDP),
affects industries across the board. Higher GDP growth typically leads to increased consumer
spending, business investment, and government expenditure, benefiting sectors such as consumer
goods, retail, housing, financial services, manufacturing, and technology.
Inflation: Inflation: The rate at which prices of goods and services increase, affects industries
differently. Rising inflation can lead to increased input costs, squeezing profit margins for
industries such as retail, consumer goods, and manufacturing. However, industries tied to
commodities, energy, and natural resources may benefit from higher prices. Inflation can also
impact interest rates, wages, and consumer purchasing power.
The economic environment is important because it shows the level of confidence people have in
the environment. Businesses flourish, people get more job opportunities, and customers spend
more because of a favorable economic environment.

Concept of Global Environment: The global environment is important for both nations and
businesses as it offers a comprehensive platform to gain more consumers of a product or service.
It ensures the growth and development of nations and businesses. It improves the economic
status of nations and fosters a good business relationship with other nations. The global
environment consists of multifaceted factors that affect a business's operation, and the business
has no control over them. These are inevitable external barriers imposed by the environment,
people's way of life, governments, legislation, competitors, technology, and other external
factors to a business. An example of a global business environment is the United States. The
United States is one of the most powerful countries in the world, with a strong and stable
economy that has been growing for decades. This makes it one of the best places to do business
in terms of stability and growth. The global business environment is a term used to describe the
challenges and opportunities that businesses face when operating in a global marketplace. It
reflects the interconnectedness of all parts of the world, which means that what happens in one
country or region has an impact on other regions or countries. The global environment is at the
core of the operations of business organizations. The factors of the global environment affect
businesses in their daily transactions, but they are generally beyond the control of management,
plus they constantly change. Businesses that align with global environment factors' requirements
achieve increased performance, elevated morale to their employees, and ultimately a higher
profit margin for individuals and their businesses.
 Segment Industry Positive Neutral Negative

01. Increasing Global Trade Garments Sector In 

Bangladesh

Shipping Industry in 
Bangladesh

Pharmaceutical 
Industry

Jute and Jute 

Products

02. Currency Exchange 

Rates

03. Creation of WTO 

Reasons:
Increasing Global Trade: Positive-Garments Industry
The Ready-Made Garments (RMG) industry contributes to the Bangladesh economy in a
distinctive manner. The impact of globalization has brought massive positive changes on
garments sector in Bangladesh. Some of the sectors have been discussed as under:

Increasing the export earnings:

It can be observed that the export is in upward trends which indicates that the value of export is
increasing day by day. Despite the concern and fear of negative impact on in the aftermath of
quota removal, the whole scenario of RMG sector in Bangladesh appears with positive trends.
Bangladesh mainly garment, knit and woven goods including shorts, trousers, shirts, sweaters,
blouses, skirts, tea-shirts, jackets, sports attire and many more casual and fashion items with the
changing times.
Increasing trend in employment:
This sector opened up employment opportunities for many more individuals through direct and
indirect economic activities which eventually help the country’s social development, woman
empowerment and poverty alleviation.
Reason:
Increasing Global Trade: Positive-Shipping Industry
Shipbuilding is a growing industry in Bangladesh with great potentials. Bangladesh has a long
history of shipbuilding dating back to the early modern era. However, shipbuilding has become a
major promising industry in recent years when the locally made ships began to be exported. The
optimism about this industry arose from the success attained by a number of local entrepreneurs
who brought the name and fame to Bangladesh as a country with great potentials in shipbuilding
by building and handing over some ocean-going vessels to over sea buyers. Since then, the
shipbuilding in Bangladesh did not have to look back and now new opportunities are knocking at
the door to flourish this industry further. It has 9,000 sq km of territorial waters, 720 km long
coastline. It has 700 rivers that come down from the surrounding countries and which provide
24000 km long inland water ways. At present about 10,000 inland and coastal ships have been
working all over the country, which carry more than 90% of total oil product, 70% of cargo and
35%of passengers. More than 150,000 skilled and semi-skilled workers are employed in this
labour intensive sector. Two million people are related directly or indirectly with shipbuilding
industry. All inland and coastal ships are constructed and repaired locally in Bangladeshi
shipyards. Recently Bangladesh has successfully exported her first ocean going ship to a high-
end market like Denmark competing with giant competitor like China, India and Vietnam in
2022. Bangladesh has now over 200 shipbuilding companies, mostly concentrated in Dhaka,
Chittagong, Narayanganj, Barisal and Khulna. However, due to global nature of this industry, an
assessment of suitability to modern shipbuilding in terms of global standard is of prime
importance.
Reason:
Increasing Global Trade: Positive- Pharmaceutical Industry
The Pharmaceutical sector, one of the most developed technology and knowledge based sectors
within Bangladesh, has been transforming and evolving since the early 80s. Over the last 4
decades of painstaking effort, Bangladesh is now considered as emerging generic drug hub in the
region. According to Bangladesh Association of Pharmaceutical Industries (BAPI) and
Directorate General of Drug Administration (DGDA), approximately 257 licensed
pharmaceutical manufacturers are operating in Bangladesh and about 150 are functional.
According to the industry experts, Bangladesh's pharmaceuticals sector will grow 15 percent
year-on-year to reach $5.11 billion by 2023, propelled by high investments by local companies
as they seek to grab a bigger share of the global market. Bangladesh is going to be a major global
hub for high quality and low cost generic medicine and vaccine in a little while. Bangladesh's
pharmaceutical industries aim to capture 10 percent of the global generic market as 5 to 7
companies have received approval from top regulatory bodies. According to Bangladesh
Association of Pharmaceutical Industries (BAPI), approximately 1,200 pharmaceutical products
received registration for export over the last two years. According to Bangladesh Export
Promotion Bureau, Bangladesh exported pharmaceuticals product to 147 countries in the fiscal
year 2018-19. Among 147 exporting countries, top 7 countries (Myanmar, Sri Lanka, Philippines,
Vietnam, Afghanistan, Kenya and Slovenia) constitute 60.32% of total pharma export. Rest
39.68% comes from other countries. Bangladesh has exported pharmaceutical products worth
USD $130.0 million in 2018-19 as against USD 103.5 million in 2017-18 (source: Bangladesh
Export Promotion Bureau). Pharmaceuticals export has crossed $100-million mark for the 2nd
time in the country's history, according to the Export Promotion Bureau.

Reason:
Increasing Global Trade: Positive- Jute and Jute Products
Jute is one of Bangladesh’s main cash crops. The contribution of the jute sector to the economy of
Bangladesh is enormous. In Bangladesh, Jute is a vital sector from economical, agricultural, industrial,
and commercial perspectives. Different kinds of jute products are made in Bangladesh and the
products are environmentally friendly as well. Every year Bangladesh earns an amount of foreign
currency by exporting jute and jute products in different countries all over the world. That
contributes to the national income of Bangladesh. Jute was once called Bangladesh's Golden Fibre.

Reasons:
Currency Exchange Rates-Negative
Private sector credit has been growing exorbitantly in recent periods and reached 13.9 percent at
the end of October 2022. During the same periods of high private sector credit growth, the
Bangladesh economy has also been experiencing external sector vulnerabilities mainly generated
through global commodity price-induced higher import costs and significant depreciation of the
exchange rate of BDT against USD.

Reasons:
Creation of WTO-Positive
As a least developed country (LDC), Bangladesh is largely affected by rules and regulations set
by the WTO. External factors such as export, import, remittances, and foreign aid have always
played important roles to Bangladesh’s economy, though the relative importance of various
external factors has changed over time. Therefore, Bangladesh must be cautious about the
process of trade liberation started by the WTO. As an LDC, Bangladesh enjoys many advantages,
because since Uruguay round, LDCs are recognized as unable to make substantial reduction in
tariffs. for industrialized sectors, they are bound to reduce only a token amount of tariff on very
limited number of items. And in agricultural sector, they are not required to reduce tariff.
However, LDCs, along with other countries are required to bind their tariffs. Most LDCs have
given bindings at a rate significantly higher than the existing rates.