University of Essex

ESSEX BUSINESS SCHOOL

BE154 International Management Accounting

Coursework 2

Title

Management Accounting Controls and aftermath of covid in

terms of Bangladeshi Fast Fashion Industry

Word Limit: 3000 words

Student Name:

Student ID:
Introduction

To ensure fairness and impartiality in the workplace and organization, management accounting
controls is a must thing to include. It gives clarity of quality work with justice and accountability
for all the parties associated with the organization. The fashion industry of Bangladesh is a
promising and prominent sector which contributes 18% in the GDP. Being a developing country,
Bangladesh has been greatly impacted by the fashion industry in the recent decades. In fact, this
industry has succeeded to earn recognition worldwide in Bangladesh. The projected CAGR rate
of the fashion industry of Bangladesh is nearly 18.5% (BGMEA,2023). The market side of this
industry in Bangladesh is around US$4,087.8 million till 2028. But every blessing has its
drawbacks in disguise. Still, the fast fashion industry in Bangladesh has many alarming issues to
solve. To keep the accolades, the industry has to maintain certain management accounting
controls to utilize the resources and advantages. Moreover, to organize the production activities
to incentivize manpower, management accounting controlling is needed in the industry. The
most important resource in any industry (Ahmed,2019). , especially in the fashion industry, is
human resources. From a documentary called - True cost, it is exposed how local garment
factories exploit the workers for monetary benefits (sometimes being helpless before the foreign
brands) and how the workers face the consequences regarding the mistreatment. Furthermore,
COVID has changed the dynamics of every human interacting industry. It has somewhat
hampered the fashion industry and the worst sufferers are the garment workers who have lost
their only earning sources (Uzzaman,2021). That is why, this report emphasizes on how
management accounting controlling practices can influence the developments of fast fashion
industries and how the current and potential irregularities can be avoided and eradicated in the
global south countries like Bangladesh and connects each dot and reflects some major loopholes
in the wellbeing of the workers and how the rights of the workers can be protected. Moreover,
how supply chain disruption due to covid has impeded the livelihood of the worker is also
mentioned.
Research Findings

There are many consequences regarding the dark sides of the fast fashion industry. Over the
course of the COVID-19 pandemic, the predicament that workers found themselves in has shed
insight on the issue that surrounds the effectiveness of weaker restrictions. The discussion has
centered on the question of whether retailers ought to take on a greater and more direct
responsibility for safeguarding the rights of workers in the supply chain. The debate is advanced
in several different ways by this study (Jamal,2021). In the first place, we show that more lax
rules are not sufficient to stop abuses of workers' rights in global supply chains. By drawing on
the experiences of workers and suppliers from the Bangladeshi apparel industry, our objective is
to provide an explanation of how retailers handled the rights of workers throughout the pandemic
epidemic. Second, the tyranny of workers and the infringement of their rights occurred prior to
the time of the COVID-19 pandemic. Hammer and (Uddin,2019) have done research in the
United Kingdom that demonstrates how the supply chain for fast fashion creates precarious
employment situations even in the absence of a pandemic. When taking into consideration
apparel factories located in less developed nations, we contend that the working conditions of
workers are deteriorating due to the fact that merchants are less likely to accept responsibility for
supply chain workers, particularly during a pandemic. Nevertheless, the number of studies that
have been conducted in the past on the conditions that enable workers' rights breaches to
continue is still low and requires further investigation (Pereira, et al,2021). In this setting, the
paper makes use of value traps and adverse incorporation in order to gain a deeper
comprehension of the ongoing violation of workers' rights and the effectiveness of more lax
rules. In the third part of the study, the authors propose a method for holding retailers
accountable, building on empirical reports and the various relevant literature. The assertion that
more lax restrictions are ineffective in protecting workers is not one that we intend to make.
Despite this, structural issues, such as value traps within the supply chain and the consequent
unfavorable incorporation in less developed countries, continue to have an effect on workers who
are not protected and on the working circumstances they are subjected to.
What is Management Accounting Controls

Management Accounting Controls is a structure that works like an organized system that enables
business to balance, select, design, streamline the essential activities. It helps to take business
decisions and to assess performance. It utilizes the resources effectively and maximizes the
output within the given limited resources. Every organization should have such a control system
to accomplish organizational tasks. To longitude the management harmony, management
accounting controls is an essential aspect. Especially in the labor-intensive market, it is required
to have management accounting controls (Chinweike,2018). It directs the employees to achieve
organizational goals. There are two types of controls in this regard. One is behavioral control,
and another is social control. Behavioral control refers to a style of supervision that entails
closely monitoring individuals while they carry out their tasks. This is most effective in
situations when it is straightforward to establish clear cause and effect links (Ahmed,2019). The
objective is to determine whether the proper methodology has been adhered to by solely
examining the outcome or output of a technique. Undoubtedly, this method of control is the most
effective preventive measure. Getting employees to work together and get to know each other
better is the main idea here. It is thought that promoting unionism will help people internalize the
organization's goals, making the pursuit of a shared goal the most important thing for everyone.
This kind of control, which is also called regulating culture is used by the human resources team
when they hire people. This is done so that only people who already agree with the company's
rules and ideals will be hired or promoted. Some people say that this type of control, when used
correctly, will make sure that other controls are not needed at all.

Fast fashion industry in Bangladesh

Bangladesh is a country located in South Asia that has rapidly developed into a nation that places
a significant emphasis on the creation of clothes. Regarding Bangladesh's export revenue, the
International Labor Organization reports that the production of garments accounts for 82% of the
total revenue. As a result of its substantial supply of skilled laborers and its advanced
technology, Bangladesh has become a prominent sourcing hub for corporations that manufacture
apparel (Initiative,2023). In addition, Bangladeshi workers receive very low wages, which makes
the country an ideal location for fast fashion businesses to manufacture large volumes of apparel
at reduced prices (Akhter,2014). Companies consider Bangladesh to be an ideal source of low-
cost labor because the minimum salary in Bangladesh is lower than the minimum wage in other
countries that are near Bangladesh (Jani,2023), such as China, Cambodia, and Vietnam. Tommy
Hilfiger, Gap, Calvin Klein, Ralph Lauren, Giorgio Armani, and H&M are just a few examples
of famous apparel brands that have their headquarters mostly in Bangladesh (Bick,2018). As a
result of the high demand for these brands in the United States and Europe, Bangladeshi laborers
are under increasing pressure to ensure that their production is more efficient. As a result, lots of
difficulties are being faced by Bangladeshi garment owners. These
are-

Amount of wage being below the standard: Garment workers often make $25–$75 per month.
Many people must work 18-hour days without pay. Why do Bangladeshi fashion workers work?
Bangladesh has 35 million impoverished people. Most people will take any work that supports
them and their families, regardless of pay. Many can only afford one meal a day and are starving
and malnourished (Uzzaman,2021).

Lack of security: Video footage has been released depicting the perilous working conditions
endured by laborers at textile manufacturers in Bangladesh. Emergency exits are secured to deter
employees from leaving their workstations and to discourage them from running. There is a
shortage of safety equipment, such as fire extinguishers and fire blankets, which leaves workers
without any means of protection in the event of a fire (Hasan,2017). In 2013, the Accord on Fire
and Building Safety was established to improve the safety conditions for workers in the textile
industry in Bangladesh. Companies like H&M and Primark have endorsed this agreement and
initiated the implementation of enhanced safety protocols in their workplaces across Bangla.

Injustice to child workers: It is so regrettable that child labor is nonetheless utilized in a great
number of places all over the world to carry out duties that children can perform significantly
more effectively. The fact that children are not required to be paid as much as adults is one of the
advantages that many businesses perceive in child labor. As a result, they may be utilized to
make items at a lower cost, which is a business advantage. This behavior violates ethical
standards and violates the right of children to get an education (Gunawan,2023). There have been
reports that certain industries in Bangladesh are requiring children to work shifts that last for
eleven hours. Without taking any breaks during their workweek, these students put in a total of
eleven hours of effort. Children in Bangladesh are at danger of experiencing serious health
consequences because of this lengthy work, including weariness and malnutrition.

What is the true cost?

Here true cost is a metaphorical term, but it has a deep devastating truth behind it. According to a
documentary video ‘True cost ‘, the fast fashion industry has a dark side and because of the dark
side, the lives of thousands of workers working in the industry are at a great stake. In the global
north countries, management accounting controls are highly and carefully practiced ensuring the
benefits of every stakeholder of a firm whether it is manager, employee, or wage earner. But in
the global south countries like Bangladesh are exploited by the developed countries in terms of
low production cost facility and low wage. And the developing countries do not follow
production guidelines such as safe infrastructure or production plants, proper wage or salary, fire
safety measurements and many more. In the fast fashion industry, the most important role
players are manufacturing laborers or workers because without them overall production is not
possible. As a result, because management accounting controls irregularities, they must pay a
huge cost and the cost can be losing their lives too. Here the true cost is basically the minimum
wages that are paid to the manpower with exploiting them strongly (Dey,2017).

Underutilization of Management Accounting Controls in the fast fashion industry in

Bangladesh

To have larger consumption of the products, fashion houses in Bangladesh use cheap marketing
strategies such as sales off, rebate, discounts and many more. To make a substantial profit
margin despite offering huge amounts of discounts to consumers, manufacturers do compromise
with the quality and sustainability of the products (Oka,2018). In the fashion industry, this
happens frequently. Manufacturers overlook the environmental and ethical factors in the
production of apparel. Most of the time, cheap raw materials are used to cut costs instead of
using eco-friendly materials (Anguelov,2015). Not only this, wages of the workers of fast
fashion are also heavily and disloyally compromised. If production needs huge quantities, then
more numbers of workers are also needed. At that time along with the other requirements it is
necessary to provide a safe and sustainable place where the workers can live. Besides their fair
needs, wants, and demands should be fulfilled. Giving them low wages with no work
environment safety is an utmost injustice to the workers out there. Lack of proper system of
management accounting controls , Nightmare incidents like Rana plaza took place and destroyed
a great number of workers’ life (Siddiqi D, 2017). Over the world, one out of six workers are
working in the fashion industry. In just a few short weeks after the start of the Covid-19
pandemic, thousands of workers in the ready-made garment (RMG) industry were fired without
cause. These people are generally considered to be Bangladesh's most important resource for
economic progress and the reduction of poverty. An extraordinary crisis has been caused for
RMG workers, the vast majority of whom are women. This crisis was triggered by the massive
cancellation of current orders, which was followed by plant closures and worker layoffs for
employees. The repercussions of the pandemic on the RMG workers in Bangladesh, the most of
whom come from destitute rural regions of the country, are revisited in this essay at a time when
the industry is gradually recovering from the initial upheaval and is on its path to rebounding.
This study presents a persuasive description of the disproportionate impact that the pandemic
outbreak had on female RMG workers by utilizing first-hand data as well as secondary
research(Kabir,2021). During the course of our investigation into the consequences for workers,
we will also take a look at the systemic divisions and power imbalances that are inherent in this
sector, which is a fundamental characteristic of the modern global economy. There are three
important contributions that this study makes to the growing body of scholarship on the COVID-
19 epidemic and its effects on the shifting labor spectrum in the global South. In the first place, it
investigates the pandemic's more general gendered implications, illuminating the way it
disproportionately afflicted women. The second point is that it highlights how the power
dynamic that was already present within the global supply chain further aggravated inequality,
marginalization, and the precarious position of workers in Bangladesh's ready-made garment
(RMG) industry (Habib,2022). Finally, it highlights the asymmetrical nature of the link between
epicenter and territorial countries in the global production and labor landscape, underlining the
unequal interdependence that exists between these two groups of countries.
Impact of true cost in the fast fashion industry in Bangladesh

Over the world, there are hundreds of clothing and fast fashion brands in the market. To compete
with concurrent trends and consumer preference, they introduce a variety of designs in clothing
overnight especially when one era of trends ends or preference and likelihood of the consumers
shifts substantially. But having a variety of designs, frequent product facility is needed and
following this the cost is in the sky (Ullah, 2021). Hence brands of industrially developed
countries like H & M, Zara, Fashion Nova, Forever 21 are seeking help from developing
countries like Bangladesh in disguise of export as Bangladesh has a knack in clothing production
and low wage mechanism. As a result, the foreign brands send demand and manufacturing
quotations to the Bangladeshi garments owner (Cline,2020). After getting the quotation, they
start the production with the manpower. But manufacturers do not get proper and sufficient
export income and for this reason they do not pay much to the laborers. At the same time, the
local manufacturers cannot ensure the security of the lives of the garment workers and massacres
like the Rana Plaza explosion occur (Chowdhury, 2017). Maybe innocent people have lost their
lives only because of the insincerity and carelessness of the authority and the owner of the firm.
In fact, especially women workers who leave their village home with a hope that they can earn
some money in Dhaka city or any mainstream city (Siddiqui, J.,2016). They have bare minimum
residents to accommodate. One woman in the documentary said she came with her daughter in
the city, and she must keep her daughter with her as she does not have any safe place where she
can keep her daughter. So, in the factory where she works, she keeps her daughter with her, but
the place is also not safe as garment factories use chemicals in production. On the other hand,
another woman working the same as the previous woman has faced workplace anarchy and
indiscipline. For the welfare of the factory, that worker proposed to form a worker union board
and it was formed also. But when the decision-making time came, she and the other colleagues
of hers got brutally beaten and oppressed by the higher authority managers because she used to
raise her voice against the uncontrollable and intolerable issues (Donaghey,2018). In conclusion,
most garment factories want to earn foreign currency but with the cost of poor illiterate workers.
Some garments owners are still ethical to some extent but have no strong stand rather their
voices are suppressed before the demand of foreign brands (LeBaron G, 2015).

Recommendations

1)Brands should always consider the ethical and environmental outlook and should respect the
end of foreign manufacturers and workers.
2) Government should enact powerful laws and safety regulations so that such occurrences like
Rana Plaza do not occur again. Moreover, mobile courts and responsible and honest magistrates
should be deployed so that they can frequently check the situations of the factory plants.
3) In every garment factory, a necessary union board should be created, and it should give utmost
priority and importance to the valid and legit thoughts and demands of the workers.
4) Workers need to be educated about their rights and the local welfare organizations should take
this responsibility to spread awareness among the employees.
5) Worker’s welfare funds should be allocated to those garments companies which do not
allocate such funds for the workers.
6) Precautionary emergency exit should be decided to take quick actions in times of occurrence
such building collapse, fair outbreak, natural disaster

Conclusion

In all, the fast fashion industry plays a significant role in the economy of Bangladesh. But it is
high time that it should be established that the fashion industry should not be the reason for the
death or mourning of thousands of people. All the organizations in the fast fashion industry
should include and implement the guidelines of safety and wage income of the workers set by
governments or regulatory authorities and should also include mandatorily the management
accounting controls for the accurate accountability and justification of the activities of the
garments factories. To shift from developing country to developed country, Bangladesh has to go
far with the fairness and rights of its human capital.
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