Case: “MAS Holdings: Providing Design to Delivery Solutions to the Global Apparel Industry”
Writing Task: Recommend a decision to Mahesh Amalean, tell him why it’s the best choice and draft an action plan.
Mahesh Amalean must make a decision that will shape the future of MAS Holdings. In January 2005, WTO mandates will implement a quota-free international textile trade system, which will open the market up to many new Chinese firms who are expected to possibly take up 50% of the textile market. The company has already begun reorganizing internally to focus its 16 joint ventures around three key product lines, Intimates, Activewear/Leisureware and Fabrics. It has also taken the steps to move towards becoming more of a full service provider to its customers. MAS Holdings needs to reorganize itself internally in such a way as to better meet customer demands, while continuously searching for ways to improve and innovate in the industry. Options
Alamean is considering four options to bring MAS Holdings into a post-quota industry:
1. Invest in building a retail brand.
2. Bring raw-material suppliers in-house.
3. Focus on configuring supply chain management to optimize existing business processes.
4. Focus on Improving information technology systems across the organization. Selection Criteria
Alamean should evaluate the options based on three objectives:
1. A solution that fits the needs of its customers.
2. A solution that provides the possibility of having a competitive advantage
3. A common goal of making operations more efficient
1. Building a Retail Brand
MAS Holdings has moved from being a contract manufacturer to a provider of “design to delivery” solutions. The company has acquired the skills and knowledge for design and product development over the course of twenty-plus years. MAS also has the supply chain to support the manufacturing of a retail brand, and it can capitalize on Sri Lanka’s low labor costs and high literacy rate. By developing a retail brand in-house, MAS can also take advantage of the opportunity of financial incentives in Sri Lanka and this sort of venture could facilitate company growth and innovation within the organization. A retail brand could possibly provide better solutions for MAS’s customers. However, in order to begin such a venture, MAS would need to invest an undetermined amount of capital in research and development as well as other resources such as new factories, more raw materials, increased capacity and labor costs. It is not clear how efficient this would be in relation to the rest of the organization. This venture also entails the question of what this retail brand would actually encompass. Would it be a retail brand in the product line of intimates? Or would it be a brand line in activerwear/leisureware? Building a retail brand also poses the questions whether or not MAS would be able to develop a brand on their own or if it would need help from a joint venture, since the company relies somewhat heavily on backwards integration. In addition, because Sri Lanka depends so much on exports, raw materials would still have to be imported. Also, it is unclear whether many of MAS’s customers would be interested in supporting such a retail brand. It might be a solution that a customer would not necessarily need. Certain customers may not want a standardized product, but rather opt for more personalized and collaborative solutions and products. It still is unclear whether a retail brand would give MAS a competitive edge or if it would hinder or slow down operations due to the fact that MAS will still have to compete with the growing competition from China.
2. Bringing Raw-Material Suppliers In-House
Bringing raw-material suppliers in-house would greatly reduce costs for MAS. MAS Holdings can continue using backward integration, setting up new joint ventures and...