Sri Lankan Apparel Industry :
MAS Holdings Facing The Post MFA Era
Schulich School of Business
York University, Canada
April 18, 2009
With the phasing out of the Multi Fiber Agreement[i] in 2005, China & India have bombarded the market with low cost mass produced apparel. Exports from India and China have grown over 100% with the expiration of the MFA whilst other countries such Sri Lanka and Pakistan have seen a loss of market share in terms of volume traded. (Christoph, Alfons Hernández, & Daan, 2005). MAS Holdings Ltd (MAS) one of the largest apparel manufacturers is faced with this intense global competition and a constellation of other issues. The macro-economic environment in which MAS holdings operates is highly volatile. The country in spite of its high literacy rates and relatively high growth records is caught up in a 25 year old civil war which has destabilized the economy and the political environment. The government also has also issues with the global community on human rights which has resulted in bars on trade concessions. These has affected MAS Holdings negatively, which focuses on foreign joint ventures and partnerships for growth. Other challenges comes by way of cost & time to market due to higher wages, lack of country infrastructure, reliance on external raw material suppliers and utility costs. These factors have MAS falling behind on market competition. However, to MAS’s credit it has been focusing heavily on green and ethical manufacturing practices which have earned much credit in the global arena. It has also built a name for itself in the niche markets of lingerie. After conducting a complete analysis on MAS’s micro and macro environments, its recommended that MAS holdings pursue a differentiation strategy on its products, make backward integrations on its value chain to source its own raw materials and build a global brand image using its strengths on ethical and green manufacturing. MAS should also focus on lobbying the government on the aspect of human rights to win back trade concessions. These recommendations would help put MAS in a competitive & sustainable position in the global apparel market.
1. Introduction to MAS Holdings Ltd
MAS Holdings Ltd (MAS) is a private venture founded by three brothers, Mahesh, Sharad and Ajay Amalean, in 1986. MAS holdings humble beginning was marked by a single factory, named Unichela has grown out to the global operation it is today with 28 world-class manufacturing facilities spanning 5 countries in the African and Asian Continent employing an international workforce of 45,000 (Refer Appendix 1 : MAS Holdings Limited Corporate Structure). MAS’s factories in Sri Lanka are situated in the suburbs of Colombo (economic capital), Sri Lanka. With an annual turnover of over USD $700 million MAS Holdings is in the business of producing Ready-made garments for export and is headquartered in Colombo, Sri Lanka. MAS holds the number one position in intimate apparel production in the South Asian market and is the regions’ most rapidly growing producer of competitive sportswear. MAS’s modus operandi involves a multitude of joint ventures with its buyers and suppliers. It is involved in a number of integrations along the value chain of apparel manufacturing in a big way, true to its philosophy of ‘seamless concept-to-delivery’. At present MAS is the leading strategic partner of Victoria’s Secret and Triumph International and has forged similar partnerships with Nike, & Marks & Spencer. It is also one of the largest manufacturers/suppliers for Banana Republic, Ann Taylor, Lane Bryant, Adidas, Nike, Columbia, Marks & Spencer, Gap and Speedo brands. (MAS Holdings, 2006). MAS is renowned for its progressive management culture and people centric work environment it cultivates, and is held up as an industry benchmark for championing the cause of women empowerment through its flagship CSR initiative MAS...
References: Asian Develpment Bank. (2008, March). Asian Development Bank and Sri Lanka - Fact Sheet. Retrieved April 17, 2009, from Asian Development Bank: http://www.adb.org/Documents/Fact_Sheets/SRI.pdf
Central Bank of Sri Lanka
CIA. (2009, April 09). CIA - The World Fact Book : Sri Lanka. Retrieved April 13, 2009, from CIA World Fact Book: https://www.cia.gov/library/publications/the-world-factbook/geos/ce.html
International Finance Corporation Corporation, I
Datamonitor. (2008). Global Apparel Industry.
Datamonitor. (2008). Sri Lanka Country Profile.
EU. (2005). GSP: The new EU preferential terms of trade for. Brussels.
Gereffi, G., & Memedovic, O. (2003). The Global Apparel Value Chain - What Prospects for Upgrading. Vienna: United Nations Indistrial Development Organization.
Government Statistics Department. (2008). Sri Lanka Labour Force Survey 2007. Retrieved April 13, 2009, from http://www.statistics.gov.lk/samplesurvey/2007%20annual%20report%20English.pdf
JAAF Sri Lanka
Just Style. (2009). MAS Holdings : Apparel & Textile Industry Fact Sheet. Retrieved April 10, 2009, from Just Style: http://www.just-style.com/factsheet.aspx?id=463
Watson, N. (2007). Case Study : MAS Women Go Beyond. Fontainebleau, France: INSEAD.
Source: Appelbaum and Gereffi (1994), p. 46.
Appendix 7 : Apparel Export Destinations
Appendix 8 : MAS Holdings Revenue USD Millions (2002-2006)
Please join StudyMode to read the full document