Markets and Strategy - CW1 BMM20Buckinghamshire New University itle: Module Title: Markets and Strategy Module Code: BMM20 Student ID No: 21125373 Dissertation Title: A Review of a Firms Operating Environment Module Co-ordinator / Tutor: Cicely Davey, Steve Millard Word Count: 1085 Submission Date: 12th February 2012 Student ID 21125373 Page 1 Porters five forces model for maliban 6. Conclusion 7. Sri Lanka Apparel industry overview 2. Brandix Lanka B. Global Apparel Industry Overview 3. Competitor Analysis 5. Bibliography 3 4 5 5 5 6 6 6 9 10 10 Student ID 21125373 Page 2 .CW1 BMM20 Table of contents Part 1: Page Number Executive Summery 3 1.Markets and Strategy . MAS Holdings C. References 8. Hidaramani Industries 4. Main Players in Sri Lanka Apparel Industry A. Maliban is one of large scale apparel exporting companies in Sri Lanka employing over 12000 man power and operating in 12 locations in Sri Lanka and Jordan. its main competitors. Sri Lanka having established itself as a reliable supplier of quality garments at competitive prices. According to apparel exports association of Sri Lanka. also carries ethical practices and been identified as a producer of Student ID 21125373 Page 3 . (Sri Lanka Apparel exporters association.Markets and Strategy . heron known as Maliban. The industry has grown by 47% in the exports to the Europe and by 28% to the United States. The industry has been positioned as socially responsible and preferred destination for apparel sourcing. its market share using Porters 5 forces model for EAM Maliban Textiles (Pvt) Ltd.7 million pieces a month.2012) apparel industry is the largest employer in manufacturing sector in Sri Lanka which is employing 15% of employment either directly or indirectly. 1. garments exports have reached 4 Billion US$ at the end of 2011 financial year. Sri Lanka apparel Industry overview Sri Lanka apparel export industry is the most significant and it is the second largest foreign currency earner accounting 40% share on annual exports. Maliban is specialised in woven garments manufacturing and offers a one stop solution for the global customer. Customer portfolio includes many global brands.CW1 BMM20 Executive Summery The objective of this assignment is to assess the operating environment. its production capacity exceeds 1. Global apparel industry overview Below figure 1shows apparel manufacturing global market share in 2006 Figure 1 Source: Fashion Products The industry have become more labour intensive and requires less capital investment in shifting more towards developing countries hence the industry has been decreased from developed counties between 1980 and 1996 and at the same time developing countries increased six times according to fashion products. Asia Pacific constitutes the largest amount of production and the trade in apparel industry worldwide. The percentage shares of different regions are shown in appendix table 1.CW1 BMM20 “Garments without guilt” making the “Made In Sri Lanka” label synonymous with quality.Markets and Strategy . Student ID 21125373 Page 4 . 2. reliability together with social and environmental accountability. New business models and competitive strategies are used to enhance profit and growth. Apparel manufacturers are now adapting new techniques to increase the trade. Other main apparel manufacturers in Sri Lanka are listed below. Main players in Sri Lanka Apparel Industry Maliban has annual turnover has been shown in figure 2 Figure 2 Maliban Turnover (US$ Million) 250 200 150 100 138 50 0 2007 2008 2009 2010 2011 2012 154 157 200 220 180 Source: EAM Maliban Marketing Department. the B. It has also moved its operations to India namely Brandix India Apparel City one of the revolutionary development in the industry. Brandix is owing an over 20% market share generate a turnover around 800 million US$.CW1 BMM20 3. 2012 Department Maliban is having an annual growth rate of 10% and holds a market share of nearly 8% in Sri Lanka apparel Exports.000 people. It is also employing around 44.000 people directly. MAS Holdings Started in 1986 as a manufacturer of intimate apparels have now grown in to a 700 million US$ business in operation with 34 facilities across 5 countries. MAS also have got a market share of 20% Student ID 21125373 Page 5 .Markets and Strategy . A. Brandix Lanka Brandix Started in 1972 and it has springboard to 34 plants and employee over 35. Markets and Strategy . Student ID 21125373 Page 6 . Hidaramani Industries Limited It has over 15 factories in Sri Lanka and employees over 25000 people and generate 500 million US$ holding a share of around 13% 4. MAS Hidaramani High High Very High Very High Very High Very High Very High Very High Same As Above Same As Above Considering above Maliban is operating in a very competitive market. Competitor Analysis Competitors Growth Rate Financial Stability Very High Turnover Market Share Comments Brandix High Very High Very High Since the company is well over from Maliban stats they are so called threat and a major competitor.CW1 BMM20 C. Some of the competitors have got joint ventures with international manufacturers. com Below table 1 discuss porters model applied to Maliban Table 1 5 forces Threat of new entrants Student ID 21125373 Impact to Maliban Operating Environment • Government support to enter in to the market been a developing country Page 7 .Millard.Markets and Strategy . Porter’s five forces model for Maliban (Porters. 1998) The five forces are environmental forces that impact on a company’s ability to compete in a given market ( Davey.C..S.CW1 BMM20 5. Market and Strategy Lecture notes 2011) The aim of this analysis to evaluate the principal competencies in the apparel exports market for maliban and the importance of each category as shown in figure 3 Figure 3 Source: Strategy4u. Markets and Strategy . They are financially very sound hence can play for low margins to take the business • Small suppliers also have a competitive advantage to play in the market due to their less overhead. Threat of substitute products Rivalry between existing firms Clothing is a basic need of humans. So there is no substitute product for it. Hence maliban will have less bargain power with those suppliers. • The other three giants in this industry are a big threat.CW1 BMM20 • • • Tax free benefit if it is started under BOI ( board of investment ) in Sri Lanka Investors are keen to start business in Sri Lanka due to potential Most of the basic resources will be provided by the government or can be sourced at low prices to set up a new business Determinants of supplier power • • • Big suppliers in China is a threat to Maliban in terms of the price they offer to buyer For some new designs raw material suppliers demand high prices as raw material is not freely available Some raw material suppliers are nominated by the Buyer when placing the order. So can reduce price margins up to great extent. Some buyers demand price cuts because of their low profit margins Some buyers do backward integration and acquiring small factories. Determinants of Buyer power • • • • • High bargain power of buyers due to Asia region giants low cost products. specially due to Chinese suppliers High bargain power of buyers due to their competitors Some economic conditions as recession in Europe also lead to huge price cuts and less order placement by buyers. • Student ID 21125373 Some big companies in Sri Lanka are acquiring small Page 8 . Still Sri Lanka is standing in a strong position in terms of the price. • Big companies are also converting apparel manufacturing plants to “green” concept (conserve the environment) with a huge investment to attract buyers as they were given top priority. Last but not the least maliban will however confront with all these challenges been a successful business in Sri Lanka to prove that it is worth to carry the mark as a most preferred supplier and ethical manufacturer of world class garments.Markets and Strategy . conclusion. Upgrading old factories to comply with this concept is another challenge. This is also a main threat to small players who can’t make such upgrades. Conclusion Considering porters five forces the main competition maliban face with is the world apparel market growth in new regions like as in China. Note: word count has been calculated excluding executive summary. quality and reliability of the products made with ethical practices together with less delivery lead times.CW1 BMM20 companies to compete for the market share. Another challenge would be “go green” conserve environment practice with less carbon foot print. References and appendix. Growing economy high labour costs is another factor maliban is facing. Modern factories are built to this concept and buyers are giving high preference to these. Student ID 21125373 Page 9 . 6. Welcome To Sri Lanka. 40. Essex: Pearson Education Limited. CHALLENGES. New markets. Last accessed 10th Feb 2012. London: McGrawHill Professional. VI. Policy Research Working Paper. Available: http://srilankaapparels.CW1 BMM20 7. II. Trade and the Crisis. Gary Gereffi. Sri Lanka Apparel. 192. Available: http://www. VIII. Available: http://jaafsl. 42.lankabusinessonline.garmentslanka. Exploring Strategy. Prospects and Strategies1. Related News. Sri Lanka apparel industry shrugs off loss of trade benefit. 5251 (1). (2010). (2012).com/fullstory.com/. 8. Stacey Frederick. Rupa Dheerasinghe.com/. IV. (2012). Sri Lanka Apparel Sourcing Association. Sri Lanka Apparel Exporters Association. Appendix Table 1 Source: Global fashion apparel industry Student ID 21125373 Page 10 .J Et al (2011).com/projects. Gerry. References I. Lanka Business Online. the Global Apparel Value Chain. Available: http://www.php?nid=1587564030. PROSPECTS AND STRATEGIES FOR THE GARMENT INDUSTRY IN SRI LANKA. 771. Last accessed 09th Feb V.Markets and Strategy . Jason Trennert (2004). Garment Industry in Sri Lanka Challenges. (2010). new strategies. 9th ed. III. VII. (2012). 1 (1). Last accessed 09th Feb 2012. Projects. Last accessed 09th Feb 2012. (2012).html.
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