Sri Lankan Apparel Industry : Mas Holdings Post Mfa
Sri Lankan Apparel Industry :
MAS Holdings Facing The Post MFA Era
Prepared By:
Sulatha Gengatharan
Schulich School of Business
York University, Canada
April 18, 2009
Executive Summary
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
MAS Holdings Facing The Post MFA Era
Prepared By:
Sulatha Gengatharan
Schulich School of Business
York University, Canada
April 18, 2009
Executive Summary
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
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