SWOT Analysis, PESTEL Analysis and Porter Five Forces of Mas Holdings - Case Study Example

of the of the Concerned 27 October MAS Holdings Chosen Management Theories: SWOT analysis, PESTEL analysis and Porter Five Forces. Justification for the Selection of these Frameworks: SWOT analysis, PESTEL analysis and Porter’s Five Forces stand to be time tested and reputed management tools for assessing the strategic strengths and weaknesses of any organization, both at a micro and macro level. Usage of these tools to analyze the given case study will immensely help the organization under consideration to chalk out an appropriate business model, to exploit its resources and assets, so as to respond aptly to the existing business environment. Such an approach will facilitate a thorough identification of the prospective opportunities and potential threats, both from within and outside the organization. The chosen management theories will also help MAS Holdings to have an overall perspective of its core competencies and strategic objectives. It goes without saying that such an analysis needs to be taken as a continual exercise and not a onetime measure. Essay MAS is one of the few established brand names on the supply side of international apparel business. It has a reputation amidst the established retail brands like Victoria’s Secret, Nike, Reebok, Hanes, Tesco, etc for delivering the right products, as per the agreed upon timeline and quality standards. The biggest asset of MAS is its empowered, trained, dedicated and IT enabled workforce. MAS has negligible labour issues and has immense clout in the social and political setup in Sri Lanka. Its manufacturing facilities and HR policies are in consonance with the international values and in alignment with the rising concern for ‘sustainable consumption’ in the developed economies. MAS has indigenous IT systems and immense resources at its disposal. Being a family owned company, it could afford to be creative and bold. The foreign collaborators of MAS are potent enough to extend to it the required resources, technology and access to the desired markets. MAS has largely been unable to highlight its ethical and value based HR and manufacturing practices till now, though it does contribute significantly to social and environmental service. A majority of its revenues still come from one brand that is Victoria’s Secret. Reliance on one primary customer could by threatening, in case the customer decides to switch its suppliers. Courtesy, its investments in workforce and philanthropic activities, MAS has a high cost structure as compared to the Chinese companies. Going by the very size of the international apparel market that is approximately $ 925 billion (Case Study pp. 26), MAS has an immense opportunity for growth. Its established customers and collaborators could greatly help it in fulfilling such aspirations. MAS could exploit its educated and skilled workforce and IT competencies to aid its growth. The rise of the concern for ethical manufacturing practices in the international community and the potential ‘Green Lobby’ in the West represent a propitious opportunity for MAS (Crane & Matten 2006). The post-tsunami preferential trade opportunities offered to Sri Lanka by the EU and the US pose positive opportunities for growth. So does the virgin East-Asian retail markets. The biggest threat to MAS is from the competitive and rather the predatory pricing practised by its Chinese and Indian competitors (Crowley 2003). The political unrest in Sri Lanka and the nation’s somewhat conservative value system is one other serious problem. MAS is considering, initiating retail activities in India and South-East Asia. While opting for retailing in India and South-East Asia, MAS may enervate some of its old customers. Sri Lankan government is towing a pro-liberalization policy. MAS enjoys an impressive political influence on the government. However, the internecine ethnic unrest in the country is not conducive for business (Winslow & Woost 2004). Sri Lanka has a low GDP, but an educated and healthy population that could be trained to operate in a modern business venture. Quota provisions have vanished, but in a post-tsunami scenario, Sri Lanka enjoys preferential trade facilities from the EU and the US. The society’s attitude towards women in Sri Lanka is conservative, constituting a major proportion of the workforce in apparel manufacturing business. People have access to education and health. MAS has immensely contributed towards social progress and women empowerment in rural communities. The workforce at MAS is IT enabled. The company has its own IT consultancy facilities, at par with the best in the world. The production facilities and processes at MAS are state of the art and modern. MAS has strong affiliations to environment friendly manufacturing practices. The international consumers are generally shifting towards environmental friendly products and processes. Pressure is increasing on the international brands to go for ethical and environmental friendly suppliers and manufacturers. MAS’s manufacturing practices are in consonance with the international labour norms and statutes. China, which already enjoys a 18% and 16% share in the clothing markets in the EU and the US respectively, is expected to increase it to 29% and 50% respectively, after quota elimination (Case Study pp. 25). The Chinese supply chains and expertise are at par with any other country in the world. Going by its labour policies, the Chinese are able to offer a stiff competition on costs. The lead retailers still give primary preference to the suppliers offering lower costs. In a profitability scenario and taking the proliferation of economic manufacturing hubs like China and India, the customers do to some extent command an elevated bargaining power. However, MAS being able to offer specialized and differentiated products does enjoy some preference amongst the lead retailers. Besides, MAS’s reliance on joint ventures with top notch brand names makes it a bit dearer for the customers to switch suppliers. If one goes by the contemporary international labour related preferences, ethics and policies, the customers are left with a very limited choice, except MAS. Going by the requisite inputs, components and technology that goes into the manufacturing of quality apparel, MAS is self sufficient. MAS Fabrics, a subsidiary of MAS does provide it with much of the required supplies. Hence, the outside suppliers are left with a very little bargaining power. If one ignores the current political will in support of ethical manufacturing practices and labour policies, the Chinese are more capable of supplying the MAS’s customers with similar products at a cheaper price. Going by the proportion of China’s share and stakes in the international clothing trade, the rivalry amongst the players is intense. For strategic reasons, China could resort to predatory pricing to weaken and if possible, drive out the other competitors. Considering the fact that the size of the international apparel market has not increased much, the Chinese are enjoying this competitive advantage in terms of costs only and that too primarily owing to their repressive and abusive labour policies (Dewar 1997). As per the above analysis, MAS cannot do much to increase its market share and meet the Chinese competition, except for highlighting what it does best, that is its commitment to corporate social responsibility, ethical HR policies and women empowerment. In this scenario, the company needs to be real innovative and creative. In fact it has already made a good start by organizing and systematizing its CSR activities, backed by the commensurate PR activity and advertising. MAS has the access to basic ingredients for success that are ample resources, access to marketing channels and right markets, a pool of educated and healthy workforce to choose from, reputed collaborators, IT inputs and an IT enabled workforce, possibility for growth, self sufficiency, vision, leadership and social and political recognition. All that MAS needs to do is to transfer these facts to the end consumers. ‘MAS Women Go Beyond’ is a good start. MAS ought to stretch this initiative from internal levels to an international arena. In fact, MAS cannot afford to be slow with this strategy. The lead customers doing business with MAS could prefer to switch to affordable Chinese suppliers, but for the public pressure and the respectable political will of their end consumers. Tagging the ‘Women Go Beyond’ logos on the clothing manufactured by MAS and allowing the customers free access to its plants and manufacturing facilities is an appropriate step, as far as conveying the MAS initiative to foreign markets is concerned. However, MAS needs to REALIZE that it would be much profitable to go a little political with this strategy. Unfolding a related advertising campaign in the print and digital media of the target markets could further accumulate consumer opinion in favour of MAS. Entering the South-East Asian markets and India as a retailer is one other step that portends growth. These markets are home to a burgeoning middle class that not only has access to spendable income, but a taste for international quality clothing (Goodman & Robison 1996). Forward integration is very right. However, while doing so, MAS needs to take care that it does not jeopardize the interests of its branded customers in these markets. Regarding MAS’s expertise in striking collaborations and partnerships, it does have the capacity to come out with something workable in this context. References Crane, Andrew & Matten, Dirk 2006. Business Ethics, OUP Oxford, Oxford. Crowley, Meredith A 2003. ‘An Introduction to the WTO and GATT’, Economic Perspectives, Vol. 27, no. 4, pp. 42-49. Dewar, Angela 1997, ‘The Girl Power and the China Doll: The Wannabe Workers Earn Pounds 1 a Day’, Sunday Mail, 9 November. Goodman, David SG & Robison, Richard 1996, The New Rich in Asia: Mobile Phones, McDonald’s and Middle Class Revolution, Routledge, New York. Winslow, Deborah & Woost, Michael 2004. Economy, Culture and Civil War in Sri Lanka, Indiana University Press, Indiana. Read More