Company Background

Amalean brothers started their journey in apparel industry 27 years ago in Ratmalana with a 30

workforce . The first business was began with a hand shake with the Mark & Spence

representatives and Mahesh Amalean, where no formal agreement was signed between the 2

companies. Today this company has grown to be the largest apparel manufacturer in South Asia

by providing employment opportunity for over 60,000 people in 34 manufacturing facilities

which are situated in various part of Sri Lanka and worldwide with their design officers and

production facilities.

MAS was named using the first letters of 3 Amalean brothers who are Mahesh, Ajay and Sharad.

MAS enjoying an annual turnover over US$ 1 Billion as of year 2012. MAS secret for success is

the commitment to engage in continuous improvements in innovation and sustainable apparel

solution. And the other success factor is the strategic partnership with world class brands such as

Victoria Secret, Marks & Spencer, Nike, Speedo and Triumph International. MAS Operating

System which is inspired by Toyota Production System of Lean Manufacturing has given a

competitive advantage over their competitors.

MAS Intimates largest customer is the Victoria Secret where VS Pink is the largest contributor

which products are focused on teenagers while VSX focused towards sportswear.

Next largest contributor for MAS Intimates revenue is the Marks & Spencer where they have

built a world’s first eco-friendly 100% Carbon Neutral facility in 2008.

Even though Nike is the largest customer for MAS Active, they have worked closely with MAS

Intimates to develop and manufacture Nike Revolutionary Sports Bra which became the highest

selling Sports Bra in United States.

MAS Intimates Vidiyal is the 33rd production facility with providing job opportunity for 800

employees in North of Sri Lanka which have been badly affected by the ethnic war. It was

declared open on the 19th of January 2012. Vidiyal’s main aim is to develop the economy of the

area with the help of government and create job opportunities for the internally displaced people

and aiding rehabilitation efforts via employment and training. At the moment their main

customers are VS Logo, H&M and Oysho where average 600,000 Briefs are produced monthly.

Environment of the Organization

The organization works within the framework provided by various elements of society. All such

elements which lie outside the organization are called external environment or simply as

environment. Also, the organization may create an environment internal to it which affects the

various subsystems of the organization The organization needs to properly understand the

environment for effective management.

Factors controlling organizational environment Factors that control an organizational

environment are classified into internal & external factors.

Internal environment the internal environment is composed of the elements within the

organization, including current employees, management - and especially corporate culture,

which defines employee behavior. Trade unions, management, current employees, share holders,

etc. control the internal environment.

External environment the external environment of an organization refers to the forces and

institutions outside the organization that potentially affect its performance. External environment

has two layers –general environment task environment

General environment the general environment refers to the non-specific elements of an

organization’s surrounding that might affect the organization indirectly. These external forces

are: Political, Economic, Technological, Socio-cultural.

Internal Stakeholders and their level of influence and importance

Stakeholders defined as those persons and organizations that have an interest in the strategy of

the organization. Stakeholders normally include shareholders, customers, suppliers, staff and the

local community etc. MAS Intimates Vidiyal as a grass root Strategic Business Unit (SBU) of

MAS Holdings, it’s very important to treat their internal stakeholders. Aubrey Mendelow have

introduced a Power vs Interest matrix which is known as Mendelow’s Matrix. It’s easier to

identify / understand the importance of stakeholders and their interest & impact to the business

through matrix.

MAS Intimates Vidiyal's Mendelow's Matrix

Minimal Effort [Low interest Low Power]

Contractors such as Janitorial, Security & Canteen will not involve directly on the business and

follow the direction given by the management. Similarly Contract Staff including drivers where

they were recruited upon a specific task and at the end of the task they are no more employed in

the business. Trainees and Interns are another group comes under low interest & low power due

to minimal participation in the business process.

Minimal Effort Keep informed

Contractors (Janitorial, Security,

Canteen etc.)

Contract Staff (Drivers & others)

Trainees & Interns

Logistics Team

IT Staff

Merchandises & Planners

Keep Satisfying Key Player

Finance Team

Consultants

MOS Staff

Directors

Management

HR & Admin Staff

Operators

Interest

P

o

w

e

r

Keep Informed [High interest Low Power]

Logistic has higher level of interest towards the business while achieving their KPI’s in 100%

Delivery on time and 0% complaints. They need more information on shipments and delivery to

execute the milk run system according to the lean concept. Support staff including Quality, Lab,

IT, Work Study & Engineering etc. have a greater level of interest in business to increase the

efficiency and effectiveness through implementing new system or upgrading new systems. But

they has less power to influence on the decisions. Merchandisers and Planning are the other

groups who shows higher interest towards the business since their ultimate goal is to satisfying

the end customer and their requirements. But they have limited power to make decisions on

SBU’s and supports the business with their limited resources since they only involved in

sampling process, ordering raw materials and loading to plants according to the availability.

Keep Satisfied / Involved

Finance is has very limited interest on the business where they only does the bookkeeping of the

plants expenses. But they have high power to influencing decisions since they are laying out the

monetary strategies of the organization. Similarly Consultants are the next group who has higher

power to influencing in decision making towards recommending processers and suggesting new

technologies and methods to the business. Even though the impact towards MAS is greater

considering the SBU, due to processers and standards impact towards the direct business is

nominal. MOS main job roll is to see SBU carrying out the laid processers & standards are

carried out in lean methods and has higher influences in decision making power, and has very

minimum interest towards the direct business and they will not directly involved with the

customer.

Key Players

Directors have a higher influence in business where it impacts on the SBU’s business strategy

and its profitability. Therefore they have higher interest towards business as well as they have the

high power to make decisions and implement across the SBU’s and it may differ one to one

according to the business model. While Vidiyal Management have higher interest to make higher

profits and high power on decision making within the SBU. Management will influencing in

implementing strategies that were recommended by consultants and MOS staff, which will

impact on SBU’s profitability.

Since MAS in service industry HR & Admin department becomes a key player since they

manage the human capital which is the greatest asset in this sector. Every decision taken by HR

will impact on the employee motivation, efficiency and labor turnover. Hence HR have a greater

power on decision making on the HR related issues as well as the business models.

Operators being the greatest asset to the textile industry they can influence on decisions since all

decisions considering the operator behaviors and attitudes towards the decision carried out since

if the decision are affect negatively towards the operators there may be less motivated work force

and can be seen higher labor turnover which will impact on the efficiency and profitability of the

SBU. In MAS pricing strategy is based on the time taken to produce a garment, and financial

strategy is providing incentives based on efficiency of the operators where they perform higher

to gain higher incentives directly impacts on the Cost per Standard Hour and profitability.

External Stakeholders

Community

MAS Intimates Vidiyal is the 33rd production facility with providing job opportunity for 800

employees in North of Sri Lanka which have been badly affected by the ethnic war. In Northern

part of Sri Lankan people have lack of knowledge on private sector especially towards textile

and clothing industry And they have low level of job recognition by the community. Therefore

organization has a responsibility to create the awareness amongst the local community as well as

the employees.

Government

MAS export industry is the most significant and dynamic contributor for Sri Lanka’s economy.

The garments industry is a key foreign exchange earner and, with factories being set up all over

the country, provides employment for a large number of people ensuring better income

distribution. Today it provides direct employment for nearly 60,000. This industry, entirely

privately owned has successfully exploited the opportunities in the international market.

IT Partners

In 2001, MAS established Sabre Technologies, a solutions company specializing in cloud and

mobile technologies with a proven record of expertise in .NET and Java platforms. We have

supported a range of Independent Software Vendors, business start-ups and enterprise clients to

realize their aspirations through our services. At present, Sabre is playing a key role in the

Groups' future IT business strategy with a focus on providing companies in the Fashion and

Lifestyle space, with pioneering cloud and mobile technology solutions.

In November 2008, Sabre Technologies entered in to a Joint Venture with Trade Card Inc. USA,

a supply chain collaboration solutions firm to establish an off-shore services center in Sri Lanka.

Named TradeCard Services, the company is responsible for the implementation and maintenance

of TradeCard Inc.'s Pay-to-Procure solution in South Asia and the Middle East, managing a key

team of software developers and driving the regional strategy of TradeCard Inc. Key clients of

TradeCard include Levi's, Abercrombie & Fitch, Columbia Sportswear and Guess, among others.

TradeCard Services is also involved in developing MAS' future IT strategy by way of sharing its

expertise on supply chain collaboration.

Strategic Partners

Partnering up with renowned brands from across the globe has enabled us to offer fully-

integrated world class solutions to our clientele. Our alliances are based on mutual understanding

and trust, sharing the same principles in business ethics with our partners, an attribute that has

proven to be a strong competitive advantage for MAS over the years.

Our joint venture partners include:

MAST Industries, Inc., USA

Triumph International Overseas Limited, HK

Speedo International Limited, UK

Stretchline (UK) Limited, UK

Ets Lucien Noyon Et Cie, France

Prym Intimates Group Ltd, HK

Brandot International Limited, USA

Labyrinth Solutions Holdings, USA

Tradecard, Inc., USA

NSL Infratech (Private) Limited, India

Customers

Offering customers highly differentiated intimate wear, flawless designs blended with exquisite

quality, this is where perfection is revealed in every intricate detail. Drawing from 25 years of

experience in lingerie manufacturing, MAS Intimates offer niche market intimate wear of

unparalleled quality. With 12 world class manufacturing facilities in operation across Sri Lanka,

India, Bangladesh & Indonesia, together with design offices situated in New York, Hong Kong,

UK and Colombo, we service some of the most renowned global intimate brands. Sharing a long

standing strategic partnership with Victoria’s Secret, the company currently manufactures for

Victoria’s Secret, Marks & Spencer, La Senza, GAP, Soma, DBA, H&M, Lululemon, Oysho,

and athlete.

Marking the beginning of a new era for garment manufacturing in the country as well as the

region, MAS Intimates not only adheres to international standards in its services and ethics

towards both clients and employees, but also creates the benchmark for other facilities in the

region in terms of quality and recognition. Our wings spreading globally, we have grown

alongside our customers. We showcase a unique blend of technical, marketing and supply chain

expertise which has made us the largest global supplier for Victoria’s Secret.

SWOT Analysis

Evaluates the internal strength and weakness at the company against the opportunities and threats

that exist in the external environment.

Advantages

Reveals the competitive advantage of the company

Helps firms to prepare and make contingency plans for inevitable opportunities

and threats that may arise in the external environment

Helps to identify and analyze new prospects

Strength

Being the number one supplier of

intimate and sportswear apparel in Sri

Lanka and south Asia

Strong Brand name and brand loyalty

Experienced management team

Skilled employees

Creative and innovative culture

Superior technology

Well established supply chain

Offers customized design solutions to

customers with an in-house design team

leading to faster turnaround time and

efficient design solutions to customers

Weaknesses

High Employee turnover rate

Limited fund available for expansion

since it is a privately owned group

Opportunities

Export Supporting policies by the

government

Devaluation of the rupee against

foreign currency making MAS products

cheaper abroad

Threats

Volatile exchange rates that could

hinder sales

Severe competition from overseas

Suppliers

Changing government policies with

Technological advancements and break

through within the industry

Expansion opportunities

regard to foreign trade

Political instability with in the country

and international pressure that could

discourage other countries to engage in

trade with Sri Lanka

PESTLE for MAS Intimate Vidiyal

Political

Government policies regarding international trade

Political instability in the operating countries Eg: Bangaladesh

Tax Benefits given by BOI

Trading Blocks: NAFTA curtailed the export opportunities of Sri Lanka

Economical

Volatile exchange rates affect revenue

Volatile interest rates affect borrowing ability

Inflation within the home country and raw material importing countries increase the

production cost

Socio Cultural

Attitudes in the each country towards the Garments industries

Cultural barriers: Women work force

Technological

Automation: Reduce the production cost and increase the productivity

Advance technology: Gives a competitive edge to the company

Fast technological advancement: Makes some workers redundant

Legal

Maximum working hours

Minimum wage rate

Lows prohibiting the use of child labor

Rules and regulations of WTO and EU and other international bodies

Environmental

Waste management laws

Sustainability policies of the government

EU – Carbon foot print rules

Porter’s Five Forces

The Porter's Five Forces tool is a simple but powerful tool for understanding where power lies in

a business situation. This is useful, because it helps you understand both the strength of your

current competitive position, and the strength of a position you're considering moving into.

With a clear understanding of where power lies, you can take fair advantage of a situation of

strength, improve a situation of weakness, and avoid taking wrong steps. This makes it an

important part of your planning toolkit.

Conventionally, the tool is used to identify whether new products, services or businesses have

the potential to be profitable. However it can be very illuminating when used to understand the

balance of power in other situations.

Rivalry : Number of competitors,

Industrial growth, Capital

Investment, Exit Barriers

Threats of New entrant: Economic

of scale, Government policy,

Brand identity

Threats of Substitutes:

Switching costs, Buyer propencity

to substitute

Bargaining power of buyers: Size and

sccale of customer, Switching costs,

Presence of substitutes

Bargaining power of supplier:

Differentiation of inputs, Switching

costs, The company's ability

to backward integrate

Porter’s five forces for MAS Intimate Vidiyal

Rivalry

Number of competitors-High [Brandix, Penguin, Jay Jay Mills Lanka]

Relatively high capital investments must be made on technology: Thus new entrants are

somewhat discouraged

Threats of New Entrants

Economics of scale: Experienced by MAS acts as a barriers for new firms

Difficulty to obtain orders from international customers due to inexperience.

The government policy is to encourage apparel exports. Thus new entrants are welcome

by the government.

Threats of substitutes

Changes in customer preference to brands that are not manufactured by MAS can reduce

the orders received by the company.

The Customers propensity to substitute is relatively law since they do not want to share

trade secrets with new manufacturers easily.

Bargaining power of buyers

The Customers are powerful: International companies with high bargaining power

However they want high quality apparel, speedily and depend on the unique technology

of MAS.

The Customers also do not want to keep switching costs their suppliers in order to retain

their trade secrets.

Bargaining power of Suppliers

Some suppliers by the Customer and MAS cannot switch to others. Thus their bargaining

power increases.

The production process requires high quality, unique raw materials which are rare.

However MAS has its own fabric mills.

Business Strategies and Information system

In 1997 MAS become only the fourth apparel manufacturer worldwide and the first in Asia to

implement an SAP enterprise resource planning (ERP) solutions for the apparel industry.

MAS believes in using the best technology in both manufacturing and information systems to set

the bar in global industry standard in enterprise resource planning. One of the first industry

leaders to go live with SAP AFS in South Asia, we have continuously updated and revamped our

SAP versions over the past 15 years, enabling the apparel industry to steadily adapt, optimize

and align business processes. Today, MAS utilizes SAP to run its core manufacturing process,

integrate with banks, suppliers and customers, with direct processing of customer orders and

business intelligence. MAS maintains strong SAP competencies through our SAP AFS

consulting company that undertakes consulting assignments worldwide with a strong team of

consultants providing support, training and implementation.

In MAS there is a team that handles the networking. There is a MASSAI- MAS Strategic Action

Initiatives-team that handles strategic initiatives including technology.

Application of SAP in MAS

Michael Porter Value chain

The idea of the value chain is based on the process view of organizations, the idea of seeing a

manufacturing (or service) organization as a system, made up of subsystems each with inputs,

transformation processes and outputs. Inputs, transformation processes, and outputs involve the

acquisition and consumption of resources - money, labor, materials, equipment, buildings, land,

administration and management. How value chain activities are carried out determines costs and

affects profits.

Most organizations engage in hundreds, even thousands, of activities in the process of converting

inputs to outputs. These activities can be classified generally as either primary or support

activities that all businesses must undertake in some form.

According to Porter (1985), the primary activities are:

1. Inbound Logistics - involve relationships with suppliers and include all the activities

required to receive, store, and disseminate inputs.

2. Operations - are all the activities required to transform inputs into outputs (products and

services).

3. Outbound Logistics - include all the activities required to collect, store, and distribute the

output.

4. Marketing and Sales - activities inform buyers about products and services induce buyers

to purchase them, and facilitate their purchase.

5. Service - includes all the activities required to keep the product or service working

effectively for the buyer after it is sold and delivered.

Secondary activities are:

1. Procurement - is the acquisition of inputs, or resources, for the firm.

2. Human Resource management - consists of all activities involved in recruiting, hiring,

training, developing, compensating and (if necessary) dismissing or laying off personnel.

3. Technological Development - pertains to the equipment, hardware, software, procedures

and technical knowledge brought to bear in the firm's transformation of inputs into outputs.

4. Infrastructure - serves the company's needs and ties its various parts together, it consists of

functions or departments such as accounting, legal, finance, planning, public affairs,

government relations, quality assurance and general management.

Value chain for MAS Intimate Vidiyal

Primary Activities

Inbound Logistics

In the earlier process Purchase Order (PO) creation took a lot of effort and time as PO creation

required various information from different departments. The raw material supplier had to wait

until he is being informed and it was a risk to company because if the supplier is unable to meet

the target date, the company has to delay or terminate their processes until the raw materials are

received.

Furthermore all the details about the PO and invoice were maintained manually and when the PO

is created they manually check the inventories in the warehouse. Once the raw materials were

received the information on the Good Receive Note (GRN) was entered manually to the excel

files and they have manually checked the goods against the invoice.

The current system helps the company to have an internet enabled supply chain where it provides

integration among all the relative parties. All the inventory details are maintained through the

system. It further eliminates the risk of raw materials being out of stock since it provides a

vendors’ window where the vendor can keep track of their inventories and plan their operations

according to the updated Material Requirement Planning (MRP) which increases the efficiency

and effectiveness of the process. The system embedded barcode system helps the company in

checking the PO and GRN. At the end of each month the system generate many reports and these

could be used in the profitability calculation process. The system further provides

communication facilities with the external parties that help an uninterrupted process flow.

Prescribes fabrics

to be bought from a

specific Supplier

Customer places

the orders

specifying Fabric

Prescribes MAS

own Fabric to be

used

The supplier is

contacted and an

order is placed

A store requisition

is made to be ware

house

Fabric is issued to

production line

Fabric is received

by MAS stores

Production

Fabric Request Note (FRN) was produced manually by concerning the number of required

products and then sent to the warehouse. The creation of the FRN resulted in lot of errors and

was really time consuming, as it needs to go through several documents. Materials were cut

manually which incurred lot of time in finishing a single line and many man made errors were

visible. At the dying plant once the dye batch was received the operator has entered the details to

the excel sheet. In the packing process the carton sticker was written manually, this was time

consuming when it comes to a large shipment and the end result was not elegant. The cartons

were loaded to the trucks by people at warehouse.

The new system integrates all the functional units. Therefore it has increased the visibility of

information and reduced data redundancy. The cutting unit sends a FRN through the system to

the warehouse and receives the material they needed for the production process. In the cutting

unit the new machines fed data on the required size and a line finishes with minimum errors

easily. Currently at the dying plant colour mixing is done by feeding the data into the system,

and once it is fed the system selects the colours and mixes them accordingly to produce the

customer expected outcome. The carton sticker in the packing process is also now printed with

the information on the system. With the help of technology the industry has developed a

scanning system for the loading operation. The cartons are loaded to trucks through a converge

belt.

Fabric is received

from the ware

house

It is washed and

tested for quality

Fabric is cut by the

cutting department

Fabric is sent to

printing department

Fabric is sent to

stitching

department

Apparel is sent to

ironing department

Final Quality check

Apparel is sent to

packing

Department

Destruction

Processes

Out bound Logistics

Previously according to the information received through the Purchase Order, the manufacturing

company sends products to the buyer. All the shipping details were maintained/ handled

manually and it was inconvenient to access and confusing in recording. The shipping schedules

and all the relevant information about the order fulfillment is now stored in the system where it

provides easy storing and retrieval.

The carriage outwards and shipments are tone by MAS holding and the cost is affect to the final

selling price.

Marketing and Sales

MAS Holdings use direct marketing strategies and obtains sales based on past dealing with

customers. It also uses its website as a tool for affecting potential customers.

Services

Being and apparel manufacturer MAS Holdings does not provide extensive after sales services.

However it guarantees the Quality of its Products and contacts rewards activities on any rejected

or substandard items.

Supportive Activities

1. Firm Infrastructure

The physical layout at the factories uses lien, Kaizen, TQM principles

The Management Since the founders remain as the senior management at the

firm.

Their core value Prevail.

Well Established processes and rules exits that need strict adherence

2. Human Resource Management

“Our People are our pride and power Attitude “Treat its employees as a valuable resource

and uses many motivational tools to ensure that these are satisfied.

Because of heavy work load there were lots of complaints from the employees and less

value was given to the ideas of the employees. After the implementation of the new

system, when recruiting and selecting a new employee to the company the management

gives higher priority for the candidates who have a rich knowledge on existing systems

and new software. Training programs are being carried out by assigning employees on

selected projects; quality circles and activity planning.

3. Technology Development

The company uses advanced technology in order to delight its customers through

innovative product such as sweet absorbing apparel, high performing shoes, fabric that

monitor one’s heart rate and stress level etc.

In the former process interdepartmental interactions were not visible. Due to these

reasons the departments were deviating from the company’s end goal. This created many

errors, data duplications in the process and was very time consuming. They had no proper

mechanism to view all the company process related data in one place and when carrying-

out an activity they had to collect information from several places in several formats. The

current process integrates all the functions and departments of the company. The system

operates a central information repository where it provides efficient communication

between all the process related parties. And it further enables the visibility and exchange

of information among them. This eliminates the inconvenient communication barrier

within the process. This system facilitates a smooth flow over the entire process.

The company at commence of business has used entirely manual approaches. With the

technological advancements they have started using excel files. Mostly the reports were

generated manually. Today most of the companies use Six Sigma approach and ERP

(Enterprise Resource Planning) system (SAP) which includes highly developed

technology infrastructure, and support the company to make the processes efficient and

effective.

4. Procurement

Most major customers specify the supplier from whom the fabric must be bought. They

usually have already made arrangements regarding the quality of the Fabric. MAS bear

the cost at fabric but pass it down to the customer through the Quoted Prices.

Competitive Advantage

Competitive advantages give a company an edge over its rivals and an ability to generate

greater value for the firm and its shareholders. The more sustainable the competitive

advantage, the more difficult it is for competitors to neutralize the advantage.

There are two main types of competitive advantages: comparative advantage and

differential advantage. Comparative advantage, or cost advantage, is a firm's ability to

produce a good or service at a lower cost than its competitors, which gives the firm the

ability sell its goods or services at a lower price than its competition or to generate a

larger margin on sales. A differential advantage is created when a firm's products or

services differ from its competitors and are seen as better than a competitor's products by

customers.

A well established, export oriented manufacturing industry.

A ready supply of raw material and an expanding resource base.

A literate, trainable workforce.

Geographical location & infrastructure advantages.

Compliance with the best international labor and environmental laws and practices.

Market and investor friendly policies of the government.

An array of attractive incentive extended for the textile/apparel industry.

Unlimited quota free access to the EU markets.

Preferential access to Indian market including duty- free concessions provided by the

Free Trade Agreement between Sri Lanka and India

Conclusion

MAS Intimates Vidiyal is the 33rd production Facility under the MAS Holdings. It is operates

over 27 years in well established company.

Internal; shareholders are high level of influence the operations. Target customers are in

European Region and Srilanka Government policies also support to the garments industry

exports that is favorable to the company.MAS Vidiyal has Strong Brand name Victoria Secret

and well experience management team. Most of the External factors are encourage the company

activities.

According to the Micheal Porter five forces analysis MAS has high level of bargaining power,

less of thereat to the substitutes product and high level of entry barriers to the industry. MAS

becomes only the fourth apparel manufacturer in worldwide & the First in Asia to implement the

SAP technology for the apparel industry, Now MAS Utilize SAP system for integrate all

business activities.

In Micheal Porter value chain analysis Input decided by the MAS Holdings based on the

customer requirement that is provide the option to the customers for ordering the fabric from

MAS own fabric or external suppliers. New operating system integrate all the functional units

that is increased the visibility of information system and reduce data redundancy. Output details

are stored in the system that provides easy storing and retrieval .MAS use direct marketing

strategies company does not provide extensive after sales services.

Factory uses lien manufacturing system, Employees are treated as valuable resource and ensure

their satisfaction . Company uses advanced Technology (SAP), Material procurement made by

the Company cost pass it doen to the customer through the quoted prices. MAS Vidiyal

enjoying the comparative advantage as well as differencial advantage.