COMMONWEALTH EXECUTIVE MASTER OF BUSINESS

ADMINISTRATION

MCP 1604 OPERATIONS MANAGEMENT

Name : G.D.N. Lakshan

Reg. No. : 516941122
 TABLE OF CONTENT

Title Page

1 SUMMERY 2

2 STRATEGIES USED BY BRANDIX TO STAY COMPETITIVE

IN THE GLOBAL MARKET 3

3 HOW THESE LEARNING POINTS IMPROVE MANAGEMENT 7

SKILLS

References 8

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 1.SUMMERY

Garment industry has been the Sri Lankas largest gross export for many years and accounted
for more than 46 per cent of total export earnings of the country. It is also the countrys largest
net foreign exchange earner since for many years. Sri Lankas garment exports had been largely
governed by the Multi-fibre Arrangement (MFA) since 1978. The MFA is a system of export
restrictions imposed by developed countries on textiles and garment exports originating in
developing countries to protect the garment industry in developed countries. The Uruguay
Round Agreement on Textiles and Clothing (ATC) of WTO succeeded MFA in 1995. The
sector was fully integrated into normal rules of WTO by phasing out MFA in 2005.

The MFA, by providing a ready market, had restricted Sri Lankas exports but has protected it
from competitors. Phasing out of MFA has open up more markets to Sri Lankas exports, and
at the same time intensified competition from other developing countries. Post 2005, with the
abolition of the MFA, the playing field for the manufacturers changed drastically. Companies
who emerged as winners were the ones who reinvested profits and who thought about the
bigger picture. Consequently, what used to be an industry with thousands of business entities
consolidated into not more than 10 major manufacturers. In saying this, the industry has grown
substantially over the years, but growth has essentially come from major players in the industry.

Brandix was one such apparel group that showed the way forward in preparation for the
phasing out of the Multi Fibre Agreement (MFA) post-2005, despite the uncertainties of the
business of apparel manufacturing in the new, unfamiliar quota-less regime. Brandix
consolidated its customer base by adopting a narrow and deep approach, and implemented a
converse strategy. Providing a holistic model devised to integrate every aspect of fashion, from
developing the design concept to transforming that design into a final branded product for the
fashion store, has seen Brandix adopted a strategy of innovation-to-execution. Brandix
comprised 25 fully integrated manufacturing facilities to provide service worlds best apparel-
retail brands as GAP, Marks & Spencer, Victorias Secret, Next and Abercrombie & Fitch.
Brandix as the largest apparel exporter, with an annual turnover that exceeds US$ 320 million
provides employment for over 22,000 associates and generates indirect employment for an
equal number and also provides over 50% of value addition locally through backward-linked
operations in textiles, thread, buttons and hangers. Brandix infused professionalism into the

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group, ensuring that it matched benchmarked global apparel organizations, which was firmly
rooted in Sri Lanka and is committed to investing in the future of the countrys apparel industry.

2. STRATEGIES USED BY BRANDIX TO STAY COMPETITIVE IN THE

GLOBAL MARKET

Brandix Lanka Limited is a company that represent the epitome of global apparel manufacturing.
The company generate annual turnovers of $1.5 Billion plus each and have elevated Sri Lanka's
status in the global market. The company has reached a stage in its evolution where they are no
longer domestic giants, but rather regional powerhouses in the apparel manufacturing industry.

The company started as a trader, and with the open economy revolution of Sri Lanka they has
become a champions in the apparel sector. Its growth has essentially made it evolve into higher
spaces of the value chain and currently project as 'knowledge sharing powerhouse. The
evolution of the company and strategies followed to stay competitive in the global market are
described below under several topics.

Large Scale Tailor

Sri Lanka's apparel manufacturing industry largely evolved and progressed as Sri Lanka's
largest foreign exchange earner under the MFA. Under the protectionist regime, most
companies that started evolved into large scale tailors.

Brandix flourished exponentially in this period and matured into what it is today. In this initial
phase most manufacturers operated and focused on the CMT of manufacturing. CMT stands
for cut, make, trim.

This was a period where the broader value addition of the industry was under 30%. Everything,
from design to specifications and technical guidelines were provided by the buyers. The role
of the manufacturers was restricted to being specialist mass scale tailors. Sri Lankan companies
operate in an environment where there is no raw material base, no yarn, and no cotton; hence

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the sustainability of the business model was questionable. What Sri Lanka offered as a
competitive advantage was a highly skilled and literate workforce.

It is important to note that although the industry was flourishing in this period, companies that
operated were not technologically sophisticated, nor did they have any idea about their market
or customer base. Their understanding of 'speed sourcing' and fashion trends was close to nil.

Large Scale Sophisticated Manufacturer

The year 1985-1986 marked probably the most significant moment for the industry. Martin
Trust, the champion of speed sourcing for American fashion entered Sri Lanka with Brandix
and MAS Holdings. MAST Industries USA entered into a dozen important joint ventures with
both companies that set them apart from the rest of the industry.

This was the turning point for Brandix. Its progression into what it is today started at this key
moment. These joint ventures played a key role in getting technology access, broader
knowledge of products and customers, fashion trends and international recognition in a highly
competitive global business landscape. A host of top brands entered Sri Lanka through these
joint ventures.

The Company diversified into broader product portfolios, maximizing margins by focusing on
areas with the highest profitability. Importantly, the diversification also enabled these
companies to create a multi-skilled workforce. This happens to be one of the key strengths in
this industry.

Sustainable Supply Chain Companies

Although company enjoyed exponential growth during the above mentioned phase value
addition remained low. To counter this, the company embarked on a journey to create a world
class supply chain base to support their core business of manufacturing.

Their aggressive approach and commitment to building world class infrastructure and supply
chain networks has resulted in value addition reaching 70%, while the industry average remains
below 50%.

From fabrics to accessories, everything was synchronized to meet and exceed customer
expectations. The company strived to position itself as total solution provider as opposed to
being viewed just as manufacturer.

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During the next phase of their progression, Brandix ensured that the supply chain network
remained sustainable. In its pursuit of becoming a world class eco-friendly manufacturer, the
company delivered the world's first Lead certified eco-factory in Seeduwa.

This was vindication to the status of being a truly global leader in apparel manufacturing.
Brandix was no longer viewed as a domestic giant, but as the standard the rest of the world
must follow to stay competitive and recognized in the business.

Knowledge Sharing Powerhouse

This is probably the most fascinating of the stages of evolution. Years of world class
manufacturing, experience, a diverse product portfolio, in-depth customer/market knowledge,
all contributed to this positioning.

Once again, Brandix has taken the lead in this area. While other major manufacturers such as
Timex Garments Limited and MAS Holdings rely on proven Enterprise Resource Planning
(ERP) systems such as SAP to integrate their business processes, Brandix evolved into being a
service provider. Brandix i3, now rebranded as Fortude is a subsidiary of the Brandix Group
developing and selling ERP solutions to apparel manufacturing giants the world over.

Years of manufacturing excellence and in-depth knowledge of process and knowledge of

customers has been synchronized into a single technological platform, thereby creating a
colossal knowledge sharing business. As Sri Lankans, we must be proud of such wonderful
achievements where the world recognizes our talent and learns from our expertise.

Regional Presence

Fortunately, Sri Lanka is located in one of the most populated regions in the world, namely
South Asia. It is home to one of the fastest growing consumer markets and provides the much
needed raw material base for apparel manufacturing. Brandix defied the odds in growing in a
country which virtually has no material base. However, in order to continue its growth to
monumental highs company ventured into countries like India to exert its dominance in the
apparel manufacturing industry.

Today, Brandix operates an apparel city in Vizag (Andhra Pradesh, India) with state-of-the-art
infrastructure and technology. In a recent statement published by the company on its social
media portal, it boasts of a cumulative turnover of $1.2 billion, growing at 30% per annum

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based on compounded aggregate revenue growth rate. The company currently employs just
under 20,000 associates and is by far India's largest underwear exporter.

The company has taken advantage of the raw material base, thereby reducing lead times. They
have also taken advantage of the cheap labour. In addition, it also allows them to further
diversify product portfolios depending on the strength of the country they operate in.

Talent Management

During the initial phase of the industry's development, company struggled to attract top class
management talent. Brandix changed this landscape by branding its companies and business.
They faced competition from traditional blue chip Sri Lankan companies to attract talent.
However, things changed with aggressive marketing of its brands as they remodeled business
processes to attract top class talents.

Ken Balendra's appointment as the Chairman of the Brandix Group was revolutionary to say
the least. Probably the most respected corporate executive in Sri Lanka, he ensured that the
company expanded aggressively. Although Brandix is a privately owned company, he put in
reporting structures and processes to ensure transparency in the business. It functions as a
public limited company in the way it manages its business. It also paved the way to attract top
class talent into the company.

Sri Lankans should be proud of the fact that because of this company Sri Lankan executives
and management talent is held in high esteem all across the world. Bangladesh, India, and
Africa all rely on Sri Lankans to drive their businesses to greater heights. Industrial
engineering, design, merchandising, production/quality management are business functions
where Sri Lankan talent is highly recognized and preferred.

Fear of Failure

In analyzing the growth and breathtaking performance of the company, it is clear that the fear
of failure was the main driving factor. Initially, it was fear to exist post the MFA era, and then
it was fear to lose out to countries with cheap labour and raw material availability.

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It was the fear of failure that propelled them to develop unique capabilities and develop
business models that are incomparable and sustainable. Most blue chip companies in Sri Lanka
operate in what we call safety net industries. Sectors like tourism and plantations are dependent
on Mother Nature for their existence. Leading companies have done little to glorify their
respective industries into global prominence. For example, Sri Lanka does not have one brand
of tea that is valued at $100 million despite being in existence for 150 years. It is an irony to
say the least. We are not able to boast about a leading hotel chain that is comparable in size to
top players the world over, despite having one of the most attractive tourist locations in the
whole of Asia, if not the world.

Brandix has thrived to be global icons in the face of adversity. No raw material base, scarcity
of labour, high costs, and minimum support from the government have been some of the things
that they have had to deal with, and they dealt with them successfully. This makes its success
all the more resounding.

3. LEARNING OUTCOMES AND HOW TO USE THEM TO IMPROVE

MANAGEMENT SKILLS

It is been widely recognized in recent years that, without innovation, companies will quickly
lose their competitive edge. Therefore innovation strategy is an essential tool for continued
growth even in difficult times. Intensified competition, changing consumer needs and
changing business environment are the key drivers that create the need for innovation.
Moreover innovation is essential in order to generate long term stability, growth, shareholder
returns, and sustainable performance and remain at the competitive edge. Most of the industries
today are facing challenges of rapidly changing technology, globalization, uncertainty,
unpredictability and turbulence. When considering the situation of Sri Lankan apparel sector
after the MFA phasing, it is apparent that these key factors influence Sri Lankan apparel
manufactures towards the need for innovation.

Formation of Brandix group at correct time in suitable places with improved and updated
technology is one of the great decision which was made Brandix to stay competitive in the
global market. Not only that but also Providing learning and training facility within the
organization, Business widening strategies, arrangement of delivery facilities on time, upholds
the integrity of its employees preserves the confidentiality of its customers and works in every

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possible way to create sustainability in its activities as well as for its stakeholders are some
learning points to improve management skills by analyzing the formation of Brandix group.

REFERENCES

Brandix Group, corporate_review_2006, viewed 05 September 2017, from http://www.

http://brandix.com/

Brandix Group, corporate_review_2010, viewed 05 September 2017, from http://www.

http://brandix.com/

Apparel Manufacturing: A journey to riches - Ceylontoday.lk

http://www.ceylontoday.lk/print20170401CT20170630.php?id=27186Stay competitive in
the global market from usnews.com https://www.usnews.com/opinion/economic-
intelligence/

Brandix Group, sustainability, viewed 05 September 2017, from

http://www.brandix.com/sustainability/index.php