STRATEGIES USED BY BRANDIX TO STAY COMPETITIVE IN THE GLOBAL MARKET

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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 SKILLS

7

References

8





1.SUMMERY

Garment industry has been the Sri Lanka’s larges t gross export for many years and accounted

for more than 46 per cent of total export earnings of the country. country. It is also the the country’s largest net foreign exchange earner since for many years. Sri Lanka’s 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 Lanka’s exports but has protected it from competitors. Phasing out of MFA has open up more markets to Sri Lanka’s ex ports, 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. pict ure. Consequently, Conseque ntly, what used to be an industry with thousands thousan ds 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, po st-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 devis ed 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 world’s best apparel retail brands as GAP, Marks & Spencer, Victoria’s 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





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 country’s 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 stand s for cut, make, trim. This was a period where the broader value addition additio n 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





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 t hem apart from the rest of the industry. ind ustry. 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 additi on reaching 70%, while the industry average remains below 50%. From fabrics to accessories, everything was synchronized to meet and exceed customer





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.







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 compan y in the way it manages its business. busines s. It also paved the way wa y 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.





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 tour ism and plantations are dependent depend ent 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 suppor t 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 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 unpredictabilit y and turbulence. When considering the situation of Sri Lankan apparel sector





possible way to create sustainability sustainabilit y 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

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

05

September

2017,

from

STRATEGIES USED BY BRANDIX TO STAY COMPETITIVE IN THE GLOBAL MARKET

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