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Strategic

Management: Assignment II

ANALYSIS OF THE MUST CORPORATION


(INTERNAL & EXTERNAL)

Sammarth Tuli
Roll Number: MFM/16/41

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Table of Contents

Title Page No.

Company Overview: Must Garments 3

Factory Profile: Lenny Apparels Ltd. 4

Value Chain Analysis: Lenny Apparels. 5

Internal Factor Evaluation (IFE) matrix 8

External Factor Evaluation (IFE) matrix 11

Competitive Profile Matrix (CPM) 13

Bibliography 16

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Company Overview: Must Garments

Must was founded in 1981 by the Mahtani family in Hong


Kong with a single office and a handful of employees.
Today it is an international company more with than
10,000 employees supporting the company. It is currently
employed in the business of manufacturing and supplying
high quality garments to the top brands in the US and European market. With factories and
offices in Hong Kong, USA, UK, China, Bangladesh, Egypt, Vietnam, Bahrain and Oman,
the group has a global presence with exports 50 million garments annually. The factory Uses
state-of-the-art technology and are is compliant.

Must Garment Corp. Ltd., Hong Kong

It is the administrative hub employing 180 people. It has merchandising monitoring teams for
each customer. There is in-house product development, CAD & graphic design team. Must,
Hong Kong is the administrative hub of centralized sourcing fabrics, accessories, fit and
quality.

Lenny Fashions Ltd., Dhaka, Bangladesh

Lenny fashions limited Bangladesh is located in the Dhaka export processing zone. The two
units of Lenny fashions limited were set up in consultation with Kurt Salmon associates from
the UK. It has 5000 workers, with a total of 350,000 ft.2 producing 14 million garments
annually. It has in- house embroidery, laundry and laboratory. The groups R&D Industrial
engineering team is sanctioned in this factory.

Lenny Apparels Ltd., Dhaka, Bangladesh

Started in January 2011 the unit is located in Dhaka export processing zone. It has 3000
employees and covers 600,000 square ft.

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Factory Profile: Lenny Apparels Ltd.

Address: 54-56, Dhaka export processing zone, Ganakbari, Savar, Dhaka, Bangladesh, a/c-
mol consolidation service ltd

M/s. Lenny Apparels Limited, an Indian company was set up as a Woven & Knit Garments
Industry in the Dhaka Export Processing Zone 9 years ago in August 2008. It was set up as a
profit sharing venture between between the Bangladesh Export Processing Zones Authority
and the M/s. Lenny Apparels Limited in BEPZA Complex, Dhaka (15-09-2008). under the
aegis of BEPZA.

This 100% foreign owned company invested around Taka 67 crore in setting up their plant
and produce Woven & Knit products. The company has an employee strength of about 1750
locals including 60 foreign nationals.

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Value Chain Analysis: Lenny Apparels.

An overview: Value chain analysis looks at what benefits (value) a companys products and
services offer. By definition, they are a series of activities or processes which aim at creating
and adding value to an article (product) at every step during the production process.

The business activities are divided into primary activities and secondary activities. The
primary activities are directly related to the creation of a good or service while the support
activities help in enhancing the efficiency and work to obtain a competitive advantage among
peers.

The model shown below will be applied to organization: Must Garments:

Figure 1.1: Porters value Chain Analysis model


Primary Activities:

Inbound Logistics: These refer to the fabrics & Trims that must be bought in as raw
materials, the fabrics are sourced from Hong Kong, they are then sent to the
Chittagong port through a 3rd party shipping vendor, after which the rolls were
transported to Dhaka through containers and bought to Lenny Apparels are supplied
to all three factories of Lenny Apparel operating in the DEPZ area. The fabric is

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inspected using 4 point defects system, after which they are sent to the next step in
production.
Operations: The parent company Must Garments, founded in 1981 by the Mahtani
family in Hong Kong with a single office and a handful of employees. Today it is an
international company more with than 10,000 employees supporting the company. It
is currently employed in the business of manufacturing and supplying high quality
garments to the top brands in the US and European market. With factories and offices
in Hong Kong, USA, UK, China, Bangladesh, Egypt, Vietnam, Bahrain and Oman,
the group has a global presence with exports 50 million garments annually.
Outbound Logistics: Being a garment manufacturing company, the factorys
products are sold through the buyers retail outlets. The majority of their products are
sold through Walmart, Belk & Loft with bulk orders mostly coming from them. The
rejected garments are destroyed as they cannot be sold in the local markets due to
stringent DEPZ laws.
Marketing & Sales: This is mostly handled by the head office Must Garments, Hong
Kong. It acts the administrative hub employing only 180 people. It has merchandising
marketing monitoring teams for each customer. It is here where the front end
operations take place and allow merchandisers to directly interact with prospective
customers.
Service: In a manufacturing hub such as Bangladesh, timely delivery of products
within the respective lead time from the buyer is must. Competition not only comes
from other large production houses present in the tax free DEPZ area, but as well as
from the small time manufacturers who are also looking to get a share of the pie. The
fact that Walmart gives order upwards to a million pieces annually shows that the
company is able to offer good service at a low cost to the buyer.

Support Activities:

Infrastructure: In addition to the departments such as management, finance, legal,


etc. which are required to keep the factory operational, the stages through which a
garment goes through have also been divided into individual departments such as
washing, finishing, cutting, sewing. The garment passes through each of these
departments beginning with lab and ending with the packaging department.

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Human Resource Management: The workforce at Lenny is largely local, with the
workers originating from areas around Old Dhaka, the merchandisers and the
individuals at the managerial level largely comprise of Indians, Pilipinos and Sri
Lankans. Lenny takes care of its work force by providing a tax free salary,
accommodation to its employees and transportation to and fro from the factory.
Technology Development: Lenny Apparels is located in the Dhaka export processing
zone. The two units of Lenny fashions limited were set up in consultation with Kurt
Salmon associates from the UK. It has 5000 workers, with a total of 350,000 ft.2
producing 14 million garments annually. It has in- house embroidery, laundry and
laboratory. The groups R&D Industrial engineering team is sanctioned in this
factory; in addition, the machines are checked for faults on a monthly basis by the
companys own maintenance department.
Procurement: Macton Investments, their fabric sourcing wing is housed in China, the
fabric merchandisers establish strategic relationship and partnership with a supplier
which is built up after reconnaissance and communication about the company
standards High quality standards are maintained with direct involvement of the
merchandisers right from the base level of selecting the finest raw materials.

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Internal Factor Evaluation (IFE) matrix

The IFE matrix shown below is a strategic management tool for auditing or evaluating major
strengths and weaknesses in functional areas of a business.

IFE matrix also provides a basis for identifying and evaluating relationships among those
areas. Shown below is the matrix designed for Lenny Apparels factory. Note: the matrix is
designed keeping in mind the data obtained from the parent company as well.

Weight Rating Weighted scores

Internal strengths

Large presence in Indian 0.10 4 0.4


subcontinent
Supplier- major retailers 0.12 4 0.48
(Walmart & Amazon)
Good reputation ( Ability to 0.04 3 0.12
delivery within lead time)
Presence in the DEPZ area 0.08 4 0.32
(Dhaka Export Processing Zone)
Strong Expat management team 0.04 3 0.12
(Indians, Sri lankans,
Philipenos)
Increasing cash flow on an 0.05 3 0.15
annual basis
Strong local employee base 0.04 3 0.12
Access to cheep and reliable 0.03 4 0.12
labor
History of minimal service 0.04 3 0.12
complaints
Distinct front office housed in 0.04 4 0.3
highly developed economy-
Hong Kong

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Internal weaknesses

Very Competitive market 0.10 1 0.1


Sensitive to raw material (Fabric 0.15 2 0.3
prices)
Little room for cost cutting 0.08 2 0.16
Presence of strong labor unions 0.04 1 0.04
Absence of in house embroidery 0.05 1 0.05
department
Total 1.00 2.9

Table 1.1: IFE Matrix


IFE Matrix Parameters:

Internal Strengths

Large Presence in Indian subcontinent: The company is well known especially


amongst companies with a base outside India, mainly due to the volume of orders that
it handles on an annual basis, and also for poaching employees from organizations
such as Arvind/ Madura, which is why a rating of 0.4 has been given.
Supplier: Buyers make up a bulk of the companys profits which is why it has been
given the highest weightage.
Good reputation: A low weightage has been given because the companies companies
operating in the DEPZ area are all very competitive, so it is a prerequisite to be able
to deliver orders within the delivery time
Presence in the DEPZ area: This is a big advantage because the products produced in
the area are tax exempted from the Bangladeshi government, which is why it has the
2nd highest weightage.
Strong Expat Management team: Again a low weightage has been given, because
over the years the Bangladeshi workforce has strengthen with various textile colleges
opening in Dhaka. This not only saves accommodation costs for the company, but
will also allow the company to get more skilled labor at the same salary.
Strong Local Employee Base: A low weightage has been given because it is given
that since the company is operating in Bangladesh, it will be hiring locals

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Access to cheap and reliable labor: A low weightage has been given because the
labor is abundant and is available in nearby areas.
History of minimum service complaints: The company has not received any severe
complaints, except in the one case where there was strike in the year 2011, the
production was stopped and orders had to be aired, while some buyers had even
cancelled them.

Internal Weaknesses

Very Competitive Market: Bangladesh is the 2nd largest manufacturer of RMG,


therefore a low weight has been assigned, again it is a pre requisite.
Sensitive to raw material prices: This has been given the highest weightage because
raw materials form the base of the garment, any increment will result in an increment
in the cost of the garment
Little room for cost cutting: With the 2nd highest weightage, it is an important factor
for the company to remain competitive
Presence of strong labor unions: A low weightage has been given because labor
unions have a strong hold over the labor, and each worker of the Lenny is part of a
central labor union that has been given

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External Factor Evaluation Matrix (EFEM)

The EFE matrix is the strategic tool used to evaluate firm existing strategies, EFE matrix can
be defined as the strategic tool to evaluate external environment or macro environment of the
firm include economic, social, technological, government, political, legal and competitive
information.

External factors are extracted after deep analysis of external environment. Obviously there
are some good and some bad for the company in the external environment. Thats the reason
external factors are divided into two categories opportunities and threats.

The EFE matrix for Lenny Apparels is shown below:

Weight Rating Score


Opportunities
Acquiring a new buyer 0.11 3 0.33
Poaching of an experienced employee 0.09 1 0.09
Acquiring a retail brand 0.24 2 0.48
New trade agreement that lifts the ban 0.10 1 0.10
cotton being imported from Uzbekistan
Threats
Introduction of new minimum wage rate 0.17 1 0.68
( higher wage rate)
Emergency deportation of employee 0.03 2 0.06
Labor unrest (strikes) 0.14 1 0.42
Increased duty on imported fabric 0.12 2 0.24
Total 1 - 2.40
Table 1.2: EFE Matrix

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EFE matrix Parameters:

Opportunities:

- Acuiring a new buyer: The 2nd highest score, acquiring a new buyer is one of the
main objectives of a production house, as they can provide revenue and an additional
stream of orders
- Acquiring a retail brand: The Must organization has plans to forward integrate and
buy up a small retail brand, it wants to enter the market as it knows it can reap profits
because of its cost advantages, which is why it has been given the highest score
- New trade agreement that lifts the ban cotton being imported from Uzbekistan:
This is an opportunity which will benefit the industry as a whole, as currently
Uzbekistan cotton is banned across the world due to the way labor is treated in the
country. Uzbekistan cotton is ranked as the highest quality in the world, and as such
represents a opportunity for the organization
- Poaching of an experienced employee: As stated before, Lenny has a habit of
poaching prospective employees from its competitors in India by offering them a
higher wage package and prospective of international travel.

Threats:

- Introduction of new minimum wage rate ( higher wage rate): Any alteration in the
minimum wage laws will results in added costs for the company which will then be
added on to the garment cost to the buyer.
- Labout unrest: Bangladesh as a country is very volatile, and any political unrest will
indirectly result in labour unrest, in addition the labour is part of strong unioins who
are very observant about the rights of its members.

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Competitive Profile Matrix (CPM)

Competitive profile matrix is an essential strategic management tool that is used to compare a
firm with the major players of the industry. It shows a clear picture to the firm about their
strong points and weak points relative to their competitors. The CPM score is measured on
basis of critical success factors, each factor is measured in same scale mean the weight
remains same for every firm only rating varies. The best thing about CPM that it includes
your firm and also facilitate to add other competitors making easier the comparative analysis.

In the case of Lenny Apparels (Must Garments, its main competitors are as follows, each of
which will be analyzed in the CPM model.

Hameem Garments: Ha-Meem Group is a leading


wholesale clothing manufacturer in Bangladesh and
in the world. The company produces some of the
most fashionable denim fabrics and garment products and owns one of the most
comprehensive and resourceful manufacturing facilities in Bangladesh. It has a rich
history of 30 years in the textile business that has today evolved into a company with
diverse interests such as shipping, newspapers, tea gardens etc. It all started with a
garment company in 1984 when two enterprising men Mr. A. K. Azad and Mr.
Delwars vision to break through in the textile industry and making Ha-Meem Group
a leading wholesale clothing manufacturer in Bangladesh.

The business activities of Ha-Meem Group have been growing day by day under their
energetic leadership and is known for its wholesale apparel manufacturing in both
Europe and America. Today Ha-Meem Group employs around 50,000 workers and
the company has 26 garment factories consisting of 300 production lines and 7
washing plants to produce 7 million pcs/month.

Epic Garments: Established in 1971 and headquartered in Hong Kong, Epic is a


multinational textile company with world class manufacturing facilities in Asia (Hong
Kong, Vietnam, Bangladesh) employing over 20,000 people. Epic maintains design

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studios (fabrics development etc) in Hong Kong and London. And garment
production factories in Vietnam and Bangladesh. It has the capactity to produce
36 million pieces annually in its world-class manufacturing facilities.

Hameem Epic Must


Garments Group Garments
Critical Success
Factor Weight Rating Score Rating Score Rating Score
Employees:
Local &
International 0.13 2 0.26 3 0.39 1 0.13
Power Over
Suppliers 0.08 4 0.32 3 0.24 1 0.08
In house
Operations 0.05 3 0.15 1 0.05 2 0.1
Employee
Satisfaction 0.04 3 0.12 3 0.12 3 0.12
Operational
Area 0.14 2 0.28 4 0.56 4 0.56
Capital
Employed
quality:
Machinery 0.08 1 0.08 2 0.16 3 0.24
Management 0.05 1 0.05 3 0.15 4 0.2
Variety of
distribution
channels 0.07 4 0.28 2 0.14 2 0.14
Customer
retention 0.02 2 0.04 4 0.08 1 0.02
Lean
Production
System 0.11 3 0.33 4 0.44 4 0.44

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Buyers:
International 0.15 3 0.45 3 0.45 4 0.6
R&D
Spending. 0.08 1 0.08 2 0.16 1 0.08
Total 1 - 2.44 - 2.94 - 2.71

CPM Matrix Parameters

Buyers (International): These refer to the customers that the companies have,
Hameem Garments has buyers from Must Garments in addition to large scale buyers
such as Gap, who also give as much volume in orders as both the other companies
combined, this has been given the highest weightage because without buyers, there
would not be any revenue for the company
Employees (Expats & Locals): Epic Group has been given the highest rating,
because its employees are not only recruited from collages such as NIFT, but also
from International colleges such as parsons.
Power over Suppliers: Hameem garments being a local organization has the greatest
power over its competitors as its owners also have strong political influence.
In house operations: Epic group leads these criteria because they not only have a
production house, but a design house and a buying house under its wing, as compare
to Must Garments (Production office) and Hameem Garments (production & buying
office)
Employee Satisfaction: Employee satisfaction is the highest in Epic Group, as it
offers perks such as accommodation, company car as well perks such as paid holiday
and flexi work timings.
Operational Areas: Both Must and Epic get the highest rating, as they are both
present in the DEPZ area, as compared to Hameem garments, as being a local
company it is not allowed to set up its based of operations in that area.
Capital Employed quality: Machinery: The capital employed in Must Garments is
much more in terms of the machinery that is being employed, the ratings have been
given based on the capacity information that has been obtained.

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Management: All 3 companies have a centralized management system, however the
stringency with each one operates is different. Epic group has been given the highest
rating as it has employed country managers in each country the company operates in,
while Lenny on the other hand has various designations such as each factory having
its own CEO as well, this makes the decision making process much longer.
Variety of Distribution Channels: Hameem Garments leads this rating primarily
because it also has its own logistics company, which takes care of the shipping and all
the processes related to delivering the final product.
Lean Production System: Epic and Must both have been given the highest rating
here, this is based on the fact that they have Japanese consultants especially coming in
on an annual basis to train the employees in Lean manufacturing systems and training
them in six-sigma certifications.
R&D spending: Epic Group being the biggest among the 3, has been given the
highest rating primarily because it manages to generate the highest amount of revenue
among the 3, and is therefore able to spend allocate a lot more on its R&D budget.

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Works Cited

Chris Jeffs. (2015). Strategic Management (3 ed.).

Sadler, P. (2003). Strategic Management. New York.

strategicmanagementinsight. (2017). Retrieved from
https://www.strategicmanagementinsight.com/tools/value-chain-analysis.html

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