Pricing strategy auditing for garment manufacturing companies in Sri Lanka

Abstract

The Sri Lankan garment manufacturing industry needs to become competitive in terms of pricing with the phasing out of the Multi Fibre Agreement and threat of losing the GSP+ advantage. However, it is difficult for the garment manufacturing companies to identify their weaknesses in pricing due to lack of information on competitor’s prices and thus it is difficult to improve the pricing area. This study focuses on Sri Lankan apparel manufacturing industry and it reviews the pricing practices in garment manufacturing industry. The current pricing process of the garment manufacturing industry was identified using literature review, interview, questionnaire and observational studies and discussed in the thesis. This also includes the analysed data of the questionnaire survey which was designed to identify the current pricing methods and it was concluded that the Sri Lankan garment manufacturers are using either purely cost plus pricing or a hybrid pricing system with cost plus pricing with slight market based approach. Further this thesis includes a SWOT analysis which was used to identify the weaknesses and the possible improvement in existing pricing system, when developing the alternative pricing strategies. The study identifies some possible alternative pricing strategies in the forms of pricing models and some detailed cost estimation models to use with them. Further the study builds a pricing audit system which facilitates the garment manufacturing companies to identify their current pricing strategies and to identify the areas of improvement.