1.0 INTRODUCTION
Hartalega Holdings Bhd. manufactures a wide range of latex gloves. The Company's products include natural rubber examination gloves, nitrile examination gloves, nitrile clean room gloves and natural rubber surgical gloves. Hartalega has beginning their business in this rubber glove industry in 1!!. Hartalega has always been in the forefront of the glove" ma#ing industry. Hartalega also the strong company that offers a range of products, superior in $uality and critical protection. protection. %or Hartalega Hartalega there is no compromise compromise in their manufacturing manufacturing standards, in fact they consistently exceed international $uality standards. This ma#es hartalega are #nown and trusted in worldwide.Hartalega &dnBhd has since become a reputable manufacturer of atex and (itrile gloves and is now a public listed company on the )ain Board of Bursa )alaysia &ecurities Berhad. Hartalega*s continued technological innovations help ensure our gloves are manufactured with e$ual emphasis on efficiency efficiency and $uality this are the #ey reason Hartalega Hartalega being trusted as the +) manufacturer for some of the world*s biggest brands. Hartalega produce the product for the manufacturing, healthcare and laboratory environment. They are concern about the comfortable for the customer when they are using their product, protection, hygiene and cost"effectiveness in Hartalega*s range of glove. %or over - decades, Hartalega has been a reputed +), delivering consistent $uality with reliable turnaround time for some of the world's famous brands. Their promise of $uality, efficiency and cost"effectiveness has made them a sought"after producer for many famous global brands. Their export mar#ets include high $uality demand countries such as merica, merica, /ermany, 0apan and ustralia among many others. This report is to analye Hartalega*s internal strengths and wea#nesses, external opportunities and threats, competitors, financial strengths, the strategies, and their current position by loo#ing at the &2+T nalysis, strategic group map, financial ratio, space matrix and BC/ matrix.
1
2.0. VISION AND MISSION STATEMENT
-.1. vision To be the (umber +ne glove company that produces and delivers the best and most innovative gloves in the world3 and to be recognied as a caring company to the community and environment -.-. mission To deliver the best possible protection to people who wor# with their hands in exposed and challenging environments by providing consistently superior, safer, and more convenient gloves in chosen product mar#ets. -.4. analysis of vision and mission To be a number one vision is the future aspirations that lead to an inspiration to be the best and innovative in its field of activity. Based on the vision of Hartalega glove, we analye that the vision is enough strong because it show the Hartalega glove have the motivation to be the leader and to be recognied as caring company to the community and environment. However, there is still a space to improve to become more ambitious and realistic. )ission is statement of the purpose of a company, organiation or person, its reasoning for existing and also should be guide the action of the organiation, spell out its overall goal, provide a path, and guide decision ma#ing. But based on the )ission of Hartalega, we analyed that the mission is how they provide the protection towards the consumer. However to attract the customer we have to ensure the product that have been produces are in a good $uality. (ot only that, Hartalega should give an excellent service through continuous improvement improvement and also continuous innovation in order to meet the customer satisfaction -.5 formulate vision To be a number one company that produce excellent $uality product with excellent service and leading in eco"friendly product.
2
2.0. VISION AND MISSION STATEMENT
-.1. vision To be the (umber +ne glove company that produces and delivers the best and most innovative gloves in the world3 and to be recognied as a caring company to the community and environment -.-. mission To deliver the best possible protection to people who wor# with their hands in exposed and challenging environments by providing consistently superior, safer, and more convenient gloves in chosen product mar#ets. -.4. analysis of vision and mission To be a number one vision is the future aspirations that lead to an inspiration to be the best and innovative in its field of activity. Based on the vision of Hartalega glove, we analye that the vision is enough strong because it show the Hartalega glove have the motivation to be the leader and to be recognied as caring company to the community and environment. However, there is still a space to improve to become more ambitious and realistic. )ission is statement of the purpose of a company, organiation or person, its reasoning for existing and also should be guide the action of the organiation, spell out its overall goal, provide a path, and guide decision ma#ing. But based on the )ission of Hartalega, we analyed that the mission is how they provide the protection towards the consumer. However to attract the customer we have to ensure the product that have been produces are in a good $uality. (ot only that, Hartalega should give an excellent service through continuous improvement improvement and also continuous innovation in order to meet the customer satisfaction -.5 formulate vision To be a number one company that produce excellent $uality product with excellent service and leading in eco"friendly product.
2
-.6 formulate of mission To deliver the best protection towards customer with a good $uality product and at same time still balancing between the chemical and environment through continuous improvement and innovation to ensure customer get the high protection and indeed the product itself are safe to use.
3.0 SWOT S WOT ANALYSIS ANALYSIS (EXTERNAL ( EXTERNAL ANALYSIS) ANALYSIS) 3.1
OPPORTUNITIES 3.1.1 3.1.1
Support! Supp ort!"" "#!ro "#!ro#$"#t #$"#t %or ru&& ru&&"r "r 'o!" 'o!" #u* #u*tr+ tr+ # # M,,+*, M,,+*,
)alaysia has been a dominant player in the rubber glove industry for many years and 67 percentages of largest rubber glove exporters in this world. There is a supportive environment in )alaysia for rubber glove industry and it plays a role in the success of the )alaysian rubber glove players. 8n )alaysia rubber glove industry gets stron strong g gov govern ernme ment nt bac#in bac#ing g from from bod bodies ies such such as the )alay )alaysia sian n 9ubbe 9ubberr x xpor portt :romotion Council ;)9:C< and )alaysian 9ubber Board ;)9B<. lso, )alaysia is located near the #ey source of the ma=or raw material, natural latex, which mainly comes comes from Thailand. Thailand. )alaysia )alaysia is also also blessed blessed with with good infrast infrastruct ructure, ure, reliable reliable energy supply and a relatively stable government compared to some countries in the region. 3.1. .1.2
M,r-" ,r-"tt o o!"r !"r*
Hartalega Holding Berhad has huge mar#et covers and its give an opportunities for them to expand their mar#ets. Hartalega Holding Bhd is head$uartered at >uala umpur, )alaysia, and it is exports products more to 14? international clients in 4 such as (orth merica, urope, sia :acific and other region. However, Hartalega has made business meeting arranged by )T9@ in -77 with Brailian buyers which is effort to expand their target mar#et to atin merican and it successful in registration for approval license. This is to gain the potential sales and initials to enter Brailian mar#et.
3
3.1.3 /o&, o*pt, *upp"* $,r-"t*
)alaysia is the top producer of medical gloves globally and the $ualities of our gloves are competitive if not the best. dditionally, medical gloves are an industry which is growing much faster than the growth of any economies on average. The high $uality product given the th e critical nature of wor# which surgical gloves' end e nd users are involved involv ed in, $uality standards and usage effectiveness is highly regarded. Hartalega Holding Bhd may penetrate on hospital supplies mar#et where important roles play on used medical glove products. Beside, Hartalega may refer the awards or any certificate that received from the )@ Health Canada on )edical @evice icense ;Health care< to promote and support their product prod uct $uality $uali ty in the global globa l hospital supplies mar#et. This is easier to customer willing to purchase on their products base on the $uality as medical gloves. 3.1. 3.1.
R*#' R*#' ",t ",t,r ,r"" Ep"# Ep"#tu tur" r"
The overall industry is poised for growth with huge potential in emerging mar#ets due to the increased awareness of health care and global health. The reforms, especially the mar#et for rubber gloves in Brail is expanding because of the abated rules for imports of rubber gloves while China's health care reform is set to boost its health care industry. Therefore, Hartalega to focus on Brailian mar#et and it may able to expand to atin merica. 3.2
TREATS 3.2. 3.2.1 1
U#*t U#*t,& ,&" " pr pr"" ,# ,# 4",4",- US5 US5
Hartalega price is not stable and it could rise in the future. ven though most rubber glove companies include Hartalega Berhad have pricing power and are able to pass on any cost increase or savings bac# to its customers, the volatile Hartalega and wea# A& could dampen their margins and earnings in the period before the prices are ad=usted. 3.2. 3.2.2 2
R* R*#' #' # # "#"r "#"r'+ '+ o* o*tt
The overall industry is poised for growth with huge potential in emerging mar#ets due to the increased awareness of health care and global health. ccording to the graph below, shown the Health care spending has grown much faster than the rest of the 4
economy in recent decades. The reforms, especially the mar#et for rubber gloves in Brailian is expanding because of the abated rules for imports of rubber gloves while China's health care reform is set to boost its health care industry. Therefore, Hartalega to focus on Brailian mar#et and it may able to expand to atin merica.
3.2.3
A!,,&t+ o% *u&*ttut" prout
The availability of substitute product from other companies encourages the price competition in examination glove segment. The substitute product comes from Top /love, dventa, >ossan, atex and &upermax. Therefore, it may cause Hartalega decrease their economy of scale by other company. 3.2.. D%%ut to %%"r"#t,t" &r,# prout
8t is hard to identify two ma=or companies between Top /love and Hartalega which is Top /love is stand the largest in producing natural rubber gloves and Hartalega stand the largest in producing nitrile gloves. Those companies are playing a significant part on producing medical gloves. ccording to the medical gloves, it is made of different polymers including latex, nitrile rubber, vinyl and neoprene. @ue to increasing rate of people who allergic latex that become wide used. +n the other hand, due to substantial rise of the latex price by cost of product nitrile gloves lower than natural latex gloves. 9ecently, many players have started to shift from natural rubber to nitrile rubber for medical fraternity. This may cause some players not sure to cater for nitrile
5
especially new target mar#et even Harta#ega already lead while the other players. The comparison may summarie refer to the table below.
3.3 SWOT ANALYSIS (INTERNAL ANALYSIS) 3.3.1
STREN/TS 3.1.1
' "!" o% prouto# "%%"#+
The Hartalega play a ma=or role producing nitrile glove producers in the world. The production technology and the stringent product $uality have earned Hartalega Berhad various international accreditations. This has been proven when they received all its products are in compliance with &T), 08& T114, 08& T116, (566, 8&+ 1114 and &(D 5711 standards. The high $uality product produced by Hartalega Berhad has strengthened their reputation and facilitated the /roup in winning new customers. Hartalega has the latest high speed production lines which have ability to producing 56,777 pieces of glove per hour per line. 3.3.2
At!" #!o!"$"#t # r"*",r ,# "!"op$"#t (R6D)
Hartalega Berhad had invested heavily on research and development to develop new application of glove. ccording to, over the previous years, Hartalega have received numerous awards and received prestigious awards for outstanding 9 E @, innovation and $uality and good manufacturing practices. 8n -77?, they have received the award from &elangor &tate 8nvestment Centre in term of excellent in product design, product 6
safety, product research and development, technology and care towards the environment and welfare and safety of wor#ers. 3.3.3
Prout p,t"#t
Hartalega Berhad has applied for worldwide patents for its products and envisions a growing mar#et for its new and innovative application"nitrile and latex gloves. 8t ma#e hard for the competitors to imitate their product. 3..
Stro#' # r"tur# o# "7ut+ (ROE) ,# #"t pro%t $,r'#
Hartalega was a leader in the nitrile glove and latex gloves mar#et causes was also maintaining the high efficient and profitable glove ma#er. 8t presents the strong financial result that gains the highest return on e$uity and net profit margin in the industry. )oreover, Hartalega increasing profit for 11.? percentages on ended )arch 41, -716 which is from 9)65.4million to 9)5.16 million reported by Hong eong 8nvestment Ban# 9esearch, ;-716<. 3..8 T"#, r"o'#to#
Hartalega has mastered the technological #now"how of rubber glove manufacturing and is embar#ing on aggressive capacity expansion to #eep pace with demand. There is high in"house technical #nowledge base to produce this application"nitrile glove ;including surgical glove< and latex gloves which are hard earned trust of the most critical users, place Hartalega Berhad among the elite few in the industry capable of attaining worldwide acceptance. Based on technological brea#through, it have mentioned that Hartalega Holding &dn stand in the 9r*t # t" #u*tr+ on many different term such as
%irst and only manufacturer that is able to run a production speed up to 46,777 gloves piece per hour on line.
%irst in biomass energy plant in the industry registered to the Anited (ations %ramewor# Convention on Climate Change ;A(%CC< or >yoto protocol in -77?.
%irst of producing high"stress, soft, thin nitrile gloves in -77-.
7
%irst in develop 9obotic &tripping &ystem in 16 on the mimic human hand motion
This is support the good view in the brand image of Hartalega and causes the company recognition in the world gloves industry. )oreover, the company has received many awards as in -717 on +verall Best )anaged Company in )alaysia -717 ;&mall Cap< by siamoney. 3.
WEA:NESSES 3..1
D"##' Pro%t,&t+
ccording to the first $uarter ended 0une 47, -715 stated the Hartalega Holding Berhad net profit have fell for .4 F to 9)6?.1 million which is compare to last year. There are several reasons that cause the company wear down on their operation profit margin. %irst, there are high competitive selling price in glove manufacturing industry so Hartalega started reduced in their average selling price. &econd, the increase in the electricity tariff, natural gas tariff and maintenance cost that was play an important impacts to wears down their operation profit margin. 3..2. '"r t, r,t"
&ince the profit fell down that it causes largely due to big amount cost of (/C and some branding expenditure. The higher tax rate that pull down the net profit and declared to interim dividend, it is lower than last year*s 4.6 senshare. The company crises effect directly to decrease the profit and impact to increase their tax.
8
S;*tr"#'t
W;4",-#"**
' "!" o% prouto# "%%"#+
D"##' Pro%t,&t+
At!" #!o!"$"#t # r"*",r ,#
'"r t, r,t"
"!"op$"#t (R6D) Prout p,t"#t Stro#' # r"tur# o# "7ut+(ROE) ,# #"t pro%t $,r'# T"#, r"o'#to# O;opportu#t+
T;tr",t
Support!" "#!ro#$"#t %or ru&&"r
•
Anstable price and wea# A&
'o!" #u*tr+ # M,,+*,
•
9ising in energy cost
M,r-"t o!"r*
vailability of substitute product
/o&, o*pt, *upp"* $,r-"t* R*#' ",t,r" Ep"#tur"
9
.0 COMPETITIVE PRO9ILE MATRIX COMPETITIVE PRO9ILE MATRIX
Competitive :rofile )atrix is an analysis tool that helps to provide information to the company about its position among the competitors that share similar strategies in the mar#etplace. The table below shows The Competitive :rofile )atrix for Hartalega in the industry. +ur group has decided to ma#e a comparison between Hartalega with Top /love and atexx. Competitive :rofile )atrix between H9T/, T+: /+G and T Critical success factors
2eight
C+):(I Hartalega Score Top /love Score
atexx Scor
)ar#et share 7.14 4 5 0.39 0.52 Compatibility 7.11 4 4 0.33 0.33 8nnovation Capability 7.14 4 4 0.39 0.39 )anufacturing Capability 7.17 4 5 0.30 0.40 :rice competitiveness 7.17 4 5 0.30 0.40 :roduct $uality 7.14 5 5 0.52 0.52 Consumer loyalty 7.14 4 5 0.39 0.52 %inancial position 7.7 4 4 0.27 0.27 Brand name 7.7! 4 5 0.24 0.32 Total 1.77 3.13 3.67 The C:) ratings representJ" 5J ma=or strength3 4J minor strength3 -J minor wea#ness and 1J ma=or wea#ness.
4 4 4 -
e 0.26 0.22 0.26 0.30 0.30 0.39 0.26 0.18 0.16 2.33
Based on the table, it shows that Top /love has more competitive advantage compare with Hartalega and atexx. Based in the score, Top /love gains the highest score for the critical success factor which is 4.K? and followed by Hartalega which is 4.14. Hartalega get second highest which is in the middle between top glove and latex. Based on that score, we can conclude that Hartalega are the one of top competitors in this rubber glove industry and they also have strong competitive advantage compare to atexx. Therefore, to ma#e this company be more success in this industry and be the mar#et leader, Hartalega should improve and implement a new strategy to ma#e sure that they can compete with Top /love.
8.0 STRATE/IC /ROUP MAP 10
strategic group is a collection of companies that tend to behave in relatively the same way. There are clusters of firms that share similar strategies. )apping the position of competitors in an industry allows for the identification of important strategic groups.
This graph shows the )alaysian rubber glove industry strategic group map based on $uality and price. The x"axis represents the $uality of product and y"axis represents the price of the product. 2e are using high, medium and low as a measurement. This map consists of 6 companies which are Hartalega, Top /love, &upermax, atexx and >ossan. 2e choose this company because, this are the strategic group for Hartalega. The sie of circle represents the sie of the company gain in the mar#et share of the industry. %or the Hartalega and &upermax have almost the same mar#et share in industry, which is they have larger mar#et share compare >ossan and atexx. %or the bigger mar#et share, its lead by the Top /love. Top /love, Hartalega and &upermax ma#e up a strategic group because they are close to each other on these two strategic dimensions in this industry. ven though they are close but the sie of mar#et share that they gain is different because of the others factor. %or top glove, they be a leader in this mar#et share are because of the product $uality that they produce, ma#e 11
their customer be mo loyalty towards them. They also have a strong brand name in the mar#et. But Hartalega also try to ma#e sure that their product will get place at their customer. They produce the product with the high $uality and ma#e an innovation towards their product. Based on the $uality, Hartalega is the competitor that threatens them the most. %urthermore, we also can compare these 6 companies based on the breadth of product line. %or Hartalega, has lower mar#et share because of the variety of product that they produce and the less breadth of product line. Hartalega focus on the healthcare, laboratory and industrial while Top /love produce gloves for examination, surgical, household, cleaning and apron purposes and they expand globally to China, Thailand, A& and /ermany. 2ith more breadth of product line than the other company, they manage to outperform the others and are rated high on the map. &upermax, on the other hand, expands in more countries compared to Top /love, which is A&, Brail, /ermany, Canada, ustralia, and Belgium. However they produce less breadth of product line compared to Top /love. )eanwhile, Hartalega is in the middle. lthough Hartalega*s mar#et share is larger than &upermax, but they only expand in merica, /erman, 0apan and ustralia, which is fewer than &upermax. Hartalega expands in four other countries, same as Top /love, but they produce fewer breadth of product line. 8n order to be at that place in the strategic group map, Hartalega should increase the$ualityof the product and breadth of their product line than Top /love and expand in more countries than &upermax. These are the strategies that can Hartalega use to ma#e sure that they can lead in mar#et share. Hartalega also should use this strategic group map to identify barriersto mobility and opportunities to protect them from being attac# by Top /love and &upermax. The strategic group map can also help cart the future directions of Hartalega*s strategies and are helpful in thin#ing through the implications of each industry trend for the strategic group as a whole. <.0 9INANCIAL RATIO ANALYSIS
%inancial ratios are mathematical comparisons of financial statement accounts or categories. These relationships between the financial statement accounts help investors, creditors, and internal company management understand how well a business is performing and areas of needing improvement.9atios allow us to compare companies across industries, big and small, to identify their strengths and wea#nesses. %inancial ratios that we analysis, we had divided 12
up into five main categories which is li$uidity ratio, solvency ratio, efficiency ratio, profitability ratio and mar#et prospect ratio.. %inancial analysis is not =ust a tool for financial managers but also can be used effectively by investors, lenders, suppliers, employees, and customers. Basically, managers use financial ratios toJ •
8dentify deficiencies in the firm*s performance and ta#e corrective action.
•
valuate employee performance and determine incentive compensation.
•
Compare the financial performance of the firm*s different divisions.
•
:repare, at both the firm and division levels, financial pro=ections such as those associated with the launch of a new product.
•
Anderstand the financial performance of Hartalega*s competitors.
•
valuate the financial condition of a ma=or supplier.
2ithin the internal company environment, financial ratios can be used byJ L
enders to decide whether or not to ma#e a loan to Hartalega.
L
Credit"rating agencies to determine the Hartalega*s creditworthiness.
L
8nvestors to decide whether or not to invest in a company.
L
)a=or suppliers to decide whether or not to grant credit terms to a company.
6.1 LIQUIDITY RATIO
i$uidity ratios analye the ability of a company to pay off both its current liabilities as they become due as well as their long"term liabilities as they become current. 8n other words, these ratios show the cash levels of a company and the ability to turn other assets into cash to pay off liabilities and other current obligations. 8t is also a measure of how easy it will be for the company to raise enough cash or convert assets into cash. LII=UIDITY RATIO RATIO
15
14
1-
11
13
Curr"#t r,to
4.!4
4.-6
5.5-
4.K4
=u- r,to
-.5
-.65
4.-!
-.!1
Wor-#' ,pt,
9)
9)
9)
9)
--,554,6-5
-7?,--7,-6
417,5?5,445 -?6,477,5-K &ummary of Hartalega*s $uic# ratio performance within 6 years.
6.1.1 Current rt!o
Based on the table, Hartalega*scurrent ratioincreased slightly from 4.K4 to 5.5- from -711 to -71- and decreased dramatically to 4.-6 in -714 but increase recently 4.!4 in -715. %rom the analysis, we found that company is currently trying to increase their ability to pay their current liabilities using assets that can be converted into cash in the near term. This means that a company has a limited amount of time in order to raise the funds to pay for these liabilities. 8n year -715, the company is trying increase bac# their current ratio by 7.6! percent. This show the company has 7.6!F, which means they are able to pay their current liabilities in term of cash. Currently, Hartalega*s will more easily be able to pay off their current liabilities when they become due without having to sell off long"term, and their revenue generating assets. 6.1.2 Qu!c" rt!o
(ext is Hartalega*s $uic# ratio. Based on the table, their $uic# ratioincreased slightly from -.!1 to 4.-! from -711 to -71- and decreased dramatically to -.65 in -714 but increase again-.5 in -715. Higher $uic# ratios are more favorable for companies because it shows there are more $uic# assets than current liabilities. company with a $uic# ratio of 1 indicates that $uic# assets e$ual current assets. This also shows that the company could pay off its current liabilities without selling any long"term assets. 8n this analysis, Hartalega*s show a highest an acid ratio of 4.-! in -71- and slightly decreased a bit -.5 in year -715. Basically, the company is able and has twice as many $uic# assets than current liabilities. This is a good sign for them, as well to their investors, but an even better sign to creditors because creditors able to #now when they will be paid bac# on time.
14
6.1.3 #or"!n$ c%!t&
)ove on to their wor#ing capital performance. Based on the table, their wor#ing capital ratio increased slightly from -711 to -71- and decreased 9) 1? 154,7! in -714 but they able to increase again to 9) 46 1?4,7! in -715. The biggeramount is better for their performance. This mean the Hartalega*scompany has more internal funds available to pays their current liabilities on a timely basis and their finance inventory expansion, additional account receivable and a large base of operation without resorting to borrowing or raising more e$uity capital.
6.2 SOL'()CY RATIO
&olvency ratios, also called leverage ratios, measure a company's ability to sustain operations indefinitely by comparing debt levels with e$uity, assets, and earnings. 8n other words, solvency ratios identify going concern issues and a firm's ability to pay its bills in the long term.&olvency ratios show a company's ability to ma#e payments and pay off its long"term obligations to creditors, bondholders, and ban#s. Better solvency ratios indicate a more creditworthy and financially sound company in the long"term. &ummary of Hartalega*s solvency ratioJ RATIO 1
LAVERA/E RATIO 13 12
11
tot, "&t; to;
7.76K
7.7K6
7.7!K
7.11
tot, ,**"t* o#' t"r$ "&t;
7.!5
7.!K
7.!!
7.-
to; ,pt, "&t to "7ut+ o#' t"r$ "&t
7.71 K-.56
7.7K.?K
7.75 !5.1
7.7! 1-5.7-
to; "7ut+
6.2.1 Tot& *e+t to tot& ,,et,
Total debt to total assets is defines the total amount of debt relative to assets. This enables comparisons of leverage to be made across different companies. The higher the ratio, the 15
higher the degree of leverage, and conse$uently, financial ris#. This is a broad ratio that includes long"term and short"term debt ;borrowings maturing within one year<, as well as all assets which include tangible and intangible. Based on the analysis, the data show an improvement on their total debt to total assets ratio. 8t shows the decreasing order of ratio year by year. Iear -711 shows the highest ratio which is 7.11 which indicated their company conse$uently at the highest ris# compare to the other year. Therefore, a company with a high degree of leverage may find it more difficult during a recession than one with low leverage, but as we see, in year -715 shows it the lowest ratio which is 7.76K. This indicated that company manages to endure the ris# within their leverage. 6.2.2 Lon$ ter- *e+t to c%!t& rt!o
The proportion of company long term debt relative to its available capacity. By using this ratio, investor can identify the amount of leverage utilied by a specific company and compare it with other to help analyed the company*s ris# exposure. /enerally, company that finances a greater portion of their capital through debt is considered ris#ier than those the lower leverage ratio. %rom the above data, Hartalega*s show the decreasing amount of ratio year by year. 8t slightly decreases by 7.5F in -71-, 7.-F in year -714 and -715. 8n this analysis, they able to manage their creditworthiness and balance sheet strength. Iear -715 shows the lowest amount which is 7.!5 which may indicates that the lower the ratio, the greater the capacity to borrow additional funds. 6.2.3 De+t to eu!t/
The debt to e$uity ratio shows the percentage of company financing that comes from creditors and investors. higher debt to e$uity ratio indicates that more creditor financing ;ban# loans< is used than investor financing ;shareholders<. %rom the data above, company are currently able to manage to balance between debt ;fund borrow both short and long term< and the amount invest in the interprise. 8n year -715, company shows the lower amount of ratio which is 7.71 which indicated they have a higher credit rating and greater the company*s ability to borrow additional funds. This is a good signal in their balance sheet strength compare to -714, -71-, and -711. 6.2.3 Lon$ ter- *e+t to eu!t/ 16
8t shows the balances between long term debt and stoc#holders e$uity in the firm long term capital structure. %rom the analysis above, company are capable to manage their long term debt and stoc#holder e$uity. 8t shows the company have drop down their debt in year to year. s we can see, in year -715, their long term debt to e$uity has the lower amount of ratio which is K-.56 compare to before. Company is trying to lower down their debt from 1-5.7- in year -711 until K-.56 in year -715. The difference is about K1.6? percent which means company has greater capacity to borrow additional funds if needed. 6.3 (!c!enc/ rt!o
fficiency ratios also called activity ratios measure how well companies utilie their assets to generate income. fficiency ratios often loo# at the time it ta#es companies to collect cash from customer or the time it ta#es companies to convert inventory into cash. 8n other words, ma#e sales. These ratios are used by management to help improve the company as well as outside investors and creditors loo#ing at the operations of profitability of the company. &ummary of Hartalega*s efficiency ratioJ RATIO 1
E99ICIENCY RATIO 13 12
11
D,+* o%
5!.5
5K.-?
6K.11
61.11
#!"#tor+ I#!"#tor+
?.64
?.!
K.67
?.15
tur#o!"r A!"r,'"
5.-K
56.K-
56.-
67.1K
o"to# p"ro
6.3.1 D/, o !nentor/
This ratio measures the management efficiency. %ewer days of inventory are usually better. 8t measures the number of days it will ta#e a company to sell its entire inventory. 8n other words, itshows how many days a company's current stoc# of inventory will last.This is an important to creditors and investors for three main reasons. 8t measures value, li$uidity, and cash flows. Both investors and creditors want to #now how valuable a company's inventory.
17
The data shows us that year -714 has the shorter days which are 5K days compare to other year. This show that, it that year the company inventory moves as fast as possible to minimie cost and to increase cash flow. 2hereas in year -715, it ta#e 4 days more to sell their entire inventory 6.3.2 Inentor/ turnoer .
8t measures how many times average inventory is MturnedM or sold during a period. 8n other words, it measures how many times a company sold its total average inventory dollar amount during the year. This ratio is important because total turnover depends on two main components of performance. The first component is stoc# purchasing. 8f larger amounts of inventory are purchased during the year, the company will have to sell greater amounts of inventory to improve its turnover. 8f the company can't sell these greater amounts of inventory, it will incur storage costs and other holding costs.The second component is sales. &ales have to match inventory purchases otherwise the inventory will not turn effectively. The data shows that the company manages to increase their total turnover year by year. s we can see in year -71- it have the higher amount of ratio and good inventory control which is ?.! times which mean the company does not overspend by buying too much inventory and wastes resources by storing non"salable inventory. 8t also shows that the company can effectively sell the inventory it buys. 2hile the difference between year -715 and -714 is about 4KF only. Currently company is trying to manage their inventory control. 6.3.3 Aer$e co&&ect!on %er!o*
The average collection period is the average number of days between 1< the date that a credit sale is made, and -< the date that the money is received from the customer. The average collection period is also referred to as thedays' sales in accounts receivable. 8t is indicated the average length of time the firm must wait after ma#ing a sales to receive cash payment. The data above show that year -714 has the shorter period of time which is 56.K- times compare to other year. 8t indicated that the company ta#es only around 5K times to collect on its customers. 2hile in year -711, company has the problems in waiting to receive cash payment from their customers. This could also indicate the company has loosened its credit policies with customers, meaning that they may have been extending credit to companies where they normally would not have. This could temporarily boost sales, but could also result in an increase in sales revenue that cannot be recovered. 18
6.3.4 ro!t+!&!t/ rt!o
:rofitability ratios compare income statement accounts and categories to show a company's ability to generate profits from its operations. :rofitability ratios focus on a company's return on investment in inventory and other assets. These ratios basically show how well companies can achieve profits from their operations.8nvestors and creditors can use profitability ratios to =udge a company's return on investment based on its relative level of resources and assets. 8n other words, profitability ratios can be used to =udge whether companies are ma#ing enough operational profit from their assets. &ummary of Hartalega*s profitability ratioJ RATIO
PRO9ITA>ILITY RATIO 1
13
12
11
/ro** pro%t
7.44-
7.44K
7.41
7.4?-
$,r'# R"tur# o# *,"*
7.4!
7.64?
7.64!
7.5
R"tur# o# tot,
-7.!
-5.!5
-K.6!
-.?
,**"t*(ROA) R"tur# o#
-5.?1
47.66
4-.6-
45.!
*to-o"r "7ut+
6.4.1 ro,, %ro!t -r$!n
/ross profit margin measures company's manufacturing and distribution efficiency during the production process. 8t is a measurement of how much from each dollar of a company's revenue is available to cover overhead, other expenses and profits. 8t provides clues about company's pricing, cost structure and production efficiency. Therefore, gross profit margin can be used to compare company's activity over time. %rom the data analysis, the trend of ratio slowly tends to be downward. 8n year -711, it shows the higher gross profit margin which is 4?.-F compare to other. Then in year -71- it decrease about 6.4F and slightly increase a bit about 1.?F in year -714 and bac# to decrease about 7.5F in year -715. This indicated that company has a low gross of profit margin which mean they are not able to control its production cost. 8t should not fluctuate much from one
19
period to another, unless the industry it is in has been undergoing drastic changes which will affect the costs of goods sold or pricing policies. 6.4.2 Return on ,&e,
This measure of how much is profiting from its sales. high return on sales indicated that the company is selling its products well and its profits are li#ely sustainable while a low return on sales indicates the opposite. )anagement often uses the return on sales to determine how efficient the company is. s the data analysis above, year -71- and -714 show the higher amount of ratio which is 7.65 which means the company sells their products well and the company is growing efficiently. 2hereas in year -711 has the second highest percentage which 5.F and in year -715 it only has 4.!F. The different between these two years is around 1.1F. The company should try to increase their percentage of return on sales so that the trends will be upward and they are able to manage the company efficiency as well to their profits. K .4.3 Return on ,,et, The ratio that measures the net income produced by total assets during a period by comparing net income to the average total assets. 8n other words, the return on assets ratio or 9+ measures how efficiently a company can manage its assets to produce profits during a period. &ince company assets purpose is to generate revenues and produce profits, this ratio helps both management and investors see how well the company can convert its investments in assets into profits. The data above shows that the company shows the fluctuation trend. The amount shows the downward trend. The highest ratio is -.?F in year -711 then slowly fluctuated year by year until -715 which is -7.!F. The different between -711 and -715 is around !.F which mean company need to improve their efficiency in managing their assets in order to produce a higher profits. 6.4.4 Return on ,toc"o&*er eu!t/
9atio that measures the ability of a firm to generate profits from its shareholders investments in the company. 8n other words, the return on e$uity ratio shows how much profit each dollar of common stoc#holders' e$uity generates. 20
&o a return on 1 means that every ringgit of common stoc#holders' e$uity generates 1 ringgitr of net income. This is an important measurement for potential investors because they want to see how efficiently a company will use their money to generate net income. The data above shows that in year -715, the data tend to decrease -5.?1, this indicate that company is not able to use its investor*s funds effectively compare to other year. 2hereas in year -711 it show the highest return on stoc#holder*s e$uity which means at that year company are perform well and company progress. 6.5 AR(T ROS(CT RATIO
)ar#et :rospect ratios are used to compare publicly traded companies' stoc# prices with other financial measures li#e earnings and dividend rates. 8nvestors use mar#et prospect ratios to analye stoc# price trends and help figure out a stoc#'s current and future mar#et value. 8n other words, mar#et prospect ratios show investors what they should expect to receive from their investment. They might receive future dividends, earnings, or =ust an appreciated stoc# value. These ratios are helpful for investors to predict how many stoc# prices will be in the future based on current earnings and dividend measurements. &ummary of Hartalega*s mar#et prospect ratioJ RATIO E,r##'* p"r
1 41.4
*,r" (*"#) Pr" ",r##'
6.!1
MAR:ET PROSPECT RATIO 13 12 41.!! -?.K6
6.K4
K.54
11 -K.1!
K.-
6.5.1 (rn!n$ %er ,re,
This ratio measures the amount of net income earned per share of stoc# outstanding. 8n other words, this is the amount of money each share of stoc# would receive if all of the profits were distributed to the outstanding shares at the end of the year.8t also shows how profitable a company is on a shareholder basis. %rom the data above, as we can see the trend are showing upward and this are good sign for their company. The amount #eeps increasing by year to year until in year -714 but in year 21
-715 it shows slightly decrease by 7.5 sen. Basically company are in good performance because they are showing a good trends and even though there are slightly decrease but the value are still maintain by 41.4 sen.
6.5.2 r!ce ern!n$
The ratio that calculates the mar#et value of a stoc# relative to its earnings by comparing the mar#et price per share by the earnings per share. :rice"earnings ratio shows how much investor are willing to pay per ringgit of a current earnings, the higher this ratio, the higher the significant prospects for future growth for the firm. Here we can see that Hartalega price"earnings ratio is higher in -711 with K.- times earnings. 2hile in year -71-, they are maintaining their earnings by K.54 times. However in -714 and -715 there are slightly fluctuate into 6.K4 times and 6.!1 times. Basically, the difference amount is not too far, and increases by 7.1! times. &o in this moment, Hartalega should concentrate on improving this measure because it is important to have a higher future growth than the other competitors because investors often use this ratio to evaluate what a stoc#'s fair mar#et value should be by predicting future earnings per share. Companies with higher future earnings are usually expected to issue higher dividends or have appreciating stoc# in the future.
22
?.0WEI/TED COMPETITIVE STREN/T
ARTALE/A
TOP /LOVE
SUPERMAXX
R,t#
W"'t"
R,t#
W"'t"
W"'t
'
Sor"
'
Sor"
R,t#'
Sor"
)ar#eting strategy
7.17
K
7.K
?
7.?
K
7.K7
Customer service
7.17
?
7.?
?
7.?
K
7.K
$uality
7.16
!
1.-
!
1.-
?
1.76
Brand 8mage
7.14
?
7.1
1.1?
?
7.1
Technology s#ill
7.16
!
1.-
1.46
!
1.-
/lobal mar#et share
7.14
!
1.75
7.1?
?
7.1
%inancial resources
7.15
!
1.1-
!
1.1-
?
7.!
:roduct innovation
7.17
?
7.?
?
7.?
K
7.K
Tot, Sor"
1.00
*tr"#'t
17 N )a=or &trength
?.?
6 N verage
W"'t"
@.11
<.@8
1 N )a=or 2ea#ness
Based on weighted competitive strength assessment ;2C&< of Hartalega company, we have analyst that Hartalega is $uite precede in innovative compare than the other its two rival the reason that cause to this may be they has a good and strong competitive with other competitors in ruber gloves 8ndustry to #eep survive and to attract customer. However, Hartalega is good in sustainability li#e wahat they state in their mission. 8n term of mar#et share, Hartalega capture the mar#et in a second place behind the Top glove and infront of supermaxx. 8t shows that Hartalega doing a $uite well in both revenue and &ubscriber mar#et share. 8t intends to capitalise on its large customer base to
23
push more content and offer good $uality of product. 8t has its eyes set on future growth and regional expansion in their operational business. )oreover, with other strength measure Hartalega also getting the high mar# in the rating because they stay strong with their product and service. &ince its establishment, Hartalega has been providing a by providing consistently superior, safer, and more convenient gloves in chosen product mar#ets. They also relay on their technology s#ill to produce more $uality and safer product to the customer. Hartalega also significant growth and strong trac# record of bringing innovation, excellent customer service and value to sta#eholders has won the company numerous awards over the year. fter multiplying each score by its given weight, we were able to add all scores to determine the strongest company. Hartalega ended up on second ran# with the overall strength rating is ?.5?3 left behind the Top /love with the overall strength rating is !.11. ven though Hartalega did not get the highest rating, it still shows that Hartalega is one of the stronger competitors among other companies in that rubber glove industry. %rom the table above, we also can see that Hartalega position in the rubber glove industry is strong because they are the nearest competitor for Top /love with the different between their strength ratings is only 7.K5, and followed by &upermax. 2e conclude that, from this analysis Hartalega should increase reasonable mar#eting plan to ma#e sure that their customer still loyalty with their product. Besides, it*s important for them to do be ac#nowledging by customers and other sta#eholders in order to increase more mar#et share and profit in their operating business.
24
@.0 SWOT MATRIX To4* $,tr
Str"#'t* 1. ' "!" o% prouto# "%%"#+
W",-#"**"* 1. D"##' Pro%t,&t+ 2. '"r t, r,t"
2. At!" #!o!"$"#t # r"*",r ,# "!"op$"#t (R6D) 3. Prout p,t"#t . Stro#' # r"tur# o# "7ut+(ROE) ,# #"t pro%t $,r'# 8. T"#, r"o'#to# Opportu#t"* 1. Support!" "#!ro#$"#t %or ru&&"r 'o!" #u*tr+ # M,,+*, 2. M,r-"t o!"r* 3. /o&, o*pt, *upp"* $,r-"t*
5. R*#' ",t,r" Ep"#tur"
So *tr,t"'+
Wo *tr,t"'+
1.(S8 T3)
1.(W1O1O2)
Based on the strength of Hartalega that have technical recognition, they can ta#e opportunity to fulfill the increasing in the demand in global hospital suplies mar#et.as they have good technology that win many awards, they should produce more glove especially application nitrite glove; including surgical gloves< to fulfill the demand
&ince the decline in profitability the opportunity that can Hartalega ma#e is by using the supportive environment for rubber glove industry in )alaysia and ta#e the opportunity in mar#et cover. This can be advantages to eliminate the wea#nesses of the company.The company need to focus on the opportunity that they can get in )alaysia, such as using a cheap raw material from the other country li#e thailand to produce more glove and expand the mar#et by exporting it internationally ;in region<
2.(S2 T1)
Based on the strength which the are good and active in research and development to develop a new application, so it is very good as they manufactured in malaysia that have supportive environtment for rubber glove industry as their opportunity. xpanding the business not only in )alaysia but establish themselves in globaliation by expanding in many countries in the world as they can get eassier the material not only in
2.(01 03)
&ince the company has the wea#nesses in decline profitability, they can use the opportunity in demand of global hospital suplies mar#et.Hartalega should do the segmentation by region that they should focus that can give more profit. They can produce more on application nitrite glove that get 25
)alaysia, but also in Thailand.
3.(S1T1)
high demand with the patent that they get to prevent the imitation. The company need to develop a latest technology in order to response to the problems.
&ince the strength of Hartelega high level of production efficiency that bost their name internationally, they also provides a good $uality of product as the sustainability as the main standards to fulfill the opportunity in raising healthcare expenditure. The Company need to produce a good $uality ruber as the healthcare as the main because of the demand in this area and specific research and survey about the awareness in health care industry are also important to carter their expectation.
Tr",t* 1. U#*t,&" pr" ,# 4",- US5 2. R*#' # "#"r'+ o*t 3. A!,,&t+ o% *u&*ttut" prout
T* *tr,t"'+
Wt *tr,t"'+
1. (S1S83T)
1. (T1 W1)
&till able to mar#et its brand even facing rapid of competitors and many substitute products because they are strong in term of patent to protect their property right, high in 9E@ ;research and design< on behalf of product development and high level of production efficiency. There products development led the way with innovation base on the original product that response the demand of global impact.
+ffering
discounts
and
customer"oriented products in order
to
competitors
overcome in
term
the price
competitive. 8t is also trying to attract the customerssuppliers in order to selecting their products as the first choice during the crisis. 2.(T1 T2 W1)
-. (ST1 T2)
8ncrease domestic facilities and
ven though the unstable price of
recover from crises by ma#ing
rubbers gloves and wea# A& still
short term goals.
26
play an important role on their productivity but it does not mean will impact thru their return on e$uity and net profit. This is because of there are strong enough to beating their competitors and remain on their customers and suppliers loyalty.
3.(W2 T1 T2 T)
9educe threat of competitively priced and create loyalty with customer relation and $uality. 8t may also provide high value than competitors and create strong
supplier
customer
relationship.
4.(S8S1 3T) The high technology strategic that may
ensure their
productivity,
create something different and uni$ueness.
8t
response
the
demand of customers and suppliers who willing to get the high $uality products and being recognie in the mar#et. )oreover, Hartalega Holding Bhd is also represented the capability to creating and producing Othe first in industrialP within gloves rubber mar#ets 5,.(S3T3) +vercome breached patents by emphasiing
more
on product
designs.
27
.
B.0 SPACE MATRIX
&:C )atrix or the &trategic :osition and ction valuation are a management tool used to analye a company. 8t focuses on strategy formulation especially as related to the competitive position of Hartalega. 8t is used to determine what type of a strategy company should underta#e.The &:C matrix evaluates different variables and assigns them a score considering how important they are for the situation of the company. 8t analyes four different areas ;two internal to the company and two external< that will represent four $uadrants in a graphic. The purpose of this matrix is to situate the company in one of these four $uadrants and give a suggestion in according to which $uadrant results is about what type of strategies a company should followJ conservative, aggressive, defensive or competitive The &:C matrix can be used as a basis for other analyses, such as the &2+T analysis, BC/ matrix model, industry analysis, or assessing strategic alternatives. &:C )atrix is a four"$uadrant framewor# which indicates whether aggressive, conservative, defensive, or competitive strategies are most appropriate for a given company. The axes of the &:C )atrix represent the two internal dimensions of a competitive firm which are its financial strength ;%&< and its competitive advantage ;C< and two external dimensions which are environmental stability ;&< and industry strength ;8&<. These four factors are the most important determinants of a company's overall strategic position in the mar#etplace. 9.1Ste%, to *ee&o% SAC( tr!
.1.1 &elect a set of variables to define industry strength ;8&<, competitive advantage ;C<, financial strength ;%&<, and environmental stability ;&<.
28
.1.-
9ate the factors using rating system specific to each dimension. 9ate competitive advantage ;C< and environmental stability ;&< using rating scale from "K ;worst< to "1 ;best<. 9ate industry strength ;8&< and financial strength ;%&< using rating scale
.1.4
from Q1 ;worst< to QK ;best<. Compute an average score for 8&, C, %&, and & by summing the values given to the variables of each dimension and dividing by the number of variables included in the respective dimension.
.1.4 :lot the average scores for 8&, C, %&, and & on the appropriate axis in the &:C )atrix. .1.5
dd the average score for the competitive advantage ;C< and industry strength ;8&<
.1.6
dimensions. This will be the final point on axis on the &:C matrix. dd the average score for the &:C matrix environmental stability ;&< and financial strength ;%&< dimensions to find the final point on the axis I.
.1.K
@raw a directional vector from the origin of the &:C )atrix through the new intersection point. This vector reveals the type of strategies recommended for the organiationJ aggressive, competitive, defensive, or conservative.
9.2 S%ce tr! o rt&e$
xis 8ndustry &trength 9atingJ1 ;2orst< To K ;Best< 1< /rowth potential -< %inancial stability 4< :rofit potential 5< :roductivity 6< 9esources utiliation Competitive dvantage 8& Total 1 Customer loyalty - :roduct $uality 4 )ar#et share 5 Technological #now"how 6 Brand and image C Total
9atings 5.7 5.7 5.7 4.6 4.6 1.7 "-.7 "-.7 "-.6 "-.7 "-.6 "11.7
xis I %inancial strength9ating is 1 ;worst< to K ;best<
9atings 29
1 arnings per share - everage ratio 4 i$uidity ratio 5 2or#ing capital 6 fficiency ratio nvironment stability 9atingJ "1 ;best< to "K ;worst< 1 9ate of inflation - :rice competing product 4 Technological changes 5 Competitive pressure 6 @emand variability
6.7 4.6 5.6
%& Total & Total
4.7 5.7 -7.7 "5.7 "4.7 "-.6 "4.6 "-.7 "16.7
9.2.1 Aer$e ,core
%ormulaJ Total (umber of factors 1 4 5
8ndustry strengthJ Competitive advantageJ %inancial strengthsJ nvironment stabilityJ
1 6 R "11 6 R -7 6 R "16 6 R
Total axis score ;8& Q C<
4.! "-.5.7 "4.7
Total axis ES) Totatttl axisYIscore score (FS ;%& + Q &< 4.0 + (-3) 1.0
5.7 Q ;"4< R 1.7
4.! Q ;"-.-< R 1.K
9.2.2 r% o SAC( tr!
Conservative
%&
ggressive
&uggested strategy type 30
C
8&
@efensive
&
Competitive
%or the #u*tr+ *tr"#'t dimension, it is considers as the external forces that belong to the industry where the company develops its activities. 2e have rating Hartalega based on growth potential, financial stability, profit potential, productivity and resources utiliation with the rating scale from 1 ;worst< to K ;best<. %or the growth, financial stability and profit potential factors of Hartalega are good, so they have been scored as 5.7.2hereas, in Hartalega*s place at the forefront of the industry is credited to their progressive systems which enhance the speed, efficiency and cost effectiveness of their production. &o for the productivity and resources utiliation, we score it for 4.6. Then, the total amount of scores for industry strength is 1.7. %or the o$p"tt!" ,!,#t,'" dimension,this is the next variable considered in the internal strategic dimension. Customer loyalty, product $uality, mar#et share, technology#now"how also brand and image are some of the variables to be considered. s in the other internal strategic dimension, each variable considered is given a numerical value, but in this case from "1 ;being the best< to "K ;being the worst<. s Hartalega moves from strength"to"strength, new technologies will be continuously embraced and introduced and they are dedication to developing new and innovative gloves reflects their commitment to future progress.&o we scored as "-.7 for customer loyalty, technology #now"how and for product $uality factors because this is what they are excellent at. Besides that, the rate for mar#et share also brands and image we score as"-.6, ma#ing the total for competitive advantage is "11.7.
31
%or %#,#, *tr"#'t $"#*o# ,it includes everything that refers to the financials of the company. ach one of these variables is given a numeric value from 1 ;worst< to K ;best< according to our perception of how good the company is doing regarding that variable.the rating given to Hartalega are based on earning per share, leverage, li$uidity, wor#ing capital, and efficiency ratio. 2e can consider the earning per sharewith the higher earnings per share is always better because the company is more profitable and the company has more profits to distribute to its shareholders so for that factor we score Hartalegafor 6.7 because of their upward trend of earning per share. %or the leverage factor, we rate it as 4.6 because the company is able to manage their debt whereas for li$uidity we score it as 5.6 and 4.7 for wor#ing capital factor. Hartalega are good in handling their li$uidity ratio and lastly for efficiency factor we scored it as 5.7 because the company tends to have an upward trend in their management efficiency. &o after we total up, for financial strength dimension is -7.7 scores. ast, "#!ro#$"#t *t,&t+ is considered. 8t refers to how stable is the mar#et where the company operates. Things li#e rate of inflation, price competing product, technology change, competitive pressure and demand variability are considered. The more stable is the mar#et3 more favorable is for the company to operate in it. score from "1 ;best< to "K ;worst< is given to each of the variables considered. The rate of inflation factors, we score it as "5.7 and for price competing product we rate it as "4.7. s we #now in group mapping Hartalega was the second highest competing in mar#et share. Because of innovation forms the foundation to Hartalega's global success and Hartalega's status as the world's largest manufacturer of clinical (itrile gloves, can be attributed to their innovative manufacturing technologies and advanced technologies so that, for technology change and competitive pressure, we score it around "-.6 and "4.6. 2hereas, in demand variability, we rate is as "-.7 because of their efficiency and cost effectiveness of their production. Then, the total amount of scores for environment stability is "16.7. fter plotting the scored on the graph, Hartalega suggested strategy type is ,''r"**!" . The aggressive posture in the &:C nalysis )atrix occurs when all the dimensions are positive. The implicit strategy is to aggressively grow the business raising the sta#es for all competitors.
32
&ome of strategies that the company may follow are continue to invest in innovation to sustain and build the competitive advantage which exists. Basically, company has a strong competitive position inthe mar#et so they only have tofollow up on possible opportunities in the mar#et ;bac#ward or forward vertical integration< as well to increase their rapid growth.Besides that, companyalso needs to use their internal strengths to develop a mar#et penetration and mar#et development strategy. This may include some integration with other companies, product development, and ac$uisition of competitors.
33
10.0 >C/ MATRIX O9 ARTALE/A >ERAD
BC/ or Boston Consulting /roup )atrix is one of the famous approaches of portfolio management. 8t is developed to achieve better understanding of the competitive position of a portfolio of businesses within a corporation. 8t is also used to suggest strategic alternatives for each business. BC/ is a method to determine what priorities should be given in product portfolio of a business unit. 8t is based on product life cycle theory. To create a BC/ matrix, businesses gather mar#et"share and growth"rate data on their business units or products. +ne large s$uare is drawn and is divided into four e$ual $uadrants. long the top of the box, a mar#et share or cash generation is written, and a growth rate or cash use is written down the left side. +n the top left is high mar#et share, and low mar#et share is on the left. +n the left"hand side, high cash use is at the top and low cash use or growth rate is at the bottom. 2ithin the diagram, MstarsM go in the upper"left $uadrant, and M$uestion mar#sM are put in the upper"right s$uare. t the bottom, Mcash cowsM go on the left, and MdogsM are placed on the right. The diagram visually shows that stars have high mar#et share and a high growth rate, while $uestion mar#s have low mar#et share and a high growth rate. +n the bottom, cash cows have a low growth rate but a high mar#et share, and dogs have a low mar#et share and a low growth rate. :lacing products in BC/ matrix result in 5 categories in portfolio of Hartalega, which are stars, cash cows, $uestion mar#s and dogs. 8.
&tars:The business units or products that have the best mar#et share and generate the most cash are considered stars. )onopolies and first"to"mar#et products are fre$uently termed stars. However, because of their high growth rate, stars also consume large amounts of cash. This generally results in the same amount of money coming in that is going out. &tars can eventually become cash cows if they sustain their success until a time when the mar#et
88.
growth rate declines. Companies are advised to invest in stars. Suestion mar#sJ These parts of a business have high growth prospects but a low mar#et share. They are consuming a lot of cash but are bringing little in return. 8n the end, $uestion mar#s, also #nown as problem children, lose money. However, since these business units are growing rapidly, they do have
34
the potential to turn into stars. Companies are advised to invest in $uestion 888.
mar#s if the product has potential for growth, or to sell if it does not. Cash cowsJ Cash cows are the leaders in the mar#etplace and generate more cash than they consume. These are business units or products that have a high mar#et share, but low growth prospects. Cash cows provide the cash re$uired to turn $uestion mar#s into mar#et leaders, to cover the administrative costs of the company, to fund research and development, to service the corporate debt, and to pay dividends to shareholders. Companies are advised to invest in cash cows to maintain the current level of productivity or to Mmil#M the gains
8G.
passivelyP. @ogsJ dogs have low mar#et share and low growth rate and thus neither generate nor consume a large amount of cash. However, dogs are cash traps because of the money tied up in a business that has little potential. &uch businesses are candidates for divestiture.
10.1 ,rt,"', >u*#"** S"'$"#t*
Hartalega focus on produce - different of product, which isJ ;i< ;ii<
atex /loves (itrile /loves
11.2 N"t R"!"#u" %or >u*#"** S"'$"#t SE!"E#T
#$T%$&E !&'E S'T, ,$# E%' "E%$
&TE* !&'E S'T, ,$# E%'
E
"E%$
E
S&ES %EE#E
9 649
182
5 352
3 446
542
5 865
($%S) E%E#T!
1.2/
37.8/
20.6/
6.2/
51.8/
-7.6/
E ,#!E
EXPORT /ROWT
RAW
35
ID
SE/MENTS
A
(8T98 /+G T /+G
>
SOUT AMERIC A ?5
-K
CIN A
EUROPE
MATERIAL PRICE
-6 ?6
5! 6-
16F 6F
10.3 T" >o*to# Co#*ut#' /roup* /ro4t S,r" M,tr
High &T9&
SA&T8+( )9>&
A
INDUSTRY C&H GROWTH RATE
C+2&
B
@+/&
ow High
RELATIVE MARKET SHARE
ow
1. &tars Business segment for (itrile glove is fall under &tars. (itrile glove has gain the higher industry growth and also gain the higher relative mar#et share in rubber glove industry. Because of the innovation and the concept of sustainability that they implement, they get high revenue in &outh merica. (ot only that, based on the geographical segment, mostly nitrile glove get the higher revenue in each of the segment. This will give the opportunities to Hartalega to stabilie their nitrile gloves mar#et at each country.
36
-. Suestion mar#s %rom the BC/ )atrix, we found that latex glove is fall under $uestion mar#s categories. That*s means latex glove have higher in industry growth but gain low in relative mar#et share. Hartalega should improve their strategy to improve the mar#et share of the latex glove to ma#e sure that it will become the star. 8ndirectly, Hartalega will increase their profit in this product. )oreover, even though latex glove has gain low mar#et share, but in urope segment, this product get higher revenue. &o, Hartalega should increase their effort to ma#e sure that consumer want their product so that they can get higher mar#et share and will become the star.
37
11.0 CONCLUSION.
s a conclusion, based on our term paper we analye the ma=or initiatives ta#en by Hartalega holding, involving the performance in internal and external environments. Hartalega has the strength in technology and innovation through their 9Ed but with the many wea#nesses of the company such as dechline profitability ma#es the Hartalega could not gain the competitive advantage in the industry. Then, in the competitive industry of the rubber industry is the field which admittedly challengingHartalega need to rapidly expanding the business activities in various forms of investments, especially those focused on the creating a new products and improvement the product to the customer. Then, the greater supportive environtment and mar#et demand can open the opportunity for Hartalega to become more competitive in the industry. )oreover, based on our analying on the competitor movement, we already provide the strategy to overcome the wea#nesses and reduce threat with the strength and opportunities that Hartalega holding have. This is important because every of their movement is very important to ma#e sure the decision is not by the self"interest and Hartalega need to have deep understanding to ma#e sure Hartalega can beat the entire competitor in the industry. )oreover, this we call a competitive advantage when Hartalega can use the blue ocean strategy to ma#e sure the company not going into the red ocean strategies that have many competitors compete in the industry. astly, Hartalega fight was far from complete. fforts to strengthen Hartalega position as a reputable company still continues. Hartalega needs to improve efficiency and ma#e the diversification on the strategic area by enhancing the new products to satisfy the customer
38
expectation to ma#e sure Hartalega emerging to become top tier of rubber provider in the future.
39