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Strategic Analysis of POH KONG

Objective of the Presentation


To Examine Poh Kong Strategy via Internal and External
Analysis

Presentation Outline
1.

Company Introduction

a. Poh Kong History b. Poh Kong Vission, Mission, Strategic Objectives and Detailed Objectives, and Award & Recognition 2 External Analysis a. PESTEL Analysis b. Five Forces Model c. Strategic Group Mapping d. Key Success Factors e. Drivers of Change 3 Internal Analysis a. Poh Kong Current Financial Strengths Analysis b. SWOT c. Value Chain Analysis d. Competitive Strength Assessment from Internal Perspective. Islamic Perspective Conclusion & Recommendation

4. 5.

Agenda

1. 2.

Company Introduction External Analysis

3.
4. 5.

Internal Analysis
Islamic Perspective Conclusion & Recommendation

Company Introduction : History Of Poh Kong


er

xx

Xx

Xx

Xx

xx

Poh Kongs Today

Jewelry Industry

Characteristic
Competitively

fragmented Various Companies with broad scope of product offerings Market segment depends upon the marketing Popular current, stylish jewelry, ranging in quality from very good to price point quality Companies create demand through Marketing

Jewelry Industry

Luxury goods Market


Luxury

goods

Mature

Stage

Business

type

Event-centric

Sensitive

to consumer income, economic cycle

Jewelry Industry

Industry Overview
9% 4% 5% 24% 3%

Portion of Material
31%

51%

Portion of
13%

35%

Items

26%

Gold Other

Silver

Platinum Metal

Earings Wristwear

Neckwear Other

Rings

Metals

Combination

Agenda

1. 2.

Company Introduction External Analysis

3.
4. 5.

Internal Analysis
Islamic Perspective Conclusion & Recommendation

10

External Analysis
1

What does macro-environmental factor reveal about Poh Kong competitive advantages in Malaysia Jewelry industry? How does Five Forces relates Poh Kong intensity of competition? How Poh Kong Position in Malaysia ?

What is the Key Success Factor of Poh Kong In Malaysia & How well is Poh Kong performance compare to its closest rivals?
What are the important drivers of changes that may impact Poh Kongs Strategic & Financial position in Malaysia?

Political-Economic-Social-Technological-Environment-Legislations

What does macro- environmental factor reveal Poh Kong competitive advantages in Malaysia jewelry store industry?

Political

Economical

Social

Sustainable multi-racial society] Countrys complex bureaucracy governance[1]

Economic growth[1] GDP Growth[1] 4.0% Global economic instability[1] Foreign direct investment (FDI) [1] Inflation 0.6(2009) 1.7 (2010) 3.7 (2011) Unemployment 3.1%

3 racial group (Malay, Indian, Chinese) Population 28.401 million (2010) Population below Poverty Life Life Expectancy (2011) 71.7(male), 76.6 (Female)

Technological

Environmental

Legislation

Cost saving & efficiency [3] Security [3] Customer Needs / convenience[3]

xx

xxx

Sources:

Poh Kong Annual Report 2010 [2]

Five Forces Analysis

How does Five Forces relates Poh Kong intensity of competition?


Firms in other industry offering substitute Products

Suppliers

Rivalry among competing sellers

Buyers/ Customer Bargaining Power

Potential New Entrants

Five Forces Analysis

How does Five Forces relates Poh Kong intensity of competition?

Bargaining power of suppliers

Bargaining power of suppliers Scarce resource, great value to retail firms National, International reputation to get diamond Bargaining power of buyers Not standardized Not much influence on products and price Threat of New Entrants Product Differentiation Capital Requirement Threat of Substitute High-end Specialty retailer Industry Rivalry Slow industry growth Low switching costs for consumers Large # of firms attract same customer Globally expanded, top competitors open many stores

Threat of New Entrants

Threat of New Entrants

Industry Rivalry

Five Forces Analysis (contd)


Large number of jewelry store
More jewelry store that are currently operating in Malaysia (local and foreign jewelry store).

Location of the jewelry store


Greater

Rivalry

struggle between the jewelry store to capture customer. In Malaysia most of the Poh Kong closest rivalry, Habib's Jewel are offering similar product and services.

among competing sellers

Buyers / Customer bargaining power

Compete to attract the same number of customer and resources.

Rivalry

Poh Kong and other jewelry store like Habibs Jewel struggle for market leadership.

among competin g sellers - High


Threat

Supplier bargaining power

Product Differentiation
Product differentiation associated with higher level of rivalry but limited by

of substitute product

compete to boost their brand recognition and improve their quality of services in order to gain market shares

Threat

of new entrants

Five Forces Analysis (contd)


Rivalry

High information availability


In Malaysia : increase in the number of internet user from year to year

among competing sellers

Buyers / Customer bargaining power

Compare the design and services between the jewelry store

High buyer price sensitivity


Low switching cost

Customer may buy it on loan basis

/ Customer bargainin g powerHigh


Threat

Buyers

Supplier bargaining power

of substitute product

Threat

of new entrants

Five Forces Analysis (contd)


Rivalry

Technology provider

among competing sellers

xxx

Buyers / Customer bargaining power

Gold and Diamond supplier


ff

Supplier

bargainin g powerMedium

Supplier bargaining power

Threat

of substitute product

Threat

of new entrants

Five Forces Analysis (contd)


Rivalry

among competing sellers

Other branded company provide luxurious product

Buyers / Customer bargaining power

Threat

of substitute product Medium


Threat

Supplier bargaining power

of substitute product

Threat

of new entrants

Five Forces Analysis (contd)


Rivalry

among competing sellers

Buyers / Customer bargaining power

Require high capital start up high security

Required

Brand recognition - invest alots of money and time

Threat

of
Supplier bargaining power

High level of resources.

new entrant Low


Threat

of substitute product

Threat

of new entrants

Strategic Mapping

Do Poh Kong is in the Best Position in Malaysia & have potential to be a Financial Leader in the region?
jewelry store Poh Kong Habib's Jewel Public jewelry store RHB Capital AMMB Affin jewelry store
20 Alliance
Sources:

Deposit (RM Bil) 261 200 180

Loans (RM Bil) 242 268 262

Branches

SelfServiceteminal (ATM) 2847 2057 488

Total Asset (RM Bil) 380 269 229

385 324 250

94 71 32

84 70 26

185 186 91

1058 803 160

129 105 45

28

22

99

171

37

Annual Report of Poh Kong, Habib's Jewel, Public jewelry store, RHB jewelry store, AMMB, Affin jewelry

Strategic Mapping (contd)

HIGH

Poh

Kong

Public

Habib's

and Deposit

Loans

MEDIUM

jewelry store

Jewel

RHB

Capital
LOW
Aff

in
Alliance

AMMB

LOW
Branches

MEDIUM

HIGH

and Self-Service

Terminal

Key Success Factor - Competitive Profile Matrix (CPM)

What is the Key Success Factor of Poh Kong In Malaysia & How well is Poh Kong performance compare to its closest rivals Poh Kong Habib's Jewel Public jewelry store
jewelry store CRITICAL SUCCESS FACTORS PRODUCTS & SERVICES TECHNOLOGY WEIGH T 0.15 0.14 RATIN G 4 4 WEIGHTE D SCORE RATIN G WEIGHTED SCORE RATING WEIGTHED SCORE

0.60 0.56 0.18 0.32

3 3 2 4

0.45 0.42 0.12 0.32

3 1 2 2

0.45 0.14 0.12 0.16

GLOBAL EXPANSION
FINANCIAL POSITION SERVICE QUALITY jewelry store BRANCHES / SELFSERVICE TERMINAL MARKET SHARE STRONG MANAGEMENT TEAM MARKETING CUSTOMER LOYALTY TOTAL

0.06
0.08 0.13 0.12

3
4 3 5

0.39
0.60

3
4 3 4 4 4

0.39
0.48 0.18 0.36 0.36 0.32 3.40

3
3 2 3 3 2

0.39
0.36 0.12 0.27 0.27 0.16 2.44

0.06 0.09 0.09 0.08 1.00

4 4 4 3

0.24 0.36 0.36 0.24 3.85

Drivers of Changes

What are the important drivers of changes that may impact Poh Kongs Strategic & Financial position in Malaysian jewelry store industry?
Economic

Conditions

Globalization

Technology

Euro Crisis & US Economic Condition Malaysia economic growth & deficit Economic Transformation Programme will create opportunities for Poh Kongs

Increase consumer demand Regional Business expansion ASEAN Free Trade AFTA

Environmental corcern Paperless jewelry store Improve security at every stage of operation via IT advancement

Changing

Regulatory

Societal Concern, Attitudes & Lifestyle

influences and government policy changes


maximum

Product

& Services

Islamic jewelry store

Mobile jewelry store lifestyle

loan-to-value (LTV) ratio of 70 %

Rule

of the Game
Characteristic Opportunity

Sensitivity to Economic Cycle Threat of lower Jewelry & Online sale High competition & matured market

Economy recovery Online sale increase Separated brand

Key

Success Product differentiation Factor

Brand

Loyalty

Quality of Diamond Ability to customize Romance & Luxury

Marketing Marketing Marketing

Agenda

1. 2.

Company Introduction External Analysis

3.
4. 5.

Internal Analysis
Islamic Perspective Conclusion & Recommendation

25

Current Financial Analysis including Financial Ratio Analysis


Net Profit
5000 4500 4000 3500 3000 2500 2000 1500 1000 500 0 4450 3818

2981

391 172 237 245

644

864

1075 130

1360
970 840

3178 2928 2772 24252503 1996 1659

Net

692

Net Profit

profit (Profit After Tax And Minority Interest) rising by 16.6% from RM3.8 billion for FY 2010 to 4.5 billion for FY 2011
412

Total Assets
450 400 350 300 250 200 150 100 50 0 48 56 31 40 94 72 82 127 110 115 117 161 146 151 180 192 257 269 311

The

337

224

group total assets expanded by 22.4% from RM337 billion as of 30 June 2010 to RM412 billion as of 30 June 2011.

26
Total Assets

Current Financial Analysis including Financial Ratio Analysis (contd)

10.0 9.0 8.0 7.0

Share Price
8.6 7.4 5.7 4.6 3.5 6.3 5.5 4.9 6.3 6.2 7.3 7.8 7.7 6.3 5.9 7.6 8.9

In

6.0
5.0 4.0

3.0
2.0 1.0 0.0

1.1 1.1 1.3

1.9

2.0

2011, Kongs share price rose by 18.3% from RM7.56 to RM8.94.

FY Poh

Share Price

27

Current Financial Analysis including Financial Ratio Analysis (contd)

Earnings

Per Share rose by 13.8% to 61.4 cent for FY 2011 from 53.9 cent for FY 2010. Earnings Per Share is defined as net income divided by the number of shares outstanding.
28

Return

On Equity increase to 15.2% for FY2011 from 14.5% for FY2010 which exceeding the targeted Return On Equity of 14%. Return On Equity is defined as net profit divided by the shareholders equity.

Current position analysis for non financial analysis

Key

Management Changes Several key management changes also contributed to strengthened the Poh Kong leadership. Among the changes are: Appointment of Muzaffar Hashim as Chief Executive Officer of Poh Kong Islamic Berhad. Appointment of Hans De Cuyper as Head of Etiqa Insurance and Takaful. Appointment of Dr John Lee Hin Hock as Group Chief Risk Officer.
Customer

Based For the FY 2011, Poh Kong have about 21 million customers worldwide compared to 18 million customers for FY 2010.

29

SWOT Analysis

Weakness (W)
1.Low in Customer satisfaction. 2. Product Innovation might weaken. 3. Tendancy of investing in non-stable economic countries.

Strengths (S)
1.Largest commercial jewelry store in Malaysia 2.Strong Financial Position 3.Strong Reputation In Malaysia 4. Technology usage 5. Caliber senior management 6. Islamic jewelry store 7. Good Credit Ratings

Threats (T)
1. Recession 2.Competition 3.InformationTechnology

Opportunities (O)
1.Islamic jewelry store 2.Strong Financial Position 3.Good Economic Opportunities 4.Core values 5. Corporate Social Responsibility (CSR)

30

Value Chain Analysis

Primar

y Activitie s and Costs

Sales & Origination

Processing

Approval

Acceptance

Documentation

Disbursement & Release

Repayment

Monitoring & Enhancement

Enterprise Transformation Services Group Human Resources


Suppor

t Activitie s and Costs


31

Group Finance Office

Group Credit & Risk Management


Legal, Compliance & Communications

Agenda

1. 2.

Company Introduction External Analysis

3.
4. 5.

Internal Analysis
Islamic Perspective Conclusion & Recommendation

32

Islamic Perspective
An

Islamic managerial leader should serve his followers or subordinates under some distinctive principles as such:
i.

Shura

Managerial

leaders in Islam must consult with their people before making any decision. Allah (Swt) directed his Prophet (Sm) to consult with his companions.
says And those who have answered the call of their lord and establish prayer and who conduct their affairs by consultation and spend out what we bestow on
Allah
33

Islamic Perspective (contd)


ii.

Accountability

Islam

teaches accountability as vital component of management. According to Islam, each and every human being will be made responsible for his good or bad deeds and accordingly he will be rewarded or punished. says whosoever does good equal to the weight of an atom (or a small ant) shall see it. And whosoever does evil equal to the weight of an atom (or a small ant) shall see it. (Surah Az-Zilzal,Verse- 7-8 ).
Allah In
34

addition, Islam places great emphasis on the code of

Agenda

1. 2.

Company Introduction External Analysis

3.
4. 5.

Internal Analysis
Islamic Perspective Conclusion & Recommendation

35

Conclusion & Recommendation

Design

Consumers

are seeking out color, retro glamour and statement pieces More fashion designers are entering

Niche

Market

Marketing

to Mens, Younger adults gay, lesbian

Celebrities

Not

only ads. But also in jewelry collections

Low

jewelry price

Low

end retailer: Wal-Mart, Sears By cutting cost and lower quality goods: discount deeper, thinner margins for cost conscious customer New technology

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