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BPMN3023 STRATEGIC MANAGEMENT

TABLE OF CONTENTS

Contents
Introduction
.2
Background
of
the
company
3
Awards
and
Certifications
..4
Company
Profile
5
Corporate
Structure
7
Financial
Analysis..

..8
Recent
Company
Development..
......................................19
Industry
Profile
and
Analysis
.20
SWOT
Analysis
.21
Internal
Factor
Evaluation
Matrix
..29

(IFAS)...

External
Factor
Evaluation
Matrix
(EFAS)
..30

...

BPMN3023 STRATEGIC MANAGEMENT


TOWS
Matrix
31
Group
Recommendations
38
Conclusion
.40
References
.42

INTRODUCTION
What is Strategic Management?
Strategic management involves the formulation and implementation of the major goals and
initiatives taken by a company's top management on behalf of owners, based on consideration
of resources and an assessment of the internal and external environments in which the
organization competes.
Besides that, Strategic management also provides overall direction to the enterprise and involves
specifying the organization's objectives, developing policies and plans designed to achieve these

BPMN3023 STRATEGIC MANAGEMENT


objectives, and then allocating resources to implement the plans. Academics and practicing
managers have developed several models and frameworks to assist in strategic decision making
in the context of complex environments and competitive dynamics.
Before we move furthers, we should know what means by production industry. Production
industry is a measure of output of the industrial sector of the economy. The industrial sector
includes manufacturing, mining, and utilities. Although these sectors contribute only a small
portion

of

GDP (Gross

rates and consumer

demand.

Domestic
This

Product),
makes

they are

production

highly

industry

sensitive
an

to interest

important

tool

for forecasting future GDP and economic performance.


Besides that, production industry figures are also used by central banks to measure inflation, as
high levels of industrial production can lead to uncontrolled levels of consumption and
rapid inflation.

BACKGROUND OF THE COMPANY


Our group has decided to choose HeveaBoardBerhad Malaysia Company for our group project
assignment.
HeveaBoardBerhad Malaysia is a company that manufacture, trade and distribute a wide range of
particleboard and particleboard-based products.

BPMN3023 STRATEGIC MANAGEMENT


HeveaBoard takes the lead in the manufacturing of particleboard which is a reconstituted wood
panel derived from rubber wood residues, while its subsidiaries are involved in downstream
particleboard based Ready to Assemble furniture manufacturing, trading and distribution of
particleboard and wood panel related products.
This company is in the production industry which is Manufacturer Company. This is because this
company is the one and only company in Malaysia that manufacture the particleboard.
Besides that, this company also supplies for many applications including furniture components,
dining sets, speaker boxes, door manufacturing, office system, and DIY furniture components.
The competitors of this company are Mieco Chipboard Berhad, JayakuikSdnBhd, Segamat Panel
Boards and IKEA. These companies are producing the panel boards.

AWARDS AND CERTIFICATIONS


HeveaBoardBerhad Malaysia also wins the several awards and certifications which are:
I) Winner of ASEAN Energy Award Year 2014
II) Obtained PEFC Certification for Its Good Practice in Sustainable Forest Management
III) Obtained ISO 50001:2011 Certification for Its Excellent Energy Management System
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BPMN3023 STRATEGIC MANAGEMENT


IV) Malaysias First JIS Certified Particleboard Manufacturer
This table had shown the certification that HeveaBoardBerhad Malaysia had:

COMPANY PROFILE
HeveaBoard was incorporated in 1993 as a private limited company under the name of
HeveaBoardSdn Bhd. The Company was converted into a public limited company in 2004 and
assumed its present name, and was subsequently listed on the main board of Bursa Malaysia
Securities Berhad in January 2005.

BPMN3023 STRATEGIC MANAGEMENT


HeveaBoardBerhad is a Malaysian-based firm that operates as an investment holding company
involved in the manufacture and trading of particleboards and wood-related products.
It is a publicly quoted company incorporated in 1993, and has its registered head office located in
Seremban, Malaysia.
The

companys common stock

is

listed

on

the

Kuala

Lumpur

Stock

Exchange.

The company, together with its subsidiaries, offers ready-to-assemble furniture, ranging from
storage shelves and computer tables to flexi-rack under the brand name The Collection.
It serves panel furniture, speaker boxes, and door manufacturing industries.
The companys products are exported to China, Vietnam, India, Korea, Japan, Singapore, Sri
Lanka, Philipines, Hong Kong and Taiwan.
HeveaBoards subsidiaries include HeveaPacSdn. Bhd., which is engaged in manufacturing and
trading of ready-to-assemble furniture; and HeveaMartSdn. Bhd., which is active in the trading
of particleboards and other panel boards.

The HeveaBoardBerhad Company and its subsidiaries manufacture, trade and distribute a wide
range of particleboard and particleboard-based products. HeveaBoard takes the lead in the
manufacturing of particleboard which is a reconstituted wood panel derived from rubber wood
residues, while its subsidiaries are involved in downstream particleboard based ready-toassemble furniture manufacturing, trading and distribution of particleboard and wood panel
related products.
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BPMN3023 STRATEGIC MANAGEMENT


HeveaBoardBerhad Malaysia have corporate mission which are to:

1) ENHANCED GROWTH

Strive to maximize the usage of rubber wood residues

Increase the capacity for particleboard and value added finished products

Create more high skill employment opportunities for Malaysians

2) EFFICIENCY

Apply innovations and research to lower production cost

Increase efficiency through energy-saving bio-mass plant

3) EARNINGS

Optimize returns for shareholders of HeveaBoard through enhanced growth and


efficiency

CORPORATE STRUCTURE OF HEVEABOARD BERHAD MALAYSIA


Corporate structure is a grouping of different positions and departments within a company, which
all have separate tasks but work together to operate as one company.

BPMN3023 STRATEGIC MANAGEMENT


HeveaBoardBerhad Malaysia have the corporate structure from how their manufacturing and
trading the particleboard until the dormant. This table will shown the corporate structure of
HeveaBoardBerhad Malaysia.

FINANCIAL ANALYSIS

Financial Ratio

2013 (RM 000)

2012 (RM 000)


8

2011 (RM 000)

BPMN3023 STRATEGIC MANAGEMENT


Liquidity Ratio
158507

135178

129632

121636

108851

102705

= 1.3 times

= 1.24 times

= 1.26 times

191401

202825

229745

Assets 422455

411400

423767

= 45.31 %

= 49.3 %

= 54.21 %

389507

372597

373049

Inventory Turnover

66893

61690

67664

Sales

= 5.82 times

= 6.04 times

= 5.51 times

22459

15477

3341

Net Profit Margin

389507

372597

373049

Net Income

= 5.77 %

= 4.15 %

= 0.89 %

Current Ratio

Current Asset
Current Liability
Leverage Ratio

Debt-to-Total
Ratio

Total Debt
Total Asset
Activity Ratio

Inventory
Profitability Ratio

Sales
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BPMN3023 STRATEGIC MANAGEMENT


Growth Ratio

Revenue

Annual

(373049 372597)

(372597 389507)

(389507 363137)

372597

389507

363137

= - 4.34 %

= 7.2 %

Percentage = 0.12 %

Growth in Revenue

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BPMN3023 STRATEGIC MANAGEMENT


Current Ratio
Year
Current Asset
Current Liabilities
Current Ratio

2011 (RM 000)


129632
102705
1.26

2012 (RM 000)


135178
108851
1.24

2013 (RM 000)


158507
121636
1.3

Current Ratio
1.31
1.3
1.29
1.28
1.27
1.26
1.25
1.24
1.23
1.22
1.21

2011

2012

2013

Current Ratio

The current ratio is the ability of the company to pay back its short-term liabilities such as
debt and payables using its short term assets like cash, inventory and receivables. It also known
as liquidity ratio, cash asset ratio and cash ratio. The current ratio is mainly used to bring
an idea of the companys ability to pay back its short-term liabilities which includes debt and
payables with its short-term assets which is cash, inventory, and receivables. This means, the
higher the current ratio, the more capable the company is of paying its obligation and debt.
According to the current ratio analysis above, we can find that HeveaBoardBerhads
current ratio has decreased from 1.26 times in 2011 to 1.24 times in 2012 which decrease of 0.02
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BPMN3023 STRATEGIC MANAGEMENT


times. In 2012, it has drastically change to increase to 1.3 times which higher than both year
before. Thus, this means that HeveaBoardBerhad is both increase and decrease liquid. Yet, it also
still for HeveaBoardBerhad capable to cover and pay its short-term liabilities with its shortterm assets. The increase in the current liabilities is mainly cause to the increase of liabilities
which include payables and debt constantly from 2011 to 2013.

Debt-to-Total-Asset Ratio
Year
Total Asset
Total Liabilities
Debt-to-Total Assets Ratio

2011 (RM 000)


423767
229745
54.21 %

2012 (RM 000)


411400
202825
49.3 %

2013 (RM 000)


422455
191401
45.31 %

Debt-to-Total-Asset Ratio
56
54
52
50
48
46
44
42
40

2011

2012
Debt-to-Total Asset (%)

12

2013

BPMN3023 STRATEGIC MANAGEMENT


Total debt to total assets is a leverage ratio that 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 higher the degree of leverage, and consequently, financial risk. This is a broad ratio
that includes long-term and short-term debt such as borrowings maturing within one year, as well
as all assets including tangible and intangible.
In 2011, it was 54.21% which its total debt half of its total asset decrease slightly to
49.3% in 2012 then it constantly decrease to 45.31% in 2013. This indicate that the decreasing of
its total debt in 2011 to 2013 by its creditor. Thus, this will decrease the risk of the company like
loans for new projects may be easy to obtain due to decreasing of its liabilities.

Although, there is decrease in its total assets in 2012 but it is only a slight decrease in
2.91%. HeveaBoardBerhad still has a strong financial standing as this can be seen in 3 years
respectively. The decrease in total debt is due to the increasing in total asset that can be cover to
the total debt and the remaining of the asset such as long-term asset can reduce its dependent on
other creditors.

Inventory Turnover
Year
Sales
Inventory
Inventory Turnover

2011 (RM 000)


373049
67664
5.51 times

2012 (RM 000)


372597
61690
6.04 times

13

2013 (RM 000)


389507
66893
5.82 times

BPMN3023 STRATEGIC MANAGEMENT


Inventory Turnover
6.1
6
5.9
5.8
5.7
5.6
5.5
5.4
5.3
5.2

2011

2012

2013

Inventory Turnover

A ratio showing how many times a companys inventory is sold and replaced over a
period. The days in the period can then be divided by the inventory turnover formula to calculate
the days it takes to sell the inventory on hand or inventory turnover days. This ratio should be
compared against industry averages. A low turnover implies poor sales and, therefore, excess
inventory. A high ratio implies either strong sales or ineffective buying. High inventory levels are
unhealthy because they represent an investment with a rate of return of zero. It also opens the
company up to trouble should prices begin to fall.
Based on the analysis, we can see that it was 5.51 times in 2011 and it aroused to 6.04
times in 2012. However, it declined to 5.82 times in 2013 but it still more than 2011. This
represents that HeveaBoardBerhad is performing well and efficient in controlling inventory
levels.Eventhough it shows decline in its inventory turnover in 2013, but in its sales and

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BPMN3023 STRATEGIC MANAGEMENT


inventory are increasing. In 2012, the companys inventory turnover had decreased as its
revenue, RM 372,597,000, decrease of 0.12%. This was mainly due its satisfactory level of
performance decreasing among employee in HeveaBoardBerhad.
Net Profit Margin
Year
Net Income
Sales
Net Profit Margin

2011 (RM 000)


3341
373049
0.89 %

2012 (RM 000)


15477
372597
4.15 %

2013 (RM 000)


22459
389507
5.77 %

Net Profit Margin (%)


7
6
5
4
3
2
1
0

2011

2012

2013

Net Profit Margin (%)

A ratio of profitability calculated as net income divided by revenues or net profits divided
by sales. It measures how much out of every dollar of sales a company actually keeps in
earnings. Profit margin is very useful when comparing in similar industries. A higher profit

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BPMN3023 STRATEGIC MANAGEMENT


margin indicates a more profitable company that has better control over its costs compared to its
competitors. It also known as net profit margin.
HeveaBoardBerhad had recorded a 0.89% of net profit margin in 2011 and it rose to
4.15% in 2012. Furthermore, it still increases to 5.77% in 2013. This indicates that the company
is slightly efficient in converting sales into actual profit in those years as it over RM 22,459,000
in profits after paying all the firms expenses compared to RM 3,341,000 in 2011. The significant
increase of the net profit margin from 2011 to 2013 was mainly due to the earnings growth and
higher margins in the companys inventory and production.
Revenue Growth Rate
Year
2011 (RM 000)
Change in Revenue
26370
Previous
Year 363137

2012 (RM 000)


-16910
373049

2013 (RM 000)


452
372597

Revenue
Revenue Growth Rate

- 4.34 %

0.12 %

7.2 %

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BPMN3023 STRATEGIC MANAGEMENT


Revenue Growth Rate (%)
8
6
4
2
0

2011

2012

2013

-2
-4
-6
Revenue Growth Rate (%)

The amount of increase that a specific variables has gained within a specific period and
context. For investors, this typically represents the compounded annualized rate of growth of a
companys revenue, earnings, dividends and even macro concepts such as the economy as a
whole. The use of historical growth rates is one of the simplest methods of estimating future
growth. However, historically high growth rates dont always mean a high rate of growth looking
into the future, because industrial and economic conditions change constantly.
Based on the graph, HeveaBoardBerhads revenue growth rate 7.2% in the year 2011 and
it has achieved a -4.34% in 2012. Then in the year 2013, it has demonstrated a slightly increase
to 0.12%. This shows that the companys revenue decline after have high revenue growth in
2011. It can also mean that its performance is getting decline throughout the years.

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BPMN3023 STRATEGIC MANAGEMENT


In conclusion, the financial performance of HeveaBoardBerhad is having slightly good
and sometimes had low performance especially in their revenue growth rate. It should
demonstrate more better for next future in order to obtain higher margins of profits. Although the
companys total asset have increase year by year but its performance have seen as low and need
to be push higher performance than previous year.

RECENT COMPANY DEVELOPMENTS


On 10 February 2015, HeveaBoard shares up following CIMBs coverage. The share of
the company rise up at mid- afternoon on Tuesday after CIMB Research initiated coverage on
the stock with an Add recommendation and a target price of RM4.06. then at 4.14p.m, the
share rise 31sen to RM2.50 with some 6.3 million shares done between RM2.42 and RM2.55.

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BPMN3023 STRATEGIC MANAGEMENT


In 2014 HeveaBoardBerhad Malaysia proudly receives the ASEAN Best Practices
Awards for Energy Management in Buildings and Industries for the Industry Special Submission
Category from the ASEAN Energy Awards 2014 (AEA) that held on 23rd September 2014 at
Don Chan Palace Hotel, Vientiane, Lao PDR. ASEAN Centre for Energy (ACE) is an
intergovernmental organization established by Brunei, Cambodia, Indonesia, Laos, Malaysia,
Myanmar, Philippines, Singapore, Thailand and Vietnam. It is guided by Governing Council
composed of the Senior Officials on energy of the ASEAN countries and a representative from
the ASEAN Secretariat.
Besides that, in 2013 HeveaBoardBerhad successfully obtained PEFC certification for
its good practices in sustainable forest management in which complying with PEFC requirement
to ensure timber and non-timber forest products are produced with respect for the highest
ecological, social and ethical standards. The Programme for the Endorsement of Forest
Certification (PEFC) is an international, non-profit, non-governmental organization which
promotes sustainable forest management through independent third party certification.

In May 2013, this company successfully obtained CARB (California Air Resources
Board) certification which complying with applicable emission standard in section 93120.2(a)
phase 2 from PT MUTUAGUNG. Lastly, in October 2011, HeveaBoard successfully
obtained ISO 14001, OHSAS 18001 and MS 1722 by SIRIM QAS.

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BPMN3023 STRATEGIC MANAGEMENT

INDUSTRY PROFILE AND ANALYSIS


HeveaboardBerhad include in production industry (manufacturing) which are
manufacturing and trading of particleboards and wood-related products investment holdings.
Manufacturing Industry in Malaysia has established a diverse and quickly-growing
manufacturing sector that plays an increasing role in Malaysian economy. Manufacturing
contributes about 29 percent of the GDP, providing employment to 2.3 million people or 27

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BPMN3023 STRATEGIC MANAGEMENT


percent of the workforce (1999). From the late 1970s, the proportion of GDP provided by the
manufacturing sector in Malaysia grew from 20.2 percent in 1979 to around 29 percent in 1999.
Malaysia started built up its production sectors around in year 1970s and 1980s. The industrial
sector initially consisted of oil refining, machinery assembly, and light industries (including
foodstuff processing and textile manufacturing).
From the research, Malaysias production industry in furniture and wooden-related has
achieved export of furniture in global ranking (no.10) between year 2006 until 2011. In 2011 and
2012, for export timber and wooden products Malaysia are major supply in furniture and
plywood to others country. Ranked as the 10th largest exporter of furniture in the world,
Malaysia exports around 80% of its production. With large markets in US, Japan and Australia,
Malaysia has a strong position in the global furniture industry. With tremendous growth in
exports to UAE, Saudi Arabia, the Philippines and Russia, Malaysia is now eyeing countries like
Algeria, Greece, Puerto Rico and Libya.Malaysia has always been known for its wood based
furniture, owing to its natural resources. Malaysias government also plays a big role in nurturing
the industry. Providing Pioneer Status for tax exemption and Investment Tax Allowance, the probusiness environment makes doing business easier and faster.
SWOT ANALYSIS

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BPMN3023 STRATEGIC MANAGEMENT


STRENGTHS

WEAKNESSESS

1.Good sales record in HeveaBoardBerhad

1.Weak at online purchasing products

2.Largest integrated particle board


manufacturer

2.No price placed on products in companys

3.Strong US$ driven earnings momentum


and attractive valuation

website
3. Furniture production generates waste

4.Proudly awarded as ASEAN Best Practices


Awards for Energy Management and
Industries
5.Successfully obtained PEFC
OPPORTUNITIES
1.High demands of furniture stocks in West
and Asia countries
2.Exposed to new market with global trade
and investment
3.The emergence of Next-Shoring

THREATS
1.The impacts of GST at goods product
2.Competition from others competitors
3.Economic risk from various aspects
4. Threat from ASEAN Economic Community
2015

STRENGTHS

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BPMN3023 STRATEGIC MANAGEMENT


1. Good sales record in HeveaBoardBerhad
Based on sales analysis, HeveaBoard reported sales of RM 422.36 million for the year
ending December of 2014. This represent an increase of 8.4% versus of year 2013, when the
company sales RM 389.51 million. Besides that, gross profit margin increased 1.13% for the
period to 20.01 million (17.38% of revenues) from 19.79 million (18.82% of revenues) for
the same period last year. Gross profit margin increased 11.80% for the year-to-date period to
63.20 million (14.96% of revenues) from 56.53 million (14.51% of revenues) for the
comparable 12 month period last year.

2. Largest integrated particle board manufacturer


HeveaBoardBhd, Malaysias largest integrated particle board manufacturer, has secured a
RM22million contract from Boloni, Chinas leading provider of home furniture solutions.
HeveaBoard said in a statement it would supply Boloni with 1,000 forty-feet containers a year
of emission zero-grade particle boards.

3. Strong US$ driven earnings momentum and attractive valuation

Based on CIMB Equities Research, they has advised investors to remain invested in
particleboard manufacturer of Heveaboard. They had given statement such as We like
Hevea for its strong US$-driven earnings momentum and attractive valuations. The meaning
of order in earnings momentum is to drive strong of the stock.

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BPMN3023 STRATEGIC MANAGEMENT


4. Proudly awarded as ASEAN Best Practices Awards for Energy Management and
Industries

HeveaBoardBerhad Malaysia proudly receives the ASEAN Best Practices Awards for
Energy Management in Buildings and Industries for the Industry Special Submission
Category from the ASEAN Energy Awards 2014 (AEA). A sole Malaysian company who
wins the ASEAN Best Practices Awards for Energy Management in Buildings and Industries
during the ASEAN Energy Awards 2014 held on 23rd September 2014 at Don Chan Palace
Hotel, Vientiane, Lao PDR. ASEAN Centre For Energy (ACE) is an intergovernmental
organization established by Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar,
Philippines, Singapore, Thailand and Vietnam. It is guided by Governing Council composed
of the Senior Officials on energy of the ASEAN countries and a representative from the
ASEAN Secretariat.
5. Successfully obtained PEFC (Programme for the Endorsement of Forest
Certification)
HeveaBoard successfully obtained PEFC (Programme for the Endorsement of Forest
Certification) certification which complying with the good practice in the forest and to ensure
that timber and non-timber forest products are produced with respect for the highest
ecological, social and ethical standards. PEFC is the world's largest forest certification
system. Their credible standards seek to transform the way forests are managed globally
and locally - to ensure that all of us can enjoy the environmental, social and economic
benefits that forests offer.

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BPMN3023 STRATEGIC MANAGEMENT


WEAKNESSESS
1. Weak at online purchasing products
Based on our observation we noticed that there are no online purchasing system appear at
their website if customers interested to buy things via online compared to others competitors
such as IKEA they provide online purchasing to their customers if customers do want go to
their outlets. So, it can be a weakness for the company if they still not apply this online
purchasing system to expand their market and compete with existing competitors.
2. No price placed on products in companys website
Many of company have narrow perspective if they put prices on product their competitors
will able to see the price and undercut them. That perspective are totally wrong and actually
the price can build trust on customer and convince them to use the product. Other than that, it
can save you time because it stops prospects or customers from contacting you that may not
want to pay a higher price for value.
3. Furniture production generates waste
As in many other industrial processes, furniture production produces waste (e.g. waste
from wood processing and the production of panels and furniture, wood preservation wastes
and wastes from the use of paints and varnishes).
In this context, furniture producers have to comply with NATIONAL FORESTRY ACT
1984. This lays down measures to protect the environment and human health by preventing or
reducing the adverse impacts of the generation and management of waste and by reducing
overall impacts of resource use and improving the efficiency of such use.
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BPMN3023 STRATEGIC MANAGEMENT


OPPORTUNITIES
1. High demands of furniture stocks in Asia countries
In China, as living conditions continue to improve, people are becoming more
willing to invest their money in home decoration to fulfil their satisfaction. Peoples
increasing purchasing power has determined the furniture marketplace to progress in leaps
and bounds. From 2010 to 2013, the sales value of wholesalers and retailers above a
certain scale in the industry grew at an average annual rate of 41%.

According to statistics, there were about 438.93 million households in all areas,
autonomous regions and towns directly under the central government in the Chinese
mainland. Based on the assumption that people would change their home furniture once
every 10 years, around 44 million households would replace their furniture each year. So
that, Heveaboard can takes this opportunity to enter Chinas market to expand their
industry in Asia countries.
2. Exposed to new market with global trade and investment (Globalization)
Today, products are no longer made in one place from start to finish. Instead, they are
assembled over a long series of individual steps often located in different parts of the
world. The description Made in one single country is now the exception rather than the
rule. This means that we need to have a more sophisticated approach to exports and
imports

than

seeing

finished

goods

as

simply

entering

or

leaving

country.Heveaboardshould process from the beginning and make sure all the
raw materials are made in Heveaboard itself.

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BPMN3023 STRATEGIC MANAGEMENT

There are many advantages if Heveaboard exporting their products outside the
country. It can increase sales, increase profit and increase the production. Other than that, it
also can give improvements in performance and competitiveness. Besides, exporting also
can avoid the reduction in dependence on local markets.
3. The emergence of Next-Shoring
Next-shoring strategies include elements such as a diverse and active set of
production locations, a rich network of innovation-oriented partnerships, and a strong
focus on technical skills. The key factor on this opportunity is for low labor-costs. This is
strategy in which a company sources materials from countries with lower labor and
production costs in order to cut operating expenses. For example, this company can hire
employees with low labour costs with high technical skills such as employees from India.

THREATS
1. The impacts of GST at goods product
Even though the government claims that the GST would not hurt businesses due to
GST claimable practice, in fact it will hurt the businesses too. This is because of the low
demand in the market due to the high cost of product pass to the end consumers, the
businesses have to decrease the supply to meet the current condition of lower demand, thus
the businesses have to cut down the expenses such as labor cost due to the lower output
needed and eventually there might occur high rate of unemployment.
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BPMN3023 STRATEGIC MANAGEMENT

Besides, the businesses are not producing in the effective situations as they are not
maximizing the usage of the machines, rental and all these will lead them to downsize their
businesses and finally lead to the declines in a country.
So that, it can give bad impact towards Heaveaboard company. Their sales will
decrease due to low demand of customers because the high cost of raw materials.
2. Competition from others competitors
The close competitor of Heveaboard is IKEA. This is due to customer knowledge
about IKEA is more than Heveaboard. Everyone knows about IKEA products and they know
IKEA will constantly using innovations to drive costs down. Heveaboard cannot cut down
the price because they are still using high quality materials and they want to control the
quality of their products in terms of their good source raw materials.
3. Risk from various aspects
Companies are exposed to economic risk from various aspects of the overall
economy. Weakness in the economy, specific markets, industries or demographic groups can
cause sudden drops in demand for particular goods or services. Political risk represents the
financial risk that a country's government will suddenly change its policies. This is a major
reason why developing countries lack foreign investment. For example, if Malaysia increase
exports tariffs it will affect the company to penetrate their product globally.

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4. Threat from ASEAN Economic Community 2015


An ASEAN leader is to figure and endorse an integrated market and production base; a
highly competitive economic region tempered with equitable development; and a region
fully integrated into the global economy. ASEAN nations (Association of Southeast
Asian Nations) preliminary a free regional labor market for skilled workers and
professionals which will be starting on 2015. One of the aims of ASEAN 2015 would be a
healthy and see-through labor market thus hitting a mark on globalizing trend. As there
would be a good inflow and outflow of workers, we will be able to invite the best domestic
talent; the competitiveness will increase job performance and working skills. So that, the
company will recruit labors from other countries with low labor cost.Moreover, they can
minimize the labor cost and increase the production if their can find the talent labor with
good skills. So, it can be threat for the company if they still use domestic labor with
average skills, compared to other competitors using international labor with low labor cost.

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INTERNAL FACTOR EVALUATION MATRIX (IFAS)
No.

Strength

Weight

Rating

Weighted

1.

Largest integrated particle board

0.20

score
0.80

2.

manufacturer.
Strong US$ driven earnings momentum and

0.15

0.60

3.

attractive valuation.
Successfully obtained PEFC(Programme for

0.10

0.30

4.

the Endorsement of Forest Certification).


Proudly awarded as ASEAN Best Practices

0.10

0.30

0.10

0.30

Weight

Rating

Weighted

Awards for Energy Management and


5.

Industries.
Good sales record in HeveaBoardBerhad

No.

Weakness

1.
2.

Furniture production generates waste.


No price placed on products in companys

0.10
0.15

1
2

score
0.10
0.30

3.

website.
Weak at online purchasing products which is

0.10

0.20

e-commerce.
TOTALS

1.00

30

2.90

BPMN3023 STRATEGIC MANAGEMENT


EXTERNAL FACTOR EVALUATION MATRIX (EFAS)
No.

Opportunities

Weight

Rating

Weighted

1.

High demands of furniture stocks in West and

0.25

score
1

0.15

0.60

0.10
Weight

2
Rating

0.20
Weighted

Asia
2.
3.
No.

countries

since

living

conditions

continues to improve.
Exposed to new market with global trade and
investment (Globalisation)
The emergences of Next Shoring
Threat

1.

The impacts of GST (Government Service

0.10

score
0.20

2.
3.
4.

Tax) for goods product.


Competitions from other countries.
Economy risk from various aspects.
Threat from ASEAN Economic Community

0.10
0.15
0.15

1
2
3

0.10
0.30
0.45

2015.
TOTALS

1.00

31

2.55

BPMN3023 STRATEGIC MANAGEMENT


TOWS MATRIX
IFAS

STRENGTH

WEAKNESS

EFAS

Largest integrated particle


board manufacturer.
Strong US$ driven earnings
momentum and attractive
valuation.
Successfully obtained
PEFC(Programme for the
Endorsement of Forest
Certification).
Proudly awarded as ASEAN
Best Practices Awards for
Energy Management and
Industries.
Good sales record in
HeveaBoardBerhad

Furniture production
generates waste.
No price placed on
products in companys
website.
Weak at online
purchasing products
which is e-commerce.

OPPORTUNITIES

SO

WO

1. Use their current market


position to promote more the
product.

1. Start online purchasing to


ease the customer.

High demands of
furniture stocks in
West and Asia
countries since living
conditions continues
to improve.
Exposed to new
market with global
trade and investment
(Globalization)
The emergences of
Next Shoring

2. Use their strong US$ driven


earnings momentum to joint
venture with Swiss Krono
Group which is from Russia.

2. Joint venture with


company that recycle the
waste.

THREATS

ST

WT

1. Improve the brand awareness


among customers.

1. Produce the product at


Indonesia to cut the cost.

2. Do strategic alliances with


IKEA to sell the product at

2. Make an attractive
website and state the

The impacts of GST


(Government Service
Tax) for goods
product.
Competitions from

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BPMN3023 STRATEGIC MANAGEMENT

other countries.
Economy risk from
various aspects.
Threat from ASEAN
Economic
Community 2015.

the IKEA because IKEA


already have strong brand
name.

price to attract customers.

TOWS MATRIX
The Threat, Opportunities, Weaknesses, Strength (TOWS) matrix is the most widely uses as
strategic planning matrix by company. The strategic are divided from an organizations external
opportunities or threat and internal strength or weaknesses. The company needs to use its
strength to capitalize an opportunity and improve upon weaknesses and avoid threat. There are
four strategy quadrants labeled SO, WO, ST and WT which is a strategy that would benefit for
the company.
Strenght and Opportunities
1. Use their current position to promote more the product.
HeveaBoardBerhad has largest integrated particle board manufactured and that will give
the opportunity to the company to promote their company. This is because, the company
does not have a strong brand name yet although it already success in board manufacture.
As we know, strong brand name is the most important in doing business to make
customer aware with our company.

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BPMN3023 STRATEGIC MANAGEMENT


2. Use their strong US$ driven earnings momentum to joint venture with Swiss Krono
Group which is from Russia.
Earning momentum typically coincides with accelerating revenues and expanding
margins caused by increased of sales, cost improvements or overall market expansions.
Therefore, when HeveaBoardBerhad have strong US$ driven earning momentum it
showed that the company have a good sales. So, HeveaBoardBerhad can take this
opportunity to joint venture with Swiss Krono Group which is one of the biggest
manufactures of wood in Russia. As we know, the Russian unit of currency is the ruble
but its possible to purchase items in Russia with US dollar bills. However, bills must be
new and current. By doing the joint venture, HeveaBoard can go to Russia market and
increase the share.
Weaknesses and Opportunities
1. Start online purchasing to ease the customer.
HeveaBoardBerhad only have physical factory and the company does not have online
purchasing. As we know, online purchasing is very important nowadays because
customer would like to buy the product anytime and everywhere without going to the
store. If the company starting online purchasing, it will increase the sale and it ease
the customer from other country because they can see and buy the product at their
place. Other than that, HeveaBoardBerhad already have high demand of furniture
stocks in West and Asia countries since living conditions continues to improve.
Therefore, online purchasing is benefits for the customer in West and Asia countries.
2. Joint venture with company that recycle the waste.
HeveaBoardBerhad is produced a furniture so it also generates a waste that is not good
for environment. Therefore, HeveaBoard should take opportunities of ASEAN Economy
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BPMN3023 STRATEGIC MANAGEMENT


Community 2015 by joint venture with company that recycle the waste such as LHT
Holdings Limited in Singapore. LHT has established the Singapore's first wood waste
recycling plant that produces high quality products that are consistent in colour, texture
and high density. The products are therefore ideal for furniture, building material and
heavy-duty industrial usage. The constitute wood is known as Greenflo Technical Wood.

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BPMN3023 STRATEGIC MANAGEMENT


Strength and Threats
1. Improve the brand awareness among customers.
HeveaBoard have a good reputation in share market but still the brand is still not popular
among customers and this is because the promotion is not that good. Therefore,
HeveaBoardBerhad should use more money to activities that can improve the brand
awareness since the sales of the company is became better and better. Therefore,
HeveaBoardBerhad can use artist endorsement to make the customer aware of the brand.
Nowadays, artist endorsement is very important because they are the icon for the
customer. The customer will always attract with the brand if their favorite artist is using
it. As example, HeveaBoard can sponsor the furniture for the artist that own a boutique
because nowadays it is a trend that artist open their own boutique. Therefore, this will
make the customer alert with brand whenever they go and use the product.
2. Do strategic alliances with IKEA to sell the product at the IKEA because IKEA
already have strong brand name.
IKEA is the most popular company in Malaysia that sell a nice furniture and also have
their own way which is, the customer need to assemble the furniture by themselves.
Therefore, HeveaBoard should do the strategic alliances with IKEA to face the
competitor from other countries because by doing this, HeveaBoardBerhad can sell the
product at the IKEA. Other than that, this strategy can make the customer aware of the
brand because a lot of people will go to IKEA each day although they are not buying
anything. This is because, IKEA have their own attraction and family would love to shop
at IKEA because IKEA provide a room to play, to eat and to shop. So, family can shop
easily and spend time with family there.
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BPMN3023 STRATEGIC MANAGEMENT


Weaknesses and Threats

1. Produce the product at Indonesia to cut the cost.


As we know, Malaysia will do Government Service Tax (GST) starting this year and
somehow it effecting the sales because the price for the customer will higher. Although
its only 6%, it will increase the price more than that because it is 6% for every supplier.
Therefore, we suggest HeveaBoardBerhad to produce the product at Indonesia to cut the
coast. This is because, Indonesia is one of the world top then timber producing countries
and wood is from timber so HeveaBoard can use ASEAN Economy as opportunity to go
to Indonesia. Other than that, the currency in Indonesia is lower than Malaysia and also
they can use the labor from there. If HeveaBoard can cut the cost, they can sell at lower
price or the same price before GST implication.
2. Make an attractive website and state the price to attract customers.
Most of the wood company does have unattractive website because they are not sell the
product online so the customer will not go to the website. But, as we know, website is
important to attract the customer because customer will surf the internet first before go to
the store to shop. So, we suggest HeveaBoardBerhad to make a team or hire one person
that has an experience in build a website. They can build a website that simple but
attractive for all people around the world. Other than that, HeveaBoardBerhad must state
the price to make it easier for the customer to make decision either they would like to buy
or not. At the same time, whenever customer go to the website and click the link it will
increase the probability in engine search. So, it will make HeveaBoard website easily and
fast to find.
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BPMN3023 STRATEGIC MANAGEMENT

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BPMN3023 STRATEGIC MANAGEMENT


GROUP RECOMMENDATIONS
The recommendations were made for potential strategy for the future through the analysis
of the external and internal factors that has been done for HeveaBoardBerhad. Through
the analysis, the external opportunities and threats were listed and the main opportunities
identified were its focus on develop the brand name and make customer aware of the
brand. While the internal strengths and weaknesses were focus on e-commerce.
Based on the table above, TOWS matrix is illustrate strategies choices available to
HeveaBoardBerhad from the analysis from its strength, weaknesses, opportunities and
threat that arise from its external and internal environment. From the TOWS matrix, we
found the best strategic option for HeveaBoardwhish is:
1. Improve the brand awareness among customers.
As we know, HeveaBoard have strong share in market and also have a lot certificate but
the brand still not popular among customer nowadays. Therefore, HeveaBoardBerhad
must improve the brand awareness among customers to have a better future. If the brand
name already in the mind of the customer then HeveaBoard can focus more on their
product than the marketing. Therefore, HeveaBoard can do a sponsor in term of place to
do and event such as an innovation conferences and events in Kuala Lumpur.
HeveaBoard can provide the place for that event and use the furniture from HeveaBoard.
Other than that, HeveaBoard can do a campaign about the wood product to make the
customer aware and know the benefits of the HeveaBoards products.
2. Start online purchasing.
As we know, e-commerce is one of best way for customer to buy the product anywhere
and every time they would like to buy. Therefore, HeveaBoard should start make a good
website and use e-commerce as one the transactions in buying their products. By doing
this, HeveaBoard can ease the customer and will make the probability to by the product
39

BPMN3023 STRATEGIC MANAGEMENT


higher because customer nowadays would like to buy a lot of things but do not want to go
outside to buy it. So, HeveaBoard should take this opportunity to start online purchasing
because most of the wood company does not have online purchasing.

CONCLUSION
As conclusion, we had choice HeveaBoardBerhad as our company for this project and
HeveaBoardBerhad Malaysia is a manufacturing company for wood that based in Malaysia
which is in Seremban. There are few competitors for this company that producing panel boards
which are Mieco Chipboard Berhad, JayakuikSdnBhd and also Segamat Panel Board. All of
them are a direct competitor and for indirect competitor is IKEA because IKEA sell the same
product but the wood is different. HeveaBoardBerhad had a lot of certificate and it is the largest
integrated particle board manufacturer. Also, HeveaBoardBerhad is the first company that got the
JIS Certified Particleboard Manufacturer. Therefore, HeveaBoardBerhad is popular among
manufacturer market but not among customer because lack of marketing.HeveaBoards
subsidiaries include HeveaPacSdn. Bhd and HeveaMartSdn. Bhd. which is engaged in
manufacturing and trading of ready-to-assemble furniture and also active in the trading of
particleboards and other panel boards. In this project, we had found the SWOT analysis for the
40

BPMN3023 STRATEGIC MANAGEMENT


company and also we did TOWS matrix for the company to implementation it in future. For the
SWOT analysis, we found out than HeveaBoard have strong share market but the brand name
still not popular especially in Malaysia which is their home country and also there are a lot of
competitor nowadays especially when ASEAN Economy Community 2015 start implicated. At
the same time, HeveaBoard is lack in e-commerce which is very important nowadays because its
make the life of the customer easier. Other than that, we also did an analysis for financial and
from the analysis, we found out that HeveaBoardBerhad is performing well and efficient in
controlling the inventory levels. At the same time, the net profit margin is getting high and higher
from 2011 to 2013 so it shows that the earnings growth is getting higher and better.

REFERENCES
http://www.kronostar.com/eng/Company
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http://www.facebook.com/l.php?u=http%3A%2F%2Fqualityinspection.org%2Fmalaysiaproduction%2F&h=WAQEqhwwn
Kerry. K, Before You Go: Russia Travel Basics
Retrieved from: http://goeasteurope.about.com/od/russia/bb/russianbasics.htm
Waste Disposal
Retrieved from: http://www.lht.com.sg/waste.htm
Bel. B, (15 January 2015), 8Ways To Increase Your Brand Awareness In 2015
Retrieved from: http://www.eventbrite.co.uk/blog/8-ways-to-increase-brand-awareness/
IKEA services
Retrieved:http://www.ikea.com/ms/en_MY/customer_service/ikea_services/childrens_ser
vices/index.html
Earnings Momentum
Retrieved from: http://www.investopedia.com/terms/e/earnings_momentum.asp
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World Top 10 Timber Producing Countries
Retrieved from: http://www.mapsofworld.com/world-top-ten/countries-with-most-timberproducing-countries.html

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