The Lee Rubber Company:

A Case Study of

A Singapore-Based Chinese-Owned

Transnational Corporation

______________________

A Written Analysis of a Case

Submitted to

DR. LUZ B. UN
Professor

BUKIDNON STATE UNIVERSITY

Malaybalay City

___________________________

In Partial Fulfillment
of the Requirements for the Course
BUSINESS POLICY & DECISION MAKING
(BUS 104)

by

KUH IVY MAE N. CABUNOC

I. The Facts of the Case
 Lee Rubber Company (Pte) Ltd. is one of the few large rubber companies
incorporated in Asia.
 The Lee Rubber Company Ltd was first incorporated in the Straits Settlement
on 9th December 1931 under the Ordinance No. 155. Singapore was part of
the Straits Settlement at this time of incorporation.
 Lee Rubber Company started its operations in 1928. Its activities were stated
in the Articles of Incorporation as rubber planters and manufacturers, brokers,
agents, merchants, importers, exporters, and dealers in rubber and rubber
goods and related goods.
 Nominal capital of the company was $500,000 consisting of 5,000 shares each
worth $100 at the time of incorporation.
 In 1932, the largest shareholder was Mr. Lee Kong Chian with 3,123 shares
which represented 62% of the 5,000 shares taken up.
 The nominal capital was further increase in 1953 to $10.1m and in 1957, the
nominal capital doubled.
 Since its incorporation, the Company has expanded its nominal capital by
more than one hundred times while issued capital has increased almost by
eighty-one times.
 Subsidiaries have been established namely: Lee Latex, Tropical Produce, Lee
Plantations, Kota Trading, Lian Hin Rubber, United Gee Seng and Kallang
Rubber which was established between 1947 and 1951. Lee Rubber
(Selangor) was incorporated in 1962 in Malaysia.
 Lee Plantations is primarily an estate management company.
 All subsidiaries except for Lee Plantations are engaged in rubber processing
activities.
II. The Problem/s
How can the Lee Rubber Company particularly the subsidiaries in Malaysia
sustain the supply of raw rubber for their production despite the restricted supply
of raw rubber to the open market and increased competition for raw rubber
produced by small holder

III. The Causes of Problem/s

1. Potential entrants
2. Stiff competition
3. Fluctuation of exchange rate
4. Lower prices of substitutes
IV. Alternative Courses of Action

1. The Lee Rubber Company particularly the subsidiaries in Malaysia must

invest in plantations to ensure an adequate supply of raw materials.
Advantage:
 The Lee Rubber Company will surely have an adequate supply of raw
materials.
 They can also be a potential supplier of other companies that needs rubber as
their raw material and that would mean additional income for the company.

Disadvantage:

 Plantations require heavy expenditures and practical experience.

 It would require greater time and effort to establish a plantation.
 Greater costs will surely be incurred by the company in establishing a
plantation

2. Lee Rubber Company particularly its subsidiaries in Malaysia must

engage in importation of rubber from neighboring countries like
Thailand and Indonesia to sustain the supply of rubber for their
production.
Advantage:
 Lee Rubber Company would not struggle anymore in finding the supply of
rubber in Malaysia.
 Lee Rubber Company can compare the price of rubber in Malaysia and outside
the country, so they can choose who among the suppliers offers the cheapest
rate without sacrificing the quality of rubber.

Disadvantage:
 There is no assurance that the suppliers outside the country would prioritize the
Lee Rubber Company.
 It would be difficult to find a foreign supplier because some may already be
engaged in trade agreements from other buyers.

3. Lee Rubber Company must look for a potential substitute to natural

rubber like the synthetic rubber.
Advantage:
 Synthetic rubber can be a potential substitute for natural rubber and it is way
cheaper in cost.
  Synthetic rubber has several advantages like its resistance to oil and
certain chemicals.
 Synthetic rubber last longer compared to natural rubber.

Disadvantage:
 There is no assurance with regard to the quality of output.
 Lee Rubber’s customers may be disappointed with the quality of output
and cannot easily adjust with the changes in the rubber products.
 The dynamic performance of synthetic rubber cannot be assured.

V. Selection of Best Alternative/s

We choose the alternative course of action number two which is to engage in

importation of rubber from neighboring countries like Thailand and Indonesia in
order to sustain the supply of rubber for Lee Rubber’s production.
Lee Rubber Company will have various options with regard to the prices of
rubber in Malaysia and outside countries. Lee Rubber Company can choose who
among the potential supplier outside Malaysia offers the cheapest rate for quality
raw rubber Lee Rubber needs not to struggle with regard to finding suppliers
inside Malaysia. Benefits of building connections and developing trade
agreements Lastly, through the free trade agreements of Asian countries, tariffs,
quotas and other trade restrictions are being reduced and possibly eliminated
which means lower cost of importation for Lee Rubber company since it is an
Asian country and a member of ASEAN and the potential suppliers of rubber also
resides in Asia.

VI. Plans for Implementation

Lee Rubber Company should expand its communication networks between

laboratories of different subsidiaries through the data processing department. Lee
Rubber Company must establish a department that works with maintaining
communication between subsidiaries and the good relationship with the customers
which can be called Subsidiaries and Customer Relations Management. The
management should measure specific tasks in order to understand progress against
expected results through evaluation of company performance in all aspects of its
operation. The management team must also formulate an action plan to clarify and
establish the goals and assure that goals will be achieved.