Hipolito, Harold H.

November 18, 2019

BSBAMG-4B Strategic Management

Case Analysis on:

Heavy Industries Corporation of Malaysia Berhad

HEAVY INDUSTRIES CORPORATION OF MALAYSIA BERHAD

I. Time context
March 31, 1987
II. Viewpoint
Tan Sri Jamil, President of the Heavy Industries Corp.
III. VMV Statement
Vision
To be top in heavy industries and to continuously excel in all that we do.
Mission .
To lead in the growth of the nation in the areas of HICOM’S core businesses.
Values

“Excellence, decorum, teamwork, integrity, innovation, quality and

transparency.”
IV. Current Operation Policies
Management
Marketing
Operations
Finance
Human Resource
V. Statement of the Problem

1. What should the HICOM do to its three subsidiaries to mean the adverse effects to
the company?

2. What to do to the reduced production of motorcycle engines by HICOM’s three

companies due to poor demand?
VI. Statement of Objectives

1. To know what will be the action of HICOM in order to reduce the adverse effects to
the company
Hipolito, Harold H. November 18, 2019
BSBAMG-4B Strategic Management

Case Analysis on:

Heavy Industries Corporation of Malaysia Berhad

2. To implement measures that could minimize not only for the losses but to avoid its
future re-incurrence.

3. To establish effective policies that could achieve vertical integration in the

motorcycle industry.

and
VII. SWOT Analysis

STRENGTHS WEAKNESSES
 HICOM owns 51% of interest in Perwaja Trengganu  A combination of poor
Sdn Bhd(PTSB) 70% of interest in Perusahaan planning and inexperienced
Otomobil Nasioal Sedab Bhd(PROTON) aside from or inept management.
other subsidiarycompanies under metal based,
 Executives are viewed as
engineering, realty development, trading and
processing industries. bureaucratic and lacking of
leadership needed to cope
 Creation of new division called “Operation with the plant’s(PTSB)
Division” of HICOM, responsible for monitoring problem.
and coordinating its operations which is  Large Yen dept.
envisaged that prompt assistance due to it could
be rendered to the subsidiaries and associated
companies as when required.
OPPORTUNITIES: THREATS:
 The improvement in prices of primary  Future market share of Kedah
commodities in the world market, inflow of funds cement (another subsidiary of
into the country and the improved business HICOM) was expected to fall
confidence that are expected to result in with the coming on stream of
increased demand for products manufactured another cement plant in
by HICOM e.g. growth of Malaysia’s economy Malaysia.
and resumption of public and private
construction was anticipated and would mean  Potential entrants within the
the rise for demand in billets was, likewise, manufacturing and sale of hot
expected. briquette iron and steel billets
may establish effective
 The closure of the direct reduction plant had operations for the span of 2 ½
resulted in the price of steel scrap to be cheaper years.
than that of hot briquetted iron, with its view to
incorporate increased use of steel scrap would
be a great strategy to improve competitiveness
to its products.
Hipolito, Harold H. November 18, 2019
BSBAMG-4B Strategic Management

Case Analysis on:

Heavy Industries Corporation of Malaysia Berhad

VIII. Alternative Courses of Action

1. Continue operations in:
a. Perwaja Trengganu Sdn Bhd (PTSB)
b.Perusahaan Otonobil Nasional Sedan Bhd (PROTON)
2.Discontinue operations in Kedah Cement Sdn Bdh (KCSB)

IX. Analysis of Alternatives

1. Continue operations in:
a. Perwaja Trengganu Sdn Bhd (PTSB)
Advantage/s:

 Malaysia’s economy is expected to grow.

 With new leadership (Datuk Eric Chia), come fresher business
perspectives and innovations.

Disadvantage/s:

 Anticipated increase in demand may not materialize.

 Obsolescence of equipments due to technology advancement.

b.Perusahaan Otonobil Nasional Sedan Bhd (PROTON)

Advantage/s:

 Retain and exploit 65% market share

 Seize opportunity to enter US market
 Termination will undermine Malaysia’s industrialization plans
 Domestic and international markets appear to be more promising

Disadvantage/s:

 Loss may be significant but tolerable.

2.Discontinue operations in Kedah Cement Sdn Bdh (KCSB)

Advantage/s:
Hipolito, Harold H. November 18, 2019
BSBAMG-4B Strategic Management

Case Analysis on:

Heavy Industries Corporation of Malaysia Berhad

 Avoid further losses due to expected coming on stream of another

cement plant in Central Malaysia.
 Stop the incurring of debts in the future.

Disadvantage/s:

 KCSB would be out of the processing industry.

X. Decision Criteria

CRITERIA Alternative 1A Alternative 1B Alternative 2

Benefits: 30
Time: 25
Risks: 20
Ease: 15
Costs: 10
TOTAL:

XI. Decision Statement

XII. Implementation Plans

XIII. Proposed Operational Plans

Management
Marketing
Operations.
Finance
Human Resource
XIV. Other Problems and Recommendations

Other Problems Recommendations

XV. Business Lessons Learned

Hipolito, Harold H. November 18, 2019
BSBAMG-4B Strategic Management

Case Analysis on:

Heavy Industries Corporation of Malaysia Berhad