Anglia Ruskin University
LO 1. Evaluate the ways in which competitive forces impinge on an organisation's performance;
LO 2. Critically examine relationships between organisational issues and strategic development;
LO 3. Apply appropriate qualitative and quantitative tools, techniques and concepts to clarify, synthesise and evaluate an organisation's current effectiveness and future prospects;
LO 4. Develop a critical and practice-based insight into the key issues facing an organisation, supported by clear evidence-based findings and to communicate those findings and make recommendations.
The main purpose of this study to make a critical analysis on the rubber glove manufacturers that is Top Glove (Malaysia) benchmark against Hartalega Malaysia and Kossan Malaysia. This would help to make clear discussions on the issues faced by the gloves industry in Malaysia. The Top Glove in Malaysia needs to solve out the problems to increase the production of gloves. Moreover, these problems are widely discussed regarding the gloves industry in Malaysia.
1.2 Industry Background
Malaysia belong biggest consumer of rubber in the year of 2016 that forms gloves among the customers. There are various up and down happened in the gloves industry of Malaysia over the past decade. The manufacturing of gloves holds a strong position to sustain in the market of Malaysia with the help of two countries that is Vietnam and Thailand. Moreover, the gloves industry has also faced lower revenue at the time of export. However, the falling of price in rubber has created several pressures to earn profit in the gloves industry of Malaysia. From the several outcomes of past the gloves, industry has maintained to provide better quality of products among the customers of Malaysia.
1.3 Company Background
Top Glove Company is the leading manufacturer of rubber gloves in Malaysia. The organization operates nearly 30 manufacturing sector to increase the production of gloves in Malaysia (TopGlove.com. 2017). This is the main reason of highest production output nearly about 47 billion gloves piece. The company has received nearly about 24% of the sharing in world market from manufacturing of gloves. Top Gloves is trying to expand the business and looking forward for several opportunities from the other companies such as Kossan and Hartalega in Malaysia. Top Gloves has severely maintained their records in the production lines by providing high line of production of gloves among the customers. Moreover, the firm has maintained export of around 194 countries, this helps to make a global market around the world. There are nearly 1900 customers receiving the quality gloves at a minimum cost. The company has also used several new technology to increase the production of gloves and could able to serve among customers.
The main problems of Top Glove Company benchmark against Hartalega and Kossan Company lie with the main products that are rubber. The rubber industry is mainly affected by the various factors that lie with the competition for proper holding in market. The place or political could also become a major problems for the Top Glove Company (Loke and Tham, 2014. pp.57). Moreover, a vital issue lies with the labor while making the highest amount of production in gloves. New technology could be other issues for lowering the amount of gloves manufacturing in Top Gloves of Malaysia. The other benchmark company also tries to provide the better quality of gloves among the customers.
1.5 Rationale of my choice of company
The main purpose of selecting the Top Gloves Company for the study is due to holding a proper position in the global market of their products as compared with other rubber gloves manufacturers. Moreover, Top Gloves provides a high quality service by holding approximately around 500 lines of production. I was looking forward to such a company in Malaysia that provides the good knowledge in manufacturing of rubber gloves. Top Gloves has been provided me the better knowledge to sustain among the other benchmark firms in Malaysia.
|Customer Target||The products are received in locals and other territory of Malaysia.||The products are distributed among the local areas.||Products are distributed in the local and domestic market.|
|Benefits||The company provides better quality of products||The company provides a lower amount of cost of gloves||The company provides good designing of products.|
2.0 Financial Analysis
Financial analysis refers to the analysis of the financial position of a company in relation to its competitors or the current market trends. This process includes, making ratio analysis of the key indicators of the organization like that of the current assets and the current liabilities (Christensen et al. 2015, pp. 410). It helps to get an understanding of the position of the organization in comparison to its competitors.
2.1 Ratio analysis:
2.1.1 Profitability ratios:
Return on invested capital: It refers to the amount of the funds generated by the organization in regards to the amount of capital invested in it.
From the above table it is noted that, the selected company Top Glove was able to perform better in comparison to its competitor Kossan throughout the years (17.02 % in 2012 and in 2016 16.38 %). However, it is noted that the company in question was not able to perform better than its competitor Hartalega and in 2016 it almost the same (16.38 %). This indicates that, the organization was not able to employ its invested capital properly to get a better return than its competitors were.
2.1.2 Net Profit margin: the net profit margin of the organization indicates the margin of net profit earned by the organization after the payment of the payment obligations during a year.
From the above table it can be interpreted that, the net profit of the selected organization Top Glove is comparatively lower in comparison to its competitors over the years. It has been noted that the net profit margin of the organization was as low as 8.76 % in the year 2012 and in the year 2016 12.49 %. It indicates that, the payment obligations of the organization I more and as a result, it was not able to retain much of its profits.
2.1.3 Return on assets: The return on assets of an organization refers to the employment of assets of the organization in such a manner that it would generate the most revenue of the organization.
From the above table it is evident that, in the initial years the company Top Glove was able to perform better than one of its competitors Kossan (13.42 % in the year 2012). However, it is noted that, the company packs far behind in comparison to its competitor Hartalega over the years. It indicates that, the company was not able to employ properly its assets to generate more revenue.
2.1.4 Liquidity ratio:
The current ratio of the organization refers to the net working capital of the organization that is used to determine the amount of liquidity that is held by the organization in the current position.
In the above table, it can be concluded that the current ratio of the organization Top Glove is more than that of its competitors Kossan over the years (2.95 % in 2012 and 1.93 % in the year 2016). In this regards, it has been noted that one of its competitors Hartalega (2.83 % in the year 2016) has been better than that of the Top Glove (1.93 % in the year 2016). It indicates that, the company Top Glove is not able to achieve operational efficiency to meet its payment obligations.
2.1.5 Financial health:
Financial leverage: The financial leverage of the organization or as sometimes known as the gearing ratio refers to the financial health of the organization in comparison to the amount of assets that is held by the organization at a certain point of time. In other words it can be depicted as the variation between the debt of the organization at certain point of time and that of the amount of equity held by it (Yazdanfar, 2013, pp. 153).
From the above table it can be interpreted that, the financial leverage of Top Glove in comparison to its competitor Kossan is less but is more than that of Hartalega over the years (1.27 % in 2012 and 1.46 % in the year 2016). This indicates that, although the organization is bin a better position than that of Kossan but the amount of risks held by Top Glove is much more than that of Hartalega.
3.0 Strategic Analysis
3.1 Business Environment Analysis
3.1.1 PESTLE Analysis
The PESTLE analysis is mainly carried out to referees the external environmental factors required while performing business. This is mainly done to make a proper analysis on difficulties associated in the position of market.
The political issues provide a huge threatening while performing business in the rubber gloves. Moreover, the country is highly multi-democratic party providing the power of stability of performing the business (Soliman et al. 2016, pp. 910). The Government of Malaysia has made several policy and procedures for a smooth working of the Top Gloves Company. There are certain downfalls that arise from the political parties of Top Gloves.
The economic factors sometimes create a high problem in the rubber gloves industry. Top Gloves provides a good location for carrying out the business for a longer period. The company has increased its economy by exporting its products around the world.
A huge social factor affects the company of Top Gloves by lowering the amount of sales of gloves. It includes with all the employees that are present in the firm of Top Gloves. Majorly the social factors of Malaysia contribute with the population of Islamic religion (Ojo et al. 2016, pp. 70).
Technology is the major part for the company of Top Gloves. Moreover, there is a high requirement of the innovation of technology in the rubber gloves industry. This innovation of technology provides a scale of production of good quality gloves at a large amount. In order to meet the demand of customers and worldwide export requires new technological machinery. This helps the Top Gloves industry to provide the products among the customers.
In order to continue with the high production of the Top Gloves, the industry has to keep in mind about the environmental impacts. The environmental impacts provides a bad impacts in the society and causes a environmental hazards. Moreover, keeping a good policy and procedures regarding environments might be supervised by the employee in Top Gloves company. The rubber gloves industry has to use the method of recycle of the waste products (Yee and Shazali, 2016, pp. 80).
In order to maintain high production of rubber gloves, the Top Gloves industry needs to follow a proper rules and regulations based upon the legal law of Malaysia. This can be maintained by following the tax paid to the government for proper running of the Top Gloves industry in Malaysia (Tay et al. 2014, pp. 1040).
3.2 Competitive Force Analysis
3.2.1 Porter’s Five Forces
In the Porter’s Five Force analysis, there are requirements of competitive rivalry, power supply, threats of the new entry, substitute causing threats and power of the buyers.
New entry threats:-
There is always a threat of new entry that causes a huge problem while performing business in the rubber gloves industry especially for Top Gloves firm. Moreover, the new competitors can provide challenges to the existing company of rubber gloves that is Top Gloves (Wong, et al. 2014, pp. 1040).
Substitution of the threats:-
This belongs to the demand of customers at the time of getting of products that is gloves. There is always a high demand of the customers in order to get the good quality products. A substitution lowers the position of customer and decrease the profitability of Top Gloves Company.
Power of buyers:-
The buyer belongs to the consumer or customer at the time of buying of high quality products. The customers have a power at the time of buying of products by keeping the cost constant or could be variables (Ramli and Mohamad, 2015, pp. 400).
Power required by suppliers:-
The suppliers could increase the price of raw materials required to manufacture the rubber gloves. The raw materials are supplied to Top Gloves Company to provide the better quality of rubber gloves among the customer of Malaysia.
There is always a high competition with the rivalry that lies within the Top Glove industry. The main two rivalry company includes with the Kossan and Hartalega that also manufactures rubber gloves in Malaysia (Andrew and Ab Malik, 2016, pp. 430).
3.4 Key Success factors:
The main success factors of Top Gloves industry belongs with the good production of rubber gloves contributing approximately around 500 lines of gloves. Moreover, the Top Gloves Company has improved the business by exporting around 195 countries (Wong et al. 2016, pp. 452). However, the company has made a high level of success by increasing a high share of global market. The firm has expanded their business by supplying better quality of products that is gloves among the customer.
4.0 Identifying Strategies
4.1 Ansoff’s matrix
This matrix is used to make the proper strategy required to determine the various implementation on the business.
The diversification is mainly applied with the various tactics that helps in completing the business performed in the rubber gloves industry. This assist in making the proper market strategy that is used to work efficiently to increase high productivity (Darroch, 2014, pp. 135).
Development of market:-
In this condition, the organisation tries to find new market for the worldwide expansion of production in rubber gloves. There is a high requirement to develop the market of rubber gloves in Malaysia (Lages, 2016, pp. 4850).
Development of products and service:-
In order to meet the demand of the customers there is a requirement to develop the products and service. The development of products and service makes the high production of the rubber gloves industry. The Top Gloves Company provides high quality of products that are required among the customers of Malaysia and over worldwide (Grünig and Morschett, 2017, pp. 60).
Top Gloves Company in Malaysia provides good service of products to meet the demand of customers. Moreover, the proper market penetration helps the needs of customer in Malaysia. This tactics is required in every industry to grab the global market, this helps to increase the profit of the firm at the time of exporting of products in other countries (Chiang et al. 2016, pp. 240).
The Top Gloves Company currently uses the development of market to spread the products among the customers at a rapid pace. The development of market helps the Top Gloves firm to improve the market outside the country of Malaysia.
5.0 Limitations of Financial models and conventional Analysis
5.1 Limitations of Conventional Analysis
While carrying out the PESTLE analysis helps in determining the limitations of Top Gloves Company. Moreover, the PESTLE and Porter's Five Force has been carried out to know the competitive and business environment analysis of the rubber gloves industry. The PESTLE analysis model is the easy and useful method to know the external business environment that is causing threats in the organization. This model analysis provides the better scope of thinking to increase the production of the firm. This model also assists in identifying various opportunities that are useful to grab a high sharing of market. All the six factors assist in reducing the threats that rise at the time of performing business in rubber gloves industry of Top Gloves. This models analysis needs to carry out all a longer time in order to achieve success in Malaysia as well as as in other countries. The proper model analysis helps in increasing the efficiency of work among the employee.
5.2 Limitation of financial models in analysis performance
Enough limitations include with the financial model planning at the time of made analysis. This includes with the limitations of finance that states with the analysis of ratio. The ration analysis plays a major role by drawing the limitations in the Top Gloves Company. The firms need to manage the accounting section properly at the time of better performing of business and earning of profit. Moreover, ratio analysis also omits the company success, this includes with culture, skills of employee. These are the basic things that helps in earning of success of Top Gloves Company for long period of time.
It has been recommended that the proper market strategy needs to be carried out to expand the business in rubber gloves industry in Top Gloves firm. The main objective of the Top Gloves firm is to provide the better quality products at a minimum cost among the customers in Malaysia as well as in outer territories. Moreover, the limitations need to be focused by the Top Gloves firm to earn maximum profit. The company needs to improve their working techniques among the employees to spread to the customers. There is a high necessity to maintain the good quality of gloves. The firms need to be focused on the better quality of products at a minimum cost. Moreover, the organization has to focus on the ratio analysis at the time of calculating of profit. The company needs to develop new ideas and thinking for improving the quality of products among the customers. The high quality products need to be maintained to make a proper mark in the global market. Moreover, the firm needs to make an exact survey to make a proper market for selling of products in Malaysia as well as in other territory.
It has been concluded that on this project work, the firm is highly stable with the financial capacity. The firm needs to maintain a good profit by selling the better quality products that is rubber gloves among the customers in Malaysia and outside territories of world. Moreover, it has been also concluded that by maintaining a proper grip in the market helps in exporting of the products. The Top Gloves firm has made a high production line with the help of advance machinery. Moreover, the company has also introduced new technology that helps in increasing the profit as compared with the other benchmark company that is Kossan and Hartalega in Malaysia.