Download - Poh Kong Draft
Strategic Analysis of POH KONG
To Examine Poh Kong Strategy via Internal and External
Analysis
Objective of the Presentation
2
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 Analysisb. Five Forces Modelc. 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.
4. Islamic Perspective 5. Conclusion & Recommendation
Presentation Outline
3
3. Internal Analysis
Agenda
4
5. Conclusion & Recommendation
4. Islamic Perspective
2. External Analysis
1. Company Introduction
Company Introduction : History Of Poh Kong
1995
1990
1985
1975
1970
1960
1980
2010
2005
2000 xx
xx
er
Xx
Xx
Xx
Poh Kong’s Today
Jewelry Industry
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
Characteristic
Jewelry Industry
Luxury goods Market
Luxury goods
Mature Stage
Event-centric
Business type
Sensitive to consumer income, economic cycle
Jewelry Industry
Industry Overview
51%
31%
5%
4% 9%
Portion of
Material
Gold Silver Platinum
Other Metals Metal Combination
35%
26%
13%
24%
3%
Portion of
Items
Earings Neckwear Rings
Wristwear Other
3. Internal Analysis
Agenda
10
5. Conclusion & Recommendation
4. Islamic Perspective
2. External Analysis
1. Company Introduction
What does macro-environmental factor reveal about Poh Kong competitive advantages in Malaysia Jewelry industry?
1
2
How does Five Forces relates Poh Kong intensity of competition?
3How Poh Kong Position in Malaysia ?
4
What is the Key Success Factor of Poh Kong In Malaysia & How well is Poh Kong performance compare to its closest rivals?
5
What are the important drivers of changes that may impact Poh Kong’s Strategic & Financial position in Malaysia?
External Analysis
Economical
Technological Environmental
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%
xx
Sustainable multi-racial society]
Country’s complex bureaucracy governance[1]
Sources: Poh Kong Annual Report 2010 [2]
Cost saving & efficiency [3]
Security [3]
Customer Needs / convenience[3]
Political
xxx
3 racial group (Malay, Indian, Chinese)
Population 28.401 million (2010)
Population below Poverty Life Life Expectancy (2011) 71.7(male), 76.6 (Female)
Social
Legislation
Political-Economic-Social-Technological-Environment-LegislationsWhat does macro- environmental factor reveal Poh Kong competitive advantages in Malaysia jewelry store industry?
Rivalry among
competing sellers
Firms in other industry offering
substitute Products
Potential New Entrants
Buyers/ Customer
Bargaining Power
Suppliers
Five Forces AnalysisHow does Five Forces relates Poh Kong intensity of competition?
Five Forces AnalysisHow does Five Forces relates Poh Kong intensity of competition?
Bargaining power of suppliers• Scarce resource, great value to retail firms• National, International reputation to get diamond
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 Substitute• High-end Specialty retailer
Bargaining power of buyers• Not standardized• Not much influence on products and price
Threat of New Entrants• Product Differentiation• Capital Requirement
Bargaining power of suppliers
Threat of New Entrants Industry Rivalry
Threat of New Entrants
Five Forces Analysis (cont’d)
Rivalry among
competing
sellers- High
Large number of jewelry store• More jewelry
store that are currently operating in Malaysia (local and foreign jewelry store).
• Compete to attract the same number of customer and resources.
• Poh Kong and other jewelry store like Habib’s Jewel struggle for market leadership.
Rivalry among
competing sellers
Buyers / Customer bargaining
power
Threat of substitute product
Supplier bargaining
power
Threat of new entrants
Location of the jewelry store
• Greater 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.
Product Differentiation
• Product differentiation associated with higher level of rivalry – but limited by …
• compete to boost their brand recognition and improve their quality of services in order to gain market shares
Five Forces Analysis (cont’d)
Buyers / Custom
er bargaini
ng power- High
High information availability
• In Malaysia : increase in the number of internet user from year to year
• Compare the design and services between the jewelry store
Rivalry among
competing sellers
Buyers / Customer bargaining
power
Threat of substitute product
Supplier bargaining
power
Threat of new entrants
High buyer price sensitivity
• Low switching cost
• Customer may buy it on loan basis
Five Forces Analysis (cont’d)
Supplier bargaini
ng power- Medium
Technology provider
• xxx
Rivalry among
competing sellers
Buyers / Customer bargaining
power
Threat of substitute product
Supplier bargaining
power
Threat of new entrants
Gold and Diamond supplier
• ff
Five Forces Analysis (cont’d)
Threat of
substitute
product -
Medium
Rivalry among
competing sellers
Buyers / Customer bargaining
power
Threat of substitute product
Supplier bargaining
power
Threat of new entrants
• Other branded company provide luxurious product
Five Forces Analysis (cont’d)
Threat of new
entrant - Low
Rivalry among
competing sellers
Buyers / Customer bargaining
power
Threat of substitute product
Supplier bargaining
power
Threat of new entrants
• Require high capital start up
• Required high security
• Brand recognition - invest alots of money and time
• High level of resources.
Strategic Mapping
20
jewelry store
Deposit (RM Bil)
Loans (RM Bil)
BranchesSelf-
Service- teminal (ATM)
Total Asset (RM Bil)
Poh Kong 261 242 385 2847 380
Habib's Jewel
200 268 324 2057 269
Public jewelry store
180 262 250 488 229
RHB Capital 94 84 185 1058 129
AMMB 71 70 186 803 105
Affin jewelry store
32 26 91 160 45
Alliance 28 22 99 171 37
Sources: Annual Report of Poh Kong, Habib's Jewel, Public jewelry store, RHB jewelry store, AMMB, Affin jewelry store & Alliance
Do Poh Kong is in the Best Position in Malaysia & have potential to be a Financial Leader in the region?
21
L
oan
s an
d D
ep
osi
t
Branches and Self-Service Terminal
HIGH MEDIUM
LOW
H
IGH
M
ED
IUM
L
OW
RHB Capital
Affin
Strategic Mapping (cont’d)
Public jewelry
store
Poh Kong
Habib's Jewel
Alliance
AMMB
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 jewelry store
Public jewelry store
CRITICAL SUCCESS FACTORS
WEIGHT
RATING
WEIGHTED SCORE
RATING
WEIGHTED SCORE
RATING WEIGTHED SCORE
PRODUCTS & SERVICES
0.15 40.60 3 0.45 3 0.45
TECHNOLOGY 0.14 4 0.56 3 0.42 1 0.14
GLOBAL EXPANSION 0.06 3 0.18 2 0.12 2 0.12
FINANCIAL POSITION 0.08 4 0.32 4 0.32 2 0.16
SERVICE QUALITY 0.13 3 0.39 3 0.39 3 0.39
jewelry store BRANCHES / SELF-SERVICE TERMINAL
0.12 50.60 4 0.48 3 0.36
MARKET SHARE 0.06 4 0.24 3 0.18 2 0.12
STRONG MANAGEMENT TEAM
0.09 40.36 4 0.36 3 0.27
MARKETING 0.09 4 0.36 4 0.36 3 0.27
CUSTOMER LOYALTY 0.08 3 0.24 4 0.32 2 0.16
TOTAL 1.00 3.85 3.40 2.44
Drivers of Changes
Economic Conditions Globalization Technology
Changing Societal Concern, Attitudes & Lifestyle
Regulatory influences and government policy changes
Product & Services
• Euro Crisis & US Economic Condition
• Malaysia economic growth & deficit
• Economic Transformation Programme will create opportunities
• for Poh Kong’s
• 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
• Mobile jewelry store lifestyle • maximum loan-to-value (LTV) ratio of 70 %
• Islamic jewelry store
What are the important drivers of changes that may impact Poh Kong’s Strategic & Financial position in Malaysian jewelry store industry?
Quality of Diamond
Ability to customize
Romance & Luxury
Marketing
Marketing
Marketing
Sensitivity to Economic Cycle
Threat of lower Jewelry & Online sale
High competition & matured market
Economy recovery
Online sale increase
Separated brand
Rule of the Game Characteristic Opportunity
Product differentiation
Brand Loyalty
Key Success Factor
3. Internal Analysis
Agenda
25
5. Conclusion & Recommendation
4. Islamic Perspective
2. External Analysis
1. Company Introduction
26
Current Financial Analysis including Financial Ratio Analysis
Net 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 The group total
assets expanded by 22.4% from RM337 billion as of 30 June 2010 to RM412 billion as of 30 June 2011.
172 237 245 391644
8641075
2981
130
9701360
840
16591996
242525032772
31782928
692
3818
4450
0500
100015002000250030003500400045005000
Net Profit
Net Profit
31 40 48 56 72 82 94 110 115 117 127146 151 161
180 192224
257 269311
337
412
0
50
100
150
200
250
300
350
400
450
Total Assets
Total Assets
27
In FY 2011, Poh Kong’s share price rose by 18.3% from RM7.56 to RM8.94.
1.1 1.1 1.31.9
3.5
4.6
5.76.3
2.0
5.5
7.4
4.9
6.3 6.2
7.37.8 7.7
8.6
6.35.9
7.6
8.9
0.0
1.02.03.0
4.05.0
6.07.08.0
9.010.0
Share Price
Share Price
Current Financial Analysis including Financial Ratio Analysis (cont’d)
28
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.
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 Financial Analysis including Financial Ratio Analysis (cont’d)
29
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.
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)
SWOT Analysis
30
31
Value Chain Analysis
Primary
Activities and
Costs
Support
Activities and
Costs
Sales & Origination
Processing Approval Acceptance Documentation Disbursement & Release
RepaymentMonitoring & Enhancement
Enterprise Transformation Services
Group Human Resources
Group Finance Office
Group Credit & Risk Management
Legal, Compliance & Communications
3. Internal Analysis
Agenda
32
5. Conclusion & Recommendation
4. Islamic Perspective
2. External Analysis
1. Company Introduction
Islamic Perspective
33
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.
Allah 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 them for sustenance.” (Surah Al Shura, Verse-38).
Allah also says “And by the mercy of Allah, you dealt with them gently. And had you been severe or harsh-hearted, they would have broken away from about you; so pass over (their faults), and ask for (Allah’s) forgiveness for them; and consult with them in affairs. Then when you have made a decision, put your trust in Allah.” (Surah Al-Imran, Verse-159).
Islamic Perspective (cont’d)
34
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.
Allah 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 ).
In addition, Islam places great emphasis on the code of lawful and unlawful in business transactions. Many Qur’anic verses disapprove the wrongful taking of the property.
Allay says “Do not devour one another’s property
wrongfully, nor throw it before the judges in order to devour a portion of other’s property sinfully and knowingly.” (2:188).
Allah also says “Do not devour another’s property
wrongfully – unless it be by trade based on mutual consent.” (4:29).
3. Internal Analysis
Agenda
35
5. Conclusion & Recommendation
4. Islamic Perspective
2. External Analysis
1. Company Introduction
Conclusion & Recommendation
36
Low jewelry price
Design Consumers are seeking out color, retro glamour and statement pieces More fashion designers are entering
Niche Market Marketing to Men’s, Younger adults gay, lesbian
Celebrities Not only ads. But also in jewelry collections
Low end retailer: Wal-Mart, Sears By cutting cost and lower quality goods: discount deeper, thinner
margins for cost conscious customer New technology