Submitted to Sir Ayaz Rafiq

By

Ameer IzharMuhammad Atiq Godil

Noshaba AinulSana Farah

Vision Statement:Constant technology innovation, we can produce various wire mesh according to the customers' requirements. Backed by our good reputation, high quality products, first-class production technology and equipment.Mission Statement:Built long-term and stable trade relationship with many customers in China and the world and sold product widely.

SWOT Analysis:Strength: It is the largest retailer for Swiss watches world wide with 378 retail outlet in

the Great China region. High growth rate, In the first half revenue rose by 45.6% to 51.1%. Effective existing distribution and sales networks. Provide better service and transparency to its supplier through new MIS system. Also provide after sale repair service for more than 50 international brands. Ability to sell products online and had number of websites & serving different

purpose i.e. one for customer and one for repair service. Organize a trip for VVIP customer because their annual purchase value is over

(US$7,560). Covering 50 world- renowned brands. Swatch and LVMH groups are investors and stake 9.5% & 6.32% respectively.

SWOT Analysis:Weakness: Maintenance and repair service expenses. Consumer displayed much lower loyalty to retailer brands to watch brads. It spends less than 1% on marketing. High cost incurs in open new store opening. Some brands suffered severe shortage of inventory. Order fulfillment rate below from 70% to 50%.

Opportunity: New acquisitions like they acquired Elegant international holdings limited. Growing demand of watches. 50% of watches are sale in China. Being E-commerce provide trade online products. Foreign watch manufacturer entered in China.

SWOT Analysis:Threat: Increase in labor costs. Government intervene to control the import of watches. Own mono brand store, distribution and retailing network. Smuggling. Local retailers can grow much faster than before after joining Hengdeli.

Strategies Tactic Function

Internal Strength Internal Weaknesses1.      Largest retailer of Swiss watch with 378 retailer outlet in China

1.      Maintenance and repair service espenses.

2.      High growth rate roses from 45.6 % to 51.1%. 2.      Consumer lower loyality to retailer

3.      Effective existing distribution and sales network. brands watch than brnds watch. watches.

4.      Provide better service & transparency to suppliers through MIS. 3.      Spends less than 1% on marketing.5.     Also Provide after sale repair service to more than 50 international brands.

4.      High cost Incurred in open new stores.

6.     Ability to sell products on online websites. 5.     Some brands suffered severe shortage of inventory.

7.     Organize trip for VVIP customer.6.      Order fulfillment rate is below from 70% to 50%.

8. Covering 50 world renowned brands  9.     Swatch & LVMH groups are investors.  

          (SO) (WO)

External Opportunities 1.Increase marketing as there is a potential market.1. By use of IT can control the shortage of inventory.

1.      New acquisition.   ( S1,S2,S6,O1,O4,O3) (W5,W6,O2)

2.      Growing demand of watches.   2. Promote investments and use financial 2. Through new acquisition it can reduce the cost.

3.      50% of watches are sale in China.   resources to increase the retail outlet other than (W1,W4,W6,O1)4.      E-marketing   Europe and China. (S1,S2,S9,02,O5)    5.      Foreign watch manufacturer entrance.          

External Threats (ST) (WT)

1.     Increase in labor cost.   1.Sufficient financial resources help the1.By reducing cost of maintenance and repair

2.     Government intervention.   company to take over mono brands store it can avoid the increase in labor cost.3. Own mono brands stores.   (S1,S2,T3) (W1,T1)4.     Smuggling.  

2.Overwhelm main competitors (Emperor & Oriental Specialized

2.Develop efficient IT software to reduce the smuggling of watches

5.     Local & other retailers.   Watch retailer) by conducting aggressive strategies    (S6,S7,S3,T5) (W2,T4,)

       3. Form strategic alliance with supplier to expand retail network quickly

                       (W2,W6,T3,T5)

Porters’ Analysis

SuppliersNumber of Suppliers: – Swatch Group, LVMH Group, Rolex Group, Richemont Group, DKSH Group- Top suppliers - Other Renowned watch Brands

Size of Suppliers = Big Groups

Unique/Service Product:Elegant (top grade internationally brand watches)Prime Time (Middle to High internationally renowned watches)With Time (Middle to High internationally renowned fashionable watches)Mono-Brand BoutiquesRepair and maintenance services

Ability to Substitute:Top brandsOther world renowned brandWatches, Jewelry, Fashionable Watches

SubstituteSubstitute Performance:Top brands and other world renowned brandsWatches and Fashionable watchesDifferent categories of shopsJewelryRepair and Maintenance Service

Buyer Willingness:To Purchase Watches, Fashionable watches and Jewelry.Categories with respect to product and class.Repair and maintenance Services for both wholesale and retail business

Competitive RivalryNumber of Competitors = (THREE)Competitors such as Emperor Watch and Jewelry (887 HK), Oriental Watch Holdings (398 HK), Sincere Watch (444 HK).Exit Barriers: (LOW)

As on of the largest retailer in the market. Few competitors

Niche Quality: Top Brands and Renowned Brands

Differentiation:Best Retail management, Customer Management, After sale services, Top brands, Exclusive sale of renowned brands, Offers Watches and Fashionable watches, Incentives

Industry Concentration: High end and Lower End watches and Jewelry users.

Diversity of Competitors:In Watches, Fashioned watches and Jewelries item

BuyersNumber of Customers: Mainland China, Hong Kong, Taiwan, Macau, US, France, Italy, Other countries (Retail and Wholesaler)More than 1000 VVIP, Over 200,000 (Middle to high end) (only in Hangdeli)

Buying Volume:VVIP- US$75,600, 80% of Top five suppliers 50% of Swatch Group (only in Hangdeli)

Differentiation: Categories (4) , Watches and Fashion Watches 50 brands in different segmentsIncentives:Repair & Maintenance , Trip to visit Brand shops, Gifts, bonuses and discounts (within the range set)

Brand Identity: Brand Names of Suppliers

Barriers to EntryTime and Cost of Entry: High investment, Good relationship with brands(suppliers), High competition, Government laws and regulations, Good Customer and Retail management

Knowledge:Customers Behavior analysis, Market Condition, knowledge about retailing and distribution of Watches, Fashion and changing pace

Economies of scale: Large scale of economies with respect to Retailing and whole selling as Hangdeli Holding Ltd are not in production.

Cost Advantage: No investment is required for production.

Technology:High tech stores, Technological advancement and process use for sales, Repair and maintenance expertise

Barriers:High cost investment, High competition, hard to reach top suppliers, high risk, Adopt change and understanding consumers desires and fashion.

Porter’s Four Corner ModelDrivers• Financial goals • Corporate culture • Organizational structure • Leadership team backgrounds • External constraints • Business philosophy

Current strategy• How the business creates value • Where the business is choosing to invest • Relationships and networks the business has developed

Competitors Future Strategy

Management assumptions• Company’s perceptions of its strengths and weaknesses • Cultural traits • Organizational value • Perceived industry forces • Belief about competitor’s goals

Capabilities• Marketing skills • Ability to service channels • Skills and training to work force • Patents and copyrights • Financial strength • Leadership qualities of CEO

Porters’ AnalysisHANGDELI- 80% of the company’s sales of luxury watches in Hong Kong come from mainland China tourists.

The group continues to rapidly expand its number of outlets in tier-two and tier-three cities as it seeks to gain 50% of market share by 2015 from competitors such as Emperor Watch and Jewelry (887 HK), Oriental Watch Holdings (398 HK) Sincere Watch (444 HK).

Emperor Watch and Jewelry is internationally acclaimed as a retailer of the world's most prestigious timepieces of watches and a manufacturer of trendy, sophisticated jewelry.

Financial Goals :Driving the increasing consumption power of middleclass, watches and jewelrymarket presents abundantopportunities for us to furtherestablish our presence acrossGreater China and even beyond.

Expansion opportunities in Asia, in order to fully capitalize on the compelling prospects of Chinese travelers.

DRIVERSCorporate culture: Diverse workforce (gender and age, equality) Encourages female participation in the Board

Safe, effective and congenial work environment.

The Group values the health and well-being of staff, entitled to benefits.

Cultivated a corporate culture, which emphasizes close synergy among its various businesses

DRIVERS (Cont’)

Leadership team background: Founded in 1942 by Albert Yeung

 Cindy Yeung was appointed as Chairman in 2012

Organizational Structure:

Emperor Group has grown and expanded into a diversified group of businesses that includes financial services, property, watch and jewelry, entertainment, hospitality, printing and publishing, furniture and furnishing, as well as food and beverage. 

DRIVERS (Cont’)

Business Philosophy

The increasing trend of Using watches and jewelry market presents bundant opportunities for us to establish our presence across In China, Hong Kong and related areas and also in Greater China and even beyond. The group continue looks for other expansion opportunities in Asia, in order to fully capitalize on the compelling prospects of Chinese travelers.

External Constraints

High rentsRapid Fashion ChangeNew entrantsCompetitorsPrime Location

Capabilities (Cont’)Skills and Training to Workforce

Adequate arrangements, training courses and guidelines are implemented to ensure the working environment.

The Group supports its staff to develop and enhance their knowledge, skills and work capability.

Staff are encouraged to pursue educational or training opportunities that achieve personal growth and professional development.

Various training courses are regularly conducted to promote loyalty, occupational safety, customer, servicing skills and product knowledge, etc.

In 2014, the Group dedicated around 15,000 hours to staff training, representing approximately 12 hours per employee

Where the business is choosing to invest?

Emperor has chosen to invest more resources in the development of the jewelry business. Group aims to jointly expand its watch and jewelry business. In the future, Emperor Watch & Jewelry will continue to work with first-class watch brands to open specialty shops. This will not only help build customer loyalty towards the Group and individual watch brands. It will also help strengthen the synergy between Emperor Watch & Jewelry and its suppliers.

Current Strategy (Cont’)

Current Strategy (Cont’)Relationships and Networks the business has developed

From its beginning as a watch retailer.

Emperor Group has grown and expanded into a diversified group of businesses.

From retail watches, Emperor also started in manufacturing of Jewelry.

Emperor Watch & Jewelry has also opened a number of retail stores from first-tier to third-tier cities in the Mainland China, including Beijing, Shanghai, Guangzhou, Chongqing, etc.

It first ventured into an oversea market in 2013, with 4 new shops opened in Singapore.

Capabilities Marketing Skills

Target Customers-Middle to high income groups in the worldExpansion opportunities in Asian markets.

Events and exhibitions- the Group continued to effectively promote various watch brands through a range of joint.

Promotions, sponsorships and exhibitions, which all achieved positive results.

The Group also made special use of numerous celebrity endorsements, print advertisements and social media

Marketing Skills (Cont’)

To promote its jewelry products and build brand equity. The Group hosted a variety of jewelry shows to consolidate VIP customers

and widen the new customer base. Expanding opportunities via online and social media, Enhanced brand

awareness of “Emperor Jewelry” through various cost-effective advertising campaigns

Capabilities (Cont’)

Ability to Service Channel

Production of Jewelry ItemsSuppliersShopsSolid relationships with numerous European leading watch brands

Ability to Service Channel

How the business creates value ? In its early days, the Group was mainly a retailer of

clocks and watches. In the 60s, the Group also started to sell fine jewelry

products Later even went into the design and manufacture of its

own luxury line.

The Group believes that jewelry market is set for long-term growth- driven by rising demand for

gem-set jewelry. The Group is striving to expand its product mix to

offer customers an even wider selection of choices

Current Strategy

Patent and Copyright

The trademarks “Emperor” and “Emperor Jewelry” have been applied or registered under various classes in Hong Kong, Macau, the PRC, Singapore and other relevant jurisdictions.

Capabilities (Cont.’)

Leadership Qualities of CEO

InnovativeChange resisterEnvision for growth and developmentA brilliant Strategist

Capabilities (Cont’)Financial Strength

Revenue decreased by 10.6% to HK$5,924.9 million (2013: HK$6,624.4 million), due to weak consumption sentiment in relation to continued austerity initiatives and local protest in the second half of 2014.

Watch segment was relatively resilient amid a consumption market slowdown with its revenue decreased by 6.2% to HK$4,824.2 million (2013: HK$5,143.7 million) and continued to be the key contributor, accounting for 81.4% (2013: 77.6%) of the total revenue.

Gross profit margin improved to 25.1% (2013: 24.1%) Net profit decreased to HK$138.1 million (2013: HK$290.3 million), mainly due to an

upraise of rental pressure. Maintained a strong cash debt-free position as at 31 December 2014. Revenue from Singapore market increased by 39.4% to HK$164.6 million (2013:

HK$118.1 million).

Company's’ perception of SW-Strengths “Emperor Jewelry” is crafted using quality diamonds, gemstones and

precious metals. The raw materials used in the jewelry items are procured from reliable and

certified vendors. The Group has established solid relationships with numerous European

leading watch brands “Emperor Jeweler”, the Group offers customized, elegant gift boxes to

customers The frontline team comprises experienced and well-trained sales executives. Staff turnover rate among managerial positions is relatively low, reflecting a

high level of employee satisfaction and engagement. Spanning prime locations and diverse product portfolio.

Management Assumptions

Management Assumptions (Cont’)

Weaknesses : A big competition in marketFuture debt ratingHigh loan rates are possibleHigh Rental ExpensesInnovative designs in jeweler as per change.

Management Assumptions (Cont’)

Cultural TraitsFashionIntegrityEmployee Equal OpportunitiesSynergyInnovationSkills and trained employeesLuxury Market

Organizational ValueTap market potentialLeading luxury watch and jeweler retailer in Chinese-speaking communities.Diversified product rangeDiversified BusinessesStrong Financial positionfully capitalize on the compelling prospects of Chinese travellers.

Management Assumptions (Cont’)

Perceived Industry Force A wider market to penetrateAbsence of a sales tax on luxury goodsTourist come in China & Hong KongDriven by rising demand for gem-set jewelry alongside the gradualincrease in disposable income of Chinese consumers Driven by having stable demand arising from various celebratory occasions.Innovation to beat competition

Belief about Competitor’s GoalsHigh sales in watchesNew market development and PenetrationExpansion of existing marketBest customers’ services To be a big retailer

Referenceshttp://uwj.com.au/investment/equities/he

ngdeli-is-the-timing-right-for-this-watch-retailer/

http://www.emperorgroup.com/en/ourbusinesses.php?id=3

Annual Report 2014