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MARDUWATI ISMAIL

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EIM PJ

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ENTREPRENEURSHIP AND INTERNATIONAL BUSINESS VENTURING

Subject/Module

Strategic Management

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25 May 2015

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TABLE OF CONTENTS
MBA Assignment Submission Form.....................1
MBA Assignment Marking Sheet..2
Table of Content.3
PART 1..4
1.0

EXECUTIVE SUMMARY....4

2.0

DEFINITION..4

3.0

COMPANY BACKGROUND..6

4.0

ANALYSIS..8
4.1

Vision...8

4.2

Mission.8

4.3

SWOT Analysis...8

4.4

PEST Analysis...11
a. Political...11
b. Economic12
c. Social..12
d. Technological.13

4.5

Industry Analysis..13

4.6

Recommendations15
a. Best Product Positioning...15
b. Aligning Organization Broad strategies16

5.0

CONCLUSION16

6.0

REFERENCES................17

PART 2
1.0 EXECUTIVE SUMMARY
2.0 COMPANY BACKGROUND
3.0 SWOT ANALYSIS
4.0 EXTERNAL ANALYSIS
5.0 INTERNAL ANALYSIS
6.0 CONCLUSION

7.0 REFERENCES

PART 1
1.0

EXECUTIVE SUMMARY
This is a strategic management analysis on Perusahaan Otomobil Kedua Sendirian
Berhad usually known as PERODUA is the second largest automobile manufacturer in
Malaysia. The core is on company background, vision, mission, direction, proposed
realistic strategic objectives, proposed business strategies and the important aspects of the
strategy implementation that the companys management needs to consider during the
implementation of the strategic options.

2.0

DEFINITION

Definition of strategic management is consists of the analysis, decisions, an actions an

organization undertakes in order to create and sustain competitive advantage. Definition
by Katrina Cornwell, eHow Contributor: strategic management theory is planning at a
companys highest level.

Strategic management of an organization required three processes which are: analysis,

decisions, and actions. It involves a companys planning for short-term and long-term
success at its highest level, involving directors, chief executive officers and other leaders.
Strategy is the direction and scope of an organization over the long-term, which achieves
advantage for the organization through its configuration of resources within a changing
environment and to fulfill stakeholders expectations. (Johnson and Scholes, 2002, p10).

Strategy is the most important role in an organization. It concerned about analysis of

strategic goals along with the analysis of the internal and external environment of the
organization. Competition has always been the greatest fear of every entrepreneur. Trying
to think ahead of the competitors is the only option a successful entrepreneur has.
Developing a strategy, adapting and improving it and ensuring that employees are aware

of the business mission and vision are the criteria which will help them to gain competitive
advantage.

Strategy: a plan of behavior that are designed to achieve their goal of an organization.
Strategic management: consisting of an analysis, decisions, and actions that an organization
undertakes in order to create and sustain competitive advantages.
The strategic management process: the process of commitments, decisions, and actions
required for a firm to create value and earn above-average returns. (Hitt, Hoskinson, &
Ireland, 2004, p4).

3.0

COMPANY BACKGROUND

Perusahaan Otomobil Kedua Sendirian Berhad or Second Automobile Manufacturer

Private Limited (PERODUA) was established in 1993. PERODUA is a joint venture
company between Malaysian and Japanese partners. PERODUA started its operation in
1994 and the Perodua Kancil was introduced to the Malaysian market in August the same
year. The shareholders of Perodua are UMW Corporation Sdn Bhd 38%, MBM Resources
Berhad 20%, Daihatsu Motor Co. Ltd 20%, PNB Equity Resource Corporation Sdn Berhad
10%, Daihatsu (Malaysia) Sdn Bhd 5%, Mitsui & Co. Ltd 4.2% and Mitsui & Co, (Asia
Pacific) Pte Ltd 2.8% (Corporate Information n.d). the model of Perodua consists of
Perodua Kancil (1994), Perodua Rusa (1996), Perodua Kembara (1998), Perodua Kenari
(2000), Perodua Kelisa (2001), Perodua Myvi (2005), Perodua Viva (2007), Perodua
Nautica 4WD (2008), Perodua Alza (2009), and the latest is Perodua Axia that was
launched in 2014. As of March 2015, Perodua has sold some 2.5 million units of vehicle
of various models both locally and in foreign country. Perodua also sell overseas their cars
to UK, Singapore, Brunei, Indonesia, Mauritius, Fiji, Nepal and Sri Lanka. PERODUA
headquarters is located on a 162-hectare site in Sungai Choh, Rawang, Selangor Darul
Ehsan. It houses among others Perodua Corporate building, R&D Testing Laboratories and
styling studio, vehicle test track, manufacturing plant, engine plant, pre-delivery inspection
area, vehicle distribution stockyard, part warehouse, Perodua Learning centre, mosque, and
a child care centre. The plant currently has the capacity to produce 350,000 units per
annum. Currently, PSSB has 182 sales branches and 183 service branches nationwide to
serve its customers efficiently. The total number of manpower of Perodua was about 11,000
as of February 2015.
The PCBS are being managed the manufacturing operations of the Perodua Group
(Corporate Information, 2010). The entities within the group are Perodua Auto Corporation
Sdn Bhd (PCSB) was established in the final quarter year of 2001. Furthermore, there are
also another two joint venture partners of PCSB which are Daihatsu Motor Co. Ltd. and
Mitsui & Co. Ltd both are from Japan. The manufacturing operations of the Perodua Group
are being managed by PCSB. Perodua Sales Sdn Bhd (PSSB) is responsible for the sales,
marketing, and distribution of all Perodua vehicles as well as after sales service and spare
parts operations. Perodua Manufacturing Sdn Bhd (PMSB) is the company responsible for
6

the manufacturing of Perodua vehicles. Perodua Engine Manufacturing Sdn Bhd (PEMSB)
undertakes the assembly of the vehicle engines and also manufacturing of selected engine
component parts. Perodua Global Manufacturing Sdn Bhd, PGMSB (400709X) is the first
Energy Efficient Vehicle (EEV) state of the art new manufacturing facility in the country.
It has the biggest automotive rate in the country at 75%. It is also able to produce 100,000
vehicles per annum on a single shift.
To be a world class automobile company renowned for excellent quality and reliability
through: Professionalism in all our operations, Efficiency in utilizing technologies and
available resources, Resilience in meeting our challenges, Optimizing benefits to
customers and stakeholders, Dedication towards social responsibility to community, the
environment and development of competent workforce, Uniqueness in our products, and
Aspiration to glorify the name of PERODUA. Award received by PERODUA are:
PERODUA receives the European Community Whole Vehicle Type Approval
(ECWVTA) Certificate and Conformity of Production (COP) Certification from the
Vehicle Certification Agency (VCA), United Kingdom, PERODUA receives the ISO 9002
Certification from the Vehicle Certification Agency (VCA), United Kingdom, PERODUA
receives the prestigious ISO 9001 certification from the Vehicle Certification Agency
(VCA), United Kingdom, Perodua Manufacturing Sdn Bhd (PMSB) and Perodua Engine
Manufacturing Sdn Bhd (PEMSB) receive the certification award of ISO 14001:1996 from
Anglo-Japanese American (AJA) EQS Certification (M) Sdn Bhd, Perodua Myvi receives
the Autocar Aseans Car of The Year 2005/2006 Award, Perodua Kelisa receives the JD
Powers 2006 Best Compact Car Award, Perodua Myvi receives the Best Model of the
Year (Malaysia) Award at the Frost & Sullivan 2007 Asean Automotive Awards, Perodua
Viva receives Car of the Year Autocar Asean Award 2007 (Supermini), Perodua Myvi
receives the JD Powers 2007 Best Compact Car Award, Perodua Viva receives the Best
Value for Money Model of the Year (Malaysia) at Frost & Sullivan Asean Automotive
2008 Awards, Perodua Viva receives the Best Value for Money Model of the Year
(Malaysia) at Frost & Sullivan Asia Pacific Automotive 2009 Awards.

4.0

ANALYSIS
7

4.1

Vision:
To be the most preferred automotive brand renowned for products and services of
excellent quality which will contributes to the development of the nation.

4.2

Mission:
Perodua mission is to: Professionalism in all our operations, Efficiency in utilizing
technologies and available resources, Resilience in meeting our challenges,
Optimizing benefits to customers and stakeholders, Dedication towards social
responsibility to community, the environment and development of competent
workforce, Uniqueness in our products, and Aspiration to glorify the name of
PERODUA.

4.3

SWOT Analysis:
SWOT ANALYSIS

Strengths

Weaknesses

Strong support from the government

Lack of safety features

Strong brand

Higher cost than competitors

Reputation

Lack of international operations

Flexible manufacturing capability

Lack of original products and services

Limited product line
Existing social issue
Human resource issue

Opportunities

Threats

Available technological innovations

Slow growth of automotive market

Entering new markets

Change in the consumer lifestyle

Gain online or e-commerce presence

Changes in regulation (AFTA)

Strategic alliances and joint ventures

Changing technology

Green Cars

Competition from the foreign markets

Price war between competitors

a. Strengths

One of the significant strengths of the company is its reputation or strong brand image due
to the long years it had stayed in the industry. As a result of that, the Malaysian people
have become familiar and loyal to the brand. The design of the Peroduas car is suitable
for all ages specifically in teenagers as Perodua Myvi winning the Best Compact Car
Award and become the nations most loved car. Perodua as a Malaysian second biggest car
manufacturer, they have a strong support from government, which is deemed as an essential
entity in any business environment. In particular, Perodua has a manufacturing capability
at Rawang to consolidate all models.

b. Weaknesses

There are also different weaknesses which must be improved by the company in order to
preserve their position in the government. First is lack of safety features or a features that
is added to ensure a users safety. This value added is the most important thing in buying
a car. For example, comparison between two similar designated car which Perodua Myvi
and Proton Iriz. In the previous comparison between these two cars, Myvi lost on the safety
front due to its lack of safety features as those found on Iriz. After that, Perodua come out
with the new addition of safety features in Myvi Lagi Best. It is consider that the company
is lacking in international operation, due to the different factors, primarily because of huge
competition in the global market. The reputation or image of the company is also facing
difficulties because of the social issues in fatalities accident that involved Peroduas car.
Additionally, the company is having different human resource issue due to their inability
to retain and cultivate talent.

c. Opportunities

From the joint ventures with few automobile companies, the company can also take
advantage of the different technological developments, particularly the different
Information Technology or Information System which can help the company to deal with
their information that can assist them in the decision-making process. Penetrating new
markets will also assist the company to expand their business in terms of size; consequently
can assist to gain more turnovers. It is vital to consider the current popularity of e9

commerce or online selling of goods. This will facilitate the company to aim more market
in more dependable, prompt and cost-effective approach. Moreover, the changing outlook
and concern of the people towards the environment also generated opportunities for
different automotive industry, and specifically to put forward different Green cars or
hybrid cars.

d. Threats

The most critical threats to be coped with by the company are the global financial crisis
which affects the economy of Malaysia, and influence the lifestyle and buying behavior of
the consumer. The changing and growing of the technology is also another significant
factor to mull over, together with the growing number of competitors who are penetrating
the market, which result to the price wars. The major cause behind this situation is the
AFTA which focus on reducing tariffs from zero to 5% in 15 years among the six nations
through a common effective preferential tariff (Ghani & Zainuddin, 2008).

4.4

PEST Analysis:
10

Political

Economic

AFTA

Global and local economic crisis

Different environmental Policies

Slowing growth of Malaysian economy

Poor consumer sentiment and changing
buying behavior of the consumer
Increasing competition
Huge total labor force

Social

Technological

Huge population

Competing development in technology

Car ownership (1:5)

Maturity of technology

Set on big-ticket items

Intellectual property

Growing knowledge and concern of the people

Potential for innovation and development

Maturity and capacity of manufacturing

towards the environment

Impact of the image of the brand
Slowing/decreasing buying pattern of the
consumer

a. Political

One of the essential factors to reflect on is the presence of AFTA or ASEAN Free Trade
Area. Presently, most of ASEAN region are free trade or 96% of the entire ASEAN Trade.
AFTA was established in January of 1992 in order to eradicate tariff barriers among the
Southeast Asian countries. It planned to reduce tariffs to zero to 5% in 15 years among six
nations through a common effective preferential tariff (Ghani & Zainuddin, 2008). Since
Malaysia has two national car makers which are Proton and Perodua, the government wants
to protect their interests. Regrettably, the said development could prove to be a short-term
solution. If we are going to verify on the high selling prices of the national cars of Malaysia
due to high production costs and lack of vendor competence, there is a big possibility that
the local market will be ruled by imported cars. Therefore, there will be a raise in the
number of the vehicles on the road and there will be a flood of used cars in the markets, as
people will tend to trade their cars for cheaper and imported brands (Frost & Sullivan
11

2002). Conversely, the issue regarding the environment is essential since it is regarded as
one of the most talk about topics in the world. The environmental regulation in Malaysia
can be traced back during the colonialism of British which initiated the environmental
standards about the mineral and agricultural resources to Europe.

b. Economic

The vehicle sales in the country decreased in 2009 due to different economic aspects,
mainly the issue of global financial crisis, which involved the local financial rank of the
country (ASEAN One Monitoring, 2009). Consequently, the government of the country is
anticipating a slow economic growth for the country, which can influence the buying
behavior of the consumers. Moreover, owing to the AFTA, it had increased the
competition, which will impact the performance of Perodua. Conversely, the performance
of the automobile industry will be maintained and managed as a result of the huge total
labor force. In spite of the slower economic growth, the unemployment rate was only 3.5%,
which shows an almost full employment (Price Water House Cooper, 2005).

c. Social

The increasing inhabitants in the country are one of the factors which can affect the
automobile industry. This will give a larger number of markets. Moreover, the ratio of car
ownership in the country is somewhat high or total of 1:5, which signifies that people are
considering cars as vital things in their lives. Moreover, consumers are anticipated to hold
over buying different motor vehicles because of the employment market uncertainty
because of the global and local financial crisis (ASEAN One Monitoring, 2009). Another
factor to mull over is the growing knowledge and worry of the people regarding different
environmental issues. Moreover, the impact of the image to the loyalty of the customer is
also another factor.

d. Technological
12

Technology is regarded as one of the most vital factor in the automotive industry. As a
result of the growing competition, the development in the technology is increasing and
affecting the performance and position of each and every company in the automobile
industry. It is also essential to mull over the maturity of technology, accompanied by the
maturity and capacity of manufacturing, which affect the innovation process of the
company. The intellectual property is also a significant factor, since it is considered as a
sign of authenticity and uniqueness. Owing to the different technologies, mainly the help
of computer and the internet, the potential for innovation and development is escalating.

4.5

Industry Analysis:
Porters Five Forces:
a. Competitive Rivalry
i.

Improving product differentiation

ii.

Large number of firms

iii.

Low switching cost

iv.

High exit barriers

v.

Diversity of rivals

The competitive rivalry relates in the intensity of rivalry among the competitors in the
industry. It is imperative to mull over the improving product differentiation owing to the
extensive effort of each and every automobile company in the world to become unique and
have the stronger market position in the industry. This is the major impact of the large
number of firms of organization competing in the global market as well as local players
from Korea, China and Japan which result to diversity of cultures and organizational
behaviors of the rivals. The low switching cost from one brand to another intensifies the
competition in the market and pushes all of the major and minor players to focus on R&D
and innovation processes so as to improve their overall performance in the market. In
particular, the competition has increased because of high exit barriers due to the human
resources and facilities.

b. Threat of Substitution
i.

Quality of the substitutes products

13

ii.

Willingness of the buyers to substitute

iii.

Low cost of switching to substitutes

The threats of substitutes relates on the ability of the customers to go for substitute products
that might be cheaper and accessible. In terms of the passenger car industry, the growing
demands for bikes and motorcycles. More and more people are switching from using
passenger cars into using bikes and motorbikes because of two reasons, first is that it helps
them to save money because of gasoline, simultaneously, the consumer are becoming more
aware of their environmental benefits. Therefore, the quality of the substitutes products,
the readiness of the consumers and the low of switching costs enables the threats of
substitution high.

c. Buyer power
i.

Homogeneous products

ii.

Huge number of buyers

iii.

Buyers are fragmented (many, different)

iv.

High role of quality of service of products

The bargaining power of the consumers in this industry is somewhat high due to the
homogeneous or almost the same products, which divide the number of sales from
enormous number of competitors. But it can be preserved due to the enormous number of
buyers, primarily in developed countries, away from the fact that the buyers are
fragmented. In particular, the importance of quality of the products and services are
significant factors which affect the power of the buyer.

d. Threat of New Entry

i.

High capital/investment requirements

14

ii.

Availability of the distribution channels

iii.

Access to technology

iv.

Brand loyalty of the customer

v.

Friendly government regulations

The threats of new entry relates on how easy or hard for new entrant to start competing.
The primary obstacles of new entry are the high capital and investments that are required
in order to penetrate the industry. This is for the reason that it mainly focuses on the
different technologies that are required in order to come up with the quality and services
that are being offered by the long time players in the industry. Apart from that, it is also
important to mull over the availability of the distribution channel which is very significant
in connecting with the customers. Moreover, because the os long time player in the
industry, brand loyalty of the customers is considered as unavoidable. However, due to
AFTA, the government offers friendly entrance policies for the possible new entrants.

4.6

Recommendations:
a. Best Product Positioning:
Based to the current situation of the company regarding their competitive
advantage which relates on the quality of their produsts, it will be significant to
focus on the Best Product Positioning. This is due to the fact that the best way
to attract, satisfy and retain customers is through the natural characteristics of
the product itself. The position is rather inward and narrow, based upon the
existing product economics. Thus, the major strategic driving forces are the
development of an efficient supply chain that will guarantee low cost
infrastructure, a confirmed internal capability for new product development. All
at once, it will assist the proper renewal of the existing product line that will
help to secure the distribution channels that will help to transfer the products to
the targeted market segments. This will focus on the R&D and innovation
process for the company. In order to preserve the process of engineering and
designing passenger cars which will suit the taste and preferences of the
customers this is affected by different demographics, economics and social
15

aspects. Due to the growing problem of global economic crisis, it will be vital
to focus on low cost or demarcation of the products.

b. Aligning Organization Broad Strategies:

It will be vital to focus on organizational change, because it will focus on
reforming the present business rules and policies towards the strategies of the
company. In the case of the company, it will be important to focus on the strong
product base, solid supply chain infrastructure as well as internal innovation
capabilities to match.

5.0

CONCLUSION
Perodua was considered as the second national car manufacturer of Malaysia and
considered as the one of the key player in the industry. Nevertheless, due to the different
aspects, primarily the execution of AFTA, the sales and market share of the company
decline. In details, the increasing of competition enables the Malaysian market to have a
broad selection of cars to be availed. Alternatively, because of the strong support by the
government, in addition to the strong position of the company in the market, it can be said
that the company failed to focus on the most significant aspects of a company so as to
preserve competitive advantage, and that is innovation. Away from that, the company is
having a problem in their supply chain, which results to high pricing of Peroduas car
compared to other international brand in the market. Consecutively, to solve the current
condition of the company, it will be vital to focus on innovation or R&D process. This can
be done by focusing on applying new Information Technology to speed up the process of
designing. It is also significant to focus on the Human Resource factor of the company so
as to make certain that the company has talented and skilled staffs to develop new and
better products that will suit the ever changing preferences of the consumers.

6.0

REFERENCES
a. http://www.perodua.com.my/
16

b. http://en.wikipedia.org/wiki/Perodua
c. http://en.wikipedia.org/wiki/Strategic_management
d. http://www.sbaer.uca.edu/publications/strategic_management/pdf/01.pdf
e. http://en.wikipedia.org/wiki/Strategic_planning

PART 2
1.0

EXECUTIVE SUMMARY
17

This is a strategic management analysis on Jakel Trading Sdn Bhd. Firstly, the focus is on
companys background. Secondly, the focus is in identifying the Strength-WeaknessesOpportunities-Threats (SWOT) of JAKEL; in addition, we constructed a SWOT Matrix for
JAKEL where we identified the SO, ST, WO and WT strategies, which we think JAKEL
should apply to improve the competitiveness.

Next the focus is on the external as well as the internal analysis on JAKEL. In the external
analysis, the analysis based on two instruments that is the General Environment which is
also known as the PESTLE analysis to help us to understand the external environment in
which the organization operates, and also Porters Five Forces Model to identify their
industry competitiveness. On the other hand, in the internal analysis, one instrument is used
to analyze JAKEL, which is by doing an analysis on their Value Chain.

Lastly, the conclusion of this analysis is with some recommendations that suggest what
JAKEL should focus on to better improve their business.

2.0

COMPANY BACKGROUND

The journey of Jakel Trading Sdn Bhd begins when the late Mohamed Jakel Bin Ahmad
started his small retail business in Muar, Johor. The company is carrying JAKEL
TRADING as a trademark to its textile business to win over customers. Mohamed Jakel
later has expanded the business to Segamat, where the empire started to break people eyes
that Jakel is a dominant player in its category.

In 1992, JAKEL TRADING expand its operations by venturing into semi-wholesaler as

well as supplying textiles to the government agencies and private sectors. JAKEL
TRADING continues to be a highly developed and respected textile company between
1992 and 1997.
However, in the end of 1997 till 1998, Malaysia has been hit by the economic downturn.
At that point, it was certainly difficult for JAKEL TRADING to obtain supplies from Kuala
Lumpur and Singapore. Thus, the cloth stock was diminishing. However, the company was
18

able to handle the crisis successfully. Datuk Hj. Faroz Mohamed Bin Mohamed Jakel, the
eldest son of Mohamed Jakel who is now a Managing Director of Jakel Group of
Companies, tried to get manufacturers during the crisis.

Due to lack of stocks in the market, JAKEL TRADING has taken a brave step by went
directly to the manufacturers as well as importing the stocks straight from the overseas and
sell it right to the wholesalers in Malaysia. In the beginning, the Korean exporters were
reluctant to work with JAKEL TRADING as they are still bound to the Singapore
exporters. Moreover, most of the importers could not extend their businesses as bank had
dismissed their facilities. His failure at the first attempt was not an obstacle for him to keep
on trying.

Seeing his determination, the manufacturers eventually agreed. Since then, the company
has its own textiles importers. Additionally, one of the finance institution, OverseaChinese Bank Corporation (OCBC) trusted JAKEL TRADING as this company shown
their capabilities in managing the finance. OCBC did not hesitate to extend substantial
among the facilities for this company to bring the products from the overseas and sell them
in Malaysia. In the late 1990s, JAKEL TRADING became the major wholesaler and
distributed products directly to retailers in Malaysia.
With the goal of One Branch, One State, JAKEL TRADING has open 20 branches
throughout Malaysia as it intends to conquer the textile industry from north to south of
Malaysis. Jakel Mall that is located at Jalan Munshi Abdullah, Kuala Lumpur can
accommodate a wide range of high quality fabrics. Another branch which is located right
in front of MARA University of Technology (UiTM) in Seksyen 7, Shah Alam. Wisma
Jakel Shah Alam was launched by the Sultan of Selangor, Sultan Sharafuddin Idris Shah
on September 29, 2010 after five months of its opening. This branch is recorded in
Malaysia Book of Records as a Largest Textile Retail Outlet in Malaysia with 80,000
square feet.
It is not a surprise that JAKEL TRADING entrusted by the National Public Corporation
Berhad (PUNB) to become Mentors Prosper Bumiputera Entrepreneurs in the textile
19

business in 2003 till present. The company is responsible to provide a training and guidance
to Bumiputera entrepreneurs who are keen to get involved in this industry.
JAKEL TRADINGs achievement were verified with several awards that the company has
been achieved. In 2011, JAKEL TRADING was awarded The Best Textile Company of
The Year by the UDC Business Award 2011 presented by the former Prime Minister of
Malaysia, Tun Dr. Mahathir Mohamed. In 2013, this company was awarded as Best
ASEAN Textile Company 2013 by the ASEAN Retail and Franchise Federation (ARFF)
at the Outstanding Business Awards 2013 and was awarded as the Excellence in Retail
Management by the Malaysian Institute of Management (MIM) during its prestigious
Global Excellence in Management Awards 2013. In addition, JAKEL TRADING is also
one of the twenty recipients of HR Asia Best Companies To Work For in Asia 2013.
Through the textile business, the companys empire extended to several businesses and
now there are 26 subsidiaries operated under JAKEL TRADING. Two of them that
involved in the fashion sector are Ariani Textiles and Manufacturing (M) Sdn Bhd which
owns the Galeri Tudung & Skarf Ariani and has 20 branches across the country and Perano
Sdn Bhd which owns the Galeri Hajra Tudung & Selendang that operating with 10
branches throughout Malaysia.

3.0

SWOT ANALYSIS
20

SWOT analysis summaries the key issues from the business surroundings and the strategic
potential of an organization that are most likely to force on strategy development. It is also
useful as a basis against which to generate strategic options and assess future courses of
action. The aim is to identify the extent to which the current strength and weaknesses are
pertinent to and capable of dealing with the changes taking place in the business
atmosphere.

An analysis on the strength-weaknesses-opportunities-threats of JAKEL one by one is done

in order to fully understand the challenges JAKEL face.

The Strengths:
a. JAKELs currently operates 26 subsidiaries nationwide, two of them that involved in
the fashion sector are Ariani Textiles and Manufacturing (M) Sdn Bhd which owns the
Galeri Tudung & Skarf Ariani and has 20 branches across the country and Perano Sdn
Bhd which owns the Galeri Hajra Tudung & Selendang that operating with 10 branches
throughout Malaysia.
b. JAKEL has varieties of product line with their existing house brand.

The Weaknesses:
a. Inadequate training and insufficient employee benefits to their employee especially in
the operation department.
b. JAKEL branches do not resemblance their JAKEL concept and reputation.

The Opportunities:
a. JAKEL have ready customers, that are now increasing and everyone needs to buy the
products, this creates a good demand for them.
b. JAKEL is exploring into new locations in Malaysia, which is also in conjunction with
their current strategic plan which is to open branches throughout Sabah and Sarawak.
c. JAKEL can make an effort to raise the assortment of their brand, as well as introducing
other products to compete with their competitors.
The Threats:
21

a. There is taut rivalry within the industry, there are other major textile chains, such as
Gulatis Silk Store Euro Moda, Nagoya Textiles, etc. in Malaysia which is competing
alongside with JAKEL in the textile retail industry.
b. Although their brand is recognized to their customers, but sometimes it is not their
customers preferable brand, their customer still prefers other brand and cheaper
compared to theirs.
c. Websites which grants online shopping are such as www.lelong.com.my or
www.zalora.com.my, and etc. Thus, online shopping can generate threats for JAKEL
conservative brick-and-mortar type of business.

On the other hand, the SWOT matrix is an imperative matching tool that helps managers
develops four types of strategies: SO (Strengths-Opportunities), WO (WeaknessesOpportunities), ST (Strengths-Threats), and WT (Weaknesses-Threats).
SO strategies use a firms internal strengths to take advantage of external opportunities.
For the case of JAKEL, their SO strategies might be to discover into other areas in
Malaysia. It is also, to boost variety and add product line to their obtainable house brand
product to gain customers attention.

WO strategies aim at improving internal weaknesses by taking advantages of external

opportunities. For their WO strategies, JAKEL should give adequate training and more
employee benefits to their employee particularly in the operation department, to reduce
their turnover rate in the future. Besides that, they should also renovate or refurbished their
acquired branch to resemblance their JAKEL impression and status and to persist
maintenance of the outlet.
ST strategies use a firms strengths to avoid or reduce the impact of external threats. ST
strategies that would be suitable for JAKEL would be to maintain strategy to open more
branches to enlarge market share and to eradicate rivalry. Moreover, to amplify marketing
effort to grow customer alertness on their house brand products so that it can be a customer
preferable brand in the future. Additionally, JAKEL should add more selection on all the
existing product line in their branches, since this way will magnetize more customers as
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they will be able to purchase everything under one roof, therefore make JAKEL their
favourite and preferable textile shopping place.

WT strategies are defensive tactics directed at reducing internal weakness and avoiding
external threats. An organization faced with numerous external threats and internal
weaknesses may certainly be in a insecure position. Hence, it is vital for JAKEL to rise
with good WT strategies to trounce future blockages. The WT strategies as anticipated is
to make certain cleanliness of outlets and freshness of their products to allow them to
compete with their competitors, as at the present time consumers are selective in their
comfort when shopping in particular textile shop, if they prefer a particular shop, they will
maintain to shop for their goods there for a long-term period.

Above and beyond that, it is vital for JAKEL to establish a well-organized pricing system
to facilitate their customers to simply locate product price. This is also associated to the
comfort and expediency that most customers nowadays find important. If they find it
difficult to shop in your store, they can constantly shift and change to other store to shop,
as the textile industrys threats of substitute are high, JAKEL must not compromise on this
issue.

Lastly, for JAKEL to beat their high cost of advertising, they should establish other ways
of advertising such as by using electronic methods to send electronic advertising in addition
to promotions through electronic newsletter to their customers email addresses. This in a
method decreased their advertising expenditure but also able to magnetize interest as
nowadays most of the people spend hours a day in front of their computers, consequently
it is an easy way to gain their attentions.

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4.0

EXTERNAL ANALYSIS

In external analysis, two tools are used to analyzed JAKEL TRADING. They are PESTLE
Analysis and Porter Five Forces in order to make us comprehend the environment more
visibly.
a. General Environment (PESTLE)
PESTLE can be defined as management technique to help us to comprehend the
external environment in which the organization operates. It is also a well-liked method
of examining the many different external factors affecting an organization the outside
influences on accomplishment or failure. These factors may be distinguished in six
ways:

P Political The current and potential influences from political pressures.

E Economic The local, national and world economy impact

S Sociological The ways in which changes in society affect us.

T Technological How new and emerging technology affects our business?

L Legal How local, national and world legislation affects us

E Environmental The local, national and world environmental issues.

In analyzing JAKEL external environment, this model is adequate to let us know the
external impact to the business:
i.

The Political factor has much affect the company in doing business particularly.
With the support from the government, JAKELs business is growing very well.

ii.

The Economic factor the only factor that will produce profit to JAKEL. In this
case, JAKEL should monitor the economic trend of the local, national and even
world environment to establish the appropriate cost involve and setting up plant.
Above and beyond that, they may also want to collect data regarding the spending
habit of the local communities and also their purchasing power so that they can
decide the best price against their competitors.

iii.

The Sociological factor involves the ways in which changes in society affect us. In
order to continue to exist in the industry, JAKEL needs the society support to
purchase their product. This is where the profit comes and ultimately will help
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JAKEL to carry on. For instance, the product offered by JAKEL should always
meet he lifestyle and also the first choice of today customers. Their house brand
products should be well design to furnish the opportunities accessible without
scarifying any customer value in it.
iv.

The Technological factor, essentially it connected with new and emerging

technology that influence the business operation from day to day basis. Since today
market is keep on rising, every company struggle for technology advancement
which they trust that it will help to lower down the expenditure while speeding the
task to accomplish higher margin. For instance, since Internet era now become the
needs rather than want to most of the community. JAKEL had created their own
website in order to reach their customer more successfully. Even the most up-todate promotion can be downloaded from the website at the same time as customer
can search for more information about the company. Patent Act has become more
vital in today market since everything probable to be copied by the competitor.

v.

The Legal factor refers to how local, national and the world legislation affects
JAKEL. JAKEL is very caution in operation their business to avoid any illegal
action.

vi.

The Environment factor which refer to the local, national and world environmental
matters. Public currently are more consent of their environment, using too much
plastic bag will lead to pollution. JAKEL currently is planning to teach the public
of the necessity of taking care of their environment.

b. Porters Five Forces Model

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Michael Porter described a concept that has become known as the Five Forces Model.
This concept engrosses a connection between competitors within an industry, prospective
competitors, suppliers, buyers, and alternative answers to the problem being addressed.
The five forces model is used as a basic structure and built on it with concepts from the
works of numerous industries.
Any business needs inputs labour, parts, raw material, and services. The cost of JAKEL
inputs can have major effect on the companys profitability. Whether the strength of
suppliers represents a weak or a strong force hinges on the quantity of bargaining power
they can put forth and, eventually, on how they can control the terms and conditions of
transactions in their favor. Suppliers would choose to sell to JAKEL at the highest price
possible or supply it with no more services than required. If the force is weak, then JAKEL
may be able to discuss a favorable business deal for itself. On the contrary, if the force is
strong, then JAKEL are in a weak point and may have to pay a higher price or agree to a
lower level of quality or services. From this analysis, it is identified that the Suppliers
Bargaining Power for JAKELs textile industry is high. It is exerted by supplier demanding
that its pay a certain price for their goods. If JAKEL does not pay the price, they wont
get the supplies to sell. And JAKEL wont dare not to pay the price, because when they
have nothing to sell, their customers will go to their rivals.

The Bargaining Power of Buyer illustrates the effect that JAKEL clients have on the
profitability of the business. The deal between the seller and the buyer generates value for
both parties. But if customers have more economic power, JAKEL ability to detain a high
proportion of the value formed will decrease, and they will earn lower profits. Therefore,
it is obvious here that the bargaining power of buyer in this type of industry is high. As
such, if the fabrics are too expensive in JAKEL, buyers will use their power and buy from
their rivals. This will lead to lower profit margin and gradually will have a smaller portion
of market share.

JAKEL may have the market curved with their products, but the victory may motivate
others to penetrate the business and confront its position. Analyzing the threat of new
entrants engages examining the barriers to entry and the expected responses of existing
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firms to a new rival. Obstacles to entry are the costs and/or legal obligations needed to
enter a market. These obstacle protect the companies already in business by being a hurdle
to those trying to enter the market. Anyone starting up anew textiles store chain has
blockades imposed on them, implicitly or explicitly, by the existing store. For example,
JAKEL may have cornered the market for specific goods; the new textile store will not be
able to find cheap, dependable suppliers. JAKEL also has the benefit of economies of scale.
The amount it pays suppliers, per-item, is a lot less than the corner shop. It achieves this,
partly, through buying large volumes of goods. A small textile store can only buy a
relatively small volume of goods, at larger cost, therefore, the threats of new competitors
for the textile industry.

Substitute products are those that can abide by a comparable need to the one your product
fills. If JAKEL brand is undifferentiated, customers can easily switch away from JAKEL
product to a competitors product with few consequences. In contrast, there may be a
distinct penalty for changing if its product is exclusive or vital to their customers business.
For JAKEL, it has high threats of substitute product because just about all fabrics are
obtainable within roughly the same price range.

Finally, competition is the basis of the entrepreneurship system, yet with small businesses
even a little competition goes a long way. Since JAKEL is in an industry that is equally
dependent, actions by them will frequently attract competitive retribution. An analysis of
rivalry looks at the level to which the value formed in an industry will be degenerate
through head-to-head competition. It is obvious that JAKEL has a high rivalry among
established firm, noticeable through the newspapers, particularly the local ones, when
JAKEL advertises promotion from their textile store, one or two days later Euro Moda
Gulatis and even Nagoya Textile will also advertise promotions in their store, and the
promotions item will almost be the same. Having high rivalry between existing firms is not
healthy for the industry, as everybody will fight to offer the lowest price, which
sequentially will hurt them in due course. Classical economics forecasts that rivalry
between companies ought to drive profits to zero.

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5.0

INTERNAL ANALYSIS

For the internal analysis, value chain method is used to analyze JAKEL TRADING internal

Support Activities

factors.

Firm Infrastructure
Human Resource Management

Margin

Technology Development
Procurement

Inbound
Logistics

Operation
30%

Outbound
Logistics

Marketing
& Sales

15%

10%

20%

Service

5%

Margin

20%

Primary Activities

Value Addition in Value Chain of JAKEL TRADING

The concept of the value chain is based on the process view of organizations, the concept
of considering a manufacturing (or service) organization as a system, made up of
subsystems each with inputs, transformation processes and outputs. Inputs, transformation
processes and outputs entail the possession and utilization of resources money, labour,
materials, equipment, buildings, land, administration and management. Most businesses
engage in hundreds, even thousands, of activities in the process os changing inputs to
outputs. These activities can be classified ususally as either primary or support activities
that all businesses must embark on in some form.

Significant work by Michael Porter recommended that the activities of a business could be
grouped under two headings:
i.

Primary Activities those that are directly concerned with creating and delivering a
product (e.g. component assembly).

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ii.

Support Activities which whilst they are not directly engaged in production, may
boost effectiveness or efficiency (e.g. human resource management). It is exceptional
for a business to commence all primary and support activities.

Value Chain Analysis is one way of identifying which activities are best undertaken by a
business and which are best provided by others (out sourced).

JAKEL TRADING Value Chain can be divided into 2 which are the primary and secondary
activities as below:

i.

Primary Activities
Primary Activity Description:
a. Inbound Logistics:
All those activities involving receiving and storing externally sourced materials.
E.g: JAKEL receives all the raw material and product to be sold at their
premises.

Operations:
The manufacture of products and services the way in which supplied inputs
(e.g. materials) are transformed to outputs (e.g products). For example, JAKEL
generally received a big volume of raw material and ready product from the
supplier. They will break it into several small entities to be distributed to the
whole branch.

b. Outbound Logistics:
All those activities connected with getting finished goods and services to
customers. The products are now all set to be assembled to the customers by
sending it to the branches throughout Malaysia.

Marketing and Sales:

This activity is basically an information activity informing buyers and
consumers about products and services (advantages, use, price, etc). JAKEL
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usually will advertise through newspapers and flyers. The house brand will not
be promotes to the other store because it can only be acquired from JAKEL
TRADING store only.

Service:
All activities related with maintaining product performance after the product
has been sold. JAKEL offer a customer service counter if something happen to
their product throughout the warranty period (with original receipt).

ii.

Secondary Activities
Procurement:
This concerns how resources are obtained for a business (e.g. sourcing and negotiating
with fabrics/materials suppliers).

Human Resource Management:

All activities relate with recruiting, developing, motivating, and rewarding of the
employees of a business. As a textile store, most of the branches roles were made by
JAKEL TRADING itself. Specialization in production and department signifies
JAKEL need to allocate and manage their manpower efficiently so that they can
generate the maximum outcome (higher profit).

Technology activities relates with managing information processing, and the

development and protection of knowledge in a business. As new era (technology)
conquering the business surroundings, all JAKEL system were handled by digital
devices such as scanner, internet, and online database system. The most recent
promotion can be found through their website.

Infrastructure relates with wide series of support systems and function for example
finance, planning, quality control and general senior management. In managing such a
big Textile Store, JAKEL needs a team to manage all the secretarial works, which
consists of Administration, Legal, Human Resource, Finance, Operation, and etc.
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6.0

CONCLUSION

JAKEL TRADING has the prospective to grow in Malaysia. With their wise extension
strategy, it is not surprise if one day, they would be the most important and the largest
textile store chains in Malaysia. It is anticipated that JAKEL will keep on opening new
store either by acquiring small company or set up their own plant.

Finally, JAKEL TRADING still have a long way in front to make their market share
stronger. With Euro Moda Gulatis, and Nagoya Textile as the main rival in Malaysia, they
must propose a survival strategy as their rival is gradually catching up the market share.

7.0

REFERENCES
a. Crafting and Executing Strategy Concept and Reading Global Edition Thompson
Peteraf Gamble Strickland, 2012
b. http://www.ehow.com
c. http://my.news.yahoo.com
d. https://en.wikipedia.org/wiki/Strategic_management
e. https://en.wikipedia.org/wiki/Porter_five_forces_analysis
f. http://pestleanalysis.com/what-is-pestle-analysis/
g. http://www.jakel.my/

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