statements of adventa berhad marketing essay
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Statements Of Adventa Berhad Marketing EssayFor assignment help please contact
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Introduction
Company background
Adventa Berhad, an investment holding company, engages in the
manufacture and distribution of medical products and devices for the
healthcare industry. The company offers surgical and medical
examination gloves, such as latex surgical, latex surgical power free,
synthetic, surgical, orthopedic, microsurgery, powdered exams, powder
free exams, procedures, and nitrile exams gloves; and non gloves
products comprising airway management, feeding and drainage tubes,
syringe and needles, IV therapy, diagnostic, wound care, urology, non-
woven products, hemodialysis disposals, infection control, and autoclave
tapes. It also engages in the generation and supply of energy and
electricity using biomass technology; and trading of medical and
healthcare equipment and appliances. The company has operations in
Malaysia, Germany, Hong Kong, and Uruguay. Adventa Berhad is based
in Kota Bharu, Malaysia.
The group's workforce is over 2000 strong and is located in 5 countries.
In June 2004, ADVENTA was listed on the Malaysian Stock Exchange,
Bursa Malaysia. The subsidiaries of ADVENTA are committed to strong,
sustained growth within their disciplines. The means to this are product
excellence and employee commitment to customers. The group is
continuously sourcing for talents that can add strength and contribute
ideas to the organization. ADVENTA intends to create value and returns
through the implementation and commercialization of its ideas and
innovations.
Vision and mission statement
Vision statement
The vision statement of Adventa Berhad is to be the industry leader
company in the manufacture of medical glove industry as well as provide
the best products and services to its valuable customers.
Mission statement
The mission statement of Adventa Berhad as below:
Customer and supplier intimacy. Adventa Berhad wants to maintain high
customer and supplier intimacy. In order to achieve this mission, Adventa
Berhad provides excellent products and services to their customers as
well as provides extraordinary business support to their suppliers.
Profit. Adventa Berhad intends to achieve good profit for all their
stakeholders include shareholders, employees, and so on. In order to
achieve this mission, Adventa Berhad makes good use of all their assets
to make generate profit.
Better welfare. Adventa Berhad intends to improve the welfare of the
community. In order to achieve this mission, Adventa Berhad produces
high quality products and delivers excellent services to the local
community.
Environmental friendly. Adventa Berhad has an environmental friendly
policy in their company. Adventa Berhad protects the environment
through production using environmental friendly materials as well as
improve their production process though process innovation.
Market leadership. In order to achieve this mission, Adventa Berhad
continually grows by offering high quality medical gloves to the global
market. Adventa Berhad also tries to build a global brand of choice
among the end users of medical gloves such as doctor and nurse so that
it can obtain the market leader position in the medical gloves industry.
SWOT analysis
The SWOT analysis clearly shows that Adventa Berhad's strengths and
the opportunities available to it outweigh its weaknesses and the threats
to its business
3.1 Strengths
Extraordinary product quality.
Adventa Berhad has good control in their medical gloves as well as other
product quality. This can be seen as Adventa Berhad has been awarded
many certificates and awards. For example, EN ISO 13485:2003, ISO
13485:2003 with CMDCAS, ISO 9001:2000, EC Certificate for Sterile
Examination Gloves, EC Certificate for Sterile Surgical Gloves and
Industry Excellence Award 2004. To be successful in a strongly
competitive industry like rubber industry, an excellent product quality is
needed. Adventa Berhad has managed to provide excellent product as
well as a wide range of product breadth. This has made Adventa Berhad
obtain a better position in the industry.
Strong reputation.
Adventa Berhad is a strong manufacturer of medical gloves in the
medical glove industry. Adventa Berhad managed to gain their reputation
by providing sterile surgical glove for surgeons and operating room
personnel which special high risk applications is required in a modern
hospital. The good technical knowledge base of Adventa Berhad to
produce these application-surgical gloves had earned the trust of the
most critical user. This also places Adventa Berhad among the few top
manufacturers in the industry which is capable to attain worldwide
acceptance.
Strong research and development growth.
To continue growing and be competitive in the industry, Adventa Berhad
has good investment in Research and Product Development platform. The
R&D team is built over the lifetime of the company's operating units.
With the continually growth in R&D, Adventa Berhad managed to
produce a wide range of new products that can guarantee an improving
revenues and a better net incomes.
3.2 Weaknesses
Lower profit margin.
Based on the profitability ratio analysis, Adventa Berhad has very low
profit margin compared to their key competitors which is only 1 percent
of profit margin. The profit margin decreased sharply from 10 percent in
years 2010 to only 1 percent in year 2011. This shows that Adventa
Berhad is unable to generate enough profit for all their stakeholders.
Poor manufacturing cost control.
Adventa Berhad has increasing cost of goods sold over the recent years.
Adventa Berhad's cost of goods sold is increasing from RM211.3 million
in years 2008 to RM372.1 million in years 2011 which is almost nearly 76
percent in only 4 financial years. High cost structure has already cut
down their earnings.
Weak balance sheet and unhealthy cash flow.
Adventa Berhad has a relatively weak balance sheet and unhealthy cash
flow over the recent financial years. The current ratio of years 2011 is
weakened compared to in years 2008. Theoretically, current ratio must
be maintained above 2 to be considered as healthy. Unfortunately,
Adventa Berhad fails to achieve that level. Besides that, the quick ratio of
Adventa Berhad also considered as unhealthy too. Since quick ratio must
be achieve at least 1, Adventa Berhad only managed to achieve at only
0.7 in recent 2 years.
3.3 Opportunities
Increasing global demand of health care product.
Several industry analyses has shown that there is a sign of increasing
global demand of health care products include medical gloves. As few
elite manufacturer of medical glove, Adventa Berhad consider it is an
important opportunity to expand its business as well as improve its
revenue. Besides that, Adventa Berhad also can improve its brand name
and company reputation if they managed to increase its market share.
New potential market for health care products.
There are new potential market around the world today for Adventa
Berhad to continue expand its business activities. As the world's aging
population is increasing sharply in the past 2 decades, it is a good
opportunity for Adventa Berhad to offer more health care products. This
is because these aging populations need more health care products than
the younger generations.
Joint venture with local company.
Adventa Berhad can try to form a joint venture with local company when
they are expanding their business into a whole new market. By doing
this, Adventa Berhad not only can increase their market share in the
industry but also overcome the shortcoming and weakness of their
weakness. In addition, Adventa Berhad also can achieve cost saving
because the local company has already has all the critical information
about the local market.
3.4 Threats
Unstable latex price.
Latex is the main raw material of Adventa Berhad's products, and it
constitutes a huge amount of its production cost. In recent years, the
global latex price is fluctuating and showing an uptrend in price.
Therefore, it is a threat for Adventa Berhad because a higher latex price
directly contributes to higher production cost. It is unfavorable to
Adventa Berhad because its earnings will definitely decreasing.
Exchange rate risk.
Since the financial crisis started years 2008, there is an exchange rate
risk faced by Adventa Berhad. This is because Adventa Berhad is a global
company which majority of its business are denominated in USD. A
weakening of the USD against MYR may force Adventa Berhad to
increase its price to maintain its margin. Indirectly, an increased selling
price will reduce the demand of Adventa Berhad's product.
Strong competitors.
There are very strong competitors in this rubber gloves industry such as
Top Glove Corporation Berhad, Supermax Corporation Berhad, Latexx
Partners Berhad and Kossan Latex Industries (M) Sdn. Bhd. Top Glove
Corporation Berhad is the world largest manufacturer of rubber gloves
while Supermax Corporations Berrhad is the second largest
manufacturer after Top Glove. As a company in the same industry with
these strong competitors, Adventa Berhad's sales revenues is likely to be
affected because the economics of scale obtained by the strong
competitors.
Competitive Profile Matrix (CPM)
SUPERMAX
TOP GLOVE
ADVENTA
LATEXX
Critical Successful Factor
Weight
Rating
Score
Rating
Score
Rating
Score
Rating
Score
Financial Position
0.23
3
0.69
4
0.92
1
0.23
2
0.46
Expansion Market Share
0.14
3
0.42
4
0.56
1
0.14
2
0.28
Marketing
0.18
3
0.54
4
0.72
2
0.36
1
0.18
Distribution Channel
0.15
4
0.60
3
0.45
2
0.30
1
0.15
Customer Service
0.06
3
0.18
4
0.24
2
0.12
1
0.06
Product Improvement
0.10
3
0.30
4
0.40
1
0.10
2
0.20
Management
0.03
3
0.09
4
0.12
2
0.06
1
0.03
Competitiveness
0.11
3
0.33
4
0.44
2
0.22
1
0.11
Total
1.00
3.15
3.85
1.53
1.47
Competitive profile matrix (CPM) is a common yet practical strategic
management tool for people to conduct comparison among the company
and its rivals in the same industry such as rubber glove industry.
Moreover, CPM also can screen out company strengths and weaknesses
compare to its main competitors.
The critical successful factors in the table include the internal and
external issues that considered the most important issues related to the
survival of the company in rubber glove industry. The weight of each
factor represents the important of each factor. Meanwhile, the ratings in
the competitive profile matrix represent both strengths and weaknesses.
Number 4 represent major strengths, number 3 represent minor
strengths, number 2 represent minor weaknesses and number 1
represent major weaknesses.
From the financial position perspectives, CPM shows that Top Glove has
better performance than Supermax and Latexx as well as Adventa
Berhad. The financial position of Adventa Berhad is still left behind
compared to Top Glove and Supermax. This can be seen from its weak
balance sheet and unhealthy cash flow. This indicates that Adventa
should come out a new strategic plan to manage their business activities
as well as improving the cash flow of the company.
From the expansion market share perspectives, Adventa Berhad is left
behind by its rivals. From the reliable market analysis, Top Glove and
Supermax have already expanded their business worldwide which is over
140 countries. Meanwhile, Adventa Berhad has not reached these
numbers of countries. In term of marketing effort, Adventa Berhad is
slightly outperforming one of its competitors, Latexx. This has shown that
Adventa Berhad is putting an effort to market its products.
From the distributions channel and customer services perspectives,
Adventa Berhad can outperform Latexx, but it is still left behind Top
Glove and Supermax. Adventa Berhad has around 5 offices, 5 factories
and 1 warehouse around the world. Therefore, they can always create a
successful supply chain and keep efficient value chain. Customer services
of Adventa Berhad also outperformed Latexx. They are recognized for
their effort and commitment that they put in to provide high class
services to their customers. Meanwhile, it is important to mention that
Top Glove and Supermax is still a better one compared to Adventa
Berhad. Therefore, there is still a space for Adventa Berhad to improve
their customer services.
Last but not least, the management and competitiveness perspectives,
Top Glove and Supermax are outperforming Adventa Berhad and Latexx.
Both the largest world manufacturer has the better ability to manage
their company as well as business activities compared to Adventa Berhad
and Latexx. Thus, they are managed to capture a larger market share in
the world. Directly, they also can secure their competitiveness in the
market.
Generally, based on the above table of CPM, Top Glove gains the highest
score followed by Supermax, Adventa Berhad and Latexx accordingly.
Therefore, Adventa Berhad has to improve its overall performance in
order to compete with the world class manufacturer like Top Glove and
Supermax.
Strategic Group Map
Top Glove
Supermax
Kossan
High
Latexx
Price
Adventa
Low
Low Breath of Product Line High
Diagram 1: Strategic group map
Diagram 1 above shows that there are 4 strategic groups in Malaysia
Rubber Industry. The exhibition shows that Adventa Berhad is in the
lower left of it, which means that Adventa Berhad is low in its selling
price and has relatively narrow breadth of product line. In the diagram
above, Latexx is in the middle in its selling price as well as breadth of
product line. Meanwhile, Supermax and Kossan are in the upper right of
the diagram which indicates that they have relatively high in selling price
and broad range of product line. They fall into same group mean that
they are quite similar in term of selling price and breadth of product line.
At last, Top Glove is in the upper right of diagram means that it has the
highest selling price and broadest range of product line.
Financial Ration Analysis
There are five major type of financial ratios analysis discussed within this
section, include short term solvency or liquidity, long term solvency
measures, asset management, profitability and market value. To
elaborate further, Adventa Bhd has to compare with its main rivals which
are Top Glove Corporation Berhad, Supermax Corporation Berhad and
Latexx Partners Berhad.
Short term solvency, or liquidity, ratios analysis
The table below is the short term solvency, or liquidity, ratios analysis for
Adventa Berhad from year 2008 to year 2011.
Liquidity ratios
2008
2009
2010
2011
Current ratio
1.68
1.68
1.11
1.36
Quick ratio
1.13
1.13
0.70
0.73
Cash ratio
0.44
0.41
0.27
0.10
The table below is the comparison of short term solvency, or liquidity,
ratio analysis for Top Glove Corporations Berhad, Supermax
Corporations Berhad, Latexx Partners Berhad and Adventa Berhad in
year 2011.
Liquidity ratios
Top Glove
Adventa
Latexx
Supermax
Current ratio
3.12
1.36
1.56
2.13
Quick ratio
2.35
0.73
0.92
1.28
Cash ratio
0.65
0.10
0.46
0.43
Current ratio for Adventa Berhad in recent 4 years shows that it has the
ability to cover its short term liabilities by utilizing its short term assets,
because it current ratio is maintained above 1. In years 2008 and 2009,
Adventa Berhad's current ratio remains constant at 1.68 and drops to
1.11 in years 2010. But, it increase again to 1.36 in years 2011, it is a
good new for Adventa Berhad because its ability is increasing. By
comparing with key rivals, Adventa Berhad is still relatively poor
performer in this aspect because all 3 competitors' current ratios are
higher than Adventa Berhad.
Quick ratio of Adventa Berhad managed to maintain above 1 in years
2008 and years 2009, but it drops to 0.7 in years 2010 and years 2011. It
shows that its ability of covering its short term liabilities by using its
most liquid asset is decreasing. Besides that, quick ratio has shown a
downtrend in recent years. Similar to current ratio, quick ratio of
Adventa Berhad shows that it is relatively poor performer compared to
its main competitors.
Cash ratio of Adventa Berhad shows a downtrend in recent years. It
drops from 0.44 in years 2008 to 0.10 in years 2011. This is because it
increases its current liabilities from years 2008 to year 2011. Similar to
above 2 ratios, Adventa Berhad is a poorest performer in this aspect
compared to its rivals.
Trend of Short term solvency, or liquidity, ratios analysis for Adventa Berhad
Comparison of Short term solvency, or liquidity, ratios analysis
Long term solvency or financial leverage ratio analysis
The table below is the long term solvency or financial leverage, ratios
analysis for Adventa Berhad from year 2008 to year 2011.
Financial Leverage Ratio
2008
2009
2010
2011
Total debt ratio
0.47
0.46
0.47
0.53
Debt-equity ratio
0.90
0.86
0.87
1.10
Equity multiplier
1.90
1.86
1.87
2.10
Times interest earned ratio
6.03
4.29
6.61
3.31
Cash coverage ratio
9.45
6.00
9.45
5.68
The table below is the comparison of long term solvency or financial
leverage, ratio analysis for Top Glove Corporations Berhad, Supermax
Corporations Berhad, Latexx Partners Berhad and Adventa Berhad in
year 2011.
Financial Leverage Ratio
Top Glove
Adventa
Latexx
Supermax
Total debt ratio
0.19
0.53
0.39
0.35
Debt-equity ratio
0.24
1.10
0.65
0.54
Equity multiplier
1.24
2.10
1.65
1.54
Times interest earned ratio
10.44
3.31
9.89
7.27
Cash coverage ratio
16.39
5.68
9.89
7.27
Total debt ratio of Adventa Berhad maintained below 1 throughout the
recent years. This shows that its assets are sufficient to cover its
liabilities. But, Adventa Berhad's total debt ratio has shown an uptrend in
years 2011 and it is not good news for investors who intended to invest in
Adventa Berhad. Therefore, Adventa Berhad should work harder to
maintain its total debt ratio.
Debt-equity ratio of Adventa Berhad managed to maintain below 1 in
years 2008, years 2009 and years 2010. It increased to 1.10 in years
2011. The ratio means that it still has enough equity to finance its assets.
Adventa Berhad's debt-equity ratio show a relatively flat trend line in
recent years which around 0.86 to 1.10. As compared to rivals, it is still
poorest performer which scores the highest score.
Equity multiplier of Adventa Berhad shows a similar trend as debt-equity
ratio. Adventa Berhad increases its equity multiplier in years 2011 which
means it uses more debt compared to equity to finance its assets.
Adventa Berhad still the poorest performer compared to its competitors.
Time interest earned ratio Adventa Berhad floated over the years. In
years 2011, it drops to 3.31. This is because earnings before interest and
tax of Adventa Berhad has decreased from RM 33.7 million in years 2010
to RM 23.5 million in years 2011.
Cash coverage ratio of Adventa Berhad is similar to time interest earned
ratio. It has oscillating over the years. Overall, its cash coverage ratio has
drop from 9.45 in years 2008 to 5.68 in years 2011. And, it still left
behind compared to key rivals.
Trend of Long term solvency, or financial leverage ratio analysis for Adventa Berhad
Comparison of Long term solvency, or financial leverage ratio analysis
Asset utilization or turnover ratio analysis
The table below is the asset utilization or turnover ratios analysis for
Adventa Berhad from year 2008 to year 2011.
Asset Turnover Ratio
2008
2009
2010
2011
Inventory turnover
4.51
4.22
4.34
4.24
Days' sales in inventory
81.02
86.50
84.06
86.12
Receivable turnover
4.79
5.94
5.86
5.16
Days' sales in receivable
76.17
61.46
62.26
70.69
Total asset turnover
0.77
0.82
0.82
0.95
Capital intensity
1.30
1.22
1.22
1.06
The table below is the comparison of asset utilization or turnover ratio
analysis for Top Glove Corporations Berhad, Supermax Corporations
Berhad, Latexx Partners Berhad and Adventa Berhad in year 2011.
Asset Turnover Ratio
Top Glove
Adventa
Latexx
Supermax
Inventory turnover
10.36
4.24
4.93
4.43
Days' sales in inventory
35.22
86.12
74.06
82.43
Receivable turnover
8.21
5.16
8.69
5.13
Days' sales in receivable
44.46
70.69
42.00
71.09
Total asset turnover
1.44
0.95
0.99
0.87
Capital intensity
0.69
1.06
1.01
1.15
Inventory turnover of Adventa Berhad managed to maintain at the level
4.22 to 4.51 in recent years. This figure shows that Adventa Berhad can
clear its inventory 4 to 5 times in a year time. In addition, this figure is
quite close with major competitors except Top Glove Corporation Berhad
which can clear its inventory up to 10 times a year.
Day's sales in inventory of Adventa Berhad manage to maintain its DSI at
the level of 80 days to 90 days. Overall, it is quite close to its competitors
too except the top performer Top Glove Corporation Berhad which can
clears its inventory in around 36 days. Therefore Adventa Berhad needs
to drive down its DSI so that it can be more competitive in the rubber
market.
Receivable turnover of Adventa Berhad is quite constant over the recent
years. It is around 5 to 6 times a year. This figure is among the lowest
score compared to competitors. Therefore, Adventa Berhad should
consider cutting down its sales in receivable in order to push up its
receivable turnover.
Day's sales in receivable of Adventa Berhad are relatively constant over
the recent years. It is 60 days to 70 days a year. This figure is among the
highest score compared to competitors. It means that there is a space for
Adventa Berhad to improve its DSO so that it can collect its account
receivable in a shorter period of time.
Total asset turnover of Adventa Berhad is around the level of 0.8 to 0.9 in
the recent years. This figures means that it is not utilize its fixed asset
efficiently compared to its rivals. But, it is still in uptrend and investors
can forecast Adventa Berhad can utilize its fixed asset more efficient in
the near future in order to generate sales.
Capital intensity of Adventa Berhad is maintained at the level of 1 to 1.3
over the recent years. Yet, this figure is quite close with it major rivals
except Top Glove which score 0.69 in year 2011.
Trend of Asset utilization, or turnover ratio analysis for Adventa Berhad
Comparison of Asset utilization, or turnover ratio analysis
Profitability ratios analysis
The table below is the profitability ratios analysis for Adventa Berhad
from year 2008 to year 2011.
Profitability Ratios
2008
2009
2010
2011
Profit Margin
0.08
0.06
0.10
0.01
Return on Assets (ROA)
0.06
0.05
0.09
0.01
Return on Equity (ROE)
0.12
0.09
0.16
0.02
The table below is the comparison of profitability ratio analysis for Top
Glove Corporations Berhad, Supermax Corporations Berhad, Latexx
Partners Berhad and Adventa Berhad in year 2011.
Profitability Ratios
Top Glove
Adventa
Latexx
Supermax
Profit Margin
0.06
0.01
0.10
0.10
Return on Assets (ROA)
0.08
0.01
0.10
0.09
Return on Equity (ROE)
0.10
0.02
0.16
0.14
Profit margin of Adventa Berhad is not constants in recent years. In years
2011, it drops to 0.01 which is only 1 percent of profit margin. Compared
to its key competitors who have 10 percent of profit margin, it is a very
low profit margin. Therefore, Adventa Berhad needs to consider changing
its marketing strategy in order to increase its profit margin.
Return on asset of Adventa Berhad also showing downtrend in years
2011. It drops to 0.09 in years 2011. It is the lowest ROA among the
rivals. Its shows that Adventa Berhad is not utilizing its assets to
generate sales.
Return on equity of Adventa Berhad is showing a downtrend in years
2011 similar to its profit margin. It has the lowest ROE among the main
competitors. This figure shows that it is not good in generate profit with
the equity invested by shareholder.
Trend of Profitability ratios analysis for Adventa Berhad
Comparison of Profitability ratios analysis
Market value ratios analysis
The table below is the market value ratios analysis for Adventa Berhad
from year 2008 to year 2011.
Market value ratio
2008
2009
2010
2011
Price-earnings ratio
6.536
9.527
10.203
12.07
Market-to-book ratio
N/A
N/A
N/A
1.0
The table below is the comparison of market value ratio analysis for Top
Glove Corporations Berhad, Supermax Corporations Berhad, Latexx
Partners Berhad and Adventa Berhad in year 2011.
Market value ratio
Top Glove
Adventa
Latexx
Supermax
Price-earnings ratio
19.8
12.07
8.7
12.6
Market-to-book ratio
2.3
1.0
1.2
1.7
Price-earnings ratio of Adventa Berhad has increased throughout the
recent financial years. It increases from 6.536 in year 2008 to 12.07 in
year 2011. The increasing PE ratio means that Adventa Berhad has
future growth potential. When comparing Adventa Berhad with its rivals,
Adventa Berhad is still left behind Top Glove and Supermax. It only
slightly outperforms Latexx.
Market-to-book ratio of Adventa Berhad in year 2011 is 1.0. Due to lack
of information of historical data, it is not relevant to see its trend over the
years. Meanwhile, Adventa Berhad's market-to-book ratio is the lowest
among all the key competitors. This figure means that the shareholder of
Adventa Berhad is investing a big amount of capital into the company.
Comparison of price-earnings ratio
Comparison of market-to-book ratio
Weighted Competitive Strength Assessment
Key Success Factor/Strength Measure
Weight
Supermax
Top Glove
Adventa
Latexx
Quality/ product performance
0.25
9 / 2.25
10 / 2.50
5 / 1.25
6 / 1.50
Marketing/Global distribution network
0.20
10 / 2.0
9 / 1.80
6 / 1.20
7 / 1.40
Financial strength
0.15
9 / 1.35
10 / 1.50
6 / 0.90
7 / 1.05
Technological Skills
0.10
10 / 1.00
9 / 0.90
6 / 0.60
7 / 0.70
Reputation/image
0.10
9 / 0.90
10 / 1.00
5 / 0.50
6 / 0.60
Market share
0.10
9 / 0.90
10 / 1.00
4 / 0.40
5 / 0.50
Customer service
0.05
10 / 0.50
9 / 0.45
5 / 0.25
7 / 0.35
Sum of weights
1.00
Overall strength rating
8.90
9.15
5.10
6.10
* Rating Scale: 1 = Very Weak; 10 = Very Strong
** The weights and values are based on the authors' opinions and beliefs
Weighted Competitiveness Strength Analysis assesses the strengths and
weaknesses of current and potential competitors. Therefore, it is
important to include it in strategy management. A company can
formulate an outstanding strategy to outperform its competitors in the
same industry by assessing the strengths and weaknesses of its rivals in
this analysis.
To assess the strengths and weaknesses of rivals, it is necessary to
compare Adventa Berhad with its competitors such as Top Glove,
Supermax, Kossan and Latexx. The table above is the weighted
competitiveness strength analysis for Adventa Berhad and its key
competitors. The weight in the table indicates how important the key
success factors mean to Adventa Berhad. There are seven key success
factors is analyzed. They are quality/product performance,
marketing/global distribution network, financial strength, technological
skills, reputation/image, market share, and customer service. The table
above has shown that total sum of weight is equal to 1.0.
Overall strength rating
The overall rating of Adventa Berhad is 5.10 which is the lowest score
among all the major competitors include Top Glove (9.15), Supermax
(8.90), and Latexx (6.10). Top Glove and Supermax score the highest
score because both of these companies are the world's largest rubber
glove manufacturers. Overall, it can be concluded as Adventa Berhad is
in the competitive disadvantage position against all their main rivals.
Quality/Product Performance, Reputation/Image, Market Share
This key success factor carries the most weight among the others which
is 0.25 out of 1.0. Adventa Berhad gains 1.25 after multiply with the
weight which is also the lowest score among competitors. Although
Adventa Berhad did have good product quality, it is still left behind its
rivals. Therefore, Adventa Berhad should try harder to improve their
quality and product performance so that they can be more competitive in
the industry. In addition, this key success factor is positively correlated
with the reputation/image and market share. Therefore, reputation/image
and market share of Adventa Berhad also gains the lowest score among
the competitors. Only with a better quality and product performance,
Adventa Berhad can improve their reputation and market share in the
world.
Marketing/Global Distribution Network
This key success factor carries the second highest weight which is 0.20
out of 1.0. Adventa Berhad gains only 1.2 after multiply with the weight.
This score again is the lowest score among the competitors. It means that
Adventa Berhad is in a competitive disadvantage position against
competitors. Therefore, Adventa Berhad needs to put more effort in
marketing as well as its worldwide distribution network so that they can
better perform in the near future.
Financial Strength
This key success factor is assign based in the financial ratio analysis.
Adventa Berhad gains only 0.9 after multiply with the weight. Again, it is
the lowest score in the comparison with rivals. In order to obtain a better
position in the future, Adventa Berhad should have a good financial plan
as well as a good management team to execute the plan.
Technological Skills
Technological skill is positively correlated to the ability of a company to
produce a good and innovative product. Adventa Berhad gains 0.6 after
multiply with the weight. It is again the lowest score among the others.
Therefore, it is necessary for Adventa Berhad to consider improve their
current technological skills.
SWOT Matrix
SWOT matrix is a graphical representation of the SWOT framework. The
following table is the SWOT analysis for Adventa Berhad. Moreover,
there are some strategies based on the SWOT analysis are
recommended.
SO Strategies
Use strengths to take advantage of opportunities
WO Strategies
Overcome weaknesses by taking advantage of opportunities
ST Strategies
Use strengths to avoid threats
WT Strategies
Minimize weaknesses and avoid threats
The table below is the SWOT matrix for Adventa Berhad.
Strengths
Weaknesses
Extraordinary product quality.
Strong reputation.
Strong research and development growth.
Lower profit margin.
Poor manufacturing cost control.
Weak balance sheet and unhealthy cash flow.
Opportunities
S-O Strategies
W-O Strategies
Increasing global demand of health care product.
New potential market for health care products.
Joint venture with local company.
Joint venture with local company in new potential market.
Invest in R&D to develop new and improved health care products.
Fully utilize assets to generate cash flow.
Develop new policy of cost control to achieve cost efficiency.
Threats
S-T Strategies
W-T Strategies
Unstable latex price.
Exchange rate risk.
Strong competitors.
Use derivative instrument to hedge to unstable latex price.
Build capacity in foreign market.
Emphasize on marketing efforts.
Emphasize research and development.
S-O Strategies
It is the strategies formulation based on the strengths and opportunities
of Adventa Berhad.
Joint venture with local company in new potential market.
Adventa Berhad is recommended to form a joint venture with local
company in the new potential market so that they can achieve cost saving
as well as has better understanding of the particular market. Therefore,
they can produce the products that fulfill the needs and wants of the
market.
Invest in R&D to develop new and improved health care products.
Adventa Berhad is also recommended to invest more in the research and
development department. This is because R&D is the root of the new and
improved health care products. Only with better health care products,
Adventa berhad can increase its market share in the world as well as
fulfill the increasing global demand of health care products.
W-O Strategies
It is the strategies formulation based on the weaknesses and
opportunities of Adventa Berhad.
Fully utilize assets to generate cash flow.
Adventa Berhad is recommended to utilize its assets. For example,
Adventa Berhad should use 100 percent of plant capacity to produce
products. This is because waste of capacity is sunk cost. It cannot be
recover in the future date.
Develop new policy of cost control to achieve cost efficiency.
Adventa Berhad is also recommended to introduce new policy of cost
control in order to minimize its manufacturing cost. Only with a lower
cost structure, Adventa Berhad can improve the low profit margin. For
example, use of lower price of raw material.
S-T Strategies
It is the strategies formulation based on the strengths and threats of
Adventa Berhad.
Uses derivative instrument to hedge to unstable latex price.
Adventa Berhad is recommended to use derivatives instrument like
futures contract to hedge against the latex price. This instrument enable
Adventa Berhad to lock in the latex price in the future, so that they can
avoid the problem caused by the unstable latex price such as increase in
manufacturing cost.
Build capacity in foreign market
Adventa Berhad is recommended to build new capacity in foreign market.
By building the capacity in foreign market, Adventa Berhad can achieve
cost saving because there is no shopping cost anymore. Besides that, it
also can enhance its market share by producing in larger volume
compared to its competitors.
W-T Strategies
It is the strategies formulation based on the weaknesses and threats of
Adventa Berhad.
Emphasize on marketing efforts.
Adventa Berhad is recommended to emphasize more on their marketing
efforts. This is because marketing will help them to outperform their
competitors. For example, with an interesting, attractive and informative
advertisement, it can help in increase in their sales revenues. Indirectly,
they can improve their profit margin.
Emphasize research and development
Adventa Berhad is also recommended to emphasize more on research
and development efforts. This strategy can help them to produce new and
innovative products. For example, uses other materials instead of latex in
order to achieve cost saving. Besides that, with new innovative products,
they also can differentiate their products against competitors.
SPACE Matrix
Strategic Position and Action Evaluation matrix or SPACE matrix is a
management tool that used to analyze a company. It can help a company
to determine what strategy a company should apply. SPACE matrix
focuses on strategy formulation of a company. It is divided into 4
quadrants framework which each quadrant represents a different nature
of strategy such as aggressive, conservative, defensive and competitive.
The axes of the SPACE Matrix have shown two internal dimensions which
are the company's financial strength and its competitive advantage and
two external dimensions which are environmental stability and industry
strength. These four factors are the most important determinants of an
organization's overall strategic position in the marketplace.
The SPACE matrix is constructed by plotting calculated values for the
competitive advantage (CA) and industry strength (IS) dimensions on the
X axis. The Y axis is based on the environmental stability (ES) and
financial strength (FS) dimensions. The SPACE matrix can be created
using the following seven steps:
Step 1: Choose a set of variables to be used to gauge the competitive
advantage (CA), industry strength (IS), environmental stability (ES), and
financial strength (FS).
Step 2: Rate individual factors using rating system specific to each
dimension. Rate competitive advantage (CA) and environmental stability
(ES) using rating scale from -6 (worst) to -1 (best). Rate industry strength
(IS) and financial strength (FS) using rating scale from +1 (worst) to +6
(best).
Step 3: Find the average scores for competitive advantage (CA), industry
strength (IS), environmental stability (ES), and financial strength (FS).
Step 4: Plot values from step 3 for each dimension on the SPACE matrix
on the appropriate axis.
Step 5: Add the average score for the competitive advantage (CA) and
industry strength (IS) dimensions. This will be your final point on axis X
on the SPACE matrix.
Step 6: Add the average score for the SPACE matrix environmental
stability (ES) and financial strength (FS) dimensions to find your final
point on the axis Y.
Step 7: Find intersection of your X and Y points. Draw a line from the
center of the SPACE matrix to your point. This line reveals the type of
strategy the company should pursue.
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Internal strategy position
External strategy position
Competitive Advantage
Industry Strength
Product quality -3
Market shares -3
Customer services -3
Brand and image -3
Financial stability +5
Growth potential +4
Profit potential +5
Productivity +3
Average -3
Average +4.25
Total X axis score = +1.25
Financial Strength
Environmental Stability
Return on asset +1
Liquidity +1
Leverage +1
Cash flow +1
Inflation rate -4
Taxation -4
Price range of competing products -3
Demand variability -3
Average +1
Average -3.5
Total Y axis score = -2.5
The internal strategy positions include competitive advantage and
financial strength. Meanwhile, competitive advantage consists of 4
variables which are product quality, market share, customer service and
brand and image. Financial strength consists of 4 variables which are
return asset, liquidity, leverage and cash flow.
The external strategy positions include industry strength and
environmental stability. Industry strength consists of 4 variables which
are financial stability, growth potential, profit potential and productivity.
The environmental stability consists of 4 variables which are inflation
rate, taxation, pricing range of competing products and demand
variability.
The SPACE matrix above has shown that the competitive advantage for
Adventa Berhad is -3 and the industry strength is +4.25. Therefore, the
total x axis score is +1.25. In addition, Adventa Berhad's financial
strength and environmental stability has a score as +1 and -3.5
respectively. Therefore, the total y axis score is -2.5.
SPACE matrix Graph
Conservative Aggressive
1.25
-2.5
Defensive Competitive
The SPACE matrix graph above shows that Adventa Berhad should
pursue a conservative strategy. This is because Adventa Berhad has a
relatively weak position in competitive advantage.
Boston Consulting Group (BCG) Portfolio Matrix
Industry growth rate
Management services Question marks Stars
Dog Cash cows
Energy supplier Healthcare Products
Relative market share
The Boston Consulting Group (BCG) matrix has divided a company
business unit into 4 category include question marks, stars, dogs and
cash cows. Questions marks mean that the business unit has high
industry growth rate and low market share. Stars mean that the business
unit has high industry growth rate and high market share. Dogs mean
that the business unit has low industry growth rate and low market
share. Lastly, cash cows mean that the business unit has low industry
growth rate but high market share.
Adventa Berhad has 3 major business units which are management
services provider, energy suppliers and healthcare products
manufacturer.
According to the diagram above, healthcare products which include
medical gloves which are surgical gloves such as latex surgical gloves,
synthetic surgical gloves, examination gloves which are powdered exam
gloves, nitrile exam gloves fall into cash cows category. It means that
healthcare products business unit of Adventa Berhad has the highest
market share among other business unit in the company. At the same
time, Adventa Berhad is facing strong competition against Top Glove,
Supermax, Latexx and many other companies. Therefore, the healthcare
products industry has low industry growth rate.
In addition, Adventa Berhad also involved in energy supplier which is the
generation and transmission of electricity using biomass energy. This
business unit has low market share and low industry growth rate.
Although it falls into dog category, energy supplier business unit is still
generating profit for Adventa Berhad. So, it should not be divested.
Furthermore, Adventa Berhad also involved in providing management
services. This business unit falls into question marks category. Therefore,
it has the potential to gain addition market share and become stars and
eventually cash cows. In contrast, it also has the potential to degenerate
into dog. Therefore, Adventa Berhad should carefully monitor this
business unit in order to determine whether it is worth to invest in it.
Conclusion
Strategic management is important tool to manage an organization so
that it can be successful. However, strategy formulation is a critical part
in strategic management. To formulate an excellent strategy, there are
many aspect needs to be considered. Therefore, few matrixes are used to
help in strategy formulation. This report is completed and written out
focusing on Adventa Berhad.
Besides that, this report has enables our group to apply strategic
management knowledge and skills in strategic planning and strategy
formulation. So, we hope that our effort will meet the requirement of this
course. Lastly, we hope that our assignment will gather a good
assessment.