Table of Contents for Three Malaysian Companies' Profiles

TABLE OF CONTENTS
1.0 NARRA INDUSTRIES BERHAD............................................................................................3

1.1 COMPANY PROFILE...........................................................................................................3
1.1.1 NATURE OF BUSINESS...............................................................................................3
1.1.2 BOARD OF DIRECTORS..............................................................................................4
1.1.3 AUTHORIZED CAPITAL..............................................................................................9
1.1.4 PAID-UP CAPITAL........................................................................................................9
1.1.5 BOARD MEETING......................................................................................................10
1.1.6 COMPANY VISION AND MISSION..........................................................................10
1.2 GENERAL ENVIRONMENT ANALYSIS.........................................................................12
1.3 TASK ENVIRONMENT ANALYSIS.................................................................................16
1.4 SWOT ANALYSIS..............................................................................................................19
1.5 TOWS ANALYSIS..............................................................................................................26
1.6 RATIO ANALYSIS..............................................................................................................31
1.7 STRATEGIC DIRECTION..................................................................................................36
1.8 OTHER RELEVANCE INFORMATION............................................................................38
2.0 NESTLE (MALAYSIA) BERHAD.........................................................................................41
2.1 COMPANY PROFILE.........................................................................................................41
2.1.1 NATURE OF BUSINESS.............................................................................................41
2.1.2 BOARD OF DIRECTORS............................................................................................42
2.1.3 AUTHORIZED CAPITAL............................................................................................50
2.1.4 PAID-UP CAPITAL......................................................................................................50
2.1.5 BOARD MEETING......................................................................................................50
2.1.6 COMPANY VISION AND MISSION..........................................................................51
2.4 SWOT ANALYSIS..............................................................................................................59
2.5 TOWS ANALYSIS..............................................................................................................65
2.6 RATIO ANALYSIS..............................................................................................................71
2.7 STRATEGIC DIRECTION..................................................................................................76
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2.8 OTHER RELEVANT INFORMATION..............................................................................78

3.0 NEW HOONG FATT HOLDINGS BERHAD........................................................................79
3.1 COMPANY PROFILE.........................................................................................................79
3.1.1 NATURE OF BUSINESS.............................................................................................79
3.1.2 BOARD OF DIRECTORS............................................................................................80
3.1.3 AUTHORIZED CAPITAL............................................................................................86
3.1.4 PAID-UP CAPITAL......................................................................................................86
3.1.5 COMPANY MISSION AND COVER RATIONAL.....................................................86
3.1.6 CORPORATE STRUCTURE.......................................................................................87
3.1.7 COMPANY LOGO AND LOCATION.........................................................................88
3.4 SWOT ANALYSIS..............................................................................................................95
3.5 TOWS ANALYSIS............................................................................................................101
3.6 RATIO ANALYSIS............................................................................................................105
3.7 STRATEGIC DIRECTION................................................................................................109
3.8 OTHER RELEVANT INFORMATION............................................................................110
4.0 CONCLUSION......................................................................................................................111
5.0 REFERENCES......................................................................................................................112
1.0 NARRA INDUSTRIES BERHAD

1.1 COMPANY PROFILE
1.1.1 NATURE OF BUSINESS
Narra Industries Berhad (Narra) was incorporated on 9 September 1980 in Malaysia as
a private limited company under the name of Cement-Board (Malaysia) Sdn. Bhd. On 9
Septmber 1981, the name was changed to Cemboard (Malaysia) Sdn Bhd and subsequently
changed to Hume Cemboard (Malaysia) Sdn Bhd on 6 March 1991. It was then changed to
Hume Cemboard Sdn Bhd on 15 December 1993 and on 12 August 1996 it was converted to a
public limited company and changed its name to Hume Cemboard Berhad ("HCB"). HCB was
listed on the Main Board of the Kuala Lumpur Stock Exchange (now known as Main Market of
Bursa Malaysia Securities Berhad) on 16 March 1998.
On 3 March 2003, HCB disposed of its fibre cement business to Ambang Subur Sdn Bhd
(now known as Hume Cemboard Industries Sdn Bhd) and became an investment holding
company.
Subsequently on 9 October 2003, HCB acquired Hume Furniture Industries Sdn. Bhd.
from Hume Industries (Malaysia) Berhad. On 15 October 2003, Narra assumed its present name.
Narra Industries Berhad is principally an investment holding company whilst its
subsidiaries are engaged in the design, manufacture and supply of furniture, and interior design
fit-out works.
1.1.2 BOARD OF DIRECTORS

1. YBHG DATUK KWEK LENG SAN
Datuk Kwek Leng San, aged 58, a Singaporean, graduated from University of London
with a Bachelor of Science (Engineering) degree. He also holds a Master of Science (Finance)
degree from City University London. He has extensive business experience in various business
sectors, including financial services and manufacturing.
Datuk Kwek was appointed to the Board of Directors (Board) of Narra Industries
Berhad (Narra) on 1 July 2001 and assumed the position of Managing Director on 1 March
2003. He was appointed as the Chairman of Narra on 21 February 2012. He is a member of the
Nominating Committee of Narra.
He is the Chairman of Malaysian Pacific Industries Berhad (MPI), Hong Leong
Industries Berhad and Southern Steel Berhad (SSB), and a Director of Hong Leong Bank
Berhad, companies listed on the Main Market of Bursa Malaysia Securities Berhad (Bursa
Securities). He is also a Director of Hong Leong Company (Malaysia) Berhad and Hong Leong
Foundation.
2. YBHG DATUK SYED ZAID BIN SYED JAFFAR ALBAR
Datuk Syed Zaid bin Syed Jaffar Albar, aged 59, a Malaysian, graduated with a Bachelor
of Arts (Honours) degree in Law in the United Kingdom and qualified as a Barrister-at-Law from
Lincolns Inn. He has been in active legal practice for more than 30 years. Presently, he is the
managing partner of a law firm in Kuala Lumpur.
Datuk Syed Zaid was appointed to the Board of Narra on 18 September 1995. He is
presently the Chairman of the Board Audit & Risk Management Committee and Nominating
Committee of Narra.
He is a Director of MPI and Malaysia Building Society Berhad, companies listed on the
Main Market of Bursa Securities. He is also a Director of Motorsports Association of Malaysia.
3.
YBHG DATO ROSMAN BIN ABDULLAH
Dato Rosman bin Abdullah, aged 46, a Malaysian, is a chartered member of the
Malaysian Institute of Accountants and a member of the Australian Society of Certified
Practicing Accountants. He holds a Bachelor of Commerce (Accounting) degree from the
Australian National University and had attended the Advanced Management Programme at the
University of Oxford.
Dato Rosman started his career with Arthur Andersen & Co from 1989 to 1997. He was
an Executive Director of Malaysia Airport Holdings Berhad from 1997 to 2003 and a NonIndependent Non-Executive Director of KUB Malaysia Berhad from 2006 to 2011. In 2006, he
was appointed as Group Chief Executive Officer of PECD Berhad and held the position until
2009. He then served as Chief Executive Officer of Syarikat Air Negeri Sembilan Sdn Bhd from
2009 to 2012.
Currently, he is the Executive Chairman of Putrajaya Perdana Berhad. He also serves as a
Non-Independent Non-Executive Director of Cuscapi Berhad and as an Independent NonExecutive Director of Kumpulan Fima Berhad and CLIQ Energy Berhad, companies listed on
the Main Market of Bursa Securities.
Dato Rosman was appointed to the Board of Narra on 3 February 2006. He is a member
of the Board Audit & Risk Management Committee of Narra.
4. MR TERENCE LEE CHAI KOON
Mr Terence Lee, aged 55, a Malaysian, is a member of the Chartered Institute of

Marketing, United Kingdom. He holds a Diploma in Marketing from the Chartered Institute of
Marketing, United Kingdom and another from Australia Council of Marketing. He has more than
20 years of extensive experience in the manufacturing of wood-based panels.
Mr Terence Lee joined the Hong Leong Group in 1993 as Export Manager of Guotrade
(Malaysia) Sdn Bhd. He was appointed as the General Manager of Hume Fibreboard Sdn Bhd in
1996, a position he held until 2008. Currently, he is the Executive Director of Hume Furniture
Industries Sdn Bhd, a subsidiary of Narra.
Mr Terence Lee was appointed to the Board of Narra on 1 December 2008. He is a
member of the Board Audit & Risk Management Committee of Narra.
5. MR SEOW YOO LIN
Mr Seow Yoo Lin, aged 57, a Malaysian, qualified as a Certified Public Accountant in
1981. He holds a Master in Business Administration from The International Management Centre,
Buckingham, United Kingdom.
Mr Seow joined KPMG Malaysia in 1977. In 1983, he was seconded to the United States
to gain overseas experience. He returned in 1985 and was admitted as Partner in 1990. He was
the Managing Partner of KPMG Malaysia from 2007 to 2010 and retired from the firm in 2011.
During his tenure with KPMG, he has been the Audit Partner on a wide range of companies
including public listed companies and multinationals in banking and finance, manufacturing,
trading and services industries.
Mr Seow was a member of the Executive Committee of the Malaysian Institute of
Certified Public Accountants from 2009 to 2011 and was a Council member of the Malaysian
Institute of Accountants from year 2007 to 2011.
Mr Seow is a Director of SSB. Mr Seow was appointed to the Board of Narra on 21
February 2012. He is a member of the Nominating Committee of Narra.
1.1.3 AUTHORIZED CAPITAL
Authorised share capitals for Narra Industries Berhad were 350,000,000 ordinary shares where
each of shares was RM 1.00.
1.1.4 PAID-UP CAPITAL
Narra Industries Berhad issued and paid up capital was 62,188,000 ordinary shares where each of
shares was RM 1.00.
1.1.5 BOARD MEETING

Board meetings are scheduled a year ahead in order to enable full attendance at Board
meetings. Directors are required to attend at least 50% of Board meetings pursuant to the Main
Market Listing Requirements of Bursa Malaysia Securities Berhad.
The Board meets quarterly with timely notices of issues to be discussed. Additional
meetings may be convened on an ad-hoc basis as and when necessary. Where appropriate,
decisions are also taken by way of Directors Circular Resolutions.
All Board members are supplied with information on a timely manner. Board reports are
circulated prior to Board meetings and the reports provide, amongst others, financial and
corporate information, significant operational, financial and corporate issues, updates on the
performance of the Company and of the Group and managements proposals which require the
approval of the Board.
At Board meetings, active deliberations of issues by Board members are encouraged and
such deliberations, decisions and conclusions are recorded by the Company Secretaries
accordingly. Any director who has an interest in the subject matter to be deliberated shall abstain
from deliberation and voting on the same during the meetings.
The Board met four (4) times during the financial year ended 30 June 2013.
1.1.6 COMPANY VISION AND MISSION

1. VISION
The Group aims to ensure the health and safety of our employees and all who are affected
by our business operations. The Group also committed to protecting the environment.
Besides, they are committed as a company and as individuals to comply with the laws,
respect the cultures, and to have a positive impact on the lives of the people in the
communities where they conduct their businesses.
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2. MISSION
The Group sees Corporate Social Responsibility (CSR) beyond its core mission. The
Group contributes to the socio-economic development of the nation by promoting education,
providing aid to marginalised communities, supporting and developing local talent,
preserving the environment and practicing sustainable supply-chain in its operations.
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1.2 GENERAL ENVIRONMENT ANALYSIS

General environment is the external environment which can affect an organizations
business activities and performance but cannot control by them. There are 5 major factors
have significantly contributed to Hai-Os business operations and strategies, such as
political & leagal, economic, social, technological, environmental forces.
1. POLITICAL AND LEGAL FORCES
Political forces will affect a company by political pressures and will determine by the
orientations of its ideology of a country. These political and legal forces will influence the shape
the profile of a business environment.
Political forces concern the influence of political parties, leaders and pressure groups
such as civil society organization and trade unions. These forces negotiate or dictate policies that
may change the course of business in an industry.
Every state has unique regulations that guide licensing requirements, incorporation
procedures and labour issues. The legal forces are critical for successful operations in an industry
of specialization. Therefore, observe and track changes to state and federal regulations are
important to avoid legal problems. It is equally important to understand dispute resolution and
litigation procedures provided for by the federal and state laws, as this may affect our operations.
In Narra Industries Berhad, the case of access to raw materials necessary for operations,
for example like, limestone, gypsum, aggregates and other raw materials, is essentially important
for the target of the company in maintaining the sustainability and profitability of the operations.
The local legislative, regulatory or political action could have a negative impact on the results of
the target companies or on the development of their activities, if they failure to obtain, maintain
or renew these land and mining rights as well as any other permits, licenses, rights and titles
necessary to carry out the target companies operations or expropriation.
2. ECONOMIC FORCES
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The state of competitive environment in which a firm operates is determine by the factors
such as the level of employment, rate of inflation, rate of interest, demographic changes, and
fiscal and monetary policies. These forces will affect the outcome of the firms marketing
activities, by determining the volume and strength of demand for its products.
The Malaysian economy expanded by 4.3% in the second quarter of 2013. While
domestic demand remained firm, growing by 7.3%, exports registered a larger decline, amid
weakness across most export products. On the supply side, the major economic sectors expanded
further in the second quarter, supported by the continued strength in domestic demand. On a
quarter-on-quarter seasonally adjusted basis, the economy recorded a growth of 1.4%.
For the Malaysian economy, the prolonged weakness in the external environment has
affected the overall growth performance of the economy going forward. While domestic demand
is expected to remain firm, supported by sustained private consumption, capital spending in the
domestic-oriented industries and the on-going implementation of infrastructure projects, the
weak external sector in the first half of this year will affect our overall growth performance for
the year. The overall growth of the economy for this year has now been revised to 4.5 - 5.0%.
Going forward, domestic demand is expected to remain on its steady growth trajectory and will
continue to be supported by an accommodative monetary policy.
The Proposed Acquisitions will allow the Narra Group to diversify its business into the
concrete and cement-related industry, and provide it with an immediate stream of revenue and
earnings. Malaysias economy is expected to continue its growth trend on the back of the
expected roll out of more infrastructure investments by the private and public sectors. The
prospects of the concrete and cement-related business are expected to be optimistic going
forward and, subject to the completion of the Proposed Acquisitions, the business would
contribute positively to the Narra Group.
3. SOCIAL FORCES
The social environment of a business can be integral to its success or failure. Employees
are often influenced by the context in which they work and this can have implications for
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productivity. Employers who take the necessary strides to create a positive and harmonious
social environment in the workplace can set themselves up for future success. The social factors
like customs, traditions, values, beliefs, poverty, literacy and life expectancy rate are include in
the social environment of business. The social structure and the values that a society cherishes
have a considerable influence on the functioning of business firms.
Malaysian lifestyle shift towards wellness and self-administered healthcare has open
up opportunities for Hai-O to modify its strategies and product offerings to suit the market
demands.
Besides, the Group also develops talent regardless of race, gender or religious belief. Employee
advancement is based on merit and we believe that it is this variety of persuasions and cultures
that fuel creativity, entrepreneurship and openness. The Group also actively promotes work-life
balance through various sports, family and social initiatives. In this regard, various initiatives
such as sports activities, social events and family day outings were carried out with the full
support and commitment of the employees throughout the financial year.
4. TECHNOLOGICAL FORCES
Technological factors affecting businesses all over the world demands a changing
behaviour with regard to traditional marketing. The rapid development of technology requires
quick reaction by businesses in order to survive in an emerging competitive environment and
keep up with new trends and innovative services which other competitors might be offering.
These technological factors can include both products and processes and can present
opportunities and threats but it is vital for competitive advantage and is a successful driver in
globalisation. Products can be marketed in new ways and processes present immense Value to the
business.
Emphasizing more on technological aspects, Hai-O strives to improve the quality and its
product line and taking traditional medicine up to the level of the mainstream medicine
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today. The analysis also indicated that the industrys external factors will continue to open
up huge opportunities for Hai-Os business in the near future.
. These shared services are provided in-house in order to align with the Hong Leong Groups
corporate objective and management disciplines and to reduce operating cost and improve
efficiency such as through economies of scale, better utilisation and allocation of resources,
standardisation of processes and operating procedures and information technology. Accordingly,
the Board considers it beneficial to enter into transactions in respect of the Group Management
and Support Services. The Group Management and Support Services are carried out on
commercial terms, on terms not more favourable to the related parties than those generally
available to and from the public, where applicable, and which will not be detrimental to the
minority shareholders of Narra.
5. ECOLOGY FORCES
The environmental forces are elements of constant changes due to government actions
and industrial events. Environmental force can also be ecological and environmental aspects
such as weather, climate, and climate change, which may affect industries in some way.
Narra Industries Berhad has a side on environmental preservation. They practise
environmental preservation and maintain high standards of Occupational Safety and Health
management practices. Environmental management programmes such as recycling campaigns,
air pollution controls and waste management programmes are continuously deployed to achieve
the Groups objectives. In addition, they also conduct regular occupational safety and awareness
programmes for their employees.
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1.3 TASK ENVIRONMENT ANALYSIS

Task environment analysis can be done on Narra Industries Berhad by using Porters Five
Forces. Elements of Five Forces are threat of new entrants, rivalry among existing firms, threat
of substitute products, bargaining power of buyers and bargaining power of suppliers. It is a
framework to analyse level of competition within an industry and business strategy development.
1. THREAT OF NEW ENTRANTS

Competition is strong in the markets in which the target companies operate. Competition,
whether from established market participants or new entrants could cause the target companies to
lose market share, increase expenditures or reduce pricing, any one of which could have a
material adverse effect on business, financial condition, results of operations or prospects.
Threat of new entrants in furniture industry is relatively strong because the entry barriers
are low. To start up in furniture industry is relatively applicable. This business does not need high
capital requirements from 25 Million until 1 Billion. Skills and material is main resources in this
business. Investment in technologies is not really applicable. Moreover, there is government
restriction for downstream industries. All businesses are driven to use the raw materials and
given the added value rather than export the raw materials.
2. RIVALRY AMONG EXISTING FIRMS

Narra Industries Berhad is principally an investment holding company whilst its
subsidiaries are engaged in the design, manufacture and supply of furniture, and interior design
fit-out works. Nowadays, there are more and more furniture companies have been developed. In
order to be a survivor in the industry, every company will keep brainstorm to come out with the
most fashionable and comfortable furniture. The design of the furniture might also become one
of the considerations when the customers decide to buy it. There are many existing furniture
companies in the market. Among of that, the well-known company might be Ashley Furniture
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Home Stores, IKEA Home Furnishings, Gaoya Furniture Industries Sendirian Berhad, and
others.
3. THREAT OF SUBSTITUTE PRODUCTS
Threat of substitute in furniture industry is relatively weak because there are no
substitutes for furniture product that exist in the market. Until now, people use furniture from
wood, metal, plastic, and other materials in everyday activities. Furniture being used to sit, sleep,
work, and do other activities everywhere and nothing can substitute this furniture. The function
of furniture in everyday activities cannot be substitute by other thing until now. The only
substitute that exists is material substitute. For example, a wood chair can be substituted with
plastic chair. But, in this analysis we include all of material to be furniture. And furniture as a
whole group of material has no substitute at all, at least until now. So the threat of substitute in
this industry is weak and there are no threats from the substitute part.
4. BARGAINING POWER OF BUYERS

Buyers have the right to get a good quality product in line with the price they paid. Buyer
position to the furniture company is strong. This is due to the three factors which are high
switching cost, large number of buyers and seller products have many differentiation.
Switching costs are costs that will be charged to consumer if the consumer stopped
buying green furniture products and start using other products from one of the competitors. By
switching to another product, consumers will have to pay more because green furniture offer
good quality recycled products at an affordable price.
For the factor of large number of buyers, the furniture demand by public in the market
continues to rise. This condition is accompanied by supplying products that are very competitive,
both in quality and price. Producers have to compete to gain market share with other lower price
products. Consumers buy furniture based on their design preference and its price. The bargaining
power of buyers is high in the concerned industry.
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Besides, consumers see the producers providing variety of differentiated products

depending on the product design and its quality. The numbers of furniture manufacturer are
increasing due to the global competition in the market.
5. BARGAINING POWER OF SUPPLIERS
The bargaining power of suppliers for Narra Industries Berhad is considered weak,
because there are many types of plywood used to make furniture and none of the company is
able to produce all kinds of wood, so the furniture company can easily determine their suppliers.
If companies want to replace furniture supplier, then they can do so easily because of the
technology used by most of the factories are relatively equal. No single company that has huge
technological advantages compared to other wood mills. The machines used are relatively
common and can be purchased without the regulatory hurdles.
Besides, furniture companies can easily find substitutions kind of wood they used to
make furniture. For example, the company used to use teak wood in the manufacturing process
can transform into wooden furniture materials Sengon. In addition, the furniture company is now
starting to find ways to make use of wood pulp as raw material for furniture.
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1.4 SWOT ANALYSIS
SWOT ANALYSIS TABLE: NARRA INDUSTRIES BERHAD

INTERNAL: STRENGTHS
INTERNAL: WEAKNESSES
S1
Strong Board of Directors
W1
Losses in after tax for few years
S2
High quality products
W2
High sales price
S3
Innovative products
W3
Low product publicity (Advertisement)
S4
Public listed company

EXTERNAL: OPPORTUNITIES
EXTERNAL: THREATS
O1
After sales services
T1
Close substitutes
O2
Consumers preferences toward new
T2
Limited barrier to entry
furniture technology
T3
Numbers of competitors
O3
Interior design (Start to end service)
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1. STRENGTHS
i.
STRONG BOARD OF DIRECTORS

To achieve a strong board of directors, the directors of the company should have
academic knowledge and technical skills in relevance industry. The chairman of Narra
Industries Berhad, Datuk Kwek Leng San is a holder of Bachelor of Science (Engineering)
from University of London and also holds Master of Science (Finance) degree from City
University London. Knowledge of engineering is useful on manufacturing company. Besides,
Datuk Syed Zaid bin Syed Jaffar Albar, one of the directors of the company was graduated
with Bachelor of Art (Honour) degree in law in United Kingdom. He had more than 30 years
working experience and has a strong knowledge on law. He could provide consultation for
any matter that deal with legal issue or the published acts. Furthermore, there are also
directors who are expertise in accounting. They have deep knowledge on accounting and
auditing. One of the directors was the Managing Partner of KPMG. This could be assist in
dealing with auditors while auditing on company report. They are more understand on the
audit work and could check whether the auditors was carryout the auditing work properly. Mr
Seow Yoo Lin, holds a Master in Business Administration from The International
Management Centre, Buckingham, United Kingdom. He has more than 20 years of extensive
experience in the manufacturing of wood-based panels. While, Mr Terence Lee Chai Koon, a
non-executive director, holds a Diploma in Marketing from the Chartered Institute of
Marketing, United Kingdom and another from Australia Council of Marketing. It clearly
shows that all of the board of directors with a high qualification in different field. A strong
board of directors formed due to the combination of expert and experience directors.
ii.
HIGH QUALITY PRODUCTS

The company was giving emphasis on the quality of the products. A quality control
was performed in order to make sure the quality of the products could be achieved and be
sustained. Hume Furniture Industries Sdn Bhd obtained the Forest Stewardship Council
("FSC") certification, which is a first for a Malaysian indoor furniture manufacturer. This
certification has positioned HFI as a preferred supplier for "Green Products". The company
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has well established internal testing equipment and it is capable to conduct own testing on the
wooden furniture products such as in-house packaging drop test and product quality test.
These testing are to ensure the compliance of high quality standard of wooden furniture to
meet the stringent international standard and requirement.
iii.
INNOVATIVE PRODUCTS
Due to the advancement of technology and the combination with intellectual capital
of the company, the products that produced by Narra Industries Berhad was innovative and
with a multi-purpose function for a product. For example, the foldable table can also be use
as a chair or a coffee table can also be use as a books rack. A creative and good design is one
of the attractions of the products. The design of the products mostly would be simple and
easy structure. But it mainly focuses in on the functional of the products. The main concept is
that the company was tried to come out with some ideas on products which able to save place
and match together different kind of function all in one. The wholly owned subsidiary of
Narra Industries Berhad (Hume Furniture Industries Sdn Bhd) are Original Equipment
Manufacturer ("OEM") and as an Original Design Manufacturer ("ODM"). HFI performed
interior design and fit-out ("IFO") works to the hospitality sector such as hotels and service
apartments, and commercial sectors such as banks and offices. It manufactures and supplies
customized case goods furniture to hotels and serviced apartments.
iv.
PUBLIC LISTED COMPANY

Narra Industries Berhad is a public listed company where it is listed on the Bursa
Malaysia. Hence, the information of the company could be easily be assessed by the public.
In order to become a listed company, Narra Industries Berhad had fulfilled all the
requirements stated by the Bursa Malaysia. In other words, Narra Industries Berhad was able
to operate accordance to what being required. Being the public listed company, the capital
could be more easily to be obtaining as compare to the private company.
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2. WEAKNESSES
i.
LOSSES IN PROFIT BEFORE TAX (PBT) FOR FEW YEARS
It shows that Narra Industries Berhad has losses before tax on year of assessment
2007, year 2008, year 2009 and year 2011, which are 4 million, 5 million, 1 million and 4
million respectively. The profit of the company was fluctuated over the year and it proved
that the financial position of the company was not stable which lead losses in before tax
amount in some particular years. In year 2013, according to the annual report, from the
chairmans statement, it stated that the Group recorded a slightly lower profit before
taxation (PBT) of RM0.07 million for FY 2013 as compared with a PBT of RM1.1
million in FY 2012, due mainly to unfavorable sales mix and increase in project expenses
during FY 2013.
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ii.
HIGH SALES PRICE

Due to the advancement of technology used (high technology machinery) and the
recruitment of expert employees in designing and operate on machinery to produce on the

innovative products. Besides, since the company is emphasis on the quality of the product, a
good quality of raw materials is required in order to achieve on this objective (incurred
higher cost in obtaining higher quality of raw material). Hence, a higher sales price must be
set so that the production cost of the products can be covered.
iii.
LOW PRODUCT PUBLICITY (ADVERTISEMENT)

The product of the company was seldom advertise on the newspaper, magazine or any
others media. The market of the company on local was not popular and it is mainly export to
overseas. Hence, the brand of the company was unknown to the Malaysian. Hume Furniture
Industries Sdn Bhd do not have any warehouse to sales on their products, they are more
focusing on manufacturing and not direct sales to the end consumers. Through the annual
report, the company does not record any expenses made on the advertisement or marketing
purposes.
3. OPPORTUNITIES
i.
AFTER SALES SERVICE

A company who was provided the after sales service could benefit the company in
terms of reputation and also gaining the confidence of the customers. It is like a warranty on
the product purchased. The customers could consult the company on any problems regarding
the products. Repairing service is also encouraged to be put into practice by the company.
The company should not only focus on generating the revenue, but it also crucial for the
company to concern on the feedback made by the customers. The company should have a
customer service department to deal with matter regarding on after sales service.
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ii.
CONSUMERS
PREFERENCES
TOWARD
NEW
FURNITURE
TECHNOLOGY
There are high demands on the new innovative items by the customers nowadays.
Technology was changing from time to time; company should in line with the technology
advancement in order to gain the competitive advancement. It is importance for the company
to apply the new technology and the innovative concept on the products produce by the
company. The technology that used by the company must be up to date. Besides, the
company should provide a variety products which the innovation and design could not be
duplicate by the others. A unique product that promoted by company would be the main
factors that help company to become dominant amongst the others.
iii.
INTERIOR DESIGN (START TO END SERVICE)

Company might gain advantages if they are able to provide the interior design in
package. The designer could design on the products and also gives an idea on how to furnish
and decorate the furniture on customers premises. A custom made of the products according
to the requirement made by customers. The service would be provided as to ensure that the
furniture purchased was suitable for the customers premises. There are demanding on high
living standard nowadays, by providing such service will increase the sales of the furniture.
4. THREAT
i.
CLOSE SUBSTITUTES
Furniture could be easily substitutes by competitors companies products. Basically,
customers would concern on the design and the quality of the products. The branding would
not be the main focus by the customers. Customers might switch their preference from one
brand to another if the furniture was met their requirements. There are also a portion of
customers who are just concern on the usefulness of the furniture.
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ii.
LIMITED BARRIER TO ENTRY

The government was not strictly imposed any rules and regulations on the furniture
manufactures industries. Hence, the new entrance could easily get their license to operate the
manufacturing business. Moreover, the capital requirement of the industry was considered
low as compare to others.
iii.
NUMBER OF COMPETITORS
There was increase in number of competitors nowadays. The bargaining power of
supplier could be affected inversely with the increase in number of competitors. In other
words, the bargaining power of suppliers would decrease if there was increase in numbers of
competitors in the market. Due to the surplus on supplies, the customers have variety choices
and the company might be faced the risk of being eliminated from the market. Unless the
company was keep on improvement on their operation and products in order to gain
competitive advantages to compete in the saturated industry field. The competitors of Narra
Industries Berhad are Rozel, Lorenzo, Ikea and etc.
26
1.5 TOWS ANALYSIS

TOWS ANALYSIS TABLE: NARRA INDUSTRIES BERHAD
INTERNAL FACTORS
STRENGTHS
WEAKNESSES
S1
Strong Board of
W1
Directors
S2
High
tax for few years
quality
products
S3
S4
EXTERNAL
FACTORS
OPPORTUNITIES
O1
O2
High sales price
W3
Low
products
(Advertisement)
Public
listed
company
S2S3O2 Research and
W3O1O2O3 Advertising
development
S3O3
and
Consultation
service
S2O1
product
publicity
Consumers
preferences
W2
Innovative
After sales
services
Losses in after
marketing
W1O3
After sales
toward new
service
New
business
W201
furniture
Attract
customers
technology
O3
Interior
design (Start to end

service)
THREATS
T1
Close
substitutes
T2
S4T3
Limited
barrier to
T3
S2T1
entry
Numbers of
Special
W2T3
Focus on
product
large scale
Competitive
production
advantages
S3T3
Continuous
improvement
competitors
1. SO STRATEGIC
i.
RESEARCH AND DEVELOPMENT

27
Narra Industries Berhad should come out a plan to do a research on innovative

preference which could attract customers. A focus would made on the preferences that shown
by the customers in order to boost up the sales through the increasing on demand by the
consumers. Company can collect those information through survey by distribute
questionnaire or test market on a new product. Furthermore, recruitment on technical and
skill employees to make sure that the product is in higher quality and met the requirement
requested by customers. A professional, creative and innovative designer is playing an
important role on the designation and innovate a new form of products with the application
of new technology on the production. Before the new products were being introduced to the
market, a test market on the product should be done in order to get the response of the
consumers. This can be done through exhibition or advertisement.
ii.
CONSULTATION SERVICE
Consultation service provided to the customers before or during the customers
purchase on the products. The company would response on customer requests and
transformed it into the products. It could be from the suggestion or demand by the customers
before purchase on the products. By gathering the ideas from the customers, through the
creative and innovative of the employees, the product that produced could be more tallies
with customers preferences. Moreover, consultation services provide a platform for the
company to assist customers on interior design task. Narra Industries Berhad is stressed on
innovative and quality product, through providing interior design to the customers rather than
just manufactured on the product, company was allowed customers to giving their ideas on
the design and decoration, company would give some professional advice to them on the
products. This could increase the reputation of the company. Furthermore, this could be one
of the strategic that able to increase the demand of the customers on the products that being
produced.
iii.
AFTER SALES SERVICE

Company should not only concern on the revenue that could be gained from the
business operation. In contrast, Narra Industries Berhad should collect and response to the
28
feedback from the customers. After sales service is encourage to be executed by the
company, for example, by providing repairing service on the products purchased or giving
consultation for any problems faced by customers. Company continuous improvement could
be achieved if the company provided after sales service. Besides, due to the improvement,
the production line of the company products able to sustain a good quality. After sales service
was like giving a warranty to customers on the products purchased. As a result, the branding
of company able to improve and it also provide a medium for company as advertisement
purposes.
2. ST STRATEGIC
i.
SPECIAL PRODUCTS
Narra Industries Berhad situated in the industry that was highly competitive field.
Hence, the products could be easily to be substitute by competitors companys products. In

order to solve on this issue, the company should ensure that the furniture that being produce
is unique and it is not easily to be duplicate by the competitors. A new technology should be
implemented in production and higher skills employees should be employed so that the
production line of the products could be more efficiently.
ii.
COMPETITIVE ADVANTAGE
A company competitive advantage is a main factor to decide on the success or failure
of the company. Capital playing an important role to achieve the competitive advantages of
the company. Company should enlarge it competitive advantages since there are increasing in
number of competitors recently. Narra Industries Berhad is a public listed company, so the
company able to obtain capital from the public. Besides, the branding of the company must
be outstanding amongst the competitors; loyalty to the companys brand is required to be
built on the consumers so that they will not exchange to others brand.
29
iii.
CONTINUOUS IMPROVEMENT
Company should be able to continuous improve on business operation. Innovation
does not have an end, a continuous improvement is important in order to gain competitive
advantage within the field. Continuous improvement could be achieve through involvement
of employees in training courses or keep the technology of the company up-to-date. Besides,
quality control should be executed on the quality of the products by consider the
recommendation or ideas given by the customers so that the products able to improved and
ensure the level of the quality could be achieved above the benchmark that being set.
3. WO STRATEGIC
i.
ADVERTISING AND MARKETING

Company should invest more on advertising segment in order to increase the visibility
of the company name in the market. Advertising could be done through advertise on mass
media like broadcasting through television, radio, magazine or newspapers. Besides, services
provided other than production of the furniture could be a medium for company to advertise
on their brand name. Reputation and visibility of company could be increase through the
activities provided by the company.
ii.
NEW BUSINESS
Company should focus on other business segment other than the main business
operation, manufacturing. From last few years, the company was shown a negative amount
on the net profit on the annual report of the company. Hence, Narra Industries Berhad should
find an alternative solution in order to solve on this issue. New business can be carry out by
the company in order to get the other sources of income rather than manufacturing. By
providing the interior design for the customers, an extra consultation fees could be generate
through the intellectual and creativity by giving some of the professional advice, where there
30
are no cost was charged on the profit generating. This might decrease the losses that incurred
by the company.
iii.
ATTRACT CUSTOMERS
Higher price on the furniture was set by the company in order to cover on the
production costs incurred during the production activities were carry out. Some of the
customers might resist purchasing on the products due to the high cost charged by the
company. Hence, company should providing the after sales service to offset on the high price
charged. Customers might be willing to pay more if the safeguard on the interest of the
customers. This is also one of the strategic to avoid the customers refuse to buy on
companys product due to the price factor.
4. WT STRATEGIC
i.
FOCUS ON LARGE SCALE PRODUCTION

Company should set a plan that allowed company to build a good relationship with
the customers that giving chance for the company to supply on the furniture in large quantity.
This is because if the furniture was produce in batch, the economic scale could be achieved
due to the large quantity production where the efficiency also can be achieved. As a result,
the profit margin of the business operation could be increase. Since the production cost in
batch is lower compare to the production in single unit, so the prices of the products could be
decrease. The increase in the number of competitors, company should be able to be more
efficient in term of production as compare to the competitors. Company should have a
strategic that enables the company to become the product differentiation leader and also the
cost leader among the others.
31
1.6 RATIO ANALYSIS

1. EARNINGS PER SHARE (EPS)
Net Income
Average Outstanding Share
Year
2013
2012
(27,258,000)
(417,000)
62,188,000
62,188,000
= (0.4383)
= (0.0067)
Earning per share (EPS) indicate the portion of a company's profit allocated to each
outstanding share of common stock. It also serves as an indicator of a company's profitability.
Hence, the higher the earning per share (EPS) of the company indicates the good performance by
the company on it profit generation.
The company has only the basic earning per share and it does not have diluted earning
per share since the company only has ordinary shares. Both of the years were shown a negative
amount. This is due to the net income on both of the years were shown a net loss. In year 2012,
the amount is negative 0.67 cent per share. It shown decrease in value on year 2013 with a value
of negative 48.84 cent per share. Basically, we can conclude that the company was not performed
well on both of the years. But, to be more specific, we can summarized that the company was
less performed on year 2013 compare to year 2012.
32
2. RETURN ON SALE (ROS)

Earning Before Interest and Tax (EBIT)
Revenue
Year
2013
2012
(27,259,000)
(413,000)
185,000
214,000
= (147.3459)
= (1.9299)
Return on sales providing insight into how much profit is being produced per ringgit of
sales. The higher value of return on sales ratio indicates the company was efficient on its sales
generating. This ratio provides an alternative to compare on the companys return on sales over
time period to analyze on the trends and it is also can compare with other companies in the same
industry.
Through this ratio, we get to know that the company was less efficiency on year 2013
compare to year 2012. The return on sales ratio was shown a negative amount in both of the
years. The company was generated losses on both of the years. The ratio show a negative amount
of 1.9299 in year 2012, with a higher revenue amount which is RM 214,000 as compare with
year 2013 (RM 185,000). A huge difference shows between the amounts of ROS ratio for both of
the years. In years 2013, the ROS ratio was 76 times of the ROS ratio for year 2012 (in negative
value). The large amount of losses was bear by the company on year 2013.
33
3. RETURN ON INVESTMENT (ROI)

Net Profit After Interest and Tax
Total Assets
Year
2013
2012
(27,258,000)
(417,000)
30,246,000
57,582,000
= (0.9012)
= (0.0072)
Return on investment (ROI) is one of the ratio analysis which is to measure on the net
profit that a companys management able to earn through the use of the company total assets. It
is basically to measure on how efficient the company was used its total assets to generate the net
profit. Hence, the higher the value calculate on the return on investment ratio illustrate that the
company was efficient in applied of its total assets to generate the net income. The lower return
on investment proved the company does not fully used the total assets in its business operation.
According to the return on investment that have been calculated above, it have proved
that the company having a lower amount of return on investment ratio (more negative value) on
year 2013 which is in bracket 0.9012 as compared to year 2012, in bracket 0.0072. We can
conclude that year 2013; the investment was not utilized as efficient as year 2012. But, in overall,
the companys management does not manage to utilize efficiently on the assets in order to
generate the net income.
34
4. RETURN ON ASSETS (ROA)

Earnings before Interest and Tax (EBIT)
Average Total assets
Year
2013
2012
(27,259,000)
(413,000)
(30,246,000 + 57,582,000) / 2
(57,582,000 + 57,751,000) / 2
= (0.6207)
= (0.0072)
Return on assets is an indicator that shows how profitability the company is in relative to
its total assets. It indicates how efficient the business operation in using the companys to
generate earning. It should be noted that the return on assets for public companies can vary
substantially and it is highly dependent on the industry. The ROA works ideal as a comparative
measure, when it is used to compare it against a company's previous ROA numbers or the ROA
of a similar company. The higher return on assets figure is more favorable due to more efficient
of a company in managing its assets to generate the earnings. Sometimes, return on assets is also
referred as the return on investment.
Through the return on assets ratio that calculated above, it is same as the previous ratio
which the ratio figure is in negative value for both of the years. In year 2012, the ratio is in
bracket 0.0072 and for year 2013, the figure is in bracket 0.6207. Refer to this figure, we can
concluded that the company managed the assets more efficiently in year 2012 compare to year
2013.
35
5. RETURN ON EQUITY (ROE)

Net Profit
Average Shareholder Equity for Period
Year
2013
2012
(27,258,000)
(417,000)
(29,696,000 + 56,954,000) / 2
(56,954,000 + 57,371,000) / 2
= (0.6292)
= (0.0073)
Return on equity (ROE) defined as the amount of net income returned as a percentage of
shareholders equity. This ratio is measures a corporation's profitability by revealing how much
profit a company generates with the money shareholders have invested. It is useful for
comparing the profitability of a company to that of other firms in the same industry. The higher
the figure generate from the ratio, the more preferable the company is from the perspective of
shareholder. A high ROE ratio is also indicate that the company was performed well in generate
earning through the used shareholder equity.
The return on equity calculate on year 2013 was much lower as compare to the return on
equity ratio of year 2012. In year 2012, return on equity was in bracket 0.0073 and for year 2013
it is shows a value of bracket 0.6292. As a conclusion, the efficiency on profit generating of year
2013 is less than year 2012; where less profit is generate from the shareholders equity on year
2013.
36
1.7 STRATEGIC DIRECTION

Customers would be the main target that required being focus by the company. The
demand by the customers will decide on the how success the company business operation it is.
There are three stages that have to stress on when the company was planning on the strategic.
The first stage is refer to the before sales activities that required to be carry out by the top
management. Before sales activities were emphasis on collecting data, analyze the data and
transform it into useful information that used for strategic decision. Second stage is during sales
activities which discuss on the how the services are going to deliver to the consumer. Third
stage is regarding on the after sales service where the feedback from the customers were being
stressed and any action taken by the company to deal with the comments received for the
purpose of continuous improvement.
In order to gain the competitive advantages, the company should be able to response to
the requests that made by the customers. Constantly do research on the trend of consumers
preferences and develop an ideal operation method which would improve on the production line
of the manufactured products. Although a long time period was takes in order to complete a
research, but company should be avoided to remain on the traditional production method which
is out of date. In contrast, the company should be able to apply the new technology associate
with the demand of the consumer in production of the products. Due to the easy replaced issue
that faced by the companys products, the products that manufactured by the company should
apply the differentiation strategic where the products are unique and it could not be easily
replaced or duplicate by the competitors products. Innovation is the key factors to ensure the
furniture produced are in great demand.
During the second stage, the company should diversify the services that provided to the
consumer. In other word, the company is encouraged to invest in new business line. Manufacture
the furniture should not be the only business that exercise by the company, instead, the
management should introduce a consultation service which assist the consumer on any inquiries
on the interior design to match with the furniture that produce by the company. Moreover, this
provides chances for the customers to get involved in the production task. Custom made products
is one of the sales points which would receive a great response from the consumer.
37
During the third stage, after sales service through getting the feedback from the
customers is a must for the purpose of continuous improvement of a company. A team should be
established on work on the after sales service. Analysis on the feedback or comments received
would be carried out. Through the outcome from the analysis, alteration would be made on the
operation or the production method of the products. Company might incorporate with the others
corporation to deal with the repairing or supply on the accessories of the products to the
customers.
38
1.8 OTHER RELEVANCE INFORMATION

Furniture Products
39
This news is retrieve from The Star webpage where it was reported regarding the Narra
Industries shares price was down 18sen to RM 1.14. This incident was happen right after the
company announced on the corporate transaction where the HLI is disposing its entire issued and
paid-up capital in Hume Industries (M) Sdn Bhd for RM48mil, as well as its non-cumulative
irredeemable convertible preference shares (ICPS) in Hume Cement Sdn Bhd (HCement) for
RM300mil to Narra.
40
This is news for Narra Industries Berhad on dated 17 th June 2014 where it reported on the
share price spike without an explainable reason.
HFI was the first Malaysian indoor furniture manufacturer, who received the Forest Stewardship
Council (FSC) certification. Due to this award, HFI was named as a preferred supplier for
Green Products.
41
2.0 NESTLE (MALAYSIA) BERHAD

2.1 COMPANY PROFILE
Nestle (Malaysia) Berhad is an investment holding company. The Company was publicly
listed on the KLSE now known as Bursa Malaysia Berhad on 13 December, 1989. Nestl is as a
trusted food, nutrition and wellness company. It is focused to give the overall nutrition, health
and wellness to society and deliver the promise Good Food, Good Life to society. The
company operates in two segments: food and beverages and others, which include nutrition and
Nestle Professional. There are various categories of products in Malaysia such as beverages,
foods, dairy, liquid drinks, infant and maternal nutrition, performance nutrition, health care
nutrition, breakfast cereals, chilled dairy, ice cream, confectionery, Nestl Professional. The
company employs more than 5800 people and manufactures in Malaysia currently. Besides that,
Nestl Malaysia is also the Biggest Halal producer within the Nestl Group and the Halal Centre
of Excellence for the Nestl Group. Its brand name such has MILO, NESCAF, MAGGI,
NESPRAY and KIT KAT have become branded and famous names and being enjoyed by
consumers.
The commitment of Nestl is to providing the best quality products to Malaysians around
almost 100 years ago. Firstly, Nestl Malaysia was begun in year 1912 as the Anglo-Swiss
Condensed Milk Company in Penang. In 1939, it had made a move to Kuala Lumpur due to its
growth and expansion. Later on, Nestle had its first factory in Petaling Jaya in year 1962. Today,
Nestl Malaysia has 7 factories to manufactures its products at and operates its head office at
Mutiara Damansara. The 7 factories are located at Petaling Jaya, Shah Alam in Selangor,
Chembong in Negeri Sembilan and Kuching in Sarawak.
42

1. TAN SRI DATO SERI SYED ZAINOL ANWAR JAMALULLAIL
Tan Sri Dato Seri Syed Zainol Anwar Jamalullail is a Malaysian Citizen who age in 62
years old. Initially, he was appointed as a Non-Independent and Non-Executive Director on 25
February 2002 which representing Lembaga Tabung Haji. Subsequently, when Lembaga Tabung
Haji ceased to be a substantial shareholder, he was re-designated as an Independent, NonExecutive Director on 05 November 2004, and was later appointed as Chairman of the Board of
Directors on 16 April 2009. He is also Chairman of the Audit Committee and Chairman of the
Nomination Committee. In addition, he is the Chancellor of SEGi University, and the Chairman
of Cahya Mata Sarawak Berhad, Lembaga Zakat Selangor and Pulau Indah Ventures Sdn. Bhd.
Tan Sri Dato Seri Syed Zainol Anwar Jamalullail studied Bachelor of Arts degree in
Accounting from Macquarie University in Sydney, Australia. He is a qualified Chartered
Accountant from the Malaysian Institute of Accountants and also a Certified Practising
Accountant from the Australian Society of Certified Practising Accountants having qualified in
1984.
43
2. DATO MOHD. RAFIK BIN SHAH MOHAMAD
Dato Mohd. Rafik Bin Shah Mohamad is 63 years old who is a citizen of Malaysia. He is
Independent and Non-Executive Director in board. He was appointed to the Board on 01 June
2007. He is a member of the Audit Committee and the Chairman of the Compensation
Committee. Besides that, he is the Chairman of Malaysian AgriFood Corp. Berhad, Cold Chain
Network Sdn. Bhd. (a subsidiary of Malaysian AgriFood Corp. Berhad) and the Chairman of
Biotropics Malaysia Berhad.
Dato Mohd. Rafik Bin Shah Mohamad is a qualified Chartered Accountant from the
Malaysian Institute of Accountants and is a member of the Association of Chartered Certified
Accountants, United Kingdom. He has also attended the Executive Development Programme at
the International Institute for Management Development, in Lausanne, Switzerland.
44
3. TAN SRI DATUK (DR.) RAFIAH BINTI SALIM
Tan Sri Datuk (Dr.) Rafiah Binti Salim is Independent and Non-Executive Director who
is a Malaysian Cititzen with age of 67 years. She was appointed to the Board on 17 April 2009.
She is a member of the Audit Committee and the Compensation Committee. Moreover, she is the
Director of Perbadanan Usahawan Nasional Berhad and the Chairman of the Board of Directors
for Malaysian Genomics Resource Centre Berhad. Tan Sri Datuk (Dr.) Rafiah is also the Director
of Allianz Malaysia Bhd., Allianz Life Insurance Malaysia Bhd. and Allianz General Insurance
Company (Malaysia) Bhd. Tan Sri Datuk (Dr.) Rafiah Binti Salim, graduated with Masters and
Bachelor Degrees in Law from the Queens University Belfast, United Kingdom and was
awarded an honorary Doctorate by the same University in 2002. She was called to the Malaysian
Bar in 1988.
45
4. DATO FRITS VAN DIJK
Dato Frits van Dijk is Dutch National with age 66 years. He is Independent and NonExecutive Director in Board. Originally, he was appointed to the Board on 26 April 2006 as a
Non-Independent, Non-Executive Director. After a few years, he was re-designated as an
Independent, Non-Executive Director on 19 November 2013. He is a member of the Nomination
Committee and the Compensation Committee. He has a priority to his retirement from the Nestl
Group at the end of September 2011. He served the Nestl group of companies and held many
senior positions in other Nestl Markets over the last 40 years.
Dato Frits van Dijk graduated with a Bachelors Degree in Economics from the School
of Economics, Rotterdam, and the Netherlands and has also attended the Executive Development
Programme at the International Institute for Management Development, in Lausanne,
Switzerland.
46
5. TAN SRI DATUK YONG POH KON
Tan Sri Datuk Yong Poh Kon is Independent and Non-Executive Director who is a 68
years old of Malaysian Citizen. He was appointed to the Board on 25 April 2011. He is a member
of the Nomination Committee. Besides that, he is also the Managing Director of Royal Selangor
International Sdn. Bhd., a manufacturer and exporter of pewter products, a Director of TAHPS
Group Berhad and is a Fellow of the Academy of Sciences and the Malaysian Institute of
Management. He graduated from the University of Adelaide with First Class Honours in
Mechanical Engineering in 1968.
47
6. TOH PUAN DATO SERI HAJJAH DR. AISHAH ONG
Toh Puan Dato Seri Hajjah Dr. Aishah Ong is an Independent and Non- Executive
Director who are a 68 years old of Malaysian Citizen. She was appointed to the Board on 28
November 2013. Currently, she is also the Director of the Board of the Malaysian Philharmonic
Orchestra (MPO) and a Trustee of the Dewan Filharmonik Petronas. In addition, she is also the
Pro-Chancellor of the University of Malaya and having been Chairman of University Hospital
for many years. She is currently Chairman of the Institute Jantung Negara (IJN) Foundation,
the New Straits Times (NST) Press Charity Fund and Chairman of the Welfare subcommittee
of Badan Kebajikan Isteri-isteri Menteri (BAKTI). In year 1969, she was graduated from the
University of London and a qualified medical doctor and active social worker.
48
7. ALOIS HOFBAUER
Alois Hofbauer is Managing Director who is an Austrian National with age of 48 years
old. He was appointed to the Board on 22 February 2013. He has served the Nestl group of
companies for more than 20 years. Besides that, he had served several of senior positions in other
Nestl markets. Moreover, he was also the Managing Director of Nestl Sri Lanka since 2010.
Additionally, he is also a member of the Federation of Manufacturers Malaysia (FMM)
Council. For his education, he is graduate of the International Institute for Management
Development, in Lausanne, Switzerland and the University of Innsbruck, Austria.
49
8. MARC SEILER
Marc Seiler is Executive Director (Responsible for Finance & Control) who is a 90 years
old of French National. He was appointed to the Board on 01 December 2008. He had served
various senior positions in other Nestl Markets since he joined the Nestl group of companies in
1990. In addition, he is also Treasurer of the Swiss Malaysian Business Association. For his
education history, he graduated from Ecole Suprieure de Commerce de Paris, France with a
Master of Science in Management and an Accounting & Finance Diploma (Diplome dEtudes
Suprieure Comptables et Financieres).
50
Authorised share capitals for Nestle Malaysia Berhad were 300,000,000 ordinary shares
where each of shares was RM 1.00.
Nestle Malaysia Berhad issued and paid up capital was 234,500,000 ordinary shares
where each of shares was RM 1.00.
2.1.5 BOARD MEETING

The Board normally will attend 4 meetings with additional meetings to be held and when
necessary for every year. Besides that, the Board met 4 times during the year ended 31 December
2013 which are discussed and considered a lot of problem and matters such as the Groups
financial results, major investments, strategic decisions and the direction of the Group.
51
2.1.6 COMPANY VISION AND MISSION

1. VISION
To be a leading, competitive, Nutrition, Health and Wellness Company delivering

improved shareholder value by being a preferred corporate citizen preferred employer preferred
supplier selling preferred products.
2. MISSION
Nestl mission of "Good Food, Good Life" is to:
Provide consumers with the best tasting, most nutritious choices in a wide range of food
and beverage categories and eating occasions, from morning to night.
52

General environment is an environment, factors or conditions that can be usually affect to
everyone in an industry or companys business. It cannot be control by the company and it also
can have significant effects on organizations productivity and success. This is usually using
PEST analysis for environmental scanning in the company. PEST analysis is a framework of
macro-environmental factors used in the environmental scanning of strategic management. PEST
analysis included four categories which are political forces, economic forces, social forces and
technological forces.
1.
POLITICAL FORCES
Political factors can be representing the degree of intervention of government in the
economy which is also the role of government to shaping in all the businesses. These factors can
be included tax policies, political stability, pricing regulations, intellectual property rights, trade
regulations, tariffs, employee wages and benefits. Political factor is a very vital factor that can
influence the companies no matter is in term of bad or good impact on it. There are different
political systems for every country. In Malaysia, democratic system is used for the political
system in country. Therefore, Nestle Malaysia Berhad can manage and organize their business in
their own way or tactics yet still need the control by the government. This will be affected the
companies when the companies desires to be a globalization organization. Due to the control by
government, Nestle is fully supported by the government to encourage healthier diets and active
lifestyles for solve the problems of obesity, diabetes and cardiovascular diseases to create a
healthier population in country.
Besides that, government can be charged the tariffs for the import products from other
countries. This can influenced all the local companys businesses. When the government
decrease the tariffs charging for the import products, it means that the import products can be
import hugely to our country. Due to the tariffs charging towards the import items are low, the
price of import products might be cheaper than local products. Thus, citizen will rather choose to
buy import products than local products because of the tariffs and prices influencing.
53
In addition, the stability politics in a country can lead to the faster rate of economic
growth in country. In oppositely, the instability politics will be slower the economic growth in
country. For this case, the political stability of Malaysia can affected the Nestle Malaysia Berhad.
The networking between the companies in Malaysia or other countries can be wide when the
stability political Malaysia is good. Through the wide networking, Nestle Malaysia Berhad can
manage the company to increase their profit.
2.
ECONOMIC FORCES
Economic factor is also one of the factors that can be affecting to general environment in
the company. Economic factor are those which have a direct impact on the capital loss of
organizations and purchasing power of customers. The factors are included exchange rates, rate
of unemployment, interest rates, business cycle, and inflation rate, stability of currency and
efficiency of free market.
The rate of the unemployment is rising can be affected the consumers unwilling to buy
things that expensive. For the Nestle, they considered this factor carefully and create a strategy
that selling their product with the reasonable price and the consumers can afford to buy it.
Besides that, they need always be aware the current situation of the economy. Through this
action, they cannot increase the price of the products randomly during the deflation economy
situation. This may influenced the customers change their choice to other brands or companies
which selling the cheaper product compared to them.
3.
SOCIAL FORCES
Social factors are cultural and demographic variables such as age, education, leisure
activities, attitude toward career, changing lifestyle, gender, population and attitude towards
health and environment which can closely affected to the market potential and customers needs.
54
The population will increases from time to time for all the countries.
According to Department of Statistics Malaysia, the population in Malaysia is keep

increasing from year 2004 to 2014. From this increasing population factor, this means by the
growing in some families and can lead to create the opportunity of Nestle Malaysia Berhad to
having the demand increase. This also an opportunity on their sales that might be increase due to
the customers need and purchase.
Besides that, the age of the citizen also one of the social factors which can influence the
general environment of company. Nestle Malaysia Berhad need to understand more about the
different categories of age for citizen that the product they preferred and suitable to customers.
Different group of ages will have the different preference on the products. Thus, Nestle have
segment the product and markets into different ages. For example, Nestle have released and
segment the milk products for baby and elder people. For the kids and young people, beverage
Milo, Nestle ice-cream, Kit Kat and Nescafe are the best choice to them.
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Moreover, the cultural differences for every country are very important because this also
can affect the company. Nestle Malaysia Berhad has released the brand Maggi with various types
of Asia sauce and flavour. However, this brand does not released in some of the countries such as
England because of the different taste and cultural. Therefore, Nestle Malaysia Berhad can attract
the Malaysia citizen to purchase and also increase the demand on this brand and others by
understand the culture of each country.
Technological factor is means by the advancement of the technology issues that can
influence the companies brings its product or service to the marketplace. These factors are
included ecological and environmental aspects such as Research & Development (R&D) activity,
technology incentives rate of technological change, telecommunication infrastructure, internet
available and patent protection.
It cans be advantage to manufacturer when the company using the advanced technology
to its company such as machines that need to use. This is because the advancing machines can
lead to the productivity increase, lowering the cost of goods and the raw material will becomes
cheaper. In addition, the cost of labour recruitment is decreasing due to the production is used by
the advancing machines. Thus, Nestle Malaysia Berhad has used the advance technology
machines to produce its products for fulfil the customer needs.
Besides that, internet and mobile technology is keep advancing nowadays and lead to
almost all the people will use it no matter is kids or adults. Through this technological era, Nestle
Malaysia Berhad gets this opportunity by using this technology to promote their products to
everyone. Nowadays the citizens always view their Smartphone for doing everything on it
whenever they have. So, this is easily to interact with the customers about its product and
customers can get the information from their websites. Moreover, Nestle staff can use this
internet service to connect and communicate to its industry to other countries such as Singapore,
Taiwan, England and more. Therefore, technological factors are very for Nestle Malaysia
Berhad.
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57

Task environment analysis is an analysis about the external environment or factors that
can be affected to the business and reach the business targets. Porters Five-Forces Model is the
way to analyze the task environment of the business. Porters Five-Forces Model is a model to
analyze competitive industries which can help to determine the industrys weaknesses and
strengths and developing the best business strategy to compete with it. This model is included
threat of new entrants, rivalry among existing firms, threat of substitute products, bargaining
power of buyers and bargaining power of suppliers.

Food industry can be considered the largest industry in the world. This can define that
food and beverage industry is more competitive compared to other industries. Due to food and
beverage industry is a large industry, so it is easy to enter the market for the new companies to
gain the market share and the profitable market. Beyond than that, food industry is also very vital
because it is produce the products to consumers, therefore the threat of new entrants in this
industry is high. For Nestle, they have the reputation about its quality products and customer
satisfaction because the company has a long history in this industry and customers are more
confident on it. Therefore, the threat of new entrants for Nestle is become moderately.
2.
RIVALRY AMONG EXISTING FIRMS

Nestle Malaysia Berhad is the powerhouse in the food industry at Malaysia. Although
Nestle is large food industry, it still facing the strong competition with other existing company
such as Kraft Foods Group Inc, Hershey Foods (HSY), Cadbury Schweppes (CSG), Mars
Incorporated, Unilever, PepsiCo and more. These companies are continuously competing with
each other not matter is in Malaysia or worldwide. To competing with these companies, Nestle
has keeps improving their operating efficiency. For customer perception, this competing is good
for them because companies can keep improving their products to battle with other competitors.
In other words, consumers can enjoy the products which keep improving continuously.
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Moreover, Nestle has released many new products for every year to maintain their position in
this industry.
3. THREAT OF SUBSTITUTE PRODUCTS

Threat of substitute products is means by threat of the different products that regarded as
something which can meet the same need and function. In the food industry, it can appear the
high competition for substitute products. For Nestle, it has a big threat of substitute products
because of this competitive food industry. There are lots of similar products that can be direct
battle with Nestle product such as ice-cream, beverage and more. Hence, it is important for
Nestle to find new ways to improve it products such as R&D the products to new products so
that the company can be sustain longer and compete competitors. However, Nestle gain a strong
customers loyalty due to it has been a long time in this industry. Yet, Nestle is more focused on
health and wellness products to maintain its market in recent years.
4.
BARGAINING POWER OF BUYERS

Buyers have the ability to force and drive the price of products down and bargain it for
the higher quality for the same price then decrease the profits of the company. In other words, the
bargaining power of customer is high when the products are undifferentiated and standard.
Nestle has understand well about the customer needs and power so that they can meet the needs
of the customers and products easily to maintain its customers for giving the best choice to them.
Besides that, Nestle has focused more about health and wellness products recently and desire to
produce more healthy products to society.
5.
BARGAINING POWER OF SUPPLIERS

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Bargaining power of suppliers is the suppliers have the ability to raise prices or bargain to
reduce quality for the products and squeeze the companys profits. It can be influence much to
the industry if the bargaining power of suppliers is strong. For Nestle, it has the long term
positive relationship between its suppliers all over the world. This is because Nestle has the large
purchasing power and the suppliers of agricultural merchandise offer the product is far from
unique. Hence, Nestle has the more bargaining power that its suppliers.
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2.4 SWOT ANALYSIS
SWOT ANALYSIS TABLE: NESTLE MALAYSIA BERHAD

INTERNAL: STRENGTHS
S1
Strong brand name and reputation
S2
Strong management capability
S3
A good care and supporting the
INTERNAL: WEAKNESSES
W1
Too much products distract from

core business
education of employers children

S4
R&D capabilities
S5
Customer loyalty
EXTERNAL: OPPORTUNITIES
O1
Increasing demand for healthier

food
O2
EXTERNAL: THREATS
T1
Raw material price
T2
Competition
T3
Trend towards healthy eating
products
Globalization
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1. STRENGTHS
i.
STRONG BRAND NAME AND REPUTATION

Nestle has the strong brand name and reputation in the food and beverage industry at
Malaysia. In the other words, Nestle has a reputable brand for its products almost in
everywhere and millions of people used on it every day. Nestle Malaysia has over 100 years
for its brand to sustain in food and beverage industry. Thus, this can prove that the
experiences in manufacturing, food and beverage of Nestle are high. With these experiences,
the strong reputation brand has let Nestle become confident to beat up with other competitors
such as Kraft Foods Group Inc. Besides that, Nestle also continuous produce more innovative
products to the market for sustain the brand and reputation. Through Nestle Malaysias
reputation, it had get many awards such as The Prime Ministers Hibiscus Awards, The
ACCA Malaysia Sustainability Reporting Awards (ACCA MaSRA), The National Annual
Corporate Report Awards (NACRA), Life at Work Award 2013,and so on.
ii.
STRONG MANAGEMENT CAPABILITY

Nestle has offer Management Trainee programme for the young talents which are
included in Sales and Marketing, Finance, Supply Chain, Human Resource and Technical and
Production. Nestle is probably find the new talents who are with right attitude, good
communication with others, take on challenge and desire for learn new things. Based on this
programme, Nestle provided experience coaches and mentors for each trainee who is
involved to train their new skills, networking and communication. In year 2013, Nestle has
successfully recruited 20 new Management Trainees out of the 1500 applications.
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iii.
A GOOD CARE AND SUPPORTING THE EDUCATION OF EMPLOYERS

CHILDREN
Nestle cares for not only its employees, but also their families especially their
children. There are around 40 active students who their parents are working with Nestle are
having the beneficial form the Nestle Scholarship Award in year 2013. This scholarship is
chosen based on their academic results, participation in co-curricular activities and parents
financial situation. With this beneficial, students who have been chosen can receive the
award RM7000 annually during their degree programme. Besides that, they also have the
chance to do their internship programme at Nestle and have the work opportunities at Nestle
after internship. Through this care, Nestle Malaysia had get Malaysias 100 Leading
Graduate Employers Award in year 2012/2013.
iv.
RESEARCH AND DEVELOPMENT (R&D) CAPABILITIES

Every year, Nestle has invests more than RM6 billion on its R&D. To make sure that
its products have met the needs of consumers, Nestle has do innovation and renovation
continuously for its product. This innovation and renovation can let Nestle continuously
introduce its new products each year and reinforce firms competitive advantage.
v.
CUSTOMER LOYALTY
Nestle have over 100 years in the market at Malaysia. Due to its long term existing
and experienced in Malaysias market, customers are usually more confident on it products
and willing to become loyal on it because of the long lasting brand and good quality.
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2. WEAKNESSES
i.
TOO MUCH PRODUCTS DISTRACT FROM CORE BUSINESS

Nestle is a company which provided health, nutrition and wellness to consumers. This
is considering its core business. However, Nestle are introduce many products included
healthy or less healthy such as Brand Maggi of instant noodle is unhealthy to consumers. The
first concept for consumer toward Nestle is healthy product, but the instant noodle become
different categories compare to Nestle really focusing. Besides that, Nestle also released
confectionery with high sugar to consumers such as Kit Kat and ice-cream. Therefore, Nestle
has released too much of products that distract from its core business which is provided
different aim of the product business to consumers compared to its core business.
3. OPPORTUNITIES
i.
INCREASING DEMAND FOR HEALTHIER FOOD PRODUCTS

Recently, consumers are more focused on healthy life same as healthy food and
beverage for daily meals. This kind of healthy food and beverage has become a trend to
consumers. Due to this trend of consumers tastes, Nestle has introduced more healthy food
and beverage products to fulfil this trend and increase the demand to consumers.
ii.
GLOBALIZATION
Globalization is one of the opportunities to Nestle Malaysia Berhad. Nestle Malaysia
is the biggest range of Halal products producer in Nestle world. Its also appointed as Halal
Centre of Excellence for Nestle worldwide now. From previous to now, Nestle Malaysia
produces around 300 halal products included food and beverage. Other than that, it exported
the halal products to more than 50 countries in worldwide. There are 7 Halal factories and
total of 150 Halal factories in worldwide. The worldwide of the consumers can buy the halal
version of the Nestle Malaysias brand such as Milo, Nescafe, Maggi, Kit Kat and Nespray.
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Hence, Nestle Malaysia has the opportunities to go global with their product especially halal
products which can meet the needs of Muslim consumers in globally.
4. THREATS
i.
RAW MATERIAL PRICE

Started from 1st of May 2014, Milo which is one of the brands for Nestle Malaysia
and Malaysians favourite beverage have increase the price by 5% to 7%. This is because of
the unavoidable of milk products price had increased due to the higher raw material prices.
Besides that, the commodities costs are become higher included milk, coffee and cocoa.
Nestle Malaysia is finding the ways to solve it because it cant burden all these costs and
affected the price of products slightly increase. With this high price of products, it might be
influenced their consumers burden and also the demand for this products and sales.
ii.
COMPETITION
Due to Nestle Malaysia is large food and beverage industry, there are many
competitors to compete with it automatically such as Kraft Foods Group Inc, Unilever,
PepsiCo and others. To compete with its strong competitors, Nestle has produced and offer
variety of food and beverage to consumers in order to battle with its competitors easily.
Beyond than that, Nestle also make sure about it product must be in good quality, good taste
and reasonable price to consumers so that wont be loss its consumers and sales.
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iii.
TREND TOWARDS HEALTHY EATING

Although Nestle Malaysia focused on healthy, nutrition and wellness food and
beverage currently, but it is also a major supplier of chocolate and chocolate drinks which
contain high calories on it. Recently, healthy food and beverage are gradually been favorites
by consumers. Due to this trend, the changing of customers habits is influenced the demand
of high calories for chocolate food and beverage is decline. But on the other hand, its also a
good sign because consumers are become healthier for their daily life.
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2.5 TOWS ANALYSIS
TOWS ANALYSIS TABLE: NESTLE MALAYSIA BERHAD

INTERNAL
STRENGTHS
WEAKNESSES
FACTORS
(IFAS)
S1
S2
Strong brand name and
W1
Too much products
reputation
distract from core
Strong management
business
capability
EXTERNAL
S3
A good care and supporting
FACTORS
the educations of employers
(EFAS)
children
S4
R&D capabilities
S5
Customer loyalty
OPPORTUNITIES
O1 Increasing demand
SO STRATEGIES
S1S5O2 Strong brand name and
WO STRATEGIES
W1O1 Healthier food
for healthier food products
customer loyalty enable
products demand
O2 Globalization
Nestle to go globally
reduce the
Change the direction of
unhealthier products
S4O1
R&D carried out

THREATS
T1 Raw material price
ST STRATEGIES
S1S5T2
Strong brand name
WT STRATEGIES
W1T2 Reduce the
T2 Competition
and customer royalty
production of
T3 Trend towards healthy
allow Nestle to
unhealthy food
eating
compete against
products
competitor
1.
SO STRATEGIES
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i.
STRONG BRAND NAME AND CUSTOMER LOYALTY ENABLE NESTLE

TO GO GLOBALLY
As we all know, Nestle is a well known food and beverage company that has a history
of over 100 years established in Malaysia. Even every day we are using the Nestle products
such as Milo and Maggi. With the strong brand name and reputation, Nestle can expand its
business to international level. Everyone of us know what the Nestle products is and this
show the brand name of Nestle that has been deeply influenced in the society and customers.
A well established and strong brand like Nestle can have low barriers to enter the new
international market. For the additional information, Nestle has also plan to enter global
market especially the halal market. With the halal product and also the brand name of Nestle,
Nestle will have a lot of opportunity and increase the brand name again in the international
market.
Nestle has the support not only from its brand name but also its customer loyalty. As
Nestle has been long existed in the food and beverage industry, thus the customers will have
confident in its products quality. Nestle also come out with the healthier products which is
also a demand from the customers strengthen the customer loyalty towards Nestle.
Customers will feel confident to use any products from Nestle as they believe in the Nestle
which is a large and strong company. The long lasting brand and good quality of the Nestle
products will gain the confidence from the customers to support their products in the long
run.
With both the strong brand name and customer loyalty that the Nestle have, Nestle
can easily expand its business into global market. With these advantages, Nestle can grab the
external opportunities to expand its business to international market such as the Islam market.
Nestle has to build a strong customer royalty relationship with its customers in order to
survive in the international market. Good quality will be the first requirement for the
customers to buy the products. With the customer royalty and the brand name developed in
global market, only Nestle can fight against all the global competitors in the food and
beverage industry.
ii.
CHANGE THE DIRECTION OF R&D CARRIED OUT

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Each year, Nestle will allocate more than RM 6 billion of the fund in carrying out
R&D. This is done in order to do more research in its products creation and innovation and
increase the number of customers using the Nestle products. Nestle is doing R&D so that it
can best meet what the customers demand from the products and thus can best serve the
customers needs. Other than that, R&D also purposely carried out so that Nestle can produce
more and more different and innovative products in which has the competitive advantage
over its competitor.
Nowadays, due to the trends of healthier life and also the increasing type of diseases
in the society, customers try and start to demand for a healthier life through their eating
habits. So, the customers taste and choice will start to move towards healthier products such
as less sugar, less calories products. The R&D carried out by the Nestle can best match with
this opportunity as the purpose of the R&D is to meet the customers demand of healthier
food products which are increasing. The R&D can be carried out in the aspect of healthier
products which is also what the customer trend demand for. Having the information and
demand from the customers on the characteristics of healthier product, Nestle can add on
with its innovative and creative in designing the packaging of the products so that it can win
definitely in the food and beverages industry. With this best match, Nestle can continue to
survive in the food and beverage industry and even attract more customers on its newly
developed healthier products.
2. WO STRATEGIES
i.
HEALTHIER FOOD PRODUCTS DEMAND REDUCE THE UNHEALTHIER

PRODUCTS
One of the weaknesses in the Nestle is that Nestle produce many different kinds of
products from its core businesses. This included the healthier food products and also
unhealthier food products. Unhealthier food products that produced by the Nestle are the
instant noodles of Maggi, confectionery with high sugar such as ice cream and Kit Kat. This
is the weaknesses of the Nestle in which that opposite with the slogan of the Nestle good
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food, good life. These unhealthier products are in conflict with the image of Nestle in the
consumers sight which is the producer of health, nutrition, and wellness to consumers.
However, this weakness can be overcome by the opportunities in the external
environment. The trends of healthier life and healthier foods force the Nestle to consider in
the production of these unhealthier food products. In order to suit with the opportunities in
the external surrounding or market, Nestle has to focus its production in the healthier food
products rather than unhealthier products. This is because consumers will be those generate
income for Nestle and therefore it influence deeply in the Nestle financial performance.
Nestle has to follow the trends and change in its food products so that it can long lasting in
the food and beverage industry. Time after time, Nestle can overcome its weaknesses and
stay with its slogan of Good Food, Good Life.
3. ST STRATEGIES
i.
STRONG BRAND NAME AND CUSTOMER ROYALTY ALLOW NESTLE

TO COMPETE AGAINST COMPETITOR
As mentioned earlier, Nestle is a well established brand in the food and beverage
industry. Almost everyone knows about the product of Nestle and may consume it every day.
Nestle also comes out with a variety of products for the consumers such as beverages, foods,
liquid drinks, performance nutrition, healthcare nutrition, breakfast cereals, ice cream,
confectionery, dairy, infant and maternal nutrition, chilled dairy and nestle professional. With
these choices of products, Nestle successfully in attracting the consumers and thus gain the
customer royalty from its products. With also the support and confident from the customers,
Nestle can survive long lasting in the food and beverages industry. A lot of competitors in the
food and beverages industry such as Kraft Foods Group Inc, PepsiCo, Unilever and so on
compete against Nestle which is one of the large company in the industry. Nestle has the
customer royalty and customer confident in its food products and thus has a competitive
advantages over its competitors. Nestle has to keep on its products quality in order to gain the
customer royalty. Once Nestle has the customer royalty to support its food products, then
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Nestle will has an extra advantages for it to compete against the large competitor in the food
and beverages industry.
Besides that, brand name is also an important factors or characteristics for a company
to compete and survive in the related industry. Nestle, is a famous term in the food products.
Everyone know about it and has been consumed its product such as Maggi. Maggi, one of the
instant noodles produced by Nestle, is very well known among the consumers choice in
which the term has been used to replace the instant noodles term. The consumers will say
Maggi to represent all the instant noodles of other brands. This is one of the examples in
which to show that the brand name of Nestle has been wide spread among the food and
beverage industry. With this famous brand name, Nestle has been standing stable in the food
and beverages industry. The strong brand name of Nestle can avoid Nestle from being
withdraw from the food and beverages industry as the brand name is already well known by
the consumers. What Nestle has to do is that Nestle has to work on to spread its brand name
worldwide and on the other side keep on control the products quality.
4. WT STRATEGIES
i.
REDUCES THE PRODUCTION OF UNHEALTHY FOOD PRODUCTS

Due to the trends of healthy life which start from healthy eating behavior, consumers
start to look for more healthier food products such as low sugar, low calories, low fats, low
salty and so on. However, this has become a problem for Nestle because of the variety of
food products comes from its core business. Some of the food products are unhealthier for
example Kit Kat, Maggi, ice cream and so on. Nestle has to do some changes in its
production in order to follow the trend and also compete with the competitors.
In this highly competitive industry, Nestle can set a strategy that can best reduce its
weaknesses and at the same time can survive in the market or industry. Having the trend of
healthy life as a factor, the other competitors will also follow the trend by producing healthier
food products. This is because the consumers will consume the products produced and if the
company did not change according to the consumers taste, it will not long lasting and be
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kick out from the industry. Therefore, to avoid the threat of competition and continue as the
large company in the food and beverage industry, Nestle has to focus its production line in
the healthy food products such as the healthcare nutrition, infant and maternal nutrition,
breakfast cereals and others.
With the changes made by Nestle, Nestle not only can compete with the competitors
in the industry, Nestle can also overcome its weakness of the unhealthy food products
produced from its core business. Nestle can enhance its slogan of Good Food, Good Life
and also the image in the perspective of consumers which Nestle is the producer of health,
nutrition and wellness food and beverages products. And thus in conclusion, Nestle can use
this strategy of producing healthy food products so that Nestle can overcome its weakness
and avoid the threat at the same time.
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2.6 RATIO ANALYSIS

Net Income Preferred Dividends

Weighted Average Common Shares Outstanding
Year 2013
Year 2012
551,436,000
490,472,000
234,500,000
234,500,000
= RM 2.3515 per share
= RM 2.0916 per share
Earnings per share (EPS) ratio measures how many of RM of net income have been
earned by each share of common stock. It is computed by dividing net income less preferred
dividend by the number of shares of common stock outstanding during the period. The
calculation of EPS is very important for actual and potential common stockholders due to the
payment of dividend and increase in the value of stock in future largely relied on the earnings of
the company and thus need to show the EPS figure in the income statement. The higher the EPS,
the better it is. This is because a higher EPS is the sign of higher earnings, strong financial
position and thus is a reliable company to invest money.
From the calculation shown above, the earnings per share of Nestle are RM 2.0916 per
share in year 2012 and RM 2.3515 per share in year 2013. The earnings per share have been
increase from year 2012 to year 2013 in the amount of RM 0.2599 per share as the income
generated is increasing. Thus, it can be said that the financial performance of Nestle is better in
year 2013.
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2.
RETURN ON SALE (ROS)

Net Income before Interest and Tax (EBIT)
Sales
Year 2013
Year 2012
552,026,000
491,274,000
551,075,000
490,950,000
= 1.0017
= 1.0007
Return on sale is a ratio that is widely used to evaluate a companys operational

efficiency. It is calculated by dividing the net income before interest and tax by sales revenue.
ROS is helpful to management as it can provide insight into how much profit is being produced
per RM of sales. A high return on sales indicates that the company is selling its products well and
its profit is likely sustainable, the company is becoming more efficient. Thus, the higher the
ROS, the better it is.
From the calculation shown above, it can be seen that the return on sales of Nestle in year
2013 is 1.0017 while in year 2012 is 1.0007. The return on sale shows an increase from year
2012 to year 2013 of the amount of 0.0010. This means that Nestle is efficient in managing its
products as it can generate sales revenue faster and stable.
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3.
RETURN ON INVESTMENT (ROI)

Net Profit after Interest and Tax
Total Assets
Year 2013
Year 2012
551,436,000
490,472,000
679,937,000
632,640,000
= 0.8110 / 81.10%
= 0.7753 / 77.53%
Return on investment (ROI) measure the gain or loss generated on an investment relative
to the amount of the money invested. It is computed b dividing the net profit after interest and
tax by total assets. ROI is usually expressed as a percentage and is typically used for personal
financial decisions, to compare a companys profitability or to make a decision of investing an
investment by comparing the efficiency of different investments. If an investment result in a
positive ROI, then the investment should be undertaken. A higher ROI is better as the higher ROI
means that investment gains compare favorable to investment costs.
From the calculation shown above, the return on investment of Nestle is 0.8110 or
81.10% in year 2013 and 0.7753 or 77.53% in year 2012. It shows an increase of the return on
investment of 0.0357 from year 2012 to 2013. This is a good result for the Nestle as the
increasing return on investment indicates that the investment gain in Nestle is more favorable
than the investment costs incurred and thus is a good investment.
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4.
RETURN ON ASSETS (ROA)

Net Income
Average Total Assets
Year 2013
Year 2012
551,436,000
490,472,000
679,937,000 + 632,640,000
632,640,000 + 563,514,000
= 0.8402 / 84.02%
= 0.8201 / 82.01%
Return on assets (ROA) is a financial ratio that shows the percentage of profit that a
company earns in relation to its overall resources or total assets. It is computed by dividing the
net income by average total assets. ROA also means of the measurement of the amount of profit
made by a company per RM of its assets. It shows the companys ability to generate profits using
its assets rather than leverage. Thus, ROA can indicate how efficient management use company
assets to generate profit. A higher ROA shows the efficiency of the assts been used to generate
profit and thus the higher it is, the better it is.
From the calculation shown above, the return on assets for Nestle is 0.8402 or 84.02% in
year 2013 and 0.8201 or 82.01% in year 2012. There is an increase of 0.0201 from year 2012 to
2013. This means that in year 2013, Nestle can generate higher income using its assets and
therefore is more stable. Each RM of assets can generate 84.02% of income for Nestle in year
2013.
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5.
RETURN ON EQUITY (ROE)
Net Income after Tax

Average Shareholders Equity
Year 2013
Year 2012
551,436,000
490,472,000
678,404,000 + 631,143,000
631,143,000 + 562,771,000
= 0.8422 / 84.22%
= 0.8216 / 82.16%
Return on equity (ROE) is the amount of net income returned as a percentage of

shareholders equity. It is computed by dividing net income after tax by average shareholders
equity. ROE indicates how much profit a company earned in comparison to the total amount of
shareholder equity. Besides that, ROE also measure how profitable a company is for the owner
of the investment, and how profitably a company employs its equity. The higher is the ROE, the
better. This is due to a rising ROE means that a company is increasing its ability to generate
profit without needing as much capital.
From the calculation shown above, the return on equity for Nestle in year 2013 is 0.8422
or 84.22% while in year 2012 is 0.8216 or 82.16%. It shows an increase of 0.0206 from year
2012 to 2013. An increase in return on equity means that Nestle is efficient in managing its
capital as they can generate higher income using its equity. Thus, the increase in return on equity
is a good performance for Nestle.
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For the strategic direction for the Nestle, we have chosen the SO strategies formed in the
TOWS analysis table. Among the four group of strategy formed which are SO, WO, ST and WT
strategies, we found that the most appropriate and best suit the Nestle companys policy will be
the SO strategies. This is the combination of the strength and opportunities from the analysis of
Nestle. The strategies formed are taken from the strength of the Nestle and match with the
opportunities surrounding the Nestle. Under the SO strategies, there are two main strategies that
can be used to enhance the position of the Nestle in food and beverages industry. They are the
strong brand name and customer royalty enable Nestle to go globally and the change the
direction of R&D carried out.
For the first strategy of the strong brand name and customer royalty enable Nestle to go
globally, this is a strong and good strategy direction for the Nestle. This is because with the
strong brand name and reputation, Nestle can expand its business to international level. Everyone
of us know what the Nestle products is and this show the brand name of Nestle that has been
deeply influenced in the society and customers. A well established and strong brand like Nestle
can have low barriers to enter the new international market.
Nestle has the support not only from its brand name but also its customer loyalty. As
Nestle has been long existed in the food and beverage industry, thus the customers will have
confident in its products quality. Customers will feel confident to use any products from Nestle
as they believe in the Nestle which is a large and strong company. The long lasting brand and
good quality of the Nestle products will gain the confidence from the customers to support their
products in the long run.
With both the strong brand name and customer loyalty that the Nestle have, Nestle can
easily expand its business into global market. Nestle has to build a strong customer royalty
relationship with its customers in order to survive in the international market. Good quality will
be the first requirement for the customers to buy the products. With the customer royalty and the
brand name developed in global market, only Nestle can fight against all the global competitors
in the food and beverage industry.
78
For the second strategy which is the Research and Development done by the Nestle need
to change the direction so that it can fulfill the increasing demand of the healthier food products,
Nestle can properly allocate its fund in carrying out the R&D in the appropriate direction. Nestle
is doing R&D so that it can best meet what the customers demand from the products and thus can
best serve the customers needs. Other than that, R&D also purposely carried out so that Nestle
can produce more and more different and innovative products in which has the competitive
advantage over its competitor.
Nowadays, due to the trends of healthier life and also the increasing type of diseases in
the society, customers try and start to demand for a healthier life through their eating habits. So,
the customers taste and choice will start to move towards healthier products such as less sugar,
less calories products. The R&D carried out by the Nestle can best match with this opportunity as
the purpose of the R&D is to meet the customers demand of healthier food products which are
increasing. Having the information and demand from the customers on the characteristics of
healthier product, Nestle can add on with its innovative and creative in designing the packaging
of the products so that it can win definitely in the food and beverages industry. With this best
match, Nestle can continue to survive in the food and beverage industry and even attract more
customers on its newly developed healthier products.
Thus, in conclusion, both the SO strategies developed will be useful to the Nestle in order
to make their company stronger if the strategies are properly and correctly be implemented. The
suggested strategies will be those chosen among the best alternative. SO strategies will be the
best strategies as the Nestle is using what the competitive advantages it has among other
competitors and apply it in the external opportunity that existed in the food and beverage
industry.
79
2.8 OTHER RELEVANT INFORMATION

The other relevant information that we found about the Nestle is the postal address which
is Nestle (Malaysia) Berhad (110925-W), 22-1, 22nd Floor, Menara Surian, No. 1, Jalan PJU 7/3,
Mutiara Damansara, 47810 Petaling Jaya, Selangor, Malaysia. While the phone number of Nestle
is that at +603-7965 6000 or fax at +603-7965 6767. Besides that, Nestle also set up a consumer
services line at 1-800-88-3433 if the customers have any enquiry to ask for. The email address
provided by Nestle is www.nestle.com.my.
Other than that, the following pictures show all the brands of products under Nestle
Malaysia Berhad in which each of the products brands are well known to all the consumers.
80
81
3.0 NEW HOONG FATT HOLDINGS BERHAD

3.1 COMPANY PROFILE
NEW HOONG FATT HOLDINGS BERHAD ("NHF") is listed on the main market of
the Bursa Malaysia Securities Berhad. NHF Holdings Berhad established in September 1977 as a
trading company, has since grown to become a major distributor of genuine and alternative
automotive replacement body parts in Malaysia. The shareholder is 100% owned by NHF and
the paid up capital is RM1 million principal. The NHF Holdings Berhad is principally involved
into three basic types of activities which are marketing, distribution and trading of automotive
parts and accessories with certification of ISO 9001:2008.
NHF Holdings Berhad provides Automotive Parts Solutions to the local replacement
market and has grown to become a main distributor of genuine and alternative replacement body
parts. Locally, NHF has its headquarters in Klang, Segambut, Selangor Kuala Lumpur, and a
branch in Kota Kinabalu, Sabah with an extensive distribution channel of about 1,000
wholesalers and retailers throughout Malaysia.
The NHF Group ventured into manufacturing of metal and plastics automotive body
replacement parts in 1989 and this had become the core business product for the NHF Group.
Products such as door, fender, hood, bumper grille and trunk lid are distributed worldwide under
the company own brand name, "NJ". This is proven to possess high corrosion resistance, having
passed SIRIM's 800 hours salt spray test.
For growth opportunity, the Group will further expand its product range, continuously
improve its product quality and increase its regional presence. These parts are exported to about
50 countries, such as the ASEAN countries, Middle East, Central and South America, Europe,
Taiwan, China, Pakistan, India, Africa and Russia.
82
1. KAM FOONG KENG
Madam Kam is an executive chairman aged 50 years old. Madam Kam was appointed as
Executive Director of the Group on 8 April 1998, and was later appointed as an Executive
Chairman on 15 May 2008. She also serves as a member of Remuneration Committee. She holds
a Bachelor Degree in Business from South Australia Institute of Technology [now known as
University of South Australia, Australia.
She has been a key person in the Groups management and organization since graduation.
As Executive Chairman, she is responsible to oversee the strategic direction, overall performance
and business development of the Group, for both Malaysian and overseas operations. She
ensures that the operations are managed in line with the Companys mission and vision.
Currently, she sits on the Boards of the subsidiaries of the New Hoong Fatt (NHF) Group.
Madam Kam is the spouse of Chin Jit Sin, sibling of Kam Foong Sim, both are Directors
of the Company, and daughter of Wong Ah Moy @ Wong Yoke Len, a major shareholder of the
Company.
83
She has no material conflict of interest with the Group other than that which has been
disclosed to the Board of Directors and shareholders in the audited financial statements.
2. CHIN JIT SIN
Mr Chin is a managing director aged 52 years old. Mr Chin is the Group Managing
Director of NHF. He was appointed as Executive Director on 8 April 1998 and was re-designated
as Managing Director on 25 October 2007. As the Group Managing Director, he acts as Chief
Executive Officer of the Group. He holds a Bachelor of Economics (Hons) Degree (major in
Business Administration) from University of Malaya.
Mr Chin was attached to a banking institution prior to joining NHF. His experience
covers a variety of industries including banking and financial institutions, manufacturing and
trading. As the Group Managing Director of NHF, he also oversees the strategic planning, talent
management and operational management of the Group, particularly in operational effectiveness
and efficiency and ensuring adherence to the Groups policies and procedures. Currently, he sits
on the Board of the subsidiaries of the NHF Group.
He is also a director in another public company, namely the Malaysian Automotive
Component Parts Manufacturers where he serves as a member of the Executive Committee.
84
Mr Chin is the spouse of Kam Foong Keng, the Executive Chairman and major
shareholder of the Company, and is therefore related to members of her family. He has no direct
conflict of interest with the Group.
3. KAM FOONG SIM
Ms Kam is a non-independent executive director aged 49 years old. Ms Kam was

appointed as Executive Director on 17 May 2001. She holds a Bachelor Degree in Economics
(major in Accounting) from University of Adelaide, Australia. She is an accountant by profession
and a member of the Certified Practicing Accountants Australia and the Malaysian Institute of
Accountants.
She had several years of experience in accounting firms and in the commercial sector
before joining the NHF Group in 1991, where she oversees finance and accounts. Currently, she
sits on the Board of several subsidiaries of the NHF Group.
Ms Kam is the sibling of Kam Foong Keng, a director and major shareholder of the
Company, and daughter of Wong Ah Moy @ Wong Yoke Len, who is a major shareholder of the
Company.
She has no material conflict of interest with the Group other than that which has been
disclosed to the Board of Directors and shareholders in the audited financial statements.
85
4. WONG YOKE NYEN

Mr. Wong is an independent non-executive director aged 55 years old. Mr. Wong was
appointed as Independent Non-Executive Director on 16 May 2008. He also serves as a member
of the Audit Committee, Nomination and Remuneration Committees. With effect from 30
October 2008, he was appointed Chairman of the Audit Committee.
He is a graduate of The Wharton Advance Management Program from the Wharton
Business School of the University of Pennsylvania, USA. He also earned his Bachelor Degree in
Accountancy from City of London Polytechnic, United Kingdom.
He is a seasoned investment banker with more than 20 years of dedicated corporate
finance and investment banking experience. Mr. Wong was the Executive Vice President cum
Head of Corporate Finance Division in Aseambankers Malaysia Berhad now known as Maybank
Investment Bank Berhad.
Mr Wong holds directorships in four other public listed companies, namely XiDeLang
Holdings Ltd, Benalec Holdings Berhad, Focus Lumber Berhad and Sentoria Group Berhad, as
well as several private limited companies.
Mr Wong does not have any family relationship with any Director and/or major
shareholder of the Company. He has no conflict of interest with the Group.
86
5. DATUK DR. ANIS BIN AHMAD
Datuk Dr. Anis is an independent non-executive director aged 68 years old. Datuk Dr.
Anis was appointed as Independent Non-Executive Director on 2 December 2002. He also serves
as the Chairman of the Remuneration Committee and a member of the Audit Committee and
Nomination Committee.
He holds a Ph.D. in Pharmacology from University of Bath, United Kingdom, a Master
of Science in Pharmaceutical Technology from University of London and a Bachelor of
Pharmacy from University of Singapore.
Datuk Dr. Anis started his career with the Ministry of Health (MoH) in 1968 and served
the Malaysian Government in various capacities, namely as Lecturer and Head of Department of
Pharmacology in Universiti Kebangsaan Malaysia, Director of the National Pharmaceutical
Control Bureau (NPCB) of MoH, Secretary of the Drug Control Authority of MoH, Deputy
Director of the Pharmacy Division of MoH and DeputyDirector of Health (Pharmacy) for the
Department of Health, Johor. He was promoted to Director of NPCB and then Director of
Pharmacy of MoH, where he served until his retirement in 2001.
Currently, Datuk Dr. Anis is the Chairman of the Board of Directors of Y.S.P. Southeast
Asia Holding Berhad, and a Director of several private limited companies.
Datuk Dr. Anis does not have any family relationship with any Director and/or major
shareholder of the Company. He has no conflict of interest with the Group.
87
6. DANNY NG SIEW LLEONG
Mr Ng is an independent non-executive director aged 55 years old. Mr Ng was appointed

as Independent Non-Executive Director on 20 April 1998. He also serves as the Chairman of the
Nomination Committee and a member of the Audit Committee and Remuneration Committee.
He graduated with a Bachelor Degree in Agribusiness (Hons) majoring in Financial
Management from Universiti Pertanian Malaysia [now known as Universiti Putra Malaysia],
Malaysia in 1982. He started his career in the banking and finance industry with United Malayan
Banking Corporation Berhad [now known as RHB Bank Berhad] from 1982 to 1994.
He holds directorships in several private limited companies. Mr Ng does not have any
family relationship with any Director and/or major shareholder of the Company. He has no
conflict of interest with the Group.
88

During the financial year, the issued and paid-up share capital of the Company was RM 1
million.
3.1.5 COMPANY MISSION AND COVER RATIONAL

1. MISSION OF NHF HOLDING BERHAD
We provide a wide range of quality automotive parts to our customers through an integrated
supply chain system.
2. COVER RATIONALE
89
In recent years, many Asian countries have experienced rapid growth. In particular, the
Automotive industries have developed greatly and in turn the demand for automotive
replacement parts have consequently increased. As such, NHF continues its mission to grow and
expand within Asia whilst also pursuing growing demands in other regions around the world.
3.1.6 CORPORATE STRUCTURE
90
3.1.7 COMPANY LOGO AND LOCATION

1. THE COMPANY LOGO
2. THE COMPANY BRAND ADDRESS

Headquarters
Lot 5043,
Jalan Teratai, Meru,
41050 Klang, Selangor Darul Ehsan,
Malaysia.
91

1. POLITICAL FORCES
Firstly, for political environment the NHF Holdings Berhad has to follow the National
Automobile Policy which is emphasis on safety and environment aspects under NAP Review
will ensure the continued development of domestic automobile industry. The National
Automobile Policy 2014 is updated with a newly established framework of measure to liberalize
the local automobile industry, enable market forces to determine more competitive car price
within the next five years to turn Malaysia into a regional automotive hub for energy efficient
vehicle.
NHF Holdings Berhad was confident that China would be a major market. As Asian
nations and businesses continue to grow, NHF expected that Asean Free Trade Area (AFTA)
would continue to assist by means of easing the process of trade between member countries.
2. ECONOMIC FORCES
One factor that affects the world economies and industry trade was the weakening of
currencies included Malaysia. It affected the slowdown of demand .By comparing New Hoong
Fatt Holdings Berhad financial year ended 31 December 2013, there are decline of 3.2 %
compared 2012. At 2013 total revenue 210.6 million compared to RM 217.5 million in 2012.
Moreover, profit before tax which amount of RM 27.4 million declined by 1.1 %
compared to 27.7 million in 2012. Even though the revenue Ws lower expense is higher in 2013
lower manufacturing cost and impairment goodwill helped cushion their impart.
Next the Net profit also dropped, which is RM20.1 million was 11.8 % lower compare
2012 which is RM22.8 million. For taxation, it is higher in 2013 because of the higher provision
for deferred taxation compared 2013.Thus, The earning per share dropped to 26.81 cent
compared to 30.29 cent in 2012 financial year.
92
3. SOCIAL FORCES
For social environment, NHF Holdings Berhad has to focus on population, demographic,
taste of consumers on buying car. This is because NHF Holding mostly focuses on local auto part
like Proton, Perodua auto part. Thus, social environment is a challenge foe NHF Holdings
Berhad. This is because nowadays, many customers are buying import car like Honda, Toyota
and so on.
NHF Holding Berhad follow the changes of technology growth, NHF spend
approximately RM11.0 million in 2012, the new Cathodic Electro-Deposition paint line,
hydraulic press machines and plastic injection machines were fully installed and readily in 2013.
NHF also upgrade the stamping division and plastic section. Due to technology changes, NHF
need to follow the changes of technology, spending huge amount of capital to upgrades itself in
the auto parts industry. Next, NHF was capable to expand its capacity to oversea trading arms in
Indonesia and China. China and Indonesia is a major growing automotive market, NFH Holdings
Berhad continue to develop the channel in these market for future progress and growth.
5. ECOLOGY FORCES
For environmental like ecology factor, NHF holding has to follow the Environment Act
in Malaysia and schedule waste 1972. To prevent our environment pollution, auto part inset to
the car should not pollute the air environment.
93
6. LEGAL FORCES
NHF Holding Berhad has to follow the rule and regulation of Malaysia. As required by
Companies Act 1965 and listing Requirement, The financial statement have to prepared follow
the applicable approved accounting standard in Malaysia. NHF Holding Berhads director needs
to ensure the annual financial report statement give a true and fair view in the state of affairs.
Lastly, NHF Holding Berhad also is given option to make an irrevocable election to move
to single tier system or to keep on use the tax exempt account or tax credit under Section 108 of
Income Tax Act, 1967 for the objective of dividend distribution until fully utilized by 31
December 2013.
94

In order to know the task environment pertains to the Auto Parts industry, Porters FiveForces Model of competitive analysis is used. Not even for this industry, this approach actually is
used for developing strategies in many industries. The intensity of competition among firms
varies widely across industries. According to Porter, the nature of competitiveness in a given
industry can be viewed as a composite of five forces that is rivalry among competing firms,
potential entry of new competitors, potential development of substitute products, bargaining
power of suppliers and bargaining power of consumers.
1.
FOR COMPETITIVE RIVALRY

The intensity of rivalry among competing firms tends to increase as the number of
competitors increases. Highly competitive industries generally earn low returns because the cost
of competition is high. The NHF holdings Berhad is considered to be an oligopoly, which helps
to minimize the effects of price-based competition. NHF holdings Berhad know that price-based
competition does not necessarily lead to increases in the size of the marketplace, but more
recently the competition has intensified, NHF holding rebates, preferred financing and long-term
warranties have helped to lure in customers, but they also put pressure on the profit margins for
vehicle sales.

Since the capital required is high, the barrier is high, and threat is low. This is because
firms cannot easily enter auto parts industry, because of there is needed of many technologies,
equipments to set up an auto parts shops. The competitive among firms low. The demand for this
industry increases from time to time. The barriers to enter this industry such as the need to gain
technology and specialized know-how, the experience, strong customer loyalty and strong brand
preferences can limit the new firms to enter.
95
3. THREAT OF SUBSTITUTION
For threat of substitution NHF Holding Berhad suffers the threat of someone buying a
different car. However, this is the likelihood of people taking the bus, train or airplane to their
destination. The higher the cost of operating a vehicle, the more likely people will seek
alternative transportation options. The price of auto vehicle has a large effect on consumers'
decisions to buy vehicles. Trucks and sport utility vehicles have higher profit margins. When
determining the availability of substitutes you should also consider time, money, personal
preference and convenience in the auto travel industry. Then decide car auto maker poses a big
threat as a substitute.
4. THE BARGAINING POWER OF SUPPLIERS

The bargain of automobile supply business is quite high this is because there are few auto
part industry. Many consumers like auto retailers or auto consumers rely on auto part firms to
buy majority of auto parts products. If an automaker decided to switch suppliers, it could be
devastating to the previous supplier's business. As a result, suppliers are extremely susceptible to
the demands and requirements of the automobile manufacturer and hold very little power.
96
5. THE BARGAINING POWER OF CONSUMERS

This means that customers have power to choose the best quality of product. When
customers are few in number or buy in volume, their bargaining power represents a lower force
affecting the intensity of competition in an industry. On the other hand, consumers are very price
sensitive, they don't have much buying power as they never purchase huge volumes of cars.
Besides that, bargaining power of consumer also low when the products are being purchased is
standard or differentiated among the competitors. In auto parts industry, the product is easy to
differentiate. Each of cars has difference auto part in the auto car. Like Toyota auto parts is
different with proton auto parts. Therefore, the bargaining power in auto parts industry is lower.
In this condition, consumers often can focus selling price, warranty coverage and accessory
packages to a greater extent.
97
3.4 SWOT ANALYSIS

SWOT ANALYSIS TABLE: NEW HOONG FATT HOLDINGS BERHAD
STRENGTHS
S1
Up to date technology and it skill
S2
Strong corporate culture
S3
Different geographical sectors
S4
Has several types of products
S5
Market leader
S6
Financial stability
S7
Long history in automotive industry
WEAKNESSES
W
1
W
2
Voyage will make the cost increase

High of raw materials
Less of advertising and promotion
W
3
OPPORTUNITIES
O1
THREATS
T1
Competitor
T2
Difficult labor market
T3
Change of legal framework and policies
T4
Exchange rate
Technological advances
O2
New target market
O3
Change in customer behavior
O4
Increase the export to ASEAN
98
1. STRENGTHS
i. UP TO DATE TECHNOLOGY AND IT SKILL
NHF Holdings Berhad have acquire another facility specialized in manufacturing of
metal and plastic automotive part products in order to make the production become more
efficient and effective. The example of the facility such as 3D Laser Machine, CED Painting,
Stamping Press and so on to help and make sure the product that been produced is in high
quality. Besides of increasing the efficiency of production, the protection of safety for worker
also can have improvement.
ii. STRONG CORPORATE CULTURE

NHF Holdings Berhad was held a Family day in 2013 and was attended by almost
1,000 adults and children. There are several food stalls and games booths that cater all walks
of life. This some kind of this programs, it can encourage employees to mingle and interact
with one another to foster team spirit and build closer working relationship. Thus it can lead
to the positive environment in the company in order to achieve their goal.
iii. DIFFERENT GEOGRAPHICAL SECTORS

NHF Holdings Berhad avoids from have one specific market segment because it can
expose to risk rather than have different geographical sectors.
iv. HAS SEVERAL TYPES OF PRODUCTS

NHF Holdings Berhad not only focuses on their core products which are car
automotive part, but they do produce the paraffin and naphthenic lubricating oils, greases to
specially products such as high-tech additive treatments.
v. MARKET LEADER
99
NHF Holdings Berhad has become the market leader in the manufacture and supply
of automotive spare parts to the replacement market.
vi. FINANCIAL STABILITY

From the financial report of NHF Holdings berhad, it shows that they have a good
and stability in their operation. The budgeting in using their capital is good and they have the
capability on how to earn more profit.
vii. LONG HISTORY IN AUTOMOTIVE INDUSTRY

Inexperience, apparently due to long history in automotive part making, show that the
quality of the products is good and high in reputation. This could make the brand name of
NHF Holding Berhad become more valuable. NHF Holding Berhad is established in 1977
until now 2014 for over 37 years.
2. WEAKNESSES
i. VOYAGE WILL MAKE THE COST INCREASE
NHF Holdings Berhad distributed over 50 countries, but they do not have the factory
among all of the country. So that, most of the product needs to be transport and voyage from
Malaysia to other country. This will increase the transportation fees and the price of goods
sold will increase. This issue will directly effect to the demand of product from foreign
country because they maybe can get a cheaper price for the same product with other
manufacture.
ii. HIGH OF RAW MATERIALS

100
Most of the materials that used by NHF Holdings Berhad to produce their products
are metal, plastic and oil. The volume of supply for this kind of material is been estimated
that, it will decrease in the future due to supply shortage because it is not a renewable energy.
iii. LACK OF PROMOTION AND ADVERTISING

NHF Holdings Berhad is very poor in advertising; it is very hard to find an
advertisement among all kind of media such as newspapers, magazine, website or others.
Thus, it will be hard for customer to attract new customers.
3. OPPORTUNITIES
i. TECHNOLOGICAL ADVANCES
A technological advance is happened when a company is outsourcing in a foreign
country. For example, there will be an interaction between the local labors and the foreign
labors. They might observe or learn the style, attitude, skill from other to make improvement
on them to get higher achievement. For example, NHF Holdings Berhad has two overseas
operations in Jakarta, Indonesia and Shanghai, China.
ii. NEW TARGET MARKET

Although NHF Holdings Berhad already has been distributing over 50 countries, but
this is not a limitation for it to expand its market. This is because, the NHF Holdings Berhad
already get their brand name among many countries, thus the consumer will give more
confident to NHF Holdings Berhad. So, the adaptation of new consumer for a new market is
not very difficult for NHF Holdings Berhad to achieve.
iii. CHANGE IN CUSTOMER BEHAVIOR
101
Nowadays, many of the younger like to reequip their car. This is because they like to
make their car looks different from others. Thus, the trend for now is they would change the
outlook of their car such as change the bumpers, mirrors, fenders, accessory lamps and others.
iv. INCREASE THE EXPORT TO ASEAN

The exports of NHF Holdings Berhad currently contributed about 40% to NHF's
revenue, of which 25% is from Asean. The managing director Chin Jit Sin said that they
would like Asean to contribute about 50% to total export business. Asean is an economic
community with free trade. There are no import duties, so it's a level playing field.
4.
THREAT
i.
COMPETITOR
The competitor of this industry is huge. This is because of many of the car
manufacture produce the car automotive part by their own. This is to minimize the cost and
maximize the profit earned. For example, Proton car do produce the car automotive part by
own.
ii.
DIFFICULT LABOR MARKET

NHF Holdings Berhad is a producer for automotive part so that, its need some career
that with high qualification. For example, the do need many of engineer, HR manager,
technician, warehouse operator and so on. This is very hard to find a good career with require
qualification. The loyalty also had become a very concern issue by top management of the
NHF Holdings Berhad.
iii.
CHANGE OF LEGAL FRAMEWORK AND POLICIES
102
The legal framework of a country might be change by a government in a country.

There are actually many type of trade policy to be use such as AFTA (ASEAN Free Trade
Area), FTZ (Free Trade Zone) and etc. These types of trade policy can be very good to NHF
Holding Berhad because they can get more benefits from this type of policy. In the other
hand, this could become a barrier to NHF Holdings Berhad too, because some government
they want to protect their local business so that they might set some barrier for other foreign
company such as tax, custom clearance, embargo and others.
iv.
EXCHANGE RATES
NHF Holdings Berhad earns more than half of its revenue outside the Malaysia.
Exchange rate fluctuations threaten NHF Holdings Berhads profits if the MYR (Malaysia
Ringgit) would appreciate against other currencies.
3.5 TOWS ANALYSIS

TOWS ANALYSIS TABLE: NEW HOONG FATT HOLDINGS BERHAD
103
STRENGTHS
INTERNAL
FACTORS
(IFAS)
S1
Up to date skill
S2
Strong corporate culture
S3
Different
W1
Voyage will make the

cost increase
W2
geographical
High of raw materials
sectors
EXTERNAL
FACTORS
WEAKNESSES
S4
Has several types of products
(EFAS)
OPPORTUNITIES
SO STRATEGY
WO STRATEGY
NHF Holdings Berhad has strong

O1
Technological
advances
O2
New target market
corporate culture as a market leader

in auto parts industry. It is one of its
strengths to manage it corporation
to be the market leader in auto parts
industry. Due to this, the demands
will increase. When NHF Holdings
Berhad go global, it can expand
their business into foreign market.
Besides that, they can compete
healthy with other company at
around the world. The organization
need to combine strength with the
NHF
Holdings
Berhad
opportunities which is to produce

high quality products with nice
packaging by adoption information
technology in order to keep with
changing
improving
of
technology
their
operation
while
and
NHF Holdings Berhad should

manage
it
cost
budget
effective like doing schedule

set limit for cash out as cost
rising.
Next,
implements
marketing promotion based

on
its
budget
by
using
advertisement through mass

media like a television, radio
and newspaper or listing in
the
yellow
pages
or
billboard, show it corporation,

product to meet the target
market needs. NHF Holdings
Berhad should always remind
their consumer about them
nowadays. The advertisement
should
attract
customers
attention in order to increase

104
demands.
NHF
increase
Holding
can in term of demands.
market share for market
development.
THREATS
T1
Competitor
T2
The Career
ST STRATEGY
There
are
more
and
WT STRATEGY
more In order to increase the
competitors to penetrate in the auto companys

arts
industry
nowadays.
NHF Holdings
Holdings Berhad have to always up minimize
sales,
NHF
Berhad
could
cost
of
raw
to date to the technology and it skill material, cost of product.

to maintain as a market leader in the Next, NHF Holdings Berhad
auto parts industry.NHF Holdings need to recruit expertise in
Berhad
has
various
notable marketing areas by have the
implementations have to be carried competent person and experts

out though out the year in the pursuit in that filed to handle the
of excellence to enhance the quality business. This is due to the
of their products. They should increase new entrants on the
provide high value than competitors auto parts industry and many
and create strong supplier customer auto industry can use other
relationship because it can bring substitute products that come
positive
social
change
through to
this
industry.
NHF
effective business strategies. By Holdings Berhad just not only

using this method, an organization be able could use this ways to
could get benefit in their production overcome the threats but also
and thus increase the profit.
able improve their company

performance.
1.
SO STRATEGY
105
NHF Holdings Berhad haS strong corporate culture as a market leader in auto parts
industry. It is one of its strengths to manage it corporation to be the market leader in auto parts
industry. Due to this, the demands will increase. When NHF Holdings Berhad go global, it can
expand their business into foreign market. Besides that, they can compete healthy with other
company at around the world. The organization need to combine strength with the NHF
Holdings Berhad opportunities which is to produce high quality products with nice packaging
by adoption information technology in order to keep with changing of technology while
improving their operation and demands. NHF Holding can increase market share for market
development.
2.
ST STRATEGY
There are more and more competitors to penetrate in the auto arts industry nowadays.
NHF Holdings Berhad has to always up to date to the technology and it skill to maintain as a
market leader in the auto parts industry.
NHF Holdings Berhad has various notable implementations have to be carried out though
out the year in the pursuit of excellence to enhance the quality of their products. They should
provide high value than competitors and create strong supplier customer relationship because it
can bring positive social change through effective business strategies. By using this method, an
organization could get benefit in their production and thus increase the profit.
3. WO STRATEGY
NHF Holdings Berhad should manage it cost budget effective like doing schedule set
limit for cash out as cost rising. Next, implements marketing promotion based on its budget by
using advertisement through mass media like a television, radio and newspaper or listing in the
yellow pages or a billboard, show it corporation, product to meet the target market needs. NHF
Holdings Berhad should always remind their consumer about them nowadays. The advertisement
should attract customers attention in order to increase in term of demands.
4. WT STRATEGY
106
In order to increase the companys sales, NHF Holdings Berhad could minimize cost of
raw material, cost of product. Next, NHF Holdings Berhad need to recruit expertise in marketing
areas by have the competent person and experts in that filed to handle the business. This is due to
the increase new entrants on the auto parts industry and many auto industry can use other
substitute products that come to this industry. NHF Holdings Berhad just not only be able could
use this ways to overcome the threats but also able improve their company performance.
107
3.6 RATIO ANALYSIS

Net Income
Average Outstanding Share
Year 2013
Year 2012
20,149,000
22,763,000
75,157,000
75,157,000
= 0.2681
= 0.3029
Earnings per share serve as an indicator of a companys profitability. The earnings per
share for the year 2012 are even better than year 2013 which is 0.3029 compare to the year 2013
which is 0.2681.
108
2. RETURN ON SALE (ROS)

Revenue
Year 2013
Year 2012
52,218,000
32,623,000
52,723,000
33,238,000
= 0.9904
= 0.9815
Return on sales is used to evaluate an entitys operating performance. It is also indicates

how much profit an entity makes after paying for variable costs of production such as wages, raw
materials and others. From the table, we can see that on the year 2013 is even better which is
0.9904 compared to the year 2012 which is 0.9815.
109
3. RETURN ON INVESTMENT (ROI)
Net Profit after Interest and Tax

Total Assets
Year 2013
Year 2012
52,665,000
29,121,000
148,553,000
105,421,000
= 0.3545
= 0.2763
The return on investment is the ratio of money gained or lost on an investment relative to
the amount of money invested. For the year 2012 there is a gained of 0.2763 compared to the
year 2013 which is only 0.3.545. The gains are increasing.
110
4. RETURN ON ASSETS (ROA)

Average Total assets
Year 2013
Year 2012
27,358,000
27,669,000
148,553,000+105,421,000
105,421,000+85,721,721
= 0.2154
= 0.2895
Return on asset gives an idea as to how efficient management is at using its assets to
generate earnings. From the table, we can see that on the year 2012 the management of company
is more efficient which is 0.2895 compared to the year 2013 which only 0.2154.
111

1. MARKET PENETRATION STRATEGY
Company focuses on selling existing products into existing markets especially to
ASEAN countries. Market penetration is a valuable growth strategy to many
organizations because retaining existing customers is cheaper than attracting new ones.
NHF Holdings Berhad can retain existing customers by price adjustment, promotion,
advertising, and product improvement. For price adjustment, keep the price low to shut
out potential competitors. The strategy can be very effective for companies that do their
market research carefully and know that they have resources to make it work. By
lowering prices, the business hopes to generate more sales volume by increasing the
number of units purchased and to make prices more appealing to customers when
compared to the competitors. Due to that, NHF Holdings Berhad need make market
research first before make price adjustment in order to attract competitors customers.
Besides that, NHF Holdings Berhad should improve their quality of product to attract
more customers. The trend nowadays, people care about the safety of their life, so that the
demand for high quality of automotive part is important to them. Thus, NHF Holdings
Berhad can take this as their other point as an adjustment on increasing their profit. For
the marketing strategies, NHF Holdings must be more aggressive and creative in their
promotion and makes unique advertisement because other competitor also will do
something to attract consumers. NHF Holdings Berhad can conduct big promotion that
will cherish the customers such as give installment payment and free services to customer
that bought their product. This type of promotion activities will attract and retain the
attention of consumers demand for their product.
112
3.8 OTHER RELEVANT INFORMATION

1. Metal Automotive Body Parts
Door
Hood
2. Plastics Automotive Body parts
Grille
Panel
113
4.0 CONCLUSION
If comparison is made between Narra Industries Berhad, Nestle (Malaysia) Berhad and
New Hoong Fatt Holdings Berhad, we found that these companies have not much similarity for
us to do comparison due to the different industry. So, we take the ratio analysis of these three
companies to find out which is better to invest.
The Earning Per Share (EPS) for NHF Holding Berhad is RM 0.2681 per share while the
EPS ratio for Narra Industires Berhad and Nestle (Malaysia) Berhad are (RM 0.4383) per share
and RM 2.3515 per share in year 2013. The EPS ratio performance shows that Nestle (Malaysia)
Berhad had the greater value than the other companies. For conclusion, we will suggest BOD
IZAARA PLC to choose Nestle (Malaysia) Berhad as their target for them to invest in Malaysia.
Nestle (Malaysia) Berhad is a well established company in the food and beverage
industry and has strong financial performance as compared to the others. Nestle is a dominant
company among the competitors and has tendency to expand the companys share market.
Narra Industries Berhad is facing the financial downturn and is now in crisis. The losses
of the company are continuous for years and the figure of the losses is keeps on increasing. The
company was sold out their assets nearly half of the total assets in year 2012.
In conclusion, through the comparison among the three companies, we found that Nestle
(Malaysia) Berhad is the most favourable company to invest in. Thus, we suggest the company to
invest in Nestle (Malaysia) Berhad.
114
5.0 REFERENCES
1. Hong Leong Manufacturing Group Sdn Bhd. (n.d.). 10-Year Financial Highlights. Retrieved
from Hong Leong Manufacturing Group: http://www.hlmg.com.my/financial-highlights.php?
rid=4
2. Hong Leong Manufacturing Group Sdn Bhd. (n.d.). Our Businesses. Retrieved from Hong
Leong Manufacturing Group: http://www.hlmg.com.my/our-businesses.php?rid=4
3. Khuen, L. W. (2014, 6 17). Narra hits limit-up, says unaware of any reason for share price
spike. Retrieved from The Sun Daily: http://www.thesundaily.my/news/1083680
4. Narra Industries Berhad. (2013). Annual Report.
5. The Star. (2013, October 17). Narra Industries losing its lustre after HL Industries deal.
Retrieved
from
The
Star:
http://www.thestar.com.my/Business/Business-
News/2013/10/17/Narra-Industries-losing-its-lustre-after-HL-Industries-deal/
6. Malaysia Population 1960-2014.(n.d.). Malaysia Population. Retrieved September 22, 2014,
from http://www.tradingeconomics.com/malaysia/population
7. Nestle Company. (2011, 09). StudyMode.com. Retrieved September 21, 2014, from
http://www.studymode.com/essays/Nestle-Company-781198.html
8. Nestle Malaysia. (n.d.). http://www.nestle.com.my. Retrieved September 21, 2014, from
http://www.nestle.com.my/
9. Nestle to increase Milo's price by 5% to 7% .(n.d.). TheSundaily. Retrieved September 29,
2014, from http://www.thesundaily.my/news/1028188
10. Porter's Five Forces. (n.d.). Strategic Management Insight. Retrieved September 22, 2014,
from http://www.strategicmanagementinsight.com/tools/porters-five-forces.html
11. SWOT analysis of Nestle. (n.d.). Nestle SWOT analysis 2013. Retrieved September 21, 2014,
from http://www.strategicmanagementinsight.com/swot- analyses/nestle-swot-analysis.html
115
12. WikiWealth. (n.d.). Nestle Malaysia SWOT Analysis -. Retrieved September 22, 2014, from
http://www.wikiwealth.com/swot-analysis:nestle-malaysia
13. (2013). Annual Report New Holdings Berhad .
116

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TABLE OF CONTENTS

1.0 NARRA INDUSTRIES BERHAD............................................................................................3

2.8 OTHER RELEVANT INFORMATION..............................................................................78

1.0 NARRA INDUSTRIES BERHAD

1.1.2 BOARD OF DIRECTORS

2. YBHG DATUK SYED ZAID BIN SYED JAFFAR ALBAR

YBHG DATO ROSMAN BIN ABDULLAH

4. MR TERENCE LEE CHAI KOON

Mr Terence Lee, aged 55, a Malaysian, is a member of the Chartered Institute of

5. MR SEOW YOO LIN

1.1.3 AUTHORIZED CAPITAL

1.1.4 PAID-UP CAPITAL

1.1.5 BOARD MEETING

1.1.6 COMPANY VISION AND MISSION

1.2 GENERAL ENVIRONMENT ANALYSIS

1.3 TASK ENVIRONMENT ANALYSIS

1. THREAT OF NEW ENTRANTS

2. RIVALRY AMONG EXISTING FIRMS

4. BARGAINING POWER OF BUYERS

Besides, consumers see the producers providing variety of differentiated products

1.4 SWOT ANALYSIS

SWOT ANALYSIS TABLE: NARRA INDUSTRIES BERHAD

Strong Board of Directors

Losses in after tax for few years

High quality products

High sales price

Low product publicity (Advertisement)

Public listed company

After sales services

Consumers preferences toward new

Limited barrier to entry

Interior design (Start to end service)

STRONG BOARD OF DIRECTORS

HIGH QUALITY PRODUCTS

PUBLIC LISTED COMPANY

LOSSES IN PROFIT BEFORE TAX (PBT) FOR FEW YEARS

HIGH SALES PRICE

recruitment of expert employees in designing and operate on machinery to produce on the

LOW PRODUCT PUBLICITY (ADVERTISEMENT)

AFTER SALES SERVICE

INTERIOR DESIGN (START TO END SERVICE)

LIMITED BARRIER TO ENTRY

1.5 TOWS ANALYSIS

tax for few years

High sales price

design (Start to end

RESEARCH AND DEVELOPMENT

Narra Industries Berhad should come out a plan to do a research on innovative

AFTER SALES SERVICE

Hence, the products could be easily to be substitute by competitors companys products. In

ADVERTISING AND MARKETING

FOCUS ON LARGE SCALE PRODUCTION

1.6 RATIO ANALYSIS

2. RETURN ON SALE (ROS)

3. RETURN ON INVESTMENT (ROI)

4. RETURN ON ASSETS (ROA)

5. RETURN ON EQUITY (ROE)

1.7 STRATEGIC DIRECTION

1.8 OTHER RELEVANCE INFORMATION

2.0 NESTLE (MALAYSIA) BERHAD

2.1.2 BOARD OF DIRECTORS

2. DATO MOHD. RAFIK BIN SHAH MOHAMAD