Background of the company

Discuss about the Concept Of Strategic Business Management.

The concept of strategic management has become an integral part for business management these days. The concept involves activities of identifying as well as describing the strategies which are taken by the mangers in order ensure better performance along with a competitive advantage in view of the growth of organization. In terms of strategic management, managers take several decisions after considering the impact of the external as well as internal factors on the business (Hill, Jone and Schilling 2014). It has been considered that strategic management is one of the most complicated tasks that mangers deal with. The whole process of strategic management includes setting plans and then reviewing the strategies so that it can be assured that the strategies are full proved in order to fetch success. Thus the report shedding the light on the concept of strategic management discusses how the Mah Sing Group Berhad strategies the business operation towards assuring further growth of the company (Yan 2015). The report therefore begins with discussing a brief overview of the company along with its goals, objectives and mission and then proceeds to further discussion on internal as well as external analysis which includes PESTLE analysis. The Porter’s five forces analysis will also be given alongside of PESTLE. In addition to that, the report elaborates on several other analysis such as capability analysis and 3-year KPI analysis as well as benchmark with a close competitor. Towards the conclusion, the study proposes several strategies in order to address the issues and challenges. Finally, the paper concludes by summing up the whole discussion.

Based in Malaysia the company Mah Sing Group Berhad deals indifferent areas such as investment holding, real estate, plastics and so on.Started its journey in the year of 1991, the company invests as well as develops industrial properties along with commercial and residential properties. In addition to that the company manufactures, assembles and trades a wide range of products that aremade out of plastic. Property support services are also given by the company (Berhad 2018). At the same time, the company also operates investment holding beside management provision and so on. Apart from these areas, the company also does trading business of building materials. The subsidiaries of the company are Capitol Revenue Development SdnBhd and Convention City Development SdnBhd which operates in above mentioned areas as well as in hospitality management services and so on. The strong employee base consisting of 899 efficient individuals is considered as one of the strengths of the company. The annual report of the company reports RM 2916 million revenue in 2017 while net profit was reported RM 362 million along with 12.54 basic earnings per share.

Strategic challenges

The company is presently facing a few strategic challenges. The continuous competition within the real estate industry demands Mah Sing Group Berhad to be proactive in terms taking strategies to remain ahead of the competition.  S P Setia, the major competitor of the company has achieved record sales margin in the financial year of 2016-2017 (Thestar.com.my 2018) as compared to Mah Sing Group Berhad. Thus the continuous rivalry from similar other companies demands the company’s focus on strategic management than any other aspects in terms of business management.

In addition to that the growing global political as well as trade issues are the other major challenges that the company faces. The present political issues adversely impact both on the business operation of the company as well as on the purchase behavior of the customers (Ey.com 2018). Meanwhile the current economical climate all over the globe is another challenge that the company face in terms of its business process. Due to all the above mentioned challenges, the company experienced a revenue decline of 6%; RM773.9 million to RM727.14 million

In accordance with Darbi, (2013), a mission statement determines the purpose of the company. Thus the vision statement of the company states, “Inventing future living that enhances quality of life” (Berhad 2018). From this, it can be interpreted that the Mah Sing Group Berhad aims to enhance the quality of living of its customers. However the company strongly believes that excellence can only be achieved if the core principles on which the base of the company is built upon are maintained and fulfilled. Over the years, Mah Sing Group eyes on innovations while serving the best service to the customers. In respect to that it needs to be mentioned that it has been largely considered that the vision and mission statements are of immense importance in terms of strategic management (Kopaneva and Sias 2015). Mah Sing Group Berhad’s vision statement thus implies that the company exclusively focuses on delivering quality products as well as service to the customers. Additionally, the statement also signifies the emphasis on principles which makes the company distinguishable in the industry.

On the other hand, the mission statement of the company, Mah Sing Group Berhad focuses on taking sustainable approaches towards the environment as well as employees and also the community. The company aims to provide the best solution to the customers in accordance with the future trends of the industry. “We want to recreate, innovate and push boundaries,” implies that the company’s focal point is on the innovation while breaking the stereotype (Mah Sing 2018). The mission statement of the company also emphasizes on the efficiency of the workforce through rigorous training and learning programs in view of the further growth of the company. Above all, the company aims to deliver quality service to its customers.

Mission goals and objective

The political condition of Malaysia is quite stable, even in accordance with Political and Economic Risk Consultancy (PERC), in the entire continent the risk of political factors of Malaysia is the lowest. Thus it can be said that the geographical location of the company from the perspective of political condition is in favor of the real estate industry(Cbre.com.my 2018). In addition, the simplified structure of taxation and flexible foreign trade policies between Malaysia and other countries made the country suitable for Mah Sing Group Berhad. Thus the political condition of Malaysia is strength for the company.

Over the past two decades, it has been seen that the economy of Malaysia has developed in a rapid manner which reports which reported Malaysia’s GDP value at RM1.353 trillion in 2017(Cbre.com.my 2018). Meanwhile, the low employment rate of Malaysia, low interest rates on export and import made up a favorable environment for the company to grow further. The data report of Ministry of Trade and Industry, Malaysia states the real estate industry states grows at 5-6% every year making up it as the strength for the company (Ey.com 2018).

The social trend influences the business process of Mah Sing Group Berhad to a considerable extent since the business depends on the purchase behavior of the company. Forexample, the cost of living in Malaysia has increased over few years for which the demand of affordable houses is in rise (Research, Services and Trends 2018). Several social factors including population, lifestyle, and consumerism and so on impact real estate industry. For example, Customers these days to cope with up globalization, prefer modern infrastructure while buying a property. Thus giant companies in this industry focus on the aspect of modernization while developing buildings.

The technological advancement has a major influence on Mah Sing Group Berhad. In the era modern technologies, the company has made the implementation of internet in its business process. Such as, internet based web portal for placing orders and buying of the property (Jaafar Nuruddin and Bakar 2018). Addressing the market requirement, the company has been using the modern technologies in order to make the buildings earthquake resistant. In addition to that, by implementing ICT innovations, the real estate companies use mobile based application service in order to reach out to maximum customer with an ease. At the same time, special attention is given on the Research and Development department so that latest technological innovations can be implemented.

Environment analysis

The impact of trade laws and regulations play an important role for the business process of the company. The government of the Malaysia has introduced Intellectual Property Rights in order to reduce the risk of unfair practices within the real estate industry (Thepropertytimes.my 2018). Besides, Employment Act 1995 of Malaysia secures the rights of labors and employees engaged in real estate industry.Thus it will be apt to state that these legal factors are needed to be fulfilled by the company to assure uninterrupted business process of the company.

It is needless to mention that real estate and construction industry has always been imposing threat on environment. Due to rapid urbanization In Malaysia the environmental balance is getting affected as reported by Thepropertytimes.my, (2018). Thus government became strict in order to sanction permission for construction of buildings while implemented Environmental Quality Act was introduced in 1989 to control the effect of urbanization on environment. This demandsMah Sing Group Berhad to adopt sustainable approach which will have less adverse impact on environment.

Due to urbanization, the real estate industry has become highly competitive with giant companies like and PropNexandS P Setia. Real estate companies including Malaysia Realtors Inc, MindlinkGroupsare the other large real estate companies in competition with Mah Sing Group Berhad (Thepropertytimes.my 2018). In order to keep a hold on the customer base all these companies take different strategies which creates difficulties for the company.

The increased tourism and urbanization in Malaysia further encouraged new companies to enter in the industry. Teakhwa Real Estate Pte. and similar other companies entering in the real estate market of Malaysia with considerable potentiality to compete with the giant companies which is a major threat for the company (Lionglobalinvestors.com 2018).

The Mah Sing Group Berhad is highly depended on the suppliers of raw materials. Generally it is seen that the suppliers of raw materials can drive the price of the end products (Research, Services and Trends 2018). However, the suppliers for the company exist in a large number. Thus it can be said that the power of the suppliers is low, hence it can be termed as the strength for the company.

 The risk of shifting of the customers from Mah Sing Group Berhad to other companies is high as buyers or customers are concentrated on cheaper price with maximum benefits. Addressing the need, the new companies offer cheaper price (Cbre.com.my 2018). Therefore the buyers have low switching costs. The customer base of Mah Sing Group Berhad is wide since it offers different range of products. Thus the customers hold more power creating a threat for the company.

PESTLE analysis

Among all the five forces of Porter’s model, Mah Sing Group Berhad is in advantageous position since the threat of substitute product is low making it as strength for the company. (Ey.com 2018). It needs to be mentioned that the Mah Sing Group Berhad also offer plastic made goods and the demand of biodegradable products instead of plastic goods is high enough.

The above Porter’s five forces analysis suggests that while competition within the industry, potentiality of new entrants in the industry and power of customers as threats or weakness for the company, while the potentiality of substitute products and supplier’s powers can be considered as strength or opportunities.

Resource audit

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From the above Value Chain analysis, it can be understood that the firm infrastructure represents weakness since the company is only based in Malaysia while rival companies deal in the overseas market. On the other hand, the major strength of the company is its HRD which manages the workforce to make a unique team of employee. While the Mah Sing Group Berhad uses latest technologies to improve its product and business process, it is presently lagging behind compared to other companies for ineffective marketing strategies which can be considered as threats. However, it deserves mention that the efficient personnel in customer service and a wide range of products are some of the major strength of the company.

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After conducting both the external as well internal analysis, it can be seen that there are some issues presently faced by the company Mah Sing Group Berhad (Thestar.com.my 2018).The issues and challenges include inflation, competition in the industry, decline in revenue, issues regarding trade laws and regulations in the industry and so on.

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Through the model of Ansoff Matrix, the strategies will be proposed. Thus in order to begin it deserves mention that Mah Sing Group Berhad needs to increase the sales of existing product range in the present market segments (Hussainet al. 2013). For instance, more than high end market, the company needs to increase the development of affordable residential building for the customer of upper middle class so that their market share as well as competitive advantage can be increased.

Presently the company only operates within Malaysia. However, in order to increase its market share, the company can enter new markets to sustain in the competition within the industry. For instance, the company can expand its business in the other Asian countries that are developing (Hussainet al.2013). Since urbanization is increasing day by day in the developing countries, the market of developing countries has the potentiality of drawing more revenues.

Political factors

Apart from residential, industrial and commercial projects since competition is increasing day by day in the real estate industry, Mah Sing can extend its product range by developing amusement parks, children parks and city parks with gyms and so on (Razali and Mohd Adnan 2015). The purpose would be enhancing the growth of the company by developing the product range in the existing market.On the other hand, since Malaysian government introduced strict directives to control urbanization, development of parks would deal with the challenges related to sustainable approaches in business.

The real estate industry has undoubtedly become extremely competitive with giant companies not only in Malaysia but all over the globe. Thus beside of real estate industry, the company needs to give more effort on service oriented business as the industry of service is observed with rapid growth (Yan 2015). For instance consultancy business can develop through which the company will be providing services in different areas.

In order to analyze the suitability of the proposed strategy, it will be apt to assert that the strategy will be effectively exploit the opportunities and will be able to avoid the threat of as it proposes development of affordable houses because customers tend to invest less in expensive projects. Since competition is the major issue that the company is facing, the Ansoff matrix essentially suggests increasing competiveness of the company. Thus market penetration and product development would be more suitable for Mah Sing Group Berhad. Through increasing development affordable homes, the company will be able to increase its profit by 20%.

There is a need of innovative houses at an affordable price, thus as proposed, the affordable houses will be able to satisfy the market requirement and the expectation of the customers who are the key players. The recommendation states product diversification such as building of amusement parks since urbanization imposes a threat on environment. Thus, it can be stated that benefits are likely while risk is less as the proposed strategy emphasized on affordable range of product. An increased number of developments of affordable homes will increase the revenue. This in turn will positively impact on dividend payable along with earning per share through which the stakeholders will be benefitted.

The company is the second largest company after S P Setia. Presently the company has over 1500 employees which is one of the major resources of the company while the sales margin and dividend has increased by 10.43% and 14.56% respectively (Berhad 2018). This refers that the company has potential to implement the proposed strategy. On the other hand, since Mah Sing Group Berhad manufactures and markets plastic products, it can expand its product range further. At the same time the records of past few years suggest that the company has enough potential to increase the sale of existing products through effective marketing.

Economic factors

Conclusion

Thus to conclude it can be said that Mah Sing Group Berhad is one of the leading companies of Malaysia. However, presently the company is lagging behind in comparison with the company like S P Setia. Thus in order to increase the competitiveness in the industry the report has given possible recommendations at the same time the report has conducted a thorough analysis of the internal as well as external factors so that effective strategy can be proposed.

References

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Jaafar, M., Nuruddin, A.R. and Bakar, S.P.S.A., 2018. Mah Sing Group Bhd. In Business Sustainability Model for Malaysian Housing Developers (pp. 171-185). Springer, Singapore.

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Thesundaily.my. 2018. Mah Sing sees Q2 profit up 1.8% to RM90.39 million. [online] Available at: https://www.thesundaily.my/news/2017/08/28/mah-sing-sees-q2-profit-18-rm9039-million [Accessed 22 Jul. 2018].

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