1 | P a g e

In fulfillment of MBA Program for the subject- Strategic Management - Open Univers ity

Malaysia by Santhy A/P Govindasamy

Assignment Question:

This assignment is designed to develop students’’ ability to evaluate the business level and

corporate level strategies of a selected business organization.

Requirement:

Select a business organization of your choice. Preferably a medium or large company, well-known

in Malaysia.

Write a case study on the organization focusing on your evaluation of its business level and

corporate level strategies. You may use any of the models/matrices/theories in strategic

management to support your case.

TABLE OF CONTENTS

Description Page Number

1.0 Background of the Company 3

2.0 Current Corporate Level Strategies 4

2.0.1 Product Development 4

2.0.2 Market Penetration Strategy 6

2.0.3 Unrelated Diversification Strategy 7

3.0 Evaluation of Current Corporate Level Strategies 8

3.0.1 SWOT Matrix 8

3.0.2 SPACE Matrix 12

4.0 Current Business Level Strategies 16

4.0.1 Differentiation Strategy 16

4.0.2 Focus Strategy 17

5.0 Evaluation of Current Business Level Strategies 18

2 | P a g e

5.0.1 SWOT Matrix 18

5.0.2 BCG Matrix 19

6.0 Recommendations for Improvement 22

7.0 References 24

1.0 Background of the Company

The company selected for this assignment is Pos Malaysia Berhad (PMB). It is the largest provider

of postal related services in Malaysia. Currently PMB services include courier, mailing services,

parcels and even financial related services. The management of PMB realized the need to diversify

operations and venture into new products due to the industry being highly competitive with many

local and overseas courier and logistics service companies setting up operations in Malaysia. In

2011 DRB-Hicom Berhad acquired a 32.2% equity stake in the company. This acquisition created

major changes to PMB. It was realized in order for PMB to gain the competitive advantage, there

was a need to formulate and implement a strategic plan. The first step in strategic management is

to create a good vision and mission statement.

The following are the vision and mission statement of PMB from their Annual Report 2014:

Vision Statement:

“Connecting Malaysia, and beyond – for today and tomorrow”

Mission Statement:

3 | P a g e

“To build and deliver the network of choice”

A vision “is a statement that expresses organization’s ultimate objectives” and it should answer

the basic question “What do we want to become?”

PMB’s vision statement is short and is in one sentence. However in my opinion this statement fails

to specify PMB’s objective or its business.

Using evaluation of Samsonite’s vision statement, as an example, reads as: “To provide innovative

solutions for the travelling world”. This statement was criticized as lacking in objectives and “not

specific, as it could easily refer to air carriers or cruise lines, which is not good and further there

was no mention of luggage”, which is Samsonite’s business.

Applying the above evaluation on PMB’s vision statement, I would say:

PMB’s vision statement is too vague. The statement does not specify postal/courier services. The

vision statement appears to be more appropriate for a company in the telecommunication industry

because of the word “connecting Malaysia”.

Mission statements is “supposed to capture the overriding purpose of an organization in line with

the values and expectations of stakeholders”. It should answer the question” What business are we

in?” and “What is our business for?”

The following are the nine components which must be in a mission statement:

Customers – specify firm’s customers

Products or Services – specify firm’s major products and services

Markets – geographical location

Technology – Is the firm technologically current

Concern for survival, growth and profitability –Firm’s commitment to growth and

financial soundness

Philosophy – Firm’s basic beliefs, values, aspirations and ethical priorities

Self-Concept – Firm’s major competitive advantage

4 | P a g e

Concern for public image – Firm’s respond to social, community and

environmental concerns

Concern for employees – are employees their valuable asset

The recommended length of a mission statement must not be less than 250 words.

In my opinion PMB’s mission statement fails because it does not have any of the recommended

nine components for an “inspiring and enduring statement”. The statement is too short and can be

interpreted as PMB’s vision statement instead.

2.0 Current Corporate Level Strategies

2.0.1 Product Development

“A product development strategy is a strategy that seeks increased sales by improving or

modifying present products or services or developing a new product to target at a particular market

segment”. Companies need to practice consistent product development in order for them to keep

up with changes and trends in the marketplace, thereby ensuring their future profitability and

success. A company-wide commitment towards the creation of products and services is desired in

order to fulfill the unique consumer needs.

PMB realized its volume growth in conventional mail was decreasing due to consumer migrat ion

to digital channels which offers a faster and more convenient medium of communication. At the

same time the advent of internet brought opportunities to PMB as consumer require a reliable

delivery network to transport the goods purchased on-line. PMB pursued new product

development in order to deliver higher quality of service to ensure, it remained relevant to the

consumers in the market place. Two areas that were looked into were corporate mail management

and direct mail.

Corporate Mail Management service is a total mail room solution provided to organizations on a

contractual basis. PMB’s trained staff are placed at the organizations premises and they will handle

all the daily incoming and outgoing mails of the company. Services include collection and

distribution of client’s mail from the Post Office for internal circulation and the collection of out-

going mails from each unit of the company to the Post Office for delivery. It is reported in PMB’s

5 | P a g e

Annual Report 2014 this service is gaining popularity among their corporate clients. PMB

maintains high level of professionalism and integrity coupled with ease of communication with its

corporate clients in order to ensure the services meets customer expectations.

The Direct Mail service offered by PMB is essentially an effective and affordable method for their

corporate and non-corporate clients to reach out to prospective clients. PMB’s Annual Report 2014

reports Malaysian companies spend about RM4billion in advertising expenditure annually, the

bulk of which goes into print media. PMB realized the major grouse coming from customers is the

flyers or promotional mails not reaching targeted audiences. PMB decided to capitalize on the

more than 8 million addresses it services daily to ensure the promotional mails are effectively and

efficiently distributed. The Direct Mail service requires a high level of managerial and IT skills

from PMB and its employees. PMB has recently upgraded their data management system to ensure

better structure of its existing client information is available thereby ensuring the success of this

service.

The above new product developments by PMB for its mail market segment has significantly

increased the revenue generated from this segment.

2.0.2 Market Penetration Strategy

“A market penetration strategy seeks to increase market share for present products or services in

present markets through greater marketing efforts.”

The courier services industry is a highly competitive industry with the presence of both domestic

and foreign courier companies in Malaysia providing similar services. On-line business and e-

commerce growth has opened up opportunities for the courier services companies to provide

delivery service for merchandise purchased on-line. PMB has launched innovative packaging as

well as optimized its delivery/pick-up routes as part of its effort to increase market share for its

courier market segment.

In December 2013 PMB launched, PoslajuGo2U, a vehicle service which offers customized

delivery services both during and beyond normal working hours. The vehicles are equipped with

GPS tracking and with Fleet Management Information System, PMB can ensure all items are

6 | P a g e

delivered promptly and accurately to the respective addresses. Clients need for flexible delivery

hours can also be met. This optimization ofdelivery routes with the promotional efforts through

publicity in newspapers and the launching of its slogan “Positively Moving Forward” has made

PMB the preferred choice among corporate and non-corporate clients for their courier needs.

Customer convenience has always been a key feature in every PMB service and product. Potential

customers have been lost to rival firms because the post offices are open at certain hours or the

post office is located at an inconvenient distance from the client. In order to ensure greater market

share of the courier services, PMB has launched kiosks at strategic locations where there is high

pedestrian traffic zones such as at light rail transit stations (“LRT”), commuter train stations, bus

terminals, transit hubs and shopping malls. Operating from 9am to 7pm, seven days a week, these

kiosks offer customers the convenience of dropping off parcels outside normal working hours and

during weekends. There are currently six PosLaju kiosks in the Klang Valley and this channel will

soon be extended to all major cities across Malaysia.

PMB was able to capitalize on the benefits economies of scale in order to provide it with the

distinctive competitive advantage over its rivals. Thus PMB is able to maximize on its market

penetration strategy in order to secure a larger market share.

2.0.3 Unrelated Diversification Strategy

This diversification strategy is a “corporate level strategy which involves adding new businesses

to the company’s existing business, which is distinct from its established operations.” Companies

seek diversification in order to “reduce business risks through expanding their operations into new

territories.” The diversification strategy employed by PMB for its retail market segment involves

entering into new businesses areas as insurance and Islamic Micro-financing.

PMB has more than 5,700 postal outlets which provide services to customers such as bills payment,

sale of postage and collection centre for letters and parcels. PMB’s management realized there was

under utilization of existing resources and capabilities at each post office. By expanding the

provision of customer related and customer friendly services the revenue generated from the retail

market segment can be substantially increased. PMB realized it could capitalize on its vast post

office outlet throughout Malaysia in order to bring innovative services that can produce revenue.

7 | P a g e

With this regard, PMB has collaborated with Etiqa Takaful Berhad to provide its customers with

Takaful related products. Through PMB’s subsidiary Pos Takaful Agency Sdn Bhd, selected

PMB’s post office has become a one stop centre to provide advice and sales of its insurance

products. These post office counters also facilitate payments of premium from clients besides

handling other related matters on insurance. PMB has embarked on retraining of certain staffs in

order to provide them with the expert knowledge required for these services. Among the takaful

services provided include personal accident plan, drivers and passenger’s personal accident plan

and house owner insurance. These services appeals to both corporate as well as to individua l

customers who are looking for alternative Islamic insurance plans.

Another diversification exercise by PMB is the introduction of Islamic Micro Financing through

its wholly owned subsidiary, Pos Ar-Rahnu Sdn Bhd. This is a syariah-compliant business which

offers pawn-broking financing of up to 75% of the appraised value of gold. This is an interest- free

financing method which is offered to all Malaysians and foreigners holding valid passport. This is

a safe method for individuals to avail themselves with easy credit. However this facility is only

available at selected PMB’s post offices because of the need to build in strong room and increased

security features to comply with government regulations.

The above diversification exercise has spurred the growth of PMB’s retail market segment.

3.0 Evaluation of Current Corporate Level Strategies

Following discussion is on the evaluation of PMB’s current corporate level strategy. The tools

used to evaluate the strategies are the Strengths-Weaknesses-Opportunities-Threats (SWOT)

Matrix and the Strategic Position and Action Evaluation (SPACE) Matrix.

3.0.1 SWOT Matrix

Figure 1 shows the SWOT Matrix for PMB. This matrix is an important matching tool that helps

managers develop four types of strategies: SO (strengths-opportunities) Strategies, WO

(weakness-opportunities) strategies, ST (strengths-threat) strategies and WT (weakness-threat)

strategy.

8 | P a g e

It is crucial for PMB to know its internal strengths and weaknesses so that they can take advantage

of opportunities and avoid the threats which are present in the external environment. PMB should

then be able to identify its distinctive competencies in order to acquire the competitive advantage .

The SO strategy reveals the internal strengths in PMB which can prove advantageous as it looks

at the external opportunities available.

PMB has maximized the internal strength available from its 17,507strong employees to

successfully increase its existing market share in all the three market segments. In the financ ia l

year ending 2014 PMB reports the revenue generated per employee as RM81,500 as compared to

2013 when it was RM78,100, an overall increase of 4%. Any strategic exercise can only be

successful with full participation of the employees. Employees too must be equipped with the

necessary skills so that they can effectively contribute to the company.

The Mail Management service is provided exclusively to corporate clients. The handling of

corporate client mails requires PMB employees to display the highest level of professionalism.

Appropriate and selected training programmes are essential to increase employee competence.

This would ensure customer retention as well as growth of prospective new customers.

Another internal strength of PMB is the more than 5,700 post offices located around Malaysia.

They provide the services of direct mail, courier and retail business. PMB’s diversified services

require its buildings to have security features and innovative structure to appeal to its wider

customer base. PMB need to take advantage of the technological advancements in order to better

manage its customer database and to efficiently manage its delivery route.

The WO strategies involve PMB taking advantage of the opportunities provided by the external

environment in order to improve on its internal weakness. Two of the WO strategy pursued by

PMB is discussed.

Currently 80% of PMB’s corporate clients are from DRB-Hicom Berhad group. It is

recommended, PMB expand its customer base to include other non-related companies. The growth

in domestic investment and the robust private sector industry should provide the opportunity for

9 | P a g e

PMB to successfully expand its operations to other corporate clients. Expansion of customer base

would certainly increase PMB’s revenue.

PMB’s current fleet of vehicles are on average 10 years old. These vehicles currently add to the

operating costs of PMB through the higher maintenance and fuel costs. It is recommended for

PMB to consider replacement of the present fleet with the hybrid motor vehicles that are available

in the market. The initial replacement cost may be high for PMB but in the long run there would

be savings in reduced vehicle maintenance cost and fuel consumptions costs.

ST Strategies uses the strength within PMB in order to avoid or reduce the impact of external

threats.

PMB professes itself as Malaysia’s preferred domestic courier services provider. PMB need to

capitalize on this strength because of the uncertainty looming in the global market. Its present

strategy of new product development, market penetration and diversification has been well

received by both corporate and general public. PMB can reduce the shortfall in revenue brought

about by the global market by increasing its revenue domestically.

PMB need to use its current technological advancements for its fleet management to optimize

delivery routes and costs. The Management information systems developed for its fleet

management as well as GPS installation on its vehicle is a source of strength which must be

capitalized upon by PMB. This would contribute towards more efficient delivery system as well

as cost savings to PMB. Threat of fluctuating oil prices can be overcome through better

management of its fleet.

WT strategies are defensive tactics employed by PMB which are directed at reducing its interna l

weaknesses and avoiding external threats.

PMB’s current fleet of vehicles is on average 10 years old and is contributing to the high

maintenance and fuel costs for PMB. PMB is also facing external threats from the community as

more people become aware of the threat of global warming and advocating green environment.

PMB should seriously reduce or eliminate this weakness and threat by replacing its current

10 | P a g e

vehicles with hybrid models. These models are environment friendly as they not run on less fuel

and in the long run PMB should be able to lower its operating costs for motor vehicles.

PMB has 5,700 touch points consisting of post offices and post minis throughout Malaysia. These

touch points are being underutilized as the new products development and diversification exercise

by PMB is available at only selected outlets. It was reported as at 2009 there were 105 licensed

courier operators both local and foreign. In order to counter the threat from other similar service

operators PMB should introduce its new services at all the outlets.

The SWOT analysis has its limitation because it does not show how PMB can achieve a

competitive advantage. The matrix merely proposes strategy for PMB to implement strategies

which would ultimately lead to competitive advantage. The SWOT Matrix prepared for PMB is

based on the external and internal condition existing during the financial year ended 2014.

Figure 1:

SWOT Matrix – POS MALAYSIA BERHAD

Strengths Weaknesses

1. Revenue per employee RM82,000 1. 17,507 staff on PMB payroll

an increase of 4% in FY’14 2. 9,739 vehicles, average 10 2. Deliver to more than 8 years old

million addresses 3. Heavy reliance on DRB-Hicom

3. More than 5,700 group for corporate clients

touch points 4. Not all services offered at every

4. Current Ratio 1.5X, compared PMB touch points 2013 was 1.4X 5. After hours delivery only available

5. Strong brand image. 3pm-9pm daily

SO Strategies WO Strategies Opportunities

1. Corporate clients outsourcing 1. Intensify training of 1. Focus marketing efforts to their Mail management employees to make them B2B & B2C (W3, O3&4)

2. More than 350,000 items handled relevant (S1,O1&2) 2. Purchase new hybrid

for international destinations, driven 2. Enhance physical vehicles (W2, O5)

by rise e-commerce transaction infrastructure at 3. Increase services offered

3. Growth in domestic investment each touch point(S3,O3) at each touch point consumption resulted in fall in net 3. Actively use technology (W4, O3 & 4)

exports& rise in real imports platforms as enablers to

4. Strong domestic demand due to improve business

11 | P a g e

robust private sector activity (S2&3, O1&2)

5. Hybrid vehicles available as

alternative to fuel vehicles

ST Strategies WT Strategies

Threats

1. Global economy – uncertainty 1. Improve domestic 1. Replace old vehicles with

with continued weaken overall services (S2, T1) new hybrid models (W2, T2)

demand. 2. Optimize delivery routes 2. Increase availability of services

2. Fluctuating fuel prices, transport was using technology at each touch point

44% higher in FY’14 compared to (S2, T2) (W4, T4) FY ’13 3. Build on international 3. Increase operating hours

3. Consumers expect “green business destinations &presence (W5, T4)

operations” as courier of choice

4. As at 2009 there were 105 (S5, T5)

licensed courier operators in Malaysia

5. FedEx (27%) & UPS (24%) have

greater international presence

3.0.2 SPACE MATRIX

Figure 2: SPACE Matrix – Pos Malaysia Berhad

12 | P a g e

FP

Conservative Aggressive

7

6

5

4

3

2

1

CP

IP

-7 -6 -5 -4 -3 -2

-1

1 2 3 4 5 6 7

-1

-2

-3

-4

-5

-6

-7

Defensive SP

Competitive

Internal Analysis: External Analysis:

Financial Position (FP) Stability Position (SP)

Return on Investment (ROI) 7 Rate of Inflation -2

Leverage 6 Technological Changes -2

Liquidity 6 Price Elasticity of Demand -2

Working Capital 6 Competitive Pressure -5

Cash Flow 6 Barriers to Entry into Market -5

Financial Position (FP) Average 6.2 Stability Position (SP) Average -3.2

Internal Analysis: External Analysis:

Competitive Position (CP) Industry Position (IP)

Market Share -2 Growth Potential 6

Product Quality -1 Financial Stability 6

13 | P a g e

Figure 2 shows the SPACE Matrix for PMB. The Matrix shows PMB is in the competitive

quadrant. This means the recommended strategies for PMB would be

Backward, forward, horizontal integration

Market penetration

Market development

Product development

PMB is currently pursuing product development and market penetration strategy.A competitive

strategy approach occurs when the company has a high score on Industry Position/Competit ive

Position (IP/CP) axis of the SPACE matrix but is unfavorable on the Financial Position/Stability

Position (FP/SP) axis.

The IP/CP is a comparison of the postal/courier services industry against the competitive strength

of PMB. The IP score is slightly above average for this industry. This can be interpreted by using

the scales used to evaluate the industry. The industry has an above average score in its growth

potential as well as the financial stability of companies in the industry. The profitability potential

for this industry is also above average. However there is an average score for the ease of entry into

this industry. This could be contributed to the high capital expenditure required as well as

governmental regulations on the formation requirements of the industry.

However the competitive position score for PMB is relatively high at -2.2 in comparison to the

industry potential score. PMB’s high CP score can be attributed to the corporate level strategies

that have been pursued by the company. All three strategies with the combined internal strength

existing in PMB have given it the significant competitive advantage. The combined strategy has

given PMB a higher market share. PMB’s new product development with diversification has

enhanced the quality of its product/services. Customer’s satisfaction with the new products as well

Customer Loyalty -2 Ease of Entry into Market 5

Technological know-how -3 Resource Utilization 5

Control over Suppliers and Distributors -3 Profit Potential 6

Competitive Position (CP) Average -2.2

Industry Position (IP)

Average 5.6

14 | P a g e

as enhancement of existing products is reflected on the score for customer loyalty at -2. PMB has

also upgraded on its technological know-how which has given it the competitive advantage over

its competitors.

The FP/SP is a comparison of the financial position within PMB as against the stability of the

postal/courier services industry. The SP score for this industry is good at -3.2. The inflationary

average is -2 and the technological changes affecting this industry is an average -2 which is on the

low side. However this industry is facing high competition possibly due to lower barriers of entry

in to this industry.

The financial position of PMB is a score of 6.2 which is high. PMB has remained very liquid in its

position. Whilst a highly liquidity ratio is desirable as the company is able to meet its short-term

obligations without having to turn to debt financing however PMB’s leverage score is high. This

shows PMB has resorted to debt financing for its capital expenditure. The courier services industry

is stable as reflected by the score in SP. Under these circumstance it is advisable for PMB to use

its liquidity position to its advantage, for example partly financing capital expenditure or use of

cash in the day-to-day running of the business. The cash flow position of PMB is also high as

reflected by score of 6. PMB has a very good score in its return on investment (ROI) which

computed as Net Profit/Total Assets.

PMB is in the competitive quadrant due to 2 reasons. PMB has high score in its competitive score

as compared to the position of the overall industry. PMB’s corporate level strategies has been

effectively formulated and implemented giving the company a distinctive advantage in its

competitive position. PMB has above average score on its financial position and the industry is

stable as reflected by the average score of -3.2. In order for PMB to move to the aggressive

quadrant it has to work on improving its financial position, and as was analyzed above the company

should reduce its leverage ratio.

15 | P a g e

4.0 Current Business Level Strategies

Figure 4: PMB’s Five Generic Competitive Strategies

PMB’s business level strategies is identified as different ion and focus strategy.

4.0.1 Differentiation Strategy

At the business level, PMB is pursuing differentiation strategy. This strategy is appropriate for

PMB as it will complement the product development strategy pursued at the corporate level.

The corporate mail management system is essentially a service developed by PMB even before

the corporate clients realized there was a need for such a service. No company had outsourced its

mail, as corporate mails was essentially considered private to the company and highly confidentia l

16 | P a g e

matters could be exchanged in the correspondence. PMBs strong professional marketing team was

able to persuade corporate clients to sign up for this unique service. This service was offered on a

contractual basis and was customer friendly. PMB’s long standing in the industry as well as its

brand image as a reliable and trustworthy service provider were strong points to PMB favor.

Similarly for the Direct Mail services, PMB had to convince its clients to outsource the business

to them. PMB’s data base containing more than 8 million addresses and the more than 9,700

number of vehicles it had on the road were advantages that could not be rivalled by its competitors.

PMB has the distinct advantage of technology through its data base management system and Fleet

Management Information System which enabled PMB to deliver flyers to selected areas targeted

by its client. The strong coordination existing between departments in PMB ensures its customers

flyers and other promotional items are efficiently delivered to target groups, identified by PMB’s

customers.

The new services development as described above was a success among PMB’s client. Further

PMB provided training exercise for its staff which included work place management skills, inter

personal skills, communication skills and ethics. These training prepared PMB’s staff to meet

challenges successfully for both the services described above. The strong coordination existing

between departments in PMB contributed to the success of PMB’s differentiation strategy.

4.0.2 Focus Strategy

Another business level strategy pursued by PMB is the focus strategy. This strategy is especially

effective for PMB because the company is pursuing market penetration strategy at the corporate

level and the focus strategy gives it the edge. PMB has relied on the distinctive competencies

available internally in order to succeed in its market penetration strategy.

PMB discovered the growth of on-line business in Malaysia and overseas was creating a new

services demand among consumers. PMB’s product development and marketing team discovered

clients wanted durable and flexible packaging for their products. They also discovered the need

for an effective fleet management system to deliver the products purchased online. Innovation

was introduced into existing packaging so that customers could mix and match in order to meet

with different packaging requirements. As was mentioned in the Corporate Level Strategy the

17 | P a g e

installation of GPS with the Fleet Management Information System, PMB was able to successfully

enhance its delivery services. These became PMB’s area of focus to create the differentia t ion

which places it above its rivals.

As part of its focus strategy PMB found the need to extend operating hours at its kiosks centers.

These kiosk centers proved to be an effective tool in PMBs marketing strategy to expand its

existing customer base. Operating the kiosks 24 hours would give PMB the edge over its rivals

who have also introduced similar services through their kiosk centers. PMB has to also seriously

consider increasing the number of kiosks drop off centers in Malaysia. Thus in order for the focus

strategy to succeed PMB need to look at increasing the operating hours as well as availability of

these kiosk centers at various strategic locations..

The courier services industry is continually growing and in order for PMB to have a greater market

share the focus strategy is important to it.

5.0 Evaluation of Current Business Level Strategies

In order to evaluate PMB’s business level strategy I will be using SWOT analysis and BCG Matrix

as my tools.

5.0.1 SWOT Analysis

Kindly refer to Figure 1. The SO strategy suggest PMB has to look into development of its interna l

resources in order to take advantage of the opportunities available externally. One suggested

strategy is the need to provide training to staffs in order to help them in their job performance as

well as for their personal development to become valuable assets to PMB. In the SWOT analysis,

staff training has been suggested for PMB in order to take advantage of the differentiation and

focus strategy in the areas of business covering, Corporate Mail Management and on-line business.

The Corporate Mail Management is an area of business where presently there are no competitors

unlike the on-line business which is a highly competitive business. Thus PMB focusing on

customer training with special emphasis on developing distinct skills would ensure success of the

business level strategy.

18 | P a g e

The ST strategy suggest PMB has to look in to its internal strength in order to counter external

threats. PMB has the distinct advantage of 9,700 vehicles on the road to ensure success of the

business level strategy. PMB need to optimize on the delivery routes through technology

improvisation in order to counter the threat of fluctuating fuel prices. PMB has introduced GPS

system and the Fleet Management Systems Technology and is thereby able to optimize on the

delivery routes. This focus strategy would ensure greater success of the corporate level strategy

because of savings in fuel costs, employee costs and vehicle maintenance cost. In the long run this

focus strategy would ensure competitive advantage for PMB over its competitors.

The WO strategy suggests strategies for PMB to overcome the internal weakness so that it could

take advantage of the external opportunities. An opportunity available to PMB is the hybrid

vehicles. The weakness within PMB is the current fleet of vehicles is more than 10 years old. A

concerted effort to replace the old vehicles with the hybrid model would ensure greater fuel

efficiency and lower the maintenance costs. The focus and differentiation strategy would certainly

be defeated of its purpose if PMB does not take seriously the need for replacement of its vehicles

to the hybrid model. Such a move would also provide PMB with a distinct advantage on cost

savings which would be reflected in its Income Statement.

The WT strategy looks at both the weakness present in PMB as against the threat present

externally. PMB’s weakness is its operational hours for its post offices as well as at the kiosks is

limited. In order to ensure the success of the focus and differentiation strategy, PMB need to ensure

the operating hours are increased. This would be to the convenience to PMB’s customers who are

able to drop of their mail and parcels at their own time. The threat to PMB is that its competitors

too have opened kiosks centers in order to service their customers. PMB need to overcome its

weakness of service provision as this is compounded by the presence of competitors who provide

similar services. PMB has to focus on increased operational hours to ensure customers would

continue remaining loyal to it.

5.0.2 BCG Matrix

19 | P a g e

Figure 3 below shows the BCG Matrix for PMB. The BCG Matrix evaluates the strategic position

of PMB’s market segment portfolio and it’s potential. It classifies the market segment portfolio

into 4 categories based on industry attractiveness (growth rate of the courier/postal industry) and

competitive position (relative market share).

“Relative market share position is defined as the ratio of a division’s own market share (or

revenues) in a particular industry to the market share (or revenues) held by the largest rival firm in

that industry”.

Figure 1 shows all the three market segments belonging to PMB are in the Star quadrant. This

depicts PMB is operating in an attractive industry with high growth rate with PMB’s relative share

in the market is also on the high side. The current three market segments are cash generators as

well as cash users. All the three market segments require PMB to invest as they can be expected

to move to cash cows and generate positive cash flows to the company. Thus as depicted in the

SWOT Matrix it is advisable for PMB to continue its investment on:

Human resources – through training activities to enhance competency in job performance

and making them relevant to the company as valuable assets.

Technology – specific technology suggested was

replacement of current vehicles to hybrid models,

use GPS tracking and the Fleet Management Information System to better

coordinate the collection and delivery of postal/courier documents

Post Office buildings – renovation with security features and strong room storage

Such investment would mean, gaining and establishing its present competitive edge over its rival

firms. Looking at the BCG Matrix it only confirms the arguments made using the SWOT matrix

and SPACE Matrix. PMB is operating in an industry with high growth rate and its share of the

market is also high as compared to its rival firms.

The strategy recommended for a company the Star quadrant is

Vertical, horizontal integration

Market penetration

20 | P a g e

Market development

Product development

PMB is currently pursuing the market penetration and product development as its strategy.

Figure 3:

BCG Matrix – Pos Malaysia Berhad

Legend:

Courier Business Segment

Mail Business Segment

Retail Business Segment

6.0 Recommendation for Improvement

21 | P a g e

My recommendation to PMB is to implement strategic management as its tool in order to further

improve on its performance. The first stage of strategic management is formulation. Under strategy

formulation the company has to look into developing a good mission and vision statement. As was

discussed in introduction PMB must look at improving on both of this statements. It is important

for PMB to get the full cooperation from its staff and management to be actively involved in

developing the vision and mission statements. Importance of vision and mission statements cannot

be denied to an organization as it provides purpose and direction within the organization.

The SWOT matrix identified both external and internal environment factors affecting PMB. The

internet has brought e-business which is flourishing both globally as well as within Malaysia. It is

recommended for PMB to prepare its internal resources to take advantage of this huge market.

PMB need to seriously look into its human capital development through structured training and

improvements on existing structure of Pos Offices premises. Currently PMB has a good image

amongst its customers, and it is recommended PMB capitalize on its branding to place itself as the

preferred courier service provider among its customers.

PMB’s current strategy of new product development, market penetration and unrelated

diversification has certainly brought the company to the present strong position it is in as seen by

the relative market share of its market segment. It is recommended PMB to look into backward

integration as well. Thus integration involves PMB seeking ownership of its manufacturers of the

packaging and envelopes used for its business. Having control over the suppliers would give the

edge for PMB to improve on present packaging size and quality.

PMB too need to look at possible collaboration with its competitors to provide services to certain

destinations For example PMB has a good transportation network in east Malaysia, PMB can work

with its competitors to use PMB services in order to send and deliver the competitors courier. This

is also a source of revenue to PMB which PMB can look into.

PMB need to seriously study on the strength of its competitors, because as reported in 2009 there

were 105 courier operators in Malaysia. This is a huge number of companies in the postal/cour ier

industry. PMB should study the competitors target market and how successful and deficient are

22 | P a g e

they in servicing their customers. This study can provide PMB to look into possible other areas of

business within the postal/courier services industry.

(Number of Words: 5,677)

7.0 References

23 | P a g e

(1) Pos Malaysia Berhad Annual Report 2014

(2) Darbi W.P.K., 2012 www.ijbssnet.com

(3) www.strategicmanagementinsight.com/tools/vision-statement.html

(4) David, F. R., (2013). Strategic Management Concepts and Cases, Pearson Education

Limited

(5) searchcio.techtarget.com/definition/product-development-or-new-product

(6) classes.bus.oregonstate.edu/winter-06/ba469/Dibrell/ppt.ppt

(7) www.pos.com.my>.....> POSMEL>BUSINESS MAILING SOLUTIONS

(8) www.posmailroom.com.my

(9) www.pos.com.my>HOME>BUSINESS

(10) education-portal.com/.../what-is-diversification-of-business-strategies-def...

(11) www.strategy-train.eu/index.php?id=144

(12) www.differentiateyourbusiness.co.uk/space-analysis-strategic-position-an...

(13) Images for porter's five generic strategiesReport images

(14) www.strategicmanagementinsight.com/.../bcg-matrix-growth-share.html

(15) National Postal Strategy 2010-2014