PMI/ACA/03/ASC(14)/001

Rev. No.:0

PGSM
ASSIGNMENT COVER

SECTION A:

PERSONAL PARTICULARS

(PLEASE USE BLOCK LETTERS)

Programme

MBA PGSM

Module Subject:

MARKETING

Module code:

MKT 600

Name of Lecturer:

MS. EWAN LEE

Assignment title:

ASSIGNMENT 1 REPORT FORMAT

(2000-2500 words)

Assignment
Submission date

Name of Group
Members

31 MAY 2014

LIM YOU BANG

Extension date agreed

(Written approval from
Mantissa office)

Actual Late submission

date

Explanation for Late

submission (if
applicable)
Interim mark awarded

IMPORTANT:
1. All completed assignments must be accompanied by PGSM front cover sheet when submitted.
2. Students are required to submit their work through MORE Portals to ensure the originality of their
work.
3. All references must be fully cited in Harvard/ APA notation.
4. Plagiarism in any form will result in severe penalties.
5. Work submitted within up to 7 calendar days late = 10 marks subtracted.
6. Work submitted up to 10 calendar days late = 20 marks subtracted.
7. Work submitted more than 10 calendar days late = 1 marks awarded.
Declaration: I declare that

a) No part of this assignment has been copied from any other persons work except where due
acknowledgement is made in the text.
b) No part of this assignment had been written for me by any other person except where such
collaboration has been authorized by lecturer concerned.
c) All grades obtained by students are final. Appeal can only be made (on FAIL case only) to the
Academic Borad along with a payment of RM 100.00 to formalise the Process.
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d) The University/ College use plagiarism detection software.

youbang
Student Signature ___________________________

Date

31 MAY 2014

1.0 Introduction
1.1 Industry
Healthcare is related to the prevention and treatments of illness. According to the
latest Global Industry Classification Standard, the healthcare industry is comprised of
two main sectors. The first is made up of the companies who manufacture and supply
healthcare equipment or provide healthcare related services. The second includes the
companies that involved in research and development (R&D), production and
marketing of pharmaceuticals and biotechnology products. (1)

1.2 Company
Sime Darby Healthcare Group is one of the big players in the Malaysia healthcare
industry providing health care services. Sime Darby Healthcare is a business unit under
the Sime Darby Berhad. Sime Darby Health Care started operating in 1985 with the
establishment of Sime Darby Medical Centre Subang Jaya. Other entities under the
Sime Darby Healthcare Group are the Sime Darby Specialist Centre Megah, which is a
day-surgery and outpatient centre, and the Sime Darby Nursing and Health Sciences
College, in Kuala Lumpur. Sime Darby Healthcare has the vision to become the gold
standard healthcare provider in the region. The company also has a number of health
care services under different centres such as blood diseases centre, cancer and
radiosurgery centre, health screening centre, comprehensive epilepsy management,
menstrual clinic and many more.

2.11 Macro Environment

2.11(i) Political
The growth of health care industry in Malaysia is closely related to the political
environment. Recently, in the 10th Malaysia Plan tabled by the government, private
health care is included in the 12 national key economic areas of Malaysia. Therefore,
private healthcare industry is going to be benefited with the access to some portion of
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the total RM230 billions allocated for the 10th Malaysia Plan. In addition, one of the
10th Malaysia plan focuses on attracting talents. According to this plan, the
government is taking steps to attract foreign or Diasporas Malaysia talents to work in
Malaysia by issuing open visas to highly skilled foreign professionals and loosen others
restriction. (2)

2.11(ii) Economic
Although healthcare services are needed by any individuals, the fluctuation of
economy still affects the performance of the industry. During the time of economic
downturn, the performance of private health care providers will always be affected
because people can shift to other alternative that is the public hospitals, which required
a lower cost for treatments. The implementation of government policy and encouraging
competition on healthcare service industry has caused the industry under an aggressive
competitive market. (3)

2.11(iii) Socio-Cultural
As the world develops in terms of medical technology, life expectancy continues to
increase and people today are more concerning on the quality of their lives. According
to UNICEF, life expectancy in Malaysia has increased from 70 in year 1990 to 75 in
year 2009; 71 years for male and 77 years for female. By the social trend, it is now
getting more important for Malaysians to pursuit better quality life and it is now easy to
find health products in the market and people lining up to check their health in hospitals.
Malaysians prefer to seek for private healthcare services rather than government
healthcare services because of time-consuming and service quality. Purchasing medical
insurance therefore has become a necessity for this generation in order to cover high
expenses on private healthcare service

2.11(iv) Technological
Development in medical technology has helped and still helps modern society to
have better quality of life. Technology plays very important part in the healthcare
industries. Currently, one of the finest technologies in the industry is TomoTheraphy
System. This technology consists of precise radiation therapy for cancer patients. This
technology is able to deliver the desired dose to the tumour while minimising exposure
to non-tumour areas of cancer patients. With this technology, doctors are able to keep
track of the cancerous cells.

2.11(v) Environmental
One of the environmental factors that affect healthcare industry lately is the
influenza of A (H1N1). As the disease is spreading, people tend to seek for better
healthcare and healthcare centres if compared to the past. A (H1N1) had created greater
awareness of potential healthcare threats among the citizen of Malaysia. This will lead
to the increase in demand for healthcare services therefore; Sime Darby can gain
opportunities out of this disaster. For instance, Sime Darby Medical Center Subang
Jaya was chosen as one of the private hospitals that are involved in the management of
influenza H1N1 thus, it brings about an increase in demand for their services.

2.11(vi) Legal
The Act which governs the medical care provisions is known as the Private
Healthcare Facilities and Services Act 1998 and it is enforced by Ministry of Health.
Under section 106 of the act, the minister may make regulations prescribing a fee
schedule for any or all private healthcare facilities or services or health related facilities
or services. All healthcare facility or service must comply with the fee schedule
enforced by Ministry of Health. Thus, government can always interfere in the
healthcare industry by regulating the fees charged by private healthcare providers. As a
result, Sime Darby may need to take extra consideration when deciding on the mark-up
margin for their services. (4)
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2.12 Micro Environment

2.12(i) Customers
The expectations of patient are one of the determining factors of healthcare service.
Patient expectations can also be defined as the features which medical and management
service that the patients demand from health institutions should bear. The kind of Sime
Darby Healthcare of which the patient is in need, economic facilities, environmental
factors, existing health institutions and social insurance is the factors affecting
customers expectations. (5)

2.12(ii) Suppliers
As hospitals strive to improve productivity and control the cost and quality of care,
many are demanding their suppliers' assistance. Suppliers are developing new sales
strategies to build long-term, service-oriented partnerships with selected major
accounts. Material handlers then transport material from the main store room to various
secondary store rooms in wards throughout the hospital as the inventory in those wards
diminishes.

2.12(iii) Intermediaries
Marketing intermediaries such as reseller, marketing service agencies, physical
distribution firms and financial intermediaries help Sime Darby Healthcare to develop
marketing programs As a healthcare provider, there were many types of strategies
offered by outsource with regard to how to help health professionals become hospital
performance information intermediaries for their customer including creating and
disseminating information that is credible and easily accessible to health professionals.
By keeping the information updated, Sime Darby Healthcare responds to the changing
environment efficiently and effectively.

2.12(iv) Competitors
The main competitors in private healthcare industry are Pantai Hospital, Prince
Court Medical Centre and Columbia Asia. Pantai Hospital, under Pantai Holdings
Berhad, is one of the biggest hospital chain companies in Malaysia. It owns and
operates 10 hospitals around Malaysia having a total of 1,409 beds with an average of
100,000 admissions a year. Prince Court Medical Centre (PCMC) is a 300-bed private
healthcare facility located in Kuala Lumpur. It is fully owned by Petronas, Malaysias
national petroleum company. With its powerful support, PCMC could be designed like
hotel to make itself as the most luxurious hospital in Malaysia with world class
facilities. Columbia Asia is a chain of hospitals in Asia with 16 medical facilities across
not only Malaysia but also India, Indonesia and Vietnam. There are a total of 8 hospitals
around Malaysia. Unlike other giant hospitals, Columbia Asia also has its facilities in
residential areas instead of overcrowded central cities. Although it is smaller in size, it
keeps expanding its business around the world getting recognition from regions.

2.12(v) Government
For the 2010 budget, the government has announced to allocate a sum of RM 14.8
billion to enhance health facilities and provide equipment, increase supply of medicines,
intensify research and enforcement activities as well as building more hospitals and
clinics. The thrust of the health sector in the 9th Malaysia Plan (9MP) for the years
2006-2010 is Toward achieving greater health through consolidation of services. By
deciding the 9MP, the government put greater emphasis on bridging quality healthcare
to all the Malaysians and developing the industry.

2.12(vi) Financial Communities

The financial communities are referring institutions or individuals who support the
organization for future expansion. It can be shareholders and others that fund on the
business. For Sime Darby, ordinary people are the majority shareholders accounting for
nearly 50% of its total number of listed shares. Also, Sime Darby gets support from
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government because its business is close-related to government plan such as 9th

Malaysia Plan. Furthermore, since Sime Darby is currently expanding its business
globally, it can have great chance to get potential investors from overseas.

2.12(vii) Local Communities

Sime Darby provides jobs for the community and people around them and helps
people realize their full potential. The hospital may purchase goods and services from
local suppliers which are already a contribution to the local community as to these
suppliers have contract with the company therefore providing employment and jobs
indirectly. These businesses and employees then spend a portion of their income on
local goods and services, which in turn supports other local jobs and companies. Thus,
the effect of one dollar of wages is multiplied as it circulates through the community.

(6)

2.2 Portal Five Force Analysis

2.21 Threat of New Entrants
For the biotechnology industry, the biggest barrier is the initial cash investment
necessary for research and development (R&D). Firms should be willing to risk large
amount of money with the likely possibility with no return. Furthermore, the threat of
new entrants to the private healthcare sector depends heavily on the ability of the
industry to establish entry barriers that exclude newcomers. The threat of entrants to the
healthcare private sector is considered as low because people wouldnt go for
treatments at unknown clinics or hospital. Hence, its very hard for any new entrant to
enter and compete in the industry as it wont gain any profit and will need to get the
customer awareness. (7)

2.22 Threat of Substitute products or services:

There are low risks of substitute of product as the private healthcare industry in
Malaysia is growing. Sick patients will eventually have to go to specialists to cure their
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illness since the specialists are the ones who have the ability to cure the sickness of the
patient. For instance, maternity could now be done in private clinic. Patient doesnt
have to give birth in hospital any more. It is the future of medical industry but for now,
the threat is still low.
2.23 Competitive Rivalry
Rivalry has also been seen to be significant private hospitals; approximately 30%
of all patients would receive similar treatment in one of the 254 hospitals or same day
facilities, taking considerate pressure off the public hospital system. Technology
however, and medical advances and specialty services have been driving a strong trend
towards private hospitals specializations with more of the industry players are
developing a significant competition for niche areas of expertise such as coronary care,
eye surgery, mental health care and maternity admissions. With patients having a
freedom of choice to choose the hospital they want and to be seen by a specialist they
trust based on records and reputation, some hospitals have found it to be fit to set up
strategies that enable them to fend off competition they face and lure more patients to
their clinics.
2.24 Bargaining Power of Suppliers
In terms of medical equipment and pharmaceutical products, supplier power is
considered high. The supplier power as a variable has the potential to be most critical
for members of the for profit private hospital in managing viable hospital units. As
mentioned before, private hospital relies on key supply companies for their quality of
supplies and timely services and products to their various hospitals location. The
supplier power is also considered to be high regarding the credible forward integration
by suppliers of the equipment and medical suppliers. Suppliers hold latent power that
they can use in negotiation conditions of supplying their equipment to the private
hospital. (8)

2.25 Bargaining power of buyers

Regarding the role of patients in isolation to other influencing factors, it can be said
that their ability to impact on industry players in a negative or damaging way to
shareholders interests or assets and returns is relatively low. Hence, this element is
favourable to industry members. It is also favourable to private hospital. However, the
patients can easily find some alternatives to change their hospitals and doctors because
of the many medical centres around that make switching cost low. This is gives buyers
higher power, for is instance, a patient can easily shift from one specific private hospital
to other Medical centre or any other hospitals. (9)
3.0 Market segments
3.11 Geographic Segmentation
Currently, Sime Darby Healthcare owns and operates the Sime Darby Medical
Centre, the Sime Darby Specialist Centre and Sime Darby Nursing & Health Science
College. They all are located in Malaysia, particularly in Kuala Lumpur, and Sime
Darby Healthcare Group is planning third hospital by 2012 in Kuala Lumpur which is
also in. It tells that Sime Darby Healthcare focuses on Kuala Lumpur, which is capital
city of Malaysia with high degree of population and its density. Since Sime Darby
provides world class services to the customers and most of customers are high-salary
paid, they have segmented their customers within urban areas.

3.12 Demographic Segmentation

Demographic

segmentation

targets

services

for

certain

socioeconomic

characteristics such as gender, age, or cultural ethnic background. Sime Darby

Healthcare Group strategies that target women, in particular, are becoming increasingly
prevalent for several reasons such as capturing the female patient means influencing the
vast majority of health care decisions made for families and most women are
dissatisfied with how they receive care, which is often in settings that do not support the
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unique aspects of care to women. For these reasons, significant opportunity exists to
develop services targeted to women, and even to certain age groups within this
population, that can make a meaningful distinction in the marketplace, improve quality
of care, and increase patient satisfaction. These opportunities can range from focused
niche service development to comprehensive approaches that incorporate a wide range
of programs. (10)

3.2 Product life cycle

The product of healthcare can be examined from many different perspectives
including that of the product lifecycle. When examined this way it can be seen to
follow the traditional pattern despite having some elements of market failure. Because
medical care is a necessity, it has and will also be delivered in some way. The
manifestations of the product cycle, therefore, are that the organizations involved in
providing, financing, and improving the quality of healthcare changes over time.
In the growth phase the character changed to financing by insurance companies
with a very large growth in expenditures for hospitals, physicians, and medications.
The maturation phase brought government bureaucracy and a realization that the
quality for the amount of money spent (value) was low. Government, non-for-profit,
and commercial industry have all created promising new organizations and initiatives
to prevent decline in the product. Because medical care will continue to be delivered,
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these and other innovations will be required to prevent the decline. (

4.0 Conclusion

Sime Darby Healthcare is a large player in Malaysia healthcare industry. Their

performance is greatly influenced by both the macro and micro environment factors,
which are PESTEL and customers, suppliers, intermediaries, competitors, government,
the financial community, local community and lastly pressure groups. The
macro-environments are the driving forces of the company, which creates opportunities
for growth and development, meanwhile can also be appeared as an threat that disrupt
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the growth. It is very important for Sime Darby to evaluate the external environmental
forces in order to utilize the opportunities and reduce the effects from the threats. With
the analysis of the micro and macro environmental factors, Sime Darby Healthcare can
always plan for the future and react accordingly.

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5.0 References
(1) Abhijith Anand, Samuel Fosso Wamba, (2013) "Business value of
RFID-enabled

healthcare

transformation

projects",

Business

Process

Management Journal, Vol. 19 Iss: 1, pp.111 145

(2) Tak-Kee Hui, David Wan (2009), Health-care tourism in Singapore, in Joseph
S. Chen (ed.) 5 (Advances in Hospitality and Leisure, Volume 5), Emerald
Group Publishing Limited, pp.109-123
(3) Joseph Bonnici, (2007) "The marketing concept, patient dumping and
EMTALA", International Journal of Pharmaceutical and Healthcare
Marketing, Vol. 1 Iss: 3, pp.234 246
(4) Ali Mohammad Mosadeghrad, (2014) "Patient choice of a hospital:
implications for health policy and management", International Journal of
Health Care Quality Assurance, Vol. 27 Iss: 2, pp.152 164
(5) Etienne Minvielle, John R. Kimberly (2005), Measuring and Managing
Quality in Hospitals: Lessons from a French Experiment, in Grant T. Savage,
Jon A. Chilingerian, Michael Powell, Qian Xiao (ed.) International Health
Care Management (Advances in Health Care Management, Volume 5),
Emerald Group Publishing Limited, pp.247-272
(6) Geoffrey P. Lantos, (2002) "The ethicality of altruistic corporate social
responsibility", Journal of Consumer Marketing, Vol. 19 Iss: 3, pp.205 232
(7) David Forlani, Madhavan Parthasarathy, Susan M. Keaveney, (2008)
"Managerial risk perceptions of international entry-mode strategies: The
interaction effect of control and capability", International Marketing Review,
Vol. 25 Iss: 3, pp.292 311

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(8) Eamonn Ambrose, Donna Marshall, Daniel Lynch, (2010) "Buyer supplier
perspectives on supply chain relationships", International Journal of
Operations & Production Management, Vol. 30 Iss: 12, pp.1269 1290
(9) Victoria Serra-Sastre, Alistair McGuire (2012), Technology Diffusion and
Substitution of Medical Innovations, in Kristian Bolin, Robert Kaestner
(ed.) The Economics of Medical Technology (Advances in Health Economics
and Health Services Research, Volume 23), Emerald Group Publishing
Limited, pp.149-175
(10) T.P. Beane, D.M. Ennis, (1987) "Market Segmentation: A Review",
European Journal of Marketing, Vol. 21 Iss: 5, pp.20 42
(11) Adam Lindgreen, Michael Antioco, Roger Palmer, Tim van Heesch, (2009)
"High-tech, innovative products: identifying and meeting business customers'
value needs", Journal of Business & Industrial Marketing, Vol. 24 Iss: 3/4,
pp.182 - 197

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