You are on page 1of 41

Statements Of Adventa Berhad

Marketing Essay
For assignment help please contact
at help@hndassignmenthelp.co.uk or hndassignmenthelp@gmail.com

Introduction
Company background
Adventa Berhad, an investment holding company, engages in the manufacture and
distribution of medical products and devices for the healthcare industry. The
company offers surgical and medical examination gloves, such as latex surgical, latex
surgical power free, synthetic, surgical, orthopedic, microsurgery, powdered exams,
powder free exams, procedures, and nitrile exams gloves; and non gloves products
comprising airway management, feeding and drainage tubes, syringe and needles, IV
therapy, diagnostic, wound care, urology, non-woven products, hemodialysis
disposals, infection control, and autoclave tapes. It also engages in the generation
and supply of energy and electricity using biomass technology; and trading of
medical and healthcare equipment and appliances. The company has operations in
Malaysia, Germany, Hong Kong, and Uruguay. Adventa Berhad is based in Kota
Bharu, Malaysia.
The group's workforce is over 2000 strong and is located in 5 countries. In June
2004, ADVENTA was listed on the Malaysian Stock Exchange, Bursa Malaysia. The
subsidiaries of ADVENTA are committed to strong, sustained growth within their
disciplines. The means to this are product excellence and employee commitment to
customers. The group is continuously sourcing for talents that can add strength and
contribute ideas to the organization. ADVENTA intends to create value and returns
through the implementation and commercialization of its ideas and innovations.

Vision and mission statement


Vision statement

The vision statement of Adventa Berhad is to be the industry leader company in the
manufacture of medical glove industry as well as provide the best products and
services to its valuable customers.

Mission statement
The mission statement of Adventa Berhad as below:
Customer and supplier intimacy. Adventa Berhad wants to maintain high customer
and supplier intimacy. In order to achieve this mission, Adventa Berhad provides
excellent products and services to their customers as well as provides extraordinary
business support to their suppliers.
Profit. Adventa Berhad intends to achieve good profit for all their stakeholders
include shareholders, employees, and so on. In order to achieve this mission,
Adventa Berhad makes good use of all their assets to make generate profit.
Better welfare. Adventa Berhad intends to improve the welfare of the community. In
order to achieve this mission, Adventa Berhad produces high quality products and
delivers excellent services to the local community.
Environmental friendly. Adventa Berhad has an environmental friendly policy in
their company. Adventa Berhad protects the environment through production using
environmental friendly materials as well as improve their production process though
process innovation.
Market leadership. In order to achieve this mission, Adventa Berhad continually
grows by offering high quality medical gloves to the global market. Adventa Berhad
also tries to build a global brand of choice among the end users of medical gloves
such as doctor and nurse so that it can obtain the market leader position in the
medical gloves industry.

SWOT analysis
The SWOT analysis clearly shows that Adventa Berhad's strengths and the
opportunities available to it outweigh its weaknesses and the threats to its business

3.1 Strengths
Extraordinary product quality.

Adventa Berhad has good control in their medical gloves as well as other product
quality. This can be seen as Adventa Berhad has been awarded many certificates and
awards. For example, EN ISO 13485:2003, ISO 13485:2003 with CMDCAS, ISO
9001:2000, EC Certificate for Sterile Examination Gloves, EC Certificate for Sterile
Surgical Gloves and Industry Excellence Award 2004. To be successful in a strongly
competitive industry like rubber industry, an excellent product quality is needed.
Adventa Berhad has managed to provide excellent product as well as a wide range of
product breadth. This has made Adventa Berhad obtain a better position in the
industry.

Strong reputation.
Adventa Berhad is a strong manufacturer of medical gloves in the medical glove
industry. Adventa Berhad managed to gain their reputation by providing sterile
surgical glove for surgeons and operating room personnel which special high risk
applications is required in a modern hospital. The good technical knowledge base of
Adventa Berhad to produce these application-surgical gloves had earned the trust of
the most critical user. This also places Adventa Berhad among the few top
manufacturers in the industry which is capable to attain worldwide acceptance.

Strong research and development growth.


To continue growing and be competitive in the industry, Adventa Berhad has good
investment in Research and Product Development platform. The R&D team is built
over the lifetime of the company's operating units. With the continually growth in
R&D, Adventa Berhad managed to produce a wide range of new products that can
guarantee an improving revenues and a better net incomes.

3.2 Weaknesses
Lower profit margin.
Based on the profitability ratio analysis, Adventa Berhad has very low profit margin
compared to their key competitors which is only 1 percent of profit margin. The
profit margin decreased sharply from 10 percent in years 2010 to only 1 percent in
year 2011. This shows that Adventa Berhad is unable to generate enough profit for all
their stakeholders.

Poor manufacturing cost control.

Adventa Berhad has increasing cost of goods sold over the recent years. Adventa
Berhad's cost of goods sold is increasing from RM211.3 million in years 2008 to
RM372.1 million in years 2011 which is almost nearly 76 percent in only 4 financial
years. High cost structure has already cut down their earnings.

Weak balance sheet and unhealthy cash flow.


Adventa Berhad has a relatively weak balance sheet and unhealthy cash flow over the
recent financial years. The current ratio of years 2011 is weakened compared to in
years 2008. Theoretically, current ratio must be maintained above 2 to be considered
as healthy. Unfortunately, Adventa Berhad fails to achieve that level. Besides that,
the quick ratio of Adventa Berhad also considered as unhealthy too. Since quick ratio
must be achieve at least 1, Adventa Berhad only managed to achieve at only 0.7 in
recent 2 years.

3.3 Opportunities
Increasing global demand of health care
product.
Several industry analyses has shown that there is a sign of increasing global demand
of health care products include medical gloves. As few elite manufacturer of medical
glove, Adventa Berhad consider it is an important opportunity to expand its business
as well as improve its revenue. Besides that, Adventa Berhad also can improve its
brand name and company reputation if they managed to increase its market share.

New potential market for health care products.


There are new potential market around the world today for Adventa Berhad to
continue expand its business activities. As the world's aging population is increasing
sharply in the past 2 decades, it is a good opportunity for Adventa Berhad to offer
more health care products. This is because these aging populations need more health
care products than the younger generations.

Joint venture with local company.


Adventa Berhad can try to form a joint venture with local company when they are
expanding their business into a whole new market. By doing this, Adventa Berhad
not only can increase their market share in the industry but also overcome the

shortcoming and weakness of their weakness. In addition, Adventa Berhad also can
achieve cost saving because the local company has already has all the critical
information about the local market.

3.4 Threats
Unstable latex price.
Latex is the main raw material of Adventa Berhad's products, and it constitutes a
huge amount of its production cost. In recent years, the global latex price is
fluctuating and showing an uptrend in price. Therefore, it is a threat for Adventa
Berhad because a higher latex price directly contributes to higher production cost. It
is unfavorable to Adventa Berhad because its earnings will definitely decreasing.

Exchange rate risk.


Since the financial crisis started years 2008, there is an exchange rate risk faced by
Adventa Berhad. This is because Adventa Berhad is a global company which majority
of its business are denominated in USD. A weakening of the USD against MYR may
force Adventa Berhad to increase its price to maintain its margin. Indirectly, an
increased selling price will reduce the demand of Adventa Berhad's product.

Strong competitors.
There are very strong competitors in this rubber gloves industry such as Top Glove
Corporation Berhad, Supermax Corporation Berhad, Latexx Partners Berhad and
Kossan Latex Industries (M) Sdn. Bhd. Top Glove Corporation Berhad is the world
largest manufacturer of rubber gloves while Supermax Corporations Berrhad is the
second largest manufacturer after Top Glove. As a company in the same industry
with these strong competitors, Adventa Berhad's sales revenues is likely to be
affected because the economics of scale obtained by the strong competitors.

Competitive Profile Matrix (CPM)


SUPERMAX
TOP GLOVE
ADVENTA

LATEXX
Critical Successful Factor
Weight
Rating
Score
Rating
Score

Rating
Score
Rating
Score
Financial Position
0.23
3
0.69
4
0.92

1
0.23
2
0.46

Expansion Market Share


0.14
3
0.42
4
0.56

1
0.14
2
0.28
Marketing
0.18
3
0.54
4
0.72

2
0.36
1
0.18
Distribution Channel

0.15
4
0.60
3
0.45

2
0.30
1
0.15
Customer Service
0.06
3
0.18
4
0.24

2
0.12
1
0.06
Product Improvement
0.10

3
0.30
4
0.40

1
0.10
2
0.20
Management
0.03
3
0.09
4
0.12

2
0.06
1
0.03
Competitiveness
0.11
3

0.33
4
0.44

2
0.22
1
0.11

Total
1.00
3.15
3.85

1.53
1.47
Competitive profile matrix (CPM) is a common yet practical strategic management
tool for people to conduct comparison among the company and its rivals in the same
industry such as rubber glove industry. Moreover, CPM also can screen out company
strengths and weaknesses compare to its main competitors.
The critical successful factors in the table include the internal and external issues
that considered the most important issues related to the survival of the company in
rubber glove industry. The weight of each factor represents the important of each
factor. Meanwhile, the ratings in the competitive profile matrix represent both
strengths and weaknesses. Number 4 represent major strengths, number 3 represent
minor strengths, number 2 represent minor weaknesses and number 1 represent
major weaknesses.
From the financial position perspectives, CPM shows that Top Glove has better
performance than Supermax and Latexx as well as Adventa Berhad. The financial

position of Adventa Berhad is still left behind compared to Top Glove and Supermax.
This can be seen from its weak balance sheet and unhealthy cash flow. This indicates
that Adventa should come out a new strategic plan to manage their business
activities as well as improving the cash flow of the company.
From the expansion market share perspectives, Adventa Berhad is left behind by its
rivals. From the reliable market analysis, Top Glove and Supermax have already
expanded their business worldwide which is over 140 countries. Meanwhile, Adventa
Berhad has not reached these numbers of countries. In term of marketing effort,
Adventa Berhad is slightly outperforming one of its competitors, Latexx. This has
shown that Adventa Berhad is putting an effort to market its products.
From the distributions channel and customer services perspectives, Adventa Berhad
can outperform Latexx, but it is still left behind Top Glove and Supermax. Adventa
Berhad has around 5 offices, 5 factories and 1 warehouse around the world.
Therefore, they can always create a successful supply chain and keep efficient value
chain. Customer services of Adventa Berhad also outperformed Latexx. They are
recognized for their effort and commitment that they put in to provide high class
services to their customers. Meanwhile, it is important to mention that Top Glove
and Supermax is still a better one compared to Adventa Berhad. Therefore, there is
still a space for Adventa Berhad to improve their customer services.
Last but not least, the management and competitiveness perspectives, Top Glove and
Supermax are outperforming Adventa Berhad and Latexx. Both the largest world
manufacturer has the better ability to manage their company as well as business
activities compared to Adventa Berhad and Latexx. Thus, they are managed to
capture a larger market share in the world. Directly, they also can secure their
competitiveness in the market.
Generally, based on the above table of CPM, Top Glove gains the highest score
followed by Supermax, Adventa Berhad and Latexx accordingly. Therefore, Adventa
Berhad has to improve its overall performance in order to compete with the world
class manufacturer like Top Glove and Supermax.

Strategic Group Map


Top Glove
Supermax

Kossan
High
Latexx
Price
Adventa
Low
Low Breath of Product Line High
Diagram 1: Strategic group map
Diagram 1 above shows that there are 4 strategic groups in Malaysia Rubber
Industry. The exhibition shows that Adventa Berhad is in the lower left of it, which
means that Adventa Berhad is low in its selling price and has relatively narrow
breadth of product line. In the diagram above, Latexx is in the middle in its selling
price as well as breadth of product line. Meanwhile, Supermax and Kossan are in the
upper right of the diagram which indicates that they have relatively high in selling
price and broad range of product line. They fall into same group mean that they are
quite similar in term of selling price and breadth of product line. At last, Top Glove is
in the upper right of diagram means that it has the highest selling price and broadest
range of product line.

Financial Ration Analysis


There are five major type of financial ratios analysis discussed within this section,
include short term solvency or liquidity, long term solvency measures, asset
management, profitability and market value. To elaborate further, Adventa Bhd has
to compare with its main rivals which are Top Glove Corporation Berhad, Supermax
Corporation Berhad and Latexx Partners Berhad.

Short term solvency, or liquidity, ratios analysis


The table below is the short term solvency, or liquidity, ratios analysis for Adventa
Berhad from year 2008 to year 2011.

Liquidity ratios

2008
2009
2010
2011
Current ratio
1.68
1.68
1.11
1.36
Quick ratio
1.13
1.13
0.70
0.73
Cash ratio
0.44
0.41
0.27
0.10
The table below is the comparison of short term solvency, or liquidity, ratio analysis
for Top Glove Corporations Berhad, Supermax Corporations Berhad, Latexx Partners
Berhad and Adventa Berhad in year 2011.

Liquidity ratios
Top Glove
Adventa
Latexx
Supermax
Current ratio
3.12
1.36
1.56
2.13
Quick ratio
2.35
0.73
0.92
1.28
Cash ratio
0.65
0.10
0.46
0.43
Current ratio for Adventa Berhad in recent 4 years shows that it has the ability to
cover its short term liabilities by utilizing its short term assets, because it current

ratio is maintained above 1. In years 2008 and 2009, Adventa Berhad's current ratio
remains constant at 1.68 and drops to 1.11 in years 2010. But, it increase again to 1.36
in years 2011, it is a good new for Adventa Berhad because its ability is increasing. By
comparing with key rivals, Adventa Berhad is still relatively poor performer in this
aspect because all 3 competitors' current ratios are higher than Adventa Berhad.
Quick ratio of Adventa Berhad managed to maintain above 1 in years 2008 and years
2009, but it drops to 0.7 in years 2010 and years 2011. It shows that its ability of
covering its short term liabilities by using its most liquid asset is decreasing. Besides
that, quick ratio has shown a downtrend in recent years. Similar to current ratio,
quick ratio of Adventa Berhad shows that it is relatively poor performer compared to
its main competitors.
Cash ratio of Adventa Berhad shows a downtrend in recent years. It drops from 0.44
in years 2008 to 0.10 in years 2011. This is because it increases its current liabilities
from years 2008 to year 2011. Similar to above 2 ratios, Adventa Berhad is a poorest
performer in this aspect compared to its rivals.

Trend of Short term solvency, or liquidity, ratios


analysis for Adventa Berhad
Comparison of Short term solvency, or liquidity,
ratios analysis
Long term solvency or financial leverage ratio
analysis
The table below is the long term solvency or financial leverage, ratios analysis for
Adventa Berhad from year 2008 to year 2011.

Financial Leverage Ratio


2008
2009
2010
2011

Total debt ratio


0.47
0.46
0.47
0.53
Debt-equity ratio
0.90
0.86
0.87
1.10
Equity multiplier
1.90
1.86
1.87
2.10
Times interest earned ratio
6.03
4.29
6.61
3.31
Cash coverage ratio
9.45

6.00
9.45
5.68
The table below is the comparison of long term solvency or financial leverage, ratio
analysis for Top Glove Corporations Berhad, Supermax Corporations Berhad, Latexx
Partners Berhad and Adventa Berhad in year 2011.

Financial Leverage Ratio


Top Glove
Adventa
Latexx
Supermax
Total debt ratio
0.19
0.53
0.39
0.35
Debt-equity ratio
0.24
1.10
0.65
0.54
Equity multiplier

1.24
2.10
1.65
1.54
Times interest earned ratio
10.44
3.31
9.89
7.27
Cash coverage ratio
16.39
5.68
9.89
7.27
Total debt ratio of Adventa Berhad maintained below 1 throughout the recent years.
This shows that its assets are sufficient to cover its liabilities. But, Adventa Berhad's
total debt ratio has shown an uptrend in years 2011 and it is not good news for
investors who intended to invest in Adventa Berhad. Therefore, Adventa Berhad
should work harder to maintain its total debt ratio.
Debt-equity ratio of Adventa Berhad managed to maintain below 1 in years 2008,
years 2009 and years 2010. It increased to 1.10 in years 2011. The ratio means that it
still has enough equity to finance its assets. Adventa Berhad's debt-equity ratio show
a relatively flat trend line in recent years which around 0.86 to 1.10. As compared to
rivals, it is still poorest performer which scores the highest score.
Equity multiplier of Adventa Berhad shows a similar trend as debt-equity ratio.
Adventa Berhad increases its equity multiplier in years 2011 which means it uses

more debt compared to equity to finance its assets. Adventa Berhad still the poorest
performer compared to its competitors.
Time interest earned ratio Adventa Berhad floated over the years. In years 2011, it
drops to 3.31. This is because earnings before interest and tax of Adventa Berhad has
decreased from RM 33.7 million in years 2010 to RM 23.5 million in years 2011.
Cash coverage ratio of Adventa Berhad is similar to time interest earned ratio. It has
oscillating over the years. Overall, its cash coverage ratio has drop from 9.45 in years
2008 to 5.68 in years 2011. And, it still left behind compared to key rivals.

Trend of Long term solvency, or financial


leverage ratio analysis for Adventa Berhad
Comparison of Long term solvency, or financial
leverage ratio analysis
Asset utilization or turnover ratio analysis
The table below is the asset utilization or turnover ratios analysis for Adventa Berhad
from year 2008 to year 2011.

Asset Turnover Ratio


2008
2009
2010
2011
Inventory turnover
4.51
4.22
4.34

4.24
Days' sales in inventory
81.02
86.50
84.06
86.12
Receivable turnover
4.79
5.94
5.86
5.16
Days' sales in receivable
76.17
61.46
62.26
70.69
Total asset turnover
0.77
0.82
0.82
0.95
Capital intensity

1.30
1.22
1.22
1.06
The table below is the comparison of asset utilization or turnover ratio analysis for
Top Glove Corporations Berhad, Supermax Corporations Berhad, Latexx Partners
Berhad and Adventa Berhad in year 2011.

Asset Turnover Ratio


Top Glove
Adventa
Latexx
Supermax
Inventory turnover
10.36
4.24
4.93
4.43
Days' sales in inventory
35.22
86.12
74.06
82.43

Receivable turnover
8.21
5.16
8.69
5.13
Days' sales in receivable
44.46
70.69
42.00
71.09
Total asset turnover
1.44
0.95
0.99
0.87
Capital intensity
0.69
1.06
1.01
1.15
Inventory turnover of Adventa Berhad managed to maintain at the level 4.22 to 4.51
in recent years. This figure shows that Adventa Berhad can clear its inventory 4 to 5
times in a year time. In addition, this figure is quite close with major competitors

except Top Glove Corporation Berhad which can clear its inventory up to 10 times a
year.
Day's sales in inventory of Adventa Berhad manage to maintain its DSI at the level of
80 days to 90 days. Overall, it is quite close to its competitors too except the top
performer Top Glove Corporation Berhad which can clears its inventory in around 36
days. Therefore Adventa Berhad needs to drive down its DSI so that it can be more
competitive in the rubber market.
Receivable turnover of Adventa Berhad is quite constant over the recent years. It is
around 5 to 6 times a year. This figure is among the lowest score compared to
competitors. Therefore, Adventa Berhad should consider cutting down its sales in
receivable in order to push up its receivable turnover.
Day's sales in receivable of Adventa Berhad are relatively constant over the recent
years. It is 60 days to 70 days a year. This figure is among the highest score
compared to competitors. It means that there is a space for Adventa Berhad to
improve its DSO so that it can collect its account receivable in a shorter period of
time.
Total asset turnover of Adventa Berhad is around the level of 0.8 to 0.9 in the recent
years. This figures means that it is not utilize its fixed asset efficiently compared to its
rivals. But, it is still in uptrend and investors can forecast Adventa Berhad can utilize
its fixed asset more efficient in the near future in order to generate sales.
Capital intensity of Adventa Berhad is maintained at the level of 1 to 1.3 over the
recent years. Yet, this figure is quite close with it major rivals except Top Glove which
score 0.69 in year 2011.

Trend of Asset utilization, or turnover ratio


analysis for Adventa Berhad
Comparison of Asset utilization, or turnover
ratio analysis
Profitability ratios analysis
The table below is the profitability ratios analysis for Adventa Berhad from year
2008 to year 2011.

Profitability Ratios
2008
2009
2010
2011
Profit Margin
0.08
0.06
0.10
0.01
Return on Assets (ROA)
0.06
0.05
0.09
0.01
Return on Equity (ROE)
0.12
0.09
0.16
0.02

The table below is the comparison of profitability ratio analysis for Top Glove
Corporations Berhad, Supermax Corporations Berhad, Latexx Partners Berhad and
Adventa Berhad in year 2011.

Profitability Ratios
Top Glove
Adventa
Latexx
Supermax
Profit Margin
0.06
0.01
0.10
0.10
Return on Assets (ROA)
0.08
0.01
0.10
0.09
Return on Equity (ROE)
0.10
0.02
0.16

0.14
Profit margin of Adventa Berhad is not constants in recent years. In years 2011, it
drops to 0.01 which is only 1 percent of profit margin. Compared to its key
competitors who have 10 percent of profit margin, it is a very low profit margin.
Therefore, Adventa Berhad needs to consider changing its marketing strategy in
order to increase its profit margin.
Return on asset of Adventa Berhad also showing downtrend in years 2011. It drops to
0.09 in years 2011. It is the lowest ROA among the rivals. Its shows that Adventa
Berhad is not utilizing its assets to generate sales.
Return on equity of Adventa Berhad is showing a downtrend in years 2011 similar to
its profit margin. It has the lowest ROE among the main competitors. This figure
shows that it is not good in generate profit with the equity invested by shareholder.

Trend of Profitability ratios analysis for Adventa


Berhad
Comparison of Profitability ratios analysis
Market value ratios analysis
The table below is the market value ratios analysis for Adventa Berhad from year
2008 to year 2011.

Market value ratio


2008
2009
2010
2011
Price-earnings ratio
6.536

9.527
10.203
12.07
Market-to-book ratio
N/A
N/A
N/A
1.0
The table below is the comparison of market value ratio analysis for Top Glove
Corporations Berhad, Supermax Corporations Berhad, Latexx Partners Berhad and
Adventa Berhad in year 2011.

Market value ratio


Top Glove
Adventa
Latexx
Supermax
Price-earnings ratio
19.8
12.07
8.7
12.6
Market-to-book ratio

2.3
1.0
1.2
1.7
Price-earnings ratio of Adventa Berhad has increased throughout the recent financial
years. It increases from 6.536 in year 2008 to 12.07 in year 2011. The increasing PE
ratio means that Adventa Berhad has future growth potential. When comparing
Adventa Berhad with its rivals, Adventa Berhad is still left behind Top Glove and
Supermax. It only slightly outperforms Latexx.
Market-to-book ratio of Adventa Berhad in year 2011 is 1.0. Due to lack of
information of historical data, it is not relevant to see its trend over the years.
Meanwhile, Adventa Berhad's market-to-book ratio is the lowest among all the key
competitors. This figure means that the shareholder of Adventa Berhad is investing a
big amount of capital into the company.

Comparison of price-earnings ratio


Comparison of market-to-book ratio
Weighted Competitive Strength Assessment
Key Success Factor/Strength Measure
Weight
Supermax
Top Glove
Adventa
Latexx
Quality/ product performance
0.25

9 / 2.25
10 / 2.50
5 / 1.25
6 / 1.50
Marketing/Global distribution network
0.20
10 / 2.0
9 / 1.80
6 / 1.20
7 / 1.40
Financial strength
0.15
9 / 1.35
10 / 1.50
6 / 0.90
7 / 1.05
Technological Skills
0.10
10 / 1.00
9 / 0.90
6 / 0.60
7 / 0.70

Reputation/image
0.10
9 / 0.90
10 / 1.00
5 / 0.50
6 / 0.60
Market share
0.10
9 / 0.90
10 / 1.00
4 / 0.40
5 / 0.50
Customer service
0.05
10 / 0.50
9 / 0.45
5 / 0.25
7 / 0.35

Sum of weights
1.00
Overall strength rating

8.90
9.15
5.10
6.10
* Rating Scale: 1 = Very Weak; 10 = Very Strong
** The weights and values are based on the authors' opinions and beliefs
Weighted Competitiveness Strength Analysis assesses the strengths and weaknesses
of current and potential competitors. Therefore, it is important to include it in
strategy management. A company can formulate an outstanding strategy to
outperform its competitors in the same industry by assessing the strengths and
weaknesses of its rivals in this analysis.
To assess the strengths and weaknesses of rivals, it is necessary to compare Adventa
Berhad with its competitors such as Top Glove, Supermax, Kossan and Latexx. The
table above is the weighted competitiveness strength analysis for Adventa Berhad
and its key competitors. The weight in the table indicates how important the key
success factors mean to Adventa Berhad. There are seven key success factors is
analyzed. They are quality/product performance, marketing/global distribution
network, financial strength, technological skills, reputation/image, market share,
and customer service. The table above has shown that total sum of weight is equal to
1.0.

Overall strength rating


The overall rating of Adventa Berhad is 5.10 which is the lowest score among all the
major competitors include Top Glove (9.15), Supermax (8.90), and Latexx (6.10).
Top Glove and Supermax score the highest score because both of these companies
are the world's largest rubber glove manufacturers. Overall, it can be concluded as
Adventa Berhad is in the competitive disadvantage position against all their main
rivals.

Quality/Product Performance,
Reputation/Image, Market Share

This key success factor carries the most weight among the others which is 0.25 out of
1.0. Adventa Berhad gains 1.25 after multiply with the weight which is also the lowest
score among competitors. Although Adventa Berhad did have good product quality,
it is still left behind its rivals. Therefore, Adventa Berhad should try harder to
improve their quality and product performance so that they can be more competitive
in the industry. In addition, this key success factor is positively correlated with the
reputation/image and market share. Therefore, reputation/image and market share
of Adventa Berhad also gains the lowest score among the competitors. Only with a
better quality and product performance, Adventa Berhad can improve their
reputation and market share in the world.

Marketing/Global Distribution Network


This key success factor carries the second highest weight which is 0.20 out of 1.0.
Adventa Berhad gains only 1.2 after multiply with the weight. This score again is the
lowest score among the competitors. It means that Adventa Berhad is in a
competitive disadvantage position against competitors. Therefore, Adventa Berhad
needs to put more effort in marketing as well as its worldwide distribution network
so that they can better perform in the near future.

Financial Strength
This key success factor is assign based in the financial ratio analysis. Adventa Berhad
gains only 0.9 after multiply with the weight. Again, it is the lowest score in the
comparison with rivals. In order to obtain a better position in the future, Adventa
Berhad should have a good financial plan as well as a good management team to
execute the plan.

Technological Skills
Technological skill is positively correlated to the ability of a company to produce a
good and innovative product. Adventa Berhad gains 0.6 after multiply with the
weight. It is again the lowest score among the others. Therefore, it is necessary for
Adventa Berhad to consider improve their current technological skills.

SWOT Matrix
SWOT matrix is a graphical representation of the SWOT framework. The following
table is the SWOT analysis for Adventa Berhad. Moreover, there are some strategies
based on the SWOT analysis are recommended.

SO Strategies
Use strengths to take advantage of opportunities

WO Strategies
Overcome weaknesses by taking advantage of opportunities

ST Strategies
Use strengths to avoid threats

WT Strategies
Minimize weaknesses and avoid threats
The table below is the SWOT matrix for Adventa Berhad.

Strengths
Weaknesses
Extraordinary product quality.
Strong reputation.
Strong research and development growth.
Lower profit margin.
Poor manufacturing cost control.
Weak balance sheet and unhealthy cash flow.

Opportunities
S-O Strategies
W-O Strategies
Increasing global demand of health care product.

New potential market for health care products.


Joint venture with local company.
Joint venture with local company in new potential market.
Invest in R&D to develop new and improved health care products.
Fully utilize assets to generate cash flow.
Develop new policy of cost control to achieve cost efficiency.

Threats
S-T Strategies
W-T Strategies
Unstable latex price.
Exchange rate risk.
Strong competitors.
Use derivative instrument to hedge to unstable latex price.
Build capacity in foreign market.
Emphasize on marketing efforts.
Emphasize research and development.

S-O Strategies
It is the strategies formulation based on the strengths and opportunities of Adventa
Berhad.

Joint venture with local company in new


potential market.
Adventa Berhad is recommended to form a joint venture with local company in the
new potential market so that they can achieve cost saving as well as has better

understanding of the particular market. Therefore, they can produce the products
that fulfill the needs and wants of the market.

Invest in R&D to develop new and improved


health care products.
Adventa Berhad is also recommended to invest more in the research and
development department. This is because R&D is the root of the new and improved
health care products. Only with better health care products, Adventa berhad can
increase its market share in the world as well as fulfill the increasing global demand
of health care products.

W-O Strategies
It is the strategies formulation based on the weaknesses and opportunities of
Adventa Berhad.

Fully utilize assets to generate cash flow.


Adventa Berhad is recommended to utilize its assets. For example, Adventa Berhad
should use 100 percent of plant capacity to produce products. This is because waste
of capacity is sunk cost. It cannot be recover in the future date.

Develop new policy of cost control to achieve


cost efficiency.
Adventa Berhad is also recommended to introduce new policy of cost control in order
to minimize its manufacturing cost. Only with a lower cost structure, Adventa Berhad
can improve the low profit margin. For example, use of lower price of raw material.

S-T Strategies
It is the strategies formulation based on the strengths and threats of Adventa Berhad.

Uses derivative instrument to hedge to unstable


latex price.
Adventa Berhad is recommended to use derivatives instrument like futures contract
to hedge against the latex price. This instrument enable Adventa Berhad to lock in

the latex price in the future, so that they can avoid the problem caused by the
unstable latex price such as increase in manufacturing cost.

Build capacity in foreign market


Adventa Berhad is recommended to build new capacity in foreign market. By
building the capacity in foreign market, Adventa Berhad can achieve cost saving
because there is no shopping cost anymore. Besides that, it also can enhance its
market share by producing in larger volume compared to its competitors.

W-T Strategies
It is the strategies formulation based on the weaknesses and threats of Adventa
Berhad.

Emphasize on marketing efforts.


Adventa Berhad is recommended to emphasize more on their marketing efforts. This
is because marketing will help them to outperform their competitors. For example,
with an interesting, attractive and informative advertisement, it can help in increase
in their sales revenues. Indirectly, they can improve their profit margin.

Emphasize research and development


Adventa Berhad is also recommended to emphasize more on research and
development efforts. This strategy can help them to produce new and innovative
products. For example, uses other materials instead of latex in order to achieve cost
saving. Besides that, with new innovative products, they also can differentiate their
products against competitors.

SPACE Matrix
Strategic Position and Action Evaluation matrix or SPACE matrix is a management
tool that used to analyze a company. It can help a company to determine what
strategy a company should apply. SPACE matrix focuses on strategy formulation of a
company. It is divided into 4 quadrants framework which each quadrant represents a
different nature of strategy such as aggressive, conservative, defensive and
competitive. The axes of the SPACE Matrix have shown two internal dimensions
which are the company's financial strength and its competitive advantage and two
external dimensions which are environmental stability and industry strength. These

four factors are the most important determinants of an organization's overall


strategic position in the marketplace.
The SPACE matrix is constructed by plotting calculated values for the competitive
advantage (CA) and industry strength (IS) dimensions on the X axis. The Y axis is
based on the environmental stability (ES) and financial strength (FS) dimensions.
The SPACE matrix can be created using the following seven steps:
Step 1: Choose a set of variables to be used to gauge the competitive advantage (CA),
industry strength (IS), environmental stability (ES), and financial strength (FS).
Step 2: Rate individual factors using rating system specific to each dimension. Rate
competitive advantage (CA) and environmental stability (ES) using rating scale from
-6 (worst) to -1 (best). Rate industry strength (IS) and financial strength (FS) using
rating scale from +1 (worst) to +6 (best).
Step 3: Find the average scores for competitive advantage (CA), industry strength
(IS), environmental stability (ES), and financial strength (FS).
Step 4: Plot values from step 3 for each dimension on the SPACE matrix on the
appropriate axis.
Step 5: Add the average score for the competitive advantage (CA) and industry
strength (IS) dimensions. This will be your final point on axis X on the SPACE
matrix.
Step 6: Add the average score for the SPACE matrix environmental stability (ES) and
financial strength (FS) dimensions to find your final point on the axis Y.
Step 7: Find intersection of your X and Y points. Draw a line from the center of the
SPACE matrix to your point. This line reveals the type of strategy the company
should pursue.
(http://www.maxipedia.com/SPACE+matrix+model+strategic+management+method)

Internal strategy position


External strategy position
Competitive Advantage

Industry Strength
Product quality -3
Market shares -3
Customer services -3
Brand and image -3
Financial stability +5
Growth potential +4
Profit potential +5
Productivity +3
Average -3
Average +4.25

Total X axis score = +1.25


Financial Strength
Environmental Stability
Return on asset +1
Liquidity +1
Leverage +1
Cash flow +1
Inflation rate -4
Taxation -4
Price range of competing products -3
Demand variability -3

Average +1
Average -3.5

Total Y axis score = -2.5


The internal strategy positions include competitive advantage and financial strength.
Meanwhile, competitive advantage consists of 4 variables which are product quality,
market share, customer service and brand and image. Financial strength consists of 4
variables which are return asset, liquidity, leverage and cash flow.
The external strategy positions include industry strength and environmental
stability. Industry strength consists of 4 variables which are financial stability,
growth potential, profit potential and productivity. The environmental stability
consists of 4 variables which are inflation rate, taxation, pricing range of competing
products and demand variability.
The SPACE matrix above has shown that the competitive advantage for Adventa
Berhad is -3 and the industry strength is +4.25. Therefore, the total x axis score is
+1.25. In addition, Adventa Berhad's financial strength and environmental stability
has a score as +1 and -3.5 respectively. Therefore, the total y axis score is -2.5.

SPACE matrix Graph


Conservative Aggressive
1.25
-2.5

Defensive Competitive
The SPACE matrix graph above shows that Adventa Berhad should pursue a
conservative strategy. This is because Adventa Berhad has a relatively weak position
in competitive advantage.

Boston Consulting Group (BCG) Portfolio Matrix


Industry growth rate
Management services Question marks Stars

Dog Cash cows


Energy supplier Healthcare Products
Relative market share
The Boston Consulting Group (BCG) matrix has divided a company business unit
into 4 category include question marks, stars, dogs and cash cows. Questions marks
mean that the business unit has high industry growth rate and low market share.
Stars mean that the business unit has high industry growth rate and high market
share. Dogs mean that the business unit has low industry growth rate and low market
share. Lastly, cash cows mean that the business unit has low industry growth rate but
high market share.
Adventa Berhad has 3 major business units which are management services provider,
energy suppliers and healthcare products manufacturer.
According to the diagram above, healthcare products which include medical gloves
which are surgical gloves such as latex surgical gloves, synthetic surgical gloves,
examination gloves which are powdered exam gloves, nitrile exam gloves fall into
cash cows category. It means that healthcare products business unit of Adventa
Berhad has the highest market share among other business unit in the company. At
the same time, Adventa Berhad is facing strong competition against Top Glove,
Supermax, Latexx and many other companies. Therefore, the healthcare products
industry has low industry growth rate.
In addition, Adventa Berhad also involved in energy supplier which is the generation
and transmission of electricity using biomass energy. This business unit has low
market share and low industry growth rate. Although it falls into dog category,
energy supplier business unit is still generating profit for Adventa Berhad. So, it
should not be divested.
Furthermore, Adventa Berhad also involved in providing management services. This
business unit falls into question marks category. Therefore, it has the potential to
gain addition market share and become stars and eventually cash cows. In contrast,
it also has the potential to degenerate into dog. Therefore, Adventa Berhad should
carefully monitor this business unit in order to determine whether it is worth to
invest in it.

Conclusion

Strategic management is important tool to manage an organization so that it can be


successful. However, strategy formulation is a critical part in strategic management.
To formulate an excellent strategy, there are many aspect needs to be considered.
Therefore, few matrixes are used to help in strategy formulation. This report is
completed and written out focusing on Adventa Berhad.
Besides that, this report has enables our group to apply strategic management
knowledge and skills in strategic planning and strategy formulation. So, we hope that
our effort will meet the requirement of this course. Lastly, we hope that our
assignment will gather a good assessment.