University of San Carlos

CASE STUDY: Mydin Mohamed Holdings

Course: Corporate and Social Responsibility
Program: Master in Management Major in Hospitality Management
Presented by: Likha Himaya G. Piao
Presented to: Dr. Lape

I. Introduction
Mydin Mohamed Holdings started in humble beginnings in the year 1940 in
Malaysia. Mydin Mohamed the Founder of this company started selling
merchandise and toys until it grew into a hypermarket chain system in 2007.
This is because of the leadership of Dato’ Ameer Ali Mydin and his three
brothers, who were all brought up to a good entrepreneur by their Father Mydin
Mohamed.
The company currently is operating hypermarkets, Mymart, Convenience
store, and Emporium all-over Malaysia. The success of this company is due to
its leadership and organizational change effort by its leaders and commitment
of its employees. Factors such as leadership, decision making, human
resource management, expansion of operations, and dynamism in getting
along with the changes in the company’s business environment, paved way in
maintaining their share in the retail and merchandising industry.
However even with so much success there are still issues that hunt the
company’s management. Lack of long-term planning on globalization effort,
enable to cater non-Islam clients, technological issues, and social
responsibilities effort are some of these issues the management should cater.
These challenges if not considered by management may affect, on a long-term
basis, the image of the company as one of the forerunners of the retail industry
in Malaysia.
This case study will determine management issues that affected the
company as evidence by the performance of Mydin Mohamed Holdings in the
recent years. This case study would recommend strategies and interventions
that the company may implement to solve the management issues determined.
II. Statement of the Problem
This case analysis aims to determine the following:
1. What are the management practices of Mydin Mohamed Holdings on the
following challenges:
1.1 Globalization
1.2 Technological Innovation
1.3 Corporate Social Responsibilities
2. What possible proposals will be drafted to improve organizational
effectiveness base on the challenges above?

III. Objectives
The objectives of this analysis is to formulate proposals to improve
organizational effectiveness by determining proper interventions on the
following factors:
1. Globalization - expanding operations in the international arena catering
a variety of clientele.
2. Technological Innovation – develop and implement changes in
technological area such as automation of some of the business
processes of Mydin.
3. Corporate Social Responsibilities – develop a concrete social
responsibility program that will root deeply on the community where
Mydin resides.

IV. Relevant Facts of the Case

The Rise of Dato’ Ameer Ali Mydin

In early years of Mydin, Dato’ Ameer one of Mydin Mohamed’s sons, took
another path before joining in his family-run business. He was then involve in
the banking sector. His experiences in the banking industry coupled with skills
and determination made him a promising leader of Mydin. Because of him
Mydin has become one of the most trusted retail chain business in Malaysia
defeating international competitors.

Mydin Expansion Efforts

Mydin Mohamed started his business in Penang and later on migrated to
Kelantan. He then pursue his business as general retailer in Kota Bharu
together with his family. This pave way to the formation of Syarikat Mydin
Mohammed sole proprietorship company. The company’s close proximity to
Thailand made it the best transit for business between Malaysia and Thailand.
Efforts of expansion begin in 1979 when Tuan Murad Ali, son of Mydin, open a
branch in Kuala Terengganu. In 1989, Mydin opened its third branch in Kuala
Lumpur. Mydin then expanded business operations not just an emporium but
hypermarkets. The company established itself as a reliable and trustworthy
brand.

Product and Clientele focus

Mydin offers its products and merchandise based on the principle of Halal
(permissible). In this principle nothing of the product is forbidden unless it is
declared as such by Qur’an. Most of their products are catering Muslim
customers accounting 95% of all of their clients. The main problem on this
concept is that clients are often tagged Mydin’s products as “Muslim Goods”
making it difficult to sell on non-Muslim customers. With this challenges Mydin
had to break ranks with religious and racial barriers inherent in Malaysia’s
culture. Currently, Myden caters loyal customers consisting of various races
that exist harmoniously in Malaysia.

Human Resource Focus

Mydin manage human capital through leadership by example. All policies
and regulations should be followed by all people in the organization may it be
low or high ranking employees. Part of its practices is to focus on non-monetary
rewards which will motivate more its employees by committing themselves to
 their respective functions in the company. Maintaining close relationship to
employees is one of the successful HR practices of Mydin. The company also
values trainings and even established training session through proper coaching
of management to employees to improve productivity. Human capital is
considered by Mydin to the point that manual procedures are done by people
like taking notes of customer suggestions and complaints.

Corporate Social Responsibilities Focus

Corporate social responsibility has been practiced by Mydin Mohamed
Holdings in order to enhance its image to the public, including to those less-
fortunate people such as the single mothers and orphans. Many events have
been conducted by the organization such as free meals and free gifts for
orphans such clothes during Ramadhan. As a responsible Malaysian
entrepreneur, Dato’ Ameer occasionally gives motivational talks to students
and young entrepreneurs in order to guide them with knowledge on how to be
successful in the business arena.

V. Analysis of the Relevant Facts

While it is true that Mydin Mohamed Holdings is expanding their business,
but this effort is only evident in Malaysia. The long-term plan is to expand
business on different location and must not only focus in Malaysia but also in
the international arena. In this way, opportunity to earn more and to attract more
investor will be achieved by Mydin. This effort will be made possible if Mydin
will serve a wide variety of customers and be more open to other forms of
product that may cater non-Muslim clients. Catering Chinese and Indo-Chinese
clients will bring more profits to Mydin.
Mydin lacks investment in the advancement of technology. Existing ways to
operate the business is made manually. This is evident by the way Mydin cater
clients’ request and complaints through manual notes made by front-liners.
 Social responsibility efforts is focus more on programs that are not
sustaining. Feeding the less-fortunate will not result into great impact in
alleviating their status.
The effects of the above factors are evident in the financial reports in the
case. Return of Assets (ROA), which measures how well the organization
utilizes their resources in generating profits, shows a decline for more than one
half in 2006 and 2007 compared to the early years. This is because of the
increase in assets due to expansion efforts but did not generate enough profits
to sustain the ROA. The concept of ROA is that once an investment is made
corresponding increase in profits should follow in this ways there is proper
utilization of assets.
If the company continue to expand only on the boarder of Malaysia they will
decrease the chance of earning potential profit. As technological advancement
is evident even in the retail arena, the company should find ways to go global
through a feasible management strategy.

VI. Alternative Courses of Actions

The author of this case analysis is thinking of proposing two alternative
courses of actions as follows:

Plan A
Plan A will focus, firstly on the improvement of technology in the business
processes of Mydin Mohamed Holdings. Investment in Information Technology
(IT) and Management Information System (MIS) solutions will assist
management in making decisions based on reliable and important information.
Information such as inventory level, inventory turnover, customer complaints,
inventory management, customers needs and customer feedbacks will be
readily available through these solutions. This will be very useful specially if
decisions are centralized in the Head Quarters.
Secondly, Corporate Social Responsibilities Program should be sustainable
to create impact on societal change. Educational program would be a very good
sustainable program. Providing livelihood programs for community cooperation
is also a sustainable project that will help less-fortunate community. Concern
to the environment by making business process environment friendly such as
using eco-bags in the hypermarket would be of great help in decreasing plastic
waste.
Lastly, if all of the programs above has been successfully implemented,
expanding operations on the international arena will follow. Singapore,
Vietnam, Thailand, and other parts of Southeast Asia will be a good location of
going global. This may be done by offering various type of products that will
cater the needs of non-Muslim potential customers. A carefully conducted
feasibility study must first be achieved before pursuing strategies to expand
globally.

Plan B
Plan B is focus more on the expansion of Mydin in the international arena
and followed by creating good corporate social responsibilities strategies
before investing in technological advancement of business processes.
Firstly, investing in an e-commerce platform will be a good strategy to
compete globally. Like Amazon in US and Alibaba in China, e-trading or e-
commerce has proven its worth in delivering opportunity of earning profits. This
can only be done if they also offer variety of goods to a wide range of clients
that are non-Muslim but by still keeping the principle of Halal (permissible).
This strategy will not be possible if technology will not be upgraded in Mydin.
Massive technological investment will be done first and to re-engineer current
operations to cater this type of platform is a must to implement e-commerce.
This strategy is very much promising since technology has breach all types of
business processes. This advancement will impact the society and is potential
in giving convenience and security to clients as they will just do this at their
respective homes.
In the aspect of social responsibility the strategy presented in Plan A is will
still be applied.
VII. Analysis of the Alternative Courses of Action
Both alternatives would expose MYDIN to risk specially that they will require
a huge capitalization in their implementation. Potential profits can only be
estimated if a feasibility study would be conducted first. But among the two
alternatives Plan B would be easy to apply since it is more focus only in
imploring a good e-commerce platform that will only require a relatively small
amount of capitalization compared to Plan A. Implementation of the first
alternative will require shorter time frame compared to Plan B.

VIII. Conclusion and Recommendation

Both alternatives would solve the problem stated in this case but the author
recommends the second alternative is the best way to solve the problem.
MYDIN in implementing the second alternative should hire or outsource the
development of the e-commerce platform but should carefully plan how this
platform should operate and decide on which product to offer online to a wide
range of customer in the international arena.