Thesis Master in Corporate Management

EVALUATION OF BUSINESSES AND CORPORATE LEVEL BASED ON SELECTED ORGANIZATION (DEVEVELOPMENT AND CONSTRUCTION INDUSTRY) ABBREVIATION ECO WORLD DEVELOPMENT GROUP BERHAD – EW COMPANY INTRODUCTION “The brand is about the pursuit of better, greater ways to complete people’s living experience. We want to be through leaders and innovators – a non-traditional business with positive economic, social and environmental impact. We push boundaries in our Vision of Creating Tomorrow & Beyond” (Annual Report 2021). Focal Aims Holding Berhad is previously name before the company changed formally as new name to ECO WORLD DEVELOPMENT GROUP BERHAD on dated Dec 26, 2013 been directed by CEO Tan Sri Dato’ Liew Kee Sin. It is a public liability company incorporated in Malaysia was listed on the Main Market of Bursa Malaysia Securities Berhad, Stock Code 8206. Founded by Tan Sri Abdul Rashin bin Abdul Manaf on March 8, 1974. The head quartered is located at No. 60, Setia Avenue, No 2, Jalan Setia Prima SU13/S, Setia Alam, Seksyen U13, 40170 Shah Alam, Selangor Darul Ehsan. The principal activities are property developments, investment holding and dormant; consist of integrated commercial developments, green business parks, townships and luxury high-rise apartments. Also involved in the supply of building materials, promotion, manufacture and trade of prefabricated and precast components, marketing and other activities related to property management. On-going projects during the year 2021 included Bukit Bintang City Centre (BBCC) located in Hang Tuah, Eco Majestic, Eco Sky and Saujana Glenmarie in the Klang Valley; Eco Botanic, Eco Spring, Eco Summer, Eco Business Park I Eco Tropics and Eco Business Park III in Iskandar Malaysia; and Eco Terraces on Penang Island. Strategic Management (Page 2) CURRENT CORPORATE LEVEL STRATEGIES EW, Vision of Creating Tomorrow & Beyond places sustainability as Core Value of the brand as “Eco” seek to build responsibly and with long life to make a positive impact on the lives and livelihoods of the communities that serve and are as part for generations. This commitment to sustainability forms an integral part of their corporate strategy, which is built on the three pillars of every stage of the development process are inclusive in elemental Environmental, Social and Governance (ESG), held together by their pledge to uphold high standards of Governance in all their endeavours; 1st Board leadership and effectiveness, 2nd Effective audit and risk management, and 3rd Integrity in corporate reporting and meaningful relationship with stakeholders Sustainability Governance Framework in three-tier is head by the Board of Director (BOD), Sustainability Committee (SC) is the key driver of the Group’s sustainability initiatives and reporting to the BOD. The SC is supported by the Economic & Governance Council, Green & Operations Council and Social Council; and Members are monitoring the implementation of key performance indicators are appointed by the SC for achievement Financial Year. By employing a strategic approach and embedding sustainability at the heart of culture and operations, they are able to ensure that they can continue to deliver enduring value to all stakeholders and profitable to the organization. They are committed to continually improve themselves in order to fulfil aspiration of building a better and brighter future for all. Elements of ESG are weaved into their projects right from conceptualisation, design, construction and up to when they engage with new residents to promote a positive, sustainable future; efforts on sustainability and commitment to excellence rewarded is more than 80 awards since 2014 with several accolades in FY2021: 1) 2020, EW Malaysia was included in the FTSE4Good Bursa Malaysia Index in recognition of the Group’s good ESG practices; 2) 2021, The EdgeProp Malaysia’s Responsible Developer: Building Sustainable Development Award 2021; Strategic Management (Page 3) CURRENT CORPORATE LEVEL STRATEGIES (CONT’D) 3) 2021, The “Best Culture of Learning 2021” award by LinkedIn Learning Talent Award Malaysia which recognises companies that have invested in the learning and development of their employees by connecting them to relevant and applicable skills; and 4) EW Malaysia also won the SDG Ambition Benchmark 2: Net-Positive Water Impact in Water-Stressed Basins Award at the United Nations Global Compact Malaysia & Brunei’s ("UNGCMYB") inaugural Sustainability Performance Awards 2021 held on 9 December 2021. They have been delivering sustainable profit growth while building a solid business foundation amidst a challenging operating environment. Dedicated and experienced Team Leader in various fields, believe that they have enough ability, enthusiasm and dynamism to be ready to take new opportunities, reach out to the world and face new challenges, always growing in a strong and sustainable way. EVALUATION OF CURRENT CORPORATE LEVEL STRATEGIES This analysis will define key within reach into both internal and external factors that can impact the performance of an organization based on SWOT Analysis such as below; SWOT Analysis STRENGTHS Leadership Strong market confidence brand name Land bank Financial backup S W WEAKNESS Unsuitable land & land cost Liquidity Non performing contractor OPPORTUNITIES Favourable demographics Urban migration Transport & Infrastructure connectivity O T THREATS Weaker market sentiment Lack of interest Rising cost of raw materials Strategic Management (Page 4) EVALUATION OF CURRENT CORPORATE LEVEL STRATEGIES (CONT’D) Leadership in the determinate in a context of organization for a strategic direction and results, for a goods and services (Krajewski et al, 2002), look ahead for hitting objective of company in human evolution organizations to performed well management keeping in achieving objectives in the company is profitable in Life-cycle (Dr Ruth et al, 2019); Main role of leadership can facilitate change in organization through improvement and innovation (Moo JH & Dr Rashad Y, 2015); EW has a well-defined organisational structure that clearly outlines the lines of reporting as well as the individual departments' accountability and obligations. Likewise, the Board of Directors and its several Board Committees operate under well-defined terms of reference. Despite being a new property developer, they have been able to sell homes at an unprecedented rate, demonstrating purchasers' faith in the management team's strong brand. Thirdly, large land bank is presently in the middle of a corporate exercise that would increase its land bank to 8325 acres (The Edge 2020). Finally, creative product offers. Due to its enormous land bank; the shareholder, top management and organizational management have been widely acclaimed for their strong delivery and execution track records; and wide range of products including affordable, upgrades and luxury homes and as well as integrated high-rise developments and green business parks to all walks of life. They are practising financial discipline management and back-up from the Holdings Company, Investors, Suppliers/Contractors and financial institutions (2021). Innovative new product lifestyle of homebuyers, first-time homebuyers and young families at the right price points and inclusive the best award in landscape and infrastructure and public transportations needs; Convinces that financial and brand of “Eco” benefits of every party are harmonious and not separate from benefit of customers, community and society Strategic Management (Page 5) EVALUATION OF CURRENT CORPORATE LEVEL STRATEGIES (CONT’D) The group was adopting a holistic and integrated view on managing its risk which linked to ESG, table shown sustainability matters; Weakness Description Mitigation Plan Unsuitable land & land cost Risk of acquiring land with hidden adverse topography or encumbrances or land which could not be developed feasibly to achieve the desired return -Conduct thorough feasibility studies and market surveys prior to each acquisition -Avoid over-concentration of investment in one project -Commit to only source from deforestation-free and non-peat lands for its future development Liquidity Risk of the group being unable to generate sufficient cash flow to meet its financial obligations -Close monitoring of cash flow requirements and continuous financial planning -Regularly explores new funding opportunities in capital market -Continuously be aware of banks’ lending appetite and preferred loan profile -Prioritise selling of unsold completed stocks to enhance liquidity & Group-wide cost rationalisation Non-performing contractor Risk associated with product quality, health and safety practices and project delays Close monitoring of contractors performance during construction in terms of timelines, quality of work, health and safety practices Strategic Management (Page 6) EVALUATION OF CURRENT CORPORATE LEVEL STRATEGIES (CONT’D) Threats Description Mitigation Plan Weak market sentiment The Group’s sales performance is dependent on the performance of the property market value -Providing value-added products and quality services, with more innovative and aggressive marketing strategies -JV with suitable partners to gain accelerated and more extensive access to target markets -Digitalisation journey to enhance customers experience via online sales booking -Continue to focus on landed properties and affordable homes where demand is still resilient Lack of interest from investor Risk of inability to secure investors for the Group’s projects with large commercial development -Design project master plans with right product mix, supported with market research and intelligence on the surrounding area -Experienced leasing team to actively source for tenants through a match-making service. This value-added service also helps the Group to determine the quality of tenants occupying the commercial area Rising cost of raw materials The ability of the Group to achieve the desired profitability is directly affected by the cost of construction -Through the Group’s trading arm, source for alternative supplies and increase the pool of suppliers to provide eco-friendly building materials and goods at competitive prices by consolidating the materials purchase requirements of all on-going projects -Effective and transparent open tenders for award of construction contract -In-depth cost estimates for each project prior to tender to ensure that the Group gets the best pricing -Variation order & Value management and re-engineering to bring down overall cost in the event of cost overruns Strategic Management (Page 7) CURRENT BUSINESS LEVEL STRATEGIES & EVALUATION While it has been difficulties for people to visit the show villages during the Movement Control Order (MCO) period, they started with new industrial revolution in digitalization marketing and interacting with homebuyers via the various social media platforms. The young team that is spearheading this transformation has done an unbelievable job, social media and digital marketing campaigns have been particularly successful year 2020 (The Edge Markets, 2020). Mission is providing investment opportunities, shared property products and connecting all investors and homebuyers in the world. Through its business activities, they gives employees not only high income but also a modern-tech, eco-dynamic and effective working environment together with opportunities to get advanced learning, training skills and get promoted at work place. The Group, advocates seeking talented employees and suitable partners with its business sectors to ensure that all strategies, products meeting the standard of high quality, having unique creativity to satisfy customers’ needs as well as to meet the development and internationally integration demand. With the confident, they can exceed expectations of all stakeholders by carefully considering their respective interests. EVALUATION - SWOT Analysis is a methodological approach to analyze the - Strengths & Weaknesses and Opportunities & Threats that the company are faces of competitive and macro-economic factors prevalent in Malaysia. SWOT Analysis STRENGTHS Investing into Digitalisation to Capital Goods industry S W WEAKNESS Investing into customer oriented services and supply chain OPPORTUNITIES Leveraging brand recognition in new segments O T THREATS Get out of the business and focus on growth areas Strategic Management (Page 8) EVALUATION STRENGTHS are the organization capabilities and resources that it can use to design, develop, and sustainable competitive advantage in the market challenges; 1. First mover advantage; in the increasingly crowded market place. The new products are rapidly increasing EW to develop market share in the development industry. 2. Talent management; skill developments of the employees, human resources are integral to the success in businesses of development and construction industry. 3. High margins compare to development industry's competitors - Even though is facing downward pressure on profitability, compare to competitors it is still racking in higher profit margins. 4. Market Leadership Position; has a strong market leadership position in the development. It has helped the company to rapidly scale new products successes. 5. Diverse Revenue models - Over the years ventured into various businesses outside the capital sector. This has enabled the company do develop a diversified revenue stream beyond Capital Goods sector in Development and Construction Services segment. 6. Eco-Brand’s is catering to develop extensive product offerings have helped the company to penetrate different customer segments in development products. It has also helped the organization to diversify revenue streams. Strategic Management (Page 9) EVALUATION WEAKNESSES can either be absence of strengths or resources of capabilities that are required. Leaders have to be certain if the weakness is present because of lack of strategic planning or as a result of strategic choice; 1. High cost of replacing existing experts within the organizations, few employees are responsible to develops knowledge base and replacing them will be extremely difficult in the present conditions. 2. Extra cost of building new supply chain and logistics network - Internet and Artificial Intelligence has significantly altered the business model into Capital Goods industry and given the decreasing significance of the dealer network has to build a new robust supply chain network. That can be extremely expensive. 3. Declining unit revenue - competitiveness in the development industry is putting downward pressure on the profitability. A starting guide to manage this situation for companies is objectively assessing the present value propositions of the various products. 4. Loyalty among suppliers is low - Given the history of development coming up with new innovations to drive down prices in the supply chain. 5. Niche markets and local monopolies that companies such as able to exploit are fast disappearing. The customer network that has promoted is proving less and less effective. Strategic Management (Page 10) EVALUATION OPPORTUNITIES are potential areas where the business strategy can identify potential for growth, profits, and sales; 1. Local Collaboration - Tie-up with local players can also provide opportunities of growth and develop in international markets 2. Opportunities in Online Space - Increasing adoption of online services by customers will also enable to provide new offerings to the customers in homebuyers. 3. Accelerated technological innovations and advances are improving industrial productivity, allowing suppliers to manufacture vast array of products and services. This can help significantly venture into adjacent product sales value. 4. Rapid Expansion of Economy, as the like US economy is improving faster than any other developed economy, it will provide an opportunity to expand into the US market for example. EW already has know-how to operate into the competitive market. 5. Customer preferences are fast changing - Driven by rising disposable incomes, easy access to information, and fast adoption of technological products, customers today are more willing to experiment / new products in the market. The organization teams have to carefully monitor not only wider trends within the development industry but also in the wider Capital Goods sector (2018). 6. Lower inflation rate - The low inflation rate bring more stability in the market, enable credit at lower interest rate to the stakeholder. This will increase the consumption of purchaser homebuyers. Strategic Management (Page 11) EVALUATION THREATS are factors that can be potential dangers to the business models because of changes in macro economic factors and changing consumer perceptions. Threats can be managed but not controlled; 1. Changing demographics - As the baby boomers are retiring and new generation finding hard to replace their purchasing power. This can lead to higher profits in the short run for organization but reducing margins over the long run as young people are less brand loyal and more open to experimentation. 2. Competitors catching up with the product development - Even though at present is still leader in product innovation in the development industry. It is facing stiff challenges from local competitors to international. 3. Saturation in urban market and stagnation in the rural markets - this trend is an ongoing challenge in the industry. One of the reasons is that the adoption of products is slow in rural market. Secondly it is more costly to serve the rural customers than urban customers given the vast distances and lack of infrastructure. 4. Growing technological expertise of local players (in the export market) - One of the biggest threats of tie-up with the local players in the international market sales is threat of losing IPR. The intellectual property rights framework is not very strong in emerging markets especially in China. 5. Changing political environment with US and China trade war, impacting European Union, and overall instability in the Middle East also impact business both in local market and international. Strategic Management (Page 12) CONCLUSION and Recommendation for improvements EW was created Nine Years ago from the empty land and investment of large-scale development projects. While this company of organization is still considered 'new' in the market, its board of directors are actually drawn from a solid and long-established development corporation in Malaysia. Subsequently, several billions of Ringgits have been invested into EW Malaysia alone to support and construction development of 20 projects. Not just in Malaysia but also in Singapore, United Kingdom, and Australia. Hence, the company is developing fast since each of its members is accountable for doing a job so effectively that it has received several Honours and is one of the companies that make up Bursa Malaysia's primary market. EW can still survive the very severe economic conditions of 2020 when Covid-19 is the primary constraint on economic progress. Similarly, this is likely the company's first economic issue since its establishment. The companies are unable to provide debt to their customers due to a variety of issues, including a low ability to generate profits, significant liquidity inconvenience and a lack of current assets is bankable from which financial institution in Malaysia, a low ability to provide debt, and an inability to demonstrate stable tangible and intangible assets. However, the organizations can still improving their ability to lend to homebuyers, as they can meet the Character Criteria for which they have a good brand name and achievement. Therefore, Eco World are willing to give debt to homebuyers with 5/95 Concept for the best marketing strategies to ensure fasters sales. As well as the Condition criteria, they use inventory effectively, which makes them able to generate high profitable. My opinion is looking forward the company to compensate closely attention to the SWOT Analysis in enhancement and influence the company's capabilities as this company are very high potential. This is so that the company gets a best return in the future. Eco World Development Group Berhad is will be the greeter’s developers in MALAYSIA. Strategic Management (Page 13) EVALUATION OF BUSINESSES AND CORPORATE LEVEL BASED ON SELECTED ORGANIZATION (DEVEVELOPMENT AND CONSTRUCTION INDUSTRY) References [1] Eco World Development Group Berhad; Annual Report 2021 [2] MS ISO 9001:2015; Quality management systems – Requirements (2nd Revision) [3] Operations management has its core in management of processes, operations that produce goods and services; Krajewski & Ritzman, 2002 [4] APMBoK knowledge 7th Edition, Association for Project Management; Dr Ruth M-W, Prof Daren D, Philip B, Tayyab J, Charles M & Dale S, 2019 [5] Global Journals USA, Vol 15 Issue 9 Version 1.0; How effective leadership can facilitate change in organizations through improvement and innovation; Moo JH & Dr Rashad Y, 2015 [6] BERNAMA. 2021. Kenanga keeps 'Market Perform' on Eco World Dev, TP unchanged at 85sen;Bernama. [7] EcoWorld Development Group recognised as Malaysia responsible developer.The Edgeprop,Malaysia. Khoo, N. and Khoo, N., 2021 [8] AllianceDBS Research. 2014. Company Focus Eco World Development Bhd. [ebook] Kuala Lumpur, Malaysia: AllianceDBS Research Sdn Bhd; [9] The Edge Market; Re-innovating and expending its reach; [10] Euromonitor - Capital Goods Sector Analysis; Published 2018 [11] Strategy and Structure; AD Chandler Cambridge; MIT Press, 1962 [12] Divisional Autonomy and Diversification; L.Wrigley Harvard Business School, 1970 [13] Generic Business Strategies, Organizational Context and Performance: An Empirical Investigation, Strategic Management Journal7; RE White, 1986 Acknowledgement In the name of ALLAH, the Merciful, the Compassionate, the blessings and power I've needed to fulfil this particular task have come from Allah, the Almighty, and the Creator of all things. Muhammad, God's last prophet and messenger, is the best role model for human beings and should be honoured with peace and prayers Notably, I finished my paper with all of my heart and soul. Likewise, I always put much exertion to get the job done in the most efficient manner possible, and I take it very seriously. Significantly, thank you, Mr XXXXX my best lecturer, for giving this project a clear direction throughout the creation process. Thanks for all her hard work. May Allah reward her, commensurate with her efforts. In addition, I am appreciated for her recommendations, ideas, and valuable advice. Consequently, I could finish my paper in the time frame provided. Always Thanks to my lovely wife, sons and daughter and parents for their constant encouragement and support. Finally, to Mr XXXXX, I hope this paper will be accepted as I've put in much effort to finish, and I hope that all of the information I've provided will be accepted. Please accept my sincere appreciation. Thanking you very much ALLAH