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SWOT ANALYSIS

Strengths

Tasek Corporation Berhad is the key player in the market. It is one of the largest cement
producers in Malaysia which was incorporated since 1962 previously named as Tasek
Cement Limited. The company is growing bigger and stronger. Besides being an active main
contributor influencing the direction the cement industry in Malaysia, Tasek Corporation
Berhad has also shown increase in total sales as compared to previous year. Besides, the
company is willing to embrace change. Internal projects are launched in order to keep pace
with the alteration happening in the cement industry. This includes improving the
technologies used in production and persistently search for better results to meet the existing
and new market needs. Additionally, employees in the company are eager and able to bring
changes when the needs arises.

Tasek Corporation Berhad is also a customer-oriented company. The company vision is to be


a leading manufacturer in the cement industry surpassing customer expectations. Moreover,
since the company is focusing and prioritizing on its customers, it values the concerns and
response solemnly. Furthermore, Tasek Corporation Berhad reach out to the community
through its corporate social responsibility (CSR) programme. Various sponsorship was being
done to the society as well as enhancing the community and workplace safety. The company
has strong corporate governance. Board of directors of Tasek Corporation Berhad centres its
governance on the core values of accountability and ownership, customer focus, embrace
change, innovation, integrity and teamwork. There is transparent allocation of jobs and
responsibilities between the boards of directors.

Weaknesses

Profit margin of Tasek Corporation Berhad is decreasing. The price of Ordinary Portland
Cement (OPC) at which the company is a major producer in has dropped intensely. This is
followed by the growing cost of raw materials, transportation, and energy which made up the
total cost of the cement production. Additionally, there are many other external factors as well
that caused the problem to worsen. Besides, Tasek Corporation Berhad like many other
cement producer in the market, are highly dependent on the construction industry. When
demand in the construction is low, the demand in cement will also be low. This is highly a
problem as the companys fate is reliant on the other industry and pushing more sales seems
to be even harder. In long term, sustainability of the company is a question to be asked.

Moreover, usual marketing strategies used in the market might not suit the cement
industry Tasek Corporation Berhad was in. Marketing strategies such as advertising, brand
exposure and cost advantage does not work. Instead, reputation that has been constructed
over the years is needed in order to be chosen by the concrete suppliers. This indirectly means
that once the company has a bad record such as late delivery or insufficient order quantity
being delivered, it will be very hard for the customers to make orders or purchase with them
again. Additionally, there is no product differentiation available for Tasek Corporation Berhad
to distinguish itself from its competitors. Therefore, in customers perspectives, choosing
between one company with another company do not make any difference to them.
Consequently, the situation has brings insecure sales continuously to Tasek Corporation
Berhad.

Opportunity

The opportunity spotted for Tasek Corporation Berhad includes widening its target market.
Exploring into the neighbouring foreign markets might be a good idea to increase its
customers coverage. For example, Southeast Asia market is a worthy choice of market to be
broadened since the culture gap is narrower at which people built houses mainly through
concretes and cements as compared to the Western countries which uses other more
alternatives. In addition, Southeast Asia is also considered to be easier to control as the
countries are nearby the home country of Tasek Corporation Berhad. Besides widening the
target market, the company can also expand its business to other related products. This can be
using vertical integration at which the company enlarges its business operations into different
steps on the same production path to improve costs.

Furthermore, this is the opportunity for Tasek Corporation Berhad to produce green
cement. There is increasing awareness globally urging individuals as well as business to go
green and produce environmental friendly products. Business which cannot adapt the changes
will not be able to sustain in long term. This is evident when polystyrene is banned in
Malaysia due to health and environmental concern. Moreover, Tasek Corporation Berhad can
look into the potential to obtain new technologies available in the market. This can possibly
reduce the cost incurred in the long run by relying on capital intensive compare to labour
intensive.
Threats

Tasek Corporation Berhad will need to face economy uncertainty present in the market. For
instance, when the country incurred economy downturn, less cement can be sold as there is
fewer people who wants to do construction on their properties. Besides, Tasek Corporation
Berhad will also need to battle through the weak currency. Exporting of products to growing
foreign markets will be seen as a problem with the fall of Ringgit. Also, the high cost of raw
materials, transportation and energy are posed as a threats for the company to deal with in
order to get better profit with the same amount of cements sold. The company will need to
fight against the rising cost to maintain a good position in the cement industry or else it will
not be able to survive when an extreme price drop occurs at which the company is not able to
cover its cost.

Moreover, Tasek Corporation Berhad will need to encounter strict laws and
regulations present in the cement industry. Compliance to ethical manufacturing practices is
viewed as a serious legal concern. Also, barring of Developer Interest Bearing Scheme
(DIBS) and the implementation of Real Property Gains Tax (RPGT) to restrict speculation
has obliquely caused the construction industry to slow down consequently affecting the
cement industry as well. Furthermore, Tasek Corporation Berhad also faced tight
competitions from the new and existing rivals. LaFarge, YTL and Cement Industries are the
top three largest cement producer in Malaysia while Hume Cement is the new company that
has just entered the market for a short period of time. Oversupplied and price disturbance are
seen in the market causing price of cements and profit obtained by the company being
unstable.

RECOMMENDATIONS

Tasek Corporation Berhad is one of Malaysias largest cement producers as mention on the
strength of the SWOT analysis. It shows that the company is well known in the industry and
already sustain for about half of century. To continuity sustain for the future the company
should strengthen the corporate governance element on the company. We can look on how the
biggest company collapse like Enron, WorldCom, Sathyam and others giant company due to
lack on corporate governance structure on the company. Malaysian code of corporate
governance (MCCG) was established in year 2000 and several times has been revise with the
latest issues on 2016. MCCG 2016 provides the guideline for the Public listed Company
(PLC) to comply with the best practice of corporate governance. Tasek Corporation Berhad
should follow the MCCG guideline to strengthen the corporate governance structure for
example the independence of Board which it mention that if the Chairman is dual role of
CEO the composition of members for the Board should be majority comprises of independent
director. The board of non-executive director that serve for more than 9 year may continue to
serve as non-independent director and seeks shareholders approval annually through a
separate resolution. Why that is importance to focus on the top management because to create
tune at a top is essential to keep the company performance toward sustain the business on the
long term.

Besides that, to ensure the company sustain on the business for the long term we
suggest the company to invest on Research and Development (R&D) activities. Even though
the company already invest on R&D activities but the company has to keep on make
innovation to generate added value for customers and innovative product through process
improvements and new formulation which can reduce the use of energy as well as cost related
to the product. There are crucial to invest on R & D for cutting cost purposes for the product
because the selling price of cement is according to the market price which we can said that
the company which can provide the better product with quality and include with added value
to the customer will become the selection by the customers.

In SWOT analysis also mention that the company has opportunity to widen its target
market in south East Asian Nations by venture out into foreign markets which are rapidly
growing. Tasek Corporation Berhad is aim to become the leading cement-producer in
Southeast Asian market within a five year time frame. To achieve that purpose we suggest the
company to involve in foreign joint venture with the local company in the Southeast Asian
market. The company will has better control over the operations and also accessing to local
market knowledge. Geringer and Hebert 1989 mention that the company access on joint
venture agreement is less exposed to the risk expropriation regarding to the partnership with
the local company. Therefore, the company can widen their target market by joint venture
with the Southeast Asian market.

Next, we recommend Tasek Corporation Berhad to expand its business by using


vertical integration strategy to gain power over their industrys value chain. Currently there
are supplier of cement and concrete for the construction industry which is highly dependent
on the demand from the construction industry. We suggest the company to participate on the
construction industry like to invest on property and development under Tasek Corporation
Berhad like other giant company do. For example, YTL Land & Development Bhd under
YTL group that also one of the cement producer company. The benefit from the vertical
integration there will becoming the supplier for their property and development company
which is can increase the demand for the cement product its own company. Due to that, the
company can provide their product to its own company with lower cost that can effect on
generating profit for the future return lead to sustain their business for long term. Finally, one
of the threats on SWOT analysis we found is high cost for the transportation because the
plant is located in Ipoh, Perak and the cement will be transported to Sungai Buloh, Selangor
for storage, packing and channeling to the distributor either by road or by rail to the end
users. With concerning on the fluctuated of oil price and the distance from the plant and the
warehouse about 200 kilometers it will cost a lot for the company to transport each of the
cement produced at the plant to the warehouse. We suggest building warehouse that near with
the plant which can cut cost for the transportation. Therefore, the company can use their
money to invest to develop their company rather than paying high cost for the transportation.