Not Alone In Thoughts - World Class Companies

For the past weeks before the General Election, we have made cold-calls to businesses in virtually every part of Penang and made visitations to all forms of businesses and meeting entrepreneurs. From bakery to hair salons, from restaurants to optical shops. From start-ups to companies in the process of listing.

One of the things that we noted and we are in agreement with an article recently published in BizWeek, The Star dated 22 March 2008 under Companies & Strategies, that there is an absence of world-class companies within Malaysia. (Refer http://malaysiafinance.blogspot.com/2008/03/absence-of-world-class-companies.html)

Definitely the article raised relevant issues that are prevailing within an organisation or an institution. However, we write to provide certain widely-acceptable answers to the questions in the checklist of the article, based on our personal experiences, expectations and not supporting anyone including us, being advisors and consultants.

For the questions, kindly refer to the said article provided in the website.

a) All businesses whether in making, strictly new or still active, do have some form of product strategy. Nevertheless, the key word, "strong product strategy" needs to be considered.Most entrepreneurs deliberately learn about the 4Ps; product, price, place and promotions before setting up businesses.

In fact, in our recent meeting with an arm of Boon Siew Group, we were "tried" by the managers on our knowledge of retail mix.Our deliberation on the strong product strategy would be, how does one measure the success of the product strategy and its strength. To a newcomer in business, just breaking-even within 6 months would have the same satisfying effect as to the making $120 million revenue of a company with strong financial support.

b) To do business, is to profit. If its non-profiting, it is either charity-based or public service. Definitely top management wants to seek improve margins and ways to manage finance better.

c) In most cases, business owners are consumed to know who, what and how are the competitors performing. In relation to this, business owners take efforts to find innovative ways to increase their market shares.

d) Whilst business owners are often innovative and creative in finding new solutions, often the solutions bring about newer problems to be addressed such as resources and time factors to implement the ideas. In the world of retailing especially, quality and quantity in human resources and raising fresh capital often delays even the best plans in mind. Over time, the innovation or inqenuity had been superseded by better ideas or plans which may come from competitors.

e) Companies that are established over years often adopts certain workable strategies that are often repeated. Where business growth is concerned, the same management may utilise the same key performance indicators that had largely made them successful.

In our mind, whether the strategy on growth is organic or via acquisitioning (buying advance products, services or franchised systems), a learning organisation should not put thoughts in one basket but to create newer business units and divisions to handle different product or services business growth rate. Hence companies such as Procter & Gamble or L'Oreal often have several brand managers taking care of many different types of product ranges.

As for other questions in the checklist itemised f to k, it is of note that is the basic model for a world-class companies albeit at a start-up level.

For a company to be world-class, in our opinion, they would have to go beyond the checklist.

Current active businesses hoping to turn world-class would have often amalgamate the checklist with their management responsibility and by participation, through their business experiences gained, through years of dealing with different types of staff and staff turnover, and through business associations or getting advisors and consultants in for the businesses; they have gained the understanding of what is required for the business to be world class.

In this aspect of understanding the needs and wishes of our business owners, we will depart from the article in which it firstly hypothesised,

"We also have far too many family-run enterprises. They have to learn to let go and let professionals to take over. Nepotism is rife in Aisa and only a very small percentage of family run companies do very well".

From our perspective, even if professionals were to take over the businesses but doing it for the sake of pay and trying to get results by virtue of business orientation - meaning to say, sending a memo to all the staff, please smile when attending to customers as part of the Customer Relationship Program, that memo will be largely ignored and business will surely fail.

Sam Walton of Wal-Mart made Wal-Mart today because he practiced what he preached. And how he practices it, is to do it himself. He then rub his life philosophy onto his children, their children, his staff and their children, creating a wholesome culture appreciated by the common people who buys from Wal-Mart.

The only time family run companies will perform badly; will be when there are internal conflicts amongst the family members and the people in the companies taking sides.

On the second hypothesis,

"Their mentality also restricts how a good company can grow further. Professional managers know better. Do we have the political will to employ them? Or are the entrenched interests too strong to dismantle?"

Their mentality is also our mentality. Their children and our children study in the same science/art stream, same college and in some cases, same universities. They are exposed to the same environment as we all are.

Critically we wish to point out, in most cases, a professional manager will push for his/her ideas to be generally accepted because its the role that he/she has to play. Whether a professional manager knows better or not, it is depending on skill level to explain, sell the idea, negotiate even and gaining momentum for the ideas to be fully accepted. Ideas that are pounded into acceptance or used to dismantle another idea, would often be subjected to future criticism and put on microscope at a later stage of management study when cracks start to appear.

We do strongly agree with the writer, Salvatore Dali, for the companies to be going somewhere, creating value and knowing what the critical success factors are - only then the companies will be world class. We believe that to achieve world-class is something that all of us should strive together to perform and support one another.

To be the next New York Fifth Avenue, all the businesses whether inter-business or intra-business should co-operate to launch their sector actively to a target market nation such as US, Australia or EU to ensure heads are turned this way.

To end this remarkable article published in BizWeek, we wish to summarise our contribution, We are Not Alone in Thoughts. Every business owner, every Malaysian, has the wants to be world-class, the good questions to ask, is how and when.

Automobile Industry 22 Mar 2008 (The Star)

Tan Chong Aims For Bigger Market Share

The company aims for 1% increase every year, says exec director Datuk Dr Ang Bon Beng.

Nissan Motor Co Ltd President and CEO Carlos Ghosn reaffirmed that strong products would be necessary for Nissan to achieve sustainable and profitable growth in Malaysia.

He outlined that clear business goals, a well-timed and concrete product introduction strategy, and well-established service operations network would be key drivers behind the dynamic partnership between Nissan and Tan Chong Motor.


Proton Can Survive if Managed Well

Nissan Motor Co. Ltd. and Renault SA President and CEO Carlos Ghosn believes that car manufacturers can survive if they know their markets well and their business well.

It is not true that only large car manufacturers can service because even
they can collapse,

he said.

"Working in a company with a different culture is not easy. However, when people who come from different cultures and speak different languages come together with one purpose and one vision, they can be very powerful and eliminate the competition."


Ferrari Names Naza Italia Sole Distributor for M'sia

CEO S.M. Faisal S.M. Nasimuddin said,

We see Ferrari as an iconic brand with good growth potential in the niche market
of high-end automobiles and we see te need to maximise the ownership experience
of Ferrari users.

The group will invest substantial amount in customer relationship management, sales and after sales services, training, branding and marketing activities.

Ferrari Asia-Pacific regional business manager Simon Inglefield said,

Ferrari is selling dreams, not cars.

The group would study the Malaysian market demand first and supply according to that.

Penang Retail Outlook 2010

By 2010, we will see some 25.0 million square foot of retail space in Penang.

This figure is just a rough estimate given project sizes of Paragon Hunza, Gurney Plaza New Wing, Penang Time Square, The Light, PGCC, Juru Autocity and malls that are planned and developed on continuous growing year by year basis.

Given that the population growth of more or less the same every year, some 1.5 million people on the Island and additional 0.5 million people on the Seberang Prai area, the economics for retail may be in present, downward spiral. There is also an national inflation of 2%-20% to be added to current pricing.

Contributory to the effect, worldwide recession has started with United States due to prime home loans affair and also inflation in China, that create future problems even though there may be an increase of tourists to the Island but the spendings may be limited by the same tourists.

Every year as the new generations of youths aging 20-40 years old becoming more entrepreneurial, we shall see some 15,000 new brand or businesses emerging (assuming each business is to take up 1,000 sq.ft for retail).

At present,

Penang Retail Outlook 2008

There are an estimated figure of over 10 million square foot of lettable retail space in Penang.
(8.0 million sq. ft. based on NST report in 2004 excluding Queensbay Mall)

1. Queensbay Mall (1.5 million sq. ft) 500 shops
2. Sunshine Square (452,000 sq.ft)
3. Bukit Jambul Shopping Complex (999,604 sq.ft) 414 shops
4. Gama (no details offered by Evelyn, Business Dev. Mgr 06 March)
5. Bayan Central Complex (440,640sq.ft?)
6. Gurney Plaza (754,000 sq.ft)
7. Island Plaza (320,000 sq.ft)
8. Komtar Complex (148,534 sq.ft)
9. One-Stop Midlands Park Centre
10. Prangin Mall (900,000 sq.ft) 593 shops
11. Suiwah (combined space) Sunshine Farlim, Sunshine Jelutong
12. Sunshine Square
13. Sunway Carnival (500,000 sq.ft)
14. Pan Palaca Plaza (110,000 sq.ft)
15. Penang Plaza
16. New World Park
17. Pacific Megamall
18. Bukit Mertajam Plaza
19. Kompleks Pekan Rabu Datuk Kailan
20. retail squares at Sungai Dua, Penang.
21. Prima Tanjung, Medan Fettes.
22. Ivory Properties behind USM.

Unaccounted for: 3.9 million

Sources:

http://www.nst.com.my/Weekly/PropertyTimes/News/Focus/20040724125056/Article/
http://www.hbp.usm.my/RetailPG/bayan%20baru.htm
http://www.penangresort.com/rhi/news2.php?subaction=showfull&id=1123133533&archive=&start_from=&ucat=1&
http://biz.thestar.com.my/news/story.asp?file=/2007/6/23/business/18100855&sec=business
http://www.seri.com.my/oldsite/EconBrief/EconBrief2002-11.PDF
http://announcements.bursamalaysia.com/EDMS/subweb.nsf/7f04516f8098680348256c6f0017a6bf/a5165d375a53769d48256f3c00309cd1/$FILE/Suiwah-AnnualReport2004.pdf
http://www.tourismpenang.gov.my/page.cfm?name=se02c