In fulfillment of MBA Program for the subject- Strategic Management - Open University

Malaysia by Santhy A/P Govindasamy

Assignment Question:

This assignment is designed to develop students ability to evaluate the business level and
corporate level strategies of a selected business organization.

Requirement:

Select a business organization of your choice. Preferably a medium or large company, well-known
in Malaysia.

Write a case study on the organization focusing on your evaluation of its business level and
corporate level strategies. You may use any of the models/matrices/theories in strategic
management to support your case.

TABLE OF CONTENTS

Description Page Number

1.0 Background of the Company 3
2.0 Current Corporate Level Strategies 4
2.0.1 Product Development 4
2.0.2 Market Penetration Strategy 6
2.0.3 Unrelated Diversification Strategy 7
3.0 Evaluation of Current Corporate Level Strategies 8
3.0.1 SWOT Matrix 8
3.0.2 SPACE Matrix 12
4.0 Current Business Level Strategies 16
4.0.1 Differentiation Strategy 16
4.0.2 Focus Strategy 17
5.0 Evaluation of Current Business Level Strategies 18

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 5.0.1 SWOT Matrix 18
5.0.2 BCG Matrix 19
6.0 Recommendations for Improvement 22
7.0 References 24

1.0 Background of the Company

The company selected for this assignment is Pos Malaysia Berhad (PMB). It is the largest provider
of postal related services in Malaysia. Currently PMB services include courier, mailing services,
parcels and even financial related services. The management of PMB realized the need to diversify
operations and venture into new products due to the industry being highly competitive with many
local and overseas courier and logistics service companies setting up operations in Malaysia. In
2011 DRB-Hicom Berhad acquired a 32.2% equity stake in the company. This acquisition created
major changes to PMB. It was realized in order for PMB to gain the competitive advantage, there
was a need to formulate and implement a strategic plan. The first step in strategic management is
to create a good vision and mission statement.

The following are the vision and mission statement of PMB from their Annual Report 2014:

Vision Statement:

Connecting Malaysia, and beyond for today and tomorrow

Mission Statement:

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 To build and deliver the network of choice

A vision is a statement that expresses organizations ultimate objectives and it should answer
the basic question What do we want to become?

PMBs vision statement is short and is in one sentence. However in my opinion this statement fails
to specify PMBs objective or its business.

Using evaluation of Samsonites vision statement, as an example, reads as: To provide innovative
solutions for the travelling world. This statement was criticized as lacking in objectives and not
specific, as it could easily refer to air carriers or cruise lines, which is not good and further there
was no mention of luggage, which is Samsonites business.

Applying the above evaluation on PMBs vision statement, I would say:

PMBs vision statement is too vague. The statement does not specify postal/courier services. The
vision statement appears to be more appropriate for a company in the telecommunication industry
because of the word connecting Malaysia.

Mission statements is supposed to capture the overriding purpose of an organization in line with
the values and expectations of stakeholders. It should answer the question What business are we
in? and What is our business for?

The following are the nine components which must be in a mission statement:

Customers specify firms customers

Products or Services specify firms major products and services
Markets geographical location
Technology Is the firm technologically current
Concern for survival, growth and profitability Firms commitment to growth and
financial soundness
Philosophy Firms basic beliefs, values, aspirations and ethical priorities
Self-Concept Firms major competitive advantage

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 Concern for public image Firms respond to social, community and
environmental concerns
Concern for employees are employees their valuable asset

The recommended length of a mission statement must not be less than 250 words.

In my opinion PMBs mission statement fails because it does not have any of the recommended
nine components for an inspiring and enduring statement. The statement is too short and can be
interpreted as PMBs vision statement instead.

2.0 Current Corporate Level Strategies

2.0.1 Product Development

A product development strategy is a strategy that seeks increased sales by improving or

modifying present products or services or developing a new product to target at a particular market
segment. Companies need to practice consistent product development in order for them to keep
up with changes and trends in the marketplace, thereby ensuring their future profitability and
success. A company-wide commitment towards the creation of products and services is desired in
order to fulfill the unique consumer needs.

PMB realized its volume growth in conventional mail was decreasing due to consumer migration
to digital channels which offers a faster and more convenient medium of communication. At the
same time the advent of internet brought opportunities to PMB as consumer require a reliable
delivery network to transport the goods purchased on-line. PMB pursued new product
development in order to deliver higher quality of service to ensure, it remained relevant to the
consumers in the market place. Two areas that were looked into were corporate mail management
and direct mail.

Corporate Mail Management service is a total mail room solution provided to organizations on a
contractual basis. PMBs trained staff are placed at the organizations premises and they will handle
all the daily incoming and outgoing mails of the company. Services include collection and
distribution of clients mail from the Post Office for internal circulation and the collection of out-
going mails from each unit of the company to the Post Office for delivery. It is reported in PMBs

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Annual Report 2014 this service is gaining popularity among their corporate clients. PMB
maintains high level of professionalism and integrity coupled with ease of communication with its
corporate clients in order to ensure the services meets customer expectations.

The Direct Mail service offered by PMB is essentially an effective and affordable method for their
corporate and non-corporate clients to reach out to prospective clients. PMBs Annual Report 2014
reports Malaysian companies spend about RM4billion in advertising expenditure annually, the
bulk of which goes into print media. PMB realized the major grouse coming from customers is the
flyers or promotional mails not reaching targeted audiences. PMB decided to capitalize on the
more than 8 million addresses it services daily to ensure the promotional mails are effectively and
efficiently distributed. The Direct Mail service requires a high level of managerial and IT skills
from PMB and its employees. PMB has recently upgraded their data management system to ensure
better structure of its existing client information is available thereby ensuring the success of this
service.

The above new product developments by PMB for its mail market segment has significantly
increased the revenue generated from this segment.

2.0.2 Market Penetration Strategy

A market penetration strategy seeks to increase market share for present products or services in
present markets through greater marketing efforts.

The courier services industry is a highly competitive industry with the presence of both domestic
and foreign courier companies in Malaysia providing similar services. On-line business and e-
commerce growth has opened up opportunities for the courier services companies to provide
delivery service for merchandise purchased on-line. PMB has launched innovative packaging as
well as optimized its delivery/pick-up routes as part of its effort to increase market share for its
courier market segment.

In December 2013 PMB launched, PoslajuGo2U, a vehicle service which offers customized
delivery services both during and beyond normal working hours. The vehicles are equipped with
GPS tracking and with Fleet Management Information System, PMB can ensure all items are

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delivered promptly and accurately to the respective addresses. Clients need for flexible delivery
hours can also be met. This optimization ofdelivery routes with the promotional efforts through
publicity in newspapers and the launching of its slogan Positively Moving Forward has made
PMB the preferred choice among corporate and non-corporate clients for their courier needs.

Customer convenience has always been a key feature in every PMB service and product. Potential
customers have been lost to rival firms because the post offices are open at certain hours or the
post office is located at an inconvenient distance from the client. In order to ensure greater market
share of the courier services, PMB has launched kiosks at strategic locations where there is high
pedestrian traffic zones such as at light rail transit stations (LRT), commuter train stations, bus
terminals, transit hubs and shopping malls. Operating from 9am to 7pm, seven days a week, these
kiosks offer customers the convenience of dropping off parcels outside normal working hours and
during weekends. There are currently six PosLaju kiosks in the Klang Valley and this channel will
soon be extended to all major cities across Malaysia.

PMB was able to capitalize on the benefits economies of scale in order to provide it with the
distinctive competitive advantage over its rivals. Thus PMB is able to maximize on its market
penetration strategy in order to secure a larger market share.

2.0.3 Unrelated Diversification Strategy

This diversification strategy is a corporate level strategy which involves adding new businesses
to the companys existing business, which is distinct from its established operations. Companies
seek diversification in order to reduce business risks through expanding their operations into new
territories. The diversification strategy employed by PMB for its retail market segment involves
entering into new businesses areas as insurance and Islamic Micro-financing.

PMB has more than 5,700 postal outlets which provide services to customers such as bills payment,
sale of postage and collection centre for letters and parcels. PMBs management realized there was
under utilization of existing resources and capabilities at each post office. By expanding the
provision of customer related and customer friendly services the revenue generated from the retail
market segment can be substantially increased. PMB realized it could capitalize on its vast post
office outlet throughout Malaysia in order to bring innovative services that can produce revenue.

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With this regard, PMB has collaborated with Etiqa Takaful Berhad to provide its customers with
Takaful related products. Through PMBs subsidiary Pos Takaful Agency Sdn Bhd, selected
PMBs post office has become a one stop centre to provide advice and sales of its insurance
products. These post office counters also facilitate payments of premium from clients besides
handling other related matters on insurance. PMB has embarked on retraining of certain staffs in
order to provide them with the expert knowledge required for these services. Among the takaful
services provided include personal accident plan, drivers and passengers personal accident plan
and house owner insurance. These services appeals to both corporate as well as to individual
customers who are looking for alternative Islamic insurance plans.

Another diversification exercise by PMB is the introduction of Islamic Micro Financing through
its wholly owned subsidiary, Pos Ar-Rahnu Sdn Bhd. This is a syariah-compliant business which
offers pawn-broking financing of up to 75% of the appraised value of gold. This is an interest-free
financing method which is offered to all Malaysians and foreigners holding valid passport. This is
a safe method for individuals to avail themselves with easy credit. However this facility is only
available at selected PMBs post offices because of the need to build in strong room and increased
security features to comply with government regulations.

The above diversification exercise has spurred the growth of PMBs retail market segment.

3.0 Evaluation of Current Corporate Level Strategies

Following discussion is on the evaluation of PMBs current corporate level strategy. The tools
used to evaluate the strategies are the Strengths-Weaknesses-Opportunities-Threats (SWOT)
Matrix and the Strategic Position and Action Evaluation (SPACE) Matrix.

3.0.1 SWOT Matrix

Figure 1 shows the SWOT Matrix for PMB. This matrix is an important matching tool that helps
managers develop four types of strategies: SO (strengths-opportunities) Strategies, WO
(weakness-opportunities) strategies, ST (strengths-threat) strategies and WT (weakness-threat)
strategy.

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It is crucial for PMB to know its internal strengths and weaknesses so that they can take advantage
of opportunities and avoid the threats which are present in the external environment. PMB should
then be able to identify its distinctive competencies in order to acquire the competitive advantage.

The SO strategy reveals the internal strengths in PMB which can prove advantageous as it looks
at the external opportunities available.

PMB has maximized the internal strength available from its 17,507strong employees to
successfully increase its existing market share in all the three market segments. In the financial
year ending 2014 PMB reports the revenue generated per employee as RM81,500 as compared to
2013 when it was RM78,100, an overall increase of 4%. Any strategic exercise can only be
successful with full participation of the employees. Employees too must be equipped with the
necessary skills so that they can effectively contribute to the company.

The Mail Management service is provided exclusively to corporate clients. The handling of
corporate client mails requires PMB employees to display the highest level of professionalism.
Appropriate and selected training programmes are essential to increase employee competence.
This would ensure customer retention as well as growth of prospective new customers.

Another internal strength of PMB is the more than 5,700 post offices located around Malaysia.
They provide the services of direct mail, courier and retail business. PMBs diversified services
require its buildings to have security features and innovative structure to appeal to its wider
customer base. PMB need to take advantage of the technological advancements in order to better
manage its customer database and to efficiently manage its delivery route.

The WO strategies involve PMB taking advantage of the opportunities provided by the external
environment in order to improve on its internal weakness. Two of the WO strategy pursued by
PMB is discussed.

Currently 80% of PMBs corporate clients are from DRB-Hicom Berhad group. It is
recommended, PMB expand its customer base to include other non-related companies. The growth
in domestic investment and the robust private sector industry should provide the opportunity for

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PMB to successfully expand its operations to other corporate clients. Expansion of customer base
would certainly increase PMBs revenue.

PMBs current fleet of vehicles are on average 10 years old. These vehicles currently add to the
operating costs of PMB through the higher maintenance and fuel costs. It is recommended for
PMB to consider replacement of the present fleet with the hybrid motor vehicles that are available
in the market. The initial replacement cost may be high for PMB but in the long run there would
be savings in reduced vehicle maintenance cost and fuel consumptions costs.

ST Strategies uses the strength within PMB in order to avoid or reduce the impact of external
threats.

PMB professes itself as Malaysias preferred domestic courier services provider. PMB need to
capitalize on this strength because of the uncertainty looming in the global market. Its present
strategy of new product development, market penetration and diversification has been well
received by both corporate and general public. PMB can reduce the shortfall in revenue brought
about by the global market by increasing its revenue domestically.

PMB need to use its current technological advancements for its fleet management to optimize
delivery routes and costs. The Management information systems developed for its fleet
management as well as GPS installation on its vehicle is a source of strength which must be
capitalized upon by PMB. This would contribute towards more efficient delivery system as well
as cost savings to PMB. Threat of fluctuating oil prices can be overcome through better
management of its fleet.

WT strategies are defensive tactics employed by PMB which are directed at reducing its internal
weaknesses and avoiding external threats.

PMBs current fleet of vehicles is on average 10 years old and is contributing to the high
maintenance and fuel costs for PMB. PMB is also facing external threats from the community as
more people become aware of the threat of global warming and advocating green environment.
PMB should seriously reduce or eliminate this weakness and threat by replacing its current

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vehicles with hybrid models. These models are environment friendly as they not run on less fuel
and in the long run PMB should be able to lower its operating costs for motor vehicles.

PMB has 5,700 touch points consisting of post offices and post minis throughout Malaysia. These
touch points are being underutilized as the new products development and diversification exercise
by PMB is available at only selected outlets. It was reported as at 2009 there were 105 licensed
courier operators both local and foreign. In order to counter the threat from other similar service
operators PMB should introduce its new services at all the outlets.

The SWOT analysis has its limitation because it does not show how PMB can achieve a
competitive advantage. The matrix merely proposes strategy for PMB to implement strategies
which would ultimately lead to competitive advantage. The SWOT Matrix prepared for PMB is
based on the external and internal condition existing during the financial year ended 2014.

Figure 1:

SWOT Matrix POS MALAYSIA BERHAD

Strengths Weaknesses

1. Revenue per employee RM82,000 1. 17,507 staff on PMB payroll

an increase of 4% in FY14 2. 9,739 vehicles, average 10
2. Deliver to more than 8 years old
million addresses 3. Heavy reliance on DRB-Hicom
3. More than 5,700 group for corporate clients
touch points 4. Not all services offered at every
4. Current Ratio 1.5X, compared PMB touch points
2013 was 1.4X 5. After hours delivery only available
5. Strong brand image. 3pm-9pm daily

SO Strategies WO Strategies
Opportunities

1. Corporate clients outsourcing 1. Intensify training of 1. Focus marketing efforts to

their Mail management employees to make them B2B & B2C (W3, O3&4)
2. More than 350,000 items handled relevant (S1,O1&2) 2. Purchase new hybrid
for international destinations, driven 2. Enhance physical vehicles (W2, O5)
by rise e-commerce transaction infrastructure at 3. Increase services offered
3. Growth in domestic investment each touch point(S3,O3) at each touch point
consumption resulted in fall in net 3. Actively use technology (W4, O3 & 4)
exports& rise in real imports platforms as enablers to
4. Strong domestic demand due to improve business

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 robust private sector activity (S2&3, O1&2)
5. Hybrid vehicles available as
alternative to fuel vehicles

ST Strategies WT Strategies

Threats

1. Global economy uncertainty 1. Improve domestic 1. Replace old vehicles with

with continued weaken overall services (S2, T1) new hybrid models (W2, T2)
demand. 2. Optimize delivery routes 2. Increase availability of services
2. Fluctuating fuel prices, transport was using technology at each touch point
44% higher in FY14 compared to (S2, T2) (W4, T4)
FY 13 3. Build on international 3. Increase operating hours
3. Consumers expect green business destinations &presence (W5, T4)
operations as courier of choice
4. As at 2009 there were 105 (S5, T5)
licensed courier operators in
Malaysia
5. FedEx (27%) & UPS (24%) have
greater international presence

3.0.2 SPACE MATRIX

Figure 2: SPACE Matrix Pos Malaysia Berhad

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 FP
Conservative Aggressive
7

CP IP
-7 -6 -5 -4 -3 -2 -1 1 2 3 4 5 6 7
-1

-2

-3

-4

-5

-6

-7
Defensive Competitive
SP

Internal Analysis: External Analysis:

Financial Position (FP) Stability Position (SP)
Return on Investment (ROI) 7 Rate of Inflation -2
Leverage 6 Technological Changes -2
Liquidity 6 Price Elasticity of Demand -2
Working Capital 6 Competitive Pressure -5
Cash Flow 6 Barriers to Entry into Market -5

Financial Position (FP) Average 6.2 Stability Position (SP) Average -3.2

Internal Analysis: External Analysis:

Competitive Position (CP) Industry Position (IP)
Market Share -2 Growth Potential 6
Product Quality -1 Financial Stability 6

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Customer Loyalty -2 Ease of Entry into Market 5
Technological know-how -3 Resource Utilization 5
Control over Suppliers and Distributors -3 Profit Potential 6

Industry Position (IP)

Competitive Position (CP) Average -2.2 Average 5.6

Figure 2 shows the SPACE Matrix for PMB. The Matrix shows PMB is in the competitive
quadrant. This means the recommended strategies for PMB would be
Backward, forward, horizontal integration
Market penetration
Market development
Product development
PMB is currently pursuing product development and market penetration strategy.A competitive
strategy approach occurs when the company has a high score on Industry Position/Competitive
Position (IP/CP) axis of the SPACE matrix but is unfavorable on the Financial Position/Stability
Position (FP/SP) axis.

The IP/CP is a comparison of the postal/courier services industry against the competitive strength
of PMB. The IP score is slightly above average for this industry. This can be interpreted by using
the scales used to evaluate the industry. The industry has an above average score in its growth
potential as well as the financial stability of companies in the industry. The profitability potential
for this industry is also above average. However there is an average score for the ease of entry into
this industry. This could be contributed to the high capital expenditure required as well as
governmental regulations on the formation requirements of the industry.

However the competitive position score for PMB is relatively high at -2.2 in comparison to the
industry potential score. PMBs high CP score can be attributed to the corporate level strategies
that have been pursued by the company. All three strategies with the combined internal strength
existing in PMB have given it the significant competitive advantage. The combined strategy has
given PMB a higher market share. PMBs new product development with diversification has
enhanced the quality of its product/services. Customers satisfaction with the new products as well

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as enhancement of existing products is reflected on the score for customer loyalty at -2. PMB has
also upgraded on its technological know-how which has given it the competitive advantage over
its competitors.

The FP/SP is a comparison of the financial position within PMB as against the stability of the
postal/courier services industry. The SP score for this industry is good at -3.2. The inflationary
average is -2 and the technological changes affecting this industry is an average -2 which is on the
low side. However this industry is facing high competition possibly due to lower barriers of entry
in to this industry.

The financial position of PMB is a score of 6.2 which is high. PMB has remained very liquid in its
position. Whilst a highly liquidity ratio is desirable as the company is able to meet its short-term
obligations without having to turn to debt financing however PMBs leverage score is high. This
shows PMB has resorted to debt financing for its capital expenditure. The courier services industry
is stable as reflected by the score in SP. Under these circumstance it is advisable for PMB to use
its liquidity position to its advantage, for example partly financing capital expenditure or use of
cash in the day-to-day running of the business. The cash flow position of PMB is also high as
reflected by score of 6. PMB has a very good score in its return on investment (ROI) which
computed as Net Profit/Total Assets.

PMB is in the competitive quadrant due to 2 reasons. PMB has high score in its competitive score
as compared to the position of the overall industry. PMBs corporate level strategies has been
effectively formulated and implemented giving the company a distinctive advantage in its
competitive position. PMB has above average score on its financial position and the industry is
stable as reflected by the average score of -3.2. In order for PMB to move to the aggressive
quadrant it has to work on improving its financial position, and as was analyzed above the company
should reduce its leverage ratio.

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4.0 Current Business Level Strategies
Figure 4: PMBs Five Generic Competitive Strategies

PMBs business level strategies is identified as different ion and focus strategy.

4.0.1 Differentiation Strategy

At the business level, PMB is pursuing differentiation strategy. This strategy is appropriate for
PMB as it will complement the product development strategy pursued at the corporate level.

The corporate mail management system is essentially a service developed by PMB even before
the corporate clients realized there was a need for such a service. No company had outsourced its
mail, as corporate mails was essentially considered private to the company and highly confidential

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matters could be exchanged in the correspondence. PMBs strong professional marketing team was
able to persuade corporate clients to sign up for this unique service. This service was offered on a
contractual basis and was customer friendly. PMBs long standing in the industry as well as its
brand image as a reliable and trustworthy service provider were strong points to PMB favor.

Similarly for the Direct Mail services, PMB had to convince its clients to outsource the business
to them. PMBs data base containing more than 8 million addresses and the more than 9,700
number of vehicles it had on the road were advantages that could not be rivalled by its competitors.
PMB has the distinct advantage of technology through its data base management system and Fleet
Management Information System which enabled PMB to deliver flyers to selected areas targeted
by its client. The strong coordination existing between departments in PMB ensures its customers
flyers and other promotional items are efficiently delivered to target groups, identified by PMBs
customers.

The new services development as described above was a success among PMBs client. Further
PMB provided training exercise for its staff which included work place management skills, inter
personal skills, communication skills and ethics. These training prepared PMBs staff to meet
challenges successfully for both the services described above. The strong coordination existing
between departments in PMB contributed to the success of PMBs differentiation strategy.

4.0.2 Focus Strategy

Another business level strategy pursued by PMB is the focus strategy. This strategy is especially
effective for PMB because the company is pursuing market penetration strategy at the corporate
level and the focus strategy gives it the edge. PMB has relied on the distinctive competencies
available internally in order to succeed in its market penetration strategy.

PMB discovered the growth of on-line business in Malaysia and overseas was creating a new
services demand among consumers. PMBs product development and marketing team discovered
clients wanted durable and flexible packaging for their products. They also discovered the need
for an effective fleet management system to deliver the products purchased online. Innovation
was introduced into existing packaging so that customers could mix and match in order to meet
with different packaging requirements. As was mentioned in the Corporate Level Strategy the

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installation of GPS with the Fleet Management Information System, PMB was able to successfully
enhance its delivery services. These became PMBs area of focus to create the differentiation
which places it above its rivals.

As part of its focus strategy PMB found the need to extend operating hours at its kiosks centers.
These kiosk centers proved to be an effective tool in PMBs marketing strategy to expand its
existing customer base. Operating the kiosks 24 hours would give PMB the edge over its rivals
who have also introduced similar services through their kiosk centers. PMB has to also seriously
consider increasing the number of kiosks drop off centers in Malaysia. Thus in order for the focus
strategy to succeed PMB need to look at increasing the operating hours as well as availability of
these kiosk centers at various strategic locations..

The courier services industry is continually growing and in order for PMB to have a greater market
share the focus strategy is important to it.

5.0 Evaluation of Current Business Level Strategies

In order to evaluate PMBs business level strategy I will be using SWOT analysis and BCG Matrix
as my tools.

5.0.1 SWOT Analysis

Kindly refer to Figure 1. The SO strategy suggest PMB has to look into development of its internal
resources in order to take advantage of the opportunities available externally. One suggested
strategy is the need to provide training to staffs in order to help them in their job performance as
well as for their personal development to become valuable assets to PMB. In the SWOT analysis,
staff training has been suggested for PMB in order to take advantage of the differentiation and
focus strategy in the areas of business covering, Corporate Mail Management and on-line business.
The Corporate Mail Management is an area of business where presently there are no competitors
unlike the on-line business which is a highly competitive business. Thus PMB focusing on
customer training with special emphasis on developing distinct skills would ensure success of the
business level strategy.

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The ST strategy suggest PMB has to look in to its internal strength in order to counter external
threats. PMB has the distinct advantage of 9,700 vehicles on the road to ensure success of the
business level strategy. PMB need to optimize on the delivery routes through technology
improvisation in order to counter the threat of fluctuating fuel prices. PMB has introduced GPS
system and the Fleet Management Systems Technology and is thereby able to optimize on the
delivery routes. This focus strategy would ensure greater success of the corporate level strategy
because of savings in fuel costs, employee costs and vehicle maintenance cost. In the long run this
focus strategy would ensure competitive advantage for PMB over its competitors.

The WO strategy suggests strategies for PMB to overcome the internal weakness so that it could
take advantage of the external opportunities. An opportunity available to PMB is the hybrid
vehicles. The weakness within PMB is the current fleet of vehicles is more than 10 years old. A
concerted effort to replace the old vehicles with the hybrid model would ensure greater fuel
efficiency and lower the maintenance costs. The focus and differentiation strategy would certainly
be defeated of its purpose if PMB does not take seriously the need for replacement of its vehicles
to the hybrid model. Such a move would also provide PMB with a distinct advantage on cost
savings which would be reflected in its Income Statement.

The WT strategy looks at both the weakness present in PMB as against the threat present
externally. PMBs weakness is its operational hours for its post offices as well as at the kiosks is
limited. In order to ensure the success of the focus and differentiation strategy, PMB need to ensure
the operating hours are increased. This would be to the convenience to PMBs customers who are
able to drop of their mail and parcels at their own time. The threat to PMB is that its competitors
too have opened kiosks centers in order to service their customers. PMB need to overcome its
weakness of service provision as this is compounded by the presence of competitors who provide
similar services. PMB has to focus on increased operational hours to ensure customers would
continue remaining loyal to it.

5.0.2 BCG Matrix

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Figure 3 below shows the BCG Matrix for PMB. The BCG Matrix evaluates the strategic position
of PMBs market segment portfolio and its potential. It classifies the market segment portfolio
into 4 categories based on industry attractiveness (growth rate of the courier/postal industry) and
competitive position (relative market share).

Relative market share position is defined as the ratio of a divisions own market share (or
revenues) in a particular industry to the market share (or revenues) held by the largest rival firm in
that industry.

Figure 1 shows all the three market segments belonging to PMB are in the Star quadrant. This
depicts PMB is operating in an attractive industry with high growth rate with PMBs relative share
in the market is also on the high side. The current three market segments are cash generators as
well as cash users. All the three market segments require PMB to invest as they can be expected
to move to cash cows and generate positive cash flows to the company. Thus as depicted in the
SWOT Matrix it is advisable for PMB to continue its investment on:
Human resources through training activities to enhance competency in job performance
and making them relevant to the company as valuable assets.
Technology specific technology suggested was
replacement of current vehicles to hybrid models,
use GPS tracking and the Fleet Management Information System to better
coordinate the collection and delivery of postal/courier documents
Post Office buildings renovation with security features and strong room storage

Such investment would mean, gaining and establishing its present competitive edge over its rival
firms. Looking at the BCG Matrix it only confirms the arguments made using the SWOT matrix
and SPACE Matrix. PMB is operating in an industry with high growth rate and its share of the
market is also high as compared to its rival firms.

The strategy recommended for a company the Star quadrant is

Vertical, horizontal integration
Market penetration

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 Market development
Product development
PMB is currently pursuing the market penetration and product development as its strategy.

Figure 3:
BCG Matrix Pos Malaysia Berhad

Legend:

Courier Business Segment

Mail Business Segment

Retail Business Segment

6.0 Recommendation for Improvement

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My recommendation to PMB is to implement strategic management as its tool in order to further
improve on its performance. The first stage of strategic management is formulation. Under strategy
formulation the company has to look into developing a good mission and vision statement. As was
discussed in introduction PMB must look at improving on both of this statements. It is important
for PMB to get the full cooperation from its staff and management to be actively involved in
developing the vision and mission statements. Importance of vision and mission statements cannot
be denied to an organization as it provides purpose and direction within the organization.
The SWOT matrix identified both external and internal environment factors affecting PMB. The
internet has brought e-business which is flourishing both globally as well as within Malaysia. It is
recommended for PMB to prepare its internal resources to take advantage of this huge market.
PMB need to seriously look into its human capital development through structured training and
improvements on existing structure of Pos Offices premises. Currently PMB has a good image
amongst its customers, and it is recommended PMB capitalize on its branding to place itself as the
preferred courier service provider among its customers.

PMBs current strategy of new product development, market penetration and unrelated
diversification has certainly brought the company to the present strong position it is in as seen by
the relative market share of its market segment. It is recommended PMB to look into backward
integration as well. Thus integration involves PMB seeking ownership of its manufacturers of the
packaging and envelopes used for its business. Having control over the suppliers would give the
edge for PMB to improve on present packaging size and quality.

PMB too need to look at possible collaboration with its competitors to provide services to certain
destinations For example PMB has a good transportation network in east Malaysia, PMB can work
with its competitors to use PMB services in order to send and deliver the competitors courier. This
is also a source of revenue to PMB which PMB can look into.

PMB need to seriously study on the strength of its competitors, because as reported in 2009 there
were 105 courier operators in Malaysia. This is a huge number of companies in the postal/courier
industry. PMB should study the competitors target market and how successful and deficient are

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they in servicing their customers. This study can provide PMB to look into possible other areas of
business within the postal/courier services industry.

(Number of Words: 5,677)

7.0 References

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 (1) Pos Malaysia Berhad Annual Report 2014
(2) Darbi W.P.K., 2012 www.ijbssnet.com
(3) www.strategicmanagementinsight.com/tools/vision-statement.html
(4) David, F. R., (2013). Strategic Management Concepts and Cases, Pearson Education
Limited
(5) searchcio.techtarget.com/definition/product-development-or-new-product
(6) classes.bus.oregonstate.edu/winter-06/ba469/Dibrell/ppt.ppt
(7) www.pos.com.my>.....> POSMEL>BUSINESS MAILING SOLUTIONS
(8) www.posmailroom.com.my
(9) www.pos.com.my>HOME>BUSINESS
(10) education-portal.com/.../what-is-diversification-of-business-strategies-def...
(11) www.strategy-train.eu/index.php?id=144
(12) www.differentiateyourbusiness.co.uk/space-analysis-strategic-position-an...

(13) Images for porter's five generic strategiesReport images

(14) www.strategicmanagementinsight.com/.../bcg-matrix-growth-share.html
(15) National Postal Strategy 2010-2014

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