Chee Wah Corporation Berhad has existed for more than 50 years and they primarily focuses on the manufacturing and distribution of a wide range of premium quality paper-based stationery items. Overtime, Chee Wah Corporation Berhad expanded and their subsidiaries today supplies and distributes non-paper stationery, gift paper, pre-school educational materials as well as stationery, school and office supplies retailing. Chee Wah Corporation Berhad is also the integrated supplier to hypermarkets, wholesalers, retailers and consumers (Chee Wah Annual Report, 2011).
Under Chee Wah Corporation Berhad there are a few subsidiaries which include Campap Distributor Sdn. Bhd., Sun Paper Bag & Packaging Sdn. Bhd, Chee Wah Resources Sdn, Bhd, Camel Paper Products Sdn. Bhd (Chee Wah Annual Report, 2011).
Like being in any industry, Chee Wah Coporation are also affected by uncertainty and fluctuation of paper prices that impairs the performance of the other paper trading subsidiaries as they were thwarted by higher paper cost. Furthermore, Chee Wah Corporation’s retailing subsidiary has also reported lowered revenue of RM1.8 million, which is equivalent to the fall of 16.4% between 2011 and 2010. The fall of revenue is due to the closure of under-performing retail outlets and the reduction in the production range of non-paper stationery and also the reduction of administrative expenses. (Chee Wah Annual Report, 2011)
2.0 Remote Environmental Analysis
PESTE analysis is very important for an organization considers its environment before beginning the marketing process. In fact, the environmental analysis should be continuous and fit all aspects of planning. The organization’s remote environment is made up from PESTE analysis which stands for Political, Economic, Social, Technological and Ecological analysis and describes a framework of macro-environmental factors used in the environmental scanning component of strategic management.
The external environment of a company consists of outside conditions that affect a firm’s performance. An analysis of the external environment allows a firm to identify the key conditions that are beyond its control and those elements which have an effect to the firm. Therefore, analyze these areas of the external environment can help Chee Wah Corporation Berhad to identify the opportunities and threats in the manufacture and sale of stationery and printing materials.
According to Pearce II et al. (2011), “The economic factors concern the nature and direction of the economy in which a firm operates.” The factors are not within control of company and have huge effect on business firm such as the factors of inflation rates, unemployment rates, trends in the growth of the gross national product and so on. In year 2011, the decrease in revenue was attributed to a fall in the local sales by 11.1% as compared to the local sales made in last financial year 2010. Uncertainty and fluctuation of the paper price impaired the performance of paper trading subsidiaries as they were threatened by higher paper cost (Chee Wah Annual Report, 2011).
Besides that, year over year, Chee Wah has seen revenues fall from 101.2Million to 96.4Million. This along with an increase in the cost of goods sold expense has led to a reduction in the bottom line from a loss of 1.5Million to an even larger loss of 3.3Million also is one of the threats of Chee Wah Corporation Berhad (Business Week, 2011). At the beginning of 2011, economists from different institutions were polled by Business Times for their predictions on Malaysia’s economic growth for 2010 and 2011. According to official figures released by Bank Negara, the economy registered a robust growth of 7.2% in 2010 against –1.7% in 2009 (Business Times, 2011). Thus, Chee Wah Corporation Berhad has the potential to increase purchasing powers of the consumers. Chee Wah Corporation Berhad export sales posted a modest rise of RM1.8 million,...
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