Part A - Background and Business Profile of Creative Technology Ltd Creative Technology is a publicly listed, Singapore-based company founded in July 1981 by a Singaporean Sim Wong Hoo and is a market leader in digital entertainment products. He first set up a small shop in Singapore together with his classmates; developing and selling add on memory boards for Apple II computers and later began building Personal Computers for retail with initial start-up of $6000 from Sim’s own savings. Their vision was that multimedia would revolutionise the way people interact with their personal computers. Creative introduced Cubic 99, the first personal computer to be designed and produced in Singapore in 1984 confident that it will be a hit with the mass market. However, within two years, clone computers took over the market because of lower pricing. Cubic CT, a dual language and multimedia computers were then introduce to the Singapore market to beat the clone competition in 1986. The Cubic CT failed in becoming a commercial success. Following the failure of Cubic CT, Sim moved to California in 1988, recognising that United States was fast becoming a hub for the technology revolution. There he established a subsidiary – Creative Lab which produced and introduced a sound card known as the Game Blaster. The Game Blaster provided stereo sound to PC-compatible computers and it was an instant success. Creative followed up with this success in November 1989 with its newest sound card the Sound Blaster. The Sound Blaster was the number one-selling computer add-on product by the end of 1990. The company's position in the PC industry was cemented when the new-generation Soundblaster Pro sound cards were adopted as the industry's multimedia standard in 1991. All games and sound cards were required to be compatible with the Soundblaster. In 1992, Creative Technology was the first company to be listed in the NASDAQ Exchange. Towards the end of that decade, Sim Wong Hoo who still charted the growth of the organisation turned his attention to digital music which was still in its infancy. In 1999, the Nomad line of portable audio devices that played MP3 music and the WebCam GO line of portable PCs to support Apple Macintosh computers were introduced. In a bid to compete with Apple’s Ipod, Creative then introduced the Zen line of players. Despite pricing its Zen players lower than the IPOD and having more functions and better technology, Creative was still coming a distant second. Creative currently serves its consumer through their offices in US, Europe and Singapore. The company recorded revenues of S$231 million in the fiscal year ended June 2011, a decrease of 16.1% compared to 2010. Between the years 2008 and 2011 company sales have dropped from S$737 million to S$231 million. During the same time gross profit has reduced from S$164 million in 2008 to S$49.1 million in 2011, even though expenses were falling. This is a far cry from heyday in 2000 when it hit revenues of $1.3 billion dollars. Please refer to table 1 below, derived from annual reports of Creative Technology (2008-2011) Table 1
All figures in SGD$ and millions
In the absence of a ‘killer application / product’, Creative has been floundering and currently turning its attention to China to carve out a niche for them in tablet business using their own proprietary Zii platform. Creative’s latest innovation – Han Zpad aims to use take the China market by storm through its dual language capabilities.
Part B - Key forces in the general environment
The key forces discussed are (i) Political and Legal Forces (ii) Economic Forces (iii) Technological and Social Cultural Forces (i) Political and Legal Forces
Singapore started moving into knowledge-intensive activities such as R&D, engineering design, and a computer software service in the 1980’s. This...