Hartalega Holdings Berhad Strategic Management

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  • Topic: Glove, Rubber glove, Gloves
  • Pages : 16 (5732 words )
  • Download(s) : 400
  • Published : April 20, 2013
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1. Introduction
Hartalega Holdings Berhad is a gloves manufacturer and began their business with the vision of produce gloves that protect life (Hartalega, 2013). Hartalega has experienced tremendous growth in the market and there are many issues and problems that faced by them. The first issue that faced by Hartalega is fluctuation of US dollar (CIMB Research Report, 2011). USA is a key market for glove industry and has contributing part of the market share of Malaysian industries. Fluctuation on US dollar has affected the margins of the company. Besides, the economic conditions have influence the glove industry will continue to be unstable due to rises in material and production costs. Moreover, high latex price also is one of the issue that faced by Hartalega (CIMB Research Report, 2011). Latex prices continue to be volatile would bring an effect to its margin. Supply of latex may be reduced due to the weather conditions. During the dry season in Thailand and Malaysia, it would decrease the production of latex. Thus, price of latex during dry season will be slightly higher compare to other season. Furthermore, Hartalega faced the issue about labor. The recent governments policies about foreign labor have cause a great concern for the gloves industry. The gloves industry has voiced out their concerns towards this issue because hired labor would have an impact on the manufacturers’ costs. Besides, more and more glove manufacturers are using automation and it will decrease the reliance on manpower. Next, pollution is one of the most important issues that faced by Hartalega as their company’s reputation has affected by the negative news or rumours. Hartalega was received complaints from the Deputy Minister in the Prime Minister’s Dept and a few residents of Taman Suria and claim that they are causing air and water pollution. Hartalega deny all the accusation and declare that they are operating legally according to the Malaysian environment regulatory standard (“Hartalega: Aggrieved At Accusations”, 2010). This might affect the reputation and the creditworthiness of Hartalega and might cause the market share decrease in this particular time frame.

2. Remote Environment
Remote environment is the factors that affect a form of decision making abilities, but are beyond its control. Political, economic, social, technological and ecological factor are the factors that include in the remote environment. The first factor is political factor. Hartalega has exports almost all of their products mainly to the developed countries such as USA, Brazil, Japan, Germany, Europe, Malaysia and others. Hartalega also has expanded its business successfully to China and India. Gloves sales have increase but a little drop in the selling prices. Major output of the company is made up by nitrile gloves. The total costs of the gloves increases due to the high output and increase in labor costs. Besides, the recent governments policies about foreign labor have cause a great concern for the industry. Hartalega have to adjust the wage structure of their workers due to the minimum wage ruling that effective from January 2013 that regulate by the government. Stringent government regulatory also is the threat for Hartalega. There are many government regulations and policies need to be follow by the company such as minimum wage legislation, guidelines on buffer zones and more. If companies fail to follow or break the rule that enforce by government, it may bring them into trouble, such as they might receive penalty from the government. Next is economic factor. Fluctuation of US dollar, raw materials prices increase and fuel costs rising has bring an impact towards the gloves industry with challenging economic conditions (Hartalega, 2013). Fluctuation on US dollar has affected the margins of the company. The nitrile gloves have experienced declining its margins due to high raw materials price and face competition with their competitors....
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