JT International Berhad is the Malaysia division of Japan Tobacco International and the third largest tobacco company in Malaysia. JTI Berhad produces the cigarette brands likes Winston, Mild Seven, Camel and more. For the fiscal year ended December 31, 2009, its total net sales amounted to RM1,158.2 million and profit before tax of RM143.6 million. The headquarters located in Menara Manulife, Damansara Heights, Kuala Lumpur. JTI Berhad has nine Sales State offices throughout Malaysia. Manufacturing facilities are placed in Selangor, while its Leaf and Stemmery operations are located in Kelantan. In addition, JTI Berhad has Leaf offices in Sabah and Kelantan. For the company operating environment, JTI Berhad ensures the capability of the tobacco growing industry by continues to place critical importance in developing strong partnerships with tobacco farmers in Malaysia to increase productivity. Meanwhile, the company also invests in human capital by providing employees with the opportunity to pursue goals and develop professionally.
2.0 Remote Environmental Analysis
The PEST analysis will use to analyse the macroenvironment. For JTI Berhad, they mainly focus on economical and ecological analysis. Economical
JTI Berhad is under tobacco industry which their primary works is as tobacco distributor. They also provide cigarette and tobacco products. Recently, JT International Berhad registered consolidated revenue of RM298.5 million for the second quarter ended June 30, 2010, an increase of 3.3% compared with RM288.9 million achieved in 2009. They also received higher profit before tax of RM45.1 million, a 10.5% increase compare with RM40.8 million for the same period in 2009. Besides that, they continued to develop high potential and talented employees through complete training and development initiatives in order to mould them into future leaders of JTI Malaysia to bring more profit and optimistic reputation for the company. JTI Berhad needs to pay a total RM 673.84 million of duties, income and other taxes to the government. However, they are glad that Government’s decision to impose a more moderate excise tax increase of RM10 per 1,000 sticks on October 1, 2009, as compared with an increase of RM30 per 1,000 sticks in the past two years. Ecological
The Company aims to eliminate all occupational injuries and illnesses, prevent pollution at its source and optimise the use of natural resources. This is JTI’s vision for Environment, Health and Safety (EHS) issues. JTI Malaysia is fully integrating EHS considerations in daily activities. In addition, the Company continued to promote the extension of EHS-consciousness from their work environment to family environment. These programmes include presentations on road and traffic safety and fire prevention. Addressing concerns on the environment, JTI Malaysia embarked on the distribution of an estimated 7,000 portable ashtrays to adult smokers in order to keep the streets clean from cigarette butt litter. The Company also implements Health Screening Day and Blood Donation Drive for the participation of its employees, with assistance from the medical fraternity.
3.0 Industry Analysis
Porter’s Five Forces will use to analyse the industry environment. For tobacco industry, I had selected the bargaining power of buyer and threat of substitute product. Bargaining Power of Buyer
Smokers cannot easily stop his tobacco consumption habits because he is addicted and available tobacco substitutes are hardly to find. A smoker strong cigarette brand favorite due to the quality and the psychological associations with certain brand will make him reluctant to switch brand. Example, a smoker that smoke Winston cigarette won’t suddenly change his favor to other brand likes Dunhill or Salem, vice versa. So, the buyer bargaining power of tobacco industry is quite weak and low. Threat of Substitute Product
Most smokers find it hard to stop...