Topglove plc is a company in Malaysia (Asia) specializing in the manufacture and sale of surgical equipments and gloves. Started in 1991, the company exports large bales of gloves and other surgical equipments to almost 200 countries countrywide.
The target groups of Topglove plc are hospitals, learning institutions and research centers where their products are used for medical and learning purposes. The target group also includes processing companies that use them (gloves) for protective purposes. Technologically, the company produces a vast range of surgical gloves. These are stretchy vinyl gloves, Nitrile examination gloves, and polyethylene gloves.
Topglove has also embraced e-business; exploiting the opportunity for advertisements that appear alongside e-mails or as attachments. The advertisements can sometimes be short film like or photographs/images. Through e-business, the company has also identified emerging trends in the; shifting changes of consumer needs, growth of demand within a given region as well as identifying competition from rival companies. It has also served as a means of getting feedback/response from the consumers.
Topglove’s resource requirements include: The rubber tree usually obtained from West African nations, hence the need to deliver it to Europe and the bulky nature of the latex as it is transported demands that ships be used. Right from the tapping of latex from the rubber tree to the final glove product, are various levels of specialization and segregation of duties, the element of labour. The other essential resource for Topglove is electricity. The Malaysian National Electricity grid has made allowance for the production of latex using heavy-duty power systems, generators running on diesel and other green energy sources e.g. solar power.
ANALSIS OF THE EXTERNAL STRATEGIC ENVIRONMENT OF TOPGLOVE PLC, USING P EST
PEST is a tool that is used to analyse enterprises in terms of the political, economic, social and technological environment.
THE POLITICAL ENVIRONMENT
Topglove’s activities are stringently regulated by various political sources. In the first place, there exists government regulations at the source nations. For instance, expiry dates vary from country to country for two or more products produced within the same date of manufacture. Also, in some developing nations, it is possible to re-use the gloves whereas in others, they are not re-usable. The Malaysian government does regulate the health and safety conditions that workers of Topglove plc have to work in. Also under regulation, is the minimum wage of workers. Some political factors have favourably affected the operations of Topglove. An example is the compulsory recycling laws. These have enabled Topglove to save on its costs of raw materials as these have to sometimes be recycled.
THE ECONOMICAL ENVIRONMENT
Approximately 30% of Malaysian budgetary revenue is based on domestic borrowing. This money is raised mainly through taxation and corporates like Topglove are taxed at rates that are quite high. Inspite of the allowance of a tax holiday to some competitor companies, Topglove does not enjoy this facility. This adversely affects its profits.The interest rates prevailing in the Malaysian market are quite high (about 10%).
Topglove relies on external sources of finance i.e. fixed charge capital to finance its operations. These sources of finance are associated with fixed interest payments. The economical ramifications of these huge financial costs are that it may affect Topglove’s financial position.
The rise in production cost, transport and the high cost of export to other consumer nations is
inevitable. This is because of the ever rising crude oil barrel prices as a result of the war in Iraq,
delta rebels and the nationalization of the Venezuelan oil companies.
The Chinese glove products have also flooded the market, being cheap and readily available.
They are a formidable competition to the Topglove product.
THE SOCIAL ENVIRONMENT
The greater percentage of Topglove’s products is meant for export. The market in Malaysia is not quite viable because much of the orders for gloves placed are by skilled professionals. This brings to fore the education level challenges since others prefer to improvise and use un hygienic or even life threatening procedures that put their lifes at risk.
Other pre-existing practices like washing of hands, use of sterilization or use of the equipment like tongs have been a challenge for the introduction of the application of gloves.
Lastly, gloves have been known to have a tight effect on the hands of the user and even with the addition of an absorbent powder on the inner parts of the gloves, excessive sweating has not been overcome. Consequently, people have shied off from the use of the gloves.
With the advent of computerization, many of Topglove plant machinery have been rendered obsolete because they are analogue as opposed to digital. There is a need to buy new computerized systems that will increase efficiency in production. However, Topglove has embarked in a rapid computerization program and has hired consultancies and professionals to fast track the process.Topglove is also pursuing a strategic plan of five years that factors in probable challenges and advancement and has also hired the services of a consultancy firm.
By integrating the e- business system and other advertisement modes in the electronic media like blackberrie, T.V and other electronic media, there has been an increase in orders placed by potential consumers. This has seen the sales turnover rising from £1.4m in the year ended 31 st December 2005 to £1.8m for the period ended 31
THE INTERNAL ENVIRONMENT
The Topglove Management Board actively agitates for change. However, it does not encourage highly radical changes like takeovers, or wrangles at the management level by letting the group CEO be the overall decision maker. This tier system ensures that the responsibility of running various sections of the company is vested on specific managerial levels. This ensures that Topglove is stable and has an edge in the stock market.
The human Resource department has also initiated training programs on work relationships and also a full time counselor to deal with employee stress and motivation in the workplace. Topglove has also provided some social amenities to its employees like buses to ferry them to and from work. This venture has enforced time-saving since the company runs on the shift system. Medical facilities including medical covers/insurance are also provided by the company to its employee. The general standard of health of the workers has thus been safeguarded.
With the advent of ISO system of certification has achieved the ISO 900 status. This is by running education programs to further their employees’ skills and setting quality standards to be achieved by every individual employee. The quality of the company’s products has also contributed to this certification. This is due to the ever rising different designs of the products.
The other internal factor affecting Topglove plc is company reputation. Owing to its financial stability as evidenced by favourable liquidity ratios, it has been able to access credit without
hindrance. In the year ended 31 st December 2005, the cash and quick ratio were 1.5:1 and 1:1 respectively. These improved to 2:1 and 1.5:1 respectively in 2006.
In conclusion, Topglove exists within a balance of both the external and internal environments. This balance involves complex financial systems geared towards servicing its credit system, employee satisfaction and making profit. The research and development section that is carrying out the employee training under Human resource management makes the employees of Topglove to have an edge over it competitors. In addition the technological improvements in its production unit have spurred the mass production of its products while maintaining quality. In essence this has given Topglove credit in international quality awards. The market for this Malaysian outfit has penetrated and is increasingly becoming a dominant presence in the European continent and the USA.
Robert Dransfield (2000) Human Resources Management: Human Resource Management, Harcourt Heinemann
Mark C. Zweig (2003) Human Resources Management: The Complete Guidebook for Design Firms Summary, John Wiley and Sons publishers, US
Ralph Christensen (2005) Roadmap to Strategic HR: Turning a Great Idea into a Business Reality Summary, AMACOM Division, and American Management.
Susan Albers and Edward Lawler (2003) Creating a Strategic Human Resources Organization:
An Assessment of Trends and New Directions Summary, Stanford University Press, Stanford
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