Top Glove Corporation Berhad Marketing Essay

slip away baseb all boxing hand fraternity Berhad Marketing Essay enlighten mitt was established in 1991 as a small factory with ternion working class defines, but it has since grown exponentially to become the queen-sizest meritless mitt manufacturer in the world ( teetotum baseball mitt, 2013). It was listed on Bursa Saham Kuala Lumpur on 27th march, 2001 and promoted to main(prenominal)(prenominal) Market of KLSE in 16th whitethorn 2002. The bon ton m opposite stockholder funds worth RM1.28b with annual turn over of RM2.31 billion at pecuniary year ended on 31st August 2012. The ships political partys current central office is located in Malaysia at Jalan Meru Klang, Selangor. The telephoner currently have sales office in China, Thailand, USA, and Germany.In social club to capture more world(prenominal) foodstuff sh ar, the company has taken a rapid expansion of its capacity. The companys manufacturing facilities which atomic number 18 located at Mala ysia, Thailand, and China grew to 24 from only 5 when it was listed in BSKL on 2001. guide boxing glove Corporation Berhad whole-own the subsidiary of jacket baseball mitt in Thailand and China. The company represents 26 percent of the foodstuff share widely distributed (Tan Sri Dato Sri Lim, 2008). Currently, the company exports to its 1,800 customers in more than 185 countries around the world ( outgo Glove, 2013). The companys produces are exported and usable in most countries in North America, Latin America, Europe, Middle vitamin E and Asia region (Tan Sri Dato Sri Lim, 2011).The vision of bloom Glove is to strive to be the worlds direct manufacturer with excellent quality manus crossings that enrich and protect human beings lives while the mission statements is to be world class glove manufacturer providing top quality product with excellent services through incessant improvement and innovation. The company offers 13 types of dick gloves to the public such a s latex examination gloves, nitrile examination gloves, vinyl examination gloves, operative glove, clean disposable gloves, general purpose glove and others. upside glove have the capabilities to produce total production capabilities of 40.3 billion pair of glove annually. This because the company has 24 factories and 462 manufacturing line that can produce vast sum of money of glove.Indonesia is a tropical farming located near Top Glove home agricultural, Malaysia. Tropical weather in Indonesia allows for fertile branch of rubber trees that are utilize in production of latex. One of the agricultural industries in Indonesia is rubber industry (CIA, 2012). The large and fertile soil is one of the geographic advantages of the country from Top Gloves view. It enables large supplies of latex to facilitate the production of gloves to partake and manufacturing plants of Top Glove. Indonesia is a country that posses one of the lowest childbed woo in the world. Indonesia currently has 248.6 million residents which is the 4th most populated country in the world (CIA, 2012). Cheap labour approach coupled with large supply of raw material makes it a suitable location for Top Glove to expand into. This factor will save the cost of production thus enable the company to sell their product at cheaper price, so that they can compete better in global market place.Indonesia in any case experience active reform in melodic phrase regulation in unseasoned years and is among the top 50 economies improving the most and the top 5 within the East Asia and Pacific Region (The World Bank and external Corporation, 2012). 14% of its GDP is consists of agricultural sector (CIA, 2012). The inflation rate to a fault improved from 5.4% in 2011 to 4.5% in 2012 (CIA, 2012). According to Dean (2001), doing production line and investment in most parts of Indonesia is relatively safe and profitable. Thus, the stable economical and political environmental encouraged Top Glove t o expands to the country.2.0 Analysis in that location are several reasons that attract Top Gloves Corporation to explore into Indonesia market. However, entranceway a contradictory may not only functions gains but in addition defects. Hence by analyzing the respective country, we able to understand is it significant for Top Gloves Corporation to invest or to enter Indonesia market.According to Managing Director of Top Gloves Corporation KM Lee, he stated that the rise in healthcare standards tied with the outgrowth in the global population had increases the demand of checkup gloves (Top Gloves, 2013). Meanwhile, Chairman Tan Sri Lim Wee Chai indicated that the rise in the fight cost with the introduction of the minimum wage policy had forces the group to increase its glove prices by 3-5 per cent, depending on the type of product. With the rise on demand of aesculapian gloves, thus, Top Gloves Corporation tends to expand their production line (Top Gloves, 2013). Besides, the increase of project cost due to minimum cost forcing the corporation to look by and by a let down-cost country, as the labor cost will be lower. From the lit findings, John Tanner (1996) found that Indonesia is low cost skilled labor that gain grounds to Top Gloves Corporation. Furthermore, Indonesia is a country that rich with natural resources that match the Top Gloves nature of line of reasoning that is the rubber (Doing Business, 2012). Thus, expanding a plant into Indonesia market may lead the corporation to gain more profit, as the production line can be more effective and efficient.Apart from that, Indonesia was a main attraction for Top Gloves Corporation because the country of Indonesia able to offer a lower production cost as the labor cost resources is lower in price. According to Sari Shaviriyani (2006), a statistic shows that Indonesias population is the world quarter largest. The workforces over the country are huge and young enable the labor cost to be lower as the workforce supply is gamy than the demand forcing the wages to be lower down. More to the point, the workforces are young and energetic allowing Top Gloves production line to produce more effectively.In addition, Indonesias judicature does encourage more overseas investment by establishing definite departments and supportive bodies in order to speed up the investment licensing procedures (Sari Shaviriyani, 2006). Besides, round incentives are also provided to irrelevant investors, including tax incentives that enable Top Gloves Corporation to increase their companys profit by paying fewer taxes (Sari Shaviriyani, 2006). However, this was theoretically to wellbeing the public interest, as the increase in competition in these decipherable sectors will force the companies to operate efficiently and cut prices to win market share (Sari Shaviriyani, 2006). In that sense, it will requires a win-win solution for the country itself and the foreign company as the providence of Indonesia able to boom and the citizen of Indonesia able to approve the goods at lower prices meanwhile the outgrowth can be strike on at a lower price.However, every pro comes with a con as Indonesia offers a lot of gains to attract foreign company to invest into Indonesia but there is still a bit of mar (Sari Shaviriyani, 2006). Top Gloves Corporation had to suffer high initial investment, as the country of Indonesia had no technological deepening of manufacturing sector production and exports creating a louse up for Top Gloves Corporation to take initiative to invest. Furthermore, home country of Indonesia drives to pick-up all the skills and technique from Top Gloves Corporation that makes them a future threat. Additionally, lack of passing tamed sight can also be a shortcoming of Top Gloves Corporation as the company focuses more on hiring super educated people. This reason is because the operation of the machine maybe too technical and may need a knowledgeable p eople to ensure everything operates in effective and efficient way.Lastly, ecology can be also round other shortcoming for the Top Gloves as the climate of Indonesia changes rapidly that may affect the fertile of the plantation causing a shortage in the resources. any(prenominal) of the global climate changes that might affect the plantation of Indonesia such as rising sea levels, rising air temperatures, changes in rainfall period, and radical climate change. Similarly, the influence of a combination of raising temperature in regions, changes in the level of precipitation and the intensity of drought/flood (Sari Shaviriyani, 2006). Although, climate changes may sound serious but open burning on the set as the tradition of Indonesia in order to entertain the plantation to be fertile would be more devastating as it will beat down the goodwill of Top Gloves Corporation (Dyna Rochmyaningsih, 2012).3.0 RecommendationThe current strategies used by Top Glove are exporting and wholl y owned subsidiary. Top Gloves had done successfully with both of the dodging, however, they are continuing in seeking the modern way to expand to more and more country. We recommended Top gloves to expand into worldwide, which is acquisition strategy. One of the successful companies who using acquisition strategy is Showa Co. who acquired all of Tillotsons Best Glove operations and subsidiaries, which are helping to cook a global leader position in the glove manufacturing (Showa Glove, 2009).acquirement of the company in the same industry will improve the company strength in production, reaching customer, and even the operation through synergism strategy such as the expertise and machinery (Showa Glove, 2009). The advantages of acquisition brings to the Top Gloves is trim down the cost. Top Gloves are able to generate the raw material mandatory to process the gloves want palm kernel shell and latex from Indonesia Besides, the labour cost in Indonesia is much cheaper compared with Malaysians labour cost. We suggest that Top Gloves should maintain their current expansion strategy which is exporting and construction the manufacture in foreign country, at the same time, adopt the acquisition to take over the related company in foreign markets. Once it is confirmed that the market possesses a huge potential for gloves market, Top Gloves may set up a manufacture plant in Indonesia and implement backward integration by pickings over the related company such as supplier for palm kernel shell firms.Top Glove should be aware of the policy changes. Policy changes exist due to unstable precedent in term of political pressure, economic trend, social unrest and parapet of the ownership of nondomestic company (Wild, J. J., Wild, K. L., Han, J. C. Y., 2010). According to Boediono (2005), to achieve long term pipeline profit in a dynamic changing country like Indonesia, it is important to maintain awareness between economies and political recognises. A steadfast p rofessional team must be developed to maintain high policy effectiveness. Hence, to managing threats of policy changes, Top Glove can gather more foreign information in Indonesia through recruit foreign secure consultant who understands the foreign culture well.Hiring local managerial talent is the shell slipway in foreseen and helps in explore business opportunity, it may facilitating the procedures in getting approval and application of local operation and result in attracting more local people join to the impertinently established company. Besides, government will make change on economic policy and jural rules in order to forcing the business to update the way they do the business (External Environment Theory, 2013). Thus, Top Glove must managing political-risk services and egressions carefully which is incur bare-asss publication, employment issues, banks association and social media network. The company can hope on lobbying to help in administration of political matter and business operation, associate with public and bringing positive impact to social. Buy this way, Top Glove can reduce the risk in global business extension and minimize the possibility of good fault.Top Glove should bring to pass own brands in the long term as it does not have own brand gloves. By creating its own blend of gloves helps Top glove to build brand images and secure customer loyalty by having products that discharge its own brand unwrap. The benefit of creating a own brand name would also include create brand recognition, an existent firm that has conceptive brand recognition will repel the new entrants and if the brand existing product is being perceived as eccentric would result in competitor need to spend more cash to promote and educate its customer about their product and straightway increase the cost of taking over the market thus make the market unfavorable for new entrants (CIMB, 2007).Due to gigantic size of Top Glove Company, exponential growth and ex pansion could go against Top Gloves favor and makes it difficult to control and preserve an eye on its foreign plants. Top Glove need to create a more centralized decision making environment which its foreign plants receive orders from its mother headquarters and levy strict controls on the foreign plants to ensure illegal activities which is demonstrated by illegal labor issue once authorizeed to top glove manufacturing plant at Klang that whooped to RM 11.4million would not happen in the future (ANIS, 2006).Top Glove should develop more unique technology to increase barrier of entry. currently Top Gloves latex manufacturing sector known to have a low entry barrier which is only from around 1 million to 1.5 million to open a new production line. It is considered low barrier for competitor manufacturer to enter the industry. juvenile players only need to keep on producing to enjoy the share of wealth from the market due to economic of scale. Aggressive expansion by bigger playe rs pose a serious threat to Top Glove as they need to come out with something unique in order to spot themselves from the competitors. For example top glove can develop proprietary product technology, technology is an intangible asset that resembles a barrier to entry, if an existing product is protected by a patent, it would not be possible for the new entrant to use the same technology to create the product without the licence from the patent owner (TomSpencer, 2010).Top-Glove needs to protect their capable home by rights from violation in Indonesia. Of Protection of intellectual property rights (IPR), Indonesia is hindered by short enforcement of the relevant rules and regulations. Problem in intellectual property rights protection raised by industry include rampant audio, software, and video disk piracies (with a piracy rate estimated at 87 percent) the high percentage of piracy will affect the revenue of Top-Glove in Indonesias market. So a bulletproof professional tea m must be created to strengthen and find ways to protect the intellectual property in Indonesia to create a high competitiveness or more values company in the Indonesia. Top Glove Company should be vigilant and creative in building strategies to protect their products from infringement. As an example, a company might first site the counterfeiters of its product. They then proceed to negotiate and try to develop them as legal licensees of it products.Several general principles are important for effective management of intellectual property rights in Indonesia. First, it is important to have an overall strategy to protect your company IP. Second, company IP is protected differently in Indonesia than in the other country. Third, right must be registered and enforced in Indonesia under their local laws. Registration of patents and trademark is on a first-in-time, first-in-right-basis, so Top Glove should apply for trademark and patent protection even out front selling their products o r services in the Indonesia market. It is the responsibility of rights holder to register, protect, and enforce their right. Company may wish to seek advice from local attorneys or IP consultants who are experts in Indonesia law. It is important of strengthen and protect the intellectual property before entering a new entry market. It will bring the company a lot of economic benefit for their business and prevents other parties from using and taking the benefit of the result of their creative and innovative read/write head without their concern (Purba, 2001 Sommeng, 2002).4.0 ConclusionTop Gloves is currently facing some problems which are the increase of labor cost, high initial investment, lack of educated people and ecology. Glove prices will increase by 3-5 percent result of the increase in the labor cost according to the categories of the product. Initially, Top Glove also need to invest heavily when first expand the market into Indonesia. In addition, lack of skills and tech nique workers in Indonesia will slow down the operation in producing the product. On top of that, plantation is also another issue result of the changes of climate.Throughout the analysis, we found out that Top Gloves using the wholly owned subsidiary and exporting as its expansion strategy. In order to compete, Top Glove needs to use exporting strategies because the local market is not big enough. Top Glove had owned the market of rubber besides from the competitors in other countries. Besides that, in our assignment, we also had recommended some expansion strategies which will work out on Top Glove Company in Indonesia.There is little aspect which Top Glove had to concern when they need to enter into new market which is political aspect, the countrys economy perspective, IP protection and so on. All these aspect will directly influence the brand image of Top Glove and also ROI to the company. contradictory country expansion and exporting strategy will help the company to reduce t he risk. If there is a problem in a country, the company still can survive because they have wholly owned subsidiaries in other countries.So in overall, we think that the company should enter Indonesia market. The benefit bought by the expansion outweighs the risk to the company.