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Top Glove Company Essay
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Dec 14th, 2019

Top Glove Company Essay

Introduction

Top Glove Company is a company dealing with the manufacture of surgical and examination glove. It is a company which is customer oriented producing various types of gloves. The company lays emphasis on the production of high quality gloves. It also researches on new developments so that it does not lag behind as a result of technological changes.

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Organization Background

Top Glove Company is a vast growing company in Malaysia. It was started in that 1991 with the motto: “The world is our market,” the company has managed to export its products to more that 150 countries.

This is attributed to very high sales volume which it has been recording. It infact has a very high turnover rate meaning that the rate at which their finished goods are convertible into sales is very high. In the period between 1996 and 2008, the company has targeted a production growth from between 720 and 40,000. Its target on sales turnover is 1600 in 2008 up from 29.1 in 1996. It has also targeted more work forces of 12000 in 2008 up from 400 in 1996.

Strengths

Financial background

Sales revenue

One of the strengths of Glove Company in the year 2006 there has been a tremendous growth in sales of 55%. To achieve this, the company must have exploited the following opportunities: –

  1. Product Range: – The Company has specialized in the production of a variety of surgical gloves. These include latex examination powder – free, vinyl examination gloves, nitrite examination gloves, industrial gloves, surgical gloves, stretchy vinyl gloves, polyethylene gloves both HDPT and LDPT, Risk gloves, clean room gloves among others. This means that they can be able to meet demand for any type of gloves hence maximizing their sales.
  2. International Market: – By selling to various European countries, Australia and in the United States top glove’s market is wide and this has a positive impact on its sales.
  • High quality products: – It is a company that has embraced total quality management as its working strategy. Total quality management is a modern quality management system focused on the customer’s needs, based on participation of all members in the organization and aims at long term and sustained customer satisfaction. It shows that one of Topglove’s strengths is that is able to integrate the quality developments, quality maintenance and quality improvement efforts to of the various functions of the business in order to meet full customer satisfaction. The sales have increased because everyone in Topglove understands that quality is theirs with a vast workforce, Topglove has been able to advocate of the commitment and active participation of all its members in working hard and realizing more revenue. The top management supports the total quality management programmes.

TQM also entails quality policies and the communication of those policies to all its members. [1]

Managers and subordinates are trained on total quality management techniques in various processes of manufacturing gloves and right from raw materials, manufacture and subsequent sale of the gloves. Quality control is also encouraged in tensile strengths and water–tightness of their equipments. The managers of the Topglove build every job and into all related systems e.g. performance appraisal. Continuous improvement of production and operations technology like the use of modern machines and equipment has made Topglove to expand its sales.

  1. Quality assurance: – Topglove’s other strength is that of quality assurance. And because of this, the sales turnover increased since quality translates to high demand hence high sales. Quality assurance has been pegged on the achievement of ISO 9001. This is a prestigious quality certification system that is recognized worldwide as the ultimate yardstick for testing organizations and businesses committed to excellence. They are issued by international organization for standardization. ISO 9001 would be of help to topglove as strength because the resultant gloves would be of top quality in terms of design. It would also ensure quality process. ISO 9001 will give the company as survival strategy in a liberalized economy.

Some of the threats, this strength of ISO 9001 will reduce include:

  1. Production of inferior products which might not be accepted globally.
  2. Competition from rival companies.
  3. Lack of confidence and public image on the organization.
  4. Lack of investor confidence leading to stagnated growth and expansion of the company.
  5. Employee de –motivation due to low income prospects [2]

Strategies and business policies

From its mission statement, Topglove’s business strategy is to be a top glove manufacturer with excellent services through research. And the opportunities this will exploit are those of “demand for better and quality products” and demand for safe product in the market.

Products

Topglove’s strength on product is that they manufacture various kings of gloves. It has very sophisticated machines used in the manufacture of its products with quality assurance being its policy it has been able to manufacture high quality products that are globally recognized and acceptable.

Building capabilities

Topglove’s success as attributed to a strong and adequate internal control system. This is a whole system financial or otherwise established by the management to ensure that the business is running in an orderly manner, to ensure that there is promotion of operational efficiency.

The internal control system ensures the gloves are safely guarded as the assets of the company. This ensures that they don’t get lost, are not interfered with nor are they stoles. The internal control system also ensures that proper procedures are devised to safeguard the gloves e.g. through lock and keys, registers about their production and subsequent sale, regular reviews etc. [3]

Production capacity efficiency

With a chain of modern machines and equipment, the company is able to produce gloves at a relatively low cost. This increases its profitability.

Human resource

Topglove hires the best people to work with it after giving out a review of the job description. The employees are given a highly competitive salary with outstanding performance being awarded. There also exists growth and development opportunities.

These are strengths that topglove can use in reducing its threats. Competitive salaries will actively motivate members of staff to work harder and achieve best results. It is important for staff to be motivated to reduce labour, turnover, conflicts, embrace change fast and commit themselves in realizing organizational goals. Competitive salary would reduce the threat of “labor plight” i.e. employees moving to other well- paying companies. Highly competitive staff would be able to exploit the opportunity of quality demand needed in the market by using their competency and skills in manufacturing high quality products. [4]

Technology

The company has quite a number of production lines with 450 targets by 2008. This is strength as it would satisfy satiable demand and reduce the threat competition by rival companies.

Market

Topglove has captured a very wide market for its products, with a credit in international quality awards the company’s image has risen quite significantly and can be able to export its gloves to European countries and the USA.

Innovation and creativity

The management of Topglove has achieved an unbeaten record on innovativeness and creativity. There exist extensive research and development activities. This is also aggravated by the fact that it has qualified and competent staff able to find new ideas/ mechanisms to production. With their motivation through better salaries, they are able to achieve this. [5]

Weaknesses

Industry Background

Topglove does not participate in social responsibility roles which improves any organizational image.

Financial Background

The company’s financial background is not all that sound. That is why it intends to enter into merger and acquisitions with other companies.

Strategies and Business Policies

There is dividend payment rate of 60%. This is a weakness on the part of the company as it will retard investments due to low retained earnings.

Products

The increase in prices of products might affect the demand of its products in the long run.

Building Capabilities

The company’s aggressiveness on merger and acquisitions and the setting of very targets would put employees into unnecessary pressure to achieve such targets.

Human Resource

The company does not have an adequate training and development programme for its human resources.

Technology

There exists no modern technology to cope with the total quality production advocated for.

Market

Although it sells it products to most European countries and the US, Topgrove has not exploited any other market for its products apart from the two.

Innovation and Creativity

Topgrove has not established enough plants yet. Its research and development on gloves has not reached its peak. It is still on the move. [6]

Opportunities

Industry background

The company has an opportunity with regard to its background because in the past its quality management and controls have been awarded. Its mechanisms on research and development have seen it expand over the years.

Financial background

With an earning per share increament of 44% form 2005 to 2006, topglove has more resources inform of retained earnings for future investment opportunities. There was also an increament in the return on equity which indicates the return for every owner’s capital invested in the firm. Topglove has the opportunity to invest more by issue of additional ordinary shares. Its increament in Net Profit after tax is yet another opportunity available to the company. This has increased by 59%. This means that the company makes enough money to pay for its production costs, operating and financial costs and yet retain enough as Net profit after tax

Strategy and business policies

The company anticipates an expansion and growth in gloves. It is ready to compete with other firms from different corners of the world. The company carries out its activities in achieving targeted profits with targets being raided every other year. One of its strategies is also payment of higher dividends. This has the effect of maintaining investor confidence. This stands at 60%.

Another strategy that Topglove is contemplating is to merge with other glove manufacturers and possibly acquire some. Mergers are an important financial aspects that bring about synergy i.e. strength. They also help in risk reduction and risk diversification.

Acquisitions are important opportunities as they reduce the threat of entry of other rival companies to the glove manufacture industry.

Topglove has also set up a policy to increase its capital expenditure tremendously. This would lead to growth and the curbing of the threat of closure of business i.e. winding up. [7]

Products

With the planned acquisition of Medi–Flex, top glove is assured of increasing its production capacity of gloves. Medi–Flex itself produces more than 1.5 million gloves annually. And with the planned mergers and acquisitions of more companies this production is expected to increase to 40 billion. It intends to commence the manufacture of aprons made of polythene. The opportunities also available with regard to products are the possibility of expansionist product range further to satisfy the big market. [8]

Building capabilities

The company plans to invest in three other plants to increase its production and sales volume of gloves. In order to achieve this, it is planning to expand its capital investments and also borrow externally. This growth has been necessitated by growing demand.

Human Resource

Topglove capitalizes on the skilled and competent labour available in the market. One of the opportunities it has of attracting this human resource is the availability of scholarship awards for successful candidates. It recognizes people as one very important resource in any organization.

Technology

Topglove has many production lines with a lot of machinery. It continuously reviews its old machinery for efficiency and if questionable results to modernized machines.

Market

Opportunities available include greater demand for gloves as a result of certain calamities like diseases outbreaks and floods. The company plans to increase its market share which is possible because it’s recognized as total quality manufacturer of gloves

Innovations and creativity

The skilled labor that top glove goes for is able to generate new ideas and come up with better ways/ methods of production and marketing.

Threats

Industry background

The company initially had a problematic beginning with pressure to reduce its prices for gloves while maintaining their quality.

Financial background

With the borrowings from commercial banks topglove is faced with the threat of incurring extremely high interest rates which it might not be able to pay. During wintering seasons i.e. when harvest of rubber is low, the company records low sales of gloves.

Strategies and business policies

The company plans merges and acquisitions without first evaluating the companies for soundness. They are faced with a threat of dealing with non-blue chip companies which may adversely affect the overall image/ picture of Topglove. [9]

Products

The firm is faced with competition by companies producing gloves of pure synthetic. The other threat vis–a-viz products are that of expanding the product range without first expanding the production facilities.

Building capabilities

The building of new factories/ plant is to be financed through borrowings (binds). These are expensive sources of finance as they attract high fixed interests. The new plants being built might not effectively benefit Topglove as some may turn out to be unprofitable (cost centers)

Human resource

The threat here is that of employees not being able to adapt to new changes/ expansions.

Technology

The new technology may not necessarily be compatible with current production.

Market

There is entry of new companies manufacturing the same product thereby diluting its market share.

Innovations and creativity

This must be a continuous exercise for its results to be felt.

Recommendations

The company should carefully analyze the opportunities available in the environment to which it exist at the same time using the strengths at hand to exploit its weaknesses and how these can be reduced to counter threats. [10]

Conclusion

The company’s policies and strategies in expanding its operations are welcome. It should continue its crusade for top quality products while at the same time fighting competition in a fair manner.

References

Brandenburger, A.M. and Nalebuff, B.J. (1995): “The Right Game: Use Game Theory to

Shape Strategy”, Harvard Business Review, Jul-Aug, pp.57-71

Coyne, K.P. and Subramaniam, S. (1996): “Bringing discipline to strategy”, The

McKinsey Quarterly, No.4

Gordon, I. (1989): Beat the Competition: How to Use Competitive Intelligence to Develop

Winning Business Strategies: Oxford: Basil Blackwell Publishers

Hunger, J. David & Wheelen, Thomas L. (2003): “Essentials of Strategic Management”.

New Jersey: Pearson Education Inc.

Kotter, J.P. (1996): Leading Change – London: Harvard Business School Press.

McGahan, A. (2004): “How Industries Evolve – Principles for Achieving and Sustaining

Superior Performance”. , Boston, Harvard Business School Press

Menon, A. and Menon, A. (1997): Enviropreneurial marketing strategy: the emergence of

corporate environmentalism as marketing strategy. Journal of Marketing. Vol. 61, pp.51 – 67

Porter, M. (1979): “How competitive forces shape strategy”, Harvard Business Review,

March/April 1979.

Porter, M. (1980):”Competitive Strategy”, New York, The Free Press

Porter, M. (1998): ‘Competitive Advantage (with a new introduction)’: New York, The

Free Press

Peteraf, A. (1993): “The Cornerstones of Competitive Advantage: A Resource-Based

View,” in Strategic Management Journal, Vol. 14, pp. 179-191.

[1] Gordon, I. (1989): Beat the Competition: How to Use Competitive Intelligence to Develop Winning Business Strategies: Oxford: Basil Blackwell Publishers

[2] Coyne, K.P. and Subramaniam, S. (1996): “Bringing discipline to strategy”, The McKinsey Quarterly, No.4

[3] Peteraf, A. (1993): “The Cornerstones of Competitive Advantage: A Resource-Based View,” in Strategic Management Journal, Vol. 14, pp. 179-191.

[4] Porter, M. (1998): ‘Competitive Advantage (with a new introduction)’: New York, The Free Press

[5] Gordon, I. (1989): Beat the Competition: How to Use Competitive Intelligence to Develop Winning Business Strategies: Oxford: Basil Blackwell Publishers

[6] McGahan, A. (2004): “How Industries Evolve – Principles for Achieving and Sustaining Superior Performance”. , Boston, Harvard Business School Press

[7] McGahan, A. (2004): “How Industries Evolve – Principles for Achieving and Sustaining Superior Performance”. , Boston, Harvard Business School Press

[8] Gordon, I. (1989): Beat the Competition: How to Use Competitive Intelligence to Develop Winning Business Strategies: Oxford: Basil Blackwell Publishers

[9] Kotter, J.P. (1996): Leading Change – London: Harvard Business School Press.

[10] Kotter, J.P. (1996): Leading Change – London: Harvard Business School Press.

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