MANAGEMENT ASSIGNMENT 1.docx

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BACKGROUND Hai-O Enterprise Berhad is the first traditional healthcare enterprise which was pioneered in 1975, has since become an established household name offering a wide range of complementary and superior quality of products that include medicines, medicated tonic, wellness, beauty and healthcare products and clinical services. Hai-O was became a public listed company which was listed on the Second Board of Bursa Malaysia since 1996 and being the first traditional healthcare company on the Bursa Stock Exchange. After ride through the several business challenges, that was on 8 October 2007, Hai-O was triumphantly conveyed to the Main Board of Bursa Malaysia with a fit equity base more than RM200 million. The prosperity of the corporate resulted in there were miscellaneous reputable awards inclusive of Forbes Awards (2007-2010), CIO 100 Honouree Award (2010-2011), and so forth, had been esteemed to the company attributable to its favorable outcomes. There have various types of business activities that include Wholesale, Multi-level Marketing, Retailing, Pharmaceutical, Chinese Consulting Clinics and QIS Research Laboratory which all are the principal business of the company. Hai-O had been became the market leader in Malaysia by honing its skill in building extensive and efficient distribution network for over three decades. Peking Tongrentang (M) Sdn. Bhd., a joint venture company between the world-renowned Beijing Tongrentang and Hai-O has started its business in Kuala Lumpur since 2002 and achieved remarkable performance in offering Traditional Chinese Medicine (TCM) Consultation services and high quality herbal medicines to the public. As a consequence, Hai-O has developed into a mighty and renowned company with more than 12 subsidiaries from a compact grocery store and acknowledge by the worldwide.

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ORGANIZATION CHART BOARD OF DIRECTORS Y. Bhg. Tan Sri Osman S. Cassim Tan Kai Hee Datin Sunita Mei-Lin Rajakumar Chow Kee Kan @ Chow Tuck Kwan Tan Keng Kang Chia Kuo Wui Tan Keng Song Lim Chin Luen

CHIEF EXECUTIVE DIRECTOR Tan Keng Song PRESIDENT Y. Bhg. Tan Sri Osman S. Cassim

GROUP ADMIN & PROPERTY MANAGER Julie Tan Chwee Sin

GROUP FINANCE MANAGER Yap Sooi Mee

GROUP PERSONNEL MANAGER Jessica Lim Yim Peng

GROUP MIS MANAGER Jackson Cheah Kah Loong

GROUP ADVERTISNG & PUBLICITY MANAGER Teoh Soo Hin

The organizational structure that applied by Hai-O Enterprise Berhad is functional structure which is grouping by similar work specialties. The company specializes the work units into 5 areas that include admin and property, personnel, finance, management information system and advertising and publicity. The company group employees who have similar knowledge in each unit to carry out its specific roles. The company has an efficiency distribution network on account of the employees have expert enough in their functional area to perform their task.

Page |3 BASIC STRATEGIES

The basic strategy used by Hai-O Enterprise Berhad is prospector. Prospectors are focus on developing new markets or services and in seeking out new markets rather than waiting for things to happen. HAI-O Enterprise established in 1975, has since become an established household name offering a wide range of Chinese medicines, medicated tonic, wellness, beauty and healthcare like quality Traditional Chinese Medicines, teas, wines and consumer products. HAI-O is principally engaged in the wholesaling and retailing of herbal medicines and healthcare products and investment holding. The business segments of the Company include wholesale, multi-level marketing, retail, manufacturing and others. The wholesale segment includes wholesaling and trading in herbal medicines and healthcare products, herbs and tea. The multi-level marketing segment includes operating multi-level direct marketing of healthcare and beauty products. The retail segment includes retail chain stores. The manufacturing segment includes manufacturing, producing and distributing pharmaceutical products, alcoholic and non-alcoholic drinks. The others segment includes businesses involving leasing of machinery and equipment, licensed money lender, insurance agent, advertising services, rental income, trading of clocks and investment holding. Besides, they have developed multi-distribution channels that give them broad access to Chinese medical halls, hypermarkets, supermarkets, convenience stores, and food & beverage outlets. Currently, they have more than 50 experienced and dynamic sales personnel and promoters to serve the wholesale market. Recently, Group managing director Tan Kai Hee told StarBiz, they will introduce new creative products and adding new distributors will help drive their multi-level marketing (MLM) business. Tan added that HAI-O planned to introduce new technology products by early next year under a newly formed Energy Division. He said the new division would help to offset the slowdown in MLM business and would be the company‟s growth driver in the future. From the annual report 2012, we can know that the Wholesale Division of HAI-O is looking to expand its business network and to relook at its product mix and marketing strategies to capture younger and newer market. Other than that, For the Retail Division, it

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will continue to develop more new house brand products to expand its product mix, thus to enhance its profitability. A series of new products has been launched to expand its product mix and to cater to a wider group of target audience. The new products launched were: Honbo Meno Care Plus, Honbo Vitel Line, GLOU OCTA Essence of Chicken, HAI-O Twin Happiness Gift Pack, Green Essence Diet Café and Royal Cracker Healthy Snack. The response to all the products was encouraging.

Page |5 MISSION AND VISION

Mission We are committed to promoting healthcare culture and improving human's well-being.

Vision We aim to become the premier healthcare company in Malaysia and thereby bringing the greatest value and pride to our customers, business partners, employees and shareholders.

Page |6 SWOT ANALYSIS

Strengths The strength of Hai-O Enterprise Berhad is their successful marketing techniques; they provide a fair and reliable system to all distributors. Their commitment has provided customers with comprehensive support and incentive programs. They have more than 70 chain stores, which enable them to have a strong retail business. Each store will also by the professional herb masters to provide advice on herbs and TCMs to customers, this will serve as part of their service. SG Global Biotech Sdn Bhd is the 1st traditional medicinal plant to comply with Good Manufacturing Practice (GMP) standard in Malaysia. Their commitment to quality has been rewarded with ISO 9001. They also set up an analysis laboratory arm QIS Research Laboratory Sdn Bhd certified with Good Laboratory Practice Standard (GLP) to perform various testing services to meet the stringent quality controls. The laboratory is run by a team herbal monograph, including qualified chemists, microbiologists and experienced staff to meet customer demand. They will ensure that herbal research process and the quality of the herbs in compliance with the procedures to protect the safety of customers; meanwhile comply with Department of Standard (DSM) requirement. Weaknesses The lack of talent of the Chinese medicine profession becomes the problem for Hai-O Enterprise Berhad. Only some of Hai-O chain stores are providing integrated medical services by making available in-house consultations by qualified TCM physicians. Plan in 2012 is expected to bring a decent performance, but based on the limited space of the shares rose, still unable to achieve a breakthrough. As the supplier of the Chinese herbal medicine, they have to face more and more debate about its effectiveness and potential side effects. The safety and quality of finished herbal medicine products require tests on their resources which at one point can comprise hundreds of natural constituents. Chinese herbal medicine is lack of international standards and evaluation methods, some countries do not have the policies and regulations of traditional medicine. Products of traditional medicine are produced form natural elements which mostly are collected from wild plants. Scarcity of resources could also be an issue for business practices.

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Opportunities Hai-O Enterprise Berhad decided to improve their marketing strategies to use the multi-level marketing business, so they have a more balanced product group. Hai-O Enterprise Berhad has signed a world distributorship of Kaeam Bamboo Salt to expand a new market and the bird's nest export business is expected to recover. The Beijing Tongrentang Co Ltd and Hai-O Enterprise Berhad recently contracted associates, to set up a bird's nest Holdings Limited in order to extraction, processing and distribution of bird's nest and bird's nest products. Cooperation with them, Hai-O Enterprise Berhad can learn to their business strategy and how to promote the brand culture. There have professional‟s communication and learning to enhance the level of traditional Chinese medicine knowledge. Strengthening the existing health care services, and actively explore the field of pharmaceutical equipment, to promote research programs, and to promote investment in the field of medicine. Hai-O merged with Yan Ou Holdings SB which is sourcing for and processing, trading and distributing bird's nest. Once it obtains the licence to export bird's nest, this will represent another good revenue stream for the company since the consumption of the product in Asia, especially China. Threats China has banned the import of bird's nest for Hai-O Enterprise Berhad because the bird's nest exports to China containing excess nitrite, which is commonly used to preserve meats but can also cause cancer, in last year July. More than that, other competitive enterprises such as Eu Yan Sang and Brand‟s gradually to replace their herbal medicines position in Malaysia. Indonesia MLM operation is still relatively small and not making much progress due to fierce competition and strict regulations. They have been applying for the licence for the past three or four years for their Indonesian subsidiary P.T. to approve their products. If they still cannot get a license from Indonesia which will bring the loss and investors will also lose the confidence to invest in their company.

Page |8 GRAND STRATEGY OF THE COMPANY

Hai-O Enterprise Berhad has become a biggest premier healthcare company in Malaysia. The aim of Hai-O Enterprise Berhad is bringing the greatest value and pride to their customer. One of the obvious strategies to market its product is the group formation of Hai-O Marketing Sdn. Bhd. Most of the health food, wellness, and beauty products are sold by Hai-O company. The strategy has successfully boosted the group business and a huge exposure for Hai-O‟s brand into customer market. Hai-O sources raw materials for its produces are from the main land China. Traditional Chinese Medicine market in china is saturated and the products are variety. However, Hai-O Enterprise Berhad is devoted to solitary select the right ones to bring into product line. The group is selling genuine quality product at a fair price with Hai-O branding to build its clients trust. Since the setting of its Multi-Level Marketing Division, Malay customer have constituted a large segment of fits market as well as its sales forces, which has result in remarkable transformation for Hai-O as a group. One of the famous product among Malay consumer is „Pur Er‟ tea. „Pur Er‟ tea considered as a wonder tonic with abundant health benefits ranging from removing toxins to improving blood circulation. The Group‟s image has been changed after they are achieving reputation among the Malay customer. The power of traditional medicine has shown the evidence results in today‟s healthcare industry. Therefore, the group decided to take the business abroad by penetrating the lucrative markets of China and Indonesia. Hai-O Enterprie Berhad ventuning into the international market is the one of their brand even further and promote their company products especially Chinese medicine to a higher level.

Page |9 COMPETITIVE STRATEGIES USED BY THE COMPANY

Firstly, the company is used the cost –leadership competitive strategy to compete with other company which is selling the same type of products such as Amway and CNI holdings, and this 2 company are the main competitor of Hai-O enterprise. The strategy is use to decrease the price of widely needs product to gain less profit over other competitor. Secondly, Hai-O company purchases raw materials from China because of the goods of China are inexpensive compare to local country, and it can lower the cost price, so the company can implement the cost-leadership strategy in the market for compete with other in lower price. Besides that, the company are using the technique reduce the production process cost for lower the cost. For example, the “Natural Toothpaste” produce by Amway company, the price is RM30.50; “Nature Paste Toothpaste” produce by Hai-O company is only RM 22.50, toothpaste is widely needs product Hai-O company is using the low price to sell this product, so its shows that the Hai-O enterprise is using the cost-leadership strategy. In the other hand, the company is also use differentiation strategy, which is increase the quality of the products as a way to attract buyers to choose their goods over the similar product of other company and this is also widely need by the market. For example, recently the company is produce a new product called “Bamboo Salt Premier Drink” , it is the natural salt made of energy seawater generated by the vast underground(West Coast of Korea), this salt contain inorganic metal which are essential for human body. The advantages is can remove toxin and improves restorative capacity of our body. Nowadays, only a little market is selling this product in the market, so this very unique product. This product is more special than the other company health drinks, therefore, Hai-O is using the differentiation strategy compete with other competitor.

P a g e | 10 UTILIZING THE IDENTIFIED STRENGTHS AND OPPORTUNITIES

According to the SWOT analysis we have done, we can know that Hai-O Enterprise Berhad has an efficient distribution network system that give the organization implement the task effectively. This may help the company to expand their business successfully. For instance, it can start new branches to the international stage and create new products and services based on its well management to improve market share. Hai-O Enterprise Berhad had been received many rewards from various aspects such as The Brand Laureate Award, CIO 100 Honouree Award and so on, that boost up the reputation of the company. The company can take this advantage to do a lot of promotion or advertising because the quality of the goods and services had been aware of the government to attract more investors and customers. Besides, QIS Research carries out the research and testing the Traditional Chinese Medicine (TCM) to maintain the grade of products. This is one of the factors that have made Hai-O become the leader of Traditional Chinese Medicine‟s market. Other than that, the Multi-Level Marketing is one of the plans that can broaden the market. The company not only considers the Chinese customer and also the Malay customer, Indian customer and the others. Hai-O Enterprise Berhad is the sole cooperate which gained the distributorship of Kaeam Bamboo Salt. This is one of the strategies use by the company to overcome loss on the birds‟ nest export-business which happened in 2011. Hai-O Enterprise Berhad may bring more benefits to the customers with acquires the distributorship of Kaeam Bamboo Salt. This is because customers can easily get the product in Malaysia. Furthermore, Hai-O Enterprise Berhad cooperates with a well-renowned Traditional Chinese Medicine company, Beijing Tongrentang, to get back the birds‟ nest market in China. The market will also develop rapidly due to the company has merged with new subsidiary, Yan Ou Berhad.

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OVERCOME THE IDENTIFIED WEAKNESS AND THREATS From the SWOT analysis above, Hai-O Enterprise can gives workers the training and send them to interact with the professional in this area to solve the situation of lack of profession. The company may have an internship with universities or colleges to discovery the students who are talent in this aspect. For example, Hai-O Enterprise Berhad had been agreeing the internship with UTAR. Besides, the company can develop a land to plant their own resources to overcome the problem of limitation of Traditional Chinese Medicine. The quality and safety of the resources also can be guarantee. Since there have ethnic diversity, Traditional Chinese Medicine are not acceptable by all the country, the company come out some methods to produce new products which best suited with the people all around the world. The company can utilize QIS Research Laboratory to carry out the research to find the way of reducing the nitrite. The existing of the competitors like Eu Yan Sang, Brands may become an incentives to the company to work their best. The company can realize and recover the weakness of the company by comparing the company‟s performances with other competitors. The company also can obtain the information from their competitors by public and advertising to strengthen the management of the company. A good relationship with customers must be maintained via doing survey and feedback to customer, that In addition, the company can seek out the new markets against with Indonesia such as Myanmar, Singapore, Brunei and so on.

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CONCLUSION Hai-O Enterprise Berhad has an excellence achievement and good reputation base on the rewards and recognitions of the company. The valuable rewards and recognitions are including CIO Asia's Annual Index of Asia's Top Performing, The Brand Laureate Award CIO 100 index highlights top 100 regional enterprises and organisations that have excelled through creative and innovative IT projects in the past year. Companies that achieve CIO 100 listing have broken new ground by using IT systems, initiatives and projects to provide added value to their customers.

The Brand Laureate Award International Best Brand Awards

QMSS can be expressed as the organizational structure, procedures, processes and resources needed to implement quality management In the 21st century, QMS has tended to converge with sustainability and transparency initiatives, as both investor and customer satisfaction and perceived quality is increasingly tied to these factors. Of all QMS regimes, theISO 9000 family of standards is probably the most widely implemented worldwide - the ISO 19011 audit regime applies to both, and deals with quality and sustainability and their integration.

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Reference http://www.hai-o.com.my/ http://www.hai-o.com.my/background.php http://www.hai-o.com.my/vision.php http://www.hai-o.com.my/bod.php http://www.hai-o.com.my/products.php http://www.hai-o.com.my/awards.php http://klse.i3investor.com/blogs/journeytowealth88/9579.jsp http://www.hai-o.com.my/corporatestructure.php