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CONFIDENTIAL

BM/APR2007/MGT658/649/650/HRM580

UNIVERSITI TEKNOLO GI MAR A

FINAL EXAMINATION

COURSE

COURSE CODE

EXAMINATION

TIME

: STRATEGIC MANA GEMENT

: MGT658/649/650/HRM580

: APR IL 2007

: 3 HOURS

INSTRUCTIONS TO CANDIDATES

1 . This question paper consists of two (2) parts : PART A (4 Questions)

PART B (6 Questions)

2. Answer ALL questions from PART A and three (3) questions from PART B in the Answe r

Booklet. Start each answer on a new page.

3. Do not bring any material into the examination room unless permission is given by the

invigilator.

4. Please check to make sure that this examination pack consists o f:

i) the Ques tion Paper

ii) an Ans wer Booklet - provided by the Faculty

DO NOT TURN

THIS

P GE UNTIL YOU RE TOLD TO DO SO

This examination paper consists of 5 printed pag es

© Hak Cipta Universiti Teknologi MARA

CONFIDENTIAL

7/23/2019 MGT 657 APR 2007


CONFIDEN TIAL 2 BM/APR 2007/MGT658/649/650/HRM 580

PART A

CASE STUDY

KBB THE BIHUN KING

A monopoly is emerging in the wholesale market for vermicelli or better known locally as

bihun.

P enang-based KBB Resources B hd. is winning favour from investment analysts for its

growing dom inance as a bihun producer. Earning itself the title King of Bihun since buying

its closest competitor, Rasayang Food Industries, it appears KBB won't stop at gobbling up

other bihun makers to kill the competition.

Since buying R asayang w e've increased our m arket share to over 50% . W e want to

dominate the market. I think we'll stop at 70%. We will target those that 'disturb' us with

pricing

said the executive director K enny Ang.

He must be lucky there isn't such thing as antitrust laws in this country. Of course it is every

firm's aim to dominate. Dominance gives market control and that means certainty at a time

where producer costs are rising from inflationary pressures.

The RM11.6 million purchase of Rasayang was crucial because Rasayang, it seemed, was

the biggest price threat to KBB fortunes. After completing the buyout in the first quarter of

this year, bihun prices have gradually moved up.

A report estimates that average industry prices of bihun and laksa (ranging between

RM1 500 and RM2200 per tonne) improved by close to 50% between the first half of this year

and last year. For this reason, revenue will grow by 66.5% to RM131.2 million in the current

financial to Decem ber. Net earning will jum p by 39.5% to RM1 5.1 million.

Ang says about 1 0 other bihun producers remain in the market. He did not identify who KB B

was eyeing nor how it would execute the takeover. According to some analysts, some

competitors are keen to sell out. One in Kedah and another in Penang reportedly generate

RM5 million to RM8 million annually from selling bihun and laksa. Others reportedly sell less

than RM 5million of those noodles annua lly.

KBB doesn't seem to be threatened by imports. Higher cost of production and transport are

pricing the imported brands out of the market. O n the other han d, the higher freight charges

prevent KBB from exporting its bihun to other markets as

well.

But KBB has made investments in Indonesia, venturing upstream into rice flour milling. It

formed PT Bersatu International Food Industries (BIFI) in 2004, which commenced milling

late last year. As a new entrant, BIFI hasn't yet achieved full capacity utilization. It has to

contend with price competition as the market leader, PT Budi Makmur, seeks to restrain

BIFI.

Besides rice flour, sago is the other key ingredient in making bihun. A few months back, KBB

acquired a sago supplier in Sibu, which will help lower the cost of manufacturing bihun in

Sabah and Sarawak. This gives it a price advantage over higher quality C hinese imports.

© Hak Cipta Universiti Teknologi MARA C O N F ID E N T IA L

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CONFIDEN TIAL 3 BM/APR 2007/MGT658/649/650/HRM580

Ang says KBB may consider venturing into sago production in Indonesia if the market there

matures.

With very low debt and comfortable cash flow from operations, some wonder if KBB really

needs to execute its proposed private placement. The exercise is expected to raise some

RM20 million for the company, which it says will help with working capital and debt

repayment.

It hasn't had much luck with the proposal to place out 24 million new shares (it has a base of

120 million shares), which recently gained approval from the Securities Commission to

extend the time frame to Fe bruary next year. Perhaps it will give KBB the financial m uscle to

achieve its bigger goals as spelt out by An g.

We understand that bihun is the fast food of Malaysia and Southeast Asia. It is our vision to

become a brand name like Nestle.

Adapted from The Edge Malaysia July 31 2006

Answer A LL questions

QUESTION 1

What are the three (3) strategies adopted by KBB. Explain and give one example for each

strategy mentioned.

(14 marks)

QUESTION 2

Explain the components of Michael Porter's competitive forces model. Using the model

illustrate the competitiveness of KBB.

(12 marks)

QUESTION 3

Explain briefly one (1 ) advantage and one (1 ) disadvantage of low debt ratio to KB B?

(6 marks)

QUESTION 4

How long do you think, it will take for K BB to realize its vision? Wh y?

(8 marks)


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CONF IDENTIAL 4 BM/APR 2007/MGT658/649/650/HRM580

P A R T B

QUESTION 1

a) Define and give an example for each of th three intensive strategies.

(9 marks)

b) List five (5) guidelines as to when market development would be a particularly good

strategy to pu rsue.

(11 marks)

QUESTION 2

a) Using a Grand Strategy Matrix approach, identify what are the strategies to be

recommended to a firm that is a weak competitor in a slow-growing market?

(10 marks)

b) Describe the positive features and limitations of the Quantitative Strategic Planning

Matrix (QSPM).

(10 marks)

QUESTION 3

a) The re are three (3) major approaches for minimizing and resolving conflict in an

organization. Define these three approaches an d give an example of each.

(10 marks)

b) Com pare and contrast between restructuring and reengineering .

(10 marks)

QUESTION 4

a) Identify five (5) key external forces that could represent major opportun ities or threats to

a bank in your town or city.

(10 m arks)

b) Do you agree with the following statement: Corporate intelligence is not corporate

espionage because 95 percent of the information a company needs to make strategic

decisions is available and accessible to the public. Wh y?

(10 m arks)


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CONFIDENTIAL

BM/APR2007/MGT658/649/650/HRM580

QUESTION 5

a) Describe why a mission statement is so important in the strategic-management

process.

(6 marks)

b) Explain the process of developing a mission statement.

c) Describe the characteristics of an effective mission statement.

QUESTION 6

a) Explain what Drucker means when he says Trees die from the top.

b) Compare and contrast business and military strategy.

(8 marks)

(6 marks)

(10 m arks)

(10 marks)

END OF QUESTION PAPER

© Hak C ipta Universiti Teknologi MARA

CONFIDENTIAL

mgt 657 apr 2007

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