University of Tenaga Nasional

Group Project
Responsive Model Analysis on Top Glove Berhad
For
Strategic Management MGTM633
Group Member:
1. Ho Jien Hau SB21041
2. Ahmad Alsaqr SB21579
3. Azadeh Taghizadeh Bidhendi SB21333
4. Putra Bala A/L Balasundram SP21013

Lecturer: Prof. Dr. Zainal Ariffin Ahmad


Page | 2

No Table of content Page
1 Current Situation (Case Summary) 3
2 Corporate Governance 3-4
3 External Environment PESTLE
Industry Analysis
5-8
9-10
4 Internal Environment
SWOT Analysis & Financial Ratio
Name the Reasons for Weaknesses and Threats
TOWS
11-25
5 Analysis of Strategic Factors
O Organisational Diagnosis
19-24
6 Strategic Alternatives And Recommended Strategy 27-31
7 Implementation 32-33
8 Visualization of Implementation Plan 34
9 Evaluation and Control 35-38
10 Reference 39












Page | 3

I. CURRRENT SITUATION (CASE SUMMARY)
R Read the case/Recognize the problems or prospects
Top Glove Berhad listed in the Malaysia share market emerges as the largest glove
manufacturer in the world. Tan Sri Lim Wee Chai as the founder of Top Glove is
managing the 26 factories of Top Glove, 498 production lines and a capacity of 43.9
billion gloves per annum. Looking at the financial ratio, Top Glove Liquidation ratio,
Net Profit Margin ratio, Return on Equity (ROE) and inventory turnover ratio have
been decreased. Although the percentage drop is small however the operating
environment for Top Glove is good, Top Glove shall perform better than the previous
financial year. A strategic analysis had been performed to scrutinize the entire Top
Glove to generate suitable strategies for better performance. Cost leadership strategy,
differentiation strategy, integration strategy and diversification strategy are
recommended to improve the operation of Top Glove Berhad. Balanced Score Card is
being implemented to monitor, evaluate and control the performance of Top Glove.


II. CORPORATE GOVERNANCE
BOARD OF DIRECTORS
Top Glove is led by experienced Board comprising members who are specialized in
the glove manufacturing and various business sectors supported by a wide range of
other professionals in the economics, engineering and accounting sectors.

The Board currently comprises eleven (11) members, made up of five (5) Executive
Directors including the Chairman and Managing Director and six (6) Independent
Non-Executive Directors. The roles of the Chairman and the Managing Director are
distinct and separate so as to ensure balance of power and authority. The composition
reflects a balance of Executive Directors and Non-Executive Directors such that no
individual or small group of individuals can dominate the Boards decision making.


Page | 4

Table 1: Top Glove Board of Director Name list
No Name Title
1 Tan Sri Lim Wee Chai Chairman
2 Tan Sri Dato Seri Utama Arshad Bin Ayub Independent Non-Executive Director
3 Tan Sri Mohd Sidek Bin Haji Hassan Independent Non-Executive Director
4 Tan Sri Dato Dr. Lin See Yan Independent Non-Executive Director
5 Tan Sri Rainer Althoff Independent Non-Executive Director
6 Lee Kim Meow Managing Director
7 Puan Sri Tong Siew Bee Executive Director
8 Lim Hooi Sin Executive Director
9 Lim Cheong Guan Executive Director
10 Sekarajasekaran a/l Arasaratnam Independent Non-Executive Director
11 Lim Han Boon Independent Non-Executive Director

Tan Sri Lim Wee Chai
Chairman

Aged 55, a Malaysian citizen, was appointed as the Chairman of Top Glove
Corporation Bhd on 4 September 2000. He is also the founder of Top Glove Group of
Companies which was established in 1991 and was listed on Bursa Malaysia
Securities Berhad on 27 March 2001.

Tan Sri Lim Wee Chai is the spouse of Puan Sri Tong Siew Bee and the brother of Mr.
Lim Hooi Sin; both are the Directors and Substantial Shareholders of the Company.
He is also a Chairman to the Board of Trustee for Top Glove Foundation. He has no
conflict of interest with the Company and has not been convicted of any offences
within the past ten (10) years other than traffic offences, if any.

Tan Sri Lims business rules for the Company are:-
i) Do not lose our shareholders money;
ii) Do not lose our health;
iii) Do not lose our temper; and
iv) Do not lose our customers.
Page | 5

Top Management
The top management of the company consists of the chairman, managing director and
executive directors in the board. Each of them is responsible for different department,
for example, Puan Sri Tong Siew Bee, she is responsible for the Information
Technology Department, Human Resource Department and the General
Administration for the Top Glove Group of Companies.

III. EXTERNAL ENVIRONMENT
E Environmental Analysis PESTLE Analysis
Politic
The general election for Malaysia was held on 5
th
May 2013. Barisan Nasional
(BN) is the government for Malaysia and continues ruling the country for the
next 5 year.
The opposition party had gained extra 4 seats from the previous election, and
it is continue to grow. However, there is little chance for the opposition to
conquer the federal government.
Penang, Selangor, Kelantan are under the Pakatan Rakyat (the opposition)
ruling.
The country risk is reduced as all the policies and government projects will be
preceded. The government is expected to continue its ongoing policies.
The government is trying to cut the subsidies for the petrol, diesel and energy
sector, price will be slowly increased for all the items.
Quota and protection of 30% shares for the listed company will be given to the
Bumiputra in Malaysia.
Small Medium Enterprise (SME) aid will be launched to provide soft loan,
incubate program, Business Accelerator Programme (BAP), SME Emergency
Fund, Branding to the SME.
1 Malaysia Transformation program was introduced by the Malaysia Prime
Minister to transform and help Malaysia to reach develop nation.

Page | 6

Economy
Global economy
United State (USA) government has pursued to accommodate expansionary
monetary policy. In 2013, the Quantitative Easing policy has continued to
reach to 4
th
time (QE4). The policy is creating more hot money flow into the
market, causing the global market economy to be blooming. Since interest rate
is low, more investments are foreseen to be embarked in the emerging market.
Malaysia economy
Malaysia economy has registered a 5.1% of real Gross Domestic Product
(GDP) growth according to the World Bank of report. It is expected to
continue its growth with 5.0% in 2013.
Bank Negara Malaysia decided to maintain the Overnight Policy Rate (OPR)
at 3.00 percent. According to Bank Negara, the global growth momentum has
continued to be modest. In the Malaysian economy, domestic demand has
continued to provide support to growth while external sector are showing
sluggish performance. Investment activities and private consumption are
expected to attain sustainable growth.
Malaysia recorded a Government Debt to GDP of 53.10 percent of the
country's Gross Domestic Product in 2012.
Standard and Poor's (S&P) has downgraded Malaysia credit rating, rating
Malaysia A-, its fourth-lowest investment grade.
In the recently released Doing Business (DB) Report 2013 by the World Bank,
Malaysia improved its ranking to 12th position among 185 countries, moving
up six notches from 18th in 2012. Malaysia is ahead of Sweden (13th), Taiwan
(16th), Thailand (18th), Germany (20th), Saudi Arabia (22nd), Japan (24th)
and Switzerland (28th).
The toll charges are expected to hike for the major highways in January 2014
in the government exercises of reducing the subsidies. The transportation cost
will be increased to accommodate the price hike.
The latex price is continued to be in the down trend due to the soft economy
performance in the Europe and USA.
Page | 7

The electricity tariff will be increased 15% by the government.
The minimum wage policy is implemented in January 2013 announced that
the minimum wage floor is RM900.
The employment rate in Malaysia is 3% in the year of 2012.
Energy alternative is available to use the biomass to obtain the energy instead
of the natural gas and distillate.
The Malaysian is now trapped in the medium income category.
Legal
As of 2012, the Malaysia Employee Provident Fund (EPF) required a
contribution of at least 11% of each member's monthly salary and storing it in
a savings account, while the member's employer is obligated to additionally
fund at least 12% of employee's salary to the savings at the same time (13% if
salary is below RM5,000). An increased of 1% for the contributor whose
salary is below RM5,000.00
Goods and Service Tax (GST) will be implemented in this country in April
2015 by the government.
Young person under the age of 16 is prohibited to work in factory according to
Children And Young Persons (Employment) Act 1966.
Patent law is enacted in Malaysia in protecting the new technology being
invented.
Social
Health-care workers and others were increasingly using the gloves to protect
themselves against the virus and other infectious diseases.
The demand for gloves increase due to frequent flu outbreak.
The population growth rate of Malaysia is expected to reach 1.51% in 2013.
Malaysia population has reached to 28 millions in year of 2010.
The composition of the races in Malaysia are Malay 50.4%, Chinese 23.7%,
indigenous 11%, Indian 7.1%, others 7.8%.
Malaysia government doesnt enforce the immigration law strictly resulted in
the millions of unskilled foreigners to work in Malaysia covering various
sectors.
Page | 8

The education from primary and secondary is free provided to all the Malaysia
citizens. Highly skilled workers and tertiary educated graduates from various
industries are widely available.
New regulation for the private sector from the Minister of Human Resource
stated the increment of the retirement age from 55 years old to 60 years old.
The unionization of the Malaysia workers is generally soft and weak in
organization.
Technology
Kossan glove maker is able to produce the CheMaz-7th Sense glove, which is
a chemical allergy-free glove targeting the healthcare sector, who only
produce normal nitrile gloves.
Hartalega glove manufacturer is engaging the technology of automated
computerization which in turn brings down the production flaw rate further.
SAP (System, Application and Product) enterprise management software is
implemented in Top Glove to smoothen and efficiently manage the production
line.
Research and Development (R&D) centre is setup in every glove manufacturer
to produce specific types of gloves to meet the requirement of the customer
globally.
Telecommunication infrastructures are fully developed and internet with high
speed connection is widely available.
Environment
The Environmental Quality Act 1974 requires that the industries to monitor
the gas emission from the chimney.
All the discharge of the industries shall comply with the effluent regulation.
The chlorinated factory shall ensure that the chlorine vapor to discharge to the
scrubber for neutralization.
The dust release from the chimney shall be monitored as required by the
Department of Environment (DOE).

Page | 9

B. Task (Industry) - Overall
Stage of Development
Top Glove was found in 1991, and it is now become the world largest glove
manufacturer. It has a shareholder fund of RM1.3 billion or USD401.2 million with
an annual turnover of about RM2.31 billion or USD713 million as at financial year
ended 31 August 2013. It has a market capitalization of RM3.61 billion as at 3
December 2013. Top Glove currently is now at the maturity stage of the company.
The company is performing diversification and growth strategy seeking to add more
value to the company.
Threat of New Entrants
The threat of new entrants to the glove manufacture industry is low. This is because
the new entrants have to reach a large economical scale in order to achieve the
required cost effective product. Currently all the glove manufacturer is producing the
glove at very big scale. For instance, Top Glove has 26 factories, 498 production lines
and a capacity of 43.9 billion gloves per annum.
Moreover, the new entrant has to invest heavily into the technologies and physical
hardware which impose a barrier to the new entrants. Since the technology of the
glove manufacturing is changing rapidly, this posses a steep learning curve for the
new entry. This would be a cost disadvantage for the new entrants. The new entrant
also has to build up reputation to increase the brand awareness of the customer.
Bargaining Power Buyers
The bargaining power of the buyers is low as Top Glove is producing in a large scale.
Only customer with large buying quantity could negotiate the price with Top Glove.
Small amount with less than 1 million quantities will have to follow the stipulated
price. In addition, the special Nitrile glove that Top Glove producing is not
substitutable. Therefore, the buyers have less power the bargain.



Page | 10

Threat of Substitutes
The latex gloves and Nitrile gloves are easily being substituted. It is a close substitute
as the customer can easily switch to another brand of glove with similar function. The
industry-level price elasticity for the glove market is large; the rising of the industry
prices will tend to drive Top Glove consumers to purchase substitutes products.
Bargaining Power Supplier
The bargaining power for the supplier to Top Glove is low as they are price taker.
They couldnt perform price discrimination. Top Glove usually order in a large
quantity which is more favorite to the supplier. A larger quantity usually will come
with lower price. Although the profit for the large quantity is lower than the small
quantity, the large quantity could actually cover back the eroded profit margin.
Besides, Top Glove has the ability to plant its own latex. If the suppliers are offering
higher price, Top Glove could have its own latex supply.
Rivalry
There are a few major players in the glove manufacturing industry which are the
Hartalega, Kossan, Supermax and Adventa. Most of them are public listed in the share
market. The technologies that they are using for the glove production is similar. The
industry is highly competitive as the public listed companies are looking for sales
increment every year. All the public listed companies are expanding their market over
the globe. They are competing not only in Malaysia.
Table 1
Porters Five Forces Analysis of the Top Glove Berhad
No Force Threat to Profits
1 Rivalry High
2 Entry Low
3 Substitutes High
4 Buyer Power Low
5 Supplier Power Low




Page | 11

IV. INTERNAL ENVIRONMENT
S SWOT Analysis
N Name the reasons for Weaknesses and Threats
Strength
1. World's largest rubber glove manufacturer
Top Glove has now emerged as the world's largest rubber glove manufacturer. It has
26 factories, 498 production lines and a capacity of 43.9 billion gloves per annum.
2. Low Production Cost
Top Glove has a lower cost structure comparing to its peers due to its advanced
engineered production lines and less expenditure on advertising and promotional
activities. Top Glove is producing variety range of gloves in a huge capacity. Thus, it
is benefit from economic of scale.
Tan Sri Lim Wee Chai mentioned in a statement, Our ability to grow our sales has
helped give us the required volume to achieve economies of scale, thus reducing our
costs and allowing us to price our products competitively.
3. Wide product range
Top Glove has a comprehensive product range with 13 major types of rubber gloves.
80% of production for health care sector and 20% for non-health care sector. Produce
69% natural rubber glove and 31% synthetic rubber glove.
Top Glove Products covers Latex Gloves, Nitrile Gloves, Vinyl Gloves, Surgical
Gloves, Household Gloves, Clean room Gloves, Cast Polyethylene (CPE) Gloves,
Polyethylene (PE) Gloves, Polyethylene (PE) Apron, Industrial/ Long Length High
Risk Gloves.
4. Geographically diversified
Top Glove has a global market share exporting its products to 195 countries with
more than 2,000 customers. It is geographically diversified and no single biggest
customer constitutes more than 4% of revenue. Customers are mainly distributors in
the respective countries.
Page | 12

5. Strong technical expertise and ability to adapt
The expertise of the Top Glove in upgrading the production lines has improvement in
plant efficiency while enable to help company to save the maintenance costs and time.
Besides, Top Glove managed to manufacture new gloves to meet customers needs
through their researches and developments (R&D).

Weakness
1. Raw material price fluctuation
The latex price is fluctuating due to weather impact, crude oil price movement,
speculation, competition with other usage. The increase in the price could not post to
the customer immediately. There is a time lag in passing on to customers when prices
move up sharply.
2. No long-term contracts.
There are no long-term contracts and orders are dependent on regular customers
which has relationship ranging from 1 year to over 10 years.
3. High investment in technology
Top Glove needs to invest heavily in buying the modern machineries and need to hire
more experienced personnel in their production process. The machineries that bought
were extremely expensive. Thus, the maintenance of the machineries is expensive and
if there had any minor or major accessories spoiled; it will be costly to the company to
repair it back.
4. Lack of brand portfolio.
Top Glove has only three brand names, i.e. Top Glove, TG Medical and Great
Glove which accounts for 30% of its production. It may need to invest in a brand-
building exercise when the industry reaches a point of saturation in order to defend its
market share.

Page | 13

5. Currency exposure
The majority sales of Top Glove are in USD, subject to USD currency movement.
Costs of productions are in Malaysia Ringgit (MYR) while the sales transactions are
carried out in USD. The appreciating of MYR against USD had lead to the fall in Top
Gloves profit as the cost of production is higher while the return (sales price) is lower.

Opportunities
1. Demand for gloves increases
The average global demand growth for the glove is 8% to 10% per annum. Medical
gloves are a necessity in healthcare industry as a barrier of protection. There is an
increasing healthcare and hygiene awareness especially in developing countries.
In some country, the ageing population such as elderly is more susceptible to a higher
risk of diseases. Besides, outbreak of emergency of health threats is frequent such as
A (H1N1), SARS, bird flu, and Bioterrorism threats.
2. Low land acquisition cost
The plantation land located in the Indonesia which is suitable for the latex plantation
is cheap compare to the acquitting cost in Malaysia. Indonesia is a developing country
with vast of land that has not being exploited. There is an opportunity for Top Glove
to backward integrate to own the natural raw material. This could help Top Glove to
have more bargaining power to its suppliers in dealing with the raw material
requisition.
3. Support by government
Rubber Research Institute and The Malaysian Rubber Export Promotion Council help
Top Glove in begin with R&D efforts and promote the gloves produce by Top Glove
to overseas. In addition, the government set up the Human Resource Development
Fund (HRDF) to encourage and push the human resource development. Subsidies are
given out to reduce the cost of the training.


Page | 14

4. Reduction in latex price
Latex is the main material in producing gloves. The price of one kilogram of latex is
RM 2.30 in December 2013 compare to RM5.10/kg in April 2010. The increase in the
latex will raise the manufacture costs. However, most of the manufacture costs can be
passed on to the customers but with a time lag.

Threats
1. High competition many players
For rubber gloves, Top Glove and Hartalega are the major two players in the industry.
It used to be Top Glove only being the largest producer by quite a fair bit while the
other players like Supermax, Kossan and Latexx Partners are smaller competitors.
However, recently another player has become larger in the context of market
capitalization and started to gain much followings which is Hartalega. Top Glove is
the largest natural rubber gloves maker globally while Hartalega is the largest
producer of nitrile gloves.
2. Increase of energy price
Government is looking for a rollback in gas subsidies, which account for 7-10% of
total production costs. This would increase the glove manufacturers cost base. Top
Glove estimates that every 5% increase in natural gas tariff would lower the net profit
forecasts by up to 3% (assuming no change in selling prices). Besides, the electricity
tariff is being revised and new tariff with higher price will be imposed to the nation
effective on 1
st
of January 2014.
3. Implementation of a minimum wage policy
On average, Top Glove staff costs account for 7-9% of total production costs, with
unskilled labor accounting for 45-50% of the workforce. Assuming zero cost pass-
through and a minimum wage of RM800-900/month, Top Glove estimates that
bottom line could be impacted by 10%. Furthermore, the higher staff costs will be
partially passed through via higher selling price, given that the minimum wage policy
would apply to the whole industry.

Page | 15

4. Higher Tax Cost (GST)
Government is going to implement a new tax structure which is Good Service Tax to
all the industry. It is estimated that the cost of the production will be higher due to an
increase in the tax. Administrative cost will be increased to execute the new tax
structure. All the accounting software will be needed to upgrade to adapt with the new
GST policy.

Financial Ratio

Figure 1: Earning per share for Top Glove
The earning per share for Top Glove is maintaining at RM0.32/share for the financial
year of 2013. The earning per share is lower compare to the year 2012 which is 1 sen
lower. The earning per share is positive. The company might consider increasing the
sales volume in order to increase the earning per share.
0.18
0.33
0.32
0
0.05
0.1
0.15
0.2
0.25
0.3
0.35
2011 2012 2013
Earning Per Share
EPS
Page | 16


Figure 2: Earning per share for Top Glove
Figure 2 shows that the liquidation ratio for Top Glove. The ability for Top Glove to
pay the short term debt is reduced from 3.0 year 2012 to 2.0 in the year of 2013.
Although the ratio has decreased, it is still above 1.0 which means that the company is
able to settle its short term debt without any concern.


Figure 3: I nventory turnover for Top Glove
Figure 3 shows that the inventory turnover for Top Glove is reduced from 10.8 in year
2012 to 8.9 in year 2013. This has shows that the stock in Top Glove is slower to sell
out compare to the previous year. This might be due to the lack of advertising or high
3.1
3.0
2.0
0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
2011 2012 2013
Liquidation ratio
Liquidation ratio
10.4
10.8
8.9
0.0
2.0
4.0
6.0
8.0
10.0
12.0
2011 2012 2013
Inventory turnover
Inventory turnover
Page | 17

competition in the market. Top Glove could engage marketing services to increase the
sales of the company.


Figure 4: Net Profit Margin for Top Glove
Figure 4 shows the net profit margin for Top Glove. It is recorded that the net profit
margin for Top Glove is reduced from 9.0 in year 2012 to 8.8 in year 2013. This
implies that the operation efficiency for Top Glove has reduced. Top Glove would
need to look at the production cost and efficiency to point out the weaknesses that
contributed to the reduced in the operational efficiency.




5.6
9.0
8.8
0.0
2.0
4.0
6.0
8.0
10.0
2011 2012 2013
Net Profit Margin
Net Profit Margin
Page | 18


Figure 5: Return on Equity for Top Glove
Figure 5 shows the Return on Equity for Top Glove has reduced from year 2012
which is 16.2 to 14.9 in the year of 2013. This shows that the amount of Top Glove
invested generate less return than the previous year. This might shows a decrease in
the profit or the cost of the material has increased. However, a 14.9 percent in the
return on equity is good in the industry. It is a healthy sign for the company.














10
16.2
14.9
0
5
10
15
20
2011 2012 2013
Return on Equity
Return on Equity
Page | 19

V. ANALYSIS OF STRATEGIC FACTORS
O Organisational Diagnosis
Insights of Top Gloves Growth Strategy
From operating in just one rented factory in 1991, Top Glove has grown
tremendously, having twenty factories, of which fourteen are in Malaysia, two are in
China, two glove manufacturing factories, and two latex concentrate factories in
Thailand. Majority of the factories in Malaysia are in Klang except one in Ipoh and
another in Banting. Through the years, Top Glove has become and remained a top
player in the rubber glove industries via expansions and strategic international
alliances. Over the years, through continuous improvements and innovations, Top
Glove is able to meet consistently the higher healthcare and safety demands with its
top quality gloves at efficient low costs. Their focus on R&D is also to meet the
customers growing demands as customer satisfaction is their main aim. Due to that,
they can become the largest rubber gloves supplier and sustain their survival in the
market of 90 suppliers from 200 plus suppliers in the whole of Malaysia.
Top Gloves products are accredited with the ISO 13 485, MS ISO 9001:2000
and SIRIM ISO 9002 standards coupled with other international quality accreditations,
such as the CE Mark of Europe, the SMG (Standard Malaysian Glove) of Malaysia,
the TUV of Germany, the NF Mark of France, the TSE of Turkey, the ADA of USA
and the necessary 510k from the Food and Drug Administration (FDA) to market its
gloves to the USA. Top Glove also has the CGSB of Canada and TGA of Australia
accreditations for export to these countries.

The structure
There are more than ten departments in Top Glove namely, the Human
Resource, Production, QA, Warehouse, Accounts, Lab, Packing, Documentation,
Marketing, Purchasing Department and R&D.

Since last year, Top Glove is aggressive in recruiting fresh graduates with
good results to work in the company. This year, they are targeting another 200 fresh
graduates from all fields, ranging from engineers to scientists and accountants. The
company employs fresh graduates from the engineering and mechanical fields with
good technical skills to come up with new ideas in respect of upgrading, improvement
Page | 20

and automation of the production line. The new chemists to do new compounding
formulation that produce quality gloves with efficient low cost.

The Accounting and Finance Function
The accounting and finance function in Top Glove Group is well established
with one finance executive director, one financial controller and few accountants.
They have a finance manager in one of the subsidiaries, Medi-Flex Limited, which is
listed in Singapore and operating their factory in Banting. In Thailand, each factory
will also have one finance manager who does accounting functions.
The executive director is responsible for the overall function of finance and
accounts department including investor relations and treasury as well as handling the
corporate exercise of the Group. Thus, he is in charge of risk management, hedging
and managing the foreign exchange losses.
Mr. Jeremy Liew, an accounts graduate from USA, is the financial controller
of Top Glove. He is responsible for the operation, i.e., the financial of the company,
the products costing and liaises with auditors and lawyer.
Each of the accountants is responsible for overseeing a few factories. Each
factory will have its own accounts departments that report to the accountant in charge.
The accountant will in turn report to Mr. Jeremy Liew who will go down to see the
accounts staff to understand the problems better. The accountant will consolidate the
individual factory accounts and reviewed by the Executive Director and Mr. Jeremy
Liew.
Mr. Liew also does the product costing for the Group. Every week, a standard
costing report is done based on that weeks latex price. In addition special costing will
be done based on the customer specification upon request by the Marketers.
With a number of accountants in the accounting and finance department, most
of the financial management and accounting functions are done in-house including
those related to financial statement compliance, budgeting, forecasting, customer
profitability analysis, financial planning, product costing and performance
management. IT consulting advisory is also done internally because they have an IT
department to handle the accounting ERP System. HR consulting and secretary are
also done in-house. All those departments mentioned above are not under Mr. Liews
department but he needs to liaise with them.
Page | 21

Top Glove used the services of independent internal auditors responsible for
internal control and risk management. Besides internal auditors, the company has a
tax department responsible for tax compliance, tax planning and tax incentive
application. The tax department has to liaise with government bodies, interpret new
tax laws, check into the accounts with regards to what is allowed and disallowed, and
have the schedule tied back with what they want at the year end.

Factors for Success
Top Gloves successful growth is mainly contributed by various factors. One
of the external factors is the ongoing demand for glove by the healthcare and other
industries Healthcare standards and best practices have improved creating even higher
demand for better hygiene, cleanliness and more advanced safety requirements. The
high demand from the traditional medical markets driven by strict regulatory
standards, aging population and emergence of health threats like A (H1N1) influenza,
SARS, bird flu and others resulted in Top Glove achieving increasing growth rate
annually to meet global demand. For example, their ended 2009 financial year with a
tremendous demand for gloves due to the emergence of A (H1N1) influenza. In
addition, the emphasis on hygiene by non-medical sectors especially within the food
and services industries has increased the use of gloves and increased the demand for
Top Gloves products.
Since the company is operating in a fairly recession proof market because their
products are necessities, particularly in the healthcare and food services industry, their
products demand is anticipated to stay resilient despite slowdown in major consuming
economies. Even when the prices of raw materials increased, the demand for gloves is
still there. The outbreak of new diseases, sales tends to exceed greatly than what have
been forecasted. Last year due to H1N1, the companys sales actually grew
tremendously and they managed to record a higher profit than anticipated.
Top Gloves success was also due to innovation in its products. For example,
they have been successful in producing quality gloves at efficient low cost. Top Glove
is the pioneer glove producer to reduce the weight of its gloves. As a result, Top
Glove can now offer their customers a wider choice of either thick gloves or thinner
gloves depending on the customer requirement. Top Glove also produced flavoured
glove such as mint flavoured gloves that has mint smell from the gloves will make the
end customers, such as the dentists patients; feel good instead of smelling the latex.
Page | 22

The success of Top Glove was also due to their effort of conducting regular
internal and external training for their staff to keep them abreast of the latest
innovations, technologies and processes in the industry. Top Glove recognises
employees as its greatest assets and rewarded them accordingly. As such, the
company organised regular recreational activities to foster strong teamwork among
the staff. Employees health considers an important aspect and the company do not
recruit smokers. Therefore, KPI is linked to their body mass index (BMI) to ensure
the employees will take care about their health. They always encouraged their staff to
join the fitness club and where the company will subsidize 50% of the fees. On top of
subsidizing fitness training for the staff, the company will encourage staff to read
books on healthy living and on management skills. Professional development of the
key management staff is inculcated by ensuring them to read the two books, relating
to health and management every month.
Their constant progressive drive for R&D into product and marketing,
capturing good students, improving products quality, productivity and cost
management to compete with the world market also contributes to their success.
Pricing to customer is based on the latest latex price so when the latex is high, the
glove selling price will be higher and vice versa. Thus price fluctuations, the company
will not be affected as they can pass the increase in the latex price to the customers.
Furthermore, their highly efficient energy cost saving measures such as implementing
biomass facilities in their factories in Malaysia, Thailand and their new factories also
help strengthen the companys competitiveness.
In order to achieve a competitive position as a world class cost efficient rubber
glove manufacturer, Top Glove invests in modern and advanced glove manufacturing
machineries that can produce good quality gloves. These advance machineries are
manned by competent personnel and regularly checked and maintained by qualified
experts to ensure the smooth running in production and ensuring the consistency in
the glove quality. On-line quality control measures have been instituted throughout
the manufacturing processes to ensure the highest quality products. Stringent quality
control procedures in line with ISO 9001 and in strict compliance with ASTM and
EN455 Standards are also practiced in Top Glove to ensure product quality. Adhering
strictly to good manufacturing practices (GMP) and Total Quality Management (TQM)
concept, each stage of the entire manufacturing process, from the receiving of the raw
materials, production process, and product quality control, pre-shipment quality
Page | 23

inspection until the loading of the finished goods into the container is carefully
monitored.
Moreover, Top Glove also collaborates with the Rubber Institute to be ahead
in the development of rubber research technology. The collaboration was for R&D
purposes. Both parties conduct a lot of studies, and cooperate in R&D to come up
with new and keep each other updated on the latest development. Top Glove does
most of the R&D themselves because it is more glove-related. For the R&D activities,
they have actually allocated a budget of about 1% of their annual turnover.
Through R&D, regular testing of the products in the manufacturing process
and maintaining the strictest quality control, Top Glove guarantees product
satisfaction and consistent quality at all times. In addition, the company is also re-
engineering their manufacturing processes to capitalize on economies of scale.
Top Glove also carries out continuous effort of aggressive marketing strategies
including participating in various exhibitions and trade shows worldwide. They have a
team of marketers to liaise with the customer and to get their feedback.
Living up to one of the companys key taglines like, The World is Our
Market, they work for their customers and their customers always come first. Top
Gloves friendly and customer oriented marketing team is well equipped to respond to
its customer at the fastest turnaround time. The company will participate in many
trade shows so that they attend to their customers enquiries. They listen to the
customers complaints and suggestions and continue improve from there. Every year,
Top Glove attends Medica Fair for the existing customers to visit them and for new
customers to make enquiries.
In addition to all of the above, Top Gloves success factor is also due to them
adopting a two-prong growth strategy. The two-prong growth strategy consists of the
vertical growth strategy which moves downstream to get closer to their customers via
setting up of more overseas marketing offices and the horizontal growth strategy in
product range expansion by increasing their sales in value added products such as the
enhanced and much improved version of powder free latex examination, soft nitrile,
vinyl, clean room and surgical gloves to capture a bigger market share.
The companys manufacturing presence in China also enables them to tap into
opportunities that synergize with their distribution channel. Furthermore, in order for
the latex supply to be consistent, Top Glove is controlling it by setting up two latex
concentrated plants in Thailand to supply the latex to their factories in Klang. Overall,
Page | 24

the ability of Top Glove to grow from strength to strength over the years has mainly
been attributed by various internal and external factors.
Challenges and Future Plan
The company faces several challenges ahead in the quest to maintain their
position. The first and foremost relates to the supply of latex in Malaysia due to the
conversion of rubber plantations to palm plantations. As such, Top Glove has set up
two latex concentrate plants in Thailand ensuring the availability and consistent
supply of latex to Klang factories. To further secure the supply of raw materials, the
company is aggressively looking for rubber plantations in Malaysia and abroad.
Beside the security of supply of latex, another challenge for Top Glove is the
fluctuation of latex prices, i.e., the main raw material. As the latex prices are volatile
due to weather impact and speculation, the company has to closely monitor the prices
as well as the foreign exchange rate as 96% of their gloves produced are sold overseas
in USD. Whenever the Ringgit Malaysia gets stronger, there will be some forex losses.
Top Glove is also looking into biomass energy because of the limited natural gas
supplied and again the government will be withdrawing the subsidies for natural gas.
In order to overcome that challenge, Top Glove has turned to biomass energy for new
factories. Besides, their Ipoh factory and Thailand factories are also using biomass.
By using biomass energy, they can apply for carbon credit. Top Glove is expecting
the gloves demand to continue to pick up momentum. Therefore, they are all set and
well positioned to continue with their successful strategy of being the worlds largest
preferred OEM gloves manufacturer through further expansions in their production
capacity to derive better economics of scale for the benefits of their customers
worldwide. As mentioned, the company target of gaining 30% worldwide market
share by 2012. To cater for the increase in sales, the company managed their
production schedule by having ample capacity to cater. Every year, they set up two
new factories. So there is some slack as the plants are also running at 80%. They will
power ahead to maintain their vision of being the worlds No.1 rubber gloves
manufacturer with Excellent quality glove products and services that enriched and
protect human lives.



Page | 25

TOWS
Strength
S1 World's largest rubber glove manufacturer
S2 Low production cost
S3 Wide product range
S4 Geographically diversified
S5 Strong technical expertise and ability to adapt
S6 High cash on hand
Weakness
W1 Raw material price fluctuation
W2 No long-term contracts
W3 High investment in technology
W4 Lack of brand portfolio
W5 Currency exposure

Opportunities

O1 Demand for gloves increases
O2 Low land acquisition cost
O3 Support from government
O4 Reduction in latex price


Top Glove can set the price in the market that has more
competitive advantage to itself and lead the market. (S1,O1)
Top Glove could negotiate with the bank to get the cheapest
interest rate. (S1, O2)
Top Glove could influence and advise the government in the
subsidies and support from the government so that maximum
advantages could be obtained. (S1,O3)
Top Glove could expand its production line for the lower latex
price. Besides, it can produce more during the low price of raw
material and keep stock. (S1,O4)
Top Glove could lower the price of the gloves it is selling to
draw customer from the competitors. (S2,O1)
Top Glove could obtain the grants from the government to lower
the production cost, for example, applying HRDF grant for
training the company employees. (S2,O3)
Top Glove could invent special glove to cater the need of specific
group. This could avoid Top Glove to compete with the other
competitors. (S3, O1)
Top Glove could engage with the government university for the
research and development of the new product. Top Glove might
obtain tax reduction in sponsoring the researchers in their
research. (S3, O3)
Top Glove could expand its sales office to capture the increase of
the gloves market. For example, set up a sales office where the
health care industry is starting to bloom. (S4,O1)
Top Glove could invent special types of gloves to cater the
market need. (S5,O1)
Top Glove could increase the capacity of the production line to
adapt on the growth of the gloves demand. The overhead for the
largest glove manufacturer will decrease. (S6, O1)
Top Glove could engage itself in the corporate social
Top Glove could lock in the price for raw material when
the price is low. (W1,O1)
Top Glove could buy land to plant its raw material which
is latex to eliminate the risk of price fluctuation. (W1,
O2)
Top Glove could pursue government in tax exemption for
imported raw material. (W1, O3)
Top Glove could sign low term contract with supplier
with the fix material price. (W1, O4)
Top Glove could offer the customer to sign with a long
term contracts with an attractive price to lock in the
demand. (W2, O1)
Top Glove could work with the government to supply
glove to government hospitals. (W2, O3)
Top Glove could pursue the customers with lower price
and discounts to capture the market share. Once the
contract is signed the competitors are losing the customer.
(W2, O4)
Top Glove could re-design the production techniques to
maximize the production of gloves. (W3, O1)
Top Glove could diversify its business into other industry
that rely less on technology, for example, real property
industry. (W3, O2)
Top Glove could obtain duty import tax exemption from
the government to reduce the high cost of the technology.
(W3, O3)
Top Glove could invent a cheaper way to produce gloves.
(W3, O4)
Top Glove could hire brand image services to rebrand the
product of Top Glove. (W1, O1)
Top Glove could obtain grant from the government to
Page | 26

responsibility to increase the image of the company. (S6, O3)
Top Glove could announce dividend of shares to attract more
investors to buy its shares. (S6, O4)
send employee for the training of the employee on the
brand management. (W4, O3)

Threats

T1 High competition
T2 Increase of energy price
T3 Minimum wage policy
T4 Higher tax cost (GST)







Top Glove can use its market position to initiate price war to
eliminate the other players. (S1,T1)
Top Glove can set up an energy efficiency management
committee to monitor the energy usage. (S1,T2)
Top Glove could reduce the manual labour to automatic control
of the production line. (S1, T3)
Top Glove can increase the production output to reduce the
overhead cost. (S1, T4)
Top Glove could set up a purchasing committee to scrutinize the
purchasing requisition to make sure that the company is choosing
the supplier with the best quality but the cheapest price. (S2, T4)
Top Glove could increase the product range to diversify the risk
of depending on the energy price. (S3, T2)
Top Glove could set up new sales channel to increase the sales to
reduce the impact of the increase of energy price. (S4, T2)
Top Glove could set up new factory at different locations to
mitigate the risk of change in government policies and country
risk. (S4,T3)
Top Glove could set up new production line at different place
where the taxation is favourable in low production cost. (S4,T4)
Top Glove could invent new gloves to differentiate itself with the
other competitor. (S5, T1)
Top Glove could examine the techniques of the production of
glove to less consuming the energy. (S5, T2)
Top Glove could buy the other competitor company to reduce the
competition. (S6,T1)
Top Glove could lock in the price of the energy by paying the
energy cost with cash instead of credit to reduce the transaction
cost. (S6, T2)
Top Glove could build factory at different country where the
labour cost is cheap. (S6, T3)
Top Glove could have its own raw material supply to
maintain its cost. (W1, T1)
Top Glove could invent in new technology that using less
material and energy. (W1, T2)
Top Glove could employ cheap foreign workers to reduce
the cost. (W1,T3)
Top Glove could invest in the marketing team to look for
long term customer. (W2, T1)
Top Glove could come out with new product that could
diversify the risk of energy price hike. (W2, T2)
Top Glove could shift its production line in country
where the labour cost is cheap. (W2, T3)
Top Glove could diversify its core business to other so
that it is not dependent on the glove business. (W2, T4)
Top Glove could invest in other business to reduce the
risk of glove manufacturing. (W3, T1)
Top Glove could venture into new business such as
plantation to diversify the risk of the glove manufacturing
business. (W3, T2)
Top Glove could venture into other business to mitigate
the risk of depending on high investment of technology.
(W3, T3)
Top Glove could spend its resources heavily in the
branding exercise to differentiate itself with other
competitors and to keep its loyal customer. (W4, T1)
Top Glove could diversify its core business to less rely on
the currency and focus on the local market. (W5, T1)
Top Glove could lock in the price of the currency to
reduce the fluctuation of the currency. (W5, T2)
Integration Strategy Intensive Strategies Diversification Strategies Defensive Strategies
Generic Strategies of
Porter
Forward
Integration
Backw
ard
Horizo
ntal
Market
Penetration
Market
Development
Product
Development
Concentric
Diversification
Conglomerate
Diversification
Horizontal
Diversification
Joint
venture
Retrench
ment
Divest
ment
Liquida
tion
Differenti
ation
Cost
Leadership
Foc
us
Page | 27

VI. STRATEGIC ALTERNATIVES AND RECOMMENDED STRATEGY
Top Glove Vision
We strive to be the world's leading manufacturer with excellent quality glove products
and services that enrich and protect human lives.
Top Glove Corporate Mission
To be a world class glove manufacturer by providing top quality products with
excellent services through continuous improvement and innovation.
To produce consistently high quality gloves with efficient low cost.
To earn 2 healthy dollars and spend 1 efficient dollar.
Alternative strategies
Cost Leadership Strategy
Top Glove could engage into cost leadership strategy with the aim to have lower cost
than its competitor to draw the customers from the other competitors. With its largest
rubber glove manufacturer, top glove could use its market leader to set the price that
is more favourable to the operation of Top Glove. For example, Top Glove has the
advanced technology that can produce high quality of Nitrile glove; it can set the price
slightly lower than the other competitors to attract all the customers to purchase its
glove. The market share will be owned by Top Glove. With this strategy, Top Glove
could eliminate the other competitors by drawing the market from the competitors.
Top Glove could use its market power to negotiate with its suppliers to obtain the
lowest possible price. Moreover, Top Glove could negotiate with the bank to obtain
the cheapest interest rate with its current position in the market and assets in the share
market. These strategies will help Top Glove to lower down its production cost which
in turn increase the profit earned.
With the high cash in hand, Top Glove could lock in the price for the raw material
when the price strikes to the lowest region. This could help Top Glove to eliminate
the risk of fluctuation raw material price. Top Glove could have more control and
monitoring on its operation of gloves.
Page | 28

Moreover, Top Glove could pursue the government in tax exemption for the imported
raw material so that it has more competitive advantages toward the global glove
manufacturers. Advanced technology might come along with the high duty import tax;
Top Glove could have a conversation with the government to reduce the duty import
which in turn reduces the overhead of the production cost.
For the high energy price and the reduction of the subsidies by the government on the
energy, Top Glove could set up an energy efficiency management committee to
monitor the energy usage. This could help Top Glove in fully utilise the energy which
it purchases. Waste energy could be utilised for the other purposes until the energy
could not contribute any more. In addition, Top Glove could engage its R&D team to
invent or re-examine the techniques of the production to use less energy. This strategy
will help Top Glove to save its cost in purchasing more unit of energy.
Due to the implementation of the minimum wages, Top Glove could shift its
production line from manual labour to automation control of the production. Legal
foreign workers might be employed to reduce the overhead cost of the factories.
Meanwhile, Top Glove could set up a purchasing audit committee to scrutinize the
purchasing requisition to make sure that the company is choosing the supplier with
the best quality but the cheapest price. Top Glove could inform the suppliers that they
would not want any gift in return but quality of products. This strategy could
guarantee that no flaw in the raw material requisition.
The risk of low cost leadership is that the competitors might imitate the strategy.
However, due to Top Glove the largest glove manufacturer, lower production cost and
high cash on hand; the competitor could not easily compete in term of cost. In order to
ensure that the strategy is on track, the company shall frequently monitor its
production cost and implement tight cost control. The product which is invented shall
be easily manufactured with the least input. Rewards could be distributed to the
production that could meet targeted quality production output.



Page | 29

Differentiation Strategy
Top Glove could invent special glove to cater the need of specific customer. This
strategy could avoid Top Glove to compete with the other competitors. The profit for
this type of special glove usually is high. Top Glove could be monopoly in this special
glove.
Besides, Top Glove could hire brand image services to rebrand the product of Top
Glove. The branding could help the customers to differentiate the product so that
brand loyalty could be formed. The customer will buy only the Top Glove brand.
With this strategy, Top Glove could charge a higher price with the Top Glove brand
instead of compete intensively with the competitors.
Advertising could help Top Glove to build its brand. Top Glove could spend its
resources into advertising to teach and aware the customer on the products of Top
Glove. The customers will slowly recognize the brand and be stay with the brand.
Besides advertising, involving into the corporate social responsibility will help Top
Glove to build its brand in the local community. For example, Top Glove could offer
scholarship to the local community to help the community. This could help Top Glove
in maintaining a pool of skilled labour. The management could easily obtain human
resource with the support of the local community.
The risk of differentiation strategy is that the company shall monitor what make the
product special. The bases for differentiation could change over the time. Top Glove
shall certain that the bases of the specialty remain. Competitor imitation on the
strategy could occur, however, once the advertising and branding exercises have
created the brand loyalty, it would be difficult for the competitor to influence the
customer. Therefore, branding exercise shall commence in the shortest time.
In order the differentiation strategy comes to success, Top Glove shall invest heavily
in the Research and Development (R&D) team. Highly skilled labour and creative
minded are the utmost needed. Besides, the marketing team would be needed in doing
the rebranding.


Page | 30

Integration Strategy
Top Glove could perform integration strategy, for instance, backward integration.
This is because Top Glove relies heavily on the raw material of rubber and the rubber
price is fluctuated in a wide range. Hence, Top Glove could acquire land to plants its
rubber tree to produce latex on its own. This could help Top Glove minimize the risk
of price hike for latex. Moreover, Top Glove would have more power in negotiate
with its suppliers on the supply of latex when it has its own latex supply.
With horizontal integration, Top Glove could open subsidiary at other countries so
that the products could be offered and sold there. This strategy could help Top Glove
to mitigate the risk of changing in government policies and country risk.
Besides, Top Glove could acquire its competitor to eliminate the competition and
control the market. With less competition in the market, Top Glove could set the price
higher. Besides, technology of the competitors also could be utilised to invent new
glove.
The integration strategy could help Top Glove to grow into a larger group with more
products being sold to other countries. Top Glove would be more geographically
diversified.
Intensive Strategies
Top Glove could penetrate the market by spending its resources in the marketing
department. Top Glove could work with the government to supply glove to
government hospitals. Due to the rising of the health care industry, Top Glove could
capture the market by attracting the customers with lower price to sign a long term
contract with the customer. With the long term contract, Top Glove could manage its
production line more efficiently. Besides, Top Glove could set up new offices and
sales channel in different country to penetrate to the new market in the new country.
The marketing team could look forward for the long term customer. With this strategy,
Top Glove could get higher sales volume and the share price of Top Glove would
increase. Moreover, the production line would be 100% utilised with the stable
demand from the long term customers.

Page | 31

Diversification Strategies
Conglomerate diversification could be the strategy for Top Glove. Top Glove could
venture into the business that rely less on investment of technology, for example, the
real property industry. The risk of the strategies is the uncertainty of the economy of
Malaysia. The high debt ratio in the country and family raise an increasing concern of
the Bank Negara Malaysia. The people are worrying on the burst of the property
bubbles. Although it would carry risk, however, with the high cash flow on hand, Top
Glove shall not only rely on the income from the glove manufacturing. Diversification
exercise will attract different type of investors to invest into Top Glove. With the
venture into new business, Top Glove could venture into the business that is less
dependent on the labour supply and the currency fluctuation. Even with the hike in
energy price, Top Glove profit could be maintained with this strategy.














Page | 32

VII. IMPLEMENTATION- I Implementation of Strategies
The recommended strategies for Top Glove are cost leader strategy, differentiation
strategy, integration strategy, intensive strategy (marketing strategy) and
diversification strategy. Top Glove top management shall involve and lead the
program of the implementation of strategies by providing signed memo by the CEO
of the company to the employees informing the upcoming related strategy. Top
management of Top Glove shall disseminate the jobs to all the related departments
down to every Top Glove employee to execute the strategy. Each department will be
set targets to be achieved and to be reviewed by end of the year.
Cost Leader Strategy
For the cost leader strategy, the top management of Top Glove shall set the objectives
of the strategy to the department and matching the managers to the goals of the
strategy. For example, to lock in the price for the raw material when it is low, the
manager shall assign an employee to monitor the market of the raw material supply.
When the price hits the low price, the employee shall inform the management to make
decision.
For the purchasing audit committee, in order to run the committee effectively, the
management of Top Glove shall identify the ability and potential of each employee to
match with the job scope. The employee with high credibility, responsibility and
honest shall be selected for the purchasing audit committee. Training and personal
development shall be provided to the employee if the employee is lack of the
respective knowledge on the committee. If the human resource is insufficient, the
Human Resource manager shall hire the related skill employee to the company.
For the price setting of the products that Top Glove are selling, the marketing team
shall work closely with the product development team and the management in order
to set the price correctly to compete with the other players in the market. All the
market data, economy and current situation of the market shall be scrutinized by the
team before setting the price lower.
The production manager in each line of the production shall be assigned a targeted
sales and operation cost so that each manager is equipped with goals to fulfil.
Page | 33

Differentiation strategy
For differentiation strategy, Top management shall allocate sufficient budget for the
Research and Development (R&D) department in order for the team to develop and
invent new types of glove. Training, seminars and forums for the team to explore shall
be given as well. Top Glove could engage with the local and overseas universities to
do the research with the new glove development. Sponsorship or scholarship could be
given to the researchers in order to keep the pool of highly skilled workforce.
Besides, Top Glove could assign the marketing and public relation manager to look
for good brand image building services company to work on the rebranding exercises.
They could form a working committee mainly for the branding work. If the staffing in
Top Glove has the appropriate knowledge on the branding exercise, the management
could spend the resources and budget into the branding committee.
Integration strategy
Top Glove shall involve the senior management team to have responsible in the
integration exercises due to the experience of the senior management and the
knowledge. The senior management shall be assigned to set up new subsidiaries,
venturing to the supplier business and acquisition. The senior management shall lead
the workgroup to accomplish the task. Reward system shall be reviewed to make sure
that the hard work from the senior management team is compensated.
Intensive Strategies
The marketing department is responsible to the intensive strategy which they have to
study and penetrate the market globally. The quantity of the long term customers that
the marketing team could obtain would be set as one of the goal. Besides, commission
shall be given to the marketing team when they have found new customers. This is to
ensure that the marketing team is working hard on the goals.
Diversification Strategies
For the diversification strategies, Top Glove shall use its upper management level
team to taking care of the new venture in different industry. It could be achieved by
acquiring developed companies in the related field to expand the non-core business of
Top Glove.
Page | 34

V Visualization of Implementation Plan
No Strategy Responsible Department
1 Cost Leader Strategy
-Purchasing audit committee
-Price setting
-Lower cost production
Top Management,
Purchasing,
Marketing,
Production
2. Differentiation Strategy
-New special glove
- Rebranding
Top Management,
R&D,
Public Relation, marketing
3. Integration Strategy
-Backward integration (acquire
supplier)
Top Management, senior management
4. Intensive Strategy
-penetrate the market share in the
global market
Top Management, marketing,
5. Diversification Top Management, upper management
Table 2: Visualization of I mplementation Plan











Page | 35

VIII. EVALUATION AND CONTROL
E Evaluation and Control
In order to perform management on the operation of Top Glove, measurement has to
be undertaken. Figure 6 below shows that the general flow for the measurement
process which follow the plan-do-check-act. Since the Return on Equity (ROE), Net
Profit Margin, Inventory turnover, Earning per Share (EPS) and Liquidation ratio has
been decreasing from the year 2012 to 2013. The measurement value that to be set to
the top management might be the five ratios mentioned which are the ROE, Net Profit
Margin, Inventory turnover, EPS and Liquidation ratio. A balanced score card
approach could be used to monitor the performance of Top Glove top management.
The management will then disseminate the job tasks to the lower management and
finally to the every employees so that everyone in the company will be assigned tasks
to hit in meeting up the objectives of the company goals.


Figure 6: Measurement of the result of the performance of Top Glove.

Page | 36


OBJECTIVES & KEY PERFORMANCE INDICATOR (KPIs) FOR PERIOD FROM 1 JANUARY 2013 TO 31 DECEMBER 2014
Rating scale: Needs Improvement; Performance Improve; Meet Expectations; Exceed Expectations; Super Exceed Expectation. (Your rating will be: NI=1; PMI=2; ME=3;
EE=4,SEE=5 )
KEY RESULTS AREA
(KRA)
WEIGHT
(%)
MEASUREMENT TARGET (KPIs)
Comments / Examples / Rationale Manager's
Evaluation
Rating
Total
Rating
Achievement Rating
FINANCIAL
ROE 25 16.3
Net Profit Margin 25 9.5
Earnings per share 20 0.35
Inventory turnover 20 11.0
Liquidation ratio 10 3.0

CUSTOMER

INTERNAL PROCESS


GROWTH


TOTAL 0

Table 3: Sample Balanced Score Card for Top Glove Top Management

Page | 37

Control
The behaviour control such as deploy working procedures and checklists to monitor
the operation of Top Glove could be set up. A good monitoring management control
would be implementing ISO standard to the company such as the ISO 9001 Quality
Management System, the ISO 14001 Environmental Management System (EMS) and
the ISO 50001:2011, Energy management systems Requirements with guidance for
use. The ISO 50001 is the new ISO standard which monitors the usage of the energy
and minimizes the wastage of energy. All the standards stated are to enable an
organization to follow a systematic approach in achieving continual improvement of
its operation and management.
ISO 9000 certification will increase Top Glove international competitiveness. It
stresses on the commitment of quality on the products and provide assurance to the
customer that the quality Top Glove could produce.
Meanwhile, ISO 14000 certification will improve environmental awareness among
employees, reduces risks of violating regulations, and improves the firms safety
standard so that zero accidents could be achieved and safe working environment could
be established.
Internal audit committee could be set up to scrutinize the Non Conformance (NC) of
the standards and to fix the problems in the process before it is getting worse. The
internal audit committee could be set up from different departments, which every
department is assigned to audit the other department to check the conformance of the
department to the predetermined standard. All the audit results will be discussed
during the management review for further improvement and arrangement.

Whistle-Blowing Policy
A whistle-blowing system could be developed to strengthens, supports good
management and at the same time demonstrates accountability and sound corporate
governance practices.

It would be a platform to act as a channel for the complaints and fraud to be reported.
Wrong doings and non compliance to any rules or procedures by the employee and
management of Top Glove would be voiced out. An Anti-Corruption and Whistle
Page | 38

Blowing Committee will be directly reported to the board of Top Glove. Any issues
raised by the whistle-blower will be investigated thoroughly.
































Page | 39

References
Bibliography
Kossan Industry. (2013). Recent Advances in the Malaysia's Glove Industry in Meeting
Today's healthcare Challenges. Malaysia: Kossan.
OSK. (2013). OSK Top Glove Investment Review 2013. Malaysia: OSk.
OSK. (2013). OSK Top Glove Market Highlight 2013. Malaysia: OSK.
TopGlove. (2009). Top Glove Annual Report 2009. Malaysia: Top Glove Berhad.
TopGlove. (2010). Top Glove Annual Report 2010. Malaysia: Top Glove Berhad.
TopGlove. (2011). Top Glove Annual Report 2011. Malaysia: Top Glove Berhad.
TopGlove. (2012). Top Glove Annual Report 2012. Malaysia: Top Glove Berhad.
TopGlove. (2013). Top Glove Annual Report 2013. Malaysia: Top Glove Berhad.