MASTER OF BUSINESS ADMINISTRATION (MBA)

GRADUATE SCHOOL OF MANAGEMENT (GSM)

KULLIYYAH OF ECONOMICS AND MANAGEMENT SCIENCES (KENMS)

OPERATIONS MANAGEMENT (MGT 6240)

COMPANY ANALYSIS
How could SMEs create competitive advantage and sustain
competitiveness via operations management:
A case study of

SUBMITTED TO:
DR. WAN ROHAIDA WAN HUSAIN

SUBMITTED BY:
SAYED FAQIR BARES (G1824469)
WAN ZUL IKRAM WAN ABDUL RAZAK (G1836919)
FARHANA ‘AYUNI SHAHRIR (G1818494)

TABLE OF CONTENTS

Executive Summary 1

CHAPTER 1 2-5
Introduction (Background of the Organization)
1.1 Competitive Strategy
1.2 SWOT Analysis

CHAPTER 2 6 - 21
Strategic Operations Management in Creating Sustainable Competitive Advantage
2.1 Human Resource and Job Design
• Discussions
• Islamic Perspectives
• Conclusion
2.2 Quality Management
• Discussions
• Islamic Perspectives
• Conclusion
2.3 Capacity Planning
• Discussions
• Islamic Perspectives
• Conclusion

References 22

EXECUTIVE SUMMARY
The creative industry (CI) has become a global idea in the past two decades and it has
been acknowledged by the Malaysian government as a significant driver to help the
economy transformation. In this transformation, the government and private sector
have been working closely to develop the creative content industries, and to make the
public aware of the importance of this ‘creative’ economy. This study approached one
of the Small and Medium-sized Enterprises (SMEs), Les’ Copaque Production (LCP)
which an animated and 3D movie private company to examine their strategic
operations management in creating competitive advantage and overcoming the
technological and market challenges. Using this approach, a better knowledge and
comprehension about strategic operations strategies of Les’ Copaque Production
(LCP) were gathered via interview, observation and findings. Specifically, LCP’s
operations strategies is by implementing (a) good human resource and job design, (b)
quality management, and (c) capacity.

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 Chapter 1
INTRODUCTION
(BACKGROUND OF THE ORGANIZATION)

Les’ Copaque Production Sdn Bhd (LCP) is a Malaysia company that was established
in 2005 which is located in Shah Alam, Selangor. It is most famous for its animation
creation of Upin & Ipin which are the main characters of a children’s show. The Upin
& Ipin brand began as a series of short movies, which were later developed into a
television series that was taken up by a local television station. In 2009 Upin & Ipin
were developed into a full-length animated 3D feature. By 2018, Upin & Ipin had
covered twelve (12) seasons of series. They have won numerous awards for both
creative content and business achievements since its establishment.

LCP was set up by young graduates of a creative multimedia school who were backed
by an experienced mentor who provided the funding and advice for them to launch
their first product. The mentor and his wife now act as the Managing Director which
is Mr. Burhanuddin Md Radzi and Mrs. Ainon Ariff as Content Director respectively.
Their mission was to do something daring and innovative while at the same time
showcasing the Malaysian culture unique local flavor. This was represented by their
name which was based on a local slang “Last Kopek” which means the last card that
one can take when playing a card game, hence placing of all your hopes and dreams
on that final card. Les’ Copaque also portrays an importance on its company logo,
which is a frog on top of a coconut shell. The logo comes from a Malay proverb,
“Bagai katak di bawah tempurung”. The proverb is meant to motivate people who
remain stagnant and do not take the initiative to venture out into the world. Les’
Copaque’s logo, however, has the frog and on top of the coconut shell, which
symbolizes their “...eagerness to dream big and our abilities to think outside of the
box.”

Source: http://www.lescopaque.com

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In serving the creative industry (CI), LCP main products are in the form of intellectual
property (IP) assets. Having ventured in this segment of economy, they directly
involved in the creation, manufacture, broadcast and distribution of copyright
protected materials. Initially, their main business is 3D animation creation such as
Upin & Ipin and Geng: The Adventure Begins, which main target market is children.
Their creations made a hit after successfully gained acceptance and great popularity
not only from domestic market but also international market like the Indonesia,
Brunei, Singapore, Philippines, India and recently China market.

The significant success of the animation series has led LCP to expand their business
and venture in a variety of other secondary businesses through launching of various
subsidiaries as shown below:

No. Subsidiaries Business

Merchandising based on
1. Les’ Copaque Merchandising Sdn. Bhd.
LCP-owned IP
Offering 3D animation
2. Les’ Copaque Animation Academy and IP business
management courses
E-sports and mobile
3. Les’ Copaque Games Development Incorporated
game development
Food and beverage –
4. Les’ Copaque Flava
food restaurant chain
Non-animation film
5. Less Copaque Film Sdn. Bhd.
production

Table 1 : Les' Copaque Subsidiaries

It is seen that LCP is generating revenue from various businesses ranging from selling
episodes to television stations, partnerships, advertising revenue sharing,
merchandising, food restaurant chain as well as education.

1.1 Competitive Strategy

Competitive strategy aims to establish a profitable and sustainable position against the
forces that determine industry competition. It is a unique strategy of an organization
to effectively utilize its resources, managing to improve customer experience and
position itself better than the competitors. According to Porter (1985), one of most
influential management gurus, stated that there are two central questions underlie the

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choice of competitive strategy. The first is the attractiveness of industries for long-
term profitability and the factors that determine it. The second central question in
competitive strategy is the determinants of relative competitive position within an
industry. In other words, an organization gains a competitive advantage either through
cost leadership, product or service differentiation or response (time-based) strategy.

In a case of LCP establishment, the entrepreneurial founder, Mr. Burhanuddin Md

Radzi and Mrs. Ainon Ariff was taking a distinctive approach in developing their
animation products. They have attended multiple industry trade shows and film
festivals throughout the world in an attempt to find the best approach. “We visited
Cannes to get same ideas. Our capabilities can be proven only if our product is
accepted by Malaysians. That means it must have local characteristics that audiences
can relate to in a more meaningful way.” said Managing Director of LCP. They
noticed that most studios desired to adopt popular technique used in American and
European animation. However, the couple had decided not to copy others but instead
they took a tradition approach by showcasing a unique local flavor as part of their
competitive strategy and bring upon a traditional Malaysian village (kampung)
setting. On top of that, since our country is ranked high in ethnic and cultural
diversity, both of them identified it as a special feature to be introduced to the world.
LCP strongly believed that significant mixture of technology creativity and Malaysian
culture play a major role in making their products unique and different from other
animated series and movies in the market. As a result, the three majority Malaysian
ethnics’ lifestyle had been portrayed in their animated series and movies.

Besides taking a product differentiation approach, LCP is getting cost leadership on

board in their business. They have been supported by not only government but
through sponsorships and strategic partnerships.

By focusing on these two competitive strategies over the competitors in the industry,
Les’ Copaque went from a small studio into one of Malaysia’s largest homegrown
animation studio in just few years.

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1.2 SWOT Analysis
According to Thompson (2007), SWOT analysis is a simple but powerful tool for
sizing up an organization’s resource capabilities and deficiencies, its market
opportunities, and the external threats to its future. For Les’ Copaque Production
(LCP), below is their analysis in creating competitive business strategies.

Strengths
• One of the pioneer animation production companies in Malaysia.
• A national benchmark for creative industry, specifically in animation.
• LCP has a distinctive style of animation and unique from other computer-
generated animations series and movies available in local market.
• Achieved significance success and have won multitude of awards.
• Entitled to financial supports by the government agencies.
• Multiple source of income stream through subsidiaries and partnerships.

Weaknesses
• Limited budget and access to financial resources to make large investments
needed to develop their products or services to go to the international market.
• Developing country like Malaysia is still unable to compete with big and
established studios like Pixar & Walt Disney from developed countries.
• Difficulty to penetrate the bigger market of international animation and break
into more mature markets like America and Europe.

Opportunities
• Creative sector is acknowledged by the Malaysian government as one of the
major drivers in the transformation of economies.
• Creative sector in Malaysia is yet to mature, therefore there is relatively low
competition and a lot of room for innovation and improvement.
• Malaysia is a multi-ethnic country and that can be used as a tool for identifying
growth opportunity and project ideas.
• Many options of modern commercialization strategies available to market the
product for example, social media.

Threats
• Creative industry is a relatively new economy sector for Malaysia which lack of
understanding from the government and public.
• Costly access to latest technologies in producing high-quality animations.
• Cost of infringement of their intellectual property (IP) rights and content piracy.
• Low level of industry exposure, profile and reputation.
• Lack of access to global market.

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 Chapter 2
STRATEGIC OPERATIONS MANAGEMENT IN CREATING
SUSTAINABLE COMPETITIVE ADVANTAGE

2.1 HUMAN RESOURCE AND JOB DESIGN

Before the company was first formed, the couple was introduced, by chance, to a
group of film and animation graduates who aspired to make an animated feature film
but had difficulties finding an investor. Mr. Burhanuddin was attracted to the
graduates’ idea and agreed to finance their project, provided they follow his business
model and that his wife will handle creative control. LCP was growing rapidly ever
since their establishment in 2005 and currently they have 171 employee headcounts in
LCP alone and 30 employees running their subsidiaries. However, in this report we
will be focusing mainly on the strategic operations decisions particularly in Les’
Copaque Production Studio.

Job design can be defined as the activity of arranging task, duties and responsibilities
into an organizational unit of work with the ultimate goal of increasing a firm’s ability
to meet its objective effectively and to provide job satisfaction to the employee
(Belias, 2013). Working towards their vision and mission, LCP Studio is strategically
organized into 3 main divisions, namely; Production, Business Sales & Marketing,
and Admin & Finance. The details are shown in the figure below:

Les’ Copaque Production Studio

Business Sales & Admin &

Production
Marketing Finance

Animation Media & Motion

Production Games Pictures

Scripts & Idea Concepts & Layout &

Development Designs Storyboard
Audio &
3D Modeling 3D Animation
Music
Lighting & Compositing &
Rendering Special Effects
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Animation Production department comprises of eight other sections (Scripts and Idea
Development, Concepts and Designs, Layout and Storyboard, Audio and Music, 3D
Modeling, 3D Animation, Lighting and Rendering, and Compositing and Special
Effects) which serve as the backbone of the whole operation and their success stories,
and it consists of the greatest number of employees in the company. Their success in
the creative industry has proved that Mr. Burhanuddin and his team are well-versed in
effectively and efficiently managing their labor and designing jobs which capitalized
on their employees’ capabilities. It can also be seen that LCP has taken into account
the aspects of capacity development in managing their capacity.

The process of recruitment in LCP is dependent on the nature and requirement of

individual department or section. Usually, candidates for Production division will
need to undergo two or three stages of interview sessions where they have to present
their skills based on the task given by interviewer. On the other hand, for
administration positions, candidates only need to attend single-session interview. LCP
is actively receiving application through their email (jobs@lescopaque.com) and third
party job application platforms such as JobStreet and JobStore. The company hire
local talent the most to align with its mission to be a production company that
specializes in creating IP with the highest quality possible that showcases local talents
and Malaysian culture. In fact, they used to hire talents among the participants at the
LCP Animation Training Center. The aim is also to be a platform for young
Malaysian talents to showcase their own limitless imagination.

Currently, labor planning in LCP uses a standard work schedule of five eight-hours
days which is 9AM – 6PM, Monday to Friday. Even though it is a project-based
company, the fixed work schedule seems to have no objection from employees
because it is compensated with fun and engaging work environment. LCP adopted
openness practice as well as flexibility and inclusiveness of employee engagement.
This practice promotes an environment of open communication and high morale to
encourage sharing of ideas in ensuring continuity of ideas and product development.
The respondent from LCP had also stressed on how they work as a team, like a big
family, and support each other while having the attitude of keeping to the deadlines.
One of the most interesting perks in LCP is that the company allowed their staff to
work in other departments, provided that they have what it takes to work in the

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requested department, and also give the opportunity to their staff to contribute their
voice to their animation production. However, this is subject to management approval
and concern.

On the other hand, motivation and incentive systems also important that serve as a
part of psychological component in designing job. LCP management team also have
considered this psychological component of job design that contribute to job
satisfaction and motivation, by providing an attractive total remuneration package and
reward to their employees. LCP rewards their staff according to their own
predetermined incentive system as listed below:
• Bonus
• Increment Based on Key Performance Indicators (KPI)
• Company Trip
• Free Training
• Staff Meal Allowance
• Staff Purchase at Upin & Ipin Merchandise Store
• Company’s Recreational Club

Discussions
It is strongly believed that, the combination of strategic human resource management,
appealing work environment and attractive incentive system contribute to improve
employee satisfaction and retention. Good human resource strategies are undoubtedly
expensive, difficult to achieve, and hard to sustain. However, LCP has demonstrated
that sustainable competitive advantage can be built through a human resource
strategy.

One success story of well established company, Starbucks Coffee Company in which
they implement the similar human resources strategies as LCP has led the company to
high organizational effectiveness in the industry, stemming in part from successful
employee engagement. Positive employee engagement leads to a psychological
climate, cultural attitude, and set of employee behaviors that positively impact an
organization from top to bottom (Kataria, Rastogi & Garg, 2013). As a large
successful company, Starbucks has more resources available to take staff out of their
daily work and place them in training sessions. Investment in training needs

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assessment and training sessions themselves may be daunting for small companies;
however, an organization operating in more flexible environments can reap the
rewards (van Eerde, Tang, & Talbot, 2008). As an example of a luxurious training
session, Starbucks took their entire work force off the line for a three-hour barista
training event, focused on making perfect espresso (MacDonald, 2008).

Besides that, based on the interview and observation that had taken place, we can see
that LCP provide a reasonable quality of work life to their employee with equitable
pay and appropriate level of both physical and psychological requirements. Mutual
commitment also is given by both management and employee in meeting their
common objectives. Mutual trust is being reflected in reasonable, documented
employment policies that are implemented to the satisfaction of both management and
employee. When the management has a genuine respect for its employees and their
contribution to the firm, establishing a reasonable quality of work life is not
particularly difficult.

However, there are some betterment that might enhance and add value to the
operation, specifically on human resource aspect. For a project-based company like
LCP, a standard work schedule is not particularly necessary. Instead, the company
might consider to opt for flextime which allows employees, within limits, to
determine their own schedules. This policy allows more autonomy and independence
on the part of the employee while at the same time enhances job satisfaction. It might
be viable to the operation of LCP, as long as the projects are delivered in timely
manner. The company also could retain the employee longer, since flexible working
hours is always one of the perks being highly sought after by employee. This
flexibility thus benefits the employee and the company.

Islamic Perspectives
In the theoretical framework of human resource practices from the Islamic
perspective, the basic human resource management functions should be performed in
accordance to guidelines prescribed in the Qur’an and Hadith (Hashim, 2010). Islam
calls for recruitment as offering job vacancies with trust and responsibility. Islam
requires the person in charge of recruitment to be pious and just. This is to ensure that

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the recruitment is fairly conducted, and a just treatment is given to all applicants. This
requirement is stated in the Quran:

“God doth command you to render back your trust to those to whom they are due;
and when ye judge between man and man, that ye judge with justice; verily how
excellent is the teaching which He gives you! For God is He who heareth and seeth
all things.” (Quran, 4:58)

Besides that, employers are required to inform the truth about the jobs offered to
potential applicants. This includes information pertaining to the jobs’ requirement, the
criteria of the jobholders, and the compensation to be paid. This information is
important to the applicants so that they can evaluate the job suitability with their
competency, capability and interest. For example, the Quran states:

“No soul shall have a burden laid on it greater than it can bear.” (Quran, 2:233)

As regard to employee selection, in Islam, it is abided by certain principles. Employer

should not nominate candidate on account of favoritism or egoism. Rather, the
employee selection should be based on their competency and both party, employer
and employee must be honest to ensure that the right decisions are made. Islam also
forbids assignment of work that will exceed the individual’s capacity. This is because
the individual may not be able to perform the assigned job due to his/her inadequacies
and it may harm him as well as the organization where he works.

Conclusion
In the light of human resource strategy and management, LCP has taken a noticeably
good approach in managing and retaining their human capital. The current strategy
adopted by LCP in managing labor and designing jobs has effectively and efficiently
utilized their workforce within their constraints of operation management decisions.
Although many decision made about people are constrained by other decisions, the
management team has to take the challenge and continuously improve their human
resource strategy.

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2.2 QUALITY MANAGEMENT
Entertainment industry is a brutal market where hundreds of companies tries their best
to find ways and strategies to take over their rivals’ market shares and without any
doubt quality management is one of the best strategic weapons known which can be
defined as an act of controlling all activities and tasks to accomplish the desired
output in efficient manner which has also been referred to as Total Quality
Management (TQM) which is one of the fundamental activities of strategic
managements. This strategy includes the determination of a quality policies, creating
and implementing quality planning and assurance, quality control and quality
improvement which are inline to companies’ mission and vision (Barone, 2019).

Les’ Copaque primary business is to create high quality animations as it is clearly

mentioned on their mission statement,

“We use this mentality to the way we do our work, in giving our best in creating
our own Intellectual Property (IP) with the highest quality possible.”

Source: http://www.lescopaque.com

The three product quality dimensions which the company mainly focuses on are
performance, features and aesthetics. Performance involves various operating
characteristics of the product and for Les’ Copaque, these characteristics is measured
in term of content, quality of sound and pictures. Firstly, their products have
educational content which teaches moral and social values to viewers which is very
appealing for parents to encourage their children to watch their animations. Secondly,
their qualities of products like sound and pictures are always updated to the newest
technologies which makes them ahead of competition.

Features are additional characteristics that enhances the appeal of products and
services to the user and Les’ Copaque has achieved this by adding Islamic values and

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authentic Malaysian cultures which makes them unique and more attractive in
comparison to big players like Disney because Muslims population is bigger in the
neighbor countries that shares the same culture.

Aesthetics has been defined as the human perception of beauty including sight, sound,
smell, touch, taste and movement. Les’ Copaque has consistently proven their
aesthetics by producing high-resolution 3D with inspirational and beautiful story-
based animations which are very pleasant to the customers.

As for quality control, Les’ Copaque practices two quality control approaches which
are product and human capital. For the product, LCP follows a ‘pipeline’ workflow in
creating a comprehensive production outputs. The animation pipeline shown in table
below consist of three (3) basic processes which is known as Pre-Production,
Production and Post-Production. The design of the animation pipelines for Upin &
Ipin are based on a 3D animation key frame workflow which focuses on the
production workflow including transition of idea, concept and illustration for 3D
computer animation. According to Watkins (2001), to measure and identify the
amount of tasks required to complete the animation prototype, an appropriate
‘pipeline’ or workflow should be constructed.

Pre-Production

Production

Post-Production

Table 2 : Animation ‘pipeline’

On the production phase, it covers the implementation of approved illustration and

concepts art from pre-production and turning them into computer generated images or
3D computer animation visuals including modeling, texturing, lighting and most
importantly rigging or animating the character, and finally rendering for video or still
image (high-resolution) output. In pre-production phase too, quality control
department will evaluate if the story which has been written by content writers meets

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customer expectations or not, if not then the story will be tweaked by both quality
control and content writer team to exceed the customer expectation.

Finally, in the post-production phase, upon completion of the final rendered

animation, the rendered animation video from the 3D software is transferred to Post-
Production for editing purposes using software such as Adobe After Effects or Adobe
Premiere. This includes adding music, editing of voice-overs, effects, transition and
other related features. This exercise is being done by quality control team too.

In the creative industry, human capital is an essential area of concern on the creative
aspects, since the technology is always innovating and in change so finding an
employee familiar with the latest technology which meets the industry demand is
really challenging. However, Les’ Copaque creatively solved this issue by learning
and sharing knowledge. To explain further, the management of the company has
created a very relaxing environment for their staff by organizing company field trips
all around the world. As such, by actively sending their staff locally and
internationally for training and to attend conferences, expos, festivals, fairs, seminars,
and workshops for their staff development. With these creative strategies the staff
have the chance to enhance their knowledge with the latest technologies available in
the market.

In addition, the company also allows their staff to work in other departments if they
want to, this way employees can share the knowledge in cross departmental bases.
Since the company inspires their employees by intrinsic motivation which is creating
a work environment that drives intrinsic value. Essentially, they have created a
workplace where employees feel comfortable and satisfied. They are proud of the
work and are driven to complete tasks for the simple sense of self satisfaction. These
intrinsically motivated employees remain productive by simply showing and doing
their work and it certainly results on high quality products.

In results of these Total Quality Management (TQM) being implemented, LCP and its
creations have won fifty-nine (59) awards like Global Business Leadership Awards
(2019), SME Brand Excellence Award (2018), The International Achievement Award
Italy (2018), Century International Quality ERA Award, Geneva (2013), the Brand

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Laureate Award (2010), the SMI Innovation Excellence Award (2011), the
President’s Award at the Business Excellence Awards run by the Malaysia Canada
Business Council (2008) and many more.

Discussions
Without any doubt quality is Les’ Copaque’s best strategic operations decision. They
have adopted most important characteristics of quality management principles by
focusing in their products and human capital which can be a very good guide to any
other organizations and companies. Moreover, for the product quality dimensions the
company have chosen; performance, features and aesthetics which make their product
unique, good and attractive to the customers and it has been proven by their
popularity in Southeast Asia. Similarly, the strategy to enhance human capital where
employees can switch teams whenever they want to, attend educational conferences,
Intrinsic motivation and encouraging innovation and ideas are all top-notch strategies.

However, in executing the quality control practices there are some improvements
which is worth to mention. Even though creating contents based on Malaysian and
Islamic culture is one of the strategies which makes Les’ Copaque unique, but
nowadays there are high potentials for companies to adopt and include multicultural
values in their products. McDonald’s is a very good example of that, they have
diversified their products based on different regions. For example, if you go to India
most of their menu contains vegan options, even in Malaysia they have added Nasi
McD, Ayam Goreng McD which tastes similarly with Malaysian foods.

“Multinational consumer brands symbolized a borderless world and integrative

globalization but as the optimism of that perspective fades, these same brands will
come to signify a different perspective on globalization. One which emphasizes the
fact that borders can be rigid, not porous, and the most accessible way to be
multicultural will be through culturally ambiguous products consumed within set
geopolitical borders.” says (Nehmadt Kaur, 2017).

Furthermore, Artificial intelligence which is also known as 4th industrial revolution

has been a very controversial technology which is being used by almost all of the
well-known companies and can add tremendous value to quality control and planning

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for Les’ Copaque. “Netflix uses data processing software and traditional business
intelligence tools such as Hadoop and Teradata, as well as its own open-source
solutions such as Lipstick and Genie, to gather, store, and process massive amounts of
information. These platforms influence its decisions on what content to create and
promote to viewers.” says (Gabrielle, 2019).

To explain further, with artificial intelligence Les’ Copaque can analyze which kind
of contents and animations most likely can succeed or fail in the market and this
process can easily be called as quality filter, instead of gambling and experimenting
the market with different and diverse products by use of AI (Artificial intelligence)
Les’ Copaque can accurately engineer their products based on reliable and complex
technologies which has been proven by well-known companies like Netflix.
Therefore, Les’ Copaque can improve their quality controls, gain market shares and
become a global company by specifying their products’ content based on regions and
by making decisions with AI (Artificial Intelligence) and these strategies has already
been proven by almost all of global companies like McDonald’s and Netflix.

Islamic Perspectives
Quality basically refers to best practices allowing for highly satisfactory end-products
and services from all sides and along all the various phases. The quality and enhance
the work is generally not a new thing in Islam. The ultimate goal of everything in
Islam is to obtain the blessing or pleasure of Allah SWT in this world and in the
Hereafter. In this context, producing goods and providing services, with best
characteristics, should be done by targeting moral practice and avoiding all kinds of
sins. The Quran says:

“Thou seest the mountains and thinkest them firmly fixed: but they shall pass away as
the clouds pass away: (such is) the artistry of Allah, who disposes of all things in
perfect order: for He is well-acquainted with all that ye do.” (Quran, 27: 88)

And there are many hadith which encourage to beautify and improve worship. In a
Hadith narrated by Al Bayhaqi that Prophet Mohammad may Allah bless him said:
“Allah loves that if one of you is doing something to do it masterfully (itqan).” These
texts urge on doing work masterfully without imperfections or defects and call people

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to be honest and trustworthy in the works they do. From the above description, we
find that in Islam Muslims must always be kind and adorn themselves with good
characters such as: loving work, consulting with colleagues, teaching and learning,
honest self-monitoring, teamwork, cooperation and solidarity among members of the
community in which it all is the quality management principles commonly used by
Les’ Copaque.

Conclusion
Overall Les’ Copaque has high quality measures which has given them lots of
competitive advantage but since there is always room for improvement it is highly
recommended for Les’ Copaque to add cross regional and culture friendly contents to
their products and drive their decisions and quality controls based on customers’
feedback.

2.3 CAPACITY PLANNING

Animated films have grown in popularity as expanding markets and new technologies
especially computer graphics imagery have broadened both the production and
consumption of animations. As a result, more animated films are produced and
watched in more places, as new “worlds of production” have emerged.

Due to this phenomenal, Les’ Copaque is not excluded from strategizing an immense
capacity planning to remain in the market. Capacity planning is very essential in
operations management and by performing capacity planning, it determines the
optimal level of production before addressing capacity decisions. There are four
factors that affect capacity decisions; (a) the stability of demand, (b) the rate of
technological change in equipment, (c) the rate of change in product design and (d)
competitive factors.

Those four factors are the major issues that are critical to LCP. Thus, their strategy is
firstly to come up with innovative designs and secondly is to sustain them. But this
will entirely lead to product development and financial support. Based on our
interview, observations, and findings, we have found six (6) capacity strategies that

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have been applied by LCP that are related to product development and financial
support.

Firstly, in order for Les’Copaque to survive with the number of human capitals that is
increasing as well as to maximize the usage of technologies, the studio continues to
produce new episodes, seasons and films. Based on the findings found during the
interview session, the expanding in terms of the number of staff is because of the
overwhelming enquiries from international producers. Even the government is
expecting Les’ Copaque to increase its size and develop into 300 staff. However, to
increase manpower means expanding the business and increasing investment in
equipment and other facilities. As shown below, list of Upin & Ipin’s episodes and
films that have been broadcasted.

Season No. of Episodes Year

1 6 2007
2 12 2008
3 42 2009
4 42 2010
5 42 2011
6 42 2012
7 42 2013
8 42 2014
9 42 2015
10 42 2016
11 42 2017
12 42 2018

Table 3 : List of Upin & Ipin seasons and episodes

Movie Year
Geng: The Adventure Begins 2009
Laksamana Upin & Ipin 2012
Upin & Ipin: Jeng Jeng Jeng! 2016
Upin & Ipin: Keris Siamang Tunggal 2019

Table 4 : Upin & Ipin films history

Secondly, in order to go international, LCP could not go too Islamic as it would

narrow the market. Instead of portraying Islamic content, LCP promotes good moral

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values Common themes of Upin & Ipin episodes include cross-cultural values such as
responsibility, honesty, and loyalty. Another different themes that is accessible to
both children and adults for example, an episode released during the 2008 FIFA Club
World Cup, an international football tournament, explored Upin & Ipin’s dreams to
become football players, which people can relate to no matter their age, nationality, or
ethnic background. In other words, mass target segment.

Thirdly, Upin & Ipin has been broadcasted with different subtitles depending on
which country that the series being broadcasted. When Upin & Ipin was first aired on
Disney Channel Asia, LCP was using two subtitles which are English in Mandarin.
This first effort at global inclusiveness brought in millions of new viewers in the form
of Disney Channel Asia subscribers from countries within the Southeast Asian region,
and this made the way for Les’ Copaque’s international presence. At the moment,
Upin & Ipin is being broadcasted in Indonesia, Turkey, Brunei, Philippine, Singapore,
India and soon in China.

Fourthly is the access to funding for production and marketing purposes. Instead of
depending on equity investment or borrowings, LCP is benefited from various
facilities made by government. They are one of roughly only a third of SMEs who
benefited from government financing facilities. LCP’s early financing and logistic
support come from not only the individual investors but also from the use of pioneer
incentives through Multimedia Development Corporation (MDeC) which is now
known as Malaysia Digital Economy Corporation (MDEC), a government linked
corporation tasked with the development of Multimedia Super Corridor (MSC).

Fifthly, by finding the right partners. As Upin & Ipin’s popularity spread, the
branding power of Les’ Copaque has attracted a number of partnerships. These
become integral to the studio’s overall business strategy because revenue from
television stations and financial support from government alone are not sufficient
enough to keep studio afloat. One of the most common forms of partnerships that Les’
Copaque enters into is sponsorship. The first sponsorship deal was with Telekom
Malaysia, followed by KPJ Healthcare Berhad. The studio’s subsidiary, Les’ Copaque
Merchandising has partnered with Carrefour, Mydin Mall, PETRONAS fuel station
convenience store, Esso fuel stations, and KFC Corporation to sell their

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merchandises. While in terms of co-brand partnership, LCP had partnered with Hong
Leong Islamic Bank to release an Upin & Ipin themed debit card. The sponsorship
and partnership have been continued until now.

Lastly, on top of those five strategies, social media has been one of the first ways in
which Les’ Copaque spread the word Upin & Ipin. Citing Les’ Copaque’s Managing
Director, Mr. Burhanuddin Md Radzi, “In our business, we make use of the Internet
to the fullest.” They revealed that they do not spend much in advertising and
promotion (A&P) of their film but made use of Internet technology to reach the
masses. The company now is maintaining an official YouTube channel, a Facebook
page, an Instagram page, and Twitter page. By combining these numbers, this strong
social media presence has continued to give more exposure of Les’ Copaque, its
brands, and goals. Below figure shows the number of social media exclusivity that
Les’ Copaque has.

446,000 followers 12,000,000 likes

825,000 subscribers 1,000 followers

Discussions
The process of globalization has inevitably increased competition in all sectors of the
economy. Like any other industry, the film industry has undergone the process of
internationalization and globalization. Many have seen the potential and risk of
cultural industries in this globalizing world. Malaysia has long embraced an open
market policy. Hence, the issue of competition is not new in the Malaysian film
industry.

There is only one risk which is film products are different from other tradable
products. They carry elements and messages that are sometimes sensitive to the
particular norms, customs and culture of a country. In view of this, an element of
control is deemed necessary. Local players believe that exposure to international films
is good as we need to learn from others in order to gauge our own ability and expand
further by improvising the current methods. Competition is necessary so long as it

I 19
does not jeopardize national culture and result in a negative influence for local
citizens.

Taking one good example of a company that is successfully meeting the market’s
demand by managing their capacity is Grab. There is no denying Grab’s popularity in
Southeast Asia is very dominant. What is Grab’s strategy in the region that was so
successful in capturing market share? They have been successful in Southeast Asia
because Grab has been focused in providing real and relevant solutions to solve local
transport issues. Their concern for safety, easy accessibility at an affordable price and
improving driver-partners’ welfare is key in all the countries they operate in.
“However, tackling the issues requires a customised approach. For example, in
congested countries or cities like Manila and Thailand, GrabBike has been the most
effective and a popular alternative. Since its launch, GrabBike is the fastest growing
vertical on Grab’s platform. In countries like Singapore and especially Malaysia,
where car ownership is the third highest in the world, shared mobility like GrabShare,
is gaining popularity where we are able to maximise the number of cars on the road to
move large groups of people at a fraction of the cost.” said Grab Malaysia Country
Head, Sean Goh.

Having said that, in order to an organization to remain competitive, capacity planning

and decisions can have a real impact on the ability of organization to meet future
demands for either products of services. Bearing in mind, capacity can affect the ease
of management, competitiveness, financial planning, and most importantly product
standards.

Islamic Perspectives
In doing business, an entrepreneur should practicing “Taqwa” as the main business’s
framework. Successful Muslim entrepreneurs must have faith (taqwa) to Allah SWT.
Through this decree, an entrepreneur must believe in Allah and strive in the search of
wealth to improve himself and do all of Allah and the Prophet’s teachings. The
successful entrepreneur is when he has taqwa to Allah and greatness of iman through
gaining lots of profit from the entrepreneurial activities. Allah says in the Quran:

I 20
“O you who have believed, shall I guide you to a transaction that will save you from a
painful punishment? You believe in Allah and His Messenger and strive in the cause
of Allah with your wealth and your lives. That is best for you, if you should know.”
(Quran, 61: 10-11)

Second framework is halal is a top priority. Added to the taqwa is the concept of
“Halal” might discourage Muslim entrepreneurs to sell alcohol and pork which are
considered to be “Haram”. The suggestion that religion has a key role to play in
shaping the mode and the level of entrepreneurial activity in a given society is gaining
widespread acknowledgment and recognition. The link between religion and
economic activity in the wider context are demonstrated by the industries. Allah says:

“Eat of the things which Allah hath provided for you, lawful and good; but fear Allah,
In whom ye believe.” (Quran, 5: 88)

Third framework is practicing high moral values. The Holy Quran and the traditions
of the Prophet Muhammad SAW explicitly praise entrepreneurship and commend
moral entrepreneurial activity such as the elimination of riba:

“But Allah hath permitted trade.” (Quran, 2: 275)

Conclusion
With the growth in demand locally and globally of animated films and products, the
opportunity for Les’ Copaque Production (LCP) indeed remains high as a strong
player in the sector because of its established reputation for creating innovative and
high quality designs by managing the capacity accordingly.

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 Chapter 3
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