IB_BM_SWOT Analysis – Sime Darby
Strength
Sime Darby is a successful business in Malaysia, and it is a company involved in
different nature of business in its operations. To get to become such successful company,
there are some strengths that have been performed by Sime Darby.
One of the strengths is Sime Darby provided a wide and comprehensive range of
goods and services in over 300 companies located in more than 20 countries especially
in the Asia Pacific. These business operations and activities of Sime Darby have been
performed by more than 30,000 employees (Sime Darby, n.d.). In fact, this has directly
increases the marketing position of Sime Darby in the competitive market. Sime Darby
owned the strong presences with the huge number of existing businesses and companies
all over the world.
Besides that, Sime Darby has the strength of lower risks in its operations due to
the diversification of the business. Sime Darby is diversified into few categories which
were named Sime Darby Plantation, Sime Darby Motors, Sime Darby Industrial, Sime
Darby Property and Sime Darby Energy and Utilities (The Sime Darby Group, n.d.). This
diversification actually leads to the reduction of risks in the company. When there is
uncertainty in one sector and losses might be happened, the diversification is able to
decreases the amount of losses in the company since it is not only focused in one sector.
Moreover, other strength of Sime Darby is the strong financial performances. In
the recent year, Sime Darby obtained a strong and all round financial performance which
it has records a pre-tax profit of RM 3.1 billion and a net profit of RM 2.2 billion (Sime
Darby, n.d.). It showed that Sime Darby increase the profit by almost 40 percent and this
indicated that Sime Darby has an efficient and effective financial management in its
operations.
Furthermore, Sime Darby has a strong governance structure which considered as
one of the strength to improve their growth. The governance framework of Sime Darby is
two-tier board structure which is headed by the main board and followed by the Flagship
Subsidiary Boards (FSBs) (Corporate Governance Report, n.d.).It’s a strong governance
framework for Sime Darby as it is sufficiently flexible and modular. Thus, this governance
framework is able to maximize the wealth of shareholders.
Weaknesses
One of the weakness of Sime Darby is Sime Darby had experienced few cases of
law case which eventually affect the brand’s image. For example, the former senior
general manager of Sime Darby Engineering Sdn Bhd was involved in a legal claim and
finally has been jailed for 27 years due to corruption. Indeed, this legal claim was
considered as bad news to Sime Darby and thus this will definitely reduce the confidence
of the investors and the consumers. The share prices of Sime Darby was badly affected
too. (The Star online, 2013).
Besides that, the other weakness of Sime Darby is their poor road infrastructure
which might reduce the quality of the products and increase the costs of the production.
In fact, the poor condition of the estate roads in the Sime Darby Plantations caused the
inconveniences to the workers as there are a lot of transport problems and it should be
improved immediately (Sime Darby Plantations, n.d.).
Opportunities
Sime Darby has many opportunities to improve their business growth. For instance,
Sime Darby has joint ventures with the Ramsay Health Care to establish the Ramsay
Sime Darby Health Care (Business News, 2013). Nowadays, health issue is one of the
most important and focused issue among the community as most people are extremely
concerned about their health condition. Thus, Sime Darby created a new opportunity to
attract more customers and investors in order to expand their business to a new sector.
Besides that, the increasing demand of crude palm oil increases the opportunities
for the growth of Sime Darby Plantation. Sime Darby Plantation is one of the largest
suppliers of the palm oil and produce mostly 5% of the world’s crude palm oil annually.
The downstream business of Sime Darby has covered in 14 countries and involved in the
manufacturing of value adding the oil and fat products into biodiesels and nutraceuticals
(Sime Darby Plantations, n.d.). The demand of the crude palm oil has increased gradually
as it has been found to be a well-balanced and healthy edible oil which is good for the
food sector. In addition, it is an important resource for the non-food sector such as the
soap production and cleaning agents. Hence, this trend will definitely increase the growth
of Sime Darby Plantations.
Moreover, Sime Darby Energy and Utilities implemented a new strategy to improve
the environmental concerns by using various proposed renewable resources in the
market. For example, Sime Darby established the House Green Idea which emphasized
on the photovoltaic cell technology that uses sunlight as a renewable energy resource
(Sime Darby Property, n.d.). Besides that, Sime Darby Plantation has cooperated with
the team of Tenaga National Bhd (TNB) and Mitsui & Co Ltd to involve in a study of biogas
projects with the aim of developing the renewable energy resources (Sime, TNB and
Mitsui to study bio-gas potential at eight palm oil mills, 2011). In short, this created an
opportunity for Sime Darby to improve their popularity as well as the brand image.
Threats
One of the threats of Sime Darby is the strong competitors in the related sectors
and market. There are a lot of competitors which are providing similar goods and services
and some of them even with the approximate quality and prices. Sime Darby faced
chances to loses its customers as well as the profits of its business. For example, one of
the competitors of Sime Darby is Wilmar International Limited Company. It is the largest
Asia agri-business groups with the production of palm, soy and other edible oils and
grains.
The international currency exchange risk is also one of the threats for Sime Darby
as well. Sime Darby is a multinational diversified company that operate in over 20
countries. Hence, Sime Darby has to use different currency to operate their business.
Each country has different currencies and exchange rates. When the currency exchange
rates fluctuate and becaome unstable, this will affect Sime Darby’s bottom line.
In addition, Sime Darby faced the threats of unfavorable government policies which
might affect their business operations. Sime Darby is a multinational company; thus it has
to follow different rules and regulations set by different countries. Some policies may be
unfavorable for the expansion of Sime Darby. For instance, operation of Sime Darby in
Hong Kong is affected by the tightening of credits by banks (Sime Darby, n.d.). This is
because the new policy implemented is imposing a higher tax on the profit of house sellers.
Indeed, this has directly decreased the demand of houses and construction projects of
Sime Darby over there.
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