Hartalega: Taking Off The Gloves Harvard Case Solution & Analysis

Hartalega: Taking Off The Gloves Case Study Solution

Speed & Efficiency

The company has a competitive advantage for the efficiencies that it has, such as: it produces 45,000 units per hour. The company has set this benchmark for the industry, which it is a key factor behind the company’s continuous success. There is an integration of the supply chain that ensures the timely delivery of gloves,for packaging and reaching to customer. The company has an advantage of minimum costs of labor, which increases its financial performance while maintaining the quality standards.

Sustainability

Awareness, mindfulness and consciousness toward the environment,are integral to Hartalega’s values. Our ecological mindset and a strong sense of responsibility towards protecting our planet,are evident throughout the production process. Advanced environmental control equipment often means that we exceed the required environmental standards.

SWOT Analysis

The first analysis is the SWOT analysis, which shows the internal as well as the external factors in the market. Internal factors will identify the weaknesses and strengths; whereas, the external factors will identify the threats and the opportunities.

Strengths:

• The company’s operations and its profits contributed to the Gross National Income (GNI) increase, i.e. from 32,780 to 55,790 in the time period of 2010 to 2011. Besides that, the GDP also rose from $ 91,148 in 2001 to $ 208,765 in 2010; therefore, the GDP growth rate is 14.5%.
• The internal business environment is healthy, and the employees are treated well; therefore, the income earned by the employees are higher.
• The company has adopted global supply chain management, which has helped it in achieving competitive advantage.
• The company provides training to the employees, for professional development and the development of leadership skills
• The operating department has achieved a high-efficiency production line, which means the output is higher even in such a short time period. Moreover, the customer has a choice to purchase
• The shares of the company are strong in the market, which is why the investors are attracted towards making investments in the company.Therefore, the goal of the firm to attract skilled employees is one of the pillars to maintain a healthy operating environment.

Weaknesses:

• The service development is limited,because of the limited size of the island.
• The company solely depends on the exports and imports; therefore, if there are environmental changes in the global market then it would become difficult for the company to be sustainable.
• The involvement of government in a local environment, whichhas increased restrictions over new entrepreneurs.
• Once the company received a complaint about the contamination from ammonia gas and chemical waste, which is not favorable for the company’s reputation.
• The company is facing a decline in profit margin as compared to the previous year’s profit margins.

Opportunities:

• There is an opportunity for the company to expand its operations if disagreements with Malaysia are resolved.
• There is still a gap between innovation and development in the market.
• The company operates in a country where the culture of tourism is prevalent, so t there is a probability that the country’s GDP will increase, which is beneficial for the company because of the demand for services, such as: hospitality services.
• If there is a vast level of tourism; the company’s profits will increase as people's income and consumption would be high in the market.
• There is a stable political environment in the country, which is effective for the company’s smooth operations.

Threats:

• The threat for the company is that it operates in an environment where many sellers offer products at lower prices, such as: India and China.
• Competitors in the market that have achieved economies of scale, which could serve as a biggest threat for the company.
• There is a natural threat to the company such as floods and other natural disasters.
• Relying on imports of raw materials for manufacturing products, is also a threat to the company.

Financial analysis

Based on the data given in Hartalega’s financial report from 2011 to 2015; the calculation shows the fluctuation in the company’s financial performance, called trend analysis. Trend analysis is based on financial ratios, which are as follows:

The trend analysis shows the fluctuations in the company’s financial performance, such as: decrease in 2013 and 2014 as compared to 2012 and 2014.However, it is still bearable for the company because current ratio scan cover current liabilities.A major fluctuation can be seen in liquidity ratios as they are affected by a decrease in the working capital. Overall the company has lower liquidity risk in the market, which can enhance the company’s flexibility. Besides that, return on assets (ROA) and return on equity (ROE) are kept dropping, which is a concern for the company that needs to be addressed. The GDP shows an increase, which means the company has an opportunity to increase its performance.

External Analysis

Porter’s five forces Analysis

Threats of new entrants:

It shows that the companies that exist in the market,have created significant barriers for the the company, so it is very difficult for new entrants to capture the market. There are several barriers for new entrants, such as: raw material accessibility, cost minimization, chemical standards, and culture standards, economies of scale and requirement of an extensive capital.

The threat of substitute products

There are major threats of substitutes in the market, as there are competitors who offer products at lower prices. This is possible because of training the economies of scale in the market as well as innovation and technological development.

Bargaining power of suppliers

The suppliers of the company have higher bargaining power as they demand higher prices from the customers. Besides that, they know that the company cannot fulfill the demands of raw materials, locally.

Bargaining power of customers

The customers have high buying power,because there are many substitutesavailable in the market so the buyers can purchase from other companies that offer lower prices. Therefore, the company must build good relationships with itscustomers, and maintain the best quality standards in order to retain them.

Competitive rivalry

There is healthy competition in the market, as companies compete with each other to lead the market within the industry. In the case of Hartalega, the company focused on development to increase the barriers so that there couldn’t be any new competition. However, this competition acts as a threat to the company as well, so the company must track the competition............

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