SA - G11 - TOP GLOVE CORPORATION - Example

COLLEGE OF BUSINESS
SCHOOL OF BUSINESS MANAGEMENT
BPMN3023 STRATEGIC MANAGEMENT

GROUP A
SEMESTER SESSION
STRATEGIC AUDIT REPORT

TOP GLOVE CORPORATION
(GROUP 11)
PREPARED BY
NAME MATRIC NO
PREPARED FOR
SUBMISSION DATE:
TABLE OF CONTENTS
INTRODUCTION....................................................................................................................1
1.0 STRATEGIC ISSUES OR PROBLEMS.................................................................... 2
2.0 INTERNAL FORCES.................................................................................................. 4
2.1 COMPANY PROFILE............................................................................................. 4
2.2 COMPANY’S TYPE AND INDUSTRY................................................................. 5
2.3 BUSINESS SEGMENT.............................................................................................6
3.0 VISION, MISSION, OBJECTIVES, AND STRATEGIES.......................................7
3.1 VISION AND MISSION...........................................................................................7
3.2 OBJECTIVES............................................................................................................8
4.0 THE LIST OF BOARD OF DIRECTOR................................................................. 10
5.0 THE LIST OF TOP MANAGEMENT TEAM........................................................ 19
6.0 ORGANIZATIONAL STRUCTURE....................................................................... 21
6.1 MARKETING..........................................................................................................22
6.2 FINANCE.................................................................................................................22
6.3 RESEARCH AND DEVELOPMENT (R&D)...................................................... 23
6.4 OPERATION AND LOGISTICS.......................................................................... 24
6.5 HUMAN RESOURCES MANAGEMENT (HRM)............................................. 25
6.6 INFORMATION TECHNOLOGY (IT)............................................................... 26
7.0 FINANCIAL ANALYSIS...........................................................................................27
7.1 CURRENT RATIO................................................................................................. 27
7.2 TOTAL ASSET TURNOVER................................................................................28
7.3 DEBT RATIO.......................................................................................................... 29
7.4 DEBT TO EQUITY RATIO...................................................................................30
7.5 NET PROFIT MARGIN.........................................................................................31
7.6 RETURN ON ASSETS........................................................................................... 32
7.7 RETURN ON EQUITY.......................................................................................... 33

8.0 VRIO FRAMEWORK OF ANALYSIS....................................................................35
Outcomes from Combinations of the Four Criteria:...................................................... 36
9.0 EXTERNAL FORCES............................................................................................... 39
9.1 STEEP ANALYSIS................................................................................................. 39
9.1.1 Sociocultural..................................................................................................... 39
9.1.2 Technological.................................................................................................... 40
9.1.3 Economic...........................................................................................................41
9.1.4 Ecological.......................................................................................................... 42
9.1.5 Political – Legal................................................................................................ 44
9.2 5 FORCES BY MICHAEL PORTER................................................................... 46
9.2.1 Threat of New Entrants................................................................................... 46
9.2.2 Threat of Substitute Products......................................................................... 46
9.2.4 The Bargaining Power of Suppliers................................................................48
9.3 STRATEGIC GROUP............................................................................................ 49
10.0 SWOT ANALYSIS......................................................................................................52
10.1 STRENGTHS...........................................................................................................52
10.1.1 High Product Quality with International Accreditations.............................52
10.1.2 Low Production Cost....................................................................................... 52
10.1.3 Strong Technical Expertise............................................................................. 53
10.1.4 Wide Product Range........................................................................................ 53
10.1.5 Global Market Leader..................................................................................... 53
10.2 WEAKNESSES........................................................................................................54
10.2.1 Weak Straight-Line Work Cell Layout..........................................................54
10.2.2 Labour Shortage...............................................................................................54
10.2.3 Extensive Investment in Technology.............................................................. 54
10.2.4 Bad International Reputation Regarding ESG related matters.................. 55
10.3 OPPORTUNITIES.................................................................................................. 56
10.3.1 Government Support....................................................................................... 56
10.3.2 Low-Interest Rate.............................................................................................56
10.3.3 Subsidies on Natural Gas by the Government have reduced the Cost of
Production....................................................................................................................... 56
10.3.4 Rising of Hygiene Awareness.......................................................................... 57
10.3.5 COVID-19 Vaccine Global Access (COVAX) Program............................... 58
10.3.6 Long-term Product Demand Growth.............................................................58
10.4 THREATS................................................................................................................ 59
10.4.1 Poor Reputation of the Company in Labour Practices................................ 59
10.4.2 Currency Exposure.......................................................................................... 59
10.4.3 Intense Competition in Glove Manufacturing Segment............................... 60
10.4.4 Fluctuation in Nitrile Latex Price...................................................................60
10.4.5 Pandemic COVID-19....................................................................................... 60
10.4.6 Ongoing ESG-related Issues............................................................................61
11.0 IFAS AND EFAS TABLE.......................................................................................... 62
11.1 IFAS TABLE........................................................................................................... 62
11.2 EFAS TABLE............................................................................................................. 63
12.0 TOWS ANALYSIS......................................................................................................66
13.0 STRATEGY FORMULATION AND IMPLEMENTATION................................ 68
14.0 REFERENCES............................................................................................................72
15.0 APPENDIXES............................................................................................................. 76
BPMN3023_ STRATEGIC AUDIT REPORT (TOP GLOVE CORPORATION) GROUP 11
INTRODUCTION
After looking at a bigger picture of a market and sector in Bursa Malaysia, we

selected active stocks from the healthcare sector, Top Glove Corporation Berhad. This project
aims to assess our ability to gain knowledge of strategic audit in a real-world corporate
setting by identifying their strategic issues or problems that appear in an organization's
current situation and analyze Top Glove's internal and external factors. Our chosen company
which is Top Glove, comes from FTSE Bursa Malaysia Top 100 Index. Our report project
will interpret more on their long-term strategic direction, resources, and competitive
capabilities for a better plan. Lastly, strategic recommendations are suggested to solve and
strengthen the business challenges in Top Glove Corporation Berhad and improve the
competitive position of the organization and potential strategic and financial goals.
The COVID-19 epidemic has forced the planet to witness a historic global economic
crisis, exposing our economy's multiple weaknesses. The massively infectious virus had
infected the majority of the world's countries, collapsing the global economy. However, not
everyone is terrible and developmentally disabled, with some businesses booming and
finding a place in a world of pandemics. For instance, a healthcare industry that manufactures
gloves worldwide must quietly count their lucky stars when sales figures skyrocket, involving
surgical, latex, and other personal protection equipment (PPE). During this pandemic, there
are many advantages that the healthcare sector will get since our economy shows an increase
in these businesses by local and foreign companies. These are the reasons we choose the
healthcare industry, such as Top Glove Corporation Berhad, as our sample to analyze in
terms of their internal and external powers and include suggestions that the company might
use.
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1.0 STRATEGIC ISSUES OR PROBLEMS
Top Glove is the world's biggest glove maker set up for more than thirty years. It has made
worldwide progress inside a limited ability to focus time. Nonetheless, it likewise stands up
to some critical issues and problems that threaten its sustainable development. These strategic
issues or concerns are affected by internal forces and external forces that appear in the
organization's current situation.
Top Glove before this is already at risk due to labour issues that become its threat on
benchmark ESG indices. Specialists caution of extreme effect on the off chance that it loses
its spot involved human resources, corporate administration among top ESG issues. Top
Glove could be at risk for being minimized or booted out of lists dependent on Environmental,
Social, and Governance (ESG) factors after the organization was indeed pushed at the center
of attention over work rehearsals. Reporting its monetary outcomes for the second quarter of
the financial year 2021, finished February, the glove producer had a month ago said it stays
on the FTSE4Good Bursa Malaysia Index and the Dow Jones Sustainability Emerging
Markets Index (DJSEMDUP).
In addition, Top Glove, along with Malaysia's top three glove manufacturers,
Supermax Corporation Berhad, Kossan Rubber Industries Berhad, and Hartalega Holdings
Berhad, had donated nearly RM400 million to the government in the 2021 budget to aid in
the reduction of the COVID-19 outbreak, which began at the end of 2019 and has since
spread across the world. The funds will be used to partially help cover the cost of vaccines
and medical devices that have been in high demand due to the pandemic. Aside from that, the
government has given incentives to pharmaceutical product manufacturers in the form of
preferential tax rates ranging from zero to ten percent for ten years in exchange for their
assistance and investment in bringing vaccines to Malaysia. As the government took part in
the COVID-19 Vaccine Global Access (COVAX) programme, they will procure vaccine
supplies estimated to cost Malaysia more than RM3 billion.
Furthermore, Top Glove is also at risk due to the changes in foreign exchange. In the
last couple of weeks, the Ringgit Malaysia against the US Dollar is very fluctuating and
volatile, indicating that the Ringgit Malaysia is weaker than before. The trade war between
China and the US impacted Ringgit Malaysia, and the COVID-19 pandemic also worsened
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the Ringgit. Furthermore, an unstable political climate also contributed to currency’s

depreciating. However, crude oil prices and oil demand have strengthened the Ringgit
Malaysia against the US Dollar. Top Glove’s revenue is in US Dollar while their cost is in
Ringgit. The US Dollar is currently depreciating against the Ringgit on a general basis.
According to Citi Research, every 1% drop in the US dollar value reduces Top Glove
earnings by 1% to 2%. This situation leads to a competitive advantage between top glove and
other companies in the healthcare sector. High prices will reduce consumers' demand, and
consumers will prefer to choose lower prices.
Top Glove should aim to understand the challenges and issues that managers and
firms faced. They also should offer some recommendations and possible solutions that can be
considered by the firm’s board of directors and managers. Most of the time, companies
operating abroad faced much more complex tasks than before due to high competition. These
are issues and problems that require immediate actions from Top Glove to resolve promptly
without negatively affecting daily operations. Top Glove should carefully analyze the
mentioned issues and other hidden issues inside and outside the company to ensure
sustainability and then adopt appropriate strategies to overcome these challenges.
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2.0 INTERNAL FORCES
2.1 COMPANY PROFILE
Figure 1: Logo of Top Glove Corporation Berhad
Top Glove Corporation Berhad is a private company that has been publicly listed on Kuala
Lumpur Stock Exchange since August 2001 and publicly listed on Main Board Singapore
Exchange. Tan Sri Dr. Lim Wee Chai established the company in Malaysia in 1991 with one
assembly line and 100 employees. He was inspired to run this business after his parents own
and trade rubber plantations. It became a stepping stone to him to successfully make Top
Glove’s name grow to become the world's largest glove maker company, with a market share
of 26% of the global rubber glove industry.
Top Glove is a healthcare industry that produces most rubber gloves to be used in
medical treatment. However, Top Glove has expanded its product line to include non-glove
items such as condoms, face masks, dental dams, fitness bands, and household items, meeting
demand in the healthcare and non-healthcare sectors. Top Glove continues to manufacture
high-quality gloves at a low cost with the encouragement of its 21,000 staff, following its
tested Business Direction. Top Glove is not prepared to rest on its laurels and has set higher
goals for itself, including becoming a Fortune Global 500 company by 2030. The company
has to manufacture its products in Malaysia, Thailand, Vietnam, and China. It also has
marketing branches in these nations, and the United States, Germany, and Brazil also sell to
more than 2,000 customers in 195 countries around the world.
Top Glove had achieved such an impressive achievement by having almost 50

factories for its production. So far, in April 2021, Top Glove does have 800 production lines
that have exported their products to 195 countries around the world. Besides, the production
capacity was amounting to 100 billion pcs of glove per annum, which is such an outstanding
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amount for a year. As of 16 April 2021, the Top Glove capitalization rate was RM43.54
billion. However, on 17 April 2021, the shareholders' fund had distributed RM8.2 billion to
the corporation. Hence, the revenue Top Glove successfully gained in the meantime was
RM5.37 billion as of last 9 March 2021.
2.2 COMPANY’S TYPE AND INDUSTRY
As mentioned above, Top Glove’s products were serving in medical areas around the world.
In our era nowadays, few distinct economic factors influence healthcare markets. Because of
some of these economic factors, government interference in healthcare markets and
operations is widespread. The demand for healthcare services is highly inelastic in terms of
price. Consumers and suppliers both face inherent uncertainty about their desires, results, and
service costs. The healthcare industry comprises a wide variety of sectors, ranging from
analysis to manufacturing to facility management. Many industries are involved in the
healthcare sector, including the drug industry, medical equipment industry, and managed
healthcare industry. All these three industries have their specialization and specification of
product. To be more specific, Top Glove Corporation Berhad is one of the companies
involved in producing products in the medical equipment industry.
Since the outbreak of COVID-19 in early 2020, it is a massive opportunity for the
healthcare sector. Surprisingly, several companies on Bursa Malaysia, including those whose
core business is unrelated to healthcare, have entered the market. Furthermore, the market
shows rubber glove manufacturers have been taking in record profits during this
unprecedented period. The trend is expected to continue at least through the first half of 2021.
Even though interest in glove stocks has subsided recently, companies segmented into the
glove industry are expected to launch next year and benefit from significant growth for
gloves even in the post-pandemic period. Top Glove grows steadily at a rate of 10% per
annum, driven by solid market fundamentals across all geographies.
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2.3 BUSINESS SEGMENT
Top Glove Corporation Berhad is primarily engaged in hand safety, sexual wellness, dental
treatment, and other related services. In the segmentation, the company Top Glove offers
latex examination gloves, nitrile examination gloves, surgical gloves, polychloroprene
examination gloves, cast polyethylene (CPE) gloves, thermoplastic elastomer (TPE) gloves,
vinyl gloves, cleanroom gloves, household gloves, industrial gloves, and non-glove items
such as dental dams, exercise bands, and condoms.
In addition, most glove products are designed for use by doctors, surgeons,
cleanrooms, industry, and the aircraft, household, food handling, and beauty industries. This
industry fulfills the need of healthcare staff and contributes to other sectors too, such as Food
and Beverage (F&B) and cosmetic industries. Based on past performance, Top Glove's
performance has increased by 16.11 percent. The rise in revenue was primarily attributed to a
30 percent increase in sales volume of nitrile gloves segmentation, improved marketing
activities, and additional nitrile capability, which has grown by 54 percent in the last two
years with plans for further expansion.
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3.0 VISION, MISSION, OBJECTIVES, AND STRATEGIES
3.1 VISION AND MISSION
A vision statement is usually a simple message. Despite this, it acts as a foundational element
of culture. As vision provides purpose for an organization, it reflects a broad target of a
company in the long term. Based on the information we retrieved from their official website,
Top Glove has an overall vision to be an excellent market leader in their industry globally.
The concept has reflected the ultimate goal that every organization wishes to achieve.
Vision
“To be your world-class partner in gloves and healthcare products.”
Their vision is suitable for Top Glove Corporation Berhad since they are the global
leader in healthcare manufacturing in glove industries. Top Glove will still be the world's
largest maker of nitrile gloves by 2020, in addition, to be the world's largest producer of
natural rubber gloves and surgical gloves. Their vision globally is achievable because Top
Glove Corporation Berhad is recognized globally. Through their vision, we were able to get
the overview of their world-class partners in a glove that showed in their strategic acquisition
to produce excellent products with different industries and organizations. Finally, to meet
changing consumer demands, they will extend their product line to offer more specialized
gloves and non-glove health products.
An organization's mission statement outlines the company's reason(s) for being in a precise
and straightforward manner. The idea is typically just a single sentence or a few paragraphs
long. These disclosures have a dual purpose: they keep employees focused on the tasks at
hand while also encouraging them to think about new ways to achieve the company's
objectives more quickly.
Mission
“Ensuring safe human protection globally.”
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In the mission statement, the customer of Top Glove will be secured. Top Glove
companies provide human protection in the global market. The company also produces a
product that will connect the customers and give human protection. Top Glove is also
concerned for the public image because of ensuring the safety and security of their customers.
3.2 OBJECTIVES
There are two types of objectives which are financial goals and strategic goals. Revenue
growth, profitability, and return on investment were all common financial goals. It also
includes the economic output goals set by managers. On the other hand, strategic objectives
are goals linked to a company's marketing position and competitive productivity. If the
organization meets its targets, it indicates that its projected financial results will be higher
than its current or previous performance. Top Glove companies set out a few strategic goals,
which are to be the world’s undisputed leading producer of latex gloves, to be the world’s
leading nitrile glove manufacturer, and to be the fastest growing surgical solutions provider.
Furthermore, Top Glove also has one financial goal: to materialize strategic acquisitions that
can contribute at least 20% of additional revenues.
3.3 STRATEGIES
Top Glove executes its plan by using the tools at its disposal to implement its business model
to maximize long-term success and value generation. Top Glove Corporation Berhad has four
ways of achieving its strategies.
The first one is cost-efficiency. Top Glove will ensure that Quality Assurance teams
check their quality control. Then, continue to upgrade their digital system with the best
technology for greater performance and optimize their inventory of storehouses to avoid any
number of orders for their clients. Since Top Glove manufactures high-quality gloves at an
effective low cost, this shows that their strategies to attract customers work on their
customers in Malaysia, Thailand, Vietnam, China, USA, Germany, Brazil, and countries
worldwide to buy their product. Not only are their products inexpensive, but they are also
suitable for both humans and the environment, with their nitrile gloves receiving 510(K) FDA
approval (Class I), confirming the glove's protection and functionality.
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Secondly is customer service, where their research and development (R&D) team
collaborates with customer support to meet their clients' needs, industry dynamics, and
concerns. In addition, they provide a support forum for their clients to find and correct flaws
in their goods and services. They are digitizing customer care to reduce workload and human
error in operations management. This shows that, with their strong relationship with the
customers, they can improve their productivity and reduce the incident rate with a safer work
environment and continue as a future leader supply to their customers.
The following strategy is technological capabilities, and they partner with a credible
recruitment firm to support hiring managers' searches for Industry 4.0 professionals to join
Industry 4.0 preparation workshops. With the knowledge of Industry Revolution of 4.0, they
can closely monitor their budget allocated for investment and prevent spending and monitor
their manufacturing performance to ensure their efficient investment in Industry 4.0. Besides
that, Top Glove also educates IT security to its employees by investing in cybersecurity
training. Building new technological advanced facilities and enhancing existing
manufacturing facilities can increase their production lines, reduce manual labour, and
improve the quality of their products.
The last strategy is strategic acquisitions, where Top Glove will recruit suitable and
quality Mergers and Acquisitions (M&A) talent and train their talent. To implement their
long-term performance in the organization to achieve objectives to inspire the acquisitions
team to pursue prospects and synergies while ensuring their long-term priorities are shared by
employees and stakeholders. The strategic acquisition demonstrates that their Managing
Director and Executive Directors can guide the Board papers and include detailed examples
of growth strategies, financial results, future mergers and acquisitions, and other relevant
matters. Top Glove can set goals that are good for the company and stakeholders to continue
growth in another sector of business with other companies under M&A activity.
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4.0 THE LIST OF BOARD OF DIRECTOR
The Board of Directors (BOD) comprised members who possessed a broad spectrum of skills,
experience, and expertise. They have been chosen to represent the interests of the
stakeholders to strike a balance between the company's benefit and the interests of the
stakeholders. Furthermore, BOD evaluates the company's policies, goals, and directions for
the company to stay on track and remain competitive. The Executive Chairman is in charge
of the day-to-day management of the company's business and operations. Non-executive
directors are directors who do not involve in the daily process of the company. Still, they will
provide supervising and monitoring for the direction and guidance of the company's
performance. The following are the BOD of Top Glove Corporation Berhad:
1. Tan Sri Dr. Lim Wee Chai (Executive Chairman)
Tan Sri Dr. Lim is the Executive Chairman and Founder of Top Glove Corporation Berhad
(appointed on September 4, 2000). He obtained a Bachelor of Science Degree in Physics with
Honours from the University of Malaya and a Master of Business Administration from Sul
Ross State University in the United States. He also holds a Ph.D. in Management from the
Malaysia's University of Selangor. He was conferred an Honorary Doctorate in Business
Administration by Oklahoma City University, the USA, and Honorary Doctorate in
Entrepreneurship by Management & Science University, Malaysia.
In Malaysia, he has been involved in the glove industry and business-related

associations and organizations. He was the Honorary President of the Associated Chinese
Chambers of Commerce and Industry of Malaysia (ACCCIM) in 2017. He is also the
President of the Malaysia-China Chamber of Commerce and Industry of Kuala Lumpur and
Selangor (KLSCCCI). Additionally, he was appointed as Director and Board Member of the
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Employees Provident Fund (2019-2021) and Non-Executive Chairman of Tropicana

Corporation Bhd.
Tan Sri Dr. Lim is primarily responsible for the orderly conduct of the Board
meetings and ensures the board's effectiveness, and manages the interface between the Board
and Management. He is also responsible for the board's orderly conduct and practical
function in implementing the Board policies, making operational decisions, and monitoring
the day-to-day running of the businesses, including defining the limits of Management’s
responsibilities.
2. Dato’ Lee Kim Meow (Managing Director)
Dato' Lee is the company's Managing Director (appointed on 15 October 2003). He holds a
Bachelor of Commerce degree in accounting, finance, and information systems from the
University of New South Wales in Australia and a Bachelor of Law degree from the
University of London in the United Kingdom. He has worked in proven financial services,
trading, and manufacturing for a well-known conglomerate with diverse interests in the
ASEAN region for over 15 years.
Dato' Lee has been actively contributing to the growth of the rubber glove industry in
Malaysia and the ASEAN region for the past 20 years. He worked on the Malaysian Rubber
Export Promotion Council's Board of Directors for 16 years (MREPC). He was a past
president of the Malay Rubber Board (MRB) and the Tun Abdul Razak Research Centre
(TARRC), as well as a Past President of the Malaysian Rubber Glove Manufacturers
Association (MARGMA). From 2014 to 2016, he served as Chairman of the International
Rubber Glove Conference and Exhibition (IRGCE) Organizing Committee.
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3. Dato’ Lim Han Boon (Senior Independent Non-Executive Director)
Dato' Lim Han Boon serves as the company's Senior Independent Non-Executive Director
(appointed on 21 February 2011). He is a member of the Malaysian Institute of Accountants,
the British Institute of Management, and a Chartered Association of Certified Accountants in
the United Kingdom. He also received a Bachelor of Business Administration from the
University of South Australia in Australia. He went to Harvard Business School as well for
the Senior Management Development Program.
Dato' Lim began his professional career at Binder Hamlyn Chartered Accountants
(now known as BDO). He worked for Kontena Nasional Berhad, Northport (Malaysia)
Berhad as General Manager, Corporate Services, and NCB Holdings Berhad as Group
Financial Controller and Company Secretary for more than 20 years in the transportation and
maritime logistics industry. He also spent more than 15 years in the Global Business
Services/Outsourcing Industry as the founder of Envo BPO Services Sdn. Bhd.
4. Tan Sri Rainer Althoff (Independent Non-Executive Director)
Tan Sri Rainer Althoff serves on the BOD as an independent non-executive director
(appointed on 14 March 2013). He's a member of the Committee on Risk Management. He
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has a Master's degree in Electronics and Electrical Engineering from Bergische Universität
Wuppertal in Germany and an MBA in General Management from Duke University in the
United States.
Tan Sri Rainer has over 50 years of experience in Electrical Engineering and
Electronics and expertise in IT ventures, mobile internet, factory automation, sustainability,
and digitalization. For more than 11 years, he was the President and CEO of Siemens
Malaysia Sdn. Bhd., as well as the Siemens spokesman for all Siemens activities and
associated companies in Malaysia. Moreover, he was also a Board Director of Proton
Holdings Berhad from 2009 to 2014 and a member of BOD Group Lotus PLC from 2010 to
2011, Chairman of Nokia Solutions and Networks Sdn. Bhd, and Chairman of Coriant
Malaysia Sdn. Bhd.
5. Lim Hooi Sin (Executive Director)
Mr. Lim Hooi Sin is the company's Executive Director (appointed on 4 September 2000). He
graduated with a Bachelor of Science in Management Science from Oklahoma State
University in the United States, a Master of Business Administration from Arizona State
University, and a Charter Financial Consultant Diploma from American College in the
United States.
Mr. Lim Hooi Sin worked for MetLife Financial Services, one of the most extensive
insurances and financial services firms in the United States, for 14 years. He served as a
Management Trainee, Associate Branch Manager, Regional Marketing Specialist, Agency
Director, and Director of Asian Markets before this role. Product production, promotion,
hiring, training, and management of a massive, highly efficient sales force have all been part
of his background. He previously served on the board of the Arizona Asian American
Association (AAAA) as a director. He has more than 20 years of experience in the glove
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industry in the United States, having founded TG Medical (U.S.A.), Inc. and served as its
Executive Vice President and President from 2001 to 2005. He is also a member of the Board
of Directors of several private limited companies.
6. Lim Cheong Guan (Executive Director)
Mr. Lim Cheong Guan is the company's Executive Director (appointed on 31 August 2006).
He graduated from the University of Malaya with a bachelor's degree in accounting and is a
member of the Malaysian Institute of Certified Public Accountants and the Malaysian
Institute of Accountants. He started his career in 1990 with Price Waterhouse and has since
held numerous vital roles in various publicly traded companies whose business activities
spanned manufacturing, plantation, trading, and property development.
Since 2008, Mr. Lim Cheong Guan has served as a Top Glove Foundation's
Administrative Committee member as an advisor. He is also the Chairman of the Risk
Working Committee since 2014 and the Head of the Sustainability Steering Group since 2019.
7. Puan Sri Tong Siew Bee (Non-Independent Non-Executive Director)
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Puan Sri Siew Bee Tong is the Non-Independent Non-Executive Director (appointed on 4
September 2000). She is one of the co-founders of the Top Glove Community. She earned a
bachelor's degree in computer science from University Sains Malaysia and a master's degree
in business administration from Sul Ross State University in the United States. She has
experienced more than ten years working in the banking sector and information technology
that she formerly attached to United Overseas Bank Berhad and Utama Bank Berhad.
8. Datuk Noripah Kamso (Independent Non-Executive Director)
Datuk Noripah Kamso serves as the company's Non-Executive Director (appointed on 18

March 2015). She graduated from Northern Illinois University with a bachelor's degree in
science and Marshall University with a master's degree in business administration.
In 1980, she started working for the Urban Development Authority. She joined the
CIMB Group in 1983 and worked in a variety of leading roles until 2014. From 2013 to 2014,
Datuk Noripah served as a CIMB Islamic Advisor. She has served as the President of the
Malaysian Futures Brokers Association in the past (MFBA). In 2015, she worked as a Global
Practitioner at the Principal Financial Group Centre for Global Citizenship in the United
States. She was a Fellow in Islamic Finance at the Oxford Center for Islamic Studies (OCIS)
in 2017. Currently, she is the Chairman of Bank Kerjasama Rakyat and Chairman of Yayasan
Bank Rakyat.
9. Sharmila Sekarajasekaran (Independent Non-Executive Director)
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Sharmila Sekarajasekaran serves on the BOD as an independent non-executive director

(appointed on 18 March 2015). She is a Middle Temple Barrister-at-Law and a High Court of
Malaya Advocate and Solicitor. She graduated from Keele University in the United Kingdom
with a BA in Law and Economics.
She started her legal career as a legal assistant with Messrs. Chooi & Co before
joining Messrs Tay & Partners in the Intellectual Property Department as a Senior Legal
Assistant in 2000. She began working for the RIM Group in 2005 and has held numerous
roles within the company. She is now a consultant for RIM Group's Legal, Operations, and
Industry Development departments. Her fields of specialization include Intellectual Property,
Banking Litigation, Corporate Advisory, and Family & Estate Claims as a Partner of Jerald
Gomez & Associates.
10. Datuk Dr. Norma Mansor (Independent Non-Executive Director)
Datuk Dr. Norma Mansor is the company's Independent Non-Executive Director (appointed
on 12 May 2017). She graduated from the University of Malaya with a bachelor's degree in
economics and went on to the University of Liverpool with a master's degree in public
administration. She has earned a doctorate from the University of Liverpool.
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She began her career as a lecturer at the University of Malaya's Department of

Administrative Studies and Politics. In the year 2000, she was promoted to Associate
Professor and then to Head of Department & Professor. She served as the Executive Director
of the International Institute of Public Policy and Management from 2001 to 2004 before
being named Dean of the Faculty of Economics and Administration.
11. Azrina Arshad (Independent Non-Executive Director)
Puan Azrina serves on the board of directors as an independent non-executive director

(appointed on 8 January 2019). She holds an architecture diploma from Universiti Teknologi
MARA and a postgraduate diploma in architecture from Oxford Brooke University in the
United Kingdom.
She began her career as an Assistant Architect at Arca-3 Arkitek in Kuala Lumpur, and went
on to work for many architectural firms in various capacities. In 1994, she worked as a part-
time lecturer at Universiti Technology Malaysia (UTM). Sanichi Technology Berhad named
Puan Azrina as a Non-Independent and Non-Executive Director in 2010. She is also a partner
and director of I-Partners and the Founder of the Teapot Café Sdn. Bhd. since 1996.
12. Lim Andy ((Independent Non-Executive Director)
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Mr. Andy Lim is the company's Independent Non-Executive Director (appointed on 8

January 2020). He has a Bachelor of Engineering degree from the University of Cambridge in
the United Kingdom and a Master of Business Administration degree from the University of
California, Los Angeles.
Mr. Lim Andy has served on the boards of the Enterprise 50 Association, Honour (Singapore)
Limited, Alpha Singapore, and the National Council Against Drug Abuse (NCADA).
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5.0 THE LIST OF TOP MANAGEMENT TEAM
In Top Glove, the top management team comprises 48 members who serve as the Chief
Financial Controller, Chief Operating Officer, Executive Director, Senior General Manager,
General Manager, Deputy General Manager, and Senior Manager of different departments.
The purpose of the management team is to successfully operate the company in heading with
all the entails and develop and execute a proper strategy for the future. The team setup
typically reflects the way the company looks to a certain extent. They are often of different
functions, divisions, or business areas depending on the level and the type of company.
Since Top Glove has been operating globally, it is vital to ensure that the company
has a top management team with a proven record of success in senior-level or senior-level
experience in the industry. For example, it can be noted that their top management team is
highly significant in the aspect of financial, manufacturing, and marketing, in which these
three departments contribute almost 80% of the position in the top management team. The
following are some of the top management of Top Glove Corporation Berhad:
POSITION NAME
Director Financial Controller Melissa Cheoh Hooi Gaik
Chief Operating Office (Joint Manufacturing Council) Wong Chong Ban
Executive Director (Subsidiary - Joint Manufacturing Hue Koh Fah
Council)
Executive Director (Joint Manufacturing Council) Ng Yong Lin
Senior General Manager (Marketing) Noraziah Mahmud
Senior General Manager (Finance) Jeremy Liew Say Keong
Senior General Manager (Joint Manufacturing Council) Lew Sin Chiang
Senior General Manager (Manufacturing) John Wu Kin Yeap
Senior General Manager (Cum Assistant to Chairman) Ken Soo
General Manager (Information Technology) Tan Kian Guan
V. P Global Marketing & Sales Dorothy Ressel
General Manager (Marketing) Apple Lau Wan Peng
General Manager (Group Quality Assurance) Loo Sun Nooi
General Manager (Sourcing & Procurement) Michelle Ang Peck Kean
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General Manager (Manufacturing) Tan Chee Hoong

General Manager (Operation Audit) Puon Tuck Seng
Deputy General Manager (Finance) Wilawan Sakulsongboonsiri
Deputy General Manager (Regulatory Affair System & Noor Akilah Saidin
Conformance and Corporate Integrity)
Head of Internal Audit Jack Lim Lung Fui
General Manager (Group HR) Loke Kean Mun
General Manager (Property & Leasing) Stephanie Thong Pei Ling
Deputy General Manager (Tax) Chang Chee Keong
Deputy General Manager (Marketing) Tan Lee Sam
Deputy General Manager (Manufacturing) Ng Seow Wei
Deputy General Manager (Engineering) Mansor Bin Daud
Senior Manager (Marketing) Aileen Choh Ai Ying
Manager (Marketing) Edwyn Poon Yew Hong
Deputy General Manager (Corporate Communications) Michelle Voon Wei-Ann
National Sales Manager Thomas Buri
Company Secretary Kassy Lim Keat See
Table 1: Top Management of Top Glove Corporation Berhad
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6.0 ORGANIZATIONAL STRUCTURE
Top Glove is a centralized organization where decision-making is concentrated on higher

levels in the company. Only the management team has the power to make crucial decisions.
Top Glove has also adopted a hierarchical structure in the company, which has five senior
management teams. The higher the level of the management team, the greater the
responsibility for decision-making. Meanwhile, the lower-level employees are only
implementing and carrying out those decisions. The authority flows down from BOD to the
CEO and then to the rest of the company. This means that the chain of commands is from top
to bottom. The company is organized based on functions as the management team is divided
into various functions like marketing, manufacturing, and finance.
The core values of Top Glove’s business ethics are Honesty, Integrity, and
Transparency. It is also bonded by the company values of Respect, Integrity, Value,
Empowerment, and Relationship. Consistent with the principles, Top Glove is strictly against
corruption in its business activities. This is because it fully understands that corruption
practices can adversely affect its reputation, image, staff morale, and business relationships.
Top Glove regularly organizes awareness programs to enhance employees’ anti-corruption
practices to achieve zero corruption and bribery. Top Glove also affirmed that its suppliers
comply with its corruption-free behaviour.
In addition, Top Glove is committed to solving the most controversial issue it faced,
which is the poor treatment of foreign workers. It is guided by its corporate values to improve
the safety and well-being of the workforce continuously. As the world-leading healthcare
product manufacturer, Top Glove always prioritizes sustainability in its corporate strategy. It
ensures that its business values align with environmental requirements and are effectively
implemented towards multiple stakeholders because Top Glove is aware of its responsibilities
to influence the community positively.
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6.1 MARKETING
Top Glove’s marketing strategies are implemented based on its marketing objective, which
focuses on engagement with the customers to satisfy their needs and increase customer value.
The company adheres to provide high-quality products and also ethical marketing practices.
These practices enable a strong relationship with the customers and their long-lasting loyalty
to sustain them as the world’s largest rubber glove manufacturer.
The company’s marketing mix strategies are performed efficiently. Top Glove
manufactures and exports a variety of glove and non-glove products. Top Glove has a lower
cost structure than its competitors so that the products can be sold at a competitive price. As
Top Glove emerges into any new markets, it will set up a marketing arm in that country.
Furthermore, Top Glove participates in numerous worldwide trade shows. It also has a
marketer team to contact the customers to promote its products and get their feedback to
evaluate product performance.
It can adjust marketing strategies to the conditions based on different market

segmentation in each country it operates. Effective marketing strategies enable it to sustain a
competitive position. Its marketing manager is required to manage the marketing strategies to
keep up with the current market trend to improve the sustainability and profitability of the
company in the strategic management process.
6.2 FINANCE
Top Glove’s financial goal is generating wealth to support future growth and development.
Its capitals are reinvested to provide a platform for potential sales growth and increase
operating synergies while also bringing returns to the shareholders. The company had
increased its spending in upgrading technology and expanding production capacity to achieve
its objective: to be the world’s leading glove manufacturer.
Firm sales orders brought an increase of 51% in sales revenue in 2020. In addition,
earnings per share rise 390% to 23.31 cents while the dividend per share increases 373% to
11.83 cents in the same year. Based on these remarkable financial results, the company
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successfully achieved its financial goals because it generates higher returns to its shareholders.
Top Glove has a more substantial financial performance compared to its competitors.
Besides that, Top Glove’s net cash position is healthy. The sufficient cash flow from
operating activities allows the company to repay existing syndicated loans. As of 31 August
2020, the group’s net positive cash was RM 2.34 billion. The favorable net cash position of
the company will be used to fund ongoing organic capital expenditures (CAPEX), including
expanding production capacity, build new technologically advanced facilities, and improving
existing production facilities. The cash flow will also be used to improve the digitization of
Industry 4.0 in the operations and improve the facilities for workers.
Top Glove strives to maintain open and transparent communication channels with the
stakeholders to provide a clear vision of its financial performance. The internal control will
be improved to ensure financial integrity. The financial manager will identify, evaluate and
monitor financial risks that might have occurred and review the financial performance.
6.3 RESEARCH AND DEVELOPMENT (R&D)
Research and Development (R&D) is integral to the ongoing success of Top Glove. The
company is aimed to become a Fortune Global 500 company in the year 2035. To achieve
this highly ambitious growth plan, the company strategically invests in emerging
technologies, R&D, and artificial intelligence. Top Glove builds a team of solid and skillful
technical expertise to enhance its R&D. These developed technologies can improve factory
efficiency and improve product quality. R&D becomes a competitive advantage of Top
Glove in product development and diversification.
Top Glove emphasizes the importance of R&D, it establishes 7 R&D centers in

Peninsular Malaysia, and it has another regional 4 R&D Centres in China, Vietnam, and
Thailand. Top Glove also establishes Top Glove Innovation Campus (TGIC), an innovative
and automated manufacturing facility that uses Industry 4.0 technologies for optimum
productivity. As reported by Nakano (2020), Top Glove had invested more than RM 3 billion
to modernize its operating facilities. The company is going towards a more enhanced
automation and digitalization in all aspects of the operations.
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Top Glove concerns environmental sustainability in R&D to promote green industry

and efficient energy management in its product development. Effective control of emission
intensity can prevent adverse effects on the climate and the entire ecosystem. For example,
through greener biomass combustion plants and advanced technology facilities, the factories
emit less carbon dioxide. These new technology implementations successfully reduce
greenhouse gas emissions by 1,755 tonnes CO2-eq/year.
Top Glove’s research department had cooperated with the universities to obtain
breakthrough R&D ideas for sustainable success in the glove industry. The company is
committed to its R&D mission to be a world-class glove manufacturer by constantly refining
and innovating. The R&D manager is responsible for ensuring the R&D department improves
the product development and quality, minimizing wastage in our material use, and achieving
cost efficiency.
6.4 OPERATION AND LOGISTICS
Top Glove is committed to operating as a sustainable business that makes a lasting positive
contribution to the world. It is aimed to manufacture high-quality products. It focuses its
efforts to make the greatest return and work hard to improve its sustainable development
strategy. It is consistent with its target, which is to be the pioneer gloves manufacturer
worldwide.
At present, Top Glove has a total of 47 factories and 750 production lines worldwide.
At the same time, it continues to engage in automation and digitalization of operating
activities towards Industry 4.0. This has led to cost efficiency and better manufacturing
productivity substantially. Its operation involves the use of green energy to sustain the
environment. The company also emphasizes quality control by continuous improvement.
To become a Fortune Global 500 company, the corporation had made an effort to
maintain its competitive position by expanding its operations. Top Glove is now starting to
expand its product portfolio following changing consumer needs. The company has an
experienced team in charge of end-to-end global supply chain management efficiently. It
utilizes its strong manufacturing capabilities and external supply network, focusing on high-
quality product supply and operating cost optimization.
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The operating risks faced by the Group mainly come from weak straight-line work
cell layout, potential equipment failures, insufficient raw materials, fire outbreak, power
outages, water shortages, or reduced natural gas, which may cause unexpected shutdowns of
the factory production lines. Therefore, an operation manager must identify these risks by
maintaining a sound risk control policy and a high-quality and cost-effective preventive
maintenance method. He is also required to improve operational capabilities and efficiency.
6.5 HUMAN RESOURCES MANAGEMENT (HRM)
Top Glove is committed to employee welfare and looking for continuous upgrades of its
employee welfare practices. Fair labor practices by improving employees' skills and
knowledge through training can result in high morale and employee engagement and then
contribute to company development. During the recruitment process, the HR manager is
responsible for finding suitable employees for the positions. He should also ensure sufficient
workers in the operations because the company had faced labour shortages with meeting the
overwhelming global demands in this COVID-19 period.
Top Glove believes that the secret to changes is continuous learning. Therefore, the
company is constantly updating employees' skills and knowledge that will undoubtedly help
improve the company's competitiveness in the industry. It provides the employees with
various physical and virtual, internal and external training and sets 45 training hours as one of
their metrics to accomplish KPIs. By evaluating based on the KPIs, the company will
determine either the HRM is performing well or not.
The company has been reviewing and developing its labour standards and is
committed to compliance with the best labour practices of the International Labour
Organization. In addition, the company has adopted a Zero Cost Recruitment Program to
ensure that no recruitment fees are directly received from any staff during the hiring process.
This is to provide transparency of the recruitment process. The HR manager also ensures
HRM is implemented according to the regulatory requirements and enforces regular social
compliance audits.
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6.6 INFORMATION TECHNOLOGY (IT)
Top Glove has intensified its efforts to develop artificial intelligence systems to enhance
capabilities in visually screening gloves and growing with Big Data Analytics to build a
feedback loop of continuous quality enhancement. The involvement of Big Data Analytics
enables the company to identify the market trends and customer preferences to make a better
strategic decision. The development of its IT systems has fulfilled its direction towards a
more automated manufacturing and reduction of repetitive tasks.
The company’s IT system is performing well in office automation management. The

general and logical access controls covering the data entry process to the IT system have
become more accessible by involving IT audit experts. Top Glove’s employees can easily
understand and facilitate internal controls of raw materials costs, labour costs, and overhead
costs allocation for each product. The company has its intranet. Its employees can organize
the information and collaborate within the company.
Top Glove also has its website as a globally connected place to share information
worldwide. On the Top Glove website, there is an establishment of electronic media to write
press releases. In addition, to mitigate information security risk and maintain business
functions, Top Glove improves its IT system, invests in cybersecurity training for IT
employees, and provides continuous education on IT security for all employees. The
company has done a lot of security tasks in determining any potential cybersecurity threats to
prevent cyberattacks. The IT manager has to take responsibility for enhancing software
systems, maintaining IT infrastructure, and ensuring secured networking for the company.
The IT manager should evaluate the IT risks to help in planning strategically too.
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7.0 FINANCIAL ANALYSIS
7.1 CURRENT RATIO
CURRENT RATIO 2018 (RM’000) 2019 (RM’000) 2020 (RM’000)

�� 3,236 7,423 1,572,411
= 2.14 = 4.81 = 0.55
�� 1,509 1,542 2,862,000
Table 2: Current Ratio for Top Glove from 2018 to 2020
Graph 1: Current Ratio for Top Glove from 2018 to 2020
The graph above shows the current ratio increase from 2.14 in 2018 to 4.81 in 2019. The
current ratio increases indicate the Top Glove Company is growing into its capacity, and it
shows the higher the ratio, the more liquid the company is. However, Top Glove's current
ratio has decreases from 4.81 in 2019 to 0.55 in 2020, which is less than 1. It indicates the
company has difficulty meeting current obligations and doesn’t have enough liquidity to pay
off the current liabilities.
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7.2 TOTAL ASSET TURNOVER
TOTAL ASSET 2018 (RM’000) 2019 (RM’000) 2020 (RM’000)

TURNOVER
�� 233,759 209,218 1,637,122
= 0.25 = 0.20 = 0.77
�� 927,978 1,030,338 2,114,490
Table 3: Total Asset Turnover for Top Glove from 2018 to 2020
Graph 2: Total Asset Turnover for Top Glove from 2018 to 2020
The graph above shows an upwards trend in total asset turnover from 2019 to 2020, from 0.2
to 0.77, even though there is a slight decrease from 2018 to 2019. However, the graph above
indicates the performance of Top Glove was efficient. The company’s total asset turnover
increases when the company has reduced its inventory and cut its average receivables. It is
showing the company could increase its sales while holding its assets constantly. The total
asset turnover of Top Glove's performance was good because they managed their balance
sheet very well, which has led their company to be more efficient.
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7.3 DEBT RATIO
DEBT RATIO 2018 (RM’000) 2019 (RM’000) 2020 (RM’000)

�� 1,509 1,542 3,228
= 0.147 = 0.148 = 0.101
�� 1,022,196 1,038,479 3,190,501
Table 4: Debt Ratio for Top Glove from 2018 to 2020
Graph 3: Debt Ratio for Top Glove from 2018 to 2020
The graph above shows a constant movement of Top Glove’s debt ratio from 2018 to 2019.
However, the trend was a drop in 2020, which decreased from 0.148 to 0.101. The decreasing
pattern shows the company had lower debt compared to its assets in 2020. In financial health
condition, the ratio help investors in measuring the risk level of the company. The higher the
debt ratio, the higher the risk involve and vice versa. When the debt ratio of Top Glove starts
to drop, it determines the risk involved with the company is low. The investment opportunity
for this company is increasing and will attract more investors to invest with the company.
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7.4 DEBT TO EQUITY RATIO
DEBT TO 2018 (RM’000) 2019 (RM’000) 2020 (RM’000)

EQUITY RATIO
�� 1,509 1,542 3,228
= 1.48 = 1.49 = 1.01
�� 1,020,689 1,036,937 3,187,273
Table 5: Debt to Equity Ratio for Top Glove from 2018 to 2020
Graph 4: Debt to Equity Ratio for Top Glove from 2018 to 2020
The graph shows that the highest debt-to-equity ratio was 1.49 in 2019, and the lowest was
1.01 in 2020. A lower debt-to-equity ratio means that the company is more financially solvent
and exposed to less risk. A higher debt-to-equity ratio indicates that the company is receiving
more of its funding by borrowing capital, revealing the company to the risk of having too
much debt. For example, the company's debt to equity ratio is 2019 is 1.49, implying that for
every RM1 in equity, the company has used RM1.49 in debt financing. As a result, a higher
debt-to-equity ratio would be seen as risky by creditors because it indicates that the investor
has not adequately financed the operations.
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7.5 NET PROFIT MARGIN
NET PROFIT 2018 (RM’000) 2019 (RM’000) 2020 (RM’000)

MARGIN
�� 233,759 209,218 1,637,122
= 0.9583 = 0.9468
�� 243,942 220,964 1,636,614
= 1.0003
Table 6: Net Profit Margin for Top Glove from 2018 to 2020
Gra
ph 5: Net Profit Margin for Top Glove from 2018 to 2020
The graph and data show that Top Glove recorded a net profit margin with the lowest in 2019
at 0.9468 and the highest in 2020 at 1.0003 net profit from the total revenue. This means that
a higher net profit margin is better for Top Glove as it indicated that they have good earnings.
This shows that Top Glove generated the most profit for every RM of revenue within these
three years. The graph shows that they managed to minimize their expenses and maximize
their profit throughout 2018 until 2020, where the current is the best during the three years. A
general rule of 10% net profit margin is relatively average, a 20% margin is considered high
or significant, and a 5% margin is easily offended, but more than 90% are top-notch.
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7.6 RETURN ON ASSETS
RETURN ON 2018 (RM’000) 2019 (RM’000) 2020 (RM’000)

ASSETS
�� 233,759 209,218 1,637,122
= 0.229 = 0.201 = 0.513
�� 1,022,196 1,038,479 3,190,501
Table 7: Return on Assets for Top Glove from 2018 to 2020
Graph 6: Return on Assets for Top Glove from 2018 to 2020
The return on assets ratio measures how effectively a company can earn a return on its
investment in assets. This ratio also shows how efficiently a company can convert the money
used to purchase assets into net income or profits. The graph return on assets shows an
uptrend from 2018 to 2020, increasing from 0.229 in 2018 to 0.513 in 2020. This means that
the company is more favorable to investors because it shows that the company is more
effectively managing its assets to produce more significant net income amounts. The uptrend
return on assets usually indicates an upward profit as well.
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7.7 RETURN ON EQUITY
RETURN ON 2018 (RM’000) 2019 (RM’000) 2020 (RM’000)

EQUITY
�� 233,759 209,218 1,637,122
' = 0.23 = 0.201 = 0.513
�ℎ��ℎ�� 1,020,687 1,036,937 3,187,273
Table 8: Return on Equity for Top Glove from 2018 to 2020
Graph 6: Return on Equity for Top Glove from 2018 to 2020
Return on equity measures how efficiently a firm can use the money from shareholders to
generate profits and grow the company. Return on equity is a profitability ratio from an
investor's point of view, not the company. This ratio also calculates how much money is
made based on the investor’s investment in the company, not the company’s investment in
assets or something else. The graph of return equity for Top Glove shows an uptrend from
2018 to 2020, which is 0.23 in 2018 to 0.513 in 2020. This indicates that Top Glove is using
investors’ funds effectively. The increase of the return on equity ratio in 2020 is better than
the lower ratio is 2019, which is 0.201. However, this ratio cannot be used to compare other
companies outside of the industries.
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7.8 EARNING PER SHARE
EARNING PER 2018 (RM’000) 2019 (RM’000) 2020 (RM’000)

SHARE
�� 233,759 209,218 1,637,122
= 0.18 = 0.08 = 0.63
�� ℎ�� 1,280,032 2,555,009 2,592,546
Table 9: Earning Per Share for Top Glove from 2018 to 2020
Graph 8: Earning Per Share for Top Glove from 2018 to 2020
Top Glove’s earnings per share (EPS) decreased from 0.18 per share in 2018 to 0.08 per
share in 2019. The decline in EPS may signal to investors that the company may be in trouble,
which will cause the stock price to fall. However, the ESP increased to 0.63 per share in 2020.
This positive trend indicates that the company is generating more income for the shareholders.
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8.0 VRIO FRAMEWORK OF ANALYSIS
Begin with analyzing the surroundings, and Top Glove needs to look at the macro
environment to see what's going on globally, including politically, socially, economically,
and technologically. Top Glove must consider the microenvironment, which is what is going
on in the market, which entails analyzing competitors, suppliers, and customers.
VRIO is an acronym for the four-question framework of Value, Rarity, Imitability,

and Organization. It is used to uncover “sustained competitive advantage”. The framework's
first question is whether a resource creates value by allowing a company to take advantage of
opportunities or fight against risks. A resource is regarded as valuable if the answer is yes.
Resources are also crucial if they assist firms in improving the perceived value of their
customers. Top Glove Values is accomplished through improving product differentiation or
lowering the product's price. Resources that are unable to achieve this requirement are at a
competitive disadvantage. It's critical to keep an eye on the worth of resources because
changing internal circumstances might make them less valuable or useless.
Rare resources are those that one or a few companies can only obtain. Rare and
valuable resources provide a competitive advantage for a limited time. On the other hand,
competitive parity occurs when many enterprises share a resource or similarly use a
capability. Rarity is since organizations can employ the same resources to implement the
same plans, and no organization can outperform the others. Even though competitive parity is
not the intended position, a company should not overlook significant but common resources.
Losing necessary resources and competencies would be detrimental to an organization's
ability to compete in the market.
If they cannot imitate each other organization, buy or substitute it for a reasonable price, it's
expensive to mimic. Imitation can take two forms. First, directly imitating (duplicating) the
resource or delivering a similar product or service (substituting). Lastly, If a company is not
organized to capture the value from its resources, it will be at a disadvantage. To fully utilize
the potential of its valuable, rare, and costly to imitate resources and capabilities, a company
must organize its management systems, procedures, policies, organizational structure, and
culture. Only then will businesses be able to maintain a competitive advantage.
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Outcomes from Combinations of the Four Criteria:
VALUABLE RARE COSTLY TO NON - COMPETITIVE PERFORMANCE

IMITATE SUBSTITUTABLE CONSEQUENCES IMPLICATION
Financial YES, even NO, some YES, all of the YES, the company Temporary Above Average to
Resources COVID-19 healthcare closest rivals has a sustainable Competitive Average Returns
cannot stop Top company also have access to financial position Advantage
Glove from have an financial
having a good excellent instruments and
financial position financial market liquidity
position
Brand YES, Top Glove YES, Top NO, many YES, Top Glove has Temporary Above Average to
Awareness regularly Glove’s one of companies do taken advantage of Competitive Average Returns
organizes the leading brand awareness its dominant brand Advantage
awareness brands in the to mark up their position in a variety
programs toward industry brand of markets
community
Developing a YES, it is highly NO, the YES, it can be YES, One of the Temporary Above Average to
Digital Strategy impossible to majority of imitated by leading players in Competitive Average Returns
Successfully compete without businesses are competitors the industry Advantage
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a complete investing in
digital strategy digitizing their
process
Global and YES, diversifies NO, many YES, YES, one of the Temporary Above Average to
Local Presence revenue streams companies are competitors can most diverse Competitive Average Returns
and keeps the at the imitate businesses in this Advantage
company’s international sector
balance sheet out and local level
of the economic
cycle
Trademarks, YES, precious YES, IPR and YES, the YES, Top Glove Sustainable Above Average
Copyrights, and when it comes to other privileges competitor may register their Competitive Returns
Intellectual countering are uncommon, copy it, but it trademarks with the Advantage
Property competition where requires legal operation
Protection competitors are marketing spend
unable to clone
them
Customer-Based YES, customers NO, other NO, other NO, provide a Competitive Average Returns
involved in the companies have companies can support forum for Parity
product their ways to imitate like Top their clients to find
development have a unique Glove and correct flaws in
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process relationship their goods and

with their services
customers
Table 10: VRIO Framework
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9.0 EXTERNAL FORCES
9.1 STEEP ANALYSIS

9.1.1 Sociocultural
Social culture is one of the external forces that are important to organizations. Competitors
can imitate it and business. This sociocultural factor represents the demographic
characteristics, norms, customs, and values of the business's population. Sociocultural factors
that affect an organization are population growth rate, age distribution, income distribution,
career attitudes, health consciousness, life attitude, and cultural barriers.
Malaysia is anticipated to become an aging population by 2030, which will lead to

increasing demand for healthcare services. This population expansion, particularly among
the elderly, will be a significant determinant of healthcare demand and supply. As a result,
Top Glove has provided a full glove product line and a non-glove segment that includes face
masks, dental dams, exercise bands, and domestic products, meeting demand in both the
healthcare and non-healthcare sectors (Top Glove, 2020).
Next, since the world is facing an unprecedented challenge due to the COVID-19
pandemic, people's lifestyles have changed, and people are now wearing face masks regularly
to avoid the spread of the virus. As a result, the demand for masks, gloves, face shields, and
other personal protective equipment (PPE) is rising. To satisfy increased demand from the
coronavirus outbreak, Tan Sri Lim Wee Chai, the Executive Chairman of Top Glove,
revealed that they have 30 machines that are already fully operating with a total capacity of
8.8 million face masks per month. In June, Top Glove began selling face masks for internal
use (NST, 2020).
Furthermore, the COVID-19 epidemic has impacted career expectations, forcing

many businesses to downsize and urge staff to work remotely. Some companies are unable to
boost their revenue or are forced to shut down. Top Glove, for example, has lost RM1.2
billion in market value as a result of having to shut down 20 of its plants after over 3,000 of
its employees tested positive for the coronavirus (Rasfan, 2020).
Finally, income distribution is critical for businesses to flourish since it impacts

societal cohesiveness, defines the level of poverty for any given average income and the
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poverty-reducing effect of growth, and even affects people's health. Hence, Top Glove has
switched from semi-annual to quarterly dividend payments to reward its shareholders more
regularly, which will also help its institutional investors with dividend distribution.
9.1.2 Technological
Top Gloves' company is heavily reliant on technology. Technology is one of the external
forces that impact organizations and businesses, such as population access to technology,
supply chain distribution due to technology, product innovation, productivity gains through
automation, and the rate at which technology-driven change occurs.
Top Glove has developed new technology and a research and development strategy to
improve production efficiency even further in light of the pandemic. Since gloves have
become an essential part of the healthcare business, companies have stepped up their efforts
to build Artificial Intelligence systems to boost capabilities in visually screening gloves and
combining them with Big Data Analytics to improve quality. With product hygiene as the
most profound concern, they are also investing in “contactless” automated packing and
handling systems to ensure that gloves move from the manufacturing line to packaging
without human intervention and reduce contamination risk (Top glove 2020).
According to the UNESCO Institute of Statistics, global R&D investment has

surpassed RM 7.6 trillion for the first time. To remain competitive in the world economy,
Malaysia needs to create new sources of growth constantly. This will necessitate an
expansion in the country's R&D and innovation. Top Glove has committed RM10 million in
research and development in 2019 (Top Glove, 2019). The government also aided the
corporation with various grants and other incentives to encourage enterprises across many
industries to invest in R&D.
Moreover, automation is a technology that businesses utilize to eliminate the need

for human intervention. Top Glove can boost its productivity by using technology to
automate its factory lines further, decreasing manual labour and raising the quality of their
product by embracing automation and technological innovation. This technological
advancement will enable the company to produce a huge quantity of high-quality gloves in
order to meet client demand and sell to other countries (Top Glove,2020).
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Lastly, Top Glove has been pursuing aggressive expansion by embracing digital
technologies in its business to remain competitive and preserve its good performance. They
aim to entirely computerize its manufacturing and operational procedures utilizing this
technology (Anushia, 2020). According to Managing Director Lee Kim Meow, Top Glove
has collaborated with the Malaysian Digital Economic Corporation (MDEC) to improve the
digital integration of their factory lines and management system. By taking part in digital
adoption, companies can convert concepts into real-life applications and assist the business in
improving efficiency and cost.
9.1.3 Economic
The economic factors sometimes create a significant problem in the rubber gloves industry.
Top Glove has increased its economy by exporting its products around the world. Interest
rates, inflation, unemployment, credit availability, taxation rates, and the global financial
system are all economic issues that will impact Top Glove's profitability and operation.
According to the Malaysian Department of Statistics, the unemployment rate rose to

4.9 percent in January 2021 from 4.8 percent in December 2020, as the number of employed
people increased from 772,900 to 728,500. The labour market remained in a challenging
situation following the rising number of COVID-19 cases and Movement Control Order
(MCO). As a result, Top Glove has offered 9,000 job opportunities for Malaysians to help
tackle unemployment in the country (Thermesh, 2021).
Following that, despite the Malaysian government's issue MCO, Top Glove stock
prices have risen during the COVID-19 outbreak. According to Areca Capital CEO Danny
Wong, the only companies expected to gain profits are those untouched by COVID-19, such
as the glove industry. However, Mr. Wong believes that this industry will last in short-term
stock, but it is too early to tell (Surendran, 2020). As the economy and businesses struggle
because of the government ordered lockdown, investors are drawn to the glove stock market
to generate profit growth. This demonstrates that Top Glove maintains a competitive
advantage in certain situations even when the economic conditions evolve.
In addition, to stimulate the market and recover the economic decline caused by the
COVID-19, Bank Negara Malaysia has declared a historical record of cutting the OPR by
100 basis points to the lowest interest rate, 1.75 percent (BNM, 2020). With economic
changes in interest rates, Top Glove has modified its interest rates on loans and borrowing.
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By maintaining a mix of fixed and floating rate of borrowing, they also have actively
examined their debt portfolio by taking into account the investment holding period and nature
of their assets. This technique enables businesses to take advantage of lower-cost finance in a
low-interest-rate environment while also providing some protection against rate spikes.
Furthermore, currency markets have evolved into a serious economic concert,

resulting in fluctuation that is the norm for most major economic sectors, including the
healthcare industry. The majority of Top Glove's revenue came from export sales and all of
its exports were in US dollars. Malaysia's currency rate was RM4.08 for 1 USD in March
2019, and it has since declined to RM4.26 for 1 USD in July 2020. Weaker market currency
rates have resulted in cost-push inflation, as the price of imported raw materials has risen. As
a result, increased product prices have allowed the company to withstand the impact of
increased raw material costs and foreign exchange fluctuations (Soo Ai Peng, 2020).
Lastly, due to the expected increase in the price of natural gas, rubber glove makers
are experiencing difficulty. The recent dramatic drop in the cost of liquefied natural gas
(LNG) and coal has caused the price to rise (Syahirah, 2020). Top Glove has been relying on
alternative energy sources like biomass and other renewables to offset the expected rise in gas
prices to deal with these difficulties. This alternative energy is less expensive, which is
something that all glove makers are considering.
9.1.4 Ecological
The ecological and environmental factors can have a significant influence on Top Glove's
day-to-day operations. Companies that manufacture things from natural resources must
devote time to thoroughly researching the nation's natural system where they want to market
their goods and services. Weather, environmental offsets, water, energy, environmental
restrictions, pollution, waste management, and climate change are all elements that will have
an indirect impact on the healthcare business.
Top Glove was forced to shut down its production due to the ongoing water crisis in
Klang Valley. Top Glove is reliant on the government's water supply. Thus if a water issue
disrupts their operations, they may face operating delays due to water or energy failures. Tan
Sri Dr. Lim Wee Chai, the Executive Chairman, stated that they had spent RM15 million in
the technology and facilities of a completed reverse water treatment plant in Selangor to
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address the water issue in Klang Valley (Rashid, 2018). They can counter water outages and
run all production, as usual, thanks to the water treatment.
Furthermore, global warming has become a severe environmental concern that has
resulted in climate change, influencing business, society, and the ecosystem. In 2018, their
gas use was 16.98 kg carbon dioxide emissions per box of gloves created, which is consistent
with acknowledging the effect of climate change caused by the usage of fossil fuels (Wu et
al., 2020). As a result, Top Glove has utilized biomass, a renewable energy source, to power
its operations. It is green energy that is a renewable resource and less environmentally
harmful than fossil fuels. Simultaneously, reducing carbon dioxide emissions will lower
world temperatures and aid in the prevention of global warming.
The growing usage of natural rubber in the healthcare industry is impacting natural
rubber trends. The nitrile glove market is likely to contract as more consumers choose natural
rubber gloves. Despite the price increase and over the planting of rubber trees in 2013, the
price of natural rubber took a fatal hit due to oversupply, which might impact Top Glove
operations. The rise was related to fears about fungal disease-causing harm to the
productivity of rubber trees, resulting in a supply drop. According to the International Rubber
Study Group (IRSG), a natural rubber surplus is forecast low over the next three years.
Besides that, petroleum is utilized in butadiene, which is being used in produced

nitrile butadiene rubber (NBR) latex in Top Glove. Butadiene prices, on the other hand,
fluctuate in lockstep with oil prices. As a result, the cost of NBR latex is influenced indirectly
by the petroleum market. In 2020, global oil demand plunged dramatically as countries shut
down operations also, the oil futures prices were even briefly negative as the market reacted
to massive oversupply and a significant decline in worldwide demand from the COVID-19
pandemic (Domm, 2020). Top Glove's involvement in the petroleum sector may impact the
production of their NBR latex gloves due to price fluctuations and demand, as they have no
control over the oil business.
Lastly, in order to maintain the excellent performance of Top Glove, they must
consider the environmental impacts. However, because gloves are frequently used in the
healthcare business, they lead to environmental consequences. A study found that NBR and
natural rubber gloves contributed the most (>50%) to the effect categories of climate change,
ozone depletion, marine eutrophication, fossil depletion, and others (Patrawoot et al., 2021).
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The environmental effect of the chemicals employed throughout the manufacturing process
has also been addressed. Nonetheless, the results revealed that NBR gloves caused more
ecological impacts than natural rubber gloves.
9.1.5 Political – Legal

Politics may be defined as the legal elements that impact Top Glove's company and how the
government gets involved in the industry. Failure to adequately evaluate will lead to damages
that may be too costly to cope with. As a result, it is critical to be informed of the present
political situation or the imminent power transfer. Political stability, tax policies, pricing
regulations, consumer rights, labor force policies, state laws, and a specific law's precision
are all factors to be examined.
Top Glove must take discrimination laws seriously since they affect the ethical
behavior of their employees. Section 60L (1) of the Malaysian Employment Act 1955 states
that if a foreign employee has been discriminated against a local employee, the Director
General may provide such instructions to the company as would be necessary to resolve the
case. On July 15 2020, US Customs and Border Protection (CBP) filed a Withhold Release
Order (WRO), also known as a Detention Order, on Top Glove after determining that there
have been forced labour practices, including debt bondage presumably connected to
"recruitment fees'' by employment agents that were frequently levied on foreign workers.
Their migrant laborers are compelled to labour for the corporation until significant recruiting
fee debts are cleared (Stodder & Oleynik, 2020). This scenario demonstrated that Top Glove
discriminated against its foreign workers, as they were not paid equally as its local workers.
The biggest concern with Top Glove is the fluctuation of foreign exchange rates.
The Ringgit has recently experienced significant changes versus the US Dollar, putting it in a
considerably worse position. The trade war between the United States and China and the
COVID-19 outbreak have only exacerbated Ringgit's situation. Malaysia's volatile political
environment is also thought to have led to the country's currency depreciation. Top Glove's
income is in US dollars, while its costs are in Malaysian Ringgit. The present trend suggests
that the US Dollar is losing ground versus the Ringgit. To summarize, Top Glove cannot do
anything about the foreign currency rate because they have no power over it.
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In addition, Top Gloves must obey moral laws and regulations based on Malaysian
government law. According to The Star (2020), Top Glove has been determined to violate
the Recovery Movement Control Order (RMCO) as a breach of Standard Operating
Procedures (SOP). Following an examination by the Anti-Trafficking in Persons and Anti-
Smuggling of Migrants Act 2007, it was revealed that Top Glove workers were not practicing
social distancing and living in an overcrowded situation at its Meru, Klang headquarters. As a
result, Top Glove has been given a compound by the Health Ministry and presented with a
compliance warning by the Ministry of Housing and Local Government.
Malaysian glove makers are estimated to pay a total of RM2.4 billion in corporate
taxes in 2020, more than last year. Dr. Supramaniam Shanmugam, president of the Malaysian
Rubber Glove Manufacturers Association, stated that the windfall tax would hinder glove
producers from expanding to meet rising global demand. It demonstrated that Malaysia
stands to lose opportunities to grow and gain market share to other countries (Yunus, 2020).
So, the government should enable Top Glove to utilize their income to expand, where it will
create additional opportunities in the glove industry and other industries. Windfall tax causes
would hinder the progress of the glove sector, which indicates that they might lose this
chance to other nations such as Indonesia, Thailand, Vietnam, and China.
Lastly, many variables impact the export challenges and concerns of rubber latex in
the ASEAN market. Previous research revealed that the projected market price influenced the
supply of rubber. It was also impacted by public or government policies and private donors
interested in the production and growth of rubber. Numerous hurdles, including favorable
weather, economic stability following dramatic increases in oil prices, and various other
circumstances, are sure to directly influence the long-term sustainability of rubber prices
(Khin et al., 2019). This indicated that Top Glove was also experiencing problems with its
export since the surge in natural rubber prices was causing them tremendous stress.
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9.2 5 FORCES BY MICHAEL PORTER
9.2.1 Threat of New Entrants

The entry barriers to the glove manufacturing industry are high because of the economies of
scale. Top Glove is the world's largest glove maker, with a 26% share of the global rubber
glove market. It has the capacity to create 90 billion gloves per year. As a result, new
competitors will find it difficult to reach the same significant economies of scale as Top
Glove, which can create high-quality products at a low cost.
Furthermore, new entrants to the market have a significant capital demand. This is
because it must make substantial investments in technology and equipment. In response to the
ever-changing corporate environment, technology is rapidly evolving. As a result, newcomers
will confront a high learning curve to establish a firm foothold in the industry. This will also
put new entrants at a cost disadvantage because they will not make goods at the same or
lower cost as Top Glove.
In addition, newcomers take time to create a positive reputation to raise customer

awareness of their brand. It is not easy to establish a company’s name and gain customers'
trust for most beginners or new entrants into the market. However, if the newcomers offer
unique products that Top Glove does not show, this becomes the primary threat to Top Glove.
But, with the trust gained from the customers and good reputation, they have made Top
Glove remain to lead the market in this industry. To be conclude, the intensity threat of new
entrants of Top Glove is low due to the entry barriers for newcomers to the industry is high.
9.2.2 Threat of Substitute Products

Top Glove produces a wide range of glove products to fulfill the needs of a wide range of
users on the global market. Latex, nitrile, vinyl, and polyethylene are the four primary
categories of the company's products. These items can be used in place of one another as Top
Glove is concerned about the potential of product replacement. Top Glove has designed a
balanced product mix that includes numerous types of gloves in its production to eliminate
the possibility of product substitution. As a result, Top Glove faces a low risk of product
replacement.
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Furthermore, the low glove cost provides little motivation for purchasers to seek out
alternative goods. This relates to the need for gloves among buyers while purchasing things.
Customers are constantly on the lookout for high-quality goods. A substitute degrades the
customer's position and reduces Top Gloves' profitability. However, the threat of a substitute
product for Top Glove on rubber gloves is low. This means that rubber glove prices are low,
and there are no incentives for the research house to look for other options.
Close substitute items can make an industry more competitive while also lowering the
profitability of a specific sector. Because the rubber glove sector is dominated by just six
companies led by Top Glove, then Supermax, Kossan Rubber, Hartalega, Latexx Partners,
and Adventa, lower the threat of substitute products. Top Glove is the established industry
leader, but a recent study has shown that Hartalega is catching up to Top Glove in terms of
R&D success. So, Top Glove will be a threat to make sure their product substitute is well
managed. Based on the reason has been discussed above it may be claimed the intensity
threat of substitute products for Top Glove Corporation is between the range of low to
moderate level.
9.2.3 The Bargaining Power of Buyers

Since Top Glove is so concentrated on big consumers, including international healthcare
firms, buyers have a lot of negotiating power. Their dependence on multinational
corporations directly increases buyers' bargaining power. Since there are so many glove
manufacturers on the market, consumers with significant purchasing power can quickly turn
their purchases from one to another. Because of the lower switching costs, consumers can
easily switch between manufacturers. The firm reliance on international corporations directly
boosts buyers' bargaining power, especially during periods when capacity surplus is rising.
Moreover, as raw material costs grow, the availability of a cost pass-through

mechanism could shield glove manufacturers by passing on a portion or all of the increased
costs to consumers. Buyers' willingness to give orders to other suppliers, on the other hand,
remains strong if a medium-sized market player emerges with more significant efficiency,
consistent product quality, relatively low prices, and effective delivery schedules.
As a result, bargaining power of buyer will maintain strong, if not even higher, as
more and more capability enters available over the next two to three years. The availability of
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a price flow through process, which could assist to preserve glove producers' bargaining
strength as latex costs rise which indicate positive for the industry. Buyers can simply change
orders from Top Glove's competitors such as Supermax, Kossan, and Hartalega if Top Glove
emerges with larger capability, consistent product quality, and fast delivery schedule.
9.2.4 The Bargaining Power of Suppliers

Suppliers have a lot of negotiating leverage. The explanation for this is that glove
manufacturers depend heavily on natural rubber suppliers. The glove industry has a lot of
participants, but there are just a few suppliers. Natural rubber is also used in the production of
many other sectors, such as footwear, mattresses, tires, and so on. As a result, rubber
producers can efficiently switch buyers or increase prices at any period.
Agreement Top Glove is preferred as a customer since they are the market leader
among glove industry compared to their competitors such as Supermax, Hartalega and
Kossan. Top Gove consequently order in bulk and benefit from economies of scale. Top
gloves are guaranteed to use high-quality raw materials because they are the supplier's
preferred customer. Many manufacturing sites are located near raw material sources,
particular markets, or areas with low labor costs. This provides value by cutting production
costs, which are then delivered to customers in the form of highly discounted prices
For example, Top Glove originated in the manufacture of latex and nitrile gloves,
which accounted for 88 percent of its overall glove revenues. Since natural rubber is a key
component in the manufacture of latex and nitrile gloves, Top Glove's output processes
would be severely disrupted and may come to a halt. As a result, the increased volatility of
raw material costs can be explained by the fact that Top Glove is a price seeker with little
negotiating leverage with suppliers. When the aim production market performs successfully,
the suppliers would be expected to lift the cost.
9.2.5 Rivalry Among Existing Firms

Malaysia is the world's largest supplier of gloves, accounting for over 63 percent of
worldwide consumption. This indicates that Malaysia produces one out of every two gloves
manufactured worldwide. As a result, many glove manufacturers are scrambling for a slice of
this giant cake, causing fierce rivalry among established firms. This circumstance puts Top
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Glove in trouble and endangers its dominant status as the industry leader. Top Glove is not
the only glove manufacturer in Malaysia. A couple of leading companies supply gloves,
including Hartalega, which is Top Glove's primary challenger.
With cumulative assets valued at RM 8.71 billion and a potential of 90 billion gloves
per year, Top Glove has a leading role in respect of scale and ability. This is almost double
the amount of Hartalega. Nonetheless, if we reflect on the compound annual growth rate
(CAGR), Hartalega is steadily rising and has many opportunities to replace Top Glove in the
upcoming CAGR. Top Glove has expanded at an incredible 8.73 percent, while Hartalega has
been increased at a mind-boggling 17.33 percent. Hartalega is a competitor to Top Glove
because of its more robust CAGR growth.
Competition arises from bordering nations such as Thailand and Indonesia, in addition
to regional manufacturers. Thailand and Indonesia are the globe's primary two natural rubber
sources. Thailand and Indonesia have economic strength in producing gloves because of the
plentiful availability of rubber. Furthermore, Thailand and Indonesia have considerably
smaller labor costs than Malaysia. As a result, producers in these two nations are better
equipped to produce effective high gloves at a lower price, posing a severe challenge to Top
Glove.
9.3 STRATEGIC GROUP
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Figure 2: Strategic Groups of Glove Companies in Malaysia
This graph represents the strategic group map of the Malaysian rubber glove industry based
on quality and pricing. The y-axis reflects product quality, while the x-axis reflects product
pricing. As a scale, we are adopting high, medium, and low ratings. Top Glove, Hartalega,
Supermax, Latexx, and Kossan are the five companies shown on this map. We only
investigate five leading companies in Malaysia (Ever Pro Glove website).
The product quality that Top Glove produces shows that they are a market leader in
this strategic group because their customers are more loyal to them. They also have a well-
known brand in the marketplace. However, Hartalega makes every effort to ensure that their
product finds a home with their buyer. They offer a high-quality product and incorporate
innovation into its design. Hartalega is the competition that poses the greatest danger to them
in terms of quality.
We also make a comparison of these companies based on their price. Top Glove
produces examination, surgical, household, cleaning, and apron gloves, while Hartalega
focuses on the medical care, laboratory, and industrial markets. In line with low-cost products,
it shows that Top Glove is in the middle in terms of price compared to Hartalega. Even the
quality of Top Glove is also better than Hartalega and the rest of the companies (iPrice, price
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website). We want to investigate more companies, but it is hard to look for the price because
not all companies disclose their product price on their website or another website.
Other companies could also improve the quality of their products and their price
compared to Top Glove, as well as broaden into more countries than Supermax, to achieve
that position on the strategic group map. These are approaches that other businesses can
employ to ensure that they maintain in the market. Top Glove could also utilize this strategic
map to recognize mobility challenges and chances to defend itself from the competition. The
strategic group map can also be used to plot the future course of Top Glove's strategies and to
consider the significant impacts of each industry pattern for the strategic group overall.
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10.0 SWOT ANALYSIS
STRENGTHS WEAKNESSES
1. High Product with International 1. Weak Straight-Line Work Cell Layout
Accreditations 2. Labour Shortage
2. Low Production Cost 3. Extensive Investment in Technology
3. Strong Technical Expertise 4. Bad International Reputation Regarding
4. Wide Product Range ESG related matters
5. Global Market Leader 5. Supply of Rubber Shortages
OPPORTUNITIES THREATS
1. Government Support 1. Poor Reputation of Company in Labour
2. Low-Interest Rate Practices
3. Subsidies on Natural Gas by the 2. Currency Exposures
Government have reduced the Cost of 3. Intense Competition in Glove
Production Manufacturing Segment
4. Rising of Hygiene Awareness 4. Fluctuation in Nitrile Latex Price
5. COVID-19 Vaccine Global Access 5. Pandemic COVID-19
(COVAX) program 6. Ongoing ESG-related
6. Long-term Product Demand Growth
Table 11: SWOT Analysis
10.1 STRENGTHS
10.1.1 High Product Quality with International Accreditations
Top Glove pays close attention to implementing stringent quality management protocols in
all factories to produce consistently high-quality goods at an affordable and productive low
cost. The factories adhere to the quality requirements set out by internationally recognized
awards. Top Glove has received ISO 9001, ISO 14001, Product Halal certificate for
CPE/TPE version, Certificate of Conformity, and other accreditations worldwide.
10.1.2 Low Production Cost

Because of advanced engineered assembly lines and less investment in advertising and
promotional activities, Top Glove has a lower cost structure than its rivals. It has a large
capacity for producing different glove and non-glove products. As a result, it benefits from
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the economy's size. Top Glove's sales growth capabilities have enabled it to procure the
necessary quantities to achieve economies of scale, lowering manufacturing costs and
allowing it to sell its goods competitively.
The business is continuing to expand and has a positive outlook for the future to
maintain its current level of success. If the current trend continues, along with aggressive
marketing campaigns, sales and profit margins can increase, allowing the company to
improve manufacturing capacity and achieve greater economies of scale, quality, and cost-
efficiency.
10.1.3 Strong Technical Expertise

Top Glove has a good technological experience and is capable of upgrading its production
lines to increase factory productivity and product quality. Top Glove collaborated with
universities to launch the TGICG program in early February 2019 to gain breakthrough R&D
ideas for the glove industry. The company is dedicated to its R&D goal, which is to become a
world-class glove manufacturer by continuously improving and innovating. Top Glove can
provide top brands with excellent services and manufacture innovative products to satisfy the
needs of consumers thanks to its research and inventions.
10.1.4 Wide Product Range

Top Glove produces and exports a wide range of glove and non-glove products. Its products
cover anything from inspection to surgical and industrial applications, as well as a glove and
non-glove options. In addition, Top Glove produces 32 glove and non-glove items in total.
Latex investigation powder-free gloves, latex examination powdered gloves, soft nitrile
examination gloves, vinyl examination gloves, chloroprene examination gloves,
polychloroprene surgical gloves, food handling gloves, face mask, double donning surgical
gloves, cleanroom gloves, and so on are some of the items available. It would increase its
chances of satisfying more customers and its competitiveness by offering a wide range of
products.
10.1.5 Global Market Leader

Top Glove is the biggest rubber glove maker in the world. In the global glove industry, it has
a market share of approximately 26%. The firm had developed a foothold in both the
domestic and foreign markets. Its glove manufacturing facilities are located in Malaysia and
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in Thailand, China, and Vietnam. It has already developed marketing offices in these nations
and the United States, Brazil, and Germany.
The organization serves more than 2,000 customers in 195 countries. Top Glove
acquired Aspion Sdn Bhd in 2017 to extend its surgical glove operations and enter the
European, Japanese, and North American markets. Top Glove maintains its strong presence
in the global glove industry with these accomplishments.
10.2 WEAKNESSES
10.2.1 Weak Straight-Line Work Cell Layout
The layout of Top Glove's straight-line production lines is unsatisfactory. Workers in the
dipping line will discover that it is difficult to divide their tasks equally and that more
workers are required than in the U-shaped work cell layout. This could contribute to social
loafing in the workplace, where certain employees perform less than their coworkers. This is
not something that can happen at work because it would lower the morale of other
hardworking employees.
10.2.2 Labour Shortage

Top Glove, like all other glove manufacturers in Malaysia, is experiencing labour shortages.
Top Glove struggles to meet the increasing demand for medical gloves, particularly during
the pandemic, due to a labour shortage. It could cost the country a lot of money in terms of
exports. According to Malaysiakini news (2020), the glove manufacturing industry in
Malaysia could lose RM 7.6 billion in revenue. As a result, Top Glove's inadequate labour
force issue resulted in a revenue loss. This is because the company will have to cancel any
orders if it cannot meet the increased demand.
10.2.3 Extensive Investment in Technology

Top Glove used cutting-edge technology to create its latex gloves. It invested a lot of money
in modern equipment in order to upgrade its production methods, and it now has to hire more
skilled staff to run the machinery. The equipment is very costly. The machinery's
maintenance and repair costs are also high. This is due to the fact that its products are not
widely used by other businesses, making it difficult to find a replacement for broken
accessories. Furthermore, in order to operate these machines, the company must pay higher
wages and spend more on training new staff. As a result, the organization would have to
spend more money to run this computer technology.
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10.2.4 Bad International Reputation Regarding ESG related matters

ESG controversies are stories about a firm’s social or environmental behavior. They can
affect a firm’s market value (Aouadi & Marsat, 2015). Top Glove's ESG concerns have been
overshadowed by the company's robust performance in the first quarter ended March 31,
2018. While they may have discounted Top Glove's target price due to its first-quarter results,
most analysts have maintained their positive calls on the stock. RHB Investment Bank has
held its “buy” recommendation on Top Glove but has cut its ESG score due to a 10%
discount to its target price. CGS-CIMB cut its target price on UPL by 11% to RM8.90 per
share due to uncertainties over its ESG issues. The cut was prompted by the lower price-to-
earnings ratio and its expectation of lower sales growth for the next couple of years.
Maybank Investment Bank has maintained its target price of RM8.65 per share on
Top Glove for the next 12 months. The target price assumes a higher weighted average
capital cost. EPF, which became Top Glove’s largest direct shareholder on Sept 21, has been
shedding its shares. On Dec 7, it sold 1.5 million shares, which reduced its direct stake in the
company to 5.56%. EPF’s concerns over ESG issues may have prompted it to sell off Top
Glove shares, industry observers say. Top Glove is being investigated for violating the
provisions of the Workers' Minimum Standards Act 1990.
10.2.5 Supply of Rubber Shortages

Top Glove, the world's largest rubber glove producer, is rushing to ramp up production in
order to close a supply gap created by the coronavirus pandemic, which the country predicts
will last until 2023. According to the Malaysian Rubber Glove Manufacturers Association
(MARGMA), the government is currently oversold by 160 billion gloves (Reuters, 2021).
MARGMA President Supramaniam Shanmugam predicted that excess demand would last
until 2023, despite global output rising to 420 billion this year from 380 billion last year and
annual growth of 10-15%. Malaysia is expected to provide 280 billion, or 67%, of the
increased global supply.
According to MARGMA, Malaysia's glove export earnings more than doubled in

2020, increasing 103 percent to RM35.3 billion, with a projection of 38 billion ringgit this
year. Malaysian manufacturers addressed concerns regarding social enforcement in the
domestic industry. Unfortunately, Top Glove Corp is currently attempting to resolve an
import ban imposed by US Customs and Border Protection (CBP) in July based on forced
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labor claims. MARGMA communicated with the US Customs and Border Protection and the
European Union regularly to ensure that Top Glove was on the right track in meeting all
social compliance criteria.
10.3 OPPORTUNITIES
10.3.1 Government Support
The Malaysian Rubber Board's Directors stated that latex import duties are zero. This
exemption is part of the government's assistance for glove makers in expanding their sales
bases and lowering their manufacturing costs. Top Glove is also eligible for the investment
tax exemption, reinvestment allowance, and tax depreciation, as well as founder status. For
example, Top Glove's Factory 5 has maintained its pioneer status for the past ten years due to
the use of biomass energy in its manufacturing. So, the company is benefiting from the
incentive programs that the Malaysian government provides.
Top Glove also benefits from a reduced federal tax rate as a result of a tax bonus. The
company also has a balance of RM 401.7 million to cover potential taxable revenue for the
year 2019, as stated in the 2019 annual report. . In exchange for government assistance, the
corporation donated RM 185 million to the government to aid the nation's fight against the
coronavirus. This will assist in the establishment of a strong partnership between the
corporation and the government, which will help in the establishment of proper strategic
planning.
10.3.2 Low-Interest Rate

To deal with the economic slowdown caused by the coronavirus pandemic, Malaysia Central
Bank reduced its interest rate to the lowest annual rate of 1.75 percent in July 2020. Low
interest rates would help stimulate the country's economy by lowering the cost of credit to
fund physical and financial projects. Top Glove could use these resources to fund capacity
expansion in production facilities and investments in research and development due to the
low cost of financing. As a part of this, with the capital investments, the firm will increase its
product performance and achieve high productivity and product quality.
10.3.3 Subsidies on Natural Gas by the Government have reduced the Cost of
Production
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Tan Sri Lim Wee Chai, chairman of Top Glove, points out that Malaysian manufacturers still
support government agencies such as the Rubber Research Institute and the Malaysian
Rubber Export Promotion Council. In other words, help initiate R&D efforts and promote
local gloves overseas. Furthermore, Top Glove has lower heat and energy costs as compared
to the regional players. This is since natural gas is partially subsidized in Malaysia, and the
renewable energy supply of biomass has assisted the business in achieving higher efficiencies
with significant cost savings.
Besides that, what distinguishes Top Glove is primarily our entrepreneurship, which
has laid strong foundations for Top Glove's future development. Their willingness to increase
revenue has provided them with the necessary volume to reach economies of scale, lowering
prices and allowing them to market the goods competitively.
According to industry players, global demand for rubber gloves is expected to

increase by 10% each year, and glove manufacturers will continue to benefit from their
expansion plans in the years ahead. Top Glove's solid and stable balance sheet has allowed
the organization to continue operations and drive further growth. Top Glove had a net cash
balance of nearly RM300 million at the end of May, which Lim says would help finance
mergers and acquisitions as well as capacity expansion.
10.3.4 Rising of Hygiene Awareness

Since the outbreak of influenza has boosted hygiene consciousness, this incentive has
increased the market for gloves. Top Glove's offerings have recently become essential
commodities in the health care and pharmacy sectors. The public awareness of health care
and personal hygiene has increased due to the transmission of diseases such as H1N1
Influenza, birds’ flu, and COVID-19 that encourage people to be more concerned about the
importance of hygiene. Besides that, The increasing population in emerging countries and the
aging population in developed countries have also led to an increase in demand for gloves.
Top Glove's revenue increased by 1642% relative to the previous year, according to the
quarter report ended 31 August 2020, due to a rise in sales of nitrile medical gloves.
Since the vaccine will be available soon, the market for surgical gloves will rise.
Therefore, the global glove demand resulting from COVID-19 is expected to increase by 25%
in 2021, with post-pandemic demand rising by about 15%. During the pre-COVID era, global
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glove demand was already rising steadily at a rate of 10% per year, led by solid industry
fundamentals across all geographies. As a result, the company will seize this chance to
manufacture higher-quality gloves in order to maximize market share and revenue during
these times.
Furthermore, demand from developing countries is increasing, which has resulted in

Top Glove's success in gaining market share in the nitrile glove category. Japan and the
United States acquired the most market share, with sales rising by 24% and 20.3%,
respectively. Because of the growth of the F&B industry in Japan, the market for gloves has
increased. The increased nitrile capability allows the production of nitrile gloves in large
quantities and at a lower cost.
10.3.5 COVID-19 Vaccine Global Access (COVAX) Program

In the 2021 budget, Top Glove, along with Malaysia's top three glove manufacturers,
Supermax Corporation Berhad, Kossan Rubber Industries Berhad, and Hartalega Holdings
Berhad, donated nearly RM400 million to the government to aid in the reduction of the
COVID-19 outbreak, which began at the end of 2019 and has since spread across the globe.
The government plans to improve the Health Ministry's Off-Take Agreement Program to
make Malaysia an investment destination for domestically developed vaccines, medicines,
and medical devices, including through the Covid-19 Vaccine Global Access (COVAX)
program. So, the funds will be used to partially help cover the cost of vaccines and medical
devices that have been in high demand due to the pandemic. Aside from that, it allows the
company where the government has given incentives to pharmaceutical product
manufacturers in preferential tax rates ranging from zero to ten percent for ten years in
exchange for their assistance and investment in bringing vaccines to Malaysia.
10.3.6 Long-term Product Demand Growth

US Customs' seizure of its gloves is seen as a temporary setback that will not affect its
expansion plans. However, with 2,000 consumers in 195 countries, deliveries to the United
States accounted for 24% of total glove sales in the first nine months of the fiscal year (FY)
2020. Overall, it plans to raise its global market share for gloves from 26% to 30% by the end
of the year. Therefore, Top Glove has a diverse product line that incorporates a non-glove
division that includes condoms, facial masks, dental dams, fitness bands, and household
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accessories, fulfilling demand in healthcare and non-healthcare sectors. So, the need for Top
Glove products is constantly growing for a long-term period.
10.4 THREATS
10.4.1 Poor Reputation of the Company in Labour Practices
According to an ASEAN Human Rights Disclosure report, Top Glove factories have been
subjected to forced labour, illegal overtime, deplorable working conditions, and debt slavery.
At the same time, the United States of America has blocked imported goods suspected “made
with forced labour” due to the new law introduced in 2016. According to the current
legislation, it is illegal to import goods into the United States entirely or partly produced by
"forced labour". To resolve this issue, the company that has been barred must either reroute
and export its products to another country or have relevant documentation to persuade US
Customs and Border Protection that its goods are free of slave labour problems. Since the
American region is Top Glove's largest segment, contributing for 24% of revenue, and
demand in the American market has risen by 150% since the pandemic, Top Glove feels
compelled to address this problem within a short period.
Furthermore, on December 1, 2020, the Malaysian Labor Department announced that

the government would prosecute Top Glove in court due to inadequate job accommodations.
These incidents often give the corporation a damaging name for defending workers' rights,
resulting in a decrease in sales revenue and a high recruiting and retention expense. As a
result, the corporation must declare itself by providing credible facts and information to the
public to restore its reputation.
10.4.2 Currency Exposure

The majority of Top Glove's export revenues are denominated in US dollars (USD) and are
subject to currency fluctuations. All production costs are in Malaysia Ringgit (MYR), but its
sales are transacted using USD. So, appreciation of MYR against USD will lead to the
declining of Top Glove’s profit margin as the production cost is higher while its sales return
is lower, and vice versa. Moreover, the company’s reporting currency is MYR. Hence, if the
Malaysian ringgit rises against the US dollar, the firm would be unprofitable because all
earnings will be translated from USD to MYR. So, the company's financial results will suffer
as the USD weakens.
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10.4.3 Intense Competition in Glove Manufacturing Segment

As the COVID-19 vaccine is available now, there is still a positive outlook for the business in
the glove manufacturing industry. This is funded by a group of foreign firms, including AT
Systematization Bhd, Green Ocean Corporation Bhd, Vizione Holdings Bhd, which have
announced plans to construct glove manufacturing facilities. This would harm Top Glove's
local market share. Top Glove's rivals in the local glove maker market are Kossan, Supermax,
and Hartalega. Among these rivals, Hartalega can be considered Top Glove's main
competitor because it contributes nearly half of Malaysia's glove export market, much like
Top Glove. Top Glove has expanded its sales to the world market in order to reduce business
risk, but there are several global rivals, including Ansell Ltd in Australia and Honeywell
International Inc in America, among others. As a result, Top Glove must defend its 26 %
global market share in this competitive glove industry by designing R&D to ensure the
highest quality of products.
10.4.4 Fluctuation in Nitrile Latex Price

According to a survey in The Edge, the price of nitrile latex has risen to US$2,810 per metric
tonne from US$1,300 per metric tonne due to limited availability in the face of a surge in
nitrile glove demand (2020). Although nitrile latex is costly, the company requires it because
it is crucial in glove production. Top Glove's operating margin will be lowered as a result of
higher material costs. Due to the fierce competition, it is unclear if the corporation would
thoroughly pass on the higher costs to customers. For example, according to Top Glove's
annual report for 2019, the company absorbed a portion of the higher cost due to fierce
competition. As a result, an increase in the price of Nitrile latex would reduce the profit
margin.
10.4.5 Pandemic COVID-19

The COVID-19 pandemic started in December 2019 and had affected about 25.1 million
people worldwide as of August 31, 2020. The pandemic compelled our government to issue
the MCO on March 18, 2020, and the MCO has had a significant effect on market practices
and consumer trust. However, the pandemic has increased the need for personal protective
equipment (PPE), such as gloves. Demand began to rise as early as 20 February 2020,
especially in the United States and Europe, which have seen the highest percentage of global
cases. The extraordinary demand is mirrored in the average sale prices (ASPs) and lead times,
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in particular. With spot order inquiries on the rise, mainly from emerging countries, as a
result of the second wave of COVID-19 infections worldwide and governments stockpiling
for possible future waves, industry ASPs have seen a dramatic increase in combination with
the global glove shortage.
However, there definitely is a shortage. The demand rises and suppliers order 100
percent more, and Top Glove can only increase 20 percent, so there is a shortage of about 50
percent to 80 percent. The company is adding new machines every week and could increase
its production by as much as 30 percent. Besides, Top Glove stepped up its factory utilization
by 10 percent to 95 percent and expected to reach near maximum utilization. To keep up, the
company is scrambling to find 1,000 new employees. Top Glove usually hires from Nepal,
but they are now drafting workers from Malaysia due to travel restrictions. Top Glove needs
10% more workers. During the travel delays, they were also unable to bring in Nepalese
workers. Therefore, they have no alternative but to hire some locals to assist with the packing
especially.
10.4.6 Ongoing ESG-related Issues

Top Glove before this is still at risk due to labour problems, which challenge benchmark ESG
indices. Experts warn of severe consequences if it loses its place in human resources,
business administration, and other top ESG topics. Top Glove could be at risk for being
minimized or booted out of lists dependent on ESG factors after the organization was indeed
pushed at the center of attention overwork rehearsals. The glove manufacturer had previously
stated that it remained on the FTSE4Good Bursa Malaysia Index and the Dow Jones
Sustainability Emerging Markets Index (DJSEMDUP) when it reported its financial results
for the second quarter year 2021, which ended in February.
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11.0 IFAS AND EFAS TABLE
11.1 IFAS TABLE
Internal factors Weight Rating Weight Comment

Score
1 2 3 4 5
STRENGTH
1. High product quality with 0.10 4.3 0.43 Receive internationally

international accreditations accredited awards.
2. Low production cost 0.15 4.6 0.69 Achieve economies of scale.
3. Strong technical expertise 0.10 5.0 0.50 Research and development

process.
4. Wide product range 0.15 3.5 0.53 Variety type of products.
5. Global market leader 0.10 4.0 0.40 Holding the largest market
share worldwide.
WEAKNESS
1. Weak straight-line work cell 0.05 2.5 0.13 Affect working efficiency.
layout
2. Labour shortage 0.05 3.2 0.16 Due to strong demand since

the Covid-19 pandemic.
3. Extensive investment in 0.07 4.5 0.32 Invest in a machine for

technology R&D operation.
4. Bad international reputation 0.10 2.0 0.20 Affect market value of the
regarding ESG related matters firm.
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5. Supply of rubber shortages 0.13 3.5 0.46 High production due to

Covid-19 pandemic.
Total 1.0 3.82
Table 12: IFAS Table
11.2 EFAS TABLE
External factors Weight Rating Weight Comment

Score
1 2 3 4 5
OPPORTUNITY
1. Government Support 0.10 4.5 0.45 Incentive grand.
2. Low Interest Rate 0.05 4.0 0.20 Lowering the cost of credit to
find physical and financial
projects.
3. Subsidies on Natural Gas 0.05 4.5 0.23 Lower costs of heat and energy
by the Cost of Production compared to others.
4. Rising Hygiene 0.10 5.0 0.50 Impact of Covid-19.

Awareness
5. Covid-19 Vaccine Global 0.10 4.0 0.40 The funds are partially to help
Access (COVAX) cover costs of vaccines.
Programme
6. Long Term Product 0.05 3.0 0.15 Diversification of product

Demand Growth lines.
THREAT
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1. Poor Reputation of the 0.05 2.0 0.10 Arise from forced labour and
Company in Labour poor accommodation issues
Practices
2. Currency Exposure 0.10 3.0 0.30 Affect from profit margin
3. Intense Competition in 0.05 4.5 0.23 Need to increase market share

Glove Manufacturing
Segment
4. Fluctuation in Nitrile 0.10 3.0 0.30 Uncertain product cost

Latex Price
5. Pandemic Covid-19 0.20 5.0 1.00 Shortage of labour due to

pandemic
6. Ongoing ESG Related 0.05 4.5 0.23 Risky in benchmark ESG

Issues indices due to labour problems
Total 1.0 4.09
Table 13: EFAS Table
The Internal Factor Analysis Summary (IFAS) Table and External Factor Analysis Summary
(EFAS) Table for Top Glove is shown in the table above. The entire sum for the IFAS and
EFAS matrix's weight score is 3.82 and 4.09, respectively. A rating of 3 indicates an average
quality of responsiveness to the environment, while a number of 5 indicates exceptional
efficiency. As a result, Top Glove scored higher than the average, which is excellent since
Top Glove responded well to the effect that affected their organization. However, in order to
increase their performance, Top Glove must enhance their internal and external structure to
deliver more efficient services to their customers.
Strong technical expertise is a characteristic that has a significant influence on the

organization since it allows them to do R&D in order to maintain development in new ways.
On the other hand, Top Glove has a difficult time since they need to invest in a machine to
make different types of gloves, but if the technology breaks down, it costs a lot of money to
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maintain. Top Glove's hygiene awareness represents a significant potential for their
organization. The influence on COVID-19 and other diseases raises awareness of the need for
everyone to wear gloves, resulting in a rise in glove manufacture. However, as the COVID-
19 outbreak continues to haunt the consumers, Top Glove has to produce more gloves, but
they cannot do so due to the lack of staff and the Government lockdown Order.
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12.0 TOWS ANALYSIS
INTERNAL STRENGTHS WEAKNESSES

1. High Product with 1. Weak Straight-Line Work
International Accreditations Cell Layout
2. Low Production Cost 2. Labour Shortage
3. Strong Technical 3. Extensive Investment in
Expertise Technology
4. Wide Product Range 4. Bad International
5. Global Market Leader Reputation Regarding ESG
related matters
5. Supply of Rubber
EXTERNAL Shortages
OPPORTUNITIES SO STRATEGIES WO STRATEGIES
1. Government Support 1. Set the price in a market 1. Work with the
2. Low Interest Rate with more competition for a government to boost the
3. Subsidies on Natural Gas competitive advantage and glove industry's labor force
by the Government have lead the market. (S5, O4) (W1, W2, O2)
reduced the Cost of 2. Create exclusive styles of 2. Invest in technology to
Production gloves to meet consumer overcome the rubber
4. Rising of Hygiene demand. (S3, O4, O6) shortages and the cost of
Awareness 3. Involve the government production (W3, O2, O3)
5. COVID-19 Vaccine and a university in the new 3. Engage with the
Global Access (COVAX) product's research and government to increase
program development. (S1, S3, O1, rubber demand (W5, O1)
6. Long-term Product O5) 4. Enhanced resource access
Demand Growth 4. Partnership with by improving community
Government to go global and government
with many products (S4, S5, relationships. (W5, O1, O3,
O1, O4, O6) O6)
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THREATS ST STRATEGIES WT STRATEGIES

1. Poor Reputation of 1. Provide its raw material 1. Workplace policies and
Company in Labour supplies to keep costs down working conditions should
Practices (S2, T4) be improved. (W1, T1)
2. Currency Exposures 2. Improve product 2. To reduce the risk of
3. Intense Competition in consistency and maintain glove production, invest in
Glove Manufacturing competitive advantages (S1, other businesses. (W3, T3)
Segment T3) 3. Enable optimal cost
4. Fluctuation in Nitrile 3. Expand into the retail management. (W3, T2)
Latex Price sector (S4, T3) 4. Improvement in
5. Pandemic COVID-19 employees’ accommodation.
6. Ongoing ESG-related (W4, T6)
Table 14: TOWS ANALYSIS
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13.0 STRATEGY FORMULATION AND IMPLEMENTATION
1. Create Exclusive Styles of Glove to Meet Consumer Demand (S3, O4, O6)
Top Glove is dedicated to R&D to ensure that the business provides outstanding service and
efficiency to its customers through continuous improvement and innovation. As a result, the
company should conduct a thorough investigation into the characteristics of glove demand in
the market to develop new types of gloves that will satisfy consumer demand and improve
customer satisfaction with the product.
Based on the strength of specialized experience in the organization, the company will
invent more different gloves with high puncture resistance and provide natural rubber latex
without allergy problems. In addition, Top Glove can develop lighter gloves than its rivals. It
can also bring to market a form of glove that can disinfect with a specific disinfecting liquid.
2. Partnership with Government to go Global with Many Products (S4, S5, O1, O4,
O6)
The government must be open-minded toward the glove manufacturing business and assist
companies such as Top Glove in becoming well-known in the worldwide market. The
government should be happy with Top Glove for helping the economy by contributing
RM185 million to assist lower the COVID-19 pandemic and purchase a vaccination for the
society (The Edge Markets, 2020). As the government provides incentives in the form of
preferential tax rates ranging from zero to ten percent to pharmaceutical manufacturers in
exchange for their support in introducing vaccines to Malaysia, the government may also
reduce corporate taxes such as windfall tax, allowing them to invest in the global market.
This is also to assist Top Glove in establishing additional chances by generating new product
lines with the money saved from taxes.
Aside from tax breaks, the government might form a partnership with Top Glove by
providing further assistance. The government may also assist Top Glove in demonstrating
how vital hygiene awareness is to society, particularly during the COVID-19 epidemic, by
applying Top Glove products in all sectors such as household, food handling, industrial, and
even in schools for kids. By doing so, society not only assists Top Glove in acquiring their
products, but government hygiene awareness that shows on television, radio, or marketing
may open their eyes to how important it is to be environmentally conscious. This will result
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in rapid expansion for Top Glove and increased product demand for a more extended period.
Not just the glove, but Top Glove's diverse product line, which includes condoms, face masks,
dental dams, fitness bands, and home items, can lead to a worldwide market as customers
contribute to creating competition in glove manufacturing other than Malaysia.
3. Involve the Government and a University in the New Product’s R&D (S1, S3, O1,
O5)
Top Glove needs to involve government agencies and universities in producing new product
research and development to remain competitive in the market. For example, Top Glove may
host a competition to encourage students from all over the world to develop new glove
designs. Apart from that, the collaboration may take the form of a project in which Top Glove
would give students equipment and advanced technology to conduct tests as part of the
project. This is a win-win situation for both students and Top Glove. It helps them use
theoretical knowledge in real-world problems while also allowing them to gain new ideas
from outside the company.
Furthermore, Top Glove can also construct more research and development centers
that specialize on various elements and product lines, which allowing the company to reach
new industry achievements and expand their product selection beyond their primary product,
which include non-glove items like sport workout bands, yoga mats, tourniquets, and many
more. As a result, Top Glove will be able to expand the business into new markets in
Malaysia and globally. It will also benefit from government support, as Malaysia is eager to
promote local products in foreign markets.
4. Expand into Retail Sector (S4, T3)

In order to sustain in the market, Top Glove must implement a new strategy. Diversifying
their products into the retail market is one brilliant idea. Two years ago, top glove began
marketing its products through online shopping platforms such as Lazada and Shopee and its
own shopping website known as TGeBuy. However, these platform sales are almost non-
existent. Aside from that, Top Glove products are rarely seen on the market's shelves. As a
result, it should put more effort into this in order to gain a strategic advantage in the retail
market, such as collaborating with supermarkets, convenience store chains, and pharmacies to
sell its products under its own brand name on the shelves.
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It provides a wide range of products, ranging from medical to non-medical gloves and
from gloves to non-gloves, to meet the needs of a wide range of customers. As a result, Top
Glove now has the opportunity to enter the retail market. It will not only be more competitive
than other glove makers once it has penetrated the retail market, but it will also be able to
expand its customer base from corporate to individual customers. This will also support the
recognition of Top Glove's brand name among customers and the expansion of the company's
global market share.
5. Workplace Policies and Working Conditions should be Improved (W1, T1)

Top Glove should enhance its treatment of domestic and foreign workers to guarantee that its
labour practices are in accordance with international norms and labor regulations. Top Glove
must acquire international employees through licensed agencies and pay the foreign workers'
recruitment-related expenses to avoid debt bondage. Workers are not permitted to work
excessive overtime and are entitled to rest days under labour legislation, which provides 104
hours of overtime per month and one day off per week. Employee health and safety
initiatives should be a top priority for management since they save lives, boost productivity
and save costs. These health and safety initiatives should emphasize employee participation,
ongoing monitoring, and an overall wellness component (Anthony, 2007).
Aside from that, worker wages must be paid on schedule. Workers' movement will be
unrestricted, and they will have complete control of their passports. Furthermore, Top Glove
has to upgrade the workers' accommodations by providing full facilities and adequate space.
To avoid any danger or harm to employees, the working environment should always be safe.
Aside from that, rearrange the work arrangement into a U shape to divide job duties more
equitably and increase employee job satisfaction. By following these actions, the company's
labour policies will be considerably improved, and its reputation will be restored. It can help
prevent revenue loss due to labour concerns.
6. Engage with the Government to Increase Rubber Demand (W5, O1)

Latex trade fees are zero, according to the Malaysian Rubber Board's directors. This
restriction is part of the government's effort to help glove manufacturers broaden their
markets and reduce their production expenses. Top Glove also qualifies for the investment
tax credit reinvestment allowance and tax depreciation. As a result, the company can take
advantage of the Malaysian government's incentive programs.
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Malaysia proved victorious due to the accessible allocation of latex and the
understanding and entrepreneurial spirit required to manage all elements of glove production.
The government offered a premier title and a five-year tax-free break for businesses engaged
in pursuing the glove manufacturing industry. The Malaysian Investment Development
Authority (MIDA) generously made 600 licenses offered, of which 300 were first occupied
and have now consolidated to 57 producers. Chinese companies and business leaders took
advantage of government initiatives and made significant investments in this field. Although
the cash generated primarily from the export of rubber raw materials may be minor, the
impact of finished rubber goods on national GDP is tremendous. As a result, the natural
rubber industry remains crucial to the country.
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taxes-says-no-to-windfall-tax/
CGLytics Gustav Mahlerlaan . (2021, Mac 22). What is ESG? Retrieved from CGLytics A
Diligent Brand: https://cglytics.com/what-is-esg/
DEVI, U. (2021, APRIL FRI, 02). Will Top Glove's labour issues threaten its place on
benchmark ESG indices? Retrieved from Business Times :
https://www.businesstimes.com.sg/companies-markets/will-top-gloves-labour-issues-
threaten-its-place-on-benchmark-esg-indices
74 | P a g e
Jaafar, L. J. (2020, November 06). Budget 2021: Kossan, Top Glove, Hartalega and
Supermax confirm donations to Government RM400 million Covid-19 fund. Retrieved
from The Edge Markets: https://www.theedgemarkets.com/article/top-%09glove-
hartalega-and-supermax-confirm-donations-govts-rm400-mil-covid19-fund
Tee, K. (2020, November 06). Budget 2021: Top Glove, other rubber glove manufacturers
pledge RM400m to assist Covid-19 fight, including vaccine cost. Retrieved from
Malaysian Mail : https://www.malaymail.com/news/malaysia/2020/11/06/budget-
2021-%09top-glove-other-rubber-glove-manufacturers-pledge-rm400m-to-
ass/1920023
75 | P a g e
15.0 APPENDIXES
Figure 3: Corporate Structure
76 | P a g e
Figure 4: Budget 2021: Top Glove, other rubber glove manufacturers pledge RM400m to
assist Covid-19 fight, including vaccine cost
Figure 5: Employment Act 1955 (Act 265): Section 60L: Employment of Foreign Employees
Figure 6 : Will Top Glove's labour issues threaten its place on benchmark ESG indices?
77 | P a g e

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COLLEGE OF BUSINESS

SCHOOL OF BUSINESS MANAGEMENT

BPMN3023 STRATEGIC MANAGEMENT

STRATEGIC AUDIT REPORT

1.0 STRATEGIC ISSUES OR PROBLEMS.................................................................... 2

2.0 INTERNAL FORCES.................................................................................................. 4

2.1 COMPANY PROFILE............................................................................................. 4

2.2 COMPANY’S TYPE AND INDUSTRY................................................................. 5

2.3 BUSINESS SEGMENT.............................................................................................6

3.0 VISION, MISSION, OBJECTIVES, AND STRATEGIES.......................................7

3.1 VISION AND MISSION...........................................................................................7

4.0 THE LIST OF BOARD OF DIRECTOR................................................................. 10

5.0 THE LIST OF TOP MANAGEMENT TEAM........................................................ 19

6.0 ORGANIZATIONAL STRUCTURE....................................................................... 21

6.3 RESEARCH AND DEVELOPMENT (R&D)...................................................... 23

6.4 OPERATION AND LOGISTICS.......................................................................... 24

6.5 HUMAN RESOURCES MANAGEMENT (HRM)............................................. 25

6.6 INFORMATION TECHNOLOGY (IT)............................................................... 26

7.0 FINANCIAL ANALYSIS...........................................................................................27

7.1 CURRENT RATIO................................................................................................. 27

7.2 TOTAL ASSET TURNOVER................................................................................28

7.3 DEBT RATIO.......................................................................................................... 29

7.4 DEBT TO EQUITY RATIO...................................................................................30

7.5 NET PROFIT MARGIN.........................................................................................31

7.6 RETURN ON ASSETS........................................................................................... 32

7.7 RETURN ON EQUITY.......................................................................................... 33

Outcomes from Combinations of the Four Criteria:...................................................... 36

9.0 EXTERNAL FORCES............................................................................................... 39

9.1 STEEP ANALYSIS................................................................................................. 39

9.1.5 Political – Legal................................................................................................ 44

9.2 5 FORCES BY MICHAEL PORTER................................................................... 46

9.2.1 Threat of New Entrants................................................................................... 46

9.2.2 Threat of Substitute Products......................................................................... 46

9.2.4 The Bargaining Power of Suppliers................................................................48

9.3 STRATEGIC GROUP............................................................................................ 49

10.0 SWOT ANALYSIS......................................................................................................52

10.1.1 High Product Quality with International Accreditations.............................52

10.1.2 Low Production Cost....................................................................................... 52

10.1.3 Strong Technical Expertise............................................................................. 53

10.1.4 Wide Product Range........................................................................................ 53

10.1.5 Global Market Leader..................................................................................... 53

10.2.1 Weak Straight-Line Work Cell Layout..........................................................54

10.2.2 Labour Shortage...............................................................................................54

10.2.3 Extensive Investment in Technology.............................................................. 54

10.2.4 Bad International Reputation Regarding ESG related matters.................. 55

10.3.2 Low-Interest Rate.............................................................................................56

10.3.4 Rising of Hygiene Awareness.......................................................................... 57

10.3.5 COVID-19 Vaccine Global Access (COVAX) Program............................... 58

10.3.6 Long-term Product Demand Growth.............................................................58

10.4.1 Poor Reputation of the Company in Labour Practices................................ 59

10.4.2 Currency Exposure.......................................................................................... 59

10.4.3 Intense Competition in Glove Manufacturing Segment............................... 60

10.4.4 Fluctuation in Nitrile Latex Price...................................................................60

10.4.5 Pandemic COVID-19....................................................................................... 60

10.4.6 Ongoing ESG-related Issues............................................................................61

11.0 IFAS AND EFAS TABLE.......................................................................................... 62

11.1 IFAS TABLE........................................................................................................... 62

11.2 EFAS TABLE............................................................................................................. 63

12.0 TOWS ANALYSIS......................................................................................................66