1. Is the industry Hartalega operates in attractive?

Of course Hartalega's business industry is very interesting, considering that the world today is very
concerned about hygiene and health issues. The use of gloves as a necessity in the world of medicine
such as during surgery is a potential opportunity plus the demand for gloves every year is always
increasing.

Analyse the competitive forces shaping the industry

Hartalega's business did not only develop for domestic Malaysia but they also succeeded in
exporting gloves to several continents such as America and Europe. But keep in mind that Hartalega
is not alone in the business industry, there are many competitors such as Top Glove, Kossan, or
Supermax. Not only that, Hartalega also competes with its own customers when selling their own
products or OBM to countries such as the United States. But Hortega has not been able to reach all
large market share such as in India and China and only able to reach only a few regions, and if this
continues to be left it is not impossible someday Hartega's market share will be increasingly
narrowed especially its competitors continue to pursue innovations made by Hartalega. The
Hartalega competitors are also able to offer gloves with a variety of different types, not only
dominant in 1 type of product such as Hartalega.

2. What are the threats and opportunities facing the key players ?

The big four Malaysian manufactures accounted for roughly 80% of the country’s production: Top
Gloves 35%, Kossan 18%, Supermax 16% and Hartalega 14%. The two primary business models
adopted by glove manufactures are own brand manufacturing (OBM) and original equipment
manufacturing (OEM). Hartega and two of its other key competitors, Top Gloves and Kossan, were
largely OEM players, while the other key competitors, Supermax, was an OBM player. OBM players
typically braded and marketed their own gloves, while OEMs sold unbranded gloves to companies
around the world which did their own branding.

Top Glove was the global market leader in the latex gloves segments. Kossan Rubber Industries was
engaged in the production of latex, nitrile, cleanroom and surgical gloves for various sectors. One of
the key strengths of Kossan was its balanced product mix (65% nitrile to 35% natural rubber)/ it was
the largest industrial glove manufacturer in the world and the number one rubber technical parts
manufacturer. It also had strong in-house R&D capabilies, had innovated with several new rubber
glove product, and continued to improve production efficiency through automation. Supermax is the
largest glove manufacturer in the world. It was an own-brand manufacturer (as opposed to an OEM).
Semperit Group is the multinational group specialized in the development, production and sales of
rubber and plastic products for the industrial and medical sectors. Sri Trang Agro was a fully
intergrated natural rubber company. Ansell manufactured condoms and medical gloves. Haltega is
more like a specialty store that sells just medical gloves made from synthetic rubber.
Compared to its competitors, Haltega had consistenly enjoyed the highest operating margin and,
according to some industry analysts, was the best company in terms of consistency of its product
quality and delivery on time. The threats of facing the key players is his competitors were large
manufactures enjoying economics of scale and investing in technology, and could potentially catch
up with Hartalega’s product quality.

The opportunities are Hartalega had an integral role. It is ethos and quality standard, with and
emphasis on proprietary technology to make manufacturing more efficient and push the boundaries
of product development and quality. Quality made it hard to be profitable in this competitive
environment.the company focused on in-house R&D. over the years this allowed it to gain higher
margins than other players. Hartalega’s capabilities including developing its own machine designs. It
had the highest glove manufacturing productivity per hour. It revolutionized the industry by leading
the shift from latex to nitrile gloves, allowing Hartalega to carve out its own segment of the market.

3. What are Hartalega’s strength and weaknesses vis-à-vis its main competitors? (vicha)

Strength:

⁃The highest manufacturing productivity of Hartalega is gloves hourly.

⁃Hartalega made a revolution by making a shift from latex to nitrile gloves, until it could create its
own nitrile market.

⁃Hartalega is famous for its good quality gloves and also provides satisfying service to its customers.

Weakness:

⁃Hartalega only focuses on selling gloves made of synthetic rubber, while Top Glove sells all types of
gloves so that it can control 25% of the global market.

⁃Hartalega focuses on its technology in manufacturing gloves, but has not designed a balanced
product mix between nitrile and natural rubber.

4. What is Hartalega’s strategy? (dinda)

Hartalega’s capabilities included developing its own machine design. The focus on
technology bore fruit in two areas: first, it had the highest glove manufacturing productivity per
hour; second, it revolutionized the industry by leading the shift from latex to nitrile gloves, allowing
Hartalega to carve out its own segment of the market. While there were some concerns about rising
labour costs, these constituted a dwindling portion as glove manufacturers increasingly turned to
automation. Machinery was designed and fabricated in-house, while parts and spare-parts were
sourced locally.

Hartalega owing to the superior quality of its products, Hartalega had been able to charge premium
prices and be profitable. However, as it looked to widen its customer base, which involved selling to
smaller customers, these might be more price-sensitive than their peers in the developed markets.
Combined with stiffer competition, this might force Hartalega to lower its prices. To maintain
profitability and to keep margins stable, Hartalega would need greater operational efficiency by
controlling costs and overheads. Or it would need to further improve its products and even further
differentiate its products in order to justify charging higher prices.21 At the same time, competitors
were investing in technology, undermining its technical leadership.

5. How can Hartalega overcome the external and internal challenges ahead? (Asih)

 Innovation : due to Competition was mounting in the nitrile segment from the other three
big Malaysian manufacturers with all significantly increasing their production, and from new
entrants in countries such as Thailand and China. Hartalega can make innovation like
enhance their quality, improve its products and even further differentiate its products in
order to justify charging higher prices.
 Escalate its capacity : invested in new manufacturing capabilities and planned to increase
production significantly over the next few years; in Hartalega’s case from 16 billion to 42
billion over the next six years. There could be a glut in the market, leading to a fall in prices.
According to one analyst, the US market was somewhat saturated, but there was scope for
growth in demand in Europe.
 Enhance margin by investing in R&D : Start to invest in R&D to close the gap and improve
the quality and speed of production. As they became more competitive, margins had shrunk
 Management Transformation Attrach the right talent by integrated facility would have not
just factories but living quarters, a sports hub, a centre of excellence for R&D, a learning
centre, With production set to increase by 2.5 times in the next five years, Hartalega had to
consider professionalizing and transforming its management, as Mun Leong said: “We
cannot depend on one individual, whether it is a manager or someone else. We need to
institutionalize the organization and in order to institutionalize well.

6. How can Hartalega sustain growth while staying profitable and satisfying its
shareholders? (Gilang)

Hartalega adalah perusahaan yg paling menguntungkan karena keahlian teknologinya. Pada th 2002
Hartalega menciptakan sarung tangan nitril pertama didunia dan terbukti sukses mendominasi
dibisnis sarung tangan. Hartalega memasok terbesar ke amerika utara dan eropa. Tak hanya itu,
hartalega mempertahankan pertumbuhan dengan memperluas jangkauannya di china dan india.
Karena china dan india memiliki populasi besar yg nantinya dapat mengkonsumsi sarung tangan
.Pada th 2016 harga saham hartalega naik 20x lipat dari th 2008, kinerja sahamnya yg luar biasa
membawa harapan tinggi bagi para pemegang saham.

Translate:

7. Should Hartalega continue with its OEM strategy or switch to an OBM strategy? Why?

An Original Equipment Manufacturer (OEM) traditionally is defined as a company whose goods are
used as components in the products of another company, which then sells the finished item to users.
An OEM company manufactures the products for purchaser’s brand, means they only get paid for
assembling or producing them. While, an Original Brand Manufacturing (OBM) is a company that not
only design and produce their own products but also take care of distribute and retail their products.
That means they are responsible for everyting including concept generating, R&d, production, supply
chain, marketing and service.They sell goods under their own brand name in order to add value.

Hartalega were largely OEM players. According to our group discussion, Hartalega should move from
the current original equipment manufacturing (OEM) stage to the original brand manufacturing
(OBM) to secure a bigger share in the increasingly competitive global market. If Hartalega stick to
OEM business, they are subject to a highly competitive environment as many other OEMs can
produce the same products for less money, putting pressure on profit margins. Hartalega should try
to acquire higher efficiency through their own designing, marketing and brand management, instead
of continuing to function as nothing more than OEMs in the global market.

8. How can it manage the transition towards a more formal organizational structure? (Mary)

To manage the transition towards a more formal organizational structure, Hartalega had to consider
professionalizing and transforming its management. They cannot depend on one individual, whether
it is a manager or someone else. They need to institutionalize the organization and in order to
institutionalize well, they need to be able to attract talent to work for us in the form of professional
managers, grew ahead of people and systems and now they need to accelerate the growth of people
and the development of systems in order to support their bussines growth. Hartalega had to attrack
the right kind of talent to fill the position in their management.

9. Should the Kuan family take a step back from the management of the company?

10. Buat PPT (masykur)