SM Full

BPMN 3023 STRATEGIC MANAGEMENT
Table of Contents
1.0 Current Situation...................................................................................................................................3
1.1 Organizational Background................................................................................................................3
1.2 Current Performance.........................................................................................................................5
1.3 Strategic Posture...............................................................................................................................6
1.3.1 Vision and Mission......................................................................................................................6
1.3.2 Objectives...................................................................................................................................6
1.3.3 Strategies....................................................................................................................................7
1.3.4 Policies........................................................................................................................................7
2.0 Corporate Governance..........................................................................................................................9
2.1 Board of Directors..............................................................................................................................9
2.2 Top Management............................................................................................................................15
2.3 Shareholder.....................................................................................................................................17
3.0 External Environment..........................................................................................................................25
3.1 Physical Environment......................................................................................................................25
3.1.1 Physical Resources....................................................................................................................25
3.1.2 Climate......................................................................................................................................25
3.1.3 Wildlife.....................................................................................................................................26
3.2 Societal Environment.......................................................................................................................27
3.2.1 Economic..................................................................................................................................27
3.2.2 Technological............................................................................................................................28
3.2.3 Political-Legal............................................................................................................................29
3.2.4 Sociocultural.............................................................................................................................31
3.3 Task Environment............................................................................................................................33
3.3.1 Rivalry among Existing Firms in the Industry............................................................................33
3.3.2 The Threat of New Entrants......................................................................................................33
3.3.3 The Threat of Substitute Products or Services..........................................................................34
3.3.4 The Bargaining Power of Customers.........................................................................................35
3.3.5 The Bargaining Power of Suppliers...........................................................................................35
3.4 External Factor Analysis Summary (EFAS)........................................................................................36
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4.0 Internal Environment...........................................................................................................................37

4.1 Corporate Structure.........................................................................................................................37
4.1.1 Hospitality.................................................................................................................................37
4.1.2 F&B....................................................................................................................................38
4.1.3 Retail..................................................................................................................................38
4.1.4 PENANGPAC.......................................................................................................................38
4.2 Corporate Culture............................................................................................................................41
4.2.1 Place Making and Community Building Project.................................................................42
4.2.2 Think Green Community Education Program.....................................................................42
4.3 Corporate Resources.......................................................................................................................43
4.3.1 Marketing..........................................................................................................................43
4.3.2 Finance...............................................................................................................................45
4.3.3 Operations...........................................................................................................................47
4.3.4 Human Resource Management...........................................................................................48
4.3.5 Information Technology (IT)..............................................................................................49
4.4 Internal Factor Analysis Summary (IFAS).........................................................................................51
5.0 Analysis of Strategic Factors (SWOT)...................................................................................................52
5.1 Situational Analysis..........................................................................................................................52
5.2 Review of Direction.........................................................................................................................54
6.0 Strategic Alternatives..........................................................................................................................56
6.1 TOWS Matrix...................................................................................................................................56
6.2 Recommended Strategy..................................................................................................................58
7.0 Implementation.............................................................................................................................59
8.0 Evaluation and control...................................................................................................................60
Reference..................................................................................................................................................62
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1.0 Current Situation

1.1 Organizational Background
Eastern & Oriental Berhad (E&O) is one of the lifestyle property developments Group
listed on the Main Board of Bursa Malaysia. The E&O name is synonymous with timeless
elegance and discernment. The major services for Eastern & Oriental Berhad are property
investment and development, property management, sales consultancy, land reclamation,
project management and administrative services and sales and marketing services.
E&O is involved in investment, development and management of residential and

commercial properties which include apartments, condominiums, retail buildings, resorts and
waterparks. Besides that, the company is involved in operation and management of service
apartments, hotels, restaurants, convenience shops, food and beverage outlets and cafes. The
company along with its subsidiaries and associates operates across Malaysia, Singapore,
Guernsey, the UK, Channel Island and Hong Kong. Kuala Lumpur, Malaysia is a headquarter of
Eastern & Oriental Berhad.
Eastern & Oriental Berhad classifies its business operations into three reportable
divisions which are Properties, Hospitality and Investment and Others. For the Properties
division, it operates through its subsidiary which is E&O Property Development Berhad. E&O
Property Development Berhad involved in development investment and management of
residential and commercial properties. In addition, there are some of the key projects
completed by the company which is Manhattan, a condominiums of St Mary Residences in
Kuala Lumpur's Central Business District (CBD), Malaysia.
The second reportable division is Hospitality division. Hospitality division performs

management and operation of hotels and restaurants. For example, Eastern & Oriental Hotel
and Lone Pine Hotel in Penang, Malaysia are some of the division operates hotels.
Furthermore, E&O through its subsidiary which is The Delicious Group to operate ten
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restaurants in Penang, Kuala Lumpur, Johor Bahru and Singapore. The company also works and
deals with cafes, convenience shops, food and beverage outlets and service apartments.
Eastern & Oriental Berhad’s Investments and Others division acquires select properties
and land banks which give the company with recurring revenue stream and opportunities for
capital appreciation in the long term (World Market Intelligence, 2013). E&O Property
Development Berhad is one of the subsidiaries of Eastern & Oriental Berhad and its main
objective is to invest in residential units and commercial properties. Straits Quay in Penang and
St Mary Residences and Dua Annex in Kuala Lumpur are some of the key investment properties
of the company.
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1.2 Current Performance
Figure 1: Annual Report 2014
The above figure shows the financial summary of E&O bhd. In the figure above, the
revenue of E&O Bhd was RM 497.14 million in year 2014, which are much lower than the
revenue in year 2013, RM 605.54 million. This decline was happen when the E&O Bhd face
challenging condition, where a broad economic slowdown in regional market and other causes
(Annual Report, 2014). Although this gives big impact to the business of E&O Bhd, the company
is in progress in the current project such as the Mews (Kuala Lumpur), Seri Tanjung Ping Phase 2
(Penang), Quayside Seafront Resort Condominiums (Penang), Avira (Iskandar Johor) and Princes
House (London, UK). Thus, this project makes E&O Bhd confident to meet the interest of their
shareholder based on the current performance and upcoming launches in the future.
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1.3 Strategic Posture

1.3.1 Vision and Mission
The vision for the Eastern & Oriental Berhad is evoking old traditions with new
directions, to enrich lifestyle and experiences globally. Eastern & Oriental Berhad wishes to call
out human being’s mind about the old traditions or customs with new direction. Therefore,
they can enrich their lifestyle and also experiences or knowledge.
The mission for the Eastern & Oriental Berhad is to continuously achieve and maintain
the highest degree of prestige, reliability and quality. It means that Eastern & Oriental Berhad
want to preserve that the company become one of the highest degree property development
company in Malaysia.
1.3.2 Objectives
In 2014, Eastern & Oriental Berhad has four main objectives. The first objective is place
making and community building. The main reason that E&O implement this objective is to
foster the relationship with communities in which they operate in. When pursue this objective,
E&O realize the crucial of promoting a culture of participation among E&O’s employees. To
achieve this objective, E&O is committed to developing communities at Seri Tanjung Pinang
(STP) where various place-making tools are used to make Straits Green a catalyst for holistic
and healthy lifestyles that help bring communities together (Annual Report, 2014).
The second objective for E&O is to conduct Think Green community education
programme. The purpose of conduct this programme is to build eco-centric communities and
consolidate the civic spirit through a community food garden. In the first phase of Think Green
community education programme, the community garden included variety of activities which
are keyhole mulch bed with herbs, compost bay, raised vegetable beds and informative
education boards. The aim of all of these activities is to teach visitors how to compost and grow
healthy food.
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Furthermore, the third objective in 2014 is support for arts and culture. E&O try to
maintain a close affinity with the arts and culture scene. When E&O continues with these
efforts, the Group’s position as a proponent of arts and culture is reinforced by its instrumental
role in the setting up of the Performing Arts Centre of Penang and support in its on-going
operations.
Transparency in the market place is the fourth objective for E&O in 2014. The purpose
of provide clear, transparent and updated information to the marketplace through meetings,
road shows, newspaper and briefings is to maintain transparency and accountability to E&O’s
shareholders. Shareholders are important because they are briefed directly on the company’s
performance and plans at annual and general meetings.
1.3.3 Strategies
According to Wheelen and Hunger (2015), strategy is a comprehensive master approach
that states how the corporation will achieve its mission and objectives. In the annual report
2012, E&O bhd has clearly stated the long-term strategies. The strategies are 1) Building
regional and international exposure of our brands, 2) Forging strategic alliances and
collaborations with well-renowned and international institutions, 3) Developing new growth
engines, 4) achieving significant bottom-line growth and sustainable profits, and 5) Attracting
and retaining top talents.
1.3.4 Policies
According to Wheelen and Hunger (2015), policy is a board guideline for decision
making that links the formulation of a strategy with its implementation. Eastern & Oriental
Berhad had set many policies as the guidelines for the employees to make decision and take
actions that support the corporation’s mission, objectives, and strategies. The policies of the
company are code of conduct and whistle-blowing policy, sustainability, directors’ assessment
policy, remuneration policy, human resource policy and financial risk management policy.
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These policies are consistent with the mission and objectives set by E&O bhd as well as the
external and internal environment.
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2.0 Corporate Governance

2.1 Board of Directors
Board of directors are a group of individuals that are elected as, or elected to act as,
representatives of the stockholders to establish corporate management related policies and to
make decisions on major company issues. Such issues include the hiring/firing of executives,
dividend policies, options policies and executive compensation. Below are the lists of board of
directors in Eastern & Oriental Berhad.
Dato’ Azizan bin Abd Rahman, a Malaysian, aged 64 was appointed as Independent
Non-Executive Director/Chairman of Eastern & Oriental Berhad on 6 November 2003. He is the
Chairman of the Nomination, Remuneration and Scheme Committee.
Dato’ Azizan started his career as a Shipping Executive in Harper Gilfillan (M) Sdn Bhd
after graduating from University of Malaya in 1973 with a degree in Bachelor of Arts. In 1975,
he joined Pernas MISC Shipping Agencies Sdn Bhd as its first Branch Manager in the new Johor
Port. He later became Penang Branch Manager and MISC Marketing Manager in Kuala Lumpur.
In 1981, he was attached to Panocean Tankers Limited in London in their Chartering
Department.
Dato’ Azizan left MISC to join JF Apex Securities Berhad in 1982 as Director and
shareholder and launched his career in stockbroking and finance. As a stockbroker, he was an
active member of the stockbrokers fraternity and had held the post of President of the
Association of Stockbroking Companies of Malaysia until he left the industry. Dato’ Azizan is a
Director of Apex Equity Holdings Berhad. He is also the Chairman of the Investment Panel of
Lembaga Tabung Haji and Chairman of TH Heavy Engineering Berhad and a Director of TH
Plantations Berhad.
Dato’ Tham Ka Hon, a Malaysian, aged 61, is the Managing Director of Eastern &
Oriental Berhad. He was appointed a Director and Managing Director of Eastern & Oriental
Berhad on 16 May 1994.
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Dato’ Tham started his career as a Trainee Actuary with American International
Assurance in Kuala Lumpur. Since 1980, his experience and expertise in property development
and investment saw the highly profitable completion of Bandar Sri Damansara, when heading
the property division at Land & General Berhad. In 1994, Dato’ Tham took over Jack Chia
Enterprise Berhad which was later renamed Eastern & Oriental Berhad and was responsible for
several prestigious residential developments within Kuala Lumpur city centre such as 202 Desa
Cahaya, Kampung Warisan and Sri Se-Ekar. He also spearheaded the restoration and
refurbishment of two historic hotels on Penang island – the heritage 129-year old E&O Hotel in
George Town and Lone Pine Hotel along Batu Ferringhi. He is currently the Managing Director
of E&O Property Development Berhad and is also a Director of Performing Arts Centre of
Penang.
Mr Chan Kok Leong, a Malaysian, aged 44, is the Deputy Managing Director of Eastern &
Oriental Berhad. He joined E&O Property Development Berhad in 2003 as Director of Corporate
& Investment. He was appointed as Executive Director and as a Board Member of Eastern &
Oriental Berhad on 11 May 2006. In 2011, he was promoted to Deputy Managing Director.
Mr Chan has more than 20 years experience in corporate finance and financial
investment, which also encompassed areas relating to property development and marketing.
He holds a Master in Business Administration and is a member of the Malaysian Association of
Certified Public Accountants. He is currently the Executive Director of E&O Property
Development Berhad and is also a Director of Performing Arts Centre of Penang.
Madam Kok Meng Chow, a Malaysian, aged 54, is the Finance Director of Eastern &
Oriental Berhad. She was appointed to the Board of Eastern & Oriental Berhad on 11 August
2008. She is a member of the Risk Management Committee.
Madam Kok holds a Bachelor of Economics (Accounting) degree from Monash University
of Australia. She is a member of the Malaysian Institute of Accountants and a Fellow of the
Institute of Chartered Accountants, Australia, as well as a certified member of the Financial
Planning Association of Malaysia. She has more than 30 years working experience, both local
and in Australia, covering auditing, finance and accounting; and has received a 25-year long
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membership certificate of recognition from the Institute of Chartered Accountants in Australia.

Currently, she is the Finance Director of E&O Property Development Berhad and an Alternate
Director of the Performing Arts Centre of Penang.
Tan Sri Dato’ Seri Mohd Bakke bin Salleh, a Malaysian, aged 60, a Non-Independent
Non-Executive Director was appointed to the Board of Eastern & Oriental Berhad on 29
November 2011. He is a nominee director representing Sime Darby Berhad, a major stockholder
of the Company.
Tan Sri Dato’ Seri Mohd Bakke holds a Bachelor of Science (Economics) degree from the
London School of Economics and Political Science. He is a Fellow of the Institute of Chartered
Accountants in England and Wales and a member of the Malaysian Institute of Accountants.
Tan Sri Dato’ Seri Mohd Bakke is currently the President and Group Chief Executive of
Sime Darby Berhad. He sits on the Boards of Sime Darby Berhad, Sime Darby Property Berhad,
Yayasan Sime Darby, Northern Corridor Economic Region and Malaysian Industry-Government
Group for High Technology.
Tan Sri Dato’ Seri Mohd Bakke was formerly the Group President & Chief Executive
Officer of Felda Global Ventures Holdings Berhad. He had also served as the Group Managing
Director of Felda Holdings Berhad, Group Managing Director and Chief Executive Officer of
Lembaga Tabung Haji and a Director, Property Division of Pengurusan Danaharta Nasional
Berhad. He had previously worked with several subsidiaries within the Permodalan Nasional
Berhad Group. He was the Managing Director of Federal Power Sdn Bhd, Managing Director of
Syarikat Perumahan Pegawai Kerajaan Sdn Bhd and Group General Manager of Island &
Peninsular Group.
Dato’ Seri Abd Wahab bin Maskan, a Malaysian, aged 63, a Non-Independent Non-
Executive Director was appointed to the Board of Eastern & Oriental Berhad on 29 November
2011. He is a nominee director representing Sime Darby Berhad, a major stockholder of the
Company. He is a member of the Nomination, Remuneration and Scheme Committee.
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Dato’ Seri Abd Wahab holds a Bachelor of Science degree in Estate Management from
the University of Reading, United Kingdom. He is a Fellow of the Royal Institution of Chartered
Surveyors (England and United Kingdom), a Fellow of the Royal Institution of Surveyors
Malaysia, a Fellow of the Incorporated Society of Planters and a Fellow of the Malaysian
Institute of Management.
Dato’ Seri Abd Wahab is currently the Group Chief Operating Officer of Sime Darby
Berhad and the Managing Director of Sime Darby Property Berhad. He is in the Board of
Pelaburan Hartanah Nasional Berhad, Prima Corporation Malaysia and Battersea Project
Holding Company Limited. He has held various management and Board positions in companies
in Malaysia, Europe and Asia covering plantation, property, engineering, construction and
manufacturing.
Datuk Vijeyaratnam a/l V. Thamotharam Pillay, a Malaysian, aged 62, an Independent

Non-Executive Director was appointed to the Board of Eastern & Oriental Berhad on 28 July
2003. He is the Chairman of the Audit Committee and a member of the Risk Management
Committee and the Nomination, Remuneration and Scheme Committee.
Datuk Vijeyaratnam is a Fellow of the Institute of Chartered Accountants in England and

Wales and a member of the Malaysian Institute of Accountants. He has considerable experience
covering auditing, financial planning, general management and corporate advisory in various
business environments. He is currently the Managing Director of his own corporate advisory
and consultancy firm. Datuk Vijeyaratnam also sits on the Board of Magnum Berhad (formerly
known as Multi-Purpose Holdings Berhad).
Mr Christopher Martin Boyd, a British citizen with permanent residence in Malaysia,

aged 67, was appointed to the Board of Eastern & Oriental Berhad on 11 August 2008 as a Non-
Independent Non-Executive Director. He was redesignated to an Independent Non-Executive
Director on 17 June 2014.
Mr Boyd is a member of the Audit Committee, the Risk Management Committee and the
Nomination, Remuneration and Scheme Committee. Mr Boyd is a Fellow of the Royal Institution
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of Chartered Surveyors and the Royal Institution of Surveyors Malaysia. He is also a member of
the Singapore Institute of Surveyors and Valuers and an Associate of the Australian Property
Institute. Mr Boyd was a partner of Jones Lang Wootton Malaysia from 1974 to 1981; a Director
of Jones Lang Wootton Singapore from 1981 to 1985 and a partner of Knight Frank Baillieu
Malaysia from 1986 to 1995. From 1995 to 2001, he was Managing Director of MUI Properties
Berhad and remains on the board as a Non-Executive Independent Director. Currently, he is the
Executive Chairman of CB Richard Ellis (Malaysia) Sdn Bhd, a firm engaged in property
valuation, estate agency, property management and research.
Encik Kamil Ahmad Merican, a Malaysian, aged 64, a Non-Independent Non-Executive

Director was appointed to the Board of Eastern & Oriental Berhad on 26 April 1999. He is a
member of the Nomination, Remuneration and Scheme Committee.
Encik Kamil graduated in Architecture from Universiti Teknologi Malaysia and the
Architectural Association in London. He has worked in various architectural firms in London and
Malaysia and possesses vast experience in the architectural field. He is currently the Chief
Executive Officer of GDP Architects Sdn Bhd.
Encik Kamil was one of the Master Jury Members in the Aga Khan Award for
Architecture. He has been serving on the steering committee of the Greater Kuala Lumpur
Council (PEMANDU) since 2010. He has also been made Adjunct Professor of the Faculty of
Architecture, University of Malaya and has been the external examiner for both Universiti
Teknologi Malaysia and University of Malaya. He also sits on the Board of E&O Property
Development Berhad and AmCorp Properties Berhad.
Ms Tan Kar Leng @ Chen Kar Leng, a Malaysian, aged 70 was appointed as Independent
Non-Executive Director of Eastern & Oriental Berhad on 3 December 2012. She is the Chairman
of the Risk Management Committee and a member of the Audit Committee.
Ms Chen holds a LLB (Hons) Upper II from the University of Singapore (now National
University of Singapore). She is an Advocate & Solicitor. She was called to the Malaysian Bar in
January 1968. She has been with the law firm of SKRINE since then. She was a partner of SKRINE
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from 1974, first in the Litigation Division and thereafter in the Corporate Division. She retired as
a partner of SKRINE end-2009 but was retained as a consultant by the firm. She is currently a
member of the Advocates & Solicitors Disciplinary Board appointed by the Chief Justice of
Malaya. Ms Chen also sits on the Board of HSBC Bank Malaysia Berhad.
Directors’ Interest
According to the register of directors’ shareholdings, the interests of directors in office

at the end of the financial year in ordinary stock units and long-term stock incentive plan in the
Company during the financial year were as follows:
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2.2 Top Management

Top management team plays an important role of a company. They refers to a relatively
small group of people include managing director, deputy managing director and so on. They
controls decision making that can affects the success of the company or organization.
Eastern & Oriental Berhad (E&O) led by its Managing director, Dato’ Tham Ka Hon, also
known as Terry. Dato’ Tham has broader experience of sector property development and
investment. Before becoming Managing Director of E&O, he has held Managing Director of
Cheras Jaya Development Sdn Bhd and Terra Ventures Group of Companies, and joined the
Land & General Berhad. In 1994, he served as Managing Director and, he assess and envision
the strategic shape of E&O. He also set targets to reposition E&O. In his role as Managing
director, he is responsible for the overall management of the Group which including the
smooth operation of the businesses and implementation of policies, decisions and strategies.
Besides, he has to prepare financial statements for each financial year and responsible for
ensuring the group and the company keep accounting records which disclose with reasonable
accuracy the financial position of the group.
Mr. Chan Kok Leong (Eric), is the Deputy Managing Director of E&O. He is responsible
for ensure execution of overall operational activities of in line of the directives of Managing
Director in order to secure maximum profitability. His responsibilities also included oversight on
the group’s financial reporting and review quarterly financial results, unaudited and audited
financial statements. Mr. Chan has more than 20 years’ experience in realm of audit and
corporate finance, which also included areas relating to property development and marketing.
Mr. Chan also holds a Master degree in Business Administration.
Madam Kok Meng Chow currently is Finance Director of E&O. Her responsibilities are
oversee all financial operations and direct corporate financial planning and structure,
implementing risk management policies and strategies approved by the Board. Madam Kok holds a
Bachelor of Economics (Accounting) from Monash University of Australia. She is also a member
of the Institute of Chartered Accountants, Australia and the Malaysian Institute of Accountants.
She has more than 30 years working experience which cover auditing, finance and accounting.
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Michael Saxon, director of Group Hospitality and Lifestyle of the E&O. He is responsible
for the day to day operation and financial results for E&O Residences, E&O Hotel, and Lone Pine
Hotel amongst other challenges. Mr. Michael Saxon has more than 30 years working experience
in the hospitality businesses and he was trained in the UK. Prior to joining E&O, he was
executive chef at The Parkroyal Hotel, The Royal Holiday Inn Crowne Plaza, The Shangri-la
International Hotel, and others. He is also the author of “Chef’s Tales” which is a book on his life
as an international chef.
Mr. Lum Kok Weng, Group Project Director- Construction Management. His
responsibility is managing construction activities which included oversight of the performance
of constructor, management of construction employees and other duties as necessary. He
assumed this position in 2011 after serving as Project Manager in 1995 and Project Director in
2007. Mr. Lum started his business in a civil and structural consulting engineering firm in 1970s.
Mr. Michael Tan Hwee Hian, senior general manager. He joined E&O berhad in 2007
and served as general manager. Before joining E&O, he worked at BEP Arkitek Sdn Bhd and GDP
Architects Sdn Bhd which are the two of Malaysia’s leading architectural firms. In 2010, he was
appointed Senior General Manager. He is the expert in architectural design. He has more than
20 years experience in architectural design which cover a range of projects including public
buildings, commercial complexes, hotels, medium to high-end residential condominiums and
landed properties.
Ms. Lyn Chai, director of Group Corporate Strategy. She has a Master degree in Arts and
Bachelor of Arts degree in Oriental Studies- Japanese Politics & Economics, from Cambridge
University, UK. She started her communications career in 1992 with Burson- Marsteller in
Singapore. She worked at Malaysian Timber Council as executive to the Chairman and CEO in
1994. She joined as a member of the National Economic Action Council (NEAC)
Communications Team within the Prime Minister's Department, Malaysia in 1998. She started
at E&O in 2005 as General Manager of Communication and Marketing.
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2.3 Shareholder
Eastern & Oriental Bhd (E&O) companies stock exchange listing at two places which is
Main Market of Bursa Malaysia and Securities Berhad. In term of the Ordinary Share Capital of
the Eastern & Oriental Bhd (E&O) at 6 August 2014, authorized share capital is around RM
2,000,000,000 whereas the issued and fully paid up capital is around RM 1,140,944,610. Market
price of the ordinary stock is RM 1.00 per unit and the number of treasury stock units held is
29,439,400. In additional, one rights of vote will be given for one units of Ordinary Stock.
According to the latest annual report of the Eastern & Oriental Bhd (E&O) 2014, the
analysis of the stockholding distribution is shows at table below (Table 1.1).
Size of No. of % No. of stock unit %
Stockholding Stockholders
< 100 519 3.00 14,185 0.00
100 to 1,000 6,547 37.88 3,427,934 0.30
1,001 to 10,000 8,101 46.87 28,989,579 2.54
10,001 to 100,000 1,696 9.81 49,781,612 4.36
100,001 to less 419 2.42 689,969,000 60.48
than 5% of issued
stock units
5% and above of 3 0.02 368,762,300 32.32
issued stock units
Total 17,285 100.00 1,140,944,610 100.00
Table 1.1: Distribution of stockholding as at 6 August 2014
In E&O Company, stockholders divided into two categories which are stockholders
based on the record of depositors and substantial stockholders based on the register of
substantial stockholders. At 6 August 2014, E&O company have thirty largest stockholders
based on the record of depositors which is shows at Table 1.2 and ten substantial stockholders
based on the register of substantial stockholders which shows at Table 1.3.
NO. NAME OF STOCKHOLDERS NO.OF STOCK %
UNITS
1 Cimsec Nominees ( Tempatan ) Sdn Bhd 243,978,000 21.38
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Sime Darby Nominees Sendirian Berhad

2 CIMB Group Nominees ( Tempatan )Sdn Bhd 64,784,300 5.68
CIMB Commerce Trustee Berhad for Libra Strategic
Opportunity Fund
3 Cimsec Nominees ( Tempatan ) Sdn Bhd 60,000,000 5.26
CIMB Bank Berhad For Morning Crest Sdn Bhd ( CBM )
4 Maybank Nominees (Asing) Sdn Bhd 53,000,000 4.65
G. K. Goh Strategic Holdings Pte Ltd (260551)
5 CIMB Group Nominees (Tempatan) Sdn Bhd 52,678,700 4.62
CIMB Bank Berhad (EDP 2)
6 Cimsec Nominees (Tempatan) Sdn Bhd 42,250,000 3.70
Pledged Securities Account for Tham Ka Hon (EDG)
7 Citigroup Nominees (Tempatan) Sdn Bhd 23,989,100 2.10
Employees Provident Fund Board (HDBS)
Cacona Pte Ltd (270700)
9 Citigroup Nominees (Asing) Sdn Bhd 14,535,916 1.27
CBNY for Dimensional Emerging Markets Value Fund
10 Amsec Nominees (Tempatan) Sdn Bhd AmTrustee Berhad 14,120,200 1.24
for CIMB Islamic Dali Equity Growth
Fund (UT-CIMB-Dali)
11 HSBC Nominees (Tempatan) Sdn Bhd ,11,800,000 1.03
HSBC (M) Trustee Bhd for RHB-OSK Kidsave Trust (3621)
12 HSBC Nominees (Tempatan) Sdn Bhd 11,582,700 1.02

HSBC (M) Trustee Bhd for Hwang Select Opportunity Fund
(3969)
CIMB Bank Berhad for Pusaka Setia Sendirian Berhad
(CBM)
14 Cartaban Nominees (Tempatan) Sdn Bhd 11,296,200 0.99
Exempt An for Eastspring Investments Berhad
15 Magnum Berhad 10,231,400 0.90
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Employees Provident Fund Board

17 Amanahraya Trustees Berhad 9,134,100 0.80
Public Smallcap Fund
HSBC (M) Trustee Bhd for AMB Value Trust Fund (4249)
19 Halfmoon Bay Ventures Limited 8,019,100 0.70
Employees Provident Fund Board (Amundi)
CBNY for Emerging Market Core Equity Portfolio DFA
Investment Dimensions Group Inc
22 Malaysia Nominees (Tempatan) Sendirian Berhad 7,013,200 0.61
Great Eastern Life Assurance (Malaysia) Berhad (LPF)
23 Malaysia Nominees (Tempatan) Sendirian Berhad 6,750,100 0.59
Great Eastern Life Assurance (Malaysia) Berhad (DR)
Alpha Securities Pte Ltd (260550)
25 HSBC Nominees (Asing) Sdn Bhd 6,500,000 0.57
TNTC for Honesty LLC
26 DB (Malaysia) Nominee (Asing) Sdn Bhd 6,416,497 0.56
SSBT Fund WTAU for Wisdomtree Emerging Markets
Smallcap Dividend Fund
CBNY for DFA Emerging Markets Small Cap Series
CIMB Bank for Azizan Bin Abd Rahman (MY0531)
HSBC (M) Trustee Bhd for Pertubuhan Keselamatan
Sosial (Hwang 6939-403)
30 HSBC Nominees (Asing) Sdn Bhd 5,500,000 0.48
Exempt An for Credit Suisse Securities (USA) LLC (PB
Client)
Total 748,818,032 65.63
Table 1.2: Thirty largest stockholders based on the record of depositors
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Based on table 1.2, the largest shareholder who occupies a large amount of units stock
is Cimsec Nominees (Tempatan) Sdn Bhd / Sime Darby Nominees Sendirian Berhad which is
around 243,978,000units or 21.38 % per the total amount of stock ( 748,818,032 units ).
NAME OF SUBSTANTIAL STOCKHOLDINGS
STOCKHOLDERS DIRECT % INDIRECT %
Sime Darby Nominees Sendirian 243,978,000 21.95 - -
Berhad
Sime Darby Holdings Berhad - - 243,978,000 21.95
Sime Darby Berhad - - 243,978,000 21.95
Morning Crest Sdn Bhd 60,000,000 5.40 - -
Dato’ Tham Ka Hon 45,885,233 4.13 71,371,928 6.42
Goh Geok Khim 2,000,000 0.18 80,358,508 7.23
Goh Yew Lin - - 80,358,508 7.23
GKG Investment Holdings Pte Ltd - - 80,358,508 7.23
G. K. Goh Holdings Limited - - 69,258,508 6.23
CIMB Commerce Trustee Berhad - - 64,784,300 5.83
Table1.3: Substantial stockholders based on the register of substantial stockholders as at 6
August 2014
Notes:
1. Deemed interest by virtue of Section 6A(4) of the Companies Act, 1965 held through its
shareholding of 100% in Sime Darby Nominees Sendirian Berhad.
2. Deemed interest by virtue of Section 6A(4) of the Companies Act, 1965 held through its
shareholding of 100% in Sime Darby Holdings Berhad, which in turn holds 100% of Sime
Darby Nominees Sendirian Berhad.
3. Deemed interest by virtue of Section 6A(4) of the Companies Act, 1965 held through
Morning Crest Sdn Bhd, Pusaka Setia Sendirian Berhad (¡°Pusaka¡±) and his spouse’s
shareholdings in Pusaka.
GKG Investment Holdings Pte Ltd.
20
5. Deemed interest by virtue of Section 6A(4) of the Companies Act,1965 held through
Alpha Securities Pte Ltd, Future Equity Investments Ltd and G. K. Goh Holdings Limited.
6. Deemed interest by virtue of Section 6A(4) of the Companies Act, 1965 held through G.
K. Goh Strategic Holdings Pte Ltd and Cacona Pte Ltd.
7. Held in trust by CIMB Commerce Trustee Berhad as Trustee for Libra Strategic
Opportunity Fund.
NAME OF DIRECTORS STOCKHOLDINGS

DIRECT % INDIRECT %
Dato’ Azizan bin Abd Rahman 7,300,000 0.66 - -
Dato’ Tham Ka Hon 45,885,233 4.13 71,371,928 6.42
Chan Kok Leong 6,359,500 0.57 - -
Kok Meng Chow 888,500 0.08 - -
Tan Sri Dato’ Seri Mohd Bakke bin - - - -
Salleh
Dato’ Seri Abd Wahab bin Maskan - - - -
Kamil Ahmad Merican 1,875,000 0.17 - -
Datuk Vijeyaratnam a/l - - - -
V.Thamotharam Pillay
Christopher Martin Boyd - - - -
Tan Kar Leng @ Chen Kar Leng - - - -
Table 1.4: Directors’ interest in stock units based on the register of directors’ interest as at 6
August 2014
Note:
Morning Crest Sdn Bhd, Pusaka Setia Sendirian Berhad (“Pusaka”) and his spouse’s
shareholdings in Pusaka.
NAME OF EXECUTIVE DIRECTORS LTIP STOCK UNITS
DIRECT % INDIRECT %
21
Dato’ Tham Ka Hon - - - -

Chan Kok Leong 1,053,500 - - -
Kok Meng Chow 1,162,500 - - -
Table1.5: Directors’ interest in the long-term stock incentive plan (“LTIP”) as at 6 August 2014
Notes:
1. Dato’ Tham Ka Hon has elected not to participate in the LTIP and therefore has not
accepted any awards.
2. Details of LTIP Stock Units granted under the Restricted Stock Unit Incentive Plan ( “RSU
Award” ) and Performance-Based Restricted Stock Unit Incentive Plan ( “PSU
Award”):
 109,500 LTIP Stock Units awarded under the RSU Award for FY12/13(a)
 151,000 LTIP Stock Units awarded under the RSU Award for FY13/14(b)
 107,000 LTIP Stock Units awarded under the RSU Award for FY14/15(c)
 329,000 LTIP Stock Units awarded under the PSU Award for FY12/13(d)
 210,000 LTIP Stock Units awarded under the PSU Award for FY13/14(e)
 147,000 LTIP Stock Units awarded under the PSU Award for FY14/15(f)
3. Details of LTIP Stock Units granted under the RSU Award and PSU Award:
 788,500 LTIP Stock Units awarded under the RSU Award for FY12/13(a)
 79,000 LTIP Stock Units awarded under the RSU Award for FY13/14(b)
 56,000 LTIP Stock Units awarded under the RSU Award for FY14/15(c)
 115,000 LTIP Stock Units awarded under the PSU Award for FY12/13(d)
 73,000 LTIP Stock Units awarded under the PSU Award for FY13/14(e)
 51,000 LTIP Stock Units awarded under the PSU Award for FY14/15(f)
4. (a) The vesting of the LTIP Stock Units will fall on 31 July 2015.
(b) The vesting of the LTIP Stock Units will fall on 31 July 2016.
(c) The vesting of the LTIP Stock Units will fall on 31 July 2017.
(d) The vesting of the LTIP Stock Units will fall on 31 July 2015 and is contingent upon
the satisfaction and fulfillment of the vesting conditions.
22
(e) The vesting of the LTIP Stock Units will fall on 31 July 2016 and is contingent upon
the satisfaction and fulfillment of the vesting conditions.
(f) The vesting of the LTIP Stock Units will fall on 31 July 2017 and is contingent upon the
satisfaction and fulfillment of the vesting conditions.
Besides the latest analysis of the shareholder above which record at the annual report
Eastern & Oriental Bhd August 2014. Below are some changes in shareholding in substantial
shareholder cease after the date of August 2014:
Date Name Remark
10 September 2014 CIMB COMMERCE TRUSTEE BERHAD Sold on 5th September 2014
29 December 2014 Employees Provident Fund Board Disposed by Citigroup

Nominees (Tempatan) Sdn
Bhd – Employees Provident
Fund Board
3 March 2015 Employees Provident Fund Board Disposed by Citigroup
Nominees (Tempatan) Sdn
Bhd – Employees Provident
FD BD ( AFFIN-HWG )
23
3.0 External Environment

3.1 Physical Environment
According to Wheelen (2015), natural physical environment includes physical resources,
climate and wildlife. It was viewed as a free resource, something to be taken or fought over
such as diamond mines, land, deep water harbor or fresh water.
3.1.1 Physical Resources

Physical resources which including buildings and grounds, utilities, shops, equipment
and materials whether owned or rented are sufficient to enable the organization to fulfill its
stated purposes and objectives.
Eastern & Oriental Berhad face a threat of volatility in physical resources and raw
materials costs like steel materials and cement. In various parts of the world, steel and
cement’s price are largely influenced by volatile nature of coking coal, iron ore and oil prices.
The price of global composite carbon steel increased from US$ 686 per ton in June 2013 to US$
716 per ton in December 2013. Moreover, according to the US Energy Information
Administration, the average crude oil price too has been inconsistent which is increasing from
an average US$ 94.12 per barrel in 2012 to US$97.91 per barrel in 2013. Volatile input prices
will reduce margins, affecting the profitability and long-term sustainability of the company.
Therefore, the costs of physical resources are one of the threats for the E&O Bhd in the
construction industry.
3.1.2 Climate
Weather, climate, climate change and solar phenomena are environmental factors that
refer to ecological and environmental features. The change of environmental features will
influenced the Eastern & Oriental Berhad’s operations. This is because the geography of
Malaysia deal with the tropical climate and Malaysia located in Southeast Asia. According to
World Weather and Climate Information (2010), humidity in Malaysia is a common feature and
24
at night is fairly cool. Throughout the year, the average temperature ranges in Malaysia is from
20°C to 30°C on an average.
Therefore, this means that Malaysia has torridity climate so it is suitable for Eastern &
Oriental Berhad to implement the activities or projects in Malaysia. For example, in 2014,
Eastern & Oriental Berhad has received approval from Federal Department of Environment for
the commencement of reclamation works for the Seri Tanjung Pinang Phase Two (STP2) project
from the Penang State authorities. The main scope of works include land reclamation works,
dredging works, soil improvement works, coastal protection works, marine piling works and
other associated marine work.
Although tropical climate in Malaysia is one of the opportunities for E&O Berhad to
implement the work of construction, but at the end of the year, the temperature or weather of
Malaysia will become moist and faced with problem of flood. Therefore, it will become one of
the threats for E&O Berhad because the bad weather will influence the work of construction.
3.1.3 Wildlife
Since the development of the country is increasing, the extinction of wildlife is also
become serious day by day. To protect the wildlife, some forests are under the protection and
not allow for development. This may affects E&O Bhd to acquire and apply the new land for
development and construction. Therefore, E&O Bhd have to limit to develop their new property
as the land used to protect of wildlife’s habitat. This may cause the growth of the company.
Besides that, wildlife also brings another threat to E&O Bhd. The wildlife probably may
hurt the residents after the company had handover their property to the purchasers. This could
be happened when the place where it is developed are originally the habitat of wildlife. The
news like the residents had been attacked or killed by the wildlife may affect the buyer decision
of the E&O property. For example, in October 2010, the baby of the residents of single-storey
house near Taman Happy Garden was killed by macaque monkey (Chitra Nathan & Kong, L.,
25
October 2010). Although this happens because the monkeys want to search for foods in the
residents’ house, the development of wildlife’s habitat also is the main reason to cause this sad
case happens. If E&O Bhd faces this kind of problem, their brand and reputation may serious
affected in the negative way.
3.2 Societal Environment

3.2.1 Economic
An economy consists of the production, distribution or trade and consumption of
limited products and services by different agents in a given geographical location. The economic
agents can be individuals, businesses, organizations, or governments. Transactions occur when
two parties agree to the value or price of the transacted good or service, commonly expressed
in a certain currency. In the past, economic activity was theorized to be bounded by natural
resources, labour, and capital. This view ignores the value of technology (automation,
accelerator of process, reduction of cost functions), and innovation (new products, services,
processes, new markets, expands markets, diversification of markets, niche markets, increases
revenue functions), especially that which produces intellectual property.
The economy system of a country may affect directly to the business or company which
are operate within the country. In this case, Eastern & Oriental Bhd have to concern to the
economy environment, especially when economy slowdown. The economy slowdown is a
threat to E&O bhd in term of its financial condition. The economy environment is affected by
the country’s culture, values, education, technological evolution, history, social organization,
political structure and legal systems, as well as its geography, natural resource endowment, and
ecology, as main factors. These factors give context, content, and set the conditions and
parameters in which an economy functions. But the main factors that affect the growth of the
company within a country are market and financial. If the economy of the country is not stable,
this will directly affect the condition of their market. Unfortunately, this will also affect the
financial condition of the company. Without a stable market and strong financial condition, this
will become a huge barrier for a company to grow.
26
Besides that, the activities of property development which run by the Eastern & Oriental
Berhad will also increase the economy growing rate of the country. For example, the Mews
serviced residences convey an understated stylish simplicity, reflecting the merging of cultures
between its two joint-venture partners, E&O and Mitsui Fudosan Residential. Tucked away on
the edge of Jalan Yap Kwan Seng, The Mews is removed from the clamour of the city yet within
easy reach of the Kuala Lumpur business centre and its main attractions.
3.2.2 Technological
Technology is the collection of techniques, methods or processes used in the production
of goods or services or in the accomplishment of objectives, such as scientific investigation.
Technology can be the knowledge of techniques, processes and other or it can be embedded in
machines, computers, devices and factories which can be operated by individuals without
detailed knowledge of the workings of such things. The human species' use of technology
began with the conversion of natural resources into simple tools. The prehistoric discovery of
how to control fire increased the available sources of food and the invention of the wheel
helped humans in travelling in and controlling their environment. Recent technological
developments, including the printing press, the telephone and the internet have lessened
physical barriers to communication and allowed humans to interact freely on a global scale.
For the companies which are able to operate with the advance technology, this will
cause a lot of competitive advantages for the company to compete in the industry compare to
the others. Besides that, technology will affect the society and its. In many societies, technology
has helped develop more advanced economies and has allowed the rise of a leisure class.
In this case, Eastern & Oriental Berhad is operating with the advance technology
environment as compare to previous time. But they lack of the technical employees who able
to handle or control the technology. With the help of these technologies, E&O Bhd is able to
merge the local lifestyle and living culture of different countries with their products. This will
27
form one of the strength to help them in segmentation market. For example, the company was
able to develop the property at Seri Tanjung Pinang. Seri Tanjung Pinang is Penang Island’s
largest master planned seafront development. Developed in two phases by E&O, this world-
class waterfront community is conceptualised to celebrate the best facets of island living.
For example, during 2013 and 2014, all four growth engines that we had identified and
have been fuelling in Kuala Lumpur, Penang, Iskandar Malaysia and the United Kingdom are
gaining solid traction. Besides that, the overseas growth engine in United Kingdom enjoyed a
very encouraging debut. E&O’s first property venture abroad saw all residential units reserved
for without the need for advertising. Due for completion in 2016, Princes House along Kingsway
in the prestigious Borough of Westminster, is our first foothold into prime central London.
Fuelling these growth engines, creating a strong global property brand, nurturing our talent and
deepening our strategic partnerships are essential building blocks of our 3-year business plan.
E&O is committed to its shareholders to achieve a 3-year cumulative profit after tax (PAT) of
RM450–500 million for the financial years ending 31 March 2014 to 31 March 2016. We are on
track, with the financial year 2013/14 posting revenue of RM497.14 million and profit after tax
of RM119.78 million.
3.2.3 Political-Legal
Political legal issue stands a very important position in any company whether profit
organization or non-profit organization. Every organization cannot avoid from political legal
force, this include Eastern & Oriental Berhad (E&O). Because of the E&O is a lifestyle property
developer, thus any changing of the political and legal policy either domestic or international
level will affect the E&O operation as well as business strategies. However, domestic political
given the deep impact to E&O, thus E&O tend to be more concern about the domestic political
and legal issue. It is a fundamental of E&O to compliance the legal provision in Companies Act,
1995 on business operation. Besides that, in term of the company financial part, E&O group
follow the requirement in Companies Act, 1995 to prepare the financial statement every year
which have been made in accordance with applicable approved accounting standards. These
28
accounting standards provide recognition of true and equitable account of the state of affairs of
the group as at the end result of the class flows and financial statement for the financial year.
According to the Companies Act, 1995, the Directors of E&O group needs to do the
following action to prepare the financial statement. The action are to apply an appropriate
accounting policy consistently, prudent and reasonable to make any possible forecast and
judgments and state whether applicable accounting standards have been followed, subject to
any material departures disclosed and explained in the financial statements.
The authorities of the E&O group needs to ensure that company keep and disclose
accounting records and ensure that company yearly financial statement comply provision of the
Companies Act 1965 as well as taking an possible action to prevent and detect fraud and other
irregularities.
Moreover, political policy and legal not only will affect the E&O business operation but
sometimes will be known as a business opportunities or threats to E&O group. For instant,
Section 92C (2) (a) even allows different uses for different parts of the underground land. The
surface land may be used for residential or commercial purposes while the underground land
may be used for industrial or even agricultural uses. Sections 92C give an opportunity to E&O
group to extend and develop their property into any form of business as long as not violate the
law.
In addition, the recent political policy of Good and Services Tax (GST) which introduce by
government at 1 April 2015 is known as a barrier and threats to E&O property development.
GST is a value added tax with the purpose of sales and services tax replacement which has been
used in the country for several decades. After GST introduced, speculation effect become worse
which the property market is headed for a period of doom and gloom. Cost of building will be
increase because of the 6% GST charge on the building material and services. It means that E&O
group needs to invest more capital into property development.
29
3.2.4 Sociocultural
Sociocultural is one of the societal environments which will give a deep impact to E&O
Bhd. The theories of Max Weber explain that society plays a very important role in business
development. However, individuals’ behavior and attitude are influence by the culture which
belongs to that person. Therefore, any change in the sociocultural will direct change the
attitude, behavior as well as the purchase decision. This is because the social-cultural system
where the individual live will provide a set of values and thinking pattern to them, thus
individual decision will be influence. These theory are apply to all industry include E&O group
property industry.
As other societal environment, sociocultural will provide an opportunities as well as

threats to E&O. Normally, sociocultural change in two situation which is change in preferences
and change in demography. Change in preferences is the most important issue that E&O needs
to be concern because every business will build a brand name and create core strategies in
certain manner, but if company cannot ever realize and adapt the change of customer
preferences within quality time will influence company performance. Thus, if any changing in
customer preferences, E&O group can handle it better it will be great and it might be a good
opportunities for E&O to extend their business but if E&O failed to adapt the change it will
become a threat for E&O.
Next, demographics change also will give impact to E&O operation. Demographics
factors include the number of population live in region, their age, gender, sex, level of
education and ethnicity. All of these factors need to be consider by any industry as the change
of any one of that will influence business decision because company are based on these factor
to determine their company’s direction, new product, pricing and marketing strategies. In case
of E&O group, if the population of the region where they operate in is increase it will give an
opportunity to E&O for property development purpose because the increases of the population
will expand the property market directly. In contrast, if the population in region which E&O
operate in is decline it will give a threat to E&O property market. Moreover, the open thinking
30
pattern somehow may give good impact the sales of E&O property. This is because this will
affect the buyer’s decision towards E&O property. For example, nowadays, more people are
likely to have their own property, in used for living or investment. Thus, this kind of trend will
provides good opportunities to the property company where the market trend of property is
active.
31
3.3 Task Environment

Porter’s Five Forces model was developed by Michael Porter which is a framework to
analyze the nature of competition within an industry. In Porter's model, the five forces that
shape industry competition which are the threat of new competitors, the threat of substitute
products or services, the bargaining power of customers, the bargaining power of suppliers and
the rivalry among existing firms in the industry.
3.3.1 Rivalry among Existing Firms in the Industry

Rivalry refers to the degree to which firms respond to competitive moves of the other
firms in the industry. One firm only can be success compete with others competing firms
through pursue a competitive advantage strategies.
The rivalry among existing firms in the industry is definitely high. In Malaysia, there are
tons of property developers such as Mah Sing, Sime Darby Property, SP Setia, and Tropicana
Corp bhd. E&O is not only compete in a local level, it also compete in international level.
Competition is strong due to the large number of companies and difficulty to differentiate.
Most of the companies provide the same products and services. E&O has to compete in price,
brand name and many more. But, none is more important than the location.
The core business activities of E&O also included hospitality and lifestyle. E&O hotel is a
5 stars hotel and luxury hotel. However, there have a lot of different categories of 5 stars hotel
in Penang and Kuala Lumpur areas.
3.3.2 The Threat of New Entrants

Profitable markets that yield high returns will attract new firms. This will results in new
entrants, which eventually will decrease profitability for all the firms in the industry. Threat of
new competitors of E&O Company is moderate.
32
The barriers entries in property industry are considerably high. The capital requirements
of getting establish in property industry can be so large as to discourage all but the largest
organizations. E&O has already become the strong property developer in Malaysia and
established leadership position. Therefore, the new entrants have to offers a high quality of
products to gain the market value. Besides, the property development industry is high risk and
filled with uncertainly especially the Goods and Services Tax (GST) is started. According to
research house JF Apex Research, property transactions are expected to decline by about 10%,
with house prices remaining flattish or rising slightly by 3% to 5% upon the implementation of
the goods and services tax (GST) on building materials.
There are many tourist attractions in Malaysia. Many new entrants are view it as an
opportunity in business. It will be easy for other hotels to open in the marketplace and will be
the threat for E&O because of weak product differentiation. Moreover, it does not cost much
for E&O hotel’s customers to change to new entrant reason being low switching cost.
3.3.3 The Threat of Substitute Products or Services

A substitute product is a product that appears to be different but can satisfy the same
need as another product. The existence of products outside of the realm of the common
product boundaries increases the propensity of customers to switch to alternatives.
The threat of substitutes seems is high force for E&O Company. The high threat of
substitutes is bring the disadvantages for the company. The major reason of this force is
consumers’ ability to choose from alternative products. They can easily switch to the cheaper
luxury properties. On the other hands, many travelers are seeking for the budgets inns or
motels. They can become the important competitors for E&O. Penang also has a lots of 5 stars
hotel such as Shangri-La's Rasa Sayang Resort and Spa Penang, G Hotel Gurney and Hard Rock
Hotel. Their targets are similar with E&O hotel which is the high income tourists. For Rasa
Sayang Resort, it is nestled along the Batu Feringghi beach. Guests can enjoy the water sports
33
activities such as banana boats, parasailing and many more. It also provides the spa for their
guests. Therefore, E&O hotel can easily be substitute.
3.3.4 The Bargaining Power of Customers

The bargaining power of customers is medium. Customers or buyers are significantly
influence business. Some property developers have point out that the sector is cooling down.
Currently has more supply than demand. Buyers have ability to choose from multiple offerings.
Malaysia has many property developers are offering luxury properties to the buyers especially
in JB, Penang and Kuala Lumpur areas and, they are competing with E&O. So, customers are
able to exert pressure to drive down prices, or increase the required quality for the same price.
However, E&O offerings the seafront resort condominium of Quayside. It is the first
condominium in the region built a 4.5 acre private water park. E&O will have more bargaining
power in raising their selling prices.
3.3.5 The Bargaining Power of Suppliers

Suppliers can affect an industry through their ability to raise prices or reduce the quality
of purchased goods and services. For E&O, the bargaining power of suppliers is moderate to
high. This is because there are a not much suppliers in Malaysia. For example, the cement
suppliers in Malaysia are AALBORG Poland Malaysia Sdn Bhd, Cement Industries of Malaysia
Berhad (CIMA), CMS Cement Sdn Bhd (CMS), YTL Cement Group and so on (The Cement &
Concrete Association of Malaysia). This also because and there are many different suppliers
needed for property and hospitality industries. Therefore, the increase price raw material will
directly affect the company.
34
3.4 External Factor Analysis Summary (EFAS)

External Factor Analysis Summary (EFAS Table): Eastern & Oriental Berhad
External Factors Weight Rating Weighted Comments
Score
Opportunities
 Tropical climate in Malaysia .10 2.5 .25 Smooth operation
 Advance technology .08 3.5 .28 Market segmentation
 The open thinking pattern .05 1.5 .075 Sales increased
 Increase number of .10 4.0 .40 Sales increased
population
 High entry barrier of new .07 1.5 .105 Less competitive
entrants
Threats
 Economy slowdown of .20 4.0 .80 Financial performance
Malaysia
 Volatility raw materials .15 3.0 .45 Financial performance
prices
 Reputation affected due to .05 4.0 .20 E&O Brand
bad news
 Strong government .10 3.5 .35 Operation flow
regulations
 Rivalry among competitors .05 2.0 .10 Competition
 New alternative products .05 1.5 .075 Less innovation

Total Scores 1.00 3.085
Table 2: EFAS Table
35
4.0 Internal Environment

4.1 Corporate Structure
Eastern & Oriental Berhad (E&O) is a premier lifestyle property development Group
listed on the Main Board of Bursa Malaysia. The E&O name is synonymous with timeless
elegance and discernment, inspired by the rich heritage of our namesake, Penang’s historic
luxury icon, the Eastern & Oriental Hotel established in 1885. The Group’s hospitality and F&B
division provides a complementary lifestyle component that supports E&O’s core business of
developing premier properties with innovative concepts in key locations. This includes the
heritage Eastern & Oriental Hotel and Lone Pine Hotel in Penang, as well as the contemporary
E&O Residences Kuala Lumpur in the capital’s vibrant city center. The group is structured into
operating companies that each operated independently to focus on servicing the distinct needs
of their customers.
4.1.1 Hospitality
The Hospitality & Lifestyle arm of the E&O Group encompasses the luxury heritage
Eastern & Oriental Hotel and Lone Pine Hotel, both in Penang. The Group's operational
expertise is extended to hospitality management of serviced suites at E&O Residences Kuala
Lumpur.
Established by the famed Sarkies Brothers in 1885, the E&O Hotel is the only hotel in the
heart of the George Town UNESCO World Heritage Site that possesses prime sea frontage. Lone
Pine Hotel, the oldest beach hotel that was established in 1948 along Penang island's famed
Batu Ferringhi tourist belt, was given a new lease of life after undergoing extensive
refurbishment and expansion in 2010. E&O Residences, the first service suites to share the
name and pedigree of the legendary E&O Hotel, brings with it the level of hospitality and
prestige that is synonymous with the luxury heritage brand.
36
4.1.2 F&B
With food and beverage (F&B) closely linked to lifestyle in the modern mindset, The
Delicious Group of casual dining outlets are found within E&O's prime retail properties as well
as in leading shopping centres that introduce the E&O's lifestyle segment to a broader and
younger demographic.
4.1.3 Retail
Straits Quay in Seri Tanjung Pinang, Penang is the island's first seafronting retail marina
with 270,000-sq ft of net lettable area converging around the voluminous Straits Court and the
42-berth Straits Quay Marina for private yachts, where Penang's first water limousine shuttles
between Straits Quay and E&O Hotel.
In Kuala Lumpur, E&O's retail component is primarily designed to augment a specific

property, namely the E&O-developed Dua Residency and St Mary Residences projects. Dua
Annexe occupies 30,000 sq ft in a 3-storey glass and steel cube structure, accessible via link
bridge to Dua Residency residents and on prime Jalan Tun Razak frontage serving the affluent
neighbourhood and embassy district.
St Mary Place is a 2-storey retail podium with approximately 35,000-sq ft of net lettable
space, just off the main business arteries of Jalan Sultan Ismail and Jalan Raja Chulan, where
multinational corporations and banks are headquartered.
4.1.4 PENANGPAC
With the intent of enriching the lives of Penangites by making the arts more accessible,
E&O joined hands with The Actors Studio to establish the Performing Arts Centre of Penang,
also known as Penangpac. A non-profit organization to serve the community at large,
Penangpac is the northern region's first arts centre and only the second one in Malaysia after
klpac. Penangpac offers a host of local and international performances ranging from dance to
37
music to plays, with well-equipped facilities such as a 300-seater proscenium theatre, 150-
seater experimental black box theatre and multi-functional studios.
Eastern & Oriental Berhad (E&O) always hold the value to do things differently, always
for the better, with sincerity, integrity and passion. They are each expected to serve the
customers to a very high customer service standard. So the Board of Directors of Eastern &
Oriental Berhad is committed to ensuring that a high standard of corporate governance is
practiced throughout the Group as a fundamental part of discharging its responsibilities to
safeguard shareholders’ investments and protect the interests of all stakeholders.
The Board has delegated certain responsibilities to Board Committees, namely, the
Audit Committee, the Nomination, Remuneration and Scheme Committee and the Risk
Management Committee which operate in accordance with the Terms of Reference approved
by the Board.
Audit Committee is responsible to oversight on the Group’s financial reporting, review

quarterly financial results, unaudited and audited financial statements, monitoring of internal
control systems. For the Financial Year, internal audit reviews were carried out in accordance
with an internal audit plan approved by the Audit Committee. The result from internal audit
reviews, together with proposed action plans and management’s response are presented to the
Audit Committee for its review. In addition, the internal audit function follows up and reports to
the Audit Committee if the corrective action plans to address control weaknesses have been
satisfactorily implemented by the management.
Nomination, Remuneration and Scheme Committee is responsible to nominate new

Directors, assess the Board, the Board Committees and the contribution of each individual
Director, and recommend remuneration of Executive Directors and Non-Executive Directors to
the Board and administering the Company’s Long-Term Stock Incentive Plan 2012. To
strengthen the composition of Board of Directors, the Nomination, Remuneration and Scheme
38
Committee (“NRSC”) comprises of five members, all of whom are Non-Executive Directors, with
a majority being Independent Directors. The NRSC is responsible for determining the
appropriate character, skills, and experience for the Board as a whole and its individual
members with the objective of having a Board with diverse backgrounds and experience in
business. All Directors are expected to be individuals with integrity, high personal and
professional ethics, sound business judgment, and the ability and willingness to commit
sufficient time to the duties of the Board.
While Risk Management Committee is responsible to identify, monitor and manage the
significant risks faced by Group then formulate and implement risk management policies and
strategies. Due to inherent limitations in the systems of internal control and risk management,
such systems implemented can only manage rather than to eliminate all risks that may impede
the achievement of the Group’s business objectives. Therefore, the internal control and risk
management systems can only provide reasonable and not absolute assurance against material
misstatement or loss.
Other than that, the company has established a Code of Ethics and a Code of Conduct
that set out the principles and standards of business ethics and conduct of the Group and also a
Whistle-Blowing Policy so that any officer or employee of the Group can report genuine
concerns relating to any malpractice or improper conduct of the Group’s businesses. Disclosure
can be made in writing to the Deputy Managing Director or the Chairman of the Audit
Committee. This Whistle-Blowing Policy gives strength to the company to alert all the
employees to be alert during perform in their task. Procedures are in place for investigations
and appropriate follow-up action. The whistle-blowing officer or employee acting in good faith
is protected from retaliation for raising such allegations.
The assurance has been given based on the internal controls established and maintained
by the Group, work performed and reports provided by the internal audit function,
management letters provided by external auditors, reviews performed by management and
39
various Board Committees as well as reliance on written confirmations by management. The

Board is of the view that the existing internal control and risk management systems were
adequate and effective for the Financial Year to address the risks which the Group considers
relevant and material to its operations. The Board continues to take pertinent measures to
sustain and, where required, to improve the Group’s risk management and internal control
systems in meeting the Group’s strategic objectives.
4.2 Corporate Culture

Eastern & Oriental Berhad (E&O) known as a premier lifestyle property development
Group listed on the Main Board of Bursa Malaysia with the same purpose and value among the
employees in the company. The purpose of Eastern & Oriental Berhad (E&O) is to design and
builds properties which satisfy the discerning individuals’ lifestyle aspirations. The value is to do
things differently, always for the better, with sincerity, integrity and passion.
Eastern & Oriental Berhad (E&O) design and builds properties which satisfy the
discerning individuals’ lifestyle aspirations. Every E&O staffs strive to incarnate the organization
values of doing things differently for the better with sincerity, integrity and passion. This
organizational spirit encourages E&O staffs efforts to engage with the communities where the
company is operate in with the purpose in order to create a great, positive as well as
meaningful difference. There are two main type of project which is the effort of this value of
company culture which is the “Place Making and Community Building” project and “Think
Green Community Education Program”.
E&O Company conduct their business by taken the three importance factors into
account which is socially, environmentally and economically responsible issue. This means that
E&O will pre-consider these three factors before make any business decision in order to
demonstrate their organization commitment of corporate social responsibility while improving
the interest of E&O company’s diverse stakeholders reach a balance point. Program social
responsibility which conducted by E&O not only creates a good relationship with the
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community but also give a business opportunity for E&O group to expand their business
market.
4.2.1 Place Making and Community Building Project

E&O is known as a lifestyle property company, thus E&O realize that there is very
important to foster and create a positive, meaningful and close relationship with communities.
In order to reach and succeed the corporate social responsibility objective, E&O company
promote a culture of participation among their staff. For instant, the effort of E&O develop
communities at Seri Tanjung Pinang (SPT) by building the Straits Green a catalyst for holistic and
healthy lifestyles which can bring communities together and improve the relationship among
them. The 1st public recreational space, Seri Tanjung Pinang is 4-acre Public Park which provides
a unique recreational space with various type of water play tools to the public, E&O also
conduct a “Think Green communities education program” and conduct some activities for the
communities with free of charge that was then rolled by E&O volunteer employee. This project
involves an investment of RM4million set up cost and maintained cost around three thousand
annually.
4.2.2 Think Green Community Education Program

E&O conduct the “Think Green Community education Program” with the purpose of
building the eco-centric communities and strengthen the community spirit through this eco-
environment event. Think Green food garden at Straits Green held at outdoor which provided
as the outdoor classroom to bring the local communities, partners as well as employees
together into the effort of earth care practices and community building.
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4.3 Corporate Resources

4.3.1 Marketing
Marketing strategy is the strategy that deals with pricing, selling, and distributing a
product (Wheelen, 2015). In Eastern & Oriental Berhad (E&O), they used product development
strategy in marketing. This is because the company developed new products for existing
markets and developed new products for new market. Besides that, E&O Bhd also
accomplished some other marketing strategy, such as advertising and promotion.
The first strategy of E&O Bhd developed new products for existing markets, which are in
Penang, Malaysia. In 2003, E&O Bhd was taken over the Seri Tanjung Pinang Phase 1 (STP1),
which is first mooted by the Penang’s second Chief Minister in the year 1982. In 2005, E&O Bhd
successfully finish the project STP1 and sold it completely to the purchaser in year 2006. This
gives good impact to E&O Bhd and the company was continue to develop the new property in
Penang Island. The new project name is Seri Tanjung Pinang Phase 2 (STP2). For this project,
E&O bhd had applied the remaining 760 acres of land, which are wider than the land of project
STP1, 240 acres. This project is now under the endorsement of its master plan by Penang State
Government. The figure below shows the timeline of the project STP.
Figure 2: The Timeline of STP1 and STP2

Next, E&O Bhd also developed new products for new market, which are outsides
Penang and Kuala Lumpur, Malaysia. The current project is in London, United Kingdom. In the
‘the star’ newspaper, ‘StarBizWeek’ has stated that the E&O bhd had purchased the two office
buildings to expand their market. The two office buildings are Princes House and Esca House,
which the gross development value (GDV) are RM 325 million and RM 434 million respectively.
In the annual report of E&O Bhd 2014, the company acquired Princes House in year 2012. The
company had converting the 1920 neoclassical building into a
total 54 units comprising 20 residential units and 34 serviced
apartments. The units at Princes House are converted from 366
Figure 3: Princes House
square feet compact studio apartment to a 2580 square feet
penthouse. All residential units are successfully to handover to
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the purchasers in year 2014. In addition, E&O Bhd had also forms the E&O Property UK team in
order to manage the current and future projects in London (The Star, February 2015).
Besides that, E&O Bhd also accomplished some other marketing strategy, such as
advertising and promotion. E&O Bhd had advertised some units of property in iProperty.com.
E&O Bhd also had done many promotions in the form of gallery and exhibition. In November
2013, E&O Bhd has established a new sales gallery in Singapore at One Raffles Link (Ng Bei
Shan, November 2013). In the interview of The Star newspaper with Deputy Managing Director,
Mr. Eric Chan Kok Leong said “We hope this step-by-step initiative will promote the E&O brand
and its unique life-style experience to the regional and global market.” This indicates E&O Bhd
are implementing the marketing strategy to expand their market share and strengthen their
brand.
In the marketing dimension of E&O Bhd, the key person is Mr. Eric Chan Kok Leong. Mr.
Eric Chan is the Deputy Managing Director in E&O bhd. Now, he is 44 years old. He joined E&O
Property Development Berhad in 2003 and has 20 years experiences in corporate finance,
which also encompassed the areas relating to property development and marketing. Thus, he is
the important human resource in the company. Furthermore, Dato’ Azizan Bin Abd Rahman,
aged 64, the Chairman of E&O Bhd, also played role in marketing decisions. He has experience
in marketing as he was worked as the Marketing Manager of Pernas MISC Shipping Agencies
Sdn Bhd in Kuala Lumpur branch.
4.3.2 Finance
Madam Kok Meng Chow, a Malaysian, aged 54, is the Finance Director of Eastern &
Oriental Berhad (E&O). She was nominated to the Board of Eastern & Oriental Berhad on 11
August 2008 and she is a member of the Risk Management Committee. As a financial manager
of E&O Bhd, it is important to verify the best sources of funds, uses of funds and the control of
funds. This is because all strategic issues have financial implications. Thus, cash must be
43
collected from internal or external sources and allocated for different uses. Besides that, the
flow of funds in the operations of an organization must be monitored.
In 2013 and 2014, Eastern & Oriental Berhad faced a few challenge conditions which are
broad economic slowdown in regional markets, reduced activity with attention focused on the
general election and time to take stock of the Government’s property sector cooling measures.
Although E&O Bhd face a few challenge, but can chalk up revenue of close to half for the
financial year ended 31 March 2014. Thus, this is one of the strengths of E&O Bhd in managing
financial.
According to the annual report 2014, E&O Bhd achieve RM 497.14 million’s revenue in
year ended 31 March 2014. It reflected the initial stages of development of current projects and
preliminary levels of revenue recognition in the property segment. Furthermore, after
incorporating revenue recognised for the jointly-controlled projects which are Villas by-the-sea
bungalows, St Mary Residences and The Mews, E&O Bhd showed that adjusted revenue of RM
590.85 million.
E&O had at the 2013 annual general meeting committed to shareholders to attain a 3
years cumulative profit after tax (PAT) of RM 450 to 500 million for the financial years ending 31
March 2014 to 31 March 2016. The Group is confident that it is on track to fulfil its promise to
stockholders based on the current year’s performance and upcoming launches in the next 12 to
18 months, especially in Penang and Iskandar Johor. Finally, profit after tax (PAT) for the E&O
Bhd stood at RM 119.97 million for the 12 month period ended 31 March 2014.
Besides that, strength of Eastern & Oriental Berhad is strong operating performance.
E&O Bhd showed a strong and powerful operating performance in 2013 during which the
company recorded revenues of RM 605.5 million, with an annual growth of 23.04% and a
compound annual growth rate (CAGR) of 18.76% during 2009 to 2013. The main reason for the
increase in revenue is due to strong performance of the Property Development division.
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According to the annual report 2012 and 2013, the company reported 10.7% increase in
operating income from RM 167.1 million in 2012 to RM 185.0 million in 2013. In addition, it
reported 5.1% increase in net income from RM 123.3 million in 2012 to RM 129.6 million in
2013. Thus, strong operating performance will raise investors’ confidence and improve the
growth prospects of the company.
The weakness of E&O Bhd is limited financial position. Limited financial position of the
company may impact the ability of E&O Bhd to borrow and repay money and also affect the
business operations. The solvency position of E&O may be limited due to significant debt
funding than equity. At the end of year 2013, the debt to equity ratio of the E&O Bhd is 0.6
while the debt to equity ratio is 0.5 in 2012. In addition, at the end of 2013, the company
recorded a 27.6% increase in debts to RM 772.0 million, compared with RM 604.8 million at the
end of the previous year. To sum it up, limited solvency position represents utilization of higher
financial advantage and its comparative weaker equity position, indicating the lower credit
worthiness of the company.
4.3.3 Operations
Eastern & Oriental Berhad (E&O) implements its service objectives, strategies, policies
and programs to in its operations to ensure that its services adhere to their high standards of
meeting and exceeding customer requirements in a high quality manner appropriate to each
market segment. E&O has interests in 3 core business activities namely property development,
hospitality and lifestyle and property investment.
One of the strategy that E&O Bhd used is they build their reputation as a premier luxury
lifestyle property developer with a proven track record for delivering innovative concepts and
high standards of quality. By building this reputation, E&O Bhd is focusing on the quality of the
property they developed. Quality is first and foremen, this is what E&O known for. For an
example, Dua Residency Condominiums which consists of two sleek condominium towers
45
situated in Kuala Lumpur City Centre (KLCC) is one of the E&O Bhd projects which were
completed during in year 2007. The condominiums have the rooftop entertainment deck and
jacuzzi in penthouse triplexes offer unsurpassed views of the Kuala Lumpur skyline. Besides
that, Dua Residency has a lot of facilities available include concierge reception at each tower
lobby, meeting and reading rooms, children’s playground and playroom, gymnasium and sauna
facilities. These show that E&O Bhd is focusing on the quality of the project that they develop.
Besides that, E&O Bhd is well manage the time to complete the project. For instance, in
2003, E&O Bhd was taken over the Seri Tanjung Pinang Phase 1 (STP1), which is first mooted by
the Penang’s second Chief Minister in the year 1982. However, in 2005, E&O Bhd successfully
finish the project STP1 and sold it completely to the purchaser in year 2006. E&O Bhd managed
to take over STP1 and finished the project within 3 years time. These show that E&O Bhd able
to manage their project at an optimum level.
However, the cost of production for E&O Bhd very high because the corporation needs
to maintain the quality of the property it develop. For instance, E&O Bhd added two more
properties to its London portfolio by acquiring vintage office buildings Landmark House and
Thames Tower for a total of RM309million (The Edge Financial Daily, 2015). So, to maintain the
quality of the property, the cost of production for E&O Bhd is very high.
4.3.4 Human Resource Management

HRM objectives, strategies, policies, and programs are designed with the overall goal of
developing, engaging, and retaining talented people while aligning them with corporate values.
According to the annual report E&O Bhd 2014, one of the key elements of the group’s internal
control system is Human Resource Policy. This documented policies and guidelines covering
hiring and termination of employee, training programmers and performance appraisal to
enhance the level of employees’ competency in carrying out their duties and responsibilities.
E&O values, which emphasize ethical behavior, have been communicated to all employees. This
policy will keep the organization in compliance with legislation and provide protection against
46
employment claims. Furthermore, it can also support consistent treatment of staff, fairness and
transparency.
With the purchase of two office buildings in London – the 11 storey Thames Towers and
15-storey Landmark House for RM309million, the E&O deputy managing director Eric Chan Kok
Leong said these projects will provide it a scale that is significant to attract a separate and
dedicated London management team fully focused on building the E&O brand and properties
ahead (Joseph Chin, February 2015).
One of the key performance indicators of E&O Bhd is to become an employer of choice.
The corporation implements the Initiate Talent Management Programme. This program is to
identify strategic competencies across the company, recognize and retain top talents and
identify their development needs and stringent goal setting and performance conversation to
strengthen staff alignment, accountability, empowerment, ownership and performance based
rewards.
Furthermore, E&O Bhd also develop employee value proposition by bringing to life
through a digital platform in order to engage and attract Gen Y talents. E&O digitalize &
decentralize HR processes by revamp staff portal to make it more informative, comprehensive
and interactive. The corporation also set up human resource information system to meet
growing demand for Human Resource to migrate from intuition-to data-driven decision making,
to provide in-depth workforce insights that help achieve business objectives.
There is wide mix of different skill sets and professional diversity of the director
members provides an atmosphere where deliberations draw a wide range of viewpoints which
are at times challenged before a decision is arrived at. The Board acknowledges that a well-
balanced board will benefit the organization in promptly appraising matters and to competently
arrive at decisions which will enhance the performance of the Group (Annual Report, 2014). For
instance, Dato’ Tham Ka Hon, the Managing Director of E&O Property Development Berhad,
47
has the experience and expertise in property development and investment. He saw the highly
profitable completion of Bandar Sri Damansara, when heading the property division at Land &
General Berhad. He also spearheaded the restoration and refurbishment of two historic hotels
on Penang Island – the heritage 129-year old E&O Hotel in George Town and Lone Pine Hotel
along Batu Ferringhi.
E&O identifies their employees as an essential source of information. Employees are

encouraged to be innovative and to make decisions that advance quality goals. People at all
levels have the opportunity to develop and contribute to corporate strategy. Quality of work
life is of utmost importance.
4.3.5 Information Technology (IT)

Information Technology objectives, strategies, policies and programs are designed with
the goal of leverage on Information Technology for effective dissemination of information.
E&O’s Group Strategy and Communication Department provides the avenue for two-way
communication between the company and its shareholders, investor and so on. The company
Information technologies also help E&O to get the data about its customers. For
example, E&O Hotels can collect the customers’ personal data such as name, email address,
and payment details from various sources. By using these data, E&O Hotels can communicate
with their guests regarding their reservation at E&O Hotel, provides the services which guests
are requested or provide a better level service.
Additionally, E&O uses IT to automate the process of producing construction budgets,

provide industry expertise and experience needed to leverage corporate property in new light,
and also the get the knowledge to run and maintain in-house systems. E&O shares the
information between all departments through the information technology. Each department
has created their customers database and centralize information into a shared database used
by all departments.
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4.4 Internal Factor Analysis Summary (IFAS)

Internal Factor Analysis Summary (IFAS Table): Eastern & Oriental Berhad
Internal Factors Weight Rating Weighted Comments
Score
Strengths
 Good brand image and .20 4.0 .80 Strong, need to maintain
reputation
 Large scale of operations .10 3.0 .30 Growing global presence
 New potential products .10 2.5 .25 Variety of promotion
strategy
 Marketing talented expertise .05 1.5 .075 Increased sales
 Strong operating .05 1.0 .05 Financial performance
performance
 Convenience information .15 3.4 .51 Easy to attain information
technology
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Weaknesses
 Limited financial position .15 3.8 .57 Unable to repay load
 Higher cost production .20 3.0 .60 Quality of the property

Table 3: IFAS Table
50
5.0 Analysis of Strategic Factors (SWOT)

5.1 Situational Analysis
Strategic Factor Analysis Summary (SFAS Table): Eastern & Oriental Berhad
Strategic Factors Weight Rating Weighte Comments
Short
Intermediat
Long
d Score
S1 Good brand image and .15 4.0 .60 X Strong, need to

reputation maintain
S2 Convenience information .10 3.4 .34 X X Easy to attain
technology information
W1 Higher cost production .10 3.0 .30 X X Quality of the property
W2 Limited financial position .10 3.8 .38 X X Unable to repay loan
O1 Tropical climate in .10 2.5 .25 X Smooth operation

Malaysia
O2 Increase number of .15 4.0 .60 X X Sales increased
population
T1 Economy slowdown of .10 4.0 .40 X Financial performance
Malaysia
T2 Volatility raw materials .10 3.0 .30 X X Financial performance
prices
Table 4: SFAS Matrix
Table 4 illustrates the Strategic Factor Analysis Summary (SFAS) Matrix for Eastern &
Oriental Berhad. E&O Bhd’s SFAS Matrix total weighted score is a 3. 17. According to Wheelen
and Hunger (2015), the total weighted score for an average firm in an industry is always 3.0.
The strategic factors identified by the SFAS Matrix are imperative factors to consider in strategic
planning.
For the strengths, good brand image and reputation (S1) and convenience information
technology (S2) had a highest weight to the company. This is due to the good brand name and
reputation will attract more customers to buy the property with E&O Bhd and also attract
investors to invest in E&O Bhd. Thus, a good brand name and reputation should be continued
to maintain and improve it. E&O Bhd has a convenience information technology to make the
website visitors easy and fast to find the information about the company clearly and accurate.
51
Moreover, information technologies also help E&O Bhd to get the data about its customers
more easily.
On the other hand, E&O Bhd faced two main weaknesses which are higher cost
production (W1) and limited financial position (W2). It means that E&O Bhd has a higher cost of
production because the corporation needs to maintain the quality of the property it develops.
Limited financial position becomes one of the weaknesses is because limited financial position
of the company may impact the ability of E&O Bhd to borrow and repay money and finally it
will affect the business operations.
In the opportunities, the factors with highest weight are tropical climate (O1) and
increase number of population in Malaysia (O2). This is because the tropical climate is very
important for property companies in the activities of construction. This climate can increase
and smooth the operation of E&O Bhd as compared to the country, which have many natural
disasters happened. In the other hand, the increase number of population can increase sales of
E&O property as there are more buyers and potential buyers.
For the threats, economy slowdown (T1) had marked high weight because it brings
serious impact to the financial performance to E&O Bhd. In fact, the revenue of E&O decreased
about RM 100 million in year 2014 because of this external factor. Besides that, volatility raw
materials prices (T2) also had marked high weight. The reason is it will reduce margins, affecting
the profitability and long-term sustainability of the company.
5.2 Review of Direction

The mission and objectives for the Eastern & Oriental Berhad (E&O) is focus on
providing a highest degree of prestige, reliability and quality to the customers, foster the
relationship with communities, build eco-centric communities and consolidate the civic spirit
through a community food garden. Besides that, the objectives of E&O Bhd want to try to close
affinity with the arts and culture scene. Transparent and updated information to the
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marketplace is also one of the crucial things to E&O Bhd to maintain transparency and
accountability to E&O’s shareholders.
Therefore, in our opinion, the mission of E&O Bhd is very suitable and meets with the
project that E&O Bhd had done it before. This is because the mission of the E&O Bhd is mainly
focus on providing prestige, reliability and quality to other people like customers, stakeholders
and subordinates. For example, to become one of the prestige properties development
company, E&O Bhd emphasizes corporate social responsibility (CSR) such as E&O Bhd run Think
Green community education programme to build eco-centric communities and consolidate the
civic spirit through a community food garden. Thus, it will automatic to make E&O Bhd to
become prestige’s company because most of the people will know more about the E&O Bhd’s
exist. In addition, E&O Bhd has established a new sales galley in Singapore at One Raffles Link in
November 2013, so it is one of the promotion strategies of E&O Bhd to let more people to
know about E&O Bhd and finally increase the prestige of E&O Bhd.
For the word “reliability” in the mission of E&O Bhd, E&O Bhd provides transparent and
updated information to the marketplace through meetings, road shows, newspaper and
briefings. Besides that, E&O Bhd has a complete and clear information’s website and annual
report, so it will get the trust from investors and also stakeholders and finally they will make a
crucial decision to invest in E&O Bhd. With the investment from the investors, E&O Bhd has an
enough fund to run a development property and finally it showed the excellent financial
performance of E&O Bhd. On the other hand, E&O Bhd provide a good quality property to the
customers and it can meet the customers’ satisfaction. With the customers’ satisfaction, it will
help E&O Bhd attract more new customers and lastly E&O Bhd can get a higher profit in selling
property.
Although we think that the mission of the E&O Bhd is good but it needs some
modification. The reason is the mission that set by E&O Bhd is too broad and wide and it makes
the subordinates or employees of E&O Bhd not clear and misunderstands what they need to
53
follow. For example, the word “quality” actually can stand for many aspects such as quality of
product, quality of service and quality of employees. Besides that, the standards of quality do
not clearly stand and also do not defined the best of quality. Thus, it will make the employees
become confuse and do not know how to follow and meet the expectation of E&O Bhd. This
will directly influence the flow of management and the financial performance of E&O Bhd.
Lastly, our opinion is the mission of E&O Bhd should make some modification to make the
mission and objectives become more focus.
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6.0 Strategic Alternatives

6.1 TOWS Matrix
Internal Factors Strengths (S) Weaknesses (W)
S1 Strong brand image W1 Narrow Product Line

S2 Strong Management Team W2 High Cost of Production
S3 Marketing Strategies
S4 Quality
External Factors S5 Technological Infrastructure
Opportunities (O) S-O W-O
O1 International Expansion S3O1 Target newly developed W2O2 Lower operational cost by
O2 Technology Advancements countries to increase market share outsource
O3 Population of the Region
S1,S3O3 Utilize strong branding and marketing W1,W2O1,O2Provide lower cost of
to target the rise in the middle income property for customers by
class establish strategic partners with
vendors
S5O2 Use technological innovations to
to provide business solutions
Threats (T) S-T W-T
T1 Economy Slowdown S1T1,T2 Take local supplier W1T2,T3 Create R&D at local country
T2 Rivalry Among Competitors
T3 Government Policies S1,S3T2 Taget advertising W1T2 Use brand image
Implementation of GST
Table 5: The TOWS Matrix
The TOWS Matrix is a useful tool for in identifying strategic alternatives based on the
Strengths, Weaknesses, Opportunities and Threats. The TOWS matrix identifies many strategic
options for E&O Bhd to consider.
The first alternative for E&O Bhd is to consider to keep the current strategies which
already available and modify it to become better. E&O Bhd would continue to push a high-
performance culture focused on customer satisfaction by meeting distinct customer needs.
They utilize their value which is “Do things differently, always for the better, with sincerity,
integrity and passion” to segment the operating companies so that each company can continue
focus on its specific services and products. The advantage of this option is that E&O has made
extensive efforts in organizing the organization and has policies and procedures place to
55
support the existing strategic. The disadvantage of keeping with the current plan is that the
economy is at a standstill and the financial position of the organization is suffering.
E&O Bhd can also pursue a growth strategy by using their strong brand image to target
newly developed countries to expand internationally, which could help E&O Bhd to increase its
market share in the industry. E&O Bhd could also using their strong brand name and marketing
strategy to target the rise in the middle income class customers. They can also use
technological innovations to provide their business solutions. This horizontal growth strategy
would increase market share, expand the customer base and increase E&O’s global presence.
The cons for this strategy are the required cost of capital for the expansion will initially create a
hardship on the organization as a whole and it is difficult to break into new countries and their
markets.
E&O can also use the cost leadership business strategy for their corporate strategy
alternative. E&O could lower their prices of the property. By charging lesser to their customers,
E&O would be able to gain competitive advantages and gain more market share. The weakness
to this option is that this corporation would have to cut operating costs. For instance, they need
to take local supplier for their raw materials. E&O might not sure that the quality of raw
materials from local supplier whether as good as the foreign supplier. As E&O Bhd used to
provide good quality of products, so, they must do enough research for the local supplier which
they will choose. If they choose the suppliers which do not provide the good quality of raw
materials, this will affect the customers’ perception towards this corporation, customer
retention and long term benefit will not happen in the end. Besides that, they also can provide
lower cost of property for customers by establish strategic partners with vendors if they found
a good one. This will strengthen their position in this industry.
Differentiation business strategy will be the final alternative identified by the TOWS
Matrix. According to Annual Report 2014, E&O purpose is “E&O designs and builds properties
that cater to the lifestyle aspirations of discerning individuals”. E&O could differentiate itself
56
from their competitors by providing luxury estate. However, as the TOWS matrix shows that
E&O need to target the rise in middle income class customers. So, with the cost leadership
strategy, E&O can differentiate itself from other competitor by providing luxury estate and
home with reduction of price. Besides that, E&O also can apply outsourcing strategy which can
lower the operational cost too. The advantage to this strategy is that outsourcing becoming a
major trend and E&O has the tools to serve the distinct needs for businesses wanting to
outsource shipping/logistical needs. The advantage to this differentiation strategy is that E&O
has a strong competitive advantage. The con is that it is risky to move further away from the
original basis for which the company operates. They in part would be entering a new industry.
If the services were not above par, E&O would be risking its strong brand image and could lose
existing and potential customers.
6.2 Recommended Strategy

E&O’s financial position is directly related to the state of the economy. So, the strategy
would like to recommend is the stability strategy – No-change strategy. A no-change strategy is
a decision to do nothing new – means a choice to current operations and policies for the
foreseeable future (Wheelen, 2015). The economy appears to recovering, so it would be in the
best interest to remain focused in the current strategic plan. E&O has been expanding to
increase its global presence such as London in UK, and Singapore. The combination of the
recovering economy, slow expansion, and continued technological innovations should result in
a better financial position in the long-run. Although the implementation of Goods and Service
Tax (GST) is affecting the price of the real estate, but with the strong brand name and the
quality of estate they provided will still be the strength for itself to stand firm in this industry.
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7.1 Implementation
E&O Bhd is remain the no-change strategy to hold their value which is “Do things
differently, always for the better, with sincerity, integrity and passion” as strategy. This is the
best option for E&O Bhd to implement this stability strategy in their stage of corporate
development cycle. “E&O designs and builds properties that cater to the lifestyle aspirations of
discerning individuals”, E&O Bhd make the differentiation of itself from their competitor that to
provide luxury estate to their customers. The implementation and monitoring of the plans
progress starts at the top of the organization and filters down to every employee. The
operating companies have been structured, there are hospitality, food and beverages, retails
and Penangpac, so that each of the group can meet the needs of its distinct customers. The
upper management makes sure that the programs and procedures put in place for the
employees of E&O Bhd to carry out within the various operating companies. Important
programs are maintaining a proper organization structure, operating budgets, standard
operating procedures, sustainability programs, employee performance reviews, customer
service surveys and feedback, and customer service.
E&O Bhd’s Whistle-Blowing Policy drives employees to excel their jobs. In a service
industry, such as E&O Bhd, every employee is a key player in implementing the strategic plan. It
is imperative for E&O Bhd management and strategic planners to continually provide E&O Bhd
employees with the evolving strategic plan’s policies and procedures so that the employees at
every level can make it happen.
58
8.0 Evaluation and control

The final stage of formulation strategic is to evaluate the result of the implementation
strategic and control the strategic. After E&O Bhd decides to maintain their original strategic, it
needs to evaluate the result of the strategic to determine whether the result is same with pre
expected result. Besides, the evaluation activities is needed with the purpose of detect any
errors or problem occur while implement the strategic to ensure that possible immediately
action can be taken to solve the problem. Seem that, E&O Bhd is remain the no-change strategy
to hold their value which is “Do things differently, always for the better, with sincerity, integrity
and passion” as strategy. The next step is that E&O can form a special team to evaluate and
control the activities that held to accomplish the strategic.
E&O BHD can use the benchmarking method to evaluate their company activities and
performance. Through the benchmarking E&O BHD can analyze their companies performance
and services level, thus they can detect existing and potential problem, modify policies and
procedures and create enhancements. Besides, benchmarking known as an essential tool for
E&O BHD to ensure that their company is able to provide superior customer service and
continue to serve and meet their customer’s distinct needs.
E&O BHD needs to create an appropriate measurement and evaluation system to

ensure conformance to the recommended strategic plan. In additional, E&O BHD must be
ensure that the evaluation system that will be taken is suitable to their company strategy and
not to change the strategic to suit to the evaluation system. Evaluation system not only focuses
on the activities and company performance but also focus on the employee performance. For
those who perform under expectation will be given an appropriate training, in contrast for
employee who do well and hint the target of company expectation will be given an appropriate
award either in term of financial award or non-financial award which depends on the situation.
Evaluation performance can be held by using the observation method. There are two types of
the observation method used in community development evaluation which is Direct
Observation and Participant Observation. Direct observation is an evaluation method where
the observer is an unidentified 'fly on the wall' which generally with permission of those being
observed whereas Participant Observation is an evaluation method where the observer takes
59
part in the activity with the participants and asks questions. Employee performance appraisal
can help E&O Bhd to improve workforce spirit, services quality, productivity as well as company
performance.
60
Reference
Chin, J. (2015, February 21). E&O upbeat on new UK properties. The Star Newspaper, p. 7.
Chitra S. Nathan & Kong, L. (2010, October 7). Macaque abducts, bites and drops baby from
roof. The Star Newspaper. Retrieved March 15, 2015, from
http://www.thestar.com.my/story/?file=%2F2010%2F10%2F7%2Fnation%2F7176113
Company Act 1956. (n.d.). Ministry of Corporate Affairs. Retrieved March 28, 2015, from
http://www.mca.gov.in/Ministry/actsbills/pdf/Companies_Act_1956_Part_1.pdf
Eastern & Oriental Berhad. (2015). Retrieved March 10, 2015, from
http://www.easternandoriental.com/the-group-profile.php
Eastern & Oriental Berhad Annual Report 2007. (2007). Annual Report 2007, pp 1-164.
Member Directory. (n.d.). The Cement & Concrete Association of Malaysia. Retrieved March 15,
2015, from http://www.cnca.org.my/dir.html
Ng, A. (2011, May 21). E&O to venture outside Penang and KL. The Star Newspaper. Retrieved
March 15, 2015, from http://www.thestar.com.my/Story/?file=
%2F2011%2F5%2F21%2Fbusiness%2F8727530
World Market Intelligence. (2013). Eastern & Oriental Berhad, pp 1-36.
61

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BPMN 3023 STRATEGIC MANAGEMENT

4.0 Internal Environment...........................................................................................................................37

1.0 Current Situation

E&O is involved in investment, development and management of residential and

The second reportable division is Hospitality division. Hospitality division performs

1.2 Current Performance

Figure 1: Annual Report 2014

1.3 Strategic Posture

2.0 Corporate Governance

membership certificate of recognition from the Institute of Chartered Accountants in Australia.

Datuk Vijeyaratnam a/l V. Thamotharam Pillay, a Malaysian, aged 62, an Independent

Datuk Vijeyaratnam is a Fellow of the Institute of Chartered Accountants in England and

Mr Christopher Martin Boyd, a British citizen with permanent residence in Malaysia,

Encik Kamil Ahmad Merican, a Malaysian, aged 64, a Non-Independent Non-Executive

According to the register of directors’ shareholdings, the interests of directors in office

2.2 Top Management

Sime Darby Nominees Sendirian Berhad

12 HSBC Nominees (Tempatan) Sdn Bhd 11,582,700 1.02

Employees Provident Fund Board

NAME OF DIRECTORS STOCKHOLDINGS

Dato’ Tham Ka Hon - - - -

29 December 2014 Employees Provident Fund Board Disposed by Citigroup

3.0 External Environment

3.1.1 Physical Resources

3.2 Societal Environment

As other societal environment, sociocultural will provide an opportunities as well as

3.3 Task Environment

3.3.1 Rivalry among Existing Firms in the Industry

3.3.2 The Threat of New Entrants

3.3.3 The Threat of Substitute Products or Services

3.3.4 The Bargaining Power of Customers

3.3.5 The Bargaining Power of Suppliers

3.4 External Factor Analysis Summary (EFAS)

 Increase number of .10 4.0 .40 Sales increased

 New alternative products .05 1.5 .075 Less innovation

4.0 Internal Environment

In Kuala Lumpur, E&O's retail component is primarily designed to augment a specific

Audit Committee is responsible to oversight on the Group’s financial reporting, review

Nomination, Remuneration and Scheme Committee is responsible to nominate new

various Board Committees as well as reliance on written confirmations by management. The

4.2 Corporate Culture

4.2.1 Place Making and Community Building Project

4.2.2 Think Green Community Education Program

4.3 Corporate Resources

Figure 2: The Timeline of STP1 and STP2

4.3.4 Human Resource Management

E&O identifies their employees as an essential source of information. Employees are

4.3.5 Information Technology (IT)

Additionally, E&O uses IT to automate the process of producing construction budgets,

4.4 Internal Factor Analysis Summary (IFAS)

 Marketing talented expertise .05 1.5 .075 Increased sales

 Strong operating .05 1.0 .05 Financial performance

Total Scores 1.00 3.155

5.0 Analysis of Strategic Factors (SWOT)

S1 Good brand image and .15 4.0 .60 X Strong, need to

O1 Tropical climate in .10 2.5 .25 X Smooth operation

5.2 Review of Direction