In today's highly competitive business environment, it's crucial for new businesses to engage in a proper planning and management process. "New businesses fail usually due to poor planning and management, not because of the idea for the business." (Peter Drucker, internationally renowned management expert).

Strategic planning is a process of clearly defining an organization's goals and how to reach those goals within a specified time frame. It focuses on the entire organization. According to Bartol & Martin, strategic planning is normally targeted for a period of 3 to 5 years.

To convert the organizational goals into actions, strategic management is applied.

Strategic management is defined by Bartol & Martin as a process applied by managers to formulate and implement strategies to achieve long term goals. Five steps are involved in a strategic management process. The flow of the entire process is as below :

Source : Modern Management Pg.179, Samuel C.Certo & S.Trevis Certo, 10E, Pearson

Pearl Rubber Tiles Sdn Bhd

Pearl Rubber Tiles Sdn Bhd is a new manufacturing organization in Malaysia. It's business nature is manufacturing of raw natural rubber into Rubber Tiles. Rubber Tiles is one of the most advanced and modern flooring systems developed currently. One of its main features is that it provides protection against injury. Rubber tiles are durable, safe and comfortable. These are only some of the many unique features of rubber tiles.

Pearl Rubber Tiles Sdn Bhd plans to export rubber tiles into the EU market considering the usage and demand of the product in the European nation. In order for the organization to be sucessfull in it's business a comprehensive strategic planning and management has to be carried out. To start off, Pearl Rubber Tiles Sdn Bhd conducts an analysis on it's environmental conditions.

Environmental Analysis

According to Samuel C & Trevis C, the environmental analysis is done to identify environmental factors that can influence the organizational operations. This analysis will help the management team of Pearl Rubber Tiles Sdn Bhd to be aware of its surroundings thus increase the chances that the strategies developed will reflect the organizational environment. The organization's study includes its external and internal environments. According to Arie de Geis (1997), external environment is the key determinant of the success or failure of the organization. External environments are divided into general environment and operating environment.

General Environment:

a) Economy

Malaysia is the world's 3rd largest producer of natural rubber. Malaysia is also one of the leading suppliers of rubber based products to meet the world's demand. Referring to Table 1, in 2006 alone Malaysia produced 1.259 million tonnes of natural rubber and exported 90% of it. The table also shows an increase in the production and export of natural rubber over the past 7 years. This proves the sufficient supply of natural rubber in Malaysia. The overall Malaysian economy has also been showing steady growth over the years. Our inflation rate is under control by the government at an average of 3.8%.

Table 1: Malaysia's Rubber Position (Tonnes), 2000 - 2006

2000

2001

2002

2003

2004

2005

2006

Production of NR

927,608

882,067

889,832

985,647

,168,735

,126,023

,259,631

Export of NR

977,978

820,854

886,873

945,889

,106,086

,127,947

,134,351

Consumption of NR

363,715

400,888

407,884

420,775

402,769

386,472

376,345

Source: International Rubber Study Group (IRSG)

b) Technology

The rubber industry in Malaysia has grown and improved tremendously over the past 20 years. The Rubber Research Institute of Malaysia (RRIM) and Malaysia Rubber Board (MRB) are among the research and development (R&D) centres responsible for the technology growth within the rubber industry. The government is also playing its part to further enhance the rubber technology. In the Second Industrial Master Plan (IMP2), 2000-2005, R&D was carried out to develop ways resulting in an increase of efficiency in manufacturing processes and reduce cost. During the Third Industrial Master Plan (IMP3), the government has strategies of developing Malaysia as a regional centre for the testing and certification of rubber products, as well as to upgrade the existing technology especially in process automation and improving the skills of the workforce.

c) Socio-culture

According to Certo & Certo, two important values to look into under socio-culture are demographics and social values. Demographics are basically about the number of people in a population and the income distribution. These factors can influence the sales of a product within a population depending on how well the product is received by the people. Social values touch on aspects such as the norms, behaviours, beliefs of a society. It is important to study the overall socio-culture in the environment as it gives an impact on the sales of the product. Pearl Rubber Tiles Sdn Bhd export market is targeted to EU nations. Europeans are very much into environmental goods. With the increase awareness on the environment, EU has established the European Eco-Labelling Scheme favouring natural rubber products. This is a great advantage for Pearl Rubber Tiles Sdn Bhd as the organization in focused on using natural rubber as the raw material for the rubber tiles. Rubber tiles help ease fatigue and protects against injury. Its resilient nature helps absorb shock and reduce injury and physical harm. The market for rubber tiles is big in the EU as these tiles are suitable for golf courses, club houses, horse racing courses, jogging tracks, recreation parks, pedestrian paths, hospitals, nursing homes, school and kindergartens. The many shapes and colour would be an added value for the children's playground. Europeans and very health conscious and these tiles are environmental as well as user friendly product for all.
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d) Political and Legal

Politically Malaysia is a stable country with no riots and other major political issues. Our government encourages entrepreneurs to venture into the rubber industry. There are many multinational companies investing in the rubber based industry. Malaysian Industrial Development Authority (MIDA) provides tax incentives by providing tax waiver for a period of number of years. Small and medium scale organizations are funded by Malaysian Rubber Export Promotion Council (MREPC) to enable them expend businesses overseas.

Operating Environment:

a) Competitors

Although Malaysia is the third largest natural rubber producer in the ...

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