3

Strategic Profile and Case Analysis Purpose

Situation AnalysisA.General Environment AnalysisB.Industry AnalysisC.Competitor AnalysisD.Internal Analysis

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4 Identification of Environmental Opportunities and Threats and Firm Strengths and Weaknesses (SWOT Analysis)

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CONTENTS

Strategy Formulation

1 Company Overview

Financial Performance & News

~ KONSORTIUM TRANSNASIONAL BERHAD (KTB) made its debut on Bursa Malaysia on June 15, 2007 engages primarily in the bus transportation system comprising stage and express bus operations within Peninsular Malaysia.

~ The stage and express bus operations provide the most extensive coverage throughout Peninsular Malaysia, covering almost all major cities and towns as well as Singapore.

~ The nationwide network is serviced by a fleet of more than 1,500 buses that covers more than 250 routes, generating more than 1,000 trips daily and this translates to around 60 million passengers a year.

~ KTB commands the largest market share, with Transnasional being the leader in the express bus industry in Peninsular Malaysia. Besides Transnasional, KTB also operates Cityliner stage buses, Plusliner economy express buses and luxury bus services under the Nice brand.

Ref: Annual Report 2010

Ref: Annual Report 2010

A) General Environment Analysis (External Environment Analysis)

•Public transport around the world has seen a surge in popularity in response to high fuel prices and growing concerns about climate change .•In the 10 years to 2016, industry value-added is forecast to increase at an average annual rate of 1.9%, while the US economy is expected to grow by 2.0%.

2. INDUSTRY

3. COMPETITORSANI EXPRESS /

MARALINERTRANSTAR

ECONOM

I

C

SOCIOCULTURAL

GLO

BA

L

TECHNOLO

GY

POLITICAL/LEGAL

DEM

OGRAPHI

C

PHYSICAL

• 55 mill passenger annually• 1,500 buses - cover 234 routes - 5,200 trips daily.• 170 ticketing agents, include Petronas Mesra Stores has been appointed for greater accessibility

The largest operator of public transportation in Malaysia

* Every $1 invested in public transportation projects generates approximately $6 in local economic activity.* Every $1.25 billion investment in the nation’s transportation infrastructure supports approximately 35,000 jobs.(www.publictransport.org)• E-ticketing

• NGV buses.• Skyview buses introduced in 2007

• SPAD• Government Initiatives and subsidy.

• Express Buses• Stage Buses

1. GENERAL

PORTER’S 5FORCES

B) Industry Analysis

HIGH

HIGH

HIGHLOW

HIGH

• new comer for profitable trip• strategic alliance travel agent & local co.

• Fuel prices uncertainty - Petronas• Agent• Terminal owner• Travel agent• High maintenance cost/spare parts/ labour charges• Bus manufacturer

• Individual Customer• Organizational Customers• Discount and early bird purchases offered by other bus operators

• Seasonal express bus• Train efficiency• Other cheaper & faster mode of transportation i.e. AirAsia

• Sani Express• Others Competitors

C) Competitor Analysis

• As a general rule, a firm enters the market only if it can earn positive profits. When entry happens on a significant scale, it is expected that the incumbent reacts.

• All operators face the same costs;• All operators and passengers have complete information about services and

fares;• Operators have information about demand;• Each passenger has a preferred departure time but is indifferent between

backwards and forward rescheduling;• Traffic conditions are such that journey times are the same throughout the

day;• Departure times and fares of other operators are fixed.

D) Internal Analysis

• Cross-marketing partnership•Joint-ventures

• Replaced Corporate Web Portal• Develop Intranet Portal• Virtualization of It services• Partnership with Telco

•differentiated by size and range of products, and are customized to specific segments.

• Agency Provident Fund – Loyalty Agents•Continuous Training• Reenergizing Reward Project

•Innovation Product• R&D Investment• Restructuring (myCare / myDesk)

•Rebranding•Increased Company’s value & Brand

•Service offering and, unique distribution and delivery systems

Strength

•E Ticketing•1,500 buses•More than 200 routes•Lower fatality & accidents rates comparing with other competitors – Goodwill

Weaknesses

•High operating cost•Lack of spare part for maintenance•Low volume for certain routes

Opportunities

•Government support•NGV subsidy•Customers loyalty•Increase of population in medium income

Threat

•Gas price•Unauthority ticket seller•High quality competitors seat•Transport systems have significant impacts on the environment, 20% and 25% of worls energy consumption and carbon dioxideemissions

Collaboration with government Collaboration with travel agent Fully utilised customers during trip Improve advertising and marketing Strategic alliances with identify restaurant Diversify business activity – Hotel (Sani Express having own

hotel) Promote driver’s efficiency, bus safety (In the transportation

industry, drivers play an important role as the key personnel in delivering the products or passengers. They are in contact directly with the customers. Without them, bus operations will grind to a halt and this will affect the whole transportation system).

Customers loyalty program Partnering with other courier agencies – letter, small parcel, etc.

• Loss since 2009• No dividend has been paid since 2009. • FYE 31 December 2010, the Group incurred net losses of

RM31,140,000 and as at that date, the Group’s current liabilities exceeded its current assets by RM127,728,000. (Annual Report 2010)

• Short-term solution: suspended their Cityliner, make Residents of Taman Sentosa, a densely populated housing area here, staged a protest against KTB for halting its Cityliner bus service in Selangor. (The Star online, 3rd January 2012)

• Long-term solution: important that all bus operators sit down together and work out a strategic plan for the future. (The Star online, 14th Dec 2011)

Financial Highlights

Sales RM 264,506,000 Revenue/Share 0.83

Loss RM 31,140,000 Earnings/Share -0.09

Net Profit Margin

-11.87% Book Value/Share

0.36

Return on Equity

-24.19% Dividend Rate No dividend paid

Debt/Equity Ratio

1.30 Payout Ratio 0

Cost Leadership Differentiation

Focused Cost Leadership

Focused Differentiation

Integrated Cost Leadership /

Differentiation

Cost Uniqueness

Broadtarget

Narrowtarget

CompetitiveScope

Competitive Advantage

Ancillary business• Plusliner Travel & Tour• Mobile advertising services for transport

operations Bus division

• Stage and Express• Many routes

Quality• Products• Excellent customer service

Focusing on differentiation strategy, whereby the integrated set of action taken into consideration to produce services, must be at an acceptable cost, that customers perceive as being different in ways that are important to them.

To work together with one or more competitors to gain advantage against other competitors.

KTB to get governments fund or subsidy to maintain the operational cost.