Sime Darby Company Overview
Keywords: sime darby strategic planning
An archetypal mission statement contains the organization’s core belief and values, either for people self-oriented or business related. An effective mission statement should include everything that is highly valued by the organization, such as basic strategy to build good reputation by its employee by treating them fairly, or leadership quality. Some organization processes are working accordingly to achieve the mission statement; mission statement is like a guideline where a company is moving towards success.
Sime Darby is newly developed company in November 2007. The merger between three giant companies, Golden Hope Plantations Berhad, Kumpulan Guthrie Berhad, and Sime Darby Berhad had successfully created a new organization named Sime Darby with a brand new vision and stimulated with a renewed sense of purpose. Sime Darby is a diversified Malaysian multinational company with large workforce of employee. With the three Malaysian major corporations’ experiences in the business world and an unrivalled business heritage, Sime Darby has the confidence to be the leader of global business world in future. Sime Darby had span across over 20 countries with a team of over 100,000 people worldwide, with concept of organizational superiority provides an effective way to implement a company mission statement and achieve its goal.
Sime Darby’s mission statement – making sustainable future real for everyone – has clearly defined its mission to everyone. Sime Darby’s mission statement covered about its employees, customers, and also products. Sime Darby’s mission statement can be defined as a powerful target to achieve as it strive ever onwards to be the top one in the business market, while some other company are satisfied for being among the top tier. One of the core businesses of Sime Darby, Sime Darby Plantation, had been awarded the Roundtable on Sustainable Palm Oil (RSPO) certification. This proved that Sime Darby is committed to sustainable development in its business’s activity and obeys strictly to industry-proven best agriculture practices.
In order to be the leader in business world, Sime Darby has to maintain its quality. The organization allows its employee to make improvement by giving out training frequently to ensure that they are ready to face any unexpected circumstance. Sime Darby provides a wide variety of training intervene to different levels employees to update their knowledge and skills to enable them to handle the current roles or to prepare for taking higher responsibilities. Sime Darby formal and internally training events not only encourage its employees to maintain the quality of working, it also enabling them to acquire additional knowledge and enhance their network.
Sime Darby has a clear mission, and it did achieve it. Sime Darby should include another long-term goal to have a more successful and profitable future.
(444 words)Corporate Culture
How does Sime Darby run its organization? There are four dominant values that Sime Darby has been practicing since the day it commence: Respect and Responsibility, Excellence, Enterprising, and Integrity. The organization’s vision has promise to build a better tomorrow, from today.
Sime Darby has once face problems relating to employees dissatisfied with the decision of merging the three major companies – Sime Darby Bhd, Golden Hope Plantations Bhd, and Kumpulan Guthrie Bhd – submitted their resignation letter. The newly formed organization with the name Synergy Drive wanted to create a new image but the idea seems to be failed, Sime Darby reverted to its old name, Sime Darby. Being a government linked company, public has high expectation from Sime Darby of enhancing the allocation of resources in a national level. Sime Darby has to plan strategically to access its people, the primary resource.
Sime Darby reserves promotion opportunity for the lower levels’ employees. The organization planned the mapping of leaderships’ evaluation. The idea of bringing in young employees, and let them get promoted in the organization when they are in 30s. Employees who worked at least 10 years in Sime Darby are familiar enough with the organization will absolutely do better than someone who just enter the organization. Besides that, this is a fair treatment for the employees. Expectation to exhibit precisely or analyse in detail from the employees can be achieved as Sime Darby has made an effort trying to stay its employees.
Sime Darby will also invite some expert to work in team for new projects. For example, Sime darby brings in experts in the submarine field to finish up the submarine cable project. However, when one of the core businesses has experts ready to start any new project, Sime Darby will leave the project to the experts. New blood will be brought in at the next level. Sime Darby CEO, Datuk Seri Ahmad Zubir Murshid, said his idea was `for us to maximise the utilisation of all the people we have’.
Respect and Responsibility, one of the four values, shows the internal social interaction among employees. Employees are given the chance to share knowledge, and responsibility while having training for self-improvement in order to give better services. Responsibility to take ownership and accountably for the business decisions and results is essential to each employee as well. At Sime Darby, employees are treated fairly, in a way that people would like to be treated.
Excellence, the main focus among the four values, represents the organization’s ambitions. The whole organization is working towards this ultimate goal that drives the organization to achieve providing best-in-class standards products or services. Sime Darby has to exceed the expectations from all stakeholders and maintain globally competitive.
Enterprising and Integrity, the last two prominent values; Sime Darby must be innovative with speed and promised to have honesty is to build customer loyalty. Calculated risks must be taken on order to reach the value.
(491 words)
Corporate Governance
Sime Darby’s annual report for the year 2009 stated that the company has 13 directors on the board. The board has increased two members since the year 2007 from 11 directors. In the year 2008, an independent non-executive was promoted to senior independent non-executive director.
The most important role of non-executive directors is to contribute strategy planning and set the company’s goal. Besides that, non-executive directors are there to examine the performance of management as well; they got the right, the power to change the whole management team if they are not doing well. The annual report is prepared by one the big four auditor, the Pricewaterhouse Coopers (AF: 1146) Chartered Accountants. With the experiences and popularity of the Pricewaterhouse Cooper, the accuracy and timely reporting of trustworthy casts no doubt. Besides the directors profile, the annual report included a brief introduction of every member of management as well.
Sime Darby has confirmed to set up a taskforce which is an investigation on the hydro-electric project. Sime Darby’s energy and utilities division operation had proposed an investment on a project in Qatar and civil works on the Bakun hydro-electric dam. The project was invested more than RM1 billion during the recession period. Sime Darby will make all relevant disclosure once the investigation is completed. Sime Darby had asked its chief to leave the company after the confirmation of book losses of almost RM 1billion. Executive Vice-president of the plantation division, Datuk Azhar Abdul Hamid is taking the responsibility of the organization’s chief executive officer temporary while the nomination committee is looking for someone who is suitable to bear the responsibility.
CIMB regional research analyst Ivy Ng said: “Sime Darby will miss its key performance indicator target and there are concerns on its financial performance in the second half of the year”. There are not only one failure project that causes such a large amount of losses but four: Bulhanine and Maydan Mahzam project with Qatar Petroleum, Maersk Oil Qatar (MOQ) project, building of vessels for the MOQ project, and the Bakun hydroelectric dam project. RM 200M overrun for Bulhanine and Maydan Mahzam project with Qatar Petroleum, RM159M for Maersk Oil Qatar (MOQ) project, RM155M for further investment on MOQ project, and the most overrun cost RM450M for the Bakun hydroelectric dam project.
Sime Darby suspect that these losses caused is a fraud as no leader will invest in another three projects when there are problems occur in the first project. Although report had submitted, investigation has not stopped yet. Actions on long term structural problems will be identified as well.
Sime Darby has to find more capable assistant to support its management team, and proper procedures have to be done precisely. The chief executive officer had been sacked for the reason of fail in providing a satisfied performance which can make a correct decision.
(476 words)
Social Responsibility
Sime Darby property division implemented projects that will add value to each of its developments. Facilities like mini park and jogging paths can be found in every Sime Darby property’s townships, at least one, to encourage the communities to practice a healthy lifestyle. Sime Darby did not forget its mission – developing sustainable future – inculcate the recycling mindset of the communities by setting a recycling centre in the townships. On-going maintenances will be taken over by the Alam Flora Sdn Bhd once the centre is done. To improve safety awareness, Sime Darby recently built a state-of-art police station for one of its Damansara development and installed 22 closed-circuit televisions (CCTV). Since there are many crime incidents occurred at Subang Jaya, Selangor, Sime Darby had provided patrol units for its Subang townships. Sime Darby does consider the low and middle low income earner position, it offer variety choices of residence and apartment in a lower cost. Facilities like schools libraries will build nearby for the convenience of the communities.
Sime Darby involves in the contribution in developing the education for the young generation. It has commenced a total of 22 adopted schools in Kedah, Perlis, Penang, Kelantan and Perak. Education must not be excluded in a young Malaysian’s life; Sime Darby gives out the largest support to the students, teachers, parents, and the community. Besides that, Sime Darby encourages and recognizes an individual’s achievements in the field of science and technology. Trophy and cash rewards will be given to the best Science and Technology student from University Technology MARA (UiTM) every year. In July 2008, Yayasan Sime Darby was set up. Sime Darby offer scholarships for students who deserve it.
Sime Darby must galvanize, set the pace, and guide to fulfill the criteria to be an effective leader. Therefore, Sime Darby understands the importance of a leader existence in any level of the society, including the government. Sime Darby funds the senior government officials to attend the Wolfson Leadership Programme to improve their leadership skills. Since leadership skills are so important, the next generation leader must be successfully nurtured as well. Sime Darby contributed to the Perdana Leadership Foundation where it nurtures young leaders.
Other than that, Sime Darby collaborates with the Lembaga Urusan Tabung Haji (LUTH), and Jabatan Kebajikan Masyarakat Malaysia in sponsoring the elderly citizens. Sime Darby and its partners had make an effort to help in the establishment of a Snoezelen Therapy Room for the Kiwanis Special Children Centre in Bandar Utama, Petaling Jaya. Children having learning disorders or disability can enter the centre to have special attention in being educated. When natural disaster came to Malaysia, Sime Darby forked out a large amount of donation to the National Disaster Relief Fund to help the victims.
Sime Darby did not forget the roots; it did contribute to the society and gave a positive benchmark in the social responsibility. Sime Darby has qualified to be the leader in the business world without neglecting the social responsibility.
(498 words)
Financial Performance
Sime Darby
2007 (RM ‘0000)
2008 (RM ‘0000)
2009 (RM ‘0000)
Sales
268.3
4506.8
1281.8
Operating profit (EBIT)
115.7
2647.4
1368.9
Interest Expenses
63.4
97.9
55
Net Income
89.9
1804.6
1409.5
Cash
290
293.9
300.5
Current Assets
314.3
1420.7
1192.6
Current Liabilities
69.8
36.7
1867.8
Total Debts
1069.8
1036.7
1867.8
Total Equity
5431.5
12185.2
11109.8
Net Tangible Assets
5431.5
12185.2
11109.8
Cash Flow from Operations
90.3
1804.6
1409.5
Cash Flow from Investing
234.6
-288.6
113.2
Cash Flow from Financing
-320.6
-1797.7
-1516.2
Sime Darby has net income of RM89.9M at the end of the accounting year of 2007. Nonetheless, its total debts to pay off are RM1069.8M, which is very large amount that even the total current assets cannot cover. The cash flow from investing is a positive amount of RM234.6M, proving that the management had made the correct decision-making on investment. At the end of the accounting year of 2008, Sime Darby has improved a lot of its net income earned, RM1804.6M, and the total debt to pay off had decreased. However, cash flow from investing is in negative amount of RM288.6M. This could be the impact of recession period, when people are thriftier. From the annual report for the year 2009, net income has decreased to RM 1409.5. It is the time to pay of borrowings, which change the borrowings amount RM1000M from non-current liabilities to current liabilities. It is a good sign that the cash flow from investing had change back to its normal positive amount. Among the three years, year 2008 is the most profitable year. Sime Darby’s profit may grow in year 2010 and 2011, but the cash flow from investment will not increase, in contrast, it will decrease drastically because of the four investment made. Since the organization had changed its chief executive officer, the next one shall do his/her best for the first few years to prove his/her capability.
(234 words)
Share Price Performance
Daily Share Price Movement of Sime Darby
Date
Open
High
Low
Close
Volume
Adj. Close*
Apr 30, 2010
8.75
8.8
8.7
8.78
3,457,200
8.78
Apr 29, 2010
8.76
8.77
8.75
8.75
3,142,200
8.75
Apr 28, 2010
8.7
8.8
8.7
8.76
4,268,500
8.76
Apr 27, 2010
8.75
8.79
8.72
8.78
6,969,200
8.78
Apr 26, 2010
8.74
8.8
8.74
8.78
2,731,600
8.78
Apr 23, 2010
8.9
8.9
8.79
8.81
3,293,200
8.81
Apr 22, 2010
8.85
8.9
8.7
8.9
2,938,500
8.9
Apr 21, 2010
8.8
8.86
8.8
8.85
3,480,900
8.85
Apr 20, 2010
8.75
8.8
8.75
8.8
1,633,600
8.8
Apr 19, 2010
8.69
8.73
8.64
8.73
4,394,800
8.73
Apr 16, 2010
8.71
8.73
8.68
8.69
4,576,600
8.69
Apr 15, 2010
8.84
8.85
8.7
8.72
2,105,700
8.72
Apr 14, 2010
8.79
8.86
8.76
8.76
4,433,200
8.76
Apr 13, 2010
8.79
8.8
8.76
8.79
3,943,200
8.79
Apr 12, 2010
8.8
8.82
8.77
8.79
4,940,100
8.79
Apr 9, 2010
8.72
8.8
8.65
8.78
2,173,500
8.78
Apr 8, 2010
8.77
8.77
8.69
8.74
1,983,500
8.74
Apr 7, 2010
8.81
8.81
8.75
8.78
7,209,500
8.78
Apr 6, 2010
8.75
8.77
8.74
8.76
3,165,500
8.76
Apr 5, 2010
8.78
8.78
8.74
8.75
3,312,300
8.75
Apr 2, 2010
8.67
8.78
8.67
8.75
2,935,000
8.75
Apr 1, 2010
8.7
8.85
8.7
8.7
5,314,000
8.7
Daily Movement of the Kuala Lumpur Composite Index
Date
Closing
Date
Closing
Apr 30, 2010
1346.78
Apr 15, 2010
1338.83
Apr 29, 2010
1335.86
Apr 14, 2010
1335.89
Apr 28, 2010
1333.17
Apr 13, 2010
1334.52
Apr 27, 2010
1339.72
Apr 12, 2010
1339.61
Apr 26, 2010
1340.07
Apr 9, 2010
1333.98
Apr 23, 2010
1336.78
Apr 8, 2010
1332.93
Apr 22, 2010
1337.01
Apr 7, 2010
1345.09
Apr 21, 2010
1333.64
Apr 6, 2010
1344.37
Apr 20, 2010
1335.9
Apr 5, 2010
1341.75
Apr 19, 2010
1326.67
Apr 2, 2010
1335.94
Apr 16, 2010
1332.77
Apr 1, 2010
1329.84
On 1st of April, Sime Darby’s share cost 8.70, it increased till 8.78, 0.08 more. Sime Darby’s share price increased during the early April till 7th of April, 8.78. As for the Kuala Lumpur Composite Index (KLCI), it increased rapidly from 1329.84 till 1345.09. On 8th of April, Sime Darby’s share price dropped 0.04 to reach 8.74; KLCI has dropped suddenly from 1345.09 to 1332.93. Luckily the share price has gone higher on the 8th of April and continues increased very little till the 13th of April and start falling again to the lowest value in the month on the 16th of April at 8.69. KLCI increased quite high till the 12th of April at 1339.61. On the 13th of April, KLCI is at 1334.52, but it rose on 14th and 15th of April till 1338.83. On the 16th, KLCI also start dropped to the lowest value of 1326.67 on the 19th of April. Sime Darby share price then increased rapidly to the highest value in the month at 8.9 on the 22nd of April. It starts falling again till 29th of April and at last has a better value on the 30th at 8.78. KLCI lastly increased to its maximum value in the month at 1346.78 on the 30th of April.
(212 words)
Environmental Analysis
An analysis can be done using PESTL analysis (or called PEST analysis) to find out the external environment that may influence the company profitability to develop business strategy. P stands for Political, E stands for Economics, S stands for Social, T stands for Technology, and L stands for Legal. With the help of PESTL analysis, Manager of the company may be able to find out accurate information about competitors.
Political forces can combine with Legal forces which involve rules and regulations set by government, or all kinds of law. For Sime Darby, the Bakun hydro-electric dam had made great losses which endanger the shareholders’ dividends. The manager that decides to invest in the project had been asked to take leave as his contract will expired soon. According to the company law, the board of directors has the authority to change the management if they are not doing their job properly and satisfy the shareholder.
Economic forces include full employment, price stability, and economic growth. Sime Darby sends its employee for training to improve their working quality and know better about their job. The Organization control is formally managed in an organized way as well. Sime Darby uses operational management which it allocates a bureaucracy in every division. For example, Sime Darby plantation’s head is Azhar Abdul Hamid is temporary taking over the Group’s chief executive officer. There is a bureaucracy organization under the group’s management in each division to enhance the management control of the group.
Social forces have caused no threat to Sime Darby. Sime Darby plantation division promotes the project of offering added value houses will be the competitive advantage. For instance, the public security is very bad recently; Sime Darby offers houses with patrol units provided. Facilities like schools or libraries are nearby can attract more residents as it is very convenience. Moreover, Sime Darby is offering lower price houses for low and middle low income earner.
Lastly, the technology forces include new development, or speed of technology advance. Sime Darby is a large organization that merges three major Malaysian companies. With the experiences of three companies, Sime Darby has the capability to adapt economic changes very quickly. Its employees have no problem dealing with advance technology with the regular training given. (377 words)
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