Porter 5 Forces for Classic Scenic Berhad
Essay Preview: Porter 5 Forces for Classic Scenic Berhad
Report this essay
Porter 5 Forces for Classic Scenic BerhadEntryThe entry into the market is governed by Promotion of Investment Act 1986 which revised to include wood based product in 2012Tax incentive provided for R&D for wood based industry under PIA Act 1986Companies with Shareholder of RM2.5 Million and Above or has 75 fulltime employees can register to obtain their licenses under the Industrial Coordination Act 1975A lot of Incentives given by government to join this industry in MalaysiaGlobal market demand is driven primarily by North America given the popularity of wooden picture frames in American culture, which is not seen in many parts of the world. As the US market is considered a mature market, the industry does not attract too many new entrants as it is deemed too small and occupying a low growth environment
Power of Input SuppliersSupplier are Rubber Estate Holder in Malaysia. Their consent to fall trees aged 20 years and above unable to produce rubber is sufficient to supply the rubberwood for the wood industryPrice of rubber wood are lower compared to other woods in the marketMore Mills are opening up for Wood in Malaysia but rubber plantations are reducing. Old rubber trees are being fallen for Palm Oil. Supply may be low in the future and affect pricingOther inputs besides rubber can be used thus besides rubber wood according to CIMB report CSB also uses other 4-5 types tropical hardwood available in MalaysiaCost of tropical hardwood increasing yearly and only 26% of CSB earnings was used to buy TimberPower of BuyersBuyer for CSB products are mainly overseas at US. US customers do like to use wood framesCSB’s average selling price of its picture frames Is about US$0.65 per linear ft. Its customers sell the same product to the endconsumer at 10x higher ~US$6.50 per linear ftIndustry Rivalry4-5 large scale global players in the wooden picture moulding industry. There are two in Malaysia (CSB and E-Wood Moulding), two in Indonesia and one in China. During the global financial crisis many of its North American competitors went bankrupton account of their high cost basesIn recent years, China has also lost its competitive edge given its high labour costs