Friday, July 23, 2010

Of Conglomerates...

A few weeks ago, while studying for my CFM and CA examinations, I remember watching a CNBC special about the Walmart empire, which was directly followed by the story of the Coca-Cola company. The feature programmes showcased a brief history of how these companies started out and where they were, currently are and also where they are heading towards. It's amazing how these companies started out as small startups and in the span of a couple of decades mature into conglomerates with diversified business interests in markets all over the globe!

The thing that stuck in my mind about Walmart was how the management motivated their thousands of staff through team cheers (although a little lame sounding, but even the senior management take part in these cheers!) and annual rallies where they treat their dedicated staff to celebrity performances as well as reports on the company's performance in the past year. I can't remember whether shareholders could also attend these rallies. Well, (forgive me for being ignorant, but) I never knew companies could create this sense of somewhat 'cult' following among their staff as a means of motivation exercises. It was an eye-opener as to how strategic management could be so innovative and 'fun' (as in playing with people's minds).

The above are the conclusions I derived from the TV programme. As for my personal visit to Walmart stores in the US last month, I found the shopping experience to be overwhelming (like a food wonderland) - there were just too many choices for you to make! If you wanted to buy bread, you'd have to choose from a whole isle-full of breads of different brands (and these were not the store brand choices - those were placed somewhere nearer the entrance). It is no wonder with so much food varieties and brands available on the shelves, that it is easy for our eyes to become greedy - buying more than we need and thus consuming (eating) more than we are supposed to! In a way, I'm thankful for the lesser choices we have in our hypermarkets here - I don't get tempted and overspend whenever buying groceries.

However, I'm sure Malaysia isn't completely safe from the Walmart invasion - it's probably just a matter of time before we would have one on our very own shores. They could be driving around in their unlabelled vans conducting market surveys of potential locations (as seen in the TV special). After all, the next conglomerate I'll be addressing below has already made themselves quite comfortable 5 minutes drive from my office (and is apparently quite a favourite with the local homemakers!)

What I noticed when I reached the UK was Tesco here, Tesco there and Tesco everywhere!
The Tesco I knew was a hypermarket with increasing number of stores around the prime areas in Klang Valley. Yes, I knew it was a UK company and that they have a pretty good selection of store brand products, which were reasonably priced and (the best part) "Made in the UK." I remember my first time walking into a local Tesco store and not being Wow-ed. This was because at that time, we'd already had exposure to hypermarkets such as the early-comer (and now, I think, defunct) Makro cash & carry wholesaler and Carrefour. Later on, local retailers Giant and Mydin adopted the hypermarket concept too.

Back to the Tesco I saw in UK. In Liverpool alone, I was able to see many Tesco stores of different sizes (Extra, Express etc.), Tesco petrol stations, hear about Tesco's 1-year contract mobile phone plans (which you can buy the phone bundled with the mobile plan off their shelves), Tesco insurance (which you can also buy from their shelves in their stores) and apparently there is a Tesco bank (I can't remember whether I saw this). With the 5-letter word bombarding me at every corner, it forced me to gasp in amazement at how diversified this conglomerate is! Amazing! Another name which I encountered quite often is Sainsbury (Tesco's competitor). I know for sure that they offer financial loan services because we parked right in front of their postered wall while waiting for aunty to hop in and grab some groceries.

All this got me thinking... do we have such widely diversified local companies here in Malaysia? Apparently we do - but their diversification isn't so "in your face" (I think, probably due to some government restrictions on certain industries like banking & finance and telco). Zhulian is one of such companies. I've seen numerous billboards along interstate highways with simple messages like "Zhulian thanks you" and had always wondered what did they deal in (or sell). After some time, I found out that it was a multilevel marketing company. It started out with costume jewellery and then diversified into nutraceuticals. The group has their own manufacturing and R&D facilities and has a wholly-owned subsidiary handling its printing needs, and another for its logistics, and another to handle the Group's in-house cafeteria. Seems like they are pretty much self-sufficient (I don't know about their sourcing of raw materials though).

There are many other local conglomerates with a well-diversified portfolio of business interests - such as UMW, Sime Darby etc. but I don't have all the time in the world to read up on every one of these companies. So here ends this post!

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