1.0 EXECUTIVE SUMMARY

Palm Haul Sdn Bhd (PHSB) was a small and medium sized enterprise in the crude

palm oil (CPO) transportation business located in Taiping, Perak and was established

in 2002. Transporting crude palm oil is a nice market in the industry and pays a high

gross profit margin between 35% - 45% generally. However, Palm Haul Sdn Bhd also

faces challenges due to rising compensation over CPO shortfall and low operating

margins, high oil pilferage activities, high driver record of absenteeism and high cost

of maintenance.

Our primary suggestions revolve around two main issues which is critical to Palm

Haul Sdn Bhd as below:

1. Customer complaint over bad CPO quality

It is vital for an organization to avoid customer complaints. This is a major issue as it

will tarnish the organization's image at first instance. In this scenario, the major client

of PHSB, that is, Oilene Refineries Sdn Bhd made a direct complaint to Palm Haul

Sdn Bhd owner, that is, Datuk S. Najeed. The complaint was regarding the quality of

crude palm oil (CPO) delivered by Palm Haul Sdn Bhd. Deterioration in quality

subsequently have a negative impact on Oilene Refineries Sdn Bhd sales as customers

orders cannot be fulfilled. The significance of this situation to Palm Haul Sdn Bhd is

losing a major customer. If these problems are not being cured, Oilene Refineries Sdn

Bhd may not renew its contract with Palm Haul Sdn Bhd. This will lead to a

significant sales drop in coming years.

2. Low quarterly profit reported

Palm Haul Sdn Bhd first quarter of 2009’s financial report showed a significant

decline in profit by 300% although remaining year end period with 3 months. Datuk

S. Najeed shocked and need drastic solution to overcome high cost issues.

Compensation cot should not arise as it is avoidable cost. Other areas to be looked in

are spare parts, tyres and tube, petrol as well as upkeep and maintenance. This five

parts contribute nearly 60% more compared to last year end results.

2.0 SWOT ANALYSIS

2.1 INTERNAL ENVIRONMENT

2.1.1 STRENGTHS

a. Sustainable player in the industry

Having 80 fleet tankers out of 1,500 fleet tankers in this country were equal to 5% of

this market segment. It has been 7 years since operation and has overcome 2007

global financial crisis where during that time, many companies were forced to

withdraw from their business.

b. Strong connection

Founder of Palm Haul Sdn Bhd (PHSB), Datuk S. Najeed was a retired chief engineer

from the Ministry of Transport. Therefore, during his office, he had make connections

with big people enabling him to set up a company with sales already in hand.

Furthermore, the contracts are renewable in 5 years time.

2.1.1 WEAKNESSES

a. Lack of internal control

There are no proper guidelines on doing things the right manner. Each employee

should know their job function, responsibilities and line of reporting. Failure to do so

will lead to organization crushed-down. In other sense, poor monitoring from top

management will increase …………………………………………..

b. Financial Vulnerability

As at end of 31 March 2009, PHSB Sdn Bhd has extremely low cash situation. The

negative amount of RM 578, 443 represents an overdraft which is a liability to the

company. In the point view of financial, this is a worst scenario and should be

handled with proper due care. To add more, with current pilferage issue may lead

financial instability and contribute to further cash bail outs.

2.2 EXTERNAL ENVIRONMENT

2.2.1 OPPORTUNITIES

a. Emerging Biofuel Market

In 2008, world biofuel production will be 1.35 barrels per day (bpd and by 2013, it

will rise to 1.95 million bpd (MPOB, 2008). World oilseeds output is expanding due

to advances in technology and acreage. Expansion in world demand for vegetable oils

is about six millions MT demand for edible oils and two million MT is biofuel

demand. Palm oil production alone can expand by more than five million MT, and

even higher than expansion in demand for food in certain years. Thus, there is a need

for an additional demand outlet, a vacuum which biofuel can fill. Thus, the biofuel

industry plays a crucial role to ensure farmers are not marginalized due to price

collapse.

b. Lucrative niche of market

The demand for crude palm oil is on daily basis. It serves as the basic ingredients for

food preparation in each home. When demand is high, the price of crude palm oil is

increasing. Through the statistics, approximately 17.73 million metric tonnes of crude

palm oil (CPO) are moved across the nation from mills to refineries annually. When

this happens, transportation companies may reap approximately RM 50 million each

year. Having a market portion of 5%, would result PHSB Sdn Bhd to earn a minimum

of RM 2.5 millions annually. Gross profit margins are usually around 35% - 45% and

a reasonable profit if the company can mange effectively the administrative

overheads.

2.2.2 THREATS

a. Dampening Economic Outlook

The prolonged US-led global economic slowdown will continue to dampen

Malaysia’s exports. The dampening economic outlook has negative impacts for the oil

palm industry as demand in some regions plunges. This threat to the oil palm industry,

sooner or later, is bound to have a negative impact on all chain of crude palm oil. The

Star (22 Nov, 2008) quoted a source in the oil palm industry which states that

defaults on Malaysian and Indonesian palm oil contracts are estimated to involve 1.5

million tonnes of crude palm oil (CPO). This situation could lead to a deferment

of palm oil shipments and renegotiation of import deals especially with India and

China.

b. Stiff Competition

There are approximately 1500 tankers transporting CPO from mills to refineries in the

county. Since demand is high, so do the competition amongst all transportation

companies.

3.0 RECOMMENDATIONS

3.1 RECOMMENDATION 1

Motivate

3.2 RECOMMENDATION 2

Handbook

3.3 RECOMMENDATION 3

FMS

3.4 RECOMMENDATION 4

Assets