Case Study

Read the following case and answer all the questions that follow.

POS Malaysia continues to struggle against growing competition

Pos Malaysia provides postal and related services, namely: Standard Mail (Flexipack Domestic, Standard Mail, Non-Standard Mail, Postcards, Mel Rakyat, Pos Ekspres, Pos Daftar, Pos Solutions). Courier, Express & Parcels CEP (Same Day Delivery, Next Day Delivery, Time Certain Service, Pos Parcel, Pos Ekspres, Pos Laju Prepaid Pack, On-Demand Pick-up, Prepaid Envelopes/Boxes). Retail (Bill payments, driving marketplace). The company holds an exclusive concession to provide mail services through its network of over 926 branches and mini post offices across Malaysia.

POS Malaysia started as a medium for the transmission of letters, newspapers, and business documents. The postal service soon evolved into a multiple services provider. It began to venture into parcel delivery, registrations, insurance service, transaction of money (postal order & money order), and investment of funds (Post Office Saving Bank).

The postal service, then known as Jabatan Perkhidmatan Pos Postal Services Department (PSD), also began to take over numerous services on behalf of the Government departments. It started to collect payment of electricity bills, sale of dog licences, payment of pensions, sale of television licence and others.

In 1992, Pos Malaysia Berhad was corporated from the PSD. In September 2001, Pos Malaysia Berhad was listed on the then Kuala Lumpur Stock Exchange (now known as Bursa Malaysia Berhad) through a reverse takeover of a Philio Allied Berhad assuming its listing status. Today, Pos Malaysia has many Strategic Business Units - POS Laju, POS, Data Pos, POS ArRahnu, POS Digicert, POS Solutions & POS Online.

In a press statement by Pos Malaysia Berhad (Pos Malaysia), the company has stated that its operations have been impacted due to the ongoing Covid-19 pandemic.

While there is an increase in parcel volume throughout the MCO, Pos Malaysias other businesses namely mail, international parcels, Pos Aviation, Pos Logistics and others have been affected. Despite this, Pos Malaysia continues to protect the livelihood of over 15,000 front liners and operational support employees and ensure that their needs are prioritised, it said.

Pos Malaysia Bhd's recovery prospects remain uncertain amid intense industry competition, as reflected by another loss-making quarter of operations.

The postal service provider reported a core net loss of RM43.5mil in 3QFY22, which brought 9MFY22 net loss to RM73.5mil.

According to Hong Leong Investment Bank (HLIB) Research, the results were below its and market expectations.

"Although PosM has plans to mitigate the impact of falling parcel volumes by improving overall parcel yield, and reducing transport costs via productivity improvements, we remain wary over its recovery prospects as the competition in last mile delivery space continue to remain intense, as evident by Nationwide Express recent announcement to gradually cease operations," it said in a research note.

HLIB added that the postal operator and other industry players are also engaging with the regulators in the hope of imposing a floor-pricing for the price per parcel to create a more level playing field for all courier service providers.

We are cautious on the group due to its conventional mail business continuing to struggle to stay relevant in the digital age and we doubt that we have seen the bottom, Kenanga Research said in its latest report.

Furthermore, the group is currently facing declining courier volume.

This is because of tremendous competition from new players such as J&T Express and Ninja Van that undercut aggressively on rates to grow their market shares.

Also, Pos Malaysias cost-cutting measures are insufficient to counter its weakening core business revenue, it added.

The risks include sector consolidation that could enable big players to control the market, better cost management, particularly for labour and fuel, while the conventional mail service remains essential for security purposes, and a faster recovery in the global economy, which would boost demand. Adapted Sources: Business Today. (2020). Pos Lajus operations impacted by Covid-19 despite increase in parcel volume.

Https://Www.Businesstoday.Com.My/. https://www.businesstoday.com.my/2020/05/19/pos-lajus-operationsimpacted-by-covid-19-despite-increase-in-parcel-volume/

The Star. (2022). POS Malaysia continues to struggle against growing competition. The Star. https://www.thestar.com.my/business/business-news/2022/11/22/pos-malaysia-continues-to-struggle-againstgrowing-competition

Propose operation strategy(ies) for POS Malaysia to gain competitive advantage. Justify your proposal(s). [35 marks]

Please provide in essay format, introduction, paragraph (points and example) and conclusion as well pls