Poh Kong Holdings Berhad Case
3.0 Industry Analysis of Poh Kong Holdings Berhad (PKHB)
3.1 Threat of New Entrants: Moderate to Low
This industry requires a large amount of capital to operate the business, such as acquisition of shop lot, specialized plant and machineries to manufacture jewelries, high securities costs and so on. The inventory itself such gold and diamond is very expensive to afford compared to other industries. Besides, this industry has created a government policy's barrier by Bank Negara Malaysia (BNM) so there is essential to get approval from the Federation of Goldsmiths and Jewellers Association of Malaysia (FGJAM). Furthermore, the competition in this industry is strong as there are listed jewelry companies including PKHB and many private companies such as Habib Jewels, Wah Chan and so forth.
High barriers of entry, such as the growth of established companies in the industry and high initial investment costs, had reduced this threat. Existing firms experience economies of scale from large investments in highly-specialized plant and equipment and bulk purchasing of resources with long-term contracts and cause high barriers to entry and to exit because new entrants are …show more content…
Asian markets are predicted to continue growing until 2017 (“Gem and Jewelry Market Trends towards AEC 2015”, n.d.). There is a slow but high growth rate in this industry (Bernama, 2016). As this industry expands globally, more stores are launched by top competitors with the aim of increasing its market share and capitalizing on industry competition including PKHB (“Poh Kong’s profit margin”, 2015) and Habib Jewels (Yeong, 2013). Ultimately, the industry will become stagnant and thus they compete by taking market share away and create price wars among themselves as the fixed costs are increasingly high. Additionally, as the industry rises, the switching costs and degrees of differentiation get
3.1 Threat of New Entrants: Moderate to Low
This industry requires a large amount of capital to operate the business, such as acquisition of shop lot, specialized plant and machineries to manufacture jewelries, high securities costs and so on. The inventory itself such gold and diamond is very expensive to afford compared to other industries. Besides, this industry has created a government policy's barrier by Bank Negara Malaysia (BNM) so there is essential to get approval from the Federation of Goldsmiths and Jewellers Association of Malaysia (FGJAM). Furthermore, the competition in this industry is strong as there are listed jewelry companies including PKHB and many private companies such as Habib Jewels, Wah Chan and so forth.
High barriers of entry, such as the growth of established companies in the industry and high initial investment costs, had reduced this threat. Existing firms experience economies of scale from large investments in highly-specialized plant and equipment and bulk purchasing of resources with long-term contracts and cause high barriers to entry and to exit because new entrants are …show more content…
Asian markets are predicted to continue growing until 2017 (“Gem and Jewelry Market Trends towards AEC 2015”, n.d.). There is a slow but high growth rate in this industry (Bernama, 2016). As this industry expands globally, more stores are launched by top competitors with the aim of increasing its market share and capitalizing on industry competition including PKHB (“Poh Kong’s profit margin”, 2015) and Habib Jewels (Yeong, 2013). Ultimately, the industry will become stagnant and thus they compete by taking market share away and create price wars among themselves as the fixed costs are increasingly high. Additionally, as the industry rises, the switching costs and degrees of differentiation get