A. Case Abstract http://www. referenceforbusiness. com/history/Ja-Lo/Jardine-Cycle-Carriage-Ltd. html Jardine Cycle & Carriage Ltd. (JCC) is one of Singapore's 50 largest corporations, in part because of its strategic stake in regional automotive powerhouse PT Astra International. It has an interest 50% in Astra a premier listed Indonesian conglomerate as well as other motor interests in Southeast Asia. The company's motor vehicle arm is one of the largest automobile retailers and distributors in Singapore, and has a strong share of the Malaysian market, through its 59 percent stake in Cycle & Carriage Bintang Bhd.
The JC&C Group represents some of the world’s leading motoring marques including Mercedes-Benz, Toyota, Honda and Kia. Since the early 2000s, JCC also has begun a drive to expand its automotive business into the greater regional market, establishing a subsidiary in Thailand. JCC's property development wing is operated through its 66 percent stake in publicly listed subsidiary MCL Land. That company is one of Singapore's largest property developers, with an assets portfolio worth more than SGD 5 billion. Two brothers, named Chua founded in 1989 as Cycle & Carriage.
The company has been majority controlled by the Jardine Matheson group since 2002. B. Vision Statement Our vision is to be one of leading provide high quality; value added solutions and construction services to our clients through sustainable growth of our organization C. Mission Statement C&C’s mission is to maintain our position as a premier motor vehicle and property group by continually providing customers with the highest-quality products and services. From our humble beginnings more than 100 years ago, we have grown into a regional force comprising close to 200 subsidiaries and ssociates spanning the region. With a highly-focused business portfolio and dedicated workforce, we are confident of moving ahead and maintaining a strong foothold in the automotive and property markets in the region. D. External Audit Opportunities 1. In 2000, C&C announced that it was leading a consortium to purchase a minority share in PT Astra International. Page195 2. The oil crisis in the 1970s prompted the company to diversify further into areas such as marine and locomotive engines, medical equipment, television and radio products, and merchant banking. Page195 3.
Mercedes-Benz cars were C&C’s most important product in Singapore, with the sales of 2,468 of these cars accounting for 80% of its total profitts in 1999. Page196 4. In 1990s, rapid economic growth and the perception of cars as status symbols had led to rapidly growing demand in Singapore. Page196 5. C&C believed that Astra represented “a unique apportunity”. Page201 6. By September 2000, C&C had increased its stake in Astra by another 6. 4%, paying more than S$100 million to buy the shares of two consortium partners who had decided to dispose of their investments. Page203 7. In early 2003, C&C increased its ownership in Astra by 3. % to 34. 3%, at cost of S$143 million. page205 8. C&C tabled an S$80 million bid for 20% of Malaysia’s largest metal-can manufacturer to develop a third core business to complement its existing car and property interests. Page199 9. C&C made a S$16 million bid for the New Zealand Government-owned Vehicle Testing Limited. Page199 10. C&C purchased a New Zealand trucking firm for about S$40 million, and started a used-car business. Page199 Threats 1. DaimlerChrysler confirmed that it would distribute its own cars from 2001. Page195 2. A recession in 1986 led to the C&C’s first loss since its 1969. page196 3.
In 1990s, the Singapore government’s transportation policy placed a heavy penalty on car ownership. Page196 4. The Indonesian government had reduced tariffs on imported cars, and was expected to reduce them further in future. Page200 5. IBRA had gained control of the Astra shares as part of a government bailout of the banking sector during the 1997-98 economic crisis. Page200 6. In December 1999, IBRA chose a U. S. consortium led by Gilbert Global Equity Partners and Newbridge Capital Ltd as it’s “preferred bidder” for Astra . Page201 7. Astra’s performance was severely affected by the devaluation of the rupiah.
It fell by more than 25% in the first-half of 2000. Page203 8. Uncertain economic conditions. Political unrest, and the bombing in Bali on October 2002 hurt the vehicle market and added to Astra’s difficulties. page204 9. Fuel prices increased drastically in 2005, the Indonesian rupiah fell significantly, and the Indonesia economy slowed. page206 Internal Audit Strengths 1. C&C’s sales for the first-half of the year rose by 24% to reach S$1. 47 billion, yielding profits of S$56 million. page195 2. C&C diversified further by entering the property market in the late 1980s.
Page196 3. C&C was widely regarded as a well-managed company. Page196 4. In February 2000, C&C announced that it was the lead partner in a consortium that had submitted a late bid of S$869 million for 40%of PT Astra International, Indonesia’s leading auto manufacturer. Page199 5. Astra was also extensively engaged in the assembly of cars and engines from kits imported into the country. Page200 6. Astra taking the largest market share of 55%. Page200 7. Astra restructured several aspects of its operations in 2000 with divested itself of several business, including its footwear.
Leather, and garment operations, and restructured its Honda motorcycle business in the form of a join venture. Page 203 8. C&C’s performance in 2002 improved considerably. Page205 9. High prices and waiting lists did not seem to hamper the sales of Mercedes-Benz in Singapore. Page196 Weaknesses 1. DaimlerChrysler was considering taking back the distribution of Mercedes-Benz cars to allow C&C to focus on becoming a dealer. Page195 2. C&C’s stock price collapsed, falling as much as 40% from its all-time high price in July 1999. Page195 3.
DaimlerChrysler intended to renegotiate its agreement with C&C results to C&C’s market value declined by more than S$500 million as its shares fell by 40%. Page198 4. DaimlerChrysler would take over the importation and distribution of Mercedes-Benz into Singapore from 2001. Page199 5. C&C’s shares fell to a low of S$3. 60 in March 2000. Page199 6. Astra had been through difficult times during the economic crisis. The particular problem was a debt of S$3. 4 billion, mostly in unhedged U. S. dollars. Page200 7. C&C’s debt rose significantly, from S$91 million at the end of 1999 to S$678 million at the of 2000 and to S$870 at the end of 2001.
Page203 Short Term Objective The short term objective of the company is to stay competitive, maintains its growth rate in challenging times with other competitors such as Borneo Motors (Singapore) Pte Ltd. and WBL Corporation Limited. C&C should focus on maintaining its position in the market than achieving higher growth in revenues or earnings for its short-term objectives. By doing this, they will be able to achieve stronger long-term market share, staying in-line with its competitors. http://www. hoovers. com/company/Jardine_Cycle__Carriage_Limited/hjkxji-1-1njht4-1njhu5. html
Long Term Objective Cycle and Carriage long term objective should focus on its intent to sustain and improve its competitive strength and long-term market position through the creation of customer value. The focus areas may include taking additional market shares, fight key competitors in terms of product quality and customer service. They should also reduce costs than rivals and stay consistently ahead of its competitors. Strategic Choices Horizontal Integration In order to beat their competitors, C&C can seek ownership or gain control of their competitors’ firm by merging or acquiring them.
By doing so, it allows for increased economies of scale and enhanced transfer of resources and competencies. Apart from the above, C&C will also be able to compare their ideas, operational strategies with their competitors so as to improve the way they operate and implement new strategies. Market Development Market development involves introducing present products and services into new geographic areas. Presently, C&C directly-held motor subsidiaries operating in Singapore and Malaysia and other motor interests in Indonesia and Vietnam. With more channels of distribution, they can achieve higher revenues and better recognition.
Related Diversification Strategies C&C should expand existing services and products into new market and they may also go into developing and manufacturing vehicle equipments and motor parts by purchasing or collaborating with raw material suppliers. They may buy over potential motor company in order to engage this diversification Justification Market development is the most risky as they need capital and resources to set up company in new areas with no definite guarantee that the company will succeed even with thorough plannings and surveys.
Huge losses can be incurred and thus affect company market shares and reputation. Horizontal Integration can be costly as funds are needed to merge or acquire companies and risks are also involved as they cannot be sure the operational strategies and ideas might work for C&C, even though it works in other companies. Related Diversification Strategies is the least risky, though they’d have to utilize funds to purchase or collaborate with raw material suppliers. By engaging in this strategy, C&C is able to use the motor parts that they have to manufacture their own brand and design of cars.
Therefore, when they have their own brand of cars, they could generate revenues from there, and the market shares for C&C will increase. Conclusion As C&C already have a well-known brand in the existing market, therefore they have to find ways to source for new potential customers and retain existing customers. They have actively invested domestically and internationally, and has managed to sustain its position through investment in diversified businesses. They need to think of more innovative idea, venture into bigger potential market and continue to be consistent in their quality in products, customer service and after sale service.