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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 2009s 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.

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SWOT ANALYSIS INTERNAL ENVIRONMENT 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 2.2.1 EXTERNAL ENVIRONMENT 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.

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THREATS

a. Dampening Economic Outlook The prolonged US-led global economic slowdown will continue to dampen Malaysias 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.

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RECOMMENDATIONS RECOMMENDATION 1 Motivate

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RECOMMENDATION 2 Handbook

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RECOMMENDATION 3 FMS

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RECOMMENDATION 4 Assets