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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 worlds 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 andconstruction services to our clients through sustainable growth of our organization

C. Mission Statement

C&Cs 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 associates 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.


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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&Cs 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 symbolshad 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 3.2% to

34.3%, at cost of S$143 million. page205

8. C&C tabled an S$80 million bid for 20% of Malaysias 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


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Threats

1. DaimlerChrysler confirmed that it would distribute its own cars from 2001.Page195

2. A recession in 1986 led to the C&Cs first loss since its 1969. page196

3. In 1990s, the Singapore governments 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 bailoutof 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 its preferred bidder for

Astra . Page201

7. Astras 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 Astras 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&Cs sales for the first-half of the year rose by 24% to reach S$1.47 billion,

yielding profits of S$56 million. page195


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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 aconsortium that had submitted a late bid of S$869 million for 40%of PT Astra

International, Indonesias 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&Cs 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&Cs 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&Cs 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 ofMercedes-Benz into Singapore from 2001. Page199


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5. C&Cs 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&Cs 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.

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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 theircompetitors 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 newgeographic areas. Presently, C&C directly-held motor subsidiaries operating in Singapore and
http://www.hoovers.com/company/Jardine_Cycle__Carriage_Limited/hjkxji-1-1njht4-1njhu5.htmlhttp://www.hoovers.com/company/Jardine_Cycle__Carriage_Limited/hjkxji-1-1njht4-1njhu5.htmlhttp://www.hoovers.com/company/Jardine_Cycle__Carriage_Limited/hjkxji-1-1njht4-1njhu5.htmlhttp://www.hoovers.com/company/Jardine_Cycle__Carriage_Limited/hjkxji-1-1njht4-1njhu5.html


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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 evenwith 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 theyd 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 revenuesfrom 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.

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