The Lee Rubber Company:

A Case Study of A Singapore-Based Chinese-Owned Transnational Corporation

March 2014

Case Contents

I. II. III. IV. V. VI. VII. IX. X. XI. XII.

Case Facts Time Context Viewpoint Major Policy Statement Current Operational Plans Statement of the Problem Statement of Objectives Alternative Courses of Action Analysis of Alternatives Decision Statement Implementation Program

VIII. SWOT Analysis

XIII. Proposed Operational Plans XIV. Other Problems and Recommendations XV. Management Lessons Learned

A transnational corporation is a huge company that does business in several countries. Many TNCs are much richer than entire countries in the less developed world. Examples of TNCs include: - Nestl - Unilever - Cadbury-Schweppes - BP-Amoco I. Case Facts Lee Rubber Company (Pte) Ltd. is one of the few large rubber companies incorporated in Asia. The Lee Rubber Company Ltd was first incorporated in the Straits Settlement on 9th December 1931 under the Ordinance No. 155. Singapore was part of the Straits Settlement at this time of incorporation. Lee Rubber Company started its operations in 1928. Its activities were stated in the Articles of Incorporation as rubber planters and manufacturers, brokers, agents, merchants, importers, exporters, and dealers in rubber and rubber goods and related goods. Nominal capital of the company was $500,000 consisting of 5,000 shares each worth $100 at the time of incorporation. In 1932, the largest shareholder was Mr. Lee Kong Chian with 3,123 shares which represented 62% of the 5,000 shares taken up. The nominal capital was further increase in 1953 to $10.1m and in 1957, the nominal capital doubled. Since its incorporation, the Company has expanded its nominal capital by more than one hundred times while issued capital has increased almost by eighty-one times. Subsidiaries has been established namely: Lee Latex, Tropical Produce, Lee Plantations, Kota Trading, Lian Hin Rubber, United Gee Seng and Kallang Rubber which was established between 1947 and 1951. Lee Rubber (Selangor) was incorporated in 1962 in Malaysia. Lee Plantations is primarily an estate management company.

All subsidiaries except for Lee Plantations are engaged in rubber processing activities. Time Context April 1977

II.

III.

Viewpoint Mr. Lee Kong Chian, director of Lee Rubber Company Ltd.

IV.

Major Policy Statement Lee Rubber Company Ltd. is one of the few large rubber companies incorporated in Asia which engaged in rubber manufacturing and trading business. It aims to be one of the leading rubber providers in the world.

V.

Current Operational Plans Marketing The sales department purchases processed rubber from the factories at quoted prices or prevailing f.o:b. market prices and sells it mainly to manufacturers in the automobile industries. The major markets are in the United States and Western Europe. Management

VI.

Statement of the Problem How

VII.

Statement of Objectives Long-Range Objectives To

Short-Range Objectives To

VIII. SWOT Analysis STRENGTHS WEAKNESSES 1. Known to be one of the 1. Dual channel between the largest companies in the manager and the rubber industry directors of the parent 2. Largest exporter of company and the rubber headquarters 3. Loyal customers 2. One of the air polluters in 4. Brand identity the world OPPORTUNITIES THREATS 1. Acquisitions 1. Potential entrants 2. Emerging market and 2. Stiff competition expansion abroad 3. Fluctuation of exchange 3. Innovation rate 4. More tie-ups into 4. Lower prices of automobile industry substitutes 5. Natural calamities and disasters IX. Alternative Courses of Actions