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Company Overview Strategic Profile and Case Analysis Purpose

CONTENTS
4

Situation Analysis A. General Environment Analysis B. Industry Analysis C. Competitor Analysis D. Internal Analysis
Identification of Environmental Opportunities and Threats and Firm Strengths and Weaknesses (SWOT Analysis) Financial Performance & News

Strategy Formulation

~ KONSORTIUM TRANSNASIONAL BERHAD (KTB) made its debut on Bursa Malaysia on June 15, 2007 engages primarily in the bus transportation system comprising stage and express bus operations within Peninsular Malaysia. ~ The stage and express bus operations provide the most extensive coverage throughout Peninsular Malaysia, covering almost all major cities and towns as well as Singapore. ~ The nationwide network is serviced by a fleet of more than 1,500 buses that covers more than 250 routes, generating more than 1,000 trips daily and this translates to around 60 million passengers a year. ~ KTB commands the largest market share, with Transnasional being the leader in the express bus industry in Peninsular Malaysia. Besides Transnasional, KTB also operates Cityliner stage buses, Plusliner economy express buses and luxury bus services under the Nice brand.

YBHG DATO SRI MOHD NADZMI MOHD SALLEH

YBHG DATUK SULAIMAN DAUD

YM TENGKU MOHD HASMADI TENGKU HASHIM

ENCIK MUHAMMAD ADIB ARIFFIN

MR. WOO KOK BOON

Chairman / Managing Director

Independent NonExecutive Director

Executive Director

Independent NonExecutive Director

Independent NonExecutive Director

Ref: Annual Report 2010

Ref: Annual Report 2010

Category : STAGE BUS Fleet : 800 buses (300 powered by Compressed Natural Gas (CNG)) Target : Daily travellers Focus : Kelantan (100%), Kedah & Seberang Perai (40%), Selangor, Negeri Sembilan (85%) and Pahang (active in Temerloh & Jerantut) MILESTONES : Pioneered the use of CNG in 2007

Category : CROSS-COUNTRY EXPRESS BUS (ECONOMY) Fleet : 600 express buses of different range (75 powered by CNG) Target : Malay communities Focus : Travellers to and from the east coast MILESTONES: Introduced Transnasional Club Class to target solo travellers especially young Malay women who prefer to seat independently or with their own sex. Ensures high standards of safety with compliance to European ECE R66 safety regulations on roof crash standards Provides e-ticket service: Transnasional e-tickets can be purchased 60 days ahead of departure from 177 agents nationwide (32 from Petronas stations)

Category : HIGHWAY EXPRESS COACH Fleet : 150 coaches Target : Youngsters, students of higher learning institutions and non-malay communities Focus : Communities connected by highways Track record : 15 years as a single-deck express MILESTONES: In 2010, the Plusliner Xtreme was introduced. It is a double decker coach with the latest technology for comfort and safety, and the largest capacity express in the country with 72 passenger capacity.

Category : EXECUTIVE/LUXURY COACH Fleet : 50 coaches Target : Upper middle class and Business travellers Focus : Singapore, Kuala Lumpur and Penang (expanded to another 5 townships in 2010) MILESTONES: Executive lounges at start and end destinations for passengers to relax in air-conditioned comfort, enjoy free snacks and drinks, and surf the net. Largest operator in the country, supported by more than 20,000 Nice loyalty members Members receive privileged points that can be exchanged for free tickets, merchandizes or holiday packages Nice ++ is one of the first in the country with individual LCD screen for passengers with a selection of pre-programmed digital movies

A) General Environment Analysis (External Environment Analysis)

55 mill passenger annually 1,500 buses cover 234 routes 5,200 trips daily. 170 ticketing agents, include Petronas Mesra Stores has been appointed for greater accessibility E-ticketing NGV buses. Skyview buses introduced in 2007

1. GENERAL
The largest operator of public transportation in Malaysia
SOCIOCULTURAL

2. INDUSTRY PORTERS 5 FORCES 3. COMPETITOR SANI EXPRESS / MARALINER TRANSTAR POLITICAL/LEG

AL

* Every $1 invested in public transportation projects generates approximately $6 in local economic activity. * Every $1.25 billion investment in the nations transportation infrastructure supports approximately 35,000 jobs.(www.publictranspo rt.org) Public transport around the world has seen a surge in popularity in response to high fuel prices and growing concerns about climate change . In the 10 years to 2016, industry value-added is forecast to increase at an average annual rate of 1.9%, while the US economy is expected to grow by 2.0%.

PHYSICAL

SPAD Government Initiatives and subsidy.

Express Buses Stage Buses

B) Industry Analysis
HIGH new comer for profitable trip strategic alliance travel agent & local co.

Threat Of New Entrants HIGH Sani Express Others Competitors

Rivalry Among Competing Firms

Bargaining Power of Suppliers PORTERS 5 FORCES

HIGH Fuel prices uncertainty - Petronas Agent Terminal owner Travel agent High maintenance cost/spare parts/ labour charges Bus manufacturer

LOW Seasonal express bus Train efficiency Other cheaper & faster mode of transportation i.e. AirAsia Threat of Substitute Products Bargaining Power of Buyers

HIGH
Individual Customer Organizational Customers Discount and early bird purchases offered by other bus operators

C) Competitor Analysis
As a general rule, a firm enters the market only if it can earn positive profits. When entry happens on a significant scale, it is expected that the incumbent reacts. All operators face the same costs; All operators and passengers have complete information about services and fares; Operators have information about demand; Each passenger has a preferred departure time but is indifferent between backwards and forward rescheduling; Traffic conditions are such that journey times are the same throughout the day; Departure times and fares of other operators are fixed.

D) Internal Analysis
Cross-marketing partnership Joint-ventures Service offering and, unique distribution and delivery systems
PHYSICAL RESOURCES

FINANCIAL RESOURCES

TECHNOLOGY RESOURCES

Replaced Corporate Web Portal Develop Intranet Portal Virtualization of It services Partnership with Telco

differentiated by size and range of products, and are customized to specific segments.

Resources View
OPERATIONAL RESOURCES
REPUTATIONA L RESOURCES

Rebranding Increased Companys value & Brand

Innovation Product R&D Investment Restructuring (myCare / myDesk)

INNOVATIVE RESOURCES

HUMAN RESOURCES

Agency Provident Fund Loyalty Agents Continuous Training Reenergizing Reward Project

Strength
E Ticketing 1,500 buses More than 200 routes Lower fatality & accidents rates comparing with other competitors Goodwill

Weaknesses
High operating cost Lack of spare part for maintenance Low volume for certain routes

Opportunities
Government support NGV subsidy Customers loyalty Increase of population in medium income

Threat
Gas price Unauthority ticket seller High quality competitors seat Transport systems have significant impacts on the environment, 20% and 25% of worls energy consumption and carbon dioxideemissions

Collaboration with government Collaboration with travel agent Fully utilised customers during trip Improve advertising and marketing Strategic alliances with identify restaurant Diversify business activity Hotel (Sani Express having own hotel) Promote drivers efficiency, bus safety (In the transportation industry, drivers play an important role as the key personnel in delivering the products or passengers. They are in contact directly with the customers. Without them, bus operations will grind to a halt and this will affect the whole transportation system). Customers loyalty program Partnering with other courier agencies letter, small parcel, etc.

Loss since 2009 No dividend has been paid since 2009. FYE 31 December 2010, the Group incurred net losses of RM31,140,000 and as at that date, the Groups current liabilities exceeded its current assets by RM127,728,000. (Annual Report 2010) Short-term solution: suspended their Cityliner, make Residents of Taman Sentosa, a densely populated housing area here, staged a protest against KTB for halting its Cityliner bus service in Selangor. (The Star online, 3rd January 2012) Long-term solution: important that all bus operators sit down together and work out a strategic plan for the future. (The Star online, 14th Dec 2011)

Financial Highlights Sales Loss Net Profit Margin Return on Equity Debt/Equity Ratio RM 264,506,000 Revenue/Share RM 31,140,000 Earnings/Share -11.87% Book Value/Share -24.19% Dividend Rate 1.30 Payout Ratio 0.83 -0.09 0.36 No dividend paid 0

Competitive Advantage

Cost
Cost Leadership

Uniqueness
Differentiation

Broad target Competitive Scope Narrow target

Integrated Cost Leadership / Differentiation Focused Cost Leadership

Focused Differentiation

Ancillary business Plusliner Travel & Tour Mobile advertising services for transport operations Bus division Stage and Express Many routes Quality Products Excellent customer service

Focusing on differentiation strategy, whereby the integrated set of action taken into consideration to produce services, must be at an acceptable cost, that customers perceive as being different in ways that are important to them. To work together with one or more competitors to gain advantage against other competitors. KTB to get governments fund or subsidy to maintain the operational cost.