Focus Point Holdings Berhad Essay

FOCUS POINT HOLDINGS BERHADIntroductionThis case analyzes the effect of think commove Holdings Berhad pecuniary dodging on the firms in operation(p) activities and financial performance. counselling headway Holdings Berhad is an investment property fraternity that engages in the operation of lord eye administer centers in Malaysia. The political party is in any case involved in the trading of eyewear and eye plow products management of privileged professional eye c ar centers pro dream of medical eye c atomic number 18 serve provision of food and beverages services trading of hearing aid solutions and tie in accessories and retail of optical and related products. It operates 175 professional eye c be centers under the concentrate quest, Focus Point Optical City, Opulence, eyefont, ExcelView, Solariz, and Focus Point Signature brand lifts, each serving a different merchandise segment.This Malaysian home grown optical broth was established in 1989 as Focus Vision Ca re Center. In 1993, it became a mystic limited company and in 2010, a state-supported entity. Financial dodgeWith the understanding that the fundamental success of a dodge depends on a realistic internal view of its core competencies and sustainable competitive advantages, the company translated its vision and mission statements to pursue its economic objectives. Vision To become a leading brand in Asia through our focus approach in vision care Mission To allow consumers with the best vision care and eyewear services as well as to uphold the highest standards in reliability, smell and profesionalism The company arrived at two major decisions, that is, to go public and to franchise the store. 1Going PublicThe companys decision to go for listing on August 23, 2010 is a financial strategy that raised RM16.07 million of which 8.94 million was channeled into expansion plans and upgrading and refurbishment of the existing eyecare centers. The company pursued the market penetration growth strategy, aimed at change magnitude market trade for existing products orservices in existing markets. The focus of growth was on expansion of new outlets, upgrading and refurbishment of existing outlets and expansion of brand eyewear products. FranchisingFranchising enabled the company to improve on its economies of scale due to its size, brand name and experience. At the same time, it provided the company with the key advantage of incremental income with borderline capital expenditure in the setting up of new outlets. revenue contributed by the franchising model mainly comprises of sales of eyewear and eye care products to their franchises and royal house fees which are based on 5% of gross turnover of the individual franchisees outlets, and franchise fees payable by franchisees which amount to RM30,000 for a intent of 5 years.The franchise agreements gestural between the group and their franchisees are legitimate for a compass point of 5 years, with an option to re new for an other fivesome years with the same franchise fees of RM30,000 payable over the extended 5 year period. To rear the success of this strategy, a Memorandum of Collaboration was signed between the companys management and Permodalan Nasional Berhad to facilitate backing for Bumiputera franchisees. The company in any case collaborated with Maybank on a similar loan scheme for non-Bumiputera franchisees.2Inter statealizationIn the same year as its initial public offering, Focus Point Holdings Berhad began to pursue its overseas expansion by fountain its first franchise overseas outlet in Brunei. The companys internationalization effort accelerated the openings of franchises in other south-east Asian countries such as Singapore, Cambodia, Vietnam, Indonesia and Thailand. The first-mover advantage gave the company the edge, especially in highly-populated countries standardised Vietnam and Cambodia where consumer spending power was increasing in tandem with their growing eco nomies.On the other hand, Singapores economy provided an opportunity for thecompany to speculation into high-end market for professional eye-care services.Effect Of Strategy On Operating ActivitiesBy going public, the company was able to collaborate with and convince financial institutions and agencies to provide franchising loans to interested franchisees. Access to financing and the strong presence in the nation resulted in an increase in the number of outlets from the pre initial offering total of one hundred thirty outlets to 136 outlets in 2011. In 2012, the group has 170 outlets in of which 85 are wholly owned outlets and 85 are franchised outlets. The company cordial kinship with local and international principals and the close working relationship with departmental stores had also allowed the group to secure good premises and maintain Focus Points leading position in the market. The overseas franchise communication channel is growing with Brunei alone operating 6 franchi sed outlets.The money raised from IPO that is used for expansion plan and upgrading outlets has helped inefforts to foster greater node relations.This is vital for long term line of worksustainability as data indicated an increasing target universe. With the median age of the population increasing, it is expected that the number of population with eye disorder will also3increase. The global vision care market is expected to grow by 4.4% over the period of 2010 2017.Effect Of Strategy On Financial PerformanceThe IPO exercise, financing facilities for franchisees and internationalization have contributed to a higher revenue and better boilers suit financial performance as shown4PBT Profit before appraisePAT Profit after taxThe above financial highlights showed thatthe financial performance of Focus PointHoldings Berhad is stronger after going public and fetching on aggresive marketing activities to generate increased business volumes. However, the groups venture into the food & beverage (F&B) segment in the last arse of 2012 has affected the groups profit, earnings and 5dividends per share. The investment in the fast growing F&B segment is expected to enhance the groups revenue stream and profitability in a longer term. Companys Performance Versus IndustryThe overall train of competition among operators in the professional eye care industry in Malaysia is high as there are many players competing in the industry. As in many retail businesses, there is a low bar to entry into the operation of professional eye care centres.However, there is privation of industry peers to benchmark as there are no other competitors that are directly comparable to Focus Point Holdings Berhad. Many of the competitors are smaller outlets, independently owned and run by the owners. The nearest competitor locally is England Optical Group with similar growth strategy store expansion, franchising and internationalization. England Optical Group operates 131 outlets, 120 in Mal aysia, 10 in china and 1 in Cambodia. With reportedly 10% market share of the local optical industry, Focus Point Holdings Berhad is currently the market leader in the industry. Market share among competitors are widely dispersed with each holding a smaller percentage of the market.ConclusionA financial strategy analysis helps department heads review external and internal elements affecting a company and how such elements impact short-term and long-term activities. There are never any guarantees for business success, but creating financial strategies gives any businessdirection and guidance.For Focus Point Holdings Berhad, to ensuresustainability, the group increased the informant of income to include food and beverage, in addition to income from eyewear and eye care and franchising. overall the company is on the6right track, focusing on renewing and product development, market expansion especially in untapped regional markets and maintaining a good public image.7ReferencesBende r, R. , & Ward, K. (2003). Corporate financial strategy (2nd ed.). Burlington, MA Butterworth-HeinemannFocus Point Annual Report 2010Focus Point Annual Report 2011Focus Point Annual Report 2012Irene, Y. (2010). Focus point targets local and overseas market expansion after listing, Kuala Lumpur The Star.com.myLee, A. (2010). Focus point braces for future challenges. Kuala Lumpur The Star.com.my Lee, KS. (2010). Focus point plans forays into South-East Asia. Kuala Lumpur The Star.co.mypassword Focus Point to expand via franchising. (2003). Retrieved from Malaysian Franchise Association http//www.mfa.org.my/?franchise-newsfocus-point-to-expand-viafranchising2C00C881V1