A) PEST analysis
• Goods and Services Tax In 1 April 2015, Malaysia government has implemented a ‘good and service tax’ (GST) with a fixed rate of 6% in Malaysia. Entire market reacted negatively after implemented GST. Poh Kong’s export had reduced and cause lower demand from overseas, all customer were shift to another retailer. Consumer’s sentiment was lackluster, but GST might not reduce significantly demands of gold or jewelry. Due to commemorate occasions and fight against weak ringgit, purchase of gold is cannot be escaped for consumer. Therefore, Poh Kong tried to provide more promotions as well as selling more entry level products that are affordable by consumers in order to recover the loss of implemented GST.
• Foreign Exchange Rate
Recently, foreign exchange rate of Malaysia ringgit has dropped which mean depreciation in ringgit. This situation might help Poh Kong to attract some consumer purchase gold as a hedge against the depreciation ringgit but this cannot 100% to ensure that depreciation of ringgit will brought up company’s sale. However, based on past few year, demands of precious metals and gold were slightly increased due to depreciation of ringgit. According to financial statement of 2015, Poh Kong increased 8.8% of net profit (Rm14.48 million) compared to year of 2014 (Rm13.31 million) with weak ringgit.
Currently, Malaysia faces the problem of slow economy and serious inflation. One of the products that Poh Kong offer