Tenaga National Berhad
For example, some factory they will need to increase their product, by buying more machine or take much more time to increase their product to supply the product based on the demand of the consumer needed since when the economic growth, the purchasing power of the consumer also will increase. Interest rates Interest rates also play an important role to the TNB.
Since for a small rise of the interest rate may influnce the profit to become loss. I was read the article from Noor Yahaya Hamzah. In the article, I was seen that TNB was had a huge debt on 2005. Let assume TNB was had 30 billion bank loans, and 1% of the interest rate with the 1. 2billion profit. 1 percent of 30 billion is 300million, so the profit will have 900million. But when the interest rate was increased from 1% to 4%, the 4 percent of the 300million is 1. 2billion, so the TNB will get loss for this year.
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The location of the bussiness also one of the factors to get more profit or get loss for a business. Since different location will have different currency, so that will have a different exchange rates also. For example when the payment is 100million Pound, and the recently exchange rate is 4. 8404 that mean TNB need to pay RM 484. 04million, but if the exchange rate is for last time is around 7. 0+/- that mean TNB need to pay around RM 700million for the 100 million pound. There is a huge different which can make it get profit or loss for this payment.
Taxation When the taxation increase, the profit of the company will decrease. For example, 25% taxation recently, RM 300 million will get 75million taxation fees, but 28% taxation will get 84million taxation fees. There are 9million expenses for the company, just the small changes of the taxation rates. But when the taxation rate increase, the expenses of the company will increase also, they will spend their to buy machine, vehicle and others utilities to decrease the profit they get, so that no need to pay too much tax.
By this the profit of the TNB will increase, since for the machine or the other utilies such as electrical products will increase the usage of the electrical. Inflation When the inflation rate increase,the demand of the consumer will decrease. For example the air conditional is RM 1000 last time, now already increase from RM 1000 to RM 1500, so that not everyone can consume the products which under higher inflation rate. By this the demand of the electrical products or other utilies will decrease. So the demand of the electricity will decrease also. Therefore the profit of TNB will decrease.
Social factors of Tenaga Nasional Berhad TNB is a Malaysia-based electric utility services provider which partially-owned by Malaysia government. Until the mid nineteen twenties, most generating plants were small and used a variety of fuel including low grade coal, local wood, charcoal and important oil as well as water power. Large scale planning, huge sums of capital from overseas and hiring of foreign technical experts increase because of rapid increase in electricity demands. Now,TNB has an installed capacity of 11,941 Megawatts (MW) and operates thermal and hydro electric plants.
The company operates six thermal stations and three major hydroelectric schemes. Tnb responsible for deliver adequate, safe, reliable and continuous power supply for core businesses and operations which is essential for development of the country. To ensure this delivery, TNB has invested some RM4 billion annually for new infrastructures and technology such as the building of new transmission lines, power plants or substations. As a leading power supply company,TNB also doing more social work than any other coperal company in Malaysia.
Tnb’sCorporate Social Responsibility (CSR) policy is founded on philanthropy in key areas such as education, sports, the environment and helping the underprivileged. In 2008,Tnb become one of the largest corporate Social Responsibility(CSR) contributors in Malaysia by spending more than 1. 9 billion ringgit for social activities. In education,Tnb provide many scholarship to student and researchers through Yayasan Tenaga Nasional(YTN). Tnb also providing education through Universiti Tenaga Nasional (UNITEN) and Institut Latihan Sultan Ahmad Shah (ILSAS).
Strategic cooperation between UNITEN and the industrial sector provides access and opportunities for students and academic staff to master knowledge as well as scientific and technical expertise that are relevant with industrial and market place needs. In sports,Tnb is the main supporter for hockey. In 2007, TNB contributed RM1. 1 million to the Malaysian Olympic Council which was channeled to the Malaysian Hockey Federations (MHF) for development of hockey sport in the country. In 2008, TNB become major sponsor for the 2008 Malaysian Game (SUKMA) which held in Terengganu.
TNB is also the main sponsor for cricket in the country. Besides that,Tnb also shows their responsibility on environment by helping to conserve nature in the surrounding areas. TNB’s major contribution can be seen in the Company’s efforts in the preservation of the firefly colony in Kampung Kuantan in Kuala Selangor by providing 1. 5 billion for the protection of firefly. This species of firefly flickers in unison creating a natural lightshow after dark along the Kuala Selangor riverbank. TNB also involve in research on the lampyridae firefly lifecycle.
Technological (Yogeswary) Environmental factors of Tenaga Nasional Berhad The increasing public concern over the state of global environment has caused business organizations to give more considerations to the nature environment. In fact, environmental issues are a challenge for business organizations. Due to increasing awareness and pressure from the public, many corporations today have in some way disclosed environmental information. The most common way undertaken by companies to disseminate environmental information to the public is through the corporate annual report.
Electricity plays a very important role in human lives as well as the wellbeing of economics activities of any country. Undeniably, electricity is a critical input sustaining Malaysia economic growth and development and wellbeing of its people. Without electricity, everything in life will be interrupted and crippled. TENAGA NASIONAL BERHAD which can also call as TNB is dedicated to increase efficiency in its business operations and generation technologies; consistent with a reasonable tariff and persistently upholding the need to care for our environment.
Major environmental issues arising from electricity production include water impacts, generation of wastes, and the disruption of land uses. Due to significant environmental degradation caused by electricity production, it is important that electricity providers becoming more transparent in reporting the environmental implications of their operations. By acknowledging environmental issues in their annual report, electricity providers depict a sense of accountable towards the stakeholders and are more responsible for future generation.
This study attempts to examine the environmental reporting or disclosure practice of TENAGA NASIONAL BERHAD (TNB), the largest electricity producer in Malaysia. Social factors of Tenaga Nasional Berhad Legal environment related to the surroundings of the firm location and operations. Thus, environmental law such as Environmental Quality Act of 1974. This law ensures the firm does not pollute or cause harm to the surroundings and ultimately the environment. Legal issues can both be advantage and disadvantage. Disadvantages could be affecting the firms cost and R &D.
Advantages can be obtained such as going green and save our environment. Categories of Laws: Health and safety legislation: * Occupational Safety and Health: to secure safety, health and welfare of a person at work. Consumer laws: * National Consumer Policy: focus is the formulation of national economic and social policies based on enhancing consumer benefit. Competition laws: * Copyright Act 1987: to ensure the trademark of the company not affected and copied by other competitors to promote their product.
Being the sole major provider of electricity in Malaysia, Tenaga Nasional Berhad have a little to no competition when it comes to Malaysia. Tenaga Nasional Berhad also owns one of Malaysia’s private universities: Universiti Tenaga Nasional (UNITEN), which have to compete with other universities for students every semester and that market is more wide and price sensitive compared to the electrical distribution one for TNB but it’s still not where it specializes.
Since Tenaga Nasional Berhad is a government linked company and has been around for as long as Malaysians can remember, it has developed a trusted relationship with the public, but raising the prices, or too much Power outages are sure to backlash badly on both the company and the government’s image even if the circumstances that made that happen are out of their hands , which in any case the government must work to prevent and that is sure to keep the prices in check.
To conclude, the buyers power is Moderate because of the no major alternatives when it comes to electricity distributions in Malaysia and the government’s deep involvement which must look out after its citizens’ situation. Competitive Rivalry Rivalry among competing firms in an industry is not uncommon feature. This is because each firm in an industry is jockeying for a better position than the other competing firms. A strategic move by one competitor can only be successful to the extent that the moves provide competitive advantage over the rival firms.
However, when the rival firms retaliate with counter strategic moves, like reducing the price, intense advertising, provide high quality, superior product warranty, and many others, this could dampen the earlier move of the firm in the industry. Thus, the nature of competition would be intense and could be heightened with the presence of one or some of these factors. Tenaga Nasional Berhad is a independent power producer such as YTL, Genting Sanyen, PD Power.
The competition is expected to get more intense when Asean Free Trade Agreement (AFTA) which was implemented in 2005 that allow other ASEAN countries transformer manufacturers free to enter Malaysian market. A TNB group company is seen to form majority of Malaysia market for distribution transformers and as a result, the survival of the local manufacturers are solely depending on TNB group requirement. TNB will have to increase their efficiency in conducting their business to ensure their sustainability in the business such as low operational cost or increase the capacity of the power supply.
There are some high exit barriers for the Tenaga Nasional Berhad that is once the company has already enter the utility business, the capitals invested in the assets are very high and specialised in the utility business. Top competitors of the Tenaga Nasional Berhad are CLP Holding Limited (Kowloon, Hong Kong), The Furukawa Electric Co. LTD(Tokyo, Japan), International Power PLC(London, UK). Industries where Tenaga Nasional Berhad competes are electric utilities, business services sector, construction sector, architectural and engineering services, speciality contractors, lectrical products manufacturing. Threat of Substitution Tenaga Nasional Berhad(TNB), power supplier that monopoly the power supply all over Peninsular Malaysia, where Malaysia government is the major shareholders of the company through Ministry of Finance. TNB have collaboration with Sabah Electricity Sdn Bhd (SESB) and Sarawak Electricity Supply Corp (SESCo). IPP| Location| Capacity (MW)| YTL Power Generation| Paka, TerengganuPasir Gudang, Johor| 808404| Segari Energy Ventures Sdn Bhd| Lumut, Perak| 1303| Powertek Sdn Bhd| Alor Gajah, Melaka| 440|
Port Dickson Sdn Bhd| Tanjung Gemuk, Port Dickson| 440| Pahlawan Power Sdn Bhd| Tanjung Keling, Melaka| 334| Genting Sanyen Power Sdn Bhd| Kuala Langat, Selangor| 720| IPP are independent power producers that contribute to TNB power distribution around Peninsular Malaysia. Although, TNB is dominating the power supply market, with transmission and distribution equipment from foreign gigantic companies, such as ABB, Siemens and Samsung, the probability threat of substitution is still strong enough to overcome the domination of TNB in power supply market.
IPP’s who contributing to power supply of TNB, can be a indirect competitors in short term and can be a direct and strong competitor in future long run. In conclusion, the threat of substitution exist for TNB, but the percentage is too small, because TNB had hold the majority of Total Addressable Market Size of power supply in Peninsular Malaysia. Threat of new entry First of all, our government will decide whether to allow new entrants to enter in the electrical power industry or not. This is due to industries such as utilities are considered natural monopoly.
Natural monopoly means that if a single firm is the only seller in the market, then the costs of utilities are minimized to the customers. Thus, it is more efficient if one company provide electric power in a region rather than few electric companies. To prevent utilities from make use of this advantage, the government permits monopoly but regulates the industry. Besides, the barriers to entry in the electrical power industry is high because any new comer will need high capital investment in Research & Development (R&D), Technology and marketing in order to compete with organizations which are present in the industry.
As of 2011, Tenaga Nasional Berhad (TNB) has six thermal power stations and three major hydroelectric power generating plants in peninsular Malaysia. In addition, TNB reduces transmission loss up to 2. 8% by introducing low loss conductor as of year 2011. Furthermore, TNB covers end-to-end services such as repairing, testing, maintaining power plants, assembling and manufacturing high voltage switch gears and etc. The new entrants might be lack of proprietary technology such that to become a player in the industry.
Hence, the threat of new entrants is very unlikely as the start up cost of entering the industry needs a lot of investment. On the other hand, TNB is in the electrical power industry for more than 60 years. It has more experience in this industry than any other electrical company in Malaysia such as Sabah Electricity Sdn. Bhd and Sarawak Electricity Supply Corporation. Hence, it has gained trust and loyalty from its customers especially in peninsular Malaysia. In order to earn customers trust, new entrants will take very long term or they should come out with some innovative plan.